{"url_path":"/sec/hmelf/10-k/2026/item-3","section_key":"item-3","section_title":"Item 3 KEY INFORMATION**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-14","source_url":"https://www.sec.gov/Archives/edgar/data/1853630/0001213900-26-056780-index.html","accession_number":"0001213900-26-056780","cik":"0001853630","ticker":"HMELF","issuer_name":"Hold Me Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1853630/0001213900-26-056780-index.html","primary_entity_key":"0001853630","primary_entity_name":"Hold Me Ltd"},"word_count":13015,"has_tables":true,"body_markdown":"**ITEM 3. KEY INFORMATION**\n\n \n\n**A. Reserved.**\n\n \n\n**B. Capitalization and Indebtedness**\n\n \n\nNot applicable.\n\n \n\n**C. Reasons for the offer and use of proceeds**\n\n \n\n**D. Risk Factors**\n\n \n\n*You should consider carefully the risks described\nbelow making an investment decision. Additional risks not presently known to us or that we currently deem immaterial may also impair\nour business operations. Our business, financial condition or results of operations could be materially and adversely affected by any\nof these risks. The trading price and value of our ordinary shares could decline due to any of these risks, and you may lose all or part\nof your investment. This annual report also contains forward-looking statements that involve risks and uncertain. Our actual results\ncould differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks\nfaced by us described below and elsewhere in this annual report.*\n\n \n\n**Risks Relating to our business and industry**\n\n \n\n**Our financial situation creates doubt whether\nwe will continue as a going concern.**\n\n \n\nThere can be no assurances that we will ever\nbe able to achieve a level of revenues adequate to generate sufficient cash flow from operations or obtain additional financing through\nprivate placements, public offerings and/or bank financing necessary to support our working capital requirements. To the extent that\nfunds generated from any private placements, public offerings and/or bank financing are insufficient, we will have to raise additional\nworking capital and no assurance can be given that additional financing will be available, or if available, will be on acceptable terms.\nThese conditions raise substantial doubt about our ability to continue as a going concern. If adequate working capital is not available,\nwe may be forced to discontinue operations, which would cause investors to lose their entire investment.\n\n \n\nThe Company has not generated significant revenues,\nhas suffered recurring losses from operations, has incurred negative cash flows from operating activities and is dependent on external\nsources for financing its operations. As of December 31, 2025, the Company has an accumulated deficit of 4,724,346 NIS and a stockholders’\ndeficiency of 3,551,822 NIS. The consolidated financial statements for the year ended December 31, 2025 were prepared assuming that\nwe would continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal\ncourse of business. The accompanying financial statements do not include any adjustments relating to the recovery of the recorded assets\nor the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.\n\n \n\nThe report of our independent registered public\naccounting firm on our audited consolidated financial statements as of December 31, 2025 and 2024 includes an explanatory paragraph\nregarding substantial doubt about our ability to continue as a going concern based upon our recurring losses, cash used in operations\nand accumulated deficit.\n\n \n\n**A cyber or security attack or other similar\nincident resulting in a breach, disruption or failure in our or our supply chain’s digital environment, or of our products, could adversely\naffect us.**\n\n** **\n\nOur operations depend heavily on the continued\nand secure functioning of our varied digital environment software and hardware that stores, processes and transmits data within the Company\nand from and to us and our business partners. This digital environment is subject to breach, damage, destruction, disruption, malfunction\nor failure from, among other things, cyber-attacks and other unauthorized intrusions, power losses, telecommunications failures, acts\nof war or terror, earthquakes, fires and other natural disasters.\n\n \n\nWe are continuously subjected to attempted cyber-attacks,\nranging from standard phishing mails to sophisticated campaigns, such as spear phishing targeting specific Company management. A cybersecurity\nbreach could also contaminate the source code implemented in our products delivered to our customers. Despite our efforts to secure our\nsystems and databases and meet cyber protection and information assurance requirements, due to the complex and evolving nature of the\ncyber security risk landscape, we and some of our suppliers have in the past and may in the future face system failures, data breaches,\nloss of IP and interruptions in our operations, or fail to meet customer requirements, which could have a material adverse effect on our\nbusiness, reputation, financial condition, results of operations and cash flow. For information about our cybersecurity risk management,\nstrategy and governance, see Item 16K. Cybersecurity.\n\n \n\n1\n\n \n\n**We currently do not have any customers.\nIf we fail to acquire customers, our business, financial condition and results of operations may be materially and adversely affected.**\n\n \n\nFor the year ended December 31, 2025, we\ndid not generate any revenues from customers. Although we are in discussions with potential customers with respect to additional revenue\ngenerating projects, there is no assurance that they will result in revenues for us.\n\n \n\n**If the market for digital payments does\nnot continue to grow, our business will be adversely affected.**\n\n \n\nThe market for digital payments may not continue\nto grow. Continued growth of this market will depend, in large part, upon:\n\n \n\n \n●\nthe continued expansion\nof Internet usage and the number of organizations adopting or expanding intranets;\n\n \n \n \n\n \n●\nthe continued adoption\nof “cloud” infrastructure by organizations;\n\n \n \n \n\n \n●\nthe ability of the infrastructures\nimplemented by organizations to support an increasing number of users and services;\n\n \n \n \n\n \n●\nthe continued development\nof new and improved services for implementation across the Internet and between the Internet and intranets;\n\n \n \n \n\n \n●\nthe adoption of data security\nmeasures as it pertains to data encryption and data loss prevention technologies;\n\n \n \n \n\n \n●\ncontinued access to mobile\nAPI’s, APPs and application stores with Apple, Google and Microsoft, etc.;\n\n \n \n \n\n \n●\ngovernment regulation of\nthe Internet and governmental and non-governmental requirements and standards with respect to data security and privacy; and\n\n \n \n \n\n \n●\ngeneral economic conditions\nin the markets in which we, our customers and our suppliers operate.\n\n \n\nIn 2025, global and regional economies around\nthe world and financial markets remained volatile. Further, if the necessary infrastructure or complementary products and services are\nnot developed in a timely manner and, consequently, the enterprise security, data security, Internet or intranet markets fail to grow\nor grow more slowly than we currently anticipate, our business, results of operations and financial condition may be materially adversely\naffected.\n\n \n\n**We may not be able to successfully compete,\nwhich could adversely affect our business and results of operations.**\n\n \n\nThe digital payment market profoundly shifted\nin the post-Covid-19 pandemic context. The crisis has affected the way people think about payments and financial services, with the use\nof cash declining and the rise of contactless encouraged by many countries. All the actors are being impacted by this move towards a\ncashless society, including retailers, merchants, consumers, governments, financial institutions, and service providers.\n\n  \n\nThe market for digital payment is intensely competitive\nand we expect that competition will continue to increase in the future. Our competitors include big tech companies, such as Google, Apple\nand PayPal who are eagerly looking to grab an increasing share in the digital payment market. Apple launched its digital payment service,\nApple Pay, in Israel on May 5, 2021, which may substantially impact our ability to compete for customers in our primary market.\nIn addition, Google launched its digital payment service, Google Pay, in Israel on December 7, 2021, which may substantially impact\nour ability to compete for customers in our primary market. We also compete with several other companies, including wallet factory and\ndejamobile, with respect to digital wallets that we offer. In addition, there are hundreds of small and large companies that offer digital\npayment products that we may compete with from time to time.\n\n \n\nOur current and potential competitors have various\nadvantages over us, including longer operating histories; access to larger customer bases; significantly greater financial, technical\nand marketing resources; a broader portfolio of products, applications and services; and larger patent and intellectual property portfolios.\nAs a result, they may be able to adapt better than we can to new or emerging technologies and changes in customer requirements, or to\ndevote greater resources to the promotion and sale of their products. Furthermore, some of our competitors with more diversified product\nportfolios and larger customer bases may be better able to withstand a reduction in spending on digital payment solutions, as well as\na general slowdown or recession in economic conditions in the markets in which they operate. In addition, some of our competitors have\ngreater financial resources than we do, and they have offered, and in the future may offer, their products at lower prices than we do,\nor may bundle digital payment products with their other offerings, which may cause us to lose sales or to reduce our prices in response\nto competition.\n\n \n\n2\n\n \n\nIn addition, consolidation in the markets in\nwhich we compete may affect our competitive position. This is particularly true in circumstances where customers are seeking to obtain\na broader set of products and services than we are able to provide.\n\n \n\nThe markets in which we compete also include\nmany niche competitors, generally smaller companies at a relatively early stage of operations, which are focused on specific digital\npayment needs. These companies’ specialized focus may enable them to adapt better than we can to new or emerging technologies and\nchanges in customer requirements in their specific areas of focus. In addition, some of these companies can invest relatively large resources\non very specific technologies or customer segments. The effect of these companies’ activities in the market may result in price\nreductions, reduced gross margins and loss of market share, any of which will materially adversely affect our business, results of operations\nand financial condition.\n\n \n\nWe may not be able to continue competing successfully\nagainst our current and future competitors, and increased competition within the market may result in price reductions, reduced gross\nmargins and operating margins, reduced net income, and loss of market share, any or all of which may materially adversely affect our\nbusiness, results of operations and financial condition.\n\n \n\n**We may not be able to maintain and improve\nthe network effects of our digital economy, which could negatively affect our business and prospects.**\n\n \n\nOur ability to maintain a healthy and vibrant\ndigital economy that creates strong network effects among financial institutions, consumers, merchants, brands, retailers and other participants\nis critical to our success. The extent to which we are able to maintain and strengthen these network effects depends on our ability to:\n\n \n\n \n●\noffer secure and open platforms\nfor all participants and balance the interests of these participants;\n\n \n \n \n\n \n●\nprovide a wide range of\nhigh-quality product, service and content offerings to consumers;\n\n \n \n \n\n \n●\nattract and retain consumers,\nmerchants, brands and retailers of all sizes;\n\n \n \n \n\n \n●\nprovide effective technologies,\ninfrastructure and services that meet the evolving needs of financial institutions, consumers, merchants, brands, retailers and other\nbusinesses;\n\n \n\n \n●\nsecure and trusted digital\npayment services;\n\n \n \n \n\n \n●\naddress user concerns with\nrespect to data security and privacy measures;\n\n \n \n \n\n \n●\nattract and retain third-party\nservice providers that are able to provide quality services on commercially reasonable terms to our customers;\n\n \n \n \n\n \n●\nmaintain the quality of\nour customer service; and\n\n \n \n \n\n \n●\ncontinue adapting to the\nchanging demands of the digital payment market.\n\n \n\nIn addition, changes to current operations we\nmay make to enhance and improve our digital economy or to comply with regulatory requirements may be viewed positively from one participant\ngroup’s perspective, such as our customers, but may have negative effects from another group’s perspective, such as the clients\nof our customers. If we fail to balance the interests of all participants in our digital economy, our customers may spend less time,\nmind-share and resources on our Platform and may conduct fewer transactions or use alternative platforms, any of which could result in\na material decrease in our revenue and net income.\n\n \n\n**Raising additional capital and the conversion\nof our outstanding preferred shares owned by our majority controlling shareholder would cause significant dilution to our existing shareholders\nand may affect the rights of existing shareholders.**\n\n \n\nWe will have to seek additional capital through\na combination of private and public equity offerings, debt financing and collaborations and strategic and licensing arrangements. To\nthe extent that we raise additional capital through the issuance of equity or convertible debt securities, your ownership interest will\nbe diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a holder of our shares.\n\n \n\nIn addition, Mr. Shalom, our principal executive\nofficer, a director and majority shareholder, owns 10,000,000 preferred shares, with each share being convertible at any time by Mr. Shalom\nto 100 ordinary shares. Accordingly, if Mr. Shalom would convert some or all his preferred shares, your ownership interest in the\nCompany will be further diluted.\n\n \n\n3\n\n \n\n**We may not be able to introduce products\nacceptable to customers and we may not be able to improve the technology used in our current systems in response to changing technology\nand end-user needs.**\n\n \n\nThe markets in which we operate are subject to\nrapid and substantial innovation, regulation and technological change, mainly driven by technological advances and end-user requirements\nand preferences, as well as the emergence of new standards and practices. Even if we are able to complete the development of our products,\nour ability to compete in the digital market will depend, in large part, on our future success in enhancing our existing products and\ndeveloping new systems that will address the varied needs of prospective end-users, and respond to technological advances and industry\nstandards and practices on a cost-effective and timely basis to otherwise gain market acceptance.\n\n \n\nEven if we successfully introduce our existing\nproducts in development, it is likely that new systems and technologies that we develop will eventually supplant our existing systems\nor that our competitors will create systems that will replace our systems. As a result, any of our products may be rendered obsolete\nor uneconomical by our or others’ technological advances.\n\n \n\n**We may need to change our pricing models to compete successfully.**\n\n \n\nThe intense competition we face in the sales\nof our products and services and general economic and business conditions can put pressure on us to change our prices. If our competitors\noffer deep discounts on certain products or services or develop products that the marketplace considers more valuable, we may need to\nlower prices or offer other favorable terms in order to compete successfully. Any such changes may reduce margins and could adversely\naffect results of operations.\n\n \n\n**If our products fail to protect against\nattacks and our customers experience security breaches, our reputation and business could be harmed.**\n\n \n\nHackers and other malevolent actors are increasingly\nsophisticated, often affiliated with organized crime and operate large scale and complex attacks. In addition, their techniques change\nfrequently and generally are not recognized until launched against a target. If we fail to identify and respond to new and increasingly\ncomplex methods of attack and to update our products to detect or prevent such threats in time to protect our customers’ high-value\nbusiness data, our business and reputation will suffer.\n\n \n\nIn addition, an actual or perceived security\nbreach or theft of the sensitive data of one of our customers, regardless of whether the breach is attributable to the failure of our\nproducts, could adversely affect the market’s perception of our products. Despite our best efforts, there is no guarantee that\nour products will be free of flaws or vulnerabilities, and even if we discover these weaknesses we may not be able to correct them promptly,\nif at all. Our customers may also misuse our products, which could result in a breach or theft of business data.\n\n \n\n**Defects in products could give rise to\nproduct returns or product liability, warranty or other claims that could result in material expenses, diversion of management time and\nattention, and damage to our reputation.**\n\n \n\nEven if we are successful in introducing our\nproducts to the market, our products may contain undetected defects or errors that, despite testing, are not discovered until after a\nproduct has been used. This could result in delayed market acceptance of those products, claims from distributors, end-users or others,\nincreased end-user service and support costs and warranty claims, damage to our reputation and business, or significant costs to correct\nthe defect or error. We may from time to time become subject to warranty or product liability claims that could lead to significant expenses\nas we need to compensate affected end-users for costs incurred related to product quality issues.\n\n \n\nAny claim brought against us, regardless of its\nmerit, could result in material expense, diversion of management time and attention, and damage to our reputation, which could cause\nus to fail to retain or attract customers. Currently, we do not maintain product liability insurance, which will be necessary prior to\nthe commercialization of our products. It is likely that any product liability insurance that we will have in the future will be subject\nto significant deductibles and there is no guarantee that such insurance will be available or adequate to protect against all such claims,\nor we may elect to self-insure with respect to certain matters. Costs or payments made in connection with warranty and product liability\nclaims and product recalls or other claims could materially affect our financial condition and results of operations.\n\n \n\n4\n\n \n\n**We expect that we will need to raise substantial\nadditional capital before we can expect to become profitable from sales of our products. This additional capital may not be available\non acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product\ndevelopment efforts or other operations.**\n\n \n\nWe expect that we will require substantial additional\ncapital to commercialize our products. In addition, our operating plans may change as a result of many factors that may currently be\nunknown to us, and we may need to seek additional funds sooner than planned. Our future capital requirements will depend on many factors,\nincluding but not limited to:\n\n \n\n \n●\nthe scope, rate of progress,\nresults and cost of product development, and other related activities;\n\n \n\n \n●\nthe cost of establishing\ncommercial supplies of our products;\n\n \n\n \n●\nthe cost and timing of\nestablishing sales, marketing, and distribution capabilities; and\n\n \n\n \n●\nthe terms and timing of\nany collaborative, licensing, and other arrangements that we may establish.\n\n \n\nAny additional fundraising efforts may divert\nour management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our products. In\naddition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all.\nMoreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional\nsecurities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline.\nThe incurrence of indebtedness could result in increased fixed payment obligations, and we may be required to agree to certain restrictive\ncovenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual\nproperty rights and other operating restrictions that could adversely impact our ability to conduct our business. We could also be required\nto seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable, and\nwe may be required to relinquish rights to some of our technologies or products or otherwise agree to terms unfavorable to us, any of\nwhich may have a material adverse effect on our business, operating results and prospects. Even if we believe that we have sufficient\nfunds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific\nstrategic considerations.\n\n \n\nIf we are unable to obtain funding on a timely\nbasis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization\nof our products or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could\nmaterially affect our business, financial condition and results of operations.\n\n \n\n**Since we are solely dependent on Amazon\nCloud, our business, financial condition and results of operations may be materially and adversely affected if this agreement is terminated\nor if there are service issues with the cloud that affects our application and operations.**\n\n \n\nAs of the date of this annual report, Amazon\nCloud (also known as Amazon Web Services) is our sole cloud provider. Our entire technology was developed in Amazon’s cloud environment\nand is currently deployed on it. Our reliance on a single vendor for our business involves high risks. Our agreement with Amazon was\nnot negotiated but the standard, boilerplate agreement which Amazon utilizes with all its customers. Amazon has the ability to terminate\nits services to us at any time. Accordingly, if Amazon terminates the agreement, our business may be severely interrupted, and our financial\ncondition and results of operations may be materially and adversely affected. In addition, all our software and code are held in Amazon\ncloud and could be subject to attacks, deletion or other bad effects.\n\n \n\n5\n\n \n\n**If our relationships with other suppliers\nfor our products and services were to terminate or our software development arrangements were to be disrupted, our business could be\ninterrupted.**\n\n \n\nOur products depend on certain third-party technology,\nand we purchase component parts that are used in our products from third-party suppliers, some of whom may compete with us. For example,\nwe developed our products via a software company situated in India. Our reliance on a single or limited number of vendors involves several\nrisks, including:\n\n \n\n \n●\npotential shortages of\nsome key personnel or talented developers;\n\n \n\n \n●\ndevelopers performance\nshortfalls, if traceable to particular persons since the developers of our software cannot readily be replaced;\n\n \n\n \n●\ndiscontinuation of service\nand talent-pool on which we rely;\n\n \n\n \n●\npotential insolvency of\nthese vendors; and\n\n \n\n \n●\nreduced control over delivery\nschedules, quality and costs.\n\n \n\nIf certain suppliers were to decide to discontinue\ntheir service with us, the unanticipated change in the availability of supplies, or unanticipated supply limitations, could cause delays\nin, or loss of, developments, integrations, sales, increased production or related costs and consequently reduced margins, and damage\nto our reputation. If we were unable to find a suitable supplier on time, we could be required to modify our existing development and\nproduction settings or the end-solution that we offer to our customers.\n\n \n\n**A significant interruption in the operations\nof our third-party suppliers could potentially disrupt our operations.**\n\n \n\nWe have limited control over the operations of\nour third-party suppliers and other business partners and any significant interruption in their operations may have an adverse impact\non our operations. For example, a significant interruption in the operations of the India software company, one of our suppliers, may\ncause interruption to our business. If we could not solve the impact of the interruptions of operations of our third-party suppliers,\nour business operations and financial results may be materially and adversely affected.\n\n \n\n**Mr. Menachem Shalom, our principal\nexecutive officer and a member of our board of directors, beneficially owns 100% of our outstanding preferred shares and his interests\nmay differ from the interests of other shareholders, which could cause a material decline in the value of our shares.**\n\n \n\nMr. Menachem Shalom, our principal officer\nand a member of our board of directors, currently beneficially owns 100% of our outstanding preferred shares and 87% of the outstanding\nordinary shares. Accordingly, he has a significant influence on determining the outcome of any matters submitted to the shareholders\nfor approval, including mergers, consolidations, the election of directors and other significant corporate actions. Without his consent,\nwe may be prevented from entering into transactions that could be beneficial to us or our minority shareholders. His interest may differ\nfrom the interests of our other shareholders. The concentration in the ownership of our shares may cause a material decline in the value\nof our shares.\n\n \n\nWe cannot assure you that Mr. Shalom will\nact in the best interests of all of our shareholders given Mr. Shalom’s ability to control the Company. See “*Related\nParty Transactions*.”\n\n \n\n**We are dependent upon our Mr. Shalom\nand we cannot assure his retention.**\n\n \n\nOur success depends, in part, upon the continued\nservices of Mr. Shalom, whose knowledge of the market, our business and our Company represents a key strength of our business, which\ncannot be easily replicated. The success of our business strategy and our future growth also depend on our ability to attract, train,\nretain and motivate skilled managerial, sales, administration, development and operating personnel. Even though we have a management\nagreement with Mr. Shalom, there is no required time period in which he needs to be employed by us.\n\n \n\nThere can be no assurance that our existing personnel\nwill be adequate or qualified to carry out our strategy, or that we will be able to hire or retain experienced, qualified employees to\ncarry out our strategy. The loss of Mr. Shalom or the failure to attract and retain additional key personnel, could have a material\nadverse effect on our business, financial condition and results of operations.\n\n \n\n6\n\n \n\n**Our Chief Executive Officer’s commitments\nto other companies may limit his ability to devote full-time attention to our business, which could adversely affect our operations and\nfinancial performance.**\n\n \n\nMenachem Shalom, our Chief Executive Officer,\nalso serves as the Chief Executive Officer of T3 Defense Inc. (a Nasdaq company), Kochav Defense Acquisition Corp. (a Nasdaq company),\nSC II Acquisition Corp. (a Nasdaq company), Star 26 Capital, Inc., Water IO Ltd. (a Tel Aviv Stock Exchange company), Star 26 Capital,\nInc., Water IO Ltd. (a Tel Aviv Stock Exchange company) and Motomova Inc. These roles require Mr. Shalom to devote significant time and\nresources to the management and strategic direction of these other companies, which may reduce the time and attention he can dedicate\nto our company. This divided focus could impair our ability to execute our business strategy. The competing demands on Mr. Shalom’s\ntime may delay critical decision-making, hinder our ability to respond to market opportunities, or weaken our operational oversight, all\nof which could materially adversely affect our business, financial condition, and results of operations.\n\n \n\nFurthermore, the businesses of these other companies\nmay operate in sectors or pursue opportunities that compete with our current or future operations. While these companies are separate\nentities with potentially divergent interests, Mr. Shalom’s involvement in these companies could lead to conflicts of interest,\nincluding the allocation of business opportunities, resources, or strategic priorities that may favor these other entities over Hold\nMe. Any such competition or conflicts could harm our competitive position, limit our growth prospects, and negatively impact the value\nof our securities.\n\n \n\n**If we fail to adopt new technologies to evolving customer\nneeds or emerging industry standards, our business may be materially and adversely affected.**\n\n \n\nTo remain competitive, we must continue to stay\nabreast of the constantly evolving industry trends and to enhance and improve our technology accordingly. Our success will depend, in\npart, on our ability to identify, develop, acquire or license leading technologies useful in our business. There can be no assurance\nthat we will be able to use new technologies effectively or meet customer’s requirements. If we are unable to adapt in a cost-effective\nand timely manner in response to changing market conditions or customer preferences, whether for technical, legal, financial or other\nreasons, our business may be materially and adversely affected.\n\n \n\n**We may experience significant liability\nclaims or complaints from customers, or adverse publicity involving our products and our services.**\n\n \n\nIf we are successful at obtaining customers,\nwe face an inherent risk of liability claims or complaints from our customers. We intend to take our customers’ complaints seriously\nand endeavor to reduce such complaints by implementing various remedial measures. Nevertheless, we cannot assure you that we can successfully\nprevent or address all customer complaints.\n\n \n\nAny complaints or claims against us, even if\nmeritless and unsuccessful, may divert management attention and other resources from our business and adversely affect our business and\noperations. Customers may lose confidence in us and our brand, which may adversely affect our business and results of operations. Furthermore,\nnegative publicity including but not limited to negative online reviews on social media and crowd-sourced review platforms, industry\nfindings or media reports related to safety and quality of our products, whether or not accurate, and whether or not concerning our products,\ncan adversely affect our business, results of operations and reputation.\n\n \n\n**We may be subject to intellectual property\ninfringement claims, which may be expensive to defend and may disrupt our business and operations.**\n\n \n\nWe cannot be certain that our operations or any\naspects of our business do not or will not infringe upon or otherwise violate intellectual property rights held by third parties. We\nhave not but in the future may be, subject to legal proceedings and claims relating to the intellectual property rights of others. There\ncould also be existing intellectual property of which we are not aware that our products may inadvertently infringe. We cannot assure\nyou that holders of intellectual property purportedly relating to some aspect of our technology or business, if any such holders exist,\nwould not seek to enforce such intellectual property against us in Israel, or any other jurisdictions. If we are found to have violated\nthe intellectual property rights of others, we may be subject to liability for our infringement activities or may be prohibited from\nusing such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our own. In addition, we may\nincur significant expenses, and may be forced to divert management’s time and other resources from our business and operations\nto defend against these infringement claims, regardless of their merits. Successful infringement or licensing claims made against us\nmay result in significant monetary liabilities and may materially disrupt our business and operations by restricting or prohibiting our\nuse of the intellectual property in question, and our business, financial position and results of operations could be materially and\nadversely affected.\n\n \n\nFurther, the application and interpretation of\nIsrael’s patent laws and the procedures and standards for granting patents in Israel are still evolving and are uncertain, and\nwe cannot assure you that the courts or regulatory authorities in Israel would agree with our analysis.\n\n \n\n7\n\n \n\n**We may not be able to prevent others from\nunauthorized use of our intellectual property, which could harm our business and competitive position.**\n\n \n\nAlthough we regard our know-how, proprietary\ntechnologies, and similar intellectual property as critical to our success, we have no patents or trademarks protecting our intellectual\nproperty. We may become an attractive target to intellectual property attacks in the future with the increasing recognition of our brand.\nAny of our intellectual property rights could be challenged, invalidated, circumvented or misappropriated, or such intellectual property\nmay not be sufficient to provide us with competitive advantages. In addition, there can be no assurance that (i) all of our intellectual\nproperty rights will be adequately protected, or (ii) our intellectual property rights will not be challenged by third parties or found\nby a judicial authority to be invalid or unenforceable.\n\n \n\n**Because we are an “emerging growth\ncompany,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies\nthat are not “emerging growth companies.”**\n\n \n\nWe are an “emerging growth company”\nas defined under the Jumpstart our Business Startups Act (“JOBS Act”). We will remain an “emerging growth company”\nfor up to five years, or until the earliest of:\n\n \n\n \n(i)\nthe last day of the first\nfiscal year in which our total annual gross revenues exceed $1.235 billion,\n\n \n\n \n(ii)\nthe date that we become\na “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value\nof our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed\nsecond fiscal quarter, or\n\n \n\n \n(iii)\nthe date on which we have\nissued more than $1 billion in non-convertible debt during the preceding three-year period.\n\n \n\nAs an “emerging growth company”,\nwe may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are\nnot “emerging growth companies” including, but not limited to:\n\n \n\n \n●\nnot being required to comply\nwith the auditor attestation requirements of section 404(b) of the Sarbanes-Oxley Act (“Sarbanes Oxley”) (we also\nwill not be subject to the auditor attestation requirements of section 404(b) as long as we are a “smaller reporting company”,\nwhich includes issuers that had a public float of less than $75 million as of the last business day of their most recently completed\nsecond fiscal quarter);\n\n \n\n \n●\nreduced disclosure obligations\nregarding executive compensation in our periodic reports and proxy statements; and\n\n \n\n \n●\nexemptions from the requirements\nof holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously\napproved.\n\n \n\nIn addition, section 107 of the JOBS Act\nprovides that an “emerging growth company” can take advantage of the extended transition period provided in section 7(a)(2)(B)\nof the Securities Act of 1933 (the “Securities Act”) for complying with new or revised accounting standards. Under this provision,\nan “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise\napply to private companies. However, we are choosing to “opt out” of such extended transition period and, as a result, we\nwill comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging\ngrowth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying\nwith new or revised accounting standards is irrevocable.\n\n \n\n**The nature of our business requires the\napplication of complex revenue recognition rules. Significant changes in U.S. generally accepted accounting principles, or GAAP, including\nthe adoption of the new revenue recognition rules, could materially affect our financial position and results of operations.**\n\n \n\nWe prepare our financial statements in accordance\nwith GAAP, which is subject to interpretation or changes by the Financial Accounting Standards Board, or FASB, the SEC, and other various\nbodies formed to promulgate and interpret appropriate accounting principles. New accounting pronouncements and changes in accounting\nprinciples have occurred in the past and are expected to occur in the future, which may have a significant effect on our financial results.\nFor example, pursuant to the new revenue recognition rules, effective as of January 1, 2018, an entity recognizes sales and usage-based\nroyalties as revenue only when the later of the following events occurs: (1) the subsequent sale or usage occurs or (2) the performance\nobligation to which some or all of the sales-based or usage-based royalty allocated has been satisfied (or partially satisfied). Recognizing\nroyalty revenue on a lag time basis is not permitted. As a result, the royalties we generate from customers is based on royalty of units\nshipped during the quarter as estimated by our customers, not a quarter in arrears that we previously report. Adoption of this standard\nand any difficulties in implementation of changes in accounting principles, including uncertainty associated with royalty revenues for\nthe quarter based on estimates provided by our customer, could cause us to fail to meet our financial reporting obligations, which could\nresult in regulatory discipline and harm investors’ confidence in us.\n\n \n\n8\n\n \n\n**Risks Related to Our Proposed Non-Bank Loan\nBusiness Activity**\n\n \n\n**Our credit standards and on-going credit\nassessment processes might not protect us from significant credit losses.**\n\n \n\nHaving obtained a non-bank lending license, we\nintend to engage in the non-bank credit field by extending loans to consumers and/or other business. We envision managing credit risk\nin our loans through a program of underwriting standards, the review of certain credit decisions and an ongoing process of assessment\nof the quality of the credit already extended. While these procedures will be designed to provide us with the information needed to implement\npolicy adjustments where necessary and to take appropriate corrective actions, there can be no assurance that such measures will be effective\nin avoiding future undue credit risk, and credit losses may occur in the future.\n\n \n\nThe amount of our future loan losses could be\ninfluenced by changes in economic, operating and other conditions, including changes in interest rates, which may be beyond our control,\nand these losses may exceed current estimates. While the risk of nonpayment is inherent in providing financing, we could experience greater\nnonpayment levels than we anticipate. Deterioration in the quality of our loan portfolio could cause our interest income and net interest\nmargin to decrease and our provisions for loan losses to increase further, which could adversely affect our results of operations and\nfinancial condition.\n\n \n\n**Our allowance for loan losses may not be\nadequate to cover actual losses, which could materially and adversely affect our operating results.**\n\n \n\nWe intend to maintain an allowance for loan losses\nthat is appropriate to provide for any potential losses in our loan portfolio. The allowance is based upon factors such as the credit\nrisk of specific customers, historical trends and experience, ongoing review of the quality, size and diversity of our loan portfolio,\nthe amount and quality of collateral securing the loans, current economic conditions, geographic and industry loan concentrations and\nother information which we believe adequately covers all anticipated losses in respect of trade receivables. There can be no assurance\nthat this allowance will be adequate.\n\n \n\n**Our business will be subject to interest\nrate risk, and variations in interest rates may negatively affect financial performance.**\n\n \n\nChanges in the interest rate environment may\nreduce our profits. Loan volume and yields are affected by market interest rates on loans, and rising interest rates generally are associated\nwith a lower volume of loan originations. We cannot ensure that we can minimize our interest rate risk. While an increase in the general\nlevel of interest rates may increase the loan yield and the net interest margin, it may adversely affect the ability of certain borrowers\nwith variable rate loans to pay the interest and principal of their obligations. Accordingly, changes in levels of market interest rates\ncould materially and adversely affect the net interest spread, asset quality, loan origination volume and our overall profitability.\n\n \n\nOur proposed lending business will also subject\nus to specific Israeli laws and regulations.\n\n \n\nIf we commence operations to extend credit to\nconsumers and businesses, there are numerous Israeli laws and regulations specifically affecting non-bank lenders. These requirements\nrelate to, among other things:\n\n \n\n \n●\nMinimum shareholder equity;\n\n \n\n \n●\nAnnual and periodic reporting;\n\n \n\n \n●\nLimitations on marketing\nand solicitation of customers;\n\n \n\n \n●\nProhibition on misleading\nor fraudulent communications with our current or prospective customers;\n\n \n\n \n●\nProhibition on false or\nmisleading advertisements and solicitations;\n\n \n\n \n●\nProhibition on linking\nthe Company’s credit products with its other products; and\n\n \n\n \n●\nProhibition on extending\ncredit to minors and other consumer-protection limitations.\n\n \n\nFailure to comply with any of these laws and\nregulations may expose us to fines, penalties, and enforcement actions which would materially and adversely impact our business.\n\n \n\nOver the last several years, there also has been\nan increase in regulatory attention to the extension of credit outside of the traditional banking sector, raising the possibility that\nsome portion of the non-bank financial sector will be subject to new regulation. While it cannot be known at this time whether any regulation\nwill be implemented or what form it will take, increased regulation of non-bank credit extension could negatively impact our operations,\ncash flows or financial condition, impose additional costs on us, intensify the regulatory supervision of us or otherwise adversely affect\nour business.\n\n \n\n9\n\n \n\n**Risks relating to legal uncertainty and doing\nbusiness in Israel**\n\n \n\n**Conditions in Israel, including the recent\nattack by Hamas and other terrorist organizations from the Gaza Strip and Israel’s war against them, may adversely affect our operations\nand limit our ability to manage and market our products, which would lead to a decrease in revenues.**\n\n \n\nBecause our offices and our operations are conducted\nin Israel and all members of our board of directors and management are located in Israel, our business and operations are directly affected\nby economic, political, geopolitical and military conditions affecting Israel. Since the establishment of the State of Israel in 1948,\na number of armed conflicts have occurred between Israel and its neighboring countries and other hostile non-state actors. These conflicts\nhave involved missile strikes, hostile infiltrations and terrorism against civilian targets in various parts of Israel, which have negatively\naffected business conditions in Israel.\n\n \n\nIn October 2023, Hamas terrorists infiltrated\nIsrael’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched\nextensive rocket attacks on Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in\nother areas within the State of Israel. These attacks resulted in extensive deaths, injuries and kidnapping of civilians and soldiers.\nFollowing the attack, Israel’s security cabinet declared war against Hamas and a military campaign against these terrorist organizations\ncommenced in parallel to their continued rocket and terror attacks. Furthermore, hostilities along Israel’s northern border with\nHezbollah located in Lebanon have accelerated, and this clash may escalate in the future into a greater regional conflict.\n\n \n\nThe intensity and duration of Israel’s\ncurrent war against Hamas is difficult to predict, as are such war’s economic implications on the Company’s business and\noperations and on Israel’s economy in general. These events may be intertwined with wider macroeconomic indications of a deterioration\nof Israel’s economic standing, which may have a material adverse effect on the Company and its ability to effectively conduct its\noperations.\n\n \n\nIt is possible that other terrorist organizations\nwill join the hostilities as well, including Hezbollah in Lebanon, and Palestinian military organizations in the West Bank, as well as\nother hostile countries, such as Iran, will join the hostilities. Our facilities are not only within the range of rockets from the Gaza\nStrip, but also within the range of rockets that can be fired from Lebanon, Syria or elsewhere in the Middle East. In the event that\nour facilities are damaged as a result of hostile action or hostilities otherwise disrupt the ongoing operation of our facilities, our\nability to deliver products to customers in a timely manner to meet our contractual obligations with customers and vendors could be materially\nand adversely affected.\n\n \n\nOur commercial insurance does not cover losses\nthat may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement\nvalue of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will\nbe maintained or that it will sufficiently cover our potential damages. Any losses or damages incurred by us could have a material adverse\neffect on our business.\n\n \n\nIn addition, popular uprisings in various countries\nin the Middle East and North Africa have affected the political stability of those countries. Such instability may lead to a deterioration\nin the political and trade relationships that exist between the State of Israel and these countries. Moreover, some countries around\nthe world restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business\nwith Israel and Israeli companies if hostilities in Israel or political instability in the region continues or increases. These restrictions\nmay limit materially our ability to obtain raw materials from these countries or sell our products to companies and customers in these\ncountries. In addition, there have been increased efforts by activists to cause companies and consumers to boycott Israeli goods. Such\nefforts, particularly if they become more widespread, may materially and adversely impact our ability to sell our products outside of\nIsrael.\n\n \n\nFurthermore, following Hamas’ attack on\nIsrael and Israel’s security cabinet declaration of war against Hamas, the Houthi movement, which controls parts of Yemen, launched\na number of attacks on marine vessels traversing the Red Sea, which marine vessels were thought to either be in route towards Israel\nor to be partly owned by Israeli businessmen. The Red Sea is a vital maritime route for international trade traveling to or from Israel.\nAs a result of such disruptions, we may experience in the future delays in supplier deliveries, extended lead times, and increased cost\nof freight, increased insurance costs, purchased materials and manufacturing labor costs. The risk of ongoing supply disruptions may\nfurther result in delayed deliveries of our products.\n\n \n\nPrior to the Hamas attack in October 2023,\nthe Israeli government pursued extensive changes to Israel’s judicial system, which sparked extensive political debate and unrest.\nIn response to such initiative, many individuals, organizations and institutions, both within and outside of Israel, have voiced concerns\nthat the proposed changes may negatively impact the business environment in Israel including due to reluctance of foreign investors to\ninvest or transact business in Israel as well as to increased currency fluctuations, downgrades in credit rating, increased interest\nrates, increased volatility in security markets, and other changes in macroeconomic conditions. The risk of such negative developments\nhas increased in light of the recent Hamas attacks and the war against Hamas declared by Israel. To the extent that any of these negative\ndevelopments do occur, they may have an adverse effect on our business, our results of operations and our ability to raise additional\nfunds, if deemed necessary by our management and board of directors.\n\n \n\n10\n\n \n\n**Mandatory military reserve duty obligations\nhave resulted in, and may continue to result in, significant personnel shortages that disrupt our operations, production schedules, and\nability to fulfill contractual obligations.**\n\n** **\n\nUnder Israeli law, Israeli citizens and permanent\nresidents are subject to mandatory military reserve service obligations. Since the commencement of the “Swords of Iron” war,\nif we need employees, there is always the risk that these persons will be called up for military reserve duty, creating recurring personnel\nshortages. The impact of reserve duty call-ups on our operations may be disproportionately severe. Military reserve age persons are subject\nto call-up with little or no advance notice, for unpredictable durations. If a material number of our employees are called for reserve\nduty simultaneously, or if key personnel are called during critical project delivery periods, we may be unable to meet contractual deadlines,\nfulfill customer orders, or operate our businesses at required levels, any of which could result in breach of contract, loss of customer\nrelationships, financial penalties, and material harm to our business, financial condition, and results of operations.\n\n \n\n**We do not carry war risk insurance for our\nIsraeli operations, and losses arising from military conflict would be entirely unrecovered.**\n\n** **\n\nStandard commercial insurance policies exclude\nlosses arising from war, military action, terrorism, and related events. Specialized war risk insurance coverage for our Israeli operations\nis either unavailable or available only at costs that are prohibitively expensive relative to our current financial resources. Accordingly,\nwe carry no insurance coverage for physical damage to our facilities, destruction of inventory or equipment, business interruption, or\nloss of key personnel resulting from missile strikes, drone attacks, or other military action. To date, none of our facilities have sustained\nphysical damage from the conflict, but we cannot predict whether this will remain the case, particularly in the event of an escalation\nof hostilities with Iran or an expansion of the conflict to additional fronts. Any war-related losses would be borne entirely by us with\nno prospect of insurance recovery, which could materially impair our financial condition and ability to continue operations.\n\n \n\n**Our sales may be adversely affected by\nboycotts of Israel.**\n\n \n\nSeveral countries, principally in the Middle\nEast, restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business with\nIsrael and Israeli companies whether as a result of hostilities in the region or otherwise. In addition, there have been increased efforts\nby activists to cause companies and consumers to boycott Israeli goods based on Israeli government policies. Such actions, particularly\nif they become more widespread, may adversely impact our ability to sell our products.\n\n \n\n**It may be difficult to enforce a U.S. judgment\nagainst us, our officer and director or to assert U.S. securities laws claims in Israel or serve process on our officers and directors.**\n\n \n\nSince our directors and officers are not residents\nof the United States and all of our assets are located outside the United States, service of process upon us or our non-U.S. resident\ndirector and officers may be difficult to obtain within the United States. We have been informed by our legal counsel in Israel that\nit may be difficult to assert claims under U.S. securities laws in original actions instituted in Israel or obtain a judgment based on\nthe civil liability provisions of U.S. federal securities laws. Israeli courts may refuse to hear a claim based on a violation of U.S.\nsecurities laws against us or our non-U.S. officer and director because Israel may not be the most appropriate forum to bring such a\nclaim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable\nto the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming\nand costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing\nthe matters described above. Additionally, Israeli courts might not enforce judgments obtained in the United States against us or our\nnon-U.S. directors and executive officers, which may make it difficult to collect on judgments rendered against us or our non-U.S. officers\nand directors.\n\n \n\nMoreover, an Israeli court will not enforce a\nnon-Israeli judgment if it was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject\nto exceptional cases), if its enforcement is likely to prejudice the sovereignty or security of the State of Israel, if it was obtained\nby fraud or in the absence of due process, if it is at variance with another valid judgment that was given in the same matter between\nthe same parties, or if a suit in the same matter between the same parties was pending before a court or tribunal in Israel at the time\nthe foreign action was brought. For more information, see “Enforceability of civil liabilities.”\n\n \n\n11\n\n \n\n**Your rights and responsibilities as our\nshareholder are governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S.\ncorporations.**\n\n \n\nWe are incorporated under Israeli law. The rights\nand responsibilities of holders of our ordinary shares are governed by our articles of association and the Companies Law. These rights\nand responsibilities differ in some respects from the rights and responsibilities of shareholders in typical U.S. corporations. In particular,\npursuant to the Companies Law each shareholder of an Israeli company has to act in good faith and in a customary manner in exercising\nhis or her rights and fulfilling his or her obligations toward the company and other shareholders and to refrain from abusing his or\nher power in the company, including, among other things, in voting at the general meeting of shareholders on amendments to a company’s\narticles of association, increases in a company’s authorized share capital, mergers and certain transactions requiring shareholders’\napproval under the Companies Law. In addition, a controlling shareholder of an Israeli company or a shareholder who knows that it possesses\nthe power to determine the outcome of a shareholder vote or who has the power to appoint or prevent the appointment of a director or\nofficer in the company or has other powers toward the company has a duty of fairness toward the company. However, Israeli law does not\ndefine the substance of this duty of fairness. There is little case law available to assist in understanding the implications of these\nprovisions that govern shareholder behavior.\n\n \n\n**We are not in compliance with certain corporate\ngovernance requirements under the Companies Law.**\n\n \n\nThe Companies Law imposes various corporate governance\nrequirements upon public companies, including the requirement to establish an audit committee and compensation committee, appoint two\nexternal directors, and retain an internal auditor. As of the date of this Annual Report, we are not in compliance with these requirements.\nAs a result of this non-compliance, we are at risk of fines, penalties, and enforcement actions by the Israel Securities Authority (ISA),\nwhich may materially and adversely affect our business. While we intend to remediate these corporate governance failures prior to being\nlisted on any share exchange, there can be no guarantee that the ISA will not enforce these requirements before we achieve compliance,\nor that the ISA will penalize us for past non-compliance even after we achieve compliance.\n\n \n\n**Provisions of Israeli law and our articles\nof association may delay, prevent or make undesirable an acquisition of all or a significant portion of our shares or assets.**\n\n \n\nProvisions of Israeli law and our articles of\nassociation could have the effect of delaying or preventing a change in control and may make it more difficult for a third-party to acquire\nus or our shareholders to elect different individuals to our board of directors, even if doing so would be considered to be beneficial\nby some of our shareholders, and may limit the price that investors may be willing to pay in the future for our ordinary shares. Among\nother things:\n\n \n\n \n●\nIsraeli corporate law regulates\nmergers and requires that a tender offer be effected when more than a specified percentage of shares in a company are purchased;\n\n \n\n \n●\nIsraeli corporate law does\nnot provide for shareholder action by written consent, thereby requiring all shareholder actions to be taken at a general meeting\nof shareholders;\n\n \n\n \n●\nour articles of association\ndivide our directors into three classes, each of which is elected once every three years;\n\n \n\n \n●\nour articles of association\ngenerally require a vote of the holders of a majority of our outstanding ordinary shares entitled to vote present and voting on the\nmatter at a general meeting of shareholders (referred to as simple majority), and the amendment of a limited number of provisions,\nsuch as the provision dividing our directors into three classes, requires a vote of the holders of at least 65% of the total voting\npower of our shareholders;\n\n \n\n \n●\nour articles of association\ndo not permit a director to be removed except by a vote of the holders of at least 65% of the total voting power of our shareholders\nand any amendment to such provision requires the approval of at least 65% of the total voting power of our shareholders; and\n\n \n\n \n●\nour articles of association\nprovide that director vacancies may be filled by our board of directors.\n\n \n\nFurther, Israeli tax considerations may make\npotential transactions undesirable to us or to some of our shareholders whose country of residence does not have a tax treaty with Israel\ngranting tax relief to such shareholders from Israeli tax.\n\n \n\n12\n\n \n\n**We may be exposed to liabilities under\nthe U.S. Foreign Corrupt Practices Act and other U.S. and foreign anti-corruption anti-money laundering, export control, sanctions and\nother trade laws and regulations, and any determination that we violated these laws could have a material adverse effect on our business.**\n\n \n\nWe are subject to export control and import laws\nand regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations and various economic and trade sanctions\nregulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control. We are also subject to the U.S. Foreign\nCorrupt Practices Act of 1977, as amended, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act,\nthe USA PATRIOT Act, the United Kingdom Bribery Act 2010, the Proceeds of Crime Act 2002, Chapter 9 (sub-chapter 5) of the Israeli Penal\nLaw, 1977, the Israeli Prohibition on Money Laundering Law—2000 and possibly other anti-bribery and anti-money laundering laws\nin countries outside of the United States in which we conduct our activities. Compliance with these laws has been the subject of increasing\nfocus and activity by regulatory authorities, both in the United States and elsewhere, in recent years. Anti-corruption laws are interpreted\nbroadly and prohibit companies and their employees and third-party intermediaries from authorizing, promising, offering, providing, soliciting\nor accepting, directly or indirectly, improper payments or benefits to or from any person whether in the public or private sector.\n\n \n\nNoncompliance with anti-corruption, anti-money\nlaundering, export control, sanctions and other trade laws could subject us to whistleblower complaints, investigations, sanctions, settlements,\nprosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions,\nsuspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage\nand other collateral consequences. If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or\nif we do not prevail in any possible civil or criminal litigation, our business, results of operations and financial condition could\nbe materially harmed. Responding to any action will likely result in a materially significant diversion of management’s attention\nand resources and significant defense and compliance costs and other professional fees. In addition, regulatory authorities may seek\nto hold us liable for successor liability for violations committed by companies in which we invest or that we acquire. As a general matter,\nenforcement actions and sanctions could harm our business, results of operations and financial condition.\n\n \n\n**Risks relating to our ordinary shares**\n\n \n\n**An active trading market for our ordinary\nshares may not develop and the trading price for our shares may fluctuate significantly.**\n\n \n\nThere has not been an active public market for\nour ordinary shares, and we cannot assure you that a liquid public market for our shares will ever develop. If an active public market\nfor our shares does not develop, the market price and liquidity of our shares may be materially and adversely affected.\n\n \n\n**Our Ordinary Shares are subject to the\n“penny stock” rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock\ncumbersome and may reduce the value of an investment in the stock.**\n\n \n\nRule 15g-9 under the Exchange Act establishes\nthe definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less\nthan $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving\na penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person’s account for transactions in penny\nstocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and\nquantity of the penny stock to be purchased. In order to approve a person’s account for transactions in penny stocks, the broker\nor dealer must: (a) obtain financial information and investment experience objectives of the person and (b) make a reasonable determination\nthat the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial\nmatters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction\nin a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (a) sets\nforth the basis on which the broker or dealer made the suitability determination; and (b) confirms that the broker or dealer received\na signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions\nin securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common\nstock and cause a decline in the market value of our common stock. Disclosure also has to be made about the risks of investing in penny\nstocks in both public offerings and in secondary trading and about the commissions payable to both the broker or dealer and the registered\nrepresentative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny\nstock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account\nand information on the limited market in penny stocks.\n\n \n\n13\n\n \n\n**The trading price of our shares is likely\nto be volatile, which could result in substantial losses to investors.**\n\n \n\nIf we are successful at developing a market for\nour shares, the trading price of our shares is likely to be volatile and could fluctuate widely due to factors beyond our control. This\nmay happen because of broad market and industry factors, including the performance and fluctuation of the market prices of other companies\nwith business operations located mainly in Israel that have listed their securities in the United States. In addition to market and industry\nfactors, the price and trading volume for our shares may be highly volatile for factors specific to our own operations, including the\nfollowing:\n\n \n\n \n●\nvariations in our revenues,\nearnings and cash flow;\n\n \n\n \n●\nannouncements of new investments,\nacquisitions, strategic partnerships or joint ventures by us or our competitors;\n\n \n\n \n●\nannouncements of new offerings,\nsolutions and expansions by us or our competitors;\n\n \n\n \n●\nchanges in financial estimates\nby securities analysts;\n\n \n\n \n●\ndetrimental adverse publicity\nabout us, our services or our industry;\n\n \n\n \n●\nadditions or departures\nof key personnel;\n\n \n\n \n●\nsales of additional equity\nsecurities; and\n\n \n\n \n●\npotential litigation or\nregulatory investigations.\n\n \n\nAny of these factors may result in large and\nsudden changes in the volume and price at which our shares will trade.\n\n \n\nIn the past, shareholders of public companies\nhave often brought securities class action suits against those companies following periods of instability in the market price of their\nsecurities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and\nother resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our\nresults of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise\ncapital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which\ncould have a material adverse effect on our financial condition and results of operations.\n\n \n\n**Our majority shareholder and principal\nofficer has substantial influence over our company and his interests may not be aligned with the interests of our shareholders.**\n\n \n\nMenachem Shalom, our majority shareholder and\nprincipal officer, currently owns all the total voting power of our outstanding preferred shares and 87% of the issued and outstanding\nordinary shares. As a result, he maintains substantial influence over our business, including significant corporate actions such as mergers,\nconsolidations, sales of all or substantially all of our assets, election of directors and other significant corporate actions.\n\n \n\nMr. Shalom may take actions that are not\nin the best interest of our other shareholders. This concentration of ownership may discourage, delay or prevent a change in control\nof our company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our\ncompany and may reduce the price of the shares. These actions may be taken even if they are opposed by our other shareholders. In addition,\nthe significant concentration of share ownership may adversely affect the trading price of the shares due to investors’ perception\nthat conflicts of interest may exist or arise. For more information regarding our principal shareholders and their affiliated entities,\nsee “Principal Shareholders.”\n\n \n\n**If securities or industry analysts do not\npublish research or reports about our business, or if they adversely change their recommendations regarding our shares, the market price\nfor our shares and trading volume could decline.**\n\n \n\nThe trading market for our shares will be influenced\nby research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade\nour shares, the market price for our shares would likely decline. If one or more of these analysts cease to cover us or fail to regularly\npublish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume\nfor our shares to decline.\n\n \n\n14\n\n \n\n**If we are successful at creating a market\nfor our shares, the sale or availability for sale of substantial amounts of our shares could adversely affect their market price.**\n\n \n\nSales of substantial amounts of our shares in\nthe public market, or the perception that these sales could occur, could adversely affect the market price of our shares and could materially\nimpair our ability to raise capital through equity offerings in the future. Shares held by our existing shareholders may now or in the\nfuture be sold in the public market. There are 2,282,124 ordinary shares outstanding, of which 282,124 are freely tradeable without any\nrestrictions. In addition, there are 10,000,000 preferred shares outstanding, all owned by Mr. Shalom, which are convertible into\nan aggregate of up to 1,000,000,000 of our ordinary shares at the option of the holder and may be resold as restricted shares in the\nfuture or be registered for resale without restriction. We cannot predict what effect, if any, market sales of securities held by Mr. Shalom\nor any other shareholder or the availability of these securities for future sale will have on the market price of our shares.\n\n \n\n**Negative publicity may harm our brand and\nreputation and have a material adverse effect on our business.**\n\n \n\nNegative publicity about us, including our services,\nmanagement, business model and practices, compliance with applicable rules, regulations and policies, or our network partners may materially\nand adversely harm our brand and reputation and have a material adverse effect on our business. We cannot assure you that we will be\nable to defuse any such negative publicity within a reasonable period of time, or at all. Additionally, allegations, directly or indirectly\nagainst us, may be posted on the internet by anyone on a named or anonymous basis, and can be quickly and widely disseminated. Information\nposted may be inaccurate, misleading and adverse to us, and it may harm our reputation, business or prospects. The harm may be immediate\nwithout affording us an opportunity for redress or correction. Our reputation may be negatively affected as a result of the public dissemination\nof negative and potentially inaccurate or misleading information about our business and operations, which in turn may materially adversely\naffect our relationships with our customers, employees or business partners, and adversely affect the price of our shares.\n\n \n\n**Because we do not expect to pay dividends\nin the foreseeable future, you must rely on price appreciation of our shares for return on your investment.**\n\n \n\nWe currently intend to retain most, if not all,\nof our available funds and any future earnings to fund the development and growth of our business. In addition, the Companies Law imposes\nrestrictions on our ability to declare and pay dividends. As a result, we do not expect to pay any cash dividends in the foreseeable\nfuture. Therefore, you should not rely on an investment in our shares as a source for any future dividend income.\n\n \n\nSubject to applicable law and the provisions\nof our articles of association, our board of directors has complete discretion as to whether to distribute dividends. Even if our board\nof directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future\nresults of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our\nsubsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly,\nthe return on your investment will likely depend entirely upon any future price appreciation of our shares. There is no guarantee that\nour shares will appreciate in value or even maintain the price at which you purchased the shares. You may not realize a return on your\ninvestment in our shares and you may even lose your entire investment in our shares.\n\n \n\n**We are a foreign private issuer within\nthe meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic\npublic companies.**\n\n \n\nBecause we are a foreign private issuer under\nthe Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable\nto U.S. domestic issuers, including: (i) the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current\nreports on Form 8-K with the SEC; (ii) the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations\nin respect of a security registered under the Exchange Act; (iii) the sections of the Exchange Act requiring insiders to file public reports\nof their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and\n(iv) the selective disclosure rules by issuers of material nonpublic information under Regulation FD. However, on December 18, 2025, the\nHolding Foreign Insiders Accountable Act was enacted as part of the National Defense Authorization Act for Fiscal Year 2026, mandating\ndirectors and officers of foreign private issuers to file Section 16(a) reports (Forms 3, 4, and 5) with the SEC to report beneficial\nownership interests in companies, effective on March 18, 2026.\n\n \n\nWe will be required to file an annual report\non Form 20-F within four months of the end of each fiscal year. However, the information we are required to file with or furnish to the\nSEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result,\nyou may not be afforded the same protections or information, which would be made available to you, were you investing in a U.S. domestic\nissuer.\n\n \n\n**We are an emerging growth company within\nthe meaning of the Securities Act and may take advantage of certain reduced reporting requirements.**\n\n \n\nWe are an “emerging growth company,”\nas defined in the JOBS Act, and we may take advantage of certain exemptions from requirements applicable to other public companies that\nare not emerging growth companies including, most significantly, not being required to comply with the auditor attestation requirements\nof Section 404 of the Sarbanes-Oxley Act of 2002 for so long as we are an emerging growth company until the earliest of (a) the\nlast day of the fiscal year during which we have total annual gross revenues of at least US$1.07 billion; (b) the last day of our fiscal\nyear following the fifth anniversary of the completion of our public offering; (c) the date on which we have, during the preceding three-year\nperiod, issued more than US$1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated\nfiler” under the Exchange Act, which would occur if the market value of our Shares that are held by non-affiliates exceeds US$700\nmillion as of the last business day of our most recently completed second fiscal quarter.\n\n \n\n15\n\n \n\n**We may lose our foreign private issuer\nstatus in the future, which could result in significant additional costs and expenses.**\n\n \n\nAs discussed above, we are a foreign private issuer,\nand therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act.\nThe determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed\nsecond fiscal quarter, and, accordingly, the next determination will be made with respect to us on June 30, 2023. In the future, we would\nlose our foreign private issuer status if (1) more than 50% of our outstanding voting securities are owned by U.S. residents and (2) a\nmajority of our directors or executive officers are U.S. citizens or residents, or we fail to meet additional requirements necessary to\navoid loss of foreign private issuer status. If we lose our foreign private issuer status, we will be required to file with the SEC periodic\nreports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a\nforeign private issuer. We will also have to mandatorily comply with U.S. federal proxy requirements. As a U.S. listed public company\nthat is not a foreign private issuer, we will incur significant additional legal, accounting, SEC reporting, and other expenses that we\nwill not incur as a foreign private issuer.\n\n \n\n**If we fail to establish and maintain proper\ninternal financial reporting controls, our ability to produce accurate financial statements or comply with applicable regulations could\nbe impaired.**\n\n \n\nAs a small business company, we have limited\naccounting personnel and other resources with which to address our internal controls and procedures. Our management has not completed\nan assessment of the effectiveness of our internal controls over financial reporting, and our independent registered public accounting\nfirm has not conducted an audit of our internal control over financial reporting. In the course of auditing our consolidated financial\nstatements for the years ended December 31, 2025 and 2024, we identified several material weaknesses in our internal control over\nfinancial reporting and other control deficiencies as of December 31, 2025. A “material weakness” is a deficiency, or\na combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material\nmisstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.\n\n \n\nThe material weaknesses identified to date relate\nto (i) a lack of accounting staff and resources with appropriate knowledge of generally accepted accounting principles in the United\nStates (“U.S. GAAP”) and SEC reporting and compliance requirements; (ii) a lack of sufficient documented financial closing\npolicies and procedures; (iii) a lack of independent directors and an audit committee; (iv) lack of risk assessment in accordance with\nthe requirement of COSO 2013 framework and (v) a lack of an effective review process by the accounting manager which led to material\naudit adjustments to the financial statements.\n\n  \n\nFollowing the identification of the material\nweaknesses and control deficiencies, we plan to continue to take remedial measures including (i) hiring more qualified accounting personnel\nwith relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up\na financial and system control framework; (ii) implementing regular and continuous U.S. GAAP accounting and financial reporting training\nprograms for our accounting and financial reporting personnel; (iii) setting up an internal audit function as well as engaging an external\nconsulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal control; and\n(iv) appointing independent directors, establishing an audit committee, and strengthening corporate governance.\n\n \n\nWe plan to take measures to remedy these material\nweaknesses. The implementation of these measures may not fully address the material weaknesses in our internal control over financial\nreporting, and we cannot conclude that they have been fully remedied. Our failure to correct theses material weaknesses or our failure\nto discover and address any other material weaknesses could result in inaccuracies in our financial statements and could also impair\nour ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result,\nour business, financial condition, results of operations and prospects, as well as the trading price of our Ordinary shares, may be materially\nand adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent\nfraud. We are a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley\nAct of 2002, or Section 404 requires that we include a report from management on our internal control over financial reporting in\nour annual report on Form 20-F beginning with this annual report. In addition, once we cease to be an “emerging growth company”\nas such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness\nof our internal control over financial reporting. Our management may conclude in future reports on the effectiveness of our internal\ncontrol over financial reporting, as it has in the report for the year ending December 31, 2024, that our internal control over\nfinancial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is\neffective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is\nqualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or\nreviewed, or if it interprets the relevant requirements differently from us. In addition, after we cease to be an “emerging growth\ncompany”, our additional reporting obligations may place an added strain on our management, operational and financial resources\nand systems. We may be unable to timely complete our evaluation testing and any required remediation.\n\n \n\n16\n\n \n\n**We do not expect to pay any dividends in\nthe foreseeable future.**\n\n \n\nWe have never declared or paid any dividends\non our ordinary shares. We do not anticipate paying any dividends in the foreseeable future. We currently intend to retain future earnings,\nif any, to finance operations and expand our business. Subject to applicable law and our articles of association, our board of directors\nhas sole discretion whether to pay dividends. If our board of directors decides to pay dividends, the form, frequency and amount will\ndepend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions\nand other factors that our directors may deem relevant. The Companies Law imposes restrictions on our ability to declare and pay dividends.\nPayment of dividends may also be subject to Israeli withholding taxes. See “Taxation and government programs” for more information."}