Nayax (Nasdaq: NYAX) details 2025 results, growth and key risks
Filing Impact
Filing Sentiment
Form Type
20-F
Rhea-AI Filing Summary
Nayax Ltd., an Israel-based commerce enablement and cashless payments company, files its annual report for the year ended December 31, 2025. As of that date it had 37,301,367 ordinary shares outstanding.
The company reports its first annual net profit in 2025 after net losses of $5.6 million in 2024 and $15.9 million in 2023, reflecting rapid scaling from roughly 14,000 customers in 2019 to about 115,000 by December 31, 2025.
Management highlights extensive risks: intense global POS and payments competition, reliance on limited suppliers and manufacturers, exposure to payment processors and communications vendors, and operational strain from fast growth and acquisitions. Additional concerns include cybersecurity and privacy compliance under GDPR, CCPA, Israeli law and other regimes, FX volatility, geopolitical instability affecting Israel and key markets, and new embedded financial services such as the Yellow Account, hardware-as-a-service models and direct financing that add credit, regulatory and operational risk.
Positive
- None.
Negative
- None.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
|
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|
OR
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended |
OR
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
OR
|
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Commission file number: 001-41491
(Exact name of Registrant as specified in its charter)
State of Israel
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
Chairman and Chief Executive Officer
+972 3 769380
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
|
Title of each
Class
|
|
Trading
Symbol
|
|
Name of each exchange
on which registered
|
|
|
|
|
|
The
|
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. As of December 31, 2025, the registrant had outstanding 37,301,367 ordinary shares, par value NIS 0.001 per share.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).:
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
|
|
Accelerated Filer ☐
|
Non-accelerated Filer ☐
|
|
|
|
Emerging Growth Company
|
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards † provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
☐ U.S. GAAP
☒ International Financial Reporting Standards as issued by the International Accounting Standards Board
☐ Other
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
TABLE OF CONTENTS
Page
|
Presentation of Financial and Other Information |
- iv - | ||
|
Cautionary Statement Regarding Forward-Looking Statements
|
1 | ||
|
PART I |
2 | ||
|
ITEM 1. |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
2 | |
|
ITEM 2. |
OFFER STATISTICS AND EXPECTED TIMETABLE |
2 | |
|
ITEM 3. |
KEY INFORMATION |
2 | |
|
|
A. |
[Reserved] |
2 |
|
|
B. |
Capitalization and Indebtedness |
2 |
|
|
C. |
Reasons for the Offer and Use of Proceeds
|
2 |
|
|
D. |
Risk Factors |
2 |
|
ITEM 4. |
INFORMATION ON THE COMPANY |
39 | |
|
|
A. |
History and Development of the Company
|
39 |
|
|
B. |
Business Overview |
40 |
|
|
C. |
Organizational Structure |
60 |
|
|
D. |
Property, Plants and Equipment |
60 |
|
ITEM 4A. |
UNRESOLVED STAFF COMMENTS |
60 | |
|
ITEM 5. |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
60 | |
|
|
A. |
Operating Results |
61 |
|
|
B. |
Liquidity and Capital Resources |
73 |
|
|
C. |
Research and Development, Patents and Licenses, etc.
|
75 |
|
|
D. |
Trend Information |
75 |
|
|
E. |
Critical Accounting Estimates |
75 |
|
ITEM 6. |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
75 | |
|
|
A. |
Directors and Senior Management |
75 |
|
|
B. |
Compensation |
78 |
|
|
C. |
Board Practices |
81 |
|
|
D. |
Employees |
92 |
|
|
E. |
Share Ownership |
92 |
|
|
F. |
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation |
92 |
|
ITEM 7. |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
93 | |
|
|
A. |
Major Shareholders |
93 |
|
|
B. |
Related Party Transactions |
94 |
|
|
C. |
Interests of Experts and Counsel |
97 |
|
ITEM 8. |
FINANCIAL INFORMATION |
97 | |
|
|
A. |
Consolidated Statements and Other Financial Information
|
97 |
|
|
B. |
Significant Changes |
98 |
|
ITEM 9. |
THE OFFER AND LISTING |
98 | |
|
|
A. |
Offering and Listing Details |
98 |
|
|
B. |
Plan of Distribution |
98 |
|
|
C. |
Markets |
98 |
|
|
D. |
Selling Shareholders |
98 |
|
|
E. |
Dilution |
98 |
|
|
F. |
Expenses of the Issue |
98 |
-
i -
|
ITEM 10. |
ADDITIONAL INFORMATION |
98 | |
|
|
A. |
Share Capital |
98 |
|
|
B. |
Memorandum and Articles of Association
|
98 |
|
|
C. |
Material Contracts |
98 |
|
|
D. |
Exchange Controls |
98 |
|
|
E. |
Taxation |
99 |
|
|
F. |
Dividends and Paying Agents |
108 |
|
|
G. |
Statement by Experts |
108 |
|
|
H. |
Documents on Display |
108 |
|
|
I. |
Subsidiary Information |
108 |
|
|
J. |
Annual Report to Security Holders |
108 |
|
ITEM 11. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
109 | |
|
ITEM 12. |
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
109 | |
|
|
A. |
Debt Securities |
109 |
|
|
B. |
Warrants and Rights |
109 |
|
|
C. |
Other Securities |
109 |
|
|
D. |
American Depositary Shares |
109 |
|
PART II |
110 | ||
|
ITEM 13. |
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
110 | |
|
ITEM 14. |
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|
110 | |
|
ITEM 15. |
CONTROLS AND PROCEDURES |
110 | |
|
|
A. |
Disclosure Controls and Procedures |
110 |
|
|
B. |
Management’s Annual Report on Internal Control Over Financial Reporting |
110 |
|
|
C. |
Attestation Report of the Registered Public Accounting Firm
|
110 |
|
|
D. |
Changes in Internal Control Over Financial Reporting
|
110 |
-
ii -
|
ITEM 16. |
[RESERVED] |
110 |
|
ITEM 16A. |
AUDIT COMMITTEE FINANCIAL EXPERT |
110 |
|
ITEM 16B. |
CODE OF ETHICS |
110 |
|
ITEM 16C. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
111 |
|
ITEM 16D. |
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
111 |
|
ITEM 16E. |
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
111 |
|
ITEM 16F. |
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT |
111 |
|
ITEM 16G. |
CORPORATE GOVERNANCE |
112 |
|
ITEM 16H. |
MINE SAFETY DISCLOSURE |
112 |
|
ITEM 16I. |
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
112 |
|
ITEM 16J. |
INSIDER TRADING POLICIES |
113 |
|
ITEM 16K. |
CYBERSECURITY |
113 |
|
PART III |
115 | |
|
ITEM 17. |
FINANCIAL STATEMENTS |
115 |
|
ITEM 18. |
FINANCIAL STATEMENTS |
115 |
|
ITEM 19. |
EXHIBITS |
115 |
|
Signatures |
116 | |
|
Index to Financial Statements |
F - 2 | |
-
iii -
PRESENTATION
OF FINANCIAL AND OTHER INFORMATION
Unless otherwise indicated or the context otherwise requires, all references in this
annual report to “Nayax” or the “Company,” “we,” “our,” “ours,” “us”
or similar terms refer to Nayax Ltd., together with its consolidated subsidiaries. The term “NIS” refer to the lawful currency
of the State of Israel, the terms “dollar,” “U.S. dollar,” “US$” and “$” refer to the
lawful currency of the United States, the terms “euro,” “EUR” and “€” and refer to the lawful
currency of the European Union, the terms “Australian dollar” and “AUD” refer to the lawful currency of Australia
and the term “British pound” refers to the lawful currency of the United Kingdom. Unless derived from our financial statements
or otherwise indicated, U.S. dollar translations of NIS amounts presented in this annual report are translated using the rate of NIS 3.19
to US$1.00, the exchange rate reported by the Bank of Israel on December 31, 2025.
Financial Statements
We maintain our books and records in U.S. dollars and prepare our consolidated financial
statements in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting
Standards Board (“IASB”). The financial information contained in this annual report includes our audited consolidated statements
of financial position as of December 31, 2025 and 2024 and related audited consolidated statements of profit or loss, comprehensive income
(loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2025, which have been audited by
Kesselman and Kesselman, a member of PricewaterhouseCoopers International Limited.
Our fiscal year ends December 31. References in this annual report to a fiscal year,
such as “fiscal year 2025,” relates to our fiscal year ended on December 31 of that calendar year.
The financial information should be read in conjunction with “Item 5. Operating
and Financial Review and Prospects” and our consolidated financial statements, including the related notes thereto, included elsewhere
in this annual report.
Industry and Market Data
This annual report includes statistical data, market data and other industry data and
forecasts, which we obtained from market research, publicly available information and independent industry publications and reports that
we believe to be reliable sources, although we have not verified the accuracy and completeness of such data.
Forecasts and other forward-looking information derived from such sources and included
in this annual report are subject to the same qualifications and additional uncertainties regarding the other forward-looking statements
in this annual report. See “Cautionary Statement Regarding Forward-Looking Statements.”
Trademarks, Service Marks and Trade Names
Throughout this annual report, we refer to various trademarks, service marks and trade
names that we use in our business. The “Nayax” logo is the property of Nayax Ltd. Nayax® is our registered trademark
in the United States. We have several other trademarks and service marks. Solely for convenience, some of the trademarks, service marks
and trade names referred to in this annual report are listed without the “®” or “™” trademark designations.
All rights to such trademarks are nevertheless reserved, and other trademarks and service marks appearing in this annual report are the
property of their respective holders.
-
iv -
CAUTIONARY STATEMENT
REGARDING FORWARD-LOOKING STATEMENTS
This annual report contains statements that constitute forward-looking statements. Many
of the forward-looking statements contained in this annual report can be identified by the use of forward-looking words such as “anticipate,”
“believe,” “could,” “estimate,” “expect,” “intend,” “plan,” “potential”
and “should,” among others.
Forward-looking statements appear in a number of places in this annual report and include,
but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our management’s
beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties,
and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including,
but not limited to, those identified under the section titled “Item 3. Key Information—D. Risk Factors” in this annual
report. These risks and uncertainties include factors relating to:
| • |
our expectations regarding general market conditions and global economic trends; |
| • |
impact of the conflict in Israel on our operations and financial results; |
| • |
fluctuations in inflation, interest rates and exchange rates in the global economic environment over the world; |
| • |
our ability to implement our growth strategy; |
| • |
the success of operating initiatives, including advertising and promotional efforts and new product and concept development by us
and our competitors; |
| • |
our ability to compete and conduct our business in the future; |
| • |
changes in consumer tastes and preferences; |
| • |
the availability of qualified personnel and the ability to retain such personnel; |
| • |
changes in commodity costs, labor, distribution and other operating costs; |
| • |
changes in government regulation and tax matters; |
| • |
other factors that may affect our financial condition, liquidity and results of operations; and |
| • |
other risk factors discussed under “Item 3. Key Information—D. Risk Factors.” |
The preceding list is not intended to be an exhaustive list of all of our forward-looking
statements. The forward- looking statements are based on our beliefs, assumptions and expectations of future performance, taking into
account the information currently available to us. These statements are only estimates based upon our current expectations and projections
about future events. There are important factors that could cause our actual results, levels of activity, performance or achievements
to differ materially from the results, levels of activity, performance or achievements expressed or implied by the forward-looking statements.
In particular, you should consider the risks provided under “Item 3. Key Information—D. Risk Factors” in this annual
report.
You should not rely upon forward-looking statements as predictions of future events.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future
results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or
will occur. Each forward-looking statement speaks only as of the date of the particular statement. Except as required by law, we undertake
no obligation to update publicly any forward-looking statements for any reason after the date of this annual report, to conform these
statements to actual results or to changes in our expectations.
PART I
| ITEM 1. |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
Not applicable.
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3.
KEY INFORMATION
| A. |
[Reserved] |
| B. |
Capitalization and Indebtedness |
Not applicable.
| C. |
Reasons for the Offer and Use of Proceeds |
Not applicable.
| D. |
Risk Factors |
Our business, financial condition and results of operations could
be materially and adversely affected if any of the risks described below occur. As a result, the market price of our ordinary shares could
decline, and you could lose all or part of your investment. This annual report also contains forward-looking statements that involve risks
and uncertainties. See “Cautionary Statement Regarding Forward-Looking Statements.” Our actual results could differ materially
and adversely from those anticipated in these forward-looking statements due to certain factors, including the risks facing our Company.
Risk Factors Summary
Investing in our ordinary shares and our ability to successfully operate our business
and execute our growth plan each are subject to numerous and substantial risks. You should carefully consider the risks described in the
risk factors below before deciding to invest in our ordinary shares. If any of these risks actually occurs, our business, financial condition
or results of operations could be materially and adversely affected. In such case, the trading price of our ordinary shares would likely
decline, and you may lose all or part of your investment. The following is a summary of some of the principal risks we face:
| • |
unfavorable conditions in our industry or the global economy or reductions in spending on point of sale, or POS, technology could
limit our ability to grow our business and negatively affect our results of operations; |
| • |
we operate in a competitive business environment and a failure to compete effectively may adversely affect our financial condition,
results of operations and cash flows in the future; |
| • |
we procure some of our key components from a single or limited number of suppliers. Therefore, we are exposed to risks of shortages,
price fluctuations, tariffs and delays in delivery of such components; |
| • |
we have a limited operating history at our current scale, and our prospects and future revenues are subject to a number of uncertainties,
which limits our ability to predict them accurately; |
| • |
we have a history of annual net losses and therefore there are risks related to our ability to maintain profitability; |
| • |
if we are unable to attract customers, maintain or grow our retention rates and expand usage with existing customers, our revenue
growth and any future profitability could be harmed; |
| • |
we may be unable to successfully develop and expand our platform, which could limit our ability to grow and maintain our competitive
position and adversely affect our financial condition, results of operations and cash flow; |
| • |
we rely on processing service providers, credit card networks, banks and other entities in the payment transfer system to process
payments, and if they fail or no longer agree to provide their services or we fail to comply with our obligations under those relationships,
our customer relationships could be adversely affected, and we could lose business; |
2
| • |
any failure to offer high-quality customer support may adversely affect our relationships with our customers and could adversely
affect our business, financial condition and results of operations; |
| • |
the termination of our existing relationships with commercial communications services providers could force us to adapt our products
to a new vendor; |
| • |
After being subject to ceasefire arrangements following an extended period of war, Israel has launched together with the United States
a joint operation against Iran. The security situation remains unstable and hostilities could escalate or resume at any time, and the
duration, scope and effects of the war, the strike against Iran and related instability are uncertain; |
| • |
any past or future acquisitions, strategic investments, entries into new businesses, joint ventures, divestitures and other transactions
could fail to achieve strategic objectives, disrupt our ongoing operations or result in operating difficulties, liabilities and expenses,
harm our business and negatively impact our results of operations; |
| • |
failure to maintain and enhance our brand recognition in a cost-effective manner could harm our business, financial condition and
results of operations; |
| • |
information security failures or interruptions of our or our third-party partners’ or service providers’ information
technology systems could adversely affect our business, financial condition and results of operations; |
| • |
operational failures, including within data transfer, could harm our reputation, ability to retain customers and recruit new customers,
as well as our business results; |
| • |
our business is subject to complex and evolving regulations and oversight related to privacy and data protection; |
| • |
we are subject to substantial governmental and commercial regulations across our areas of activity. Any failure to comply with applicable
regulations or standards may lead to significant regulatory consequences and could have an adverse effect on our business, financial condition
or results of operations; |
| • |
our business could suffer if we are unable to obtain, maintain, protect, defend or enforce our intellectual property or other proprietary
rights, or if others claim that we have infringed upon, misappropriated or otherwise violated their intellectual property rights;
|
| • |
we rely on our key personnel and have not developed a succession plan for our senior management; if our key personnel leave us, our
results and product development could be harmed; and |
| • |
we are controlled by our founding shareholders, who may make decisions with which other shareholders may disagree. |
Risks Related to our Business and Industry
Unfavorable conditions in our industry or the
global economy or reductions in spending on point of sale, or POS, technology could limit our ability to grow our business and negatively
affect our results of operations.
Current or future economic uncertainties or downturns could adversely affect our business,
financial condition and results of operations. We are dependent on the growth of cashless transactions, and a reduction in customer or
consumer demand for cashless payments would negatively affect our business. The market in which we operate is sensitive, to an extent,
to changes in household income and the level of global economic activity. Any global economic slowdown or recession that leads to a decline
in private consumption, and therefore a reduction in the demand for products sold by our customers using our integrated POS devices, payment
processing services or software as a service, or SaaS, solutions, could negatively affect our revenues from existing customers. Such conditions
could also make it difficult for us to obtain new customers or expand activities with existing customers.
For example, COVID-19 initially caused sharp declines in stock markets around the world
in March 2020 and a global economic slowdown that extended into 2021 and beyond. The general slowdown in the world economy led to a drop
in consumption, which for a time had a negative impact on our activities and results. Although consumer spending has recovered from pandemic
levels, future economic downturns could again lead to declines in consumption that negatively impact us.
3
We operate in a competitive business environment
and a failure to compete effectively may adversely affect our financial condition, results of operations and cash flows in the future.
The competition we face varies across the different product markets in which we operate
and geographic regions we serve. Activity in the market for payment processing and operations is characterized by limited competition
on the global level. However, major players are active in both the markets that our solutions address and the regions we serve. We face
significant competition in the certain areas in which we are active, such as the global market for POS devices. The existence of competitors
in certain markets in which we operate, together with ever-increasing demands to provide technological solutions that make payment and
business operation accessible across attended and automated self-service environments, require us to respond quickly and constantly update
our services in order to maintain our ability to offer our customers complete, comprehensive solutions for business management.
Competitors may introduce new offerings embodying new technologies, or new industry
standards and practices could emerge, that render obsolete our existing technology, including our integrated POS devices and SaaS offerings.
Some of our competitors may offer more attractive prices, features or other services that we do not offer, and some customers may choose
to provide these services themselves. Larger customers may seek lower prices from us when they renew or extend a contract or the customer’s
business has significant volume changes. In addition, larger customers may reduce their use of our platform if they decide to move services
in-house. Further, our small business customers may seek reduced fees due to pricing competition, their own financial condition or pressures
from consumers. These factors result in lower revenue from a customer than we had anticipated based on our previous agreement with that
customer. If we are not successful in achieving high renewal rates and favorable contract terms, our results of operations and financial
condition may be materially and adversely affected. Accordingly, our future success will depend in part on our ability to respond to new
product offerings by competitors, technological advances and emerging industry standards and practices in a cost-effective and timely
manner in order to retain existing customers, renew customer contracts on favorable terms and attract new customers.
Furthermore, as the number of our customers with higher volume sales increases, so does
the need for us to offer increased functionality, scalability and support, which requires us to devote additional resources to such efforts.
For further details regarding how we address competition in our fields of activity,
see “Item 4. Information on the Company—B. Business Overview—Competition.”
We procure some of our key components
from a single or limited number of suppliers. Therefore, we are exposed to risks of shortages, price fluctuations, tariffs and delays
in delivery of such components.
We are exposed to risks of supply shortages, price increase, tariff increases, and delivery
delays for key components used to manufacture our integrated POS devices, which can adversely impact our business, financial condition
and results of operations. In addition, certain suppliers may have an increasing sentiment not to transact business with Israeli companies
as a result of the recent war in Israel or due to a shift in international relations and politics. We rely on certain components, some
of which are provided by a single or limited number of suppliers, to produce our products, including monitors, semiconductor chips and
other electronics products. We also face competition for our key components from other companies in the computers, telecom and electronics
sectors.
For example, a spike in demand for various electronic products during the COVID-19 pandemic,
together with the slowdown in manufacturing, created a global shortage of certain components required for producing many electronic products,
including certain of our products, which adversely affected our gross profit rates from the sale of POS devices starting in the third
quarter of 2021 and continuing in 2022. Although the delivery delays and shortages have since abated, any similar shortages in the future
in the components of our products could have an adverse impact on our business, financial condition or results of operations.
We have a limited operating history at our current
scale, and our prospects and future revenues are subject to a number of uncertainties, which limits our ability to predict them accurately.
We started our company in 2005 and have experienced rapid growth in recent years. Our
shares have a limited history trading on the Tel Aviv Stock Exchange (“TASE”), where they have been listed since May 2021,
and on the Nasdaq Global Select Market (“Nasdaq”), where they have been listed since September 2022. Our historical results
may not be indicative of, or comparable to, our future results and we may be unable to sustain or increase our rate of growth in the future.
We have encountered and expect to continue to encounter risks and uncertainties frequently experienced by growing companies in rapidly
evolving industries, including those associated with forecasting demand for our products and platforms, our costs of revenue, such as
those associated with device sales including hardware component costs, shipping and handling costs, manufacturing labor costs and other
related costs, and other risks and uncertainties described herein. Such uncertainties may limit our ability to accurately predict our
operating results. If we do not address these risks successfully, our results of operations could differ materially from our expectations,
or our guidance, and as a result our business, results of operations and financial condition could suffer, and the price of our ordinary
shares could decline.
4
We have a history of annual net losses and therefore
there are risks related to our ability to maintain profitability.
Although we reported a net annual profit for the first time in 2025, we have incurred
significant losses in each year since our inception, including losses of $5.6 million and $15.9 million in the years ended December 31,
2024 and 2023, respectively. Because the market for our platform and the features is rapidly evolving, it is difficult for us to predict
our future results of operations or the limits of our market opportunity. We have experienced significant revenue growth in recent periods,
but we are not certain whether we will obtain a high enough volume of revenue to sustain or increase our growth or maintain annual profitability
in the future.
We also expect that our operating expenses will increase moderately over the next several
years as we hire additional personnel, expand our customer base, operations and infrastructure, continue to enhance our brand, develop
and expand our platform’s features, integrations, capabilities and enhancements, expand and improve our integrated POS devices and
SaaS solutions and increase our spending on sales and marketing. These efforts may prove more expensive than we currently anticipate,
and we may not succeed in increasing our revenue sufficiently to offset these higher expenses. Revenue may not grow as anticipated for
a number of possible reasons, including as a result of slowing demand for our products or due to increased competition.
If we fail to manage our growth effectively,
we may be unable to execute our business plan, maintain high levels of service and customer satisfaction or adequately address competitive
challenges.
As illustrated by the increase in our number of customers from approximately 14,000
in 2019 to approximately 115,000 as of December 31, 2025, we have experienced significant growth in recent periods, which puts a strain
on our business, operations and employees. We anticipate that our operations will continue to rapidly expand. Any failure by us to manage
growth effectively could adversely affect our business.
We must also attract, train and retain a significant number of qualified sales and marketing
personnel, customer support personnel, professional services personnel, software engineers, technical personnel and management personnel,
without undermining our corporate culture of rapid innovation, teamwork and attention to customer success that has been central to our
growth.
If we are unable to attract customers, maintain
or grow our retention rates and expand usage with existing customers, our revenue growth and any future profitability could be harmed.
To increase our revenue and achieve and maintain profitability, we must increase our
customer base through various methods, including but not limited to, selling and deploying more connected POS devices in both the attended
and automated self-service markets, growing or maintaining our retention rates, and expanding usage of our end-to-end solutions by existing
customers. While we have experienced significant growth in the number of our managed and connected devices, we may not continue achieving
similar growth rates in the future.
Sales efforts targeted at larger enterprises typically involve greater costs, longer
sales cycles, greater competition and less predictability in completing some of our sales. As a result of these factors, such sales opportunities
may require us to devote greater sales, research and development, professional services and customer support resources to these customers,
resulting in increased costs and lengthened sales cycles. If our efforts to sell to large enterprises are not successful or do not generate
additional revenue, our business could suffer.
Moreover, our business is based on (i) fixed monthly subscription fees charged for accessing
our SaaS solutions, (ii) payment processing fees charged as a percent of transaction value at the point of sale and (iii) one-time revenue
from sales of our integrated POS devices. Customers who purchase and use our integrated POS devices are not always obligated to use our
payment processing or SaaS solutions, and those who do may discontinue or reduce their use of these solutions. Businesses may or may not
use our platform as a result of a number of factors, including their satisfaction or dissatisfaction with our integrated POS devices,
SaaS solutions, application programming interfaces, or APIs, our fees or pricing structure, the pricing or capabilities of the products
and services offered by our competitors, the effects of economic conditions, decreases in the number of transactions by consumers or reductions
in our customers’ spending levels.
5
It is also difficult to predict attrition rates given our varied customer base of large
enterprise and small and medium enterprises (“SMEs”), customers. Our attrition rates may increase or fluctuate as a result
of a number of factors, including customer dissatisfaction with our services, consumer spending levels, mix of customer base, decreases
in the consumer base of our customers, competition, pricing increases or changing or deteriorating general economic conditions. If we
fail to expand our customer base or increase our customers’ use of our platform’s solutions, our revenue may decline or grow
slower than anticipated, which could harm our business, results of operations and financial condition.
We may be unable to successfully develop and
expand our platform, which could limit our ability to grow and maintain our competitive position and adversely affect our financial condition,
results of operations and cash flow.
Our growth depends, in part, on continued revenue from our existing products, as well
as the successful development and introduction of new solutions or technologies, which face uncertainty with respect to customer acceptance
and reaction from competitors. Any delay in the development or launch of a new product could result in our competitors being the first
to market, which could compromise our competitive position. Further, the development and introduction of new products may require us to
make investments in specialized personnel and capital equipment, increase marketing efforts and reallocate resources away from other uses.
The attractiveness of our payment processing services also depends on our ability to
integrate emerging payment technologies, alternative payment methods and credit card systems that our processing partners or we may not
adequately support or for which they or we do not provide competitive processing rates. In the event such emerging payment methods become
popular among consumers, any failure to timely integrate such payment methods into our software, anticipate consumer behavior changes,
or contract with processing partners that support such emerging payment technologies could reduce the attractiveness of our payment processing
services and of our platform, and adversely affect our operating results.
We also may need to modify our systems and strategy in light of new products that we
develop. If we are unable to develop and introduce new products in a cost-effective manner or otherwise effectively manage our operations
relating to new products, our financial condition, results of operations and cash flows could be adversely affected.
Any failure to offer high-quality customer support
may adversely affect our relationships with our customers and could adversely affect our business, financial condition and results of
operations.
In deploying and using our products, our customers depend on our support team to resolve
complex technical and operational issues. We also rely in part on third parties to provide some customer support services, including manpower,
software development and training, and our ability to provide effective customer support is partially dependent on our ability to engage
qualified and capable third-party service providers. As we continue to grow our business and improve our platform, we will face challenges
related to providing high-quality customer support services at scale. We may be unable to respond quickly enough to accommodate short-term
increases in demand for customer support or to modify the nature, scope and delivery of our customer support to compete with changes in
customer support services provided by our competitors. Increased demand for customer support could increase costs and, without a corresponding
increase in revenue, adversely affect our operating results. Our revenue streams are highly dependent on our business reputation and on
positive recommendations from our existing customers. Any failure to maintain high-quality customer support, or a market perception that
we do not maintain high-quality customer support, could adversely affect our reputation and brand, our ability to benefit from referrals
by existing customers, our ability to sell our platform to existing and prospective customers and our business, financial condition and
results of operations.
We rely on a limited number of manufacturers
for the development of a majority of our finished POS devices.
We rely on a limited number of manufacturers to complete the assembly of the majority
of our finished POS devices. Any disruption in one or more of these relationships may cause us to fail to meet the demands of our customers,
damage our customer relationships and adversely affect our results of operations. We obtain all of the finished products from these contract
manufacturers on a purchase order basis, and none of them have an obligation to provide us with any specified minimum quantities of finished
products. In the event our relationship with one or more such contract manufacturer is disrupted or one or more is unable to deliver sufficient
quantities of finished products, we may be unable to locate, qualify and engage with an alternate contract manufacturer or manufacturers
in a timely, cost-efficient manner. Further, any failure or deterioration of quality control at such contract manufacturer could result
in defects in our projects or products, which in turn may subject us to contractual, product liability and other claims. Any such claims,
regardless of whether they are ultimately successful, could cause us to incur costs, harm our business reputation and result in disruption
to our operations.
6
We are also subject to other risks inherent in the manufacturing of our products and
their supply chain, including industrial accidents, natural disasters (including as a result of climate change), environmental events,
strikes and other labor disputes, capacity constraints and disruptions in material supplies. We are also subject to risks associated with
global shortages, disruptions in supply chain or information technology, loss or impairment of key manufacturing sites or suppliers, product
quality control and safety issues, increase in commodity prices and energy costs, licensing requirements and other regulatory issues and
other external factors over which we have no control. If such an event were to occur, it could have an adverse effect on our business,
financial condition and results of operations.
We rely on processing service providers, credit
card networks, banks and other entities in the payment transfer system to process payments, and if they fail or no longer agree to provide
their services or we fail to comply with our obligations under those relationships, our customer relationships could be adversely affected,
and we could lose business.
Our payment processing services are dependent on a payment transfer system that operates
through a chain of different entities, including but not limited to clearing entities, banks and credit card companies. We rely on payment
processors, regulated financial institutions and other partners and third-party vendors to enable us to provide services to our customers.
Due to our agreements with our partners and service providers, we are contractually required to comply with certain legal and regulatory
requirements, credit card network rules and other obligations which otherwise would not necessarily be applicable to us. If we fail to
meet our obligations under our agreements with payment processors or other service providers, one of the entities fails to fulfill its
obligations to us or engages in prohibited activity, or if we or our service providers decide to terminate our agreement, we would need
to find one or more new vendors to provide materially similar services. If we are unable to find vendors under terms consistent with,
or better than, those currently in place, or if we are unable to sign new agreements or maintain our current relationships under terms
consistent with those currently in place, our revenue and business may be harmed. This may directly result in a violation of our obligations
to our customers or otherwise adversely affect our activities, reputation and results.
The termination of our existing relationships
with commercial communications services providers could force us to adapt our products to a new vendor.
Our activities are grounded in our data transfer capability. The operation of communications
enabling our activity is dependent on the reliability and capacity of services supplied to us by communications vendors. Termination of
business relationships with vendors from the communications field, such as vendors of infrastructure and internet servers, could force
us to invest additional resources in order to adapt our products to a new vendor and could have a negative impact on our business, financial
condition or results of operations.
Any past or future acquisitions, strategic investments,
entries into new businesses, joint ventures, divestitures and other transactions could fail to achieve strategic objectives, disrupt our
ongoing operations or result in operating difficulties, liabilities and expenses, harm our business and negatively impact our results
of operations.
In pursuing our business strategy, we routinely conduct discussions and evaluate opportunities
for possible acquisitions, strategic investments, entries into new businesses, joint ventures, divestitures and other transactions. We
have in the past acquired or invested in, and we currently are active in M&A pipeline activity and execution to acquire or invest
in, businesses, technologies or other assets that we believe could complement or expand our business.
For example, in October 2023, we announced the acquisition of Retail Pro International
(“Retail Pro”), a U.S. based retail software company, for a purchase price that represents an implied enterprise value of
$36.5 million, in April 2024, we completed the acquisition of both Roseman Engineering Ltd. and Roseman Holdings Ltd. (together, “Roseman
Engineering”), which manage smart systems in the fields of refuelling, charging stations and management systems for forecourts and
vehicle fleets, and of VMtecnologia LTDA (“VMT”), a leading technology provider for the automated self-service industry in
Brazil, marking a significant step in our expansion into the Latin American market, and in December 2025, we announced the acquisition
of Lynkwell, a leading energy ecosystem platform focused on supporting developers and operators of renewable generation, battery storage,
utilities, and microgrids with next-generation technologies, for an implied effective purchase price of $25.9 million, with an additional
earnout based on certain profitability metrics within the first 12 months post-closing.
7
The identification, evaluation and negotiation of potential transactions, as well as
the integration of acquired companies and businesses, have in the past, and may continue in the future, to divert the attention of management
and require various expenses, whether or not such transactions are ultimately completed. There can be no assurance that we will be successful
in identifying, negotiating and consummating favorable transaction opportunities. In addition to transaction and opportunity costs, such
transactions involve significant challenges and risks, whether or not such transactions are completed, any of which could harm our business
and negatively impact our results of operations, including risks that:
| • |
the transaction may not advance our business strategy; |
| • |
we may not be able to secure required regulatory approvals or otherwise satisfy closing conditions for a proposed transaction in
a timely manner, or at all; |
| • |
the transaction may subject us to additional regulatory burdens, such as antitrust and competition filings, that affect our business
in potentially unanticipated and significantly negative ways; |
| • |
we may not realize a satisfactory return or increase our revenue; |
| • |
we may experience difficulty, and may not be successful in, integrating technologies, IT or business enterprise systems, culture
or management or other personnel of the acquired business; |
| • |
we may incur significant acquisition costs and transition costs, including in connection with the assumption of ongoing expenses
of the acquired business; |
| • |
we may not realize the expected benefits or synergies from the transaction in the expected time period, or at all – for example,
we expect opportunities to deliver additional revenue and costs synergies, as well as accretion to net income, with the acquisition of
Retail Pro, VMT and Lynkwell, which may or may not be realized in a timely manner or at all; |
| • |
we may be unable to retain key personnel; |
| • |
acquired businesses or businesses that we invest in may not have adequate controls, processes and procedures to ensure compliance
with laws and regulations, including with respect to data privacy and security, and our due diligence process may not identify compliance
issues or other liabilities – moreover, acquired businesses’ technology may add complexity, resource constraints and failures
that make it difficult and time consuming to achieve such adequate controls, processes and procedures; |
| • |
we may fail to identify or assess the magnitude of certain liabilities, shortcomings or other circumstances prior to acquiring or
investing in a business, which could result in additional financial, legal or regulatory exposure, which may subject us to additional
controls, policies, procedures, liabilities, litigation, costs of compliance or remediation or to other adverse effects on our business,
operating results or financial condition; |
| • |
we may have difficulty entering into new product areas, market verticals or geographic territories; |
| • |
we may be unable to retain the customers, vendors and partners of acquired businesses; |
| • |
there may be lawsuits or regulatory actions resulting from the transaction. For example, during 2023, the Israeli Competition Authority
(the “ICA”) requested from us certain documents and other information related mainly to our acquisition of OTI. We cooperated
fully and transparently with the ICA throughout its investigative process, and, on February 3, 2025, we entered into a consent decree
(the “Consent Decree”) with the ICA to settle allegations of anticompetitive practices and failing to obtain necessary ICA
consent in connection with the acquisition. Pursuant to the Consent Decree, we and Yair Nechmad, our CEO and Chairman, agreed to pay a
sum of NIS 2,500,000 (approximately $701,000) and NIS 240,000 (approximately $67,300), respectively, to the Israeli State Treasury, and
we agreed to provide up to 6,500 OTI POS kits, comprised of the Telebox hardware units paired with Uno 8/Uno Plus card readers, over a
period of five years, to third parties who may sell, distribute, and market the OTI POS kits under their own brands in the Israeli market.
The Consent Decree was approved by the Israeli Competition Court on June 4, 2025; |
| • |
there may be risks associated with undetected security weaknesses, cyber-attacks or security breaches at companies that we acquire
or with which we may combine or partner; |
8
| • |
there may be local and foreign regulations applicable to the international activities of our business and the businesses we acquire;
and |
| • |
acquisitions could result in dilutive issuances of equity securities or the incurrence of debt – for example, the acquisition
of Retail Pro was financed through bank financing, which increased our debt burden, consideration for the acquisition of VMT included
an earn-out in the amount of up to approximately $5.3 million payable primarily in our ordinary shares and consideration for the acquisition
of Roseman Engineering included 19,722 of our ordinary shares. |
We may also choose to divest certain businesses or product lines. If we decide to sell
assets or a business, we may have difficulty obtaining terms acceptable to us in a timely manner, or at all. Additionally, we may experience
difficulty separating out portions of, or entire, businesses, incur potential loss of revenue or experience negative impact on margins,
or we may not achieve the desired strategic and financial benefits. Such potential transactions may also delay achievement of our strategic
objectives, cause us to incur additional expenses, potentially disrupt customer or employee relationships and expose us to unanticipated
or ongoing obligations and liabilities, including as a result of our indemnification obligations. Further, during the pendency of a divestiture,
we may be subject to risks related to a decline in the business, loss of employees, customers or suppliers and the risk that the transaction
may not close, any of which could have a material adverse effect on the business to be divested and us. If a divestiture is not completed
for any reason, we may not be able to find another buyer on the same terms, and we may have incurred significant costs without the corresponding
benefit.
Joint ventures and minority investments inherently involve a lesser degree of control
over business operations, thereby potentially increasing the financial, legal, operational, regulatory and/or compliance risks associated
with the joint venture or minority investment. In addition, we may be dependent on joint venture partners, controlling shareholders, management
or other persons or entities who control them and who may have business interests, strategies or goals that are inconsistent with ours.
Business decisions or other actions or omissions of the joint venture partners, controlling shareholders, management or other persons
or entities who control them may adversely affect the value of our investment, result in litigation or regulatory action against us and
may otherwise damage our reputation and brand.
We rely on our key personnel and have
not developed a succession plan for our senior management; if our key personnel leave us, our results and product development could be
harmed.
Our future success and our ability to manage future growth depend, in large part, upon
the efforts, experience and expertise of our senior management team. Our senior management team is comprised of highly regarded figures
within our industry who have extensive experience with, and an exceptional understanding of, our business, customers and products. It
could be difficult or impossible for us to find appropriate replacements for our senior management, as competition for personnel is intense.
For example, Mr. Yair Nechmad, CEO, co-founder and a controlling shareholder in the Company, and Mr. David Ben-Avi, CTO, co-founder and
a controlling shareholder, are key figures in the Company. Although we are not dependent on these key figures, we could be harmed if they
were to leave the Company.
As of the date of this annual report, we have not developed a succession plan for our
senior management. If we fail to timely develop and successfully execute a succession plan capable of maintaining continuity in our senior
management and business, or if we lose senior management members and we fail to attract and retain qualified successors, our business,
financial condition, results of operations and cash flows could be harmed.
Our ability to recruit, retain and develop qualified
personnel is critical to our success and growth.
Our businesses function at the intersection of rapidly changing technological, economic
and regulatory environments that require a wide range of expertise and intellectual capital. For us to successfully compete and grow,
we must recruit, retain and develop personnel who can provide the necessary expertise across a broad spectrum of disciplines. In addition,
we must develop, maintain and, as necessary, implement appropriate succession plans to ensure we have the necessary human resources capable
of maintaining continuity in our business.
The market for qualified personnel is competitive, and we may not succeed in recruiting
additional personnel or may fail to effectively replace current personnel who depart with qualified or effective successors. Our effort
to retain and develop personnel may also result in significant additional expenses, which could adversely affect our profitability. In
addition, job candidates and existing employees often consider the value of the equity awards they receive in connection with their employment.
The trading price of our ordinary shares is likely to remain volatile, could be subject to fluctuations in response to various factors
and may not appreciate. If the perceived value of our equity awards declines for these or other reasons, it may adversely affect our ability
to attract and retain highly qualified employees.
9
We are also substantially dependent on our direct sales force and marketing team to
obtain new customers and increase sales to existing customers. There is significant competition for sales and marketing personnel with
the skills and technical knowledge that we require. Our ability to achieve significant revenue growth will depend, in large part, on our
success in recruiting, training and retaining a sufficient number of direct sales and marketing personnel to support our growth. If we
are unable to hire, train and retain a sufficient number of qualified and successful sales personnel, our business, financial condition
and results of operations could be harmed.
Failure to maintain and enhance our brand recognition
in a cost-effective manner could harm our business, financial condition and results of operations.
We believe that maintaining and enhancing our brand identity and reputation is critical
to our relationships with existing, and ability to attract new, customers, partners and employees. Accordingly, we have invested, and
expect to continue to invest, a great amount of resources in branding and other marketing initiatives, which may not be successful or
cost effective. If we do not successfully maintain and enhance our brand and reputation in a cost-effective manner, our business may not
grow, we may have reduced pricing power relative to competitors with stronger brands or reputations, and we could lose customers or partners,
all of which would harm our business, financial condition and results of operations.
In addition, any negative publicity about our company or our management, including about
the quality, stability and reliability of our products or services, changes to our products and services, our data privacy and cybersecurity
practices, litigation, regulatory enforcement and other actions involving us, as well as the perception of us and our products by our
customers and their consumers, even if inaccurate, could cause a loss of confidence in us and adversely affect our brand.
Exchange rate fluctuations could adversely affect
our results of operations.
A material portion of our expenses are denominated in NIS, USD and Euro. At the same
time, we are active in more than 120 different countries, including emerging markets, and therefore receive payments and generate revenue
in a large number of currencies, primarily from Euro, U.S. dollar, Australian dollar and British pound. We also face exposure to currency
volatility in certain emerging markets, where fluctuations may be more pronounced. Our financial statements are presented in U.S. dollar,
our functional and reporting currency, and therefore we are subject to the effects of exchange-rate fluctuations between the U.S. dollar
and other currencies, which may impact on our results of operations. Fluctuations in foreign currency exchange rates may reduce our results
and could materially adversely affect our business, operating results, and financial condition. In 2025, foreign currency transaction
gains and losses have had an impact on our financial statements, which was partially mitigated by hedging transactions. For additional
information, see “Item 5. Operating and Financial Review and Prospects - Operating Results - Components of our Consolidated Income
Statement - Finance Income (Expense), Net.”
Political and geopolitical conditions or tensions,
including trade disputes, the imposition of tariffs and direct or indirect acts of war or terrorism, could have an adverse effect on our
business, results of operations and financial results.
Since we operate on a global basis, our operations could be disrupted by political or
geopolitical conditions, trade disputes, international boycotts and sanctions, political and social instability, acts of war, terrorist
activity or other similar events.
In recent years, diplomatic and trade relationships between the U.S. government
and China have become increasingly frayed and the threat of a takeover of Taiwan by China has increased. Tensions
between the U.S. and China have led to a series of tariffs being imposed by the U.S. on imports from mainland China,
as well as other business restrictions. Following his re-election, President Donald Trump has imposed and may continue to impose
additional tariffs on U.S. imports from a variety of countries, including China, Mexico and Canada. Tariffs could increase the cost
of our products and the components that go into making them. These increased costs could adversely impact the gross margin that we earn
on our products. Tariffs could also make our products more expensive for customers, which could make our products less competitive
and reduce consumer demand. Changing our operations in accordance with new or changed trade restrictions can be expensive, time-consuming
and disruptive to our operations.
At the same time, the ongoing war between Russia and Ukraine and the instability in
the Middle East between Israel and a variety of terrorist organizations and the Islamic Republic of Iran each threaten to expand into
wider regional conflicts, which could have severe negative impact on the global economy. For more details regarding conflicts in the Middle
East, see “ - Risks Related to our Operations and Incorporation in Israel - After being subject to ceasefire arrangements following
an extended period of war, Israel has launched together with the United States a joint operation against Iran. The security situation
remains unstable and hostilities could escalate or resume at any time, and the duration, scope and effects of the war, the strike against
Iran and related instability are uncertain.”
10
The tensions between the U.S. and China, the Russia-Ukraine war and conflicts
in the Middle East remain uncertain, and while it is difficult to predict the impact of any of the foregoing, any escalation or additional
uncertainty in these situations could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability
to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition
and results of operations.
We are subject to risks related
to corporate social responsibility and the investor and regulatory focus
on environmental, social and governance, or ESG, activity.
Many factors affect our reputation and the value of our brand, including the perception
held by our customers, business partners, investors, other key stakeholders and the communities in which we operate, such as our social
responsibility, corporate governance and other company practices. As with other companies, we have faced, and will likely continue to
face, scrutiny related to our environmental, social and governance (“ESG”) activities, and our reputation, operations, access
to and cost of capital, and the value of our brand can be adversely affected if we fail to act responsibly in a number of areas, such
as diversity and inclusion, workplace conduct, sustainable environmental practices, human rights, philanthropy and support for local communities.
Certain market participants, including major institutional investors and capital providers,
use third-party benchmarks and scores to assess companies’ ESG profiles in making investment or voting decisions at shareholder
meetings. Unfavorable ESG ratings could lead to increased negative investor sentiment towards us, which could negatively impact our share
price as well as our access to and cost of capital. Any harm to our reputation could impact employee engagement and retention and the
willingness of customers and partners to do business with us, which could have an adverse effect on our business, results of operations
and cash flows. We believe that our reputation is critical to our role as a global leader in commerce enablement and cashless payments
and as a publicly traded company. While our management and directors are focused on the integrity of our business and behavior of our
board of directors, senior management, employees, other personnel and third-party suppliers and partners, we cannot assure that these
efforts will be successful in producing the desired responsible outcomes in all cases nor that they will be sufficient in meeting investor
demands in this area.
In addition, government authorities in various countries have adopted or proposed ESG
regulation, and we expect there will likely be increasing levels of regulation globally, disclosure-related and otherwise, with respect
to ESG matters. For example, the European Commission has established a number of sustainability-related due diligence, reporting and compliance
regimes, which we are subject to, including the Corporate Sustainability Reporting Directive. This directive will require disclosure of
detailed information on our social and environmental risks, impacts and sustainability performance when it comes into effect for us in
the coming years. We may in the future also be subject to climate-related disclosure laws adopted by the State of California, which are
currently subject to legal challenge. Such laws require companies with revenues in excess of certain thresholds that are doing business
in California to publicly disclose greenhouse gas emissions data and provide climate-related financial risk reports.
Our current and future ESG efforts may be costly and may not have the desired effect.
We currently engage multiple firms specializing in ESG matters to support our ESG efforts. Expectations around companies’
management of ESG matters continue to evolve rapidly, in many instances due to factors that are out of our control. Any actions we currently
take may subsequently be determined to be insufficient by various stakeholders, and we may be subject to investor or regulatory engagement
on our ESG initiatives. In addition, stakeholder expectations are not uniform, and opponents of various ESG-related matters have increasingly
resulted in a range of activism and legal and regulatory developments. For example, there is an increasing number of state-level anti-ESG
initiatives in the U.S. that may conflict with other regulatory requirements or our various stakeholders’ expectations. Moreover,
President Trump has issued an executive order directing federal agencies to take appropriate action to discourage private sector diversity,
equity and inclusion initiatives.
These and other changes in stakeholder expectations and regulations globally, whether
pro- or anti-ESG, many of which are not possible to predict, and navigating conflicting requirements, will likely lead to increased costs
as well as scrutiny that could heighten all of the risks identified in this risk factor and litigation risks.
11
Emerging markets are subject to greater risks
than more mature markets, including significant political, economic and legal risks.
We operate in several emerging markets, and plan to expand into additional emerging
markets in the future. Certain markets in which we operate or plan to operate have lower levels of economic, political or legal
stability, and tend to be more politically and economically volatile than the more established economies we serve in other countries,
which could add volatility to our future revenue and earnings.
Risks associated with operating in such markets include unexpected changes in regulatory
environments, uncertainty in enforcing contracts and intellectual property rights, challenges in obtaining legal redress, difficulties
in collecting accounts receivables, foreign exchange controls, as well as bribery and corruption risks, which can all lead to reputational
damage and impair our ability to win and retain contracts. Should one or more of these risks materialize, there could be a material adverse
effect on our business, results of operations and financial condition.
Our hardware-as-a-service offerings require substantial
capital expenditures on our part and entail additional risks to our business, financial condition and results of operations.
We have begun to offer a hardware-as-a-service subscription pricing model for our POS
devices in certain countries and plan to expand such pricing model to our offerings in other countries in the future. Hardware-as-a-service
offerings require significant additional up-front capital expenditure on our part compared to the sale of our POS devices. As we expand
such offerings, we may not have sufficient capital available on our balance sheet and may be required to finance such capital expenditures.
Hardware-as-a-service based revenue also exposes us to credit risk, as subscribers to this service may default on their payment obligations
to us. Expenses related to our hardware-as-a-service offerings are recovered by us over a longer period in comparison to the sale of our
POS devices, and we also bear the risk of malfunctioning hardware.
If our implementation of hardware-as-a-service subscription pricing model is not successful,
our results of operation and revenue could be adversely affected. In addition, customers who subscribe to our hardware-as-a-service offerings
may terminate such subscriptions under certain circumstances in accordance with our agreements with them, subject, in some instances,
to early termination fees. Accordingly, if demand for and satisfaction with hardware-as-a-service is not maintained, the overall stickiness
of our offerings as compared to the sale of our POS devices could be negatively impacted.
We offer, and may in the future expand the offering
of, certain embedded financial services through our platform, which exposes us to a variety of risks.
We have recently expanded our offerings to include embedded financial services allowing
merchants to manage and access funds through our platform. As part of this expansion, we are soon launching the “Yellow Account”,
which provides merchants with integrated deposit-accounts capabilities through a sponsor bank relationship with a third-party financial
institution. Yellow Account is first being launched in the United States, and we may expand this offering to additional markets in the
future. In addition, we offer hardware purchase financing, including installment payment arrangements, as well as hardware rental programs,
in certain jurisdictions, which we provide directly to our merchants. We may in the future offer additional embedded financial products,
including other credit-related products, either directly or through third-party financial partners, which we may offer across multiple
jurisdictions. These activities subject us to a variety of risks that are distinct from, and in some cases greater than, those associated
with our core payment processing and SaaS activities.
Our Yellow Account offering is dependent on our relationship with a third-party sponsor
bank, which holds merchant funds and provides the underlying infrastructure for this product. We do not hold merchant funds directly in
connection with Yellow Account. If our sponsor bank were to terminate, fail to renew, or materially modify the terms of our arrangement,
we may be unable to continue offering Yellow Account or may experience a significant disruption in service to our merchants. Transitioning
to an alternative sponsor bank or infrastructure could be time-consuming, costly and operationally complex, and there can be no assurance
that we would be able to secure a replacement arrangement on comparable or acceptable terms, or at all. In addition, our sponsor bank
is itself subject to regulatory requirements and oversight. Any regulatory action against, or operational failure by, our sponsor bank,
including with respect to the safeguarding and reconciliation of merchant funds, could disrupt our ability to offer Yellow Account, result
in the loss or unavailability of merchant funds, or expose us to merchant claims, regulatory scrutiny or reputational harm, even if such
issues are not caused by us. Moreover, negative events or adverse publicity involving our sponsor bank, including regulatory enforcement
actions, financial difficulties or data security incidents, could adversely affect merchant confidence in Yellow Account and in our platform
more broadly, regardless of our own performance or conduct.
12
The offering of embedded financial services subjects us to regulatory requirements that
may vary significantly across jurisdictions. Our Yellow Account offering and any future embedded financial products are or may be subject
to laws and regulations relating to anti-money laundering, counter-terrorist financing, sanctions compliance, know-your-customer obligations,
safeguarding of client funds, disclosure requirements, and other applicable regulatory frameworks. If we offer credit-related products
directly in the future, such activities may require us to obtain and maintain licenses or regulatory approvals in the applicable jurisdictions,
and to comply with additional regulatory regimes, including those relating to fair lending, interest rate restrictions, and capital or
liquidity thresholds. As we may offer these products across multiple jurisdictions, we face the additional complexity of navigating differing
and potentially conflicting regulatory frameworks. Failure to comply with applicable laws and regulations, or changes in their interpretation
or enforcement, could result in fines, penalties, restrictions on our activities, reputational harm, or the suspension or termination
of our financial services offerings.
Our hardware purchase financing and rental activities expose us to credit risk on our
balance sheet. Merchants that finance or rent hardware through us may be unable or unwilling to meet their payment obligations, particularly
during periods of macroeconomic uncertainty, rising interest rates, or industry-specific downturns affecting the sectors we serve. If
merchant defaults exceed our expectations, or if we fail to accurately price the credit risk associated with these arrangements, our results
of operations and financial condition could be materially adversely affected. If we offer additional credit-related products in the future,
either directly or through third-party financial partners, we would be exposed to further credit risk, as well as liquidity risk, interest
rate risk, and earnings volatility. Such activities may require us to commit significant capital, maintain regulatory capital, or secure
third-party funding arrangements, which could constrain our liquidity. If we are unable to access sufficient funding on acceptable terms,
or if market conditions limit the availability of capital, we may be forced to curtail such activities or bear higher funding costs, which
could adversely affect our margins and growth prospects.
The integration of financial services into our platform increases the complexity of
our operations and internal controls. We are enhancing, and expect to continue enhancing, our risk management, compliance, cybersecurity,
and fraud detection capabilities in connection with these offerings. If our systems, or those of our third-party partners, fail to effectively
manage these risks, including risks arising from data breaches or cyberattacks targeting sensitive financial information, we could incur
financial losses, regulatory scrutiny and reputational damage.
In addition, the offering of embedded financial services, including the Yellow Account
and any future products or services involving the management of merchant funds and cashflow, heightens the importance and sensitivity
of our customer support function. These services involve access to and movement of merchant funds, which may increase merchant expectations
regarding the timeliness, accuracy and effectiveness of our support. We rely on our customer support infrastructure, including third-party
service providers and, in certain cases, back-to-back support arrangements with our third-party sponsor bank. If we are unable to provide
responsive and knowledgeable assistance with respect to account access, funds availability, transaction disputes, reconciliation issues
or other financial inquiries—whether due to limitations in our resources, challenges in scaling our support operations, or delays
or deficiencies attributable to third parties—merchants may lose confidence in our services or platform. Because these offerings
represent a new category of financial service for us, we may initially encounter operational, training or coordination challenges in delivering
consistent, high-quality support at scale. Any failure, or perceived failure, to deliver the appropriate level of customer support could
result in complaints, negative publicity, reduced adoption of our services and products, merchant attrition and reputational harm, which
could materially adversely affect our business, financial condition and results of operations.
Moreover, our expansion into embedded financial services may not achieve the anticipated
benefits of higher platform adoption or improved monetization of our merchants. Merchants may be reluctant to adopt our financial products,
may prefer competing offerings from traditional financial institutions or fintech providers, or may perceive conflicts of interest in
consolidating payments, operations management, and financial services with a single provider. If adoption rates are lower than expected,
we may not realize a return on the investments made to develop and launch these offerings.
Any of the foregoing risks, individually or in the aggregate, could have a material
adverse effect on our business, financial condition, results of operations and prospects.
13
We are exposed to credit risk from trade receivables
and from financing or credit arrangements we extend to certain customers and partners.
We are exposed to credit risk in the ordinary course of our business, including from
trade receivables arising from the sale of our products and services. In addition, from time to time, we may lend money or otherwise extend
financing or credit arrangements to certain customers and partners in connection with our offerings. As of December 31, 2025, an aggregate
of approximately $7.3 million was outstanding under such loans.
These arrangements expose us to the risk that customers or partners may be unable or
unwilling to repay amounts owed to us in a timely manner or at all, whether due to liquidity constraints, financial distress, bankruptcy
or other factors. If such customers or partners were to delay payment or default on their obligations, or if our allowances for expected
credit losses prove inadequate, we may be required to record additional provisions or write-offs, which could adversely affect our results
of operations and financial condition.
Providing financing or extending credit may also increase our exposure to customer concentration
risk and require additional operational and administrative resources.
Risks Related to Data Security, Privacy, Information Technology and Intellectual Property
Information security failures or interruptions
of our or our third-party partners’ or service providers’ information technology systems could adversely affect our business,
financial condition and results of operations.
As a company that processes payments, information security failures and leaking of financial
data of our customers or their consumers, as well as passage of information between different territories in violation of privacy protection
laws, could harm our results and reputation. Sensitive credit provider information, personal information, personally identifiable information
and other financial data are transferred through our products and services, either through execution of transactions, or through remote
management services or other services we offer, including those that are consumer-facing.
The processing of the information we acquire in connection with our customers’
use of our services is subject to numerous privacy, data protection, cybersecurity and other laws, rules, regulations and standards in
a number of jurisdictions. Furthermore, we operate under strict information security standards and regulations and use advanced security
technologies in our efforts to comply with such laws, rules, regulations and standards, prevent data loss and protect the confidential,
proprietary and sensitive information to which we have access. In order to mitigate against failures, cybersecurity incidents, attacks
and other disruptions of our information technology systems, we strive to improve the security of our own servers, as well as the security
environment we provide to customers and third parties using our products. For example, we possess three on-premise environments (data
centers) for storing information, as well as dedicated cloud IT premises, mostly for customers in the Asia-Pacific region. In addition,
we have offline backup for information, as well as internal and external support teams which are active seven days a week for identification
of cyber-attacks, infiltration and exposure to other threat actors. Despite these measures, our efforts to protect such sensitive information
and the Company’s information technology systems are not always effective, which could disrupt our operations and adversely affect
our business.
The nature of our business and our reliance on digital technologies make us an attractive
and frequent target for, and vulnerable to, technological failures and exposure to cyber-attacks, fraud, computer viruses, social engineering
(including phishing and ransomware attacks), malware, password praying, credential stuffing, general hacking, physical or electronic break-ins
or similar disruptions. Breaches of our security systems, which may arise as a result of employee theft, exfiltration, misuse or malfeasance,
our actions, omissions or errors, third-party actions, omissions or errors, unintentional events or deliberate attacks by cyber criminals,
have in the past and may in the future result in the loss or vulnerability of, or unauthorized access to, our or our customers’
data, including personal data, our intellectual property or other confidential, proprietary or sensitive business information. The techniques
used to obtain unauthorized, improper or illegal access to our systems, our data, customer data or end-user data, disable or degrade service
or sabotage systems are constantly evolving and have become increasingly complex and sophisticated, may be difficult to detect quickly
and may not be recognized or detected until after they have been launched against a target. We and our service providers also face threats
from sophisticated nation-state and nation-state-supported actors who engage in attacks (including advanced persistent threat intrusions)
that add to the risks to our and their systems, internal networks and the information that we and they store and process.
Companies newly acquired by us may have different information security standards and
practices from us, making us potentially vulnerable to cybersecurity threats following such acquisitions during system integration. We
expect that a growing number of unauthorized parties will continue to attempt to gain access to our systems or facilities through various
means, including hacking into our systems or facilities or those of our customers, or attempting to fraudulently induce (for example,
through spear phishing attacks or social engineering) our employees, customers, partners, vendors or other users of our systems into disclosing
usernames, tax identifications, passwords, payment card information or other personal or sensitive information, which may in turn be used
to access our information technology systems. Despite our efforts, we cannot eliminate all risks from cybersecurity threats or incidents
or provide assurances that we have not experienced an undetected cybersecurity incident. Security breaches, incidents or other unauthorized
access to our platform could potentially impact our ability to engage with clearing entities, banks and credit companies, since under
the terms of our agreements with these entities, non-compliance with security requirements could lead to termination of the commercial
engagement. To the extent that any system failure or similar event results in harm or losses to customers using our platforms or their
data, customers could also seek monetary recourse or contractual remedies from us for their losses and such claims. Beyond the risks posed
to our reputation and financial position by loss of user financial data, personal data or other sensitive information, we could be exposed
to regulatory inquiries, time-consuming and expensive litigation, sanctions and fines.
14
Furthermore, regulators and many foreign, federal, state and local laws and regulations
require notice of certain data security breaches that involve personal information. Additionally, the SEC has adopted rules that require
us to publicly disclose information about material cybersecurity incidents, including their impact or reasonably likely impact. Disclosure
may be required before the incident has been resolved or fully investigated. These mandatory disclosures regarding a security breach are
costly to implement and often lead to widespread negative publicity, which may cause customers to lose confidence in the effectiveness
of our data security measures. Any security breach suffered by, or the occurrence of a cyber-threat to, us or our service providers, any
attack against our service availability, any unauthorized, accidental or unlawful access or loss of data, or the perception that any such
event has occurred, has the potential to result in a disruption to our service, litigation, an obligation to notify regulators and affected
individuals, the triggering of indemnification and other contractual obligations, regulatory investigations or inquiries, substantial
government fines and penalties, material reputational damage and loss of customers and ecosystem partners and a material adverse effect
on our business operations and financial conditions. In addition, we may incur significant costs and operational consequences in connection
with investigating, mitigating and remediating security incidents, including complying with any notification or other obligations resulting
from such incidents, as well as implementing prophylactic measures to prevent future actual or perceived security incidents. Our insurance
policies carry retention and coverage limits, which may not be adequate to reimburse us for losses caused by security breaches or other
cybersecurity incidents, and we may not be able to collect fully, if at all, under these insurance policies. The successful assertion
of one or more large legal claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies,
including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our business. Furthermore,
we cannot be certain that insurance coverage related to security breaches will continue to be available on acceptable terms or at all,
or that our insurer will not deny coverage as to any future claim. Any of the foregoing could have a material adverse effect on our business,
financial condition and results of operations.
Although we have continued to invest in our due diligence, onboarding and monitoring
capabilities over critical external parties with whom we do business, including our third-party vendors and service providers, our control
over the security posture of, and ability to monitor the cybersecurity practices of, such third parties remains limited, and there can
be no assurance that we can prevent, mitigate or remediate the risk of any compromise or failure in the cybersecurity infrastructure owned
or controlled by such third parties.
To the extent we use or are dependent on any particular third-party data, technology
or software, we may also be harmed if such data, technology or software becomes non-compliant with existing regulations or industry standards,
becomes subject to third-party claims of intellectual property infringement, misappropriation or other violation, or malfunctions or functions
in a way we did not anticipate. Any loss of the right to use any of this data, technology or software could result in delays in the provisioning
of our products and services until equivalent or replacement data, technology or software is either developed by us, or, if available,
obtained from a third party and integrated into our systems, and there is no guarantee that we would be successful in developing, obtaining
or integrating equivalent or similar data, technology or software, which could result in the loss or limiting of our products, services
or features available in our products or services. Any of the foregoing could have a material adverse effect on our business, financial
condition and results of operations.
For more information about our cybersecurity practices, please see “Item 16K.
Cybersecurity.”
15
Our business is subject to complex and evolving
regulations and oversight related to privacy and data protection.
We are subject to various laws, rules, directives and regulations, as well as contractual
obligations, relating to the collection, storing, sharing, use, disclosure, retention, disposition, security, protection, transfer and
other processing (“Processing”) of personal information and other data, including personally identifiable information of our
customers, their consumers and our employees. The regulatory framework for privacy and data protection worldwide is rapidly evolving and,
as a result, implementation standards and enforcement practices are likely to continue to evolve for the foreseeable future. Legislators
and regulators are increasingly adopting or revising privacy and data protection laws, rules, directives, and regulations that could have
a significant impact on our current and planned privacy and data protection-related practices, our Processing of consumer or employee
information, and our current or planned business activities.
In the United States, the Federal Trade Commission (“FTC”) and many state
attorneys general interpret federal and state consumer protection laws to impose standards for the online Processing of data. Such standards
require us to publish statements that describe how we handle personal data and choices individuals may have about the way we handle their
personal data. If such information that we publish is considered untrue, we may be subject to government claims of unfair or deceptive
trade practices, which could lead to significant liabilities and consequences. In addition, if we fail to take appropriate steps to keep
consumers’ personal data secure, such failure may also constitute unfair acts or practices under the Federal Trade Commission Act.
State consumer protection laws provide similar causes of action for unfair or deceptive practices.
Moreover, various federal and state legislative and regulatory bodies, or self-regulatory
organizations, may expand current laws or regulations, enact new laws or regulations or issue revised rules or guidance regarding data
privacy and security. For example, the State of California enacted the California Consumer Privacy Act, as amended by the California Privacy
Rights Act, as amended (collectively, the “CCPA”), which created new privacy rights for users residing in the state. The CCPA
broadly defines personal information and gives California residents expanded privacy rights and protections, such as affording them the
right to access and request deletion of their information and the right to opt out of certain sharing and sales of personal information
and provides a new cause of action for certain data breaches that result in the loss of personal information. This private right of action
is expected to increase the likelihood of, and risks associated with, data breach litigation and class actions. The law also prohibits
covered businesses from discriminating against California residents (for example, charging more for services) for exercising any of their
CCPA rights. It also creates a new California data protection agency specifically tasked to enforce the law, which could result in increased
regulatory scrutiny of businesses operating in California in the areas of data protection and security.
The enactment of the CCPA and other state privacy, data protection and cybersecurity
laws, rules and regulations has prompted a wave of similar legislative developments in other states and at the federal level, reflecting
a trend toward more stringent privacy legislation in the United States. There are also ongoing discussions in the U.S. Congress of a new
federal privacy and cybersecurity law to which we may become subject if it is enacted.
In addition, some laws require us to notify governmental authorities and/or affected
individuals of data breaches involving certain personal information or other unauthorized or inadvertent access to or disclosure of such
information. For example, laws in all 50 U.S. states may require businesses to provide notice to consumers whose personal information
has been disclosed as a result of a data breach or due to regulatory requirements. These laws are not consistent, and compliance in the
event of a widespread data breach may be difficult and costly. We also may be contractually required to notify our customers, consumers
or other counterparties of a security breach. Regardless of our contractual protections, any actual or perceived security breach or breach
of our contractual obligations could harm our reputation and brand, expose us to potential liability or require us to expend significant
resources on data security and in responding to any such actual or perceived breach.
We are also subject to other privacy and data protection laws, rules, regulations and
standards, including but not limited to the Children’s Online Privacy Protection Act, the Gramm-Leach-Bliley Act, the Controlling
the Assault of Non-Solicited Pornography and Marketing Act, the Personal Information Protection and Electronic Documents Act, the Telephone
Consumer Protection Act, the Payment Card Industry Data Security Standard, the Canadian Anti-Spam Law, and Section 30a of the Israeli
Telecommunications (Telecommunications and Broadcasts) Law. These laws and any other applicable state, federal, and international privacy
laws, may increase our compliance costs and potential liability.
16
Our operations abroad may also be subject to increased scrutiny or attention from data
protection authorities. The European Union’s (“EU”) General Data Protection Regulation (“GDPR”), which regulates
the gathering, Processing, protection, storage and transfer of personal data, applies directly to the activities of our subsidiaries that
are established in the European Union and indirectly to us and our non-EU subsidiaries to the extent that such entities process personal
data collected from EU data subjects through the offering of goods and services or monitoring of data subjects in the EU. The GDPR, which
became effective in May 2018, created new individual privacy rights and imposed worldwide obligations on companies Processing personal
data of EU users, which has created a greater compliance burden for us and other companies with European users, and subjects violators
to substantial monetary penalties. Fines for noncompliance with the GDPR are significant and can be up to the greater of €20 million
or 4% of annual global turnover. The GDPR requires data controllers to implement stringent operational requirements, including, for example,
transparent and expanded disclosure to data subjects about how their personal data is to be used, limitations on retention of information,
mandatory data breach notification requirements, and higher standards for demonstrating that they have obtained valid consent for certain
data Processing activities, and also to impose significant requirements and responsibilities on data Processing actions carried out by
data processors on their behalf. The GDPR also provides that EU member states may introduce further conditions, including limitations,
and make their own laws and regulations further limiting the Processing of ‘special categories of personal data,’ including
personal data related to health, biometric data used for unique identification purposes and genetic information, which could limit our
ability to collect, use and share EU data, and could cause our compliance costs to increase, ultimately having an adverse impact on our
business, and harm our business and financial condition.
Following the United Kingdom (“U.K.”)’s exit from the European Union,
known as Brexit, the U.K. implemented the U.K. General Data Protection Regulation (“U.K. GDPR”), which imposed substantially
the same obligations as the GDPR. However, the U.K. GDPR will not automatically incorporate changes made to the GDPR going forward (which
would need to be specifically incorporated by the U.K. government), which creates a risk of divergent parallel regimes and related uncertainty.
We also cannot predict how the U.K. GDPR and other U.K. privacy and cybersecurity laws, rules, or regulations may develop, including as
compared to the GDPR, nor can we predict the effects of divergent laws and related guidance. For example, the U.K.’s Data Use and
Access Act of 2025, which makes several modifications to the U.K. GDPR, reived Royal Assent in June 2025, and implementation began in
August 2025. Such modifications cause the U.K.’s data privacy law to deviate from the GDPR and that of the EU, and permit further
deviations in the form of regulatory guidance or secondary legislation. Fines for noncompliance with the U.K. GDPR are significant and
can be up to the greater of GBP 17.5 million or 4% of annual global turnover.
With respect to transfers of personal data from the European Economic Area (“EEA”),
on June 28, 2021, the European Commission issued an adequacy decision in respect of the U.K.’s data protection framework, enabling
data transfers from EU member states to the U.K. to continue without requiring organizations to put in place contractual or other measures
in order to lawfully transfer personal data between the territories. The decision was renewed on December19, 2025 and it is intended to
last until December 27, 2031, however, the European Commission may unilaterally revoke the adequacy decision at any point, and if this
occurs it could lead to additional costs and increase our overall risk exposure. in addition, recent legal developments in Europe have
created complexity and uncertainty regarding data transfers from the EEA to countries outside of the EEA in respect of which the European
Commission or other relevant regulatory body has not issued an adequacy decision. Furthermore, the U.K. similarly restricts transfers
of personal data to countries outside of the U.K. to countries such as the United States that the U.K. government does not consider to
provide an adequate level of personal data protection. While we currently rely on the standard contractual clauses promulgated and recently
substantially revised by the European Commission and the U.K.’s International Data Transfer Agreement (or the U.K.’s approved
international data transfer addendum to the European Union’s standard contractual clauses) for such transfers, on July 10, 2023,
the European Commission adopted an adequacy decision concluding that the United States ensures an adequate level of protection for personal
data transferred from the European Union to United States companies participating in the EU-U.S. Data Privacy Framework (followed on October
12, 2023 with the adoption of an adequacy decision in the U.K. for the U.K.-U.S. Data Bridge). However, the EU-U.S. Data Privacy Framework
(and the U.K.-U.S. Data Bridge) may be in flux as such new adequacy decision has been challenged, and is likely to face additional challenges,
including at the Court of Justice of the European Union.
An additional example of data privacy laws and regulations we may be subject to is the
Israeli Protection of Privacy Law, 5741-1981 (“PPL”), as amended, including Amendment 13 that came into force and the regulations
promulgated thereunder, including the Israeli Protection of Privacy (Data Protection) Regulations, 5777-2017. The PPL and the regulations
promulgated thereunder, as well as guidelines of the Israeli Privacy Protection Authority (the “PPA”), impose obligations
with respect to the manner personal data is processed, maintained, transferred, disclosed, accessed and secured. Failure to comply with
the PPL, its regulations and guidelines issued by the PPA may expose us to administrative fines, civil claims (including class actions)
and in certain cases criminal liability. The PPA may initiate administrative inspection proceedings, from time to time, without suspicion
of any particular breach of the PPL, as it has done in the past with respect to dozens of Israeli companies in various business sectors.
In addition, to the extent that any administrative supervision procedure is initiated by the PPA and reveals certain irregularities with
respect to our compliance with the PPL, in addition to our exposure to administrative fines, civil claims (including class actions) and
in certain cases criminal liability, we may also need to take certain remedial actions to rectify such irregularities, which may increase
our costs. Pending legislation in Israel may result in a change to the current enforcement measures and sanctions.
17
We publicly post policies and documentation regarding our practices concerning the Processing
of data. This publication of our privacy policy and other documentation that provide promises and assurances about privacy and security
is required by applicable law and can subject us to proceedings and actions brought by data protection authorities, government entities,
or others (including, potentially, in class action proceedings brought by individuals) if our policies are alleged to be deceptive, unfair,
or misrepresentative of our actual practices.
Although we endeavor to comply with our published policies and documentation, we may
at times fail to do so or be alleged to have failed to do so.
Any breach of privacy or data protection laws or regulations could result in significant
fines, regulatory investigations, reputational damage, orders to cease Processing data or to change our practices, enforcement notices
or assessment notices for a compulsory audit. We could also face civil privacy and data protection claims, including representative or
class action litigation, potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion
of internal resources, and reputational harm. Non-compliance could result in proceedings against us by governmental entities, consumers,
data subjects, or others. We may also experience difficulty retaining or obtaining new consumers in these jurisdictions due to the legal
requirements, compliance costs, potential risk exposure, and uncertainty for these entities, and we may experience significantly increased
liability with respect to these consumers pursuant to the terms set forth in our engagements with them.
Compliance with current or future privacy and data protection laws (including those
regarding security breach notification) affecting consumer and/or employee data to which we are subject could result in higher compliance
and technology costs and could restrict our ability to provide certain products and services (such as products or services that involve
us sharing information with third parties or storing personal or sensitive information), which could materially and adversely affect our
profitability and could reduce income from certain business initiatives. We have incurred, and may continue to incur, significant expenses
to comply with evolving privacy and security standards and protocols imposed by law, regulation, industry standards, shifting consumer
expectations, or contractual obligations. In particular, with laws and regulations such as the GDPR in the EU, the U.K. GDPR in the U.K.,
the PPL in Israel and the CCPA and other laws, rules, regulations and standards in the U.S. imposing new and relatively burdensome obligations,
and with substantial uncertainty over the interpretation and application of these and other laws and regulations, we may face challenges
in addressing their requirements and making necessary changes to our policies and practices, and we may incur significant costs and expenses
in an effort to do so. There is a risk that the interpretations and measures conducted by us in our efforts to comply with the applicable
privacy and data protection legislation may prove to be insufficient or incorrect. Any failure, real or perceived, by us to comply with
our privacy, data protection, or information security policies, changing consumer expectations, or with any evolving regulatory requirements,
industry standards, or contractual obligations could cause our customers to reduce their use of our products and services, disrupt our
supply chain or third-party vendor or developer partnerships, and materially and adversely affect our business. Privacy and data security
concerns, whether valid or not, may inhibit market adoption of our products and services, particularly in certain industries and jurisdictions.
If we are not able to quickly adjust to changing laws, regulations, and standards related to the internet, our business may be harmed.
Entering new markets with different legal regimes exposes us to a range of regulatory
and privacy risks. Non‑compliance with the privacy laws of such jurisdictions may lead to fines, investigations and unenforceable
contracts. In regions with evolving or fragmented privacy frameworks, there is additional uncertainty as to our ability to adapt to local
requirements which may differ materially from other privacy laws which are the basis of our current practices.
Operational failures, including within data
transfer, could harm our reputation, ability to retain customers and recruit new customers, as well as our business results.
The core of our activity is providing technological services. As a result, and in light
of the continuous, rapid development of the area of activity, as well as expansion of the services required by our customers, we are exposed
to operational risks, including risks to the stable, ongoing operation of our technological systems, data security and the durability
of our servers and data transfer infrastructure. These risks include technical malfunctions, overloads of system servers and cyber-attacks
that could lead to the failure or shutdown of our computer systems and servers. If a technical failure or an attack on our computer infrastructure
occurs and we are unable to restore our systems to proper functioning within a reasonable timeframe, our reputation and business results
may suffer. Additionally, real or perceived software errors, failures, bugs, defects or outages of our systems could materially and adversely
affect our business, results of operations, financial condition and future prospects.
18
Our systems rely on software that is highly technical and complex, and we depend on
the ability of such software to store, retrieve, manage and otherwise process immense amounts of data. As a result, undetected errors,
failures, bugs or defects may be present in such software or occur in such software in the future, especially when updates or new products
or services are released, and particularly to the extent such failures are not detected or remedied quickly. Our products and services
are designed to process complex transactions and deliver reports and other information related to those transactions, all at high volumes
and processing speeds. Since customers use our services for important aspects of their businesses, any errors, defects, disruptions in
services or other performance problems with our services could hurt our reputation and damage our customers’ businesses. For example,
if we approve a transaction incorrectly and the acquiring or issuing bank does not transfer the funds for any reason, we are liable to
our customers for the amount of the transaction. Software and system errors, or human error, could delay or inhibit settlement of payments,
result in over settlement, cause reporting errors or prevent us from collecting transaction fees, which could have a material adverse
effect on our business, financial condition and results of operations.
In addition, in order to compete as a significant player in the market for payment processing
and operations solutions for businesses, we must demonstrate technological flexibility and advanced technical capability. We operate in
an industry experiencing rapid technological change and frequent product introductions, including developments in payment card tokenization,
mobile payments, social commerce (i.e., e-commerce through social networks), authentication, virtual currencies, distributed ledger or
blockchain technologies, near field communication and other proximity or contactless payment methods, machine learning and AI.
We may not be able to make technological improvements as quickly as demanded by our
customers, or as provided by our competitors, which could harm our ability to meet market demands and maintain the innovativeness and
uniqueness of the services and products we offer. Developing and adapting to new technologies, together with expansion of our services
and an increase in our customer base, require us to continuously maintain and expand our existing technological capabilities, including
those for data transfer between the points of operation and relevant servers.
Operational failures, including regarding data transfer, could harm our reputation,
business results and our ability to retain customers and recruit new customers. Furthermore, as our business continues to grow, we will
need to invest additional resources to improve our operational infrastructure in order to maintain its performance level under a heavy
operational load. Any failure to do so effectively could harm our business.
Our services must integrate with a variety of
operating systems, software, hardware, web browsers and networks of third-party payments processors, banks and acquirers. If we are unable
to ensure that our services or hardware interoperate in real time with such operating systems, software, hardware, web browsers and networks,
our business may be materially and adversely affected.
We are dependent on the ability of our products and services to integrate with a variety
of operating systems, software, hardware and networks, as well as web browsers that we do not control. Any changes in these systems or
networks that degrade the functionality of our products and services, impose additional costs or requirements on us or give preferential
treatment to competitive services, including their own services, could materially and adversely affect usage of our products and services.
In the event that it is difficult for our customers to access and use our products and services, our business may be materially and adversely
affected. We also rely on bank platforms, acquirers, payment processors, last-mile payment service providers and others, including card
issuers and alternative payment methods, to process some of our transactions. If there are any issues with, or service interruptions in,
these bank platforms, users may be unable to have their transactions completed, which would seriously harm our business.
In addition, our solutions, including hardware and software, interoperate with mobile
networks offered by telecom operators and mobile devices developed by third parties. Changes in these networks or in the design of these
mobile devices may limit the interoperability of our solutions with such networks and devices and require modifications to our solutions.
If we are unable to ensure that our hardware continues to interoperate effectively with such networks and devices, or if doing so is costly,
our business may be materially and adversely affected.
Our business could suffer if we are unable to
obtain, maintain, protect, defend or enforce our intellectual property or other proprietary rights, or if others claim that we have infringed
upon, misappropriated or otherwise violated their intellectual property rights.
Our ability to obtain, maintain, protect, defend and enforce our existing intellectual
property and technological know-how is a matter of great importance. Continuing to lead in the provision of our services to customers
is partially dependent on our ability to protect the intellectual property upon which our products are based, as well as trade secrets.
We seek to protect our intellectual property, whether registered or unregistered, and other proprietary rights by relying on applicable
laws, rules and regulations, as well as contractual restrictions both with our employees in the development of new services and technologies
and when offering or procuring products and services, including through confidentiality agreements with our employees and third parties
with whom we conduct business.
19
Nonetheless, the steps we take to obtain, maintain, protect, defend and enforce our
intellectual property and other proprietary rights may be inadequate and, despite our efforts to protect these rights, unauthorized third
parties, including our competitors, may duplicate, mimic, reverse engineer, access, obtain or use the proprietary aspects of our technology,
processes, products or services without our permission. Our competitors and other third parties may also design around or independently
develop similar technology or otherwise duplicate or mimic our services or products such that we would not be able to successfully assert
our intellectual property or other proprietary rights against them. We cannot assure that any future patent, trademark or service mark
registrations will be issued for our pending or future applications or that any of our current or future patents, copyrights, trademarks,
or service marks (whether registered or unregistered) will be valid, enforceable, sufficiently broad in scope, provide adequate protection
of our intellectual property or other proprietary rights, or provide us with any competitive advantage. A failure to suitably protect
our technology could lead to increased competition from our competitors and even a loss of customers. Furthermore, competitors may reverse
engineer our technology and develop similar products and services. We also might not be able to detect unauthorized use of, or take appropriate
and timely steps to enforce, our intellectual property rights and technology. Additionally, our contractual arrangements may be breached
and our contractual arrangements and other steps we have taken to protect our intellectual property may not prevent third parties from
infringing or misappropriating our intellectual property or deter independent development of equivalent or superior intellectual property
rights by others. We cannot guarantee that we have entered into agreements containing obligations of confidentiality with each party that
has or may have had access to proprietary information, know-how or trade secrets owned or held by us. Protecting and/or enforcing our
intellectual property rights and other proprietary rights may be expensive, time-consuming and may require litigation for which outcomes
are inherently uncertain, such that we may not be successful. Also, we may not be able to discover or determine the extent of any unauthorized
use of our intellectual property or other proprietary rights. Defending a claim that a party illegally disclosed or misappropriated a
trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts within and outside
of the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained
or independently developed by a competitor or other third party, we would have no right to prevent them from using that technology or
information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor or other
third party, our competitive position would be materially and adversely harmed.
In addition, third parties have claimed and may from time to time claim that we infringed,
misappropriated or otherwise violated a patent, copyright, trademark or other intellectual property right belonging to them and we may
become subject to intellectual property disputes. Any such infringement claim, even one without merit, could result in the expenditure
of significant financial and managerial resources to defend against the claim. Moreover, a successful claim of intellectual property infringement,
misappropriation, dilution or other violation against us or a settlement is time-consuming and could also require us to pay substantial
amounts (including treble damages and attorneys’ fees if we are found to have willfully infringed intellectual property rights)
or obtain a license to continue to use the technology that is the subject of the claim, or otherwise restrict or prohibit our use of the
technology. We may also not be able to obtain a license to use satisfactory alternative technology that would allow us to continue selling
our products and services. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors and other
third parties access to the same technologies licensed to us. We cannot predict the outcome of lawsuits or other intellectual property
claims or disputes, and cannot ensure that the results of any such issues or actions will not have an adverse effect on our business,
financial condition or results of operations. Any intellectual property litigation to which we might become a party, or for which we are
required to provide indemnification, regardless of the merit of the claim or our defenses, may require us to do one or more of the following:
| • |
cease selling or using solutions or services that incorporate the intellectual property rights that we allegedly infringe, misappropriate,
dilute or violate; |
| • |
make payment of substantial royalty or license fees, lost profits or other damages; |
| • |
make substantial payments for legal fees, settlement payments or other costs or damages; |
| • |
discontinue some or all of the features, integrations and capabilities available through our solutions; |
| • |
indemnify our products’ users or third-party service providers; |
20
| • |
obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology; or |
| • |
redesign or rebrand our allegedly infringing solutions to avoid infringement, misappropriation, dilution or violation of third-party
intellectual property rights, which could be costly, time-consuming or impossible. |
Any of the foregoing could materially and adversely affect our business, prospects,
financial condition and results of operations.
Any settlement or adverse judgment may also require us to restrict or prohibit our use
of our intellectual property, expend significant resources to redesign our technology or products, or indemnify third parties. Furthermore,
even if intellectual property disputes do not result in litigation, the time and resources necessary to resolve them could have a material
adverse effect on our business, financial condition and results of operations. Moreover, there could be public announcements of the results
of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be
negative, it could have a substantial adverse effect on the price of our ordinary shares. We expect that the occurrence of infringement
claims is likely to grow as the market for our products and solutions grows. Accordingly, our exposure to royalties or damages resulting
from infringement claims could increase and this could further exhaust our financial and management resources.
For more information regarding our intellectual property portfolio as of the date of
this annual report, see “Item 4. Information on the Company—B. Business Overview— Intellectual Property.”
If we are unable to protect the confidentiality
of our trade secrets, our business and competitive position could be harmed.
Our success depends in large part on our proprietary information, including certain
processes, models, algorithms and other know-how developed over years of research and development. We rely on trade secrets, especially
in cases where we believe other forms of registered intellectual property protection may not be appropriate or obtainable. However, trade
secrets are difficult to protect. We seek to protect these trade secrets and other proprietary information, in part, by entering into
non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, collaborators, consultants,
advisors and other third parties.
However, we cannot guarantee that we have entered into such agreements with each party
that may have or has had access to our trade secrets or proprietary technology and processes. Further, despite these efforts, no assurance
can be given that these agreements will be effective in controlling access to and distribution of our products and proprietary information
as any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not
be able to obtain adequate remedies for such breaches.
Unauthorized parties may also attempt to copy or reverse engineer certain aspects of
our technologies that we consider proprietary. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how
and we would be unable to prevent them from doing so. Monitoring unauthorized uses and disclosures is difficult, and we do not know whether
the steps we have taken to protect our proprietary information will be effective.
We make use of open-source components in our
proprietary software, and any actual or alleged failure to comply with any licensing terms associated with such components could lead
to costly claims against us by others, possible litigation or force us to re-engineer or disclose our proprietary software.
We use open-source software, including open-source software obtained from AI applications,
in connection with our proprietary software and expect to continue to use such open-source software in the future. Some open-source licenses
require licensors to provide source code to licensees upon request, or prohibit licensors from charging a fee to licensees. While we try
to insulate our proprietary code from the effects of such open-source license provisions, we cannot guarantee these efforts will be successful.
Although we believe that we have complied with our obligations under the various applicable
licenses for open-source software, and we monitor our usage of such software, it is possible that we may not be aware of all instances
where open-source software has been incorporated into our proprietary software or used in connection with our solutions or our corresponding
obligations under open-source licenses. Accordingly, we may face claims from others claiming ownership of, or seeking to enforce the license
terms applicable to, such open-source software, including by demanding release of the open-source software, derivative works or our proprietary
source code that was developed or distributed with such software. These claims could also result in litigation, imposing costs on us for
legal hearings or requiring us to purchase a costly license or require us to devote additional research and development resources to change
our software. In addition, if the license terms for the open-source code change, we may be forced to re-engineer our software or incur
additional costs. We cannot guarantee that we have not incorporated open-source software into our proprietary software in a manner that
may subject our proprietary software to an open-source license that requires disclosure, to customers or the public, of the source code
to such proprietary software. Any such disclosure would have a negative effect on our business and the value of our proprietary software.
21
Furthermore, there are an increasing number of open-source software license types, almost
none of which have been interpreted by courts, resulting in a dearth of guidance regarding the proper legal interpretation of such licenses.
As a result, there is a risk that open-source software licenses could be construed in a manner that imposes unanticipated conditions or
restrictions on our ability to market or provide our products and services. If we are held to have breached or failed to fully comply
with all the terms and conditions of an open-source software license, we could face infringement claims or other liability, or be required
to seek costly licenses from third parties to continue providing our offerings on terms that are not economically feasible, if at all,
to re-engineer all or a portion of our products, to discontinue or delay the provision of our offerings if re-engineering could not be
accomplished on a timely basis or to make generally available, in source code form, our proprietary code.
In addition to risks related to license requirements, use of open-source software can
lead to greater risks than use of third-party commercial software, as open-source licensors generally do not provide warranties, controls
on the origin or development of the software or remedies against the licensors. Many of the risks associated with use of open-source software
cannot be eliminated and could have a material adverse effect on our business, financial condition and results of operations. For instance,
open-source software is often developed by different groups of programmers outside of our control that collaborate with each other on
projects. As a result, open-source software may have security vulnerabilities, defects or errors of which we are not aware. Even if we
become aware of any security vulnerabilities, defects or errors, it may take a significant amount of time or resources for either us or
the programmers who developed the open-source software to address such vulnerabilities, defects or errors, which could negatively impact
our products and services, including by adversely affecting the market’s perception of our products and services, impairing the
functionality of our products and services, delaying the launch of new products and services or resulting in the failure of our products
and services, any of which could result in liability to us, our vendors and service providers.
We rely in some cases on licenses to use the
intellectual property rights of third parties which are incorporated into our products, services and offerings.
We rely, and expect to continue to rely, on certain services and intellectual property
that we obtain or license from third parties for use in our operations, products and offerings. We cannot be certain that our suppliers
or licensors are not using or incorporating the intellectual property rights of others or that our suppliers and licensors have sufficient
rights to the third-party technology used in our business in all jurisdictions in which we may operate. Disputes with suppliers, licensors
or third parties over uses or terms could result in the payment of additional royalties or penalties by us, cancellation or non-renewal
of the underlying license or litigation, or changes in our supply chain. In the event that we cannot renew and/or expand existing licenses,
or obtain other necessary licenses on reasonable terms, we may be required to discontinue or limit our use of the operations, products
or offerings that include or incorporate the licensed intellectual property. Any such discontinuation or limitation could have a material
and adverse impact on our business, financial condition and results of operation.
Indemnity provisions in various agreements potentially
expose us to substantial liability for intellectual property infringement and other losses.
Our agreements with our customers, partners and other third parties may include indemnification
or other provisions under which we agree to indemnify or otherwise be liable to them for losses suffered or incurred as a result of claims
of intellectual property infringement, damages caused by us to property or persons or other liabilities relating to or arising from our
products, solutions or other acts or omissions. The term of these contractual provisions may survive termination or expiration of the
applicable agreement. Large indemnity payments or damage claims from contractual breach could harm our business, financial condition,
revenues, results of operations or cash flows.
Our use of artificial intelligence technology,
internally and in our offerings, may not be successful and may result in operational challenges, legal liability, reputational concerns
and privacy and competitive risks.
We currently use and intend to leverage third parties’ artificial intelligence
(“AI”) applications in several of our internal processes, and the products and services we sell. For example, we currently
utilize a platform that offers API integrations with Large Language Models like Open AI’s ChatGPT and Anthropic’s Claude.
These models are being trained on a replica of the Company’s database. The trained models are used as both internal and customer-facing
tools, enabling users to query the database using natural language. As this technology is becoming more prevalent, we expect to expand
our use of AI in various areas of our business. Our use of AI may result in operational challenges, legal liability, reputational concerns,
and privacy and competitive risks, which could result in adverse effects on our financial condition, results of operations, or reputation.
For example, the models underlying our AI-powered solutions may be incorrectly or inadequately designed or implemented. They may also
be trained on, or otherwise use, biased, incomplete, inaccurate, misleading, or poor-quality data or algorithms, any of which may not
be easily detectable. Further, the use of generative AI processes at scale is relatively new and may lead to challenges, concerns and
risks that are significant or that we may not be able to predict, especially if our use of such technologies in the development or delivery
of our products or services becomes more important to our operations over time. Generative AI has been known to, and may continue to,
create biased, incomplete, inaccurate, misleading, or poor-quality output or produce other discriminatory or unexpected results, errors,
or inadequacies, any of which may not be easily detectable. Accordingly, our use of AI-powered solutions may inadvertently reduce our
effectiveness and efficiency or generate unintentional or unexpected outputs (including any AI-generated content, analyses, or recommendations)
that are, or are perceived to be, biased, incomplete, inaccurate, misleading, poor-quality, unethical, or otherwise deficient or flawed,
do not match our business goals, standards, or values, do not comply with our policies or procedures, harm our brand and reputation, negatively
impact consumers or otherwise interfere with the performance of our business. Further, our competitors or other third parties may incorporate
AI into their business or operations more quickly or more successfully than us, which could impair our ability to compete effectively.
22
We may not have adequate rights to use the data on which our AI-powered solutions rely.
To the extent that we do not have sufficient rights to use the data used in, or produced by, the AI-powered solutions employed in our
business and operations, we may be subject to litigation by the owners of the content or other materials that comprise such data. Further,
any content or other output created by us using AI-powered solutions may not be subject to copyright protection, which may adversely affect
our ability to commercialize or use, or the validity or enforceability of any intellectual property rights in, such content or other output.
In addition, AI technology may present new vulnerabilities of our business to cyber threats, as they serve additional means and methods
to facilitate attacks by bad actors, that can easily access generative AI to create such threats. The use of AI by other companies has
resulted in, and our use of AI may in the future result in, cyber-attacks, cybersecurity breaches, service outages or other similar incidents,
including those that implicate the confidential and personal information of users of AI-powered solutions. If any of our employees, contractors,
third-party providers or other third parties with whom we partner input confidential or personal information while using any third-party
AI-powered solution in connection with our business or the products, solutions and services they provide to us, such practice may lead
to the inadvertent disclosure of such confidential or personal information, which may impact our ability to realize the benefit of, or
adequately obtain, maintain, protect, defend, and enforce our intellectual property in, such information or otherwise harm our competitive
position, reputation or business. Any of the foregoing could adversely affect our reputation and expose us to legal liability or regulatory
risks, including with respect to third-party intellectual property or privacy, publicity, contractual or other rights.
Regulation of AI is rapidly evolving worldwide as legislatures and regulators are increasingly
focusing on these emerging technologies. For example, the European Union’s Artificial Intelligence Act (the “AI Act”),
which entered into force on August 1, 2024, establishes, among other things, a risk-based governance framework for regulating AI systems
operating in the EU. This framework categorizes AI systems, based on the risks associated with such AI systems’ intended purposes.
The AI Act prohibits certain uses of AI systems and places numerous obligations on providers and deployers of permitted AI systems, with
heightened requirements based on AI systems that are considered high risk. New provisions of the EU AI Act took effect in August 2025
that may impact disclosure and risk management practices by us and third-party providers with whom we have commercial relationships. There
is a risk that our current or future AI-powered solutions may obligate us to comply with the applicable requirements of the AI Act, which
may impose additional costs on us, increase our risk of liability and fines or otherwise adversely affect our business, results of operations,
financial condition and future prospects.
Further, in the EU and the U.K., we are subject to the GDPR and the U.K. GDPR, respectively,
which regulate our use of personal data for automated decision-making that results in a legal or similarly significant effect on an individual,
and provides rights to individuals in respect of that automated decision-making. Recent case law from the Court of Justice of the European
Union has taken an expansive view of the scope of the GDPR’s requirements around automated decision-making and introduced uncertainty
in the interpretation of these rules. The legal obligations in this area may affect our use of AI (such as our use of generative AI in
customer support) and our ability to provide, improve or commercialize our solutions, products and services may require additional compliance
measures and changes to our operations and processes, and result in increased compliance costs and potential increases in civil claims
against us, any of which could adversely affect our business, results of operations, financial condition and future prospects.
It is possible that new laws and regulations will be adopted in the United States and
other jurisdictions, or that existing laws and regulations may be interpreted in ways that could affect our use and provision of AI in
our products, services, business and operations generally. We may not be able to adequately anticipate or respond to these evolving laws
and regulations, and we may need to expend additional resources to adjust our products, solutions and services in certain jurisdictions
if applicable legal frameworks are inconsistent across jurisdictions. The cost to comply with such laws or regulations could be significant
and may increase our operating expenses, and we could incur liability resulting from the violation of applicable laws and regulations
as well as contracts to which we are a party or civil claims.
23
Further, public and regulatory focus on ethical use and privacy and cybersecurity concerns
regarding AI could lead to reputational damage if we fail, or are perceived to fail, to align with societal expectations or regulatory
standards relating to the use of AI. Such scrutiny may result in financial or other penalties and may also erode customer trust, which
is crucial for our brand and long-term success. Although we have taken, and continue to take, steps designed to mitigate the risks associated
with the use of AI in our business and operations, including, among other things, engaging with regulatory bodies, investing in compliance
infrastructure, requiring human involvement in the training and monitoring of our AI-powered solutions, aligning our AI development policies
and procedures with guidelines for secure development practices, and fostering transparent and ethical use of AI in our products, solutions
and services, our use of AI may present ethical, reputational, technical, operational, legal, competitive and regulatory risks, any of
which could adversely affect our business, financial condition and results of operations. Furthermore, the technologies underlying AI
are complex and rapidly developing and, as a result, it is not possible to predict all of such risks related to our current or future
use of AI. We expect our use of AI will require additional resources, including the incurrence of additional costs, to develop and maintain
our products and services to minimize potentially harmful or unintended consequences, to comply with applicable and emerging laws and
regulations, to maintain or extend our competitive position, and to address any ethical, reputational, technical, operational, legal,
competitive or regulatory issues which may arise as a result of any of the foregoing.
Risks Related to Legal and Regulatory Matters
We are subject to substantial governmental and
commercial regulations across our areas of activity. Any failure to comply with applicable regulations or standards may lead to significant
regulatory consequences and could have an adverse effect on our business, financial condition or results of operations.
Our activity, particularly our payment processing offerings are subject to substantial
governmental regulations, which vary according to our different areas of activity. Our operations are also subject to commercial standards.
See “Item 4. Information on the Company—B. Business Overview—Regulation.”
For example, we provide services in more than 120 countries but only hold licenses,
registrations or other authorizations in a subset of these countries. We exercise our judgment as to whether our activities are subject
to licensing requirements or otherwise regulated in the countries in which we operate, and it is possible that regulators or other governmental
or judicial bodies in such countries may disagree with our determination as to whether we require a license, registration or other authorization
or as to the sufficiency of the scope of our licenses, registrations or other authorizations to cover our business activities. Financial
regulators across jurisdictions are increasingly focused on regulation of the payments industry, including with respect to the activities
of non-bank payment processors and intermediaries, and we may receive enquiries from regulators or third parties such as customers or
partners as to our licensing position in particular jurisdictions which may require us to engage with regulators or third parties on this
subject, and require investment of financial and managerial resources or amendments to our operations. In addition, tax administrations
in various jurisdictions in which we operate have increasingly sought to enhance their data collection and tax compliance related to payment
processing transactions by requiring electronic fiscal reporting by payment processing providers, which is referred to as fiscalization.
For example, regulators in Brazil and Romania have imposed fiscalization requirements that require us to provide almost instantaneous
reporting to tax administrations of certain of our payment processing activities. Due to the lack of uniformity in fiscalization requirements
from jurisdiction to jurisdiction, fiscalization adds complexity and associated risk to our regulatory compliance efforts. In addition,
we have a principle license with the ability to issue Mastercard in Europe, the U.K. and Israel. Our licenses impose on us a variety of
regulatory requirements in different jurisdictions, including ongoing compliance requirements, and expose us to risks applicable to credit
card issuers such as fraud. To the extent that we do not comply, or have not in the past complied, with applicable licensing or other
regulations and requirements, we could face regulatory enforcement action, including fines, penalties, suspension or revocations of licenses,
registrations or other authorizations, limitations on our products and services and other regulatory consequences, loss of business or
reputational damage which may be significant and could have an adverse effect on our business, financial condition or results of operations.
Further, the inability to obtain new licenses or other authorization in new jurisdictions into which we plan to expand our operations,
or the loss of any license or other authorization in jurisdictions in which we presently operate, could have an adverse effect on our
business, prospects, financial condition or results of operations. As we continue to expand our products offerings and our geographical
footprint, we may be exposed to regulations that are applicable to financial services related to the utilization of digital assets.
24
We are also subject to other forms of regulatory oversight, including oversight from
an antitrust and competition perspective related to mergers and acquisitions and other business activities. During 2023, the ICA requested
from us certain documents and other information related mainly to our acquisition of OTI. We cooperated fully and transparently with the
ICA throughout its investigative process, and, on February 3, 2025, we entered into the Consent Decree with the ICA to settle allegations
of anticompetitive practices and failing to obtain necessary ICA consent in connection with the acquisition. Pursuant to the Consent Decree,
we and Yair Nechmad, our CEO and Chairman, agreed to pay a sum of NIS 2,500,000 (approximately $701,000) and NIS 240,000 (approximately
$67,300), respectively, to the Israeli State Treasury, and we agreed to provide up to 6,500 OTI POS kits, comprised of the Telebox hardware
units paired with Uno 8/Uno Plus card readers, over a period of five years, to third parties who may sell, distribute, and market the
OTI POS kits under their own brands in the Israeli market. The Consent Decree was approved by the Israeli Competition Court on June 4,
2025. While we do not believe the terms of the settlement will have a significant adverse effect on our business, financial condition
or results of operations, it is possible that the ICA, or other antitrust and competition regulators in countries where we operate, will
initiate other unrelated regulatory enforcement actions in the future, which could require the expenditure of significant financial and
managerial resources to defend against and could lead to fines, penalties, limitations on our products and services and other regulatory
consequences, which may be significant and could have an adverse effect on our business, financial condition or results of operations.
In addition, changes in governmental or commercial regulations affecting our different
areas of activity require us to adapt our products in order to meet different requirements, including through the investment of financial
and managerial resources. Changes in the regulations or commercial standards applicable to our activity could substantially impact our
financial position and results.
Similarly, in certain countries, we rely on agreements with payment processing providers
that are licensed, registered or otherwise authorized to operate under applicable laws in order to be able to provide payment processing
services to our customers. There may be changes to regulations or provisions of law applicable to our engagements with these payment processing
entities that change the characteristics of, force us to engage with other payment processing entities or bring an end to these engagements
altogether, which could materially and adversely affect our business status, financial condition, and operating results. See “—Risks
Related to our Business and Industry—We rely on processing service providers, credit card networks, banks and other entities in
the payment transfer system to process payments, and if they fail or no longer agree to provide their services or we fail to comply with
our obligations under those relationships, our customer relationships could be adversely affected, and we could lose business.”
Additionally, we are licensed as an Electronic Money Institution (“EMI”)
in the EU in Lithuania. This authorization imposes significant ongoing compliance obligations and costs on us. In particular, EMIs are
subject to detailed rules on how electronic money is issued to customers, how customer funds must be safeguarded and how electronic money
may be redeemed. We are required to ensure funds received from customers for electronic money are either held in a segregated account
with an authorized credit institution, invested in secure, liquid assets or covered by an insurance policy or comparable guarantee. We
are also required to satisfy regulatory capital requirements. Specifically, EMIs must at all times hold initial capital of at least EUR
350,000. There is also an ongoing capital requirement which is calculated as a percentage of the average outstanding amount of issued
electronic money. Capital is required to be held as a buffer, absorbing both unexpected losses that arise while the business is a going
concern as well as the first losses if it is wound up. In addition to safeguarding of customers’ funds and regulatory capital requirements,
EMIs must maintain detailed internal compliance policies and procedures that address, among other things, customer complaints handling,
anti-money laundering and financial crime controls, customer due diligence, transaction monitoring, anti-bribery and corruption and compliance
with applicable sanctions. EMIs are also required to regularly submit returns to regulatory authorities and make period and event-driven
notifications. Senior managers and other key personnel within the EMI are also required to be approved by the relevant regulator to meet
specific standards of competence, integrity and reliability, and must continue to meet the applicable regulatory standards in this regard
or risk not being approved or having their approval withdrawn. EMIs are also subject to prescriptive disclosure, conduct of business,
safeguarding and additional capital requirements when they provide payment services unrelated to the issue of electronic money, which
we must also comply with given the nature of our business. These are in addition to the general legal obligations that apply to the group
by virtue of conducting business in the EU and U.K., such as compliance with relevant data protection laws (e.g., the GDPR and U.K. GDPR).
On June 26, 2023, we received our U.K. EMI License from the FCA, which became effective in January 2024. This license imposes substantially
similar ongoing regulatory requirements on the relevant U.K. subsidiary that holds the license. In Israel, we received a license to provide
financial asset services as well as a license to provide credit from the Capital Market, Insurance and Savings Authority in Israel (the
“CMISA”) pursuant to the Supervision Law, and an extended license to provide financial asset services and a basic license
to provide credit services in accordance with the Supervision Law. The Supervision Law sets forth a comprehensive regulatory framework
for the provision of certain financial services and credit in Israel, and provides limitations on managing businesses engaged in such
activities. In August 2025, we submitted an application to the Israel Securities Authority (the “ISA”) for a Payment Service
Provider license, as required under the Regulation of Payment and Payment Initiation Services Law, 2023 (“RPSL”), which on
June 6, 2024 became the regulatory framework for the supervision and licensing of non-banking payment services providers in Israel. For
a description of these and additional regulatory requirements applicable to us, see “Business—Regulation—Payment Processing
Regulation.” These and other ongoing compliance requirements may have a material impact on our financial condition and the allocation
of human resources within the Company.
25
Failure to comply with anti-bribery, anti-corruption,
anti-money laundering laws, and similar laws, could subject us to penalties and other adverse consequences.
We are subject to anti-corruption, anti-bribery, anti-money laundering and other similar
laws, including but not limited to the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the U.K. Bribery
Act 2010, (the “Bribery Act”), Chapter 9 (sub-chapter 5) of the Israeli Penal Law, 5737-1977, the Israeli Prohibition on Money
Laundering Law, 5760-2000, the Republic of Lithuania’s Law on Prevention of Terrorism Financing and Money Laundering, the U.S. Bank
Secrecy Act of 1970, as amended by the USA PATRIOT Act and the Anti-Money Laundering Act of 2020, the U.K. Money Laundering, Terrorist
Financing and Transfer of Funds (Information on the Payer) Regulations 2017, as amended by the Money Laundering and Terrorist Financing
(Amendment) Regulations 2019, the Terrorism Act 2000, the Counter-Terrorism Act 2008 and other anti-corruption, anti-bribery, and anti-money
laundering laws in countries in which we, or third parties acting on our behalf, conduct activities. Anti-corruption and anti-bribery
laws generally prohibit companies and their officers, directors, employees and business partners, including agents and other third parties
acting on the company’s behalf, from promising, authorizing, making, offering, or providing anything of value to a “foreign
official” for the purposes of influencing official decisions or obtaining or retaining business, or otherwise obtaining favorable
treatment. The FCPA further requires us to keep and maintain books and records that accurately reflect transactions and dispositions of
assets and to maintain a system of internal accounting controls. The Bribery Act also prohibits “commercial” bribery not involving
government officials, the receipt of bribes, and requires companies to implement adequate procedures to prevent bribery.
We currently do business with government entities around the world and these interactions
expose us to potential risks under anti-corruption and anti-bribery laws. As we increase our international sales and business, our risks
under these laws may increase. In addition, we use third parties to sell access to our products and services abroad. These third-party
intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated
entities, and we can be held liable for the corrupt or other illegal activities of such third-party intermediaries, and our employees,
representatives, contractors, partners and agents, even if we do not explicitly authorize such activities.
Pursuant to relevant anti-money laundering laws in the jurisdictions in which we operate
or pursuant to our agreements with payment processing providers, we engage in standard “know-your-customer” diligence prior
to initiating payments to new customers, which includes screening customers against applicable sanction lists, and we partner with third-party
service providers to assist with this diligence exercise. Such anti-money laundering laws also require ongoing monitoring of transaction
flows through our platform. If we or our service providers decide to terminate our agreement, we would need to find new providers to provide
similar services. If we are unable to find alternate providers or if we are unable to sign new agreements or maintain our current relationships,
our internal controls and compliance systems may be harmed, which may harm our business and results of operations.
In addition to diligence prior to initiating a customer relationship, we are required
by applicable anti-money laundering laws or our agreements with payment processing providers to carry out ongoing monitoring of our customer
relationships and customer transactions, assess money laundering risks posed to our business by individual customers and apply enhanced
due diligence measures as appropriate and to report suspicions of money laundering both internally and to external authorities. Failure
to comply with our obligations under applicable anti-money laundering laws could result in our licenses, registrations and authorizations
being suspended or revoked, financial sanctions, reputational damage and criminal penalties.
26
We cannot provide assurance that our internal controls and compliance systems will always
prevent acts committed by employees, agents, or business partners of ours, or of businesses we acquire or partner with, that would violate
U.S. and/or non-U.S. laws, including the money-laundering laws governing payments to government officials, bribery, fraud, kickbacks and
other related laws. Noncompliance with these laws could subject us to investigations, sanctions, settlements, prosecution, other enforcement
actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, adverse media coverage,
and other consequences. Any investigations, actions or sanctions could harm our business, results of operations, reputation and financial
condition.
Failure to comply with global economic and trade
sanctions laws and regulations may expose us to reputational harm as well as significant penalties.
Our global operations expose us to risks under economic and trade sanctions laws and
regulations. Our business must be conducted in compliance with applicable economic and trade sanctions laws and regulations, such as those
administered and/or enforced, inter alia, by the Israel Ministry of Finance or Ministry of
Defense, as well as by the U.S. Department of the Treasury’s Office of Foreign Assets Control, the U.S. Department of State, the
U.S. Department of Commerce, the European Union, the United Nations Security Council, and other relevant government authorities. These
laws and regulations generally prohibit the sale of products or provision of services to countries, governments, and persons targeted
by sanctions. A failure to comply with these laws and regulations may expose us to reputational harm as well as significant penalties,
including investigations, arrangements, fines, prosecution, enforcement actions, criminal and civil punishment etc. Despite our compliance
efforts and activities, we cannot assure compliance by our customers, employees, or anyone acting on our behalf, and therefore such liability
may be imposed on us. Any such non-compliance or violation may significantly harm our business, reputation, and financial condition.
We may be subject to legal proceedings in the
ordinary course of our business. If the outcomes of these proceedings are adverse to us, it could have an adverse effect on our business.
We are subject to various litigation matters from time to time, the outcomes of which
could harm our business. Claims arising out of actual or alleged violations of law or contractual obligations could be asserted against
us by individuals, either individually or through class actions, by governmental entities in civil or criminal investigations and proceedings
or by other entities. These claims could be asserted under a variety of laws, including but not limited to, intellectual property laws,
privacy and data protection laws, labor and employment laws, securities laws and employee benefit laws. These actions could expose us
to adverse publicity and to substantial monetary damages and legal defense costs, injunctive relief and criminal and civil fines and penalties,
including but not limited to, suspension or revocation of licenses to conduct business. Furthermore, defending ourselves against these
claims may require us to expend substantial financial resources and divert management’s attention, which could adversely impact
our business, results of operations and financial condition. See “Item 4. Information on the Company—B. Business Overview—Legal
Proceedings.”
Risks Related to our Ordinary Shares
We are controlled by our founding shareholders,
who may make decisions with which other shareholders may disagree.
As of December 31, 2025, our founding and controlling shareholders Amir Nechmad, Yair
Nechmad and David Ben-Avi beneficially owned approximately 58.34% of our outstanding ordinary shares. They have also entered into a shareholders’
agreement regarding nomination rights to our board of directors, voting their shares at a general meeting of shareholders and other matters.
See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Shareholders’ Agreement”
for more information. The interests of our founders may differ from your interests. These shareholders will be able to exert significant
influence over us and, if acting together, will be able to control matters requiring shareholder approval, including the election of directors,
amendments to our articles of association and approval of significant corporate transactions, including a merger and the issuance of equity
interests in certain circumstances. In addition, this concentration of ownership may delay, prevent or deter a change in control, or deprive
you of a possible premium for your ordinary shares as part of a sale of our Company. Our founders could also sell their stake and transfer
control to another party without your consent.
27
The market price of our ordinary shares is subject
to fluctuation, which could result in substantial losses for our investors.
The stock market in general, and the market price of our ordinary shares in particular,
is subject to fluctuation, and changes in our share price may be unrelated to our operating performance. The market price of our ordinary
shares on Nasdaq and the TASE has fluctuated in the past, and we expect it will continue to do so. The market price of our ordinary shares
is and will be subject to a number of factors, including:
| • |
actual or anticipated changes or fluctuations in our and our competitors’ results of operations; |
| • |
the guidance we may provide to analysts and investors from time to time, and any changes in, or our failure to perform in line with,
such guidance; |
| • |
announcements by us or our competitors of new offerings or new or terminated contracts, commercial relationships or capital commitments;
|
| • |
industry or financial analyst or investor reaction to our press releases, other public announcements, and filings with the U.S. Securities
and Exchange Commission (the “SEC”); |
| • |
rumors and market speculation involving us or other companies in our industry; |
| • |
future sales or expected future sales of our ordinary shares; |
| • |
investor perceptions of us and the industries in which we operate; |
| • |
price and volume fluctuations in the overall stock market from time to time; |
| • |
our shares generally trade at low volumes, which may increase the volatility of our share price; |
| • |
changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in
particular; |
| • |
failure of industry or financial analysts to maintain coverage of us, the issuance of new or updated reports or recommendations by
any analysts who follow our company, or our failure to meet the expectations of investors; |
| • |
actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;
|
| • |
litigation involving us, other companies in our industry or both, or investigations or sanctions by regulators regarding our operations
or those of our competitors; |
| • |
developments or disputes concerning our intellectual property or other proprietary rights or our solutions, or third-party intellectual
or other proprietary rights; |
| • |
announced or completed acquisitions of businesses or technologies, or other strategic transactions by us or our competitors;
|
| • |
actual or perceived breaches of, or failures relating to, privacy, data protection or data security; |
| • |
new laws or regulations, including new interpretations of existing laws or regulations applicable to our business, increased enforcement
efforts in our industry, or specific enforcement actions against us; |
| • |
actual or anticipated changes in our management or our board of directors; |
| • |
general economic conditions and slow or negative growth of our target markets; and |
| • |
other events or factors, including those resulting from regional and global conflicts such as the current conflict in Ukraine and
the ongoing instable security situation in Israel, incidents of terrorism or responses to these events. |
Furthermore, the stock market has experienced extreme volatility that in some cases
has been unrelated or disproportionate to the operating performance of particular companies. These and other factors may cause the market
price and demand for our ordinary shares to fluctuate substantially, which may limit or prevent investors from readily selling their shares
and may otherwise negatively affect the liquidity of our ordinary shares. In addition, in the past, when the market price of a company’s
shares has been volatile, holders of those shares have sometimes instituted securities class action litigation against the company that
issued the shares. If any of our shareholders were to bring a lawsuit against us, we could incur substantial costs defending the lawsuit.
Such a lawsuit could also divert the time and attention of our management from our business.
28
We have experienced, and expect to continue
to experience, quarterly fluctuations in our results of operations.
Our results of operations have fluctuated from quarter to quarter in the past and may
continue to vary significantly in the future so that period-to-period comparisons of our results of operations may not be meaningful.
Our quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of our control and may be
difficult to predict. Accordingly, our financial results in any one quarter should not be relied upon as indicative of future performance.
Factors that may cause fluctuations in our quarterly financial results include, but are not limited to:
| • |
the level of demand for our integrated POS devices; |
| • |
our ability to grow or maintain our retention rates, expand usage within our customer base, and sell our solutions to existing and
future customers; |
| • |
geopolitical uncertainty, including as a result of the current conflict in Ukraine, the ongoing instable security situation in Israel,
tensions between U.S. and China, and uncertainty as to regional economic conditions; |
| • |
costs and timing of expenses related to hiring additional personnel, technologies or intellectual property, including potentially
significant amortization costs and possible write-downs; |
| • |
the impact of market volatility and economic downturns caused by natural disasters and health epidemics, such as the COVID-19 pandemic;
|
| • |
supply chain constraints and increases in component prices; |
| • |
the timing and success of new features, integrations, capabilities and enhancements by us to our platform or by our competitors to
their products or any other change in the competitive landscape of our market; |
| • |
errors in our forecasting of the demand for our products, which could lead to lower revenue, increased costs or both; |
| • |
the amount and timing of operating expenses and capital expenditures that we may incur to maintain and expand our business and operations
and to remain competitive; |
| • |
security breaches, technical difficulties, disruptions or outages on our platform resulting in service level agreement credits;
|
| • |
changes in the legislative or regulatory environment; |
| • |
legal and regulatory compliance costs in new and existing markets; |
| • |
pricing pressure as a result of competition or otherwise; and |
| • |
fluctuations in foreign currency exchange rates. |
You may be diluted by the future public issuance
of additional ordinary shares or by grants of options or RSUs in connection with our equity incentive plans, acquisitions or otherwise.
As of December 31, 2025, we had registered share capital of 70,000,000 ordinary shares
with 37,301,367 ordinary shares outstanding. We may choose in the future to adopt new equity based compensation plans for our officers,
directors and employees or may choose to raise substantial equity capital from investors for a variety of reasons, including for the acquisition
of new businesses, to invest in new products and technologies or to meet other working capital or corporate requirements. For example,
in March 2024, we completed an underwritten public offering that included our issuance and sale of 2,600,000 ordinary shares. Consideration
for the April 2024 acquisition of VMT included an earn-out in the amount of up to approximately $5.3 million payable primarily in our
ordinary shares and consideration for the April 2024 acquisition of Roseman Engineering included 19,722 of our ordinary shares. On March
10, 2025, we completed an offering of, among others, 1,458,873 Series 1 Warrants, and on December 10, 2025 we completed an additional
offering, by way of expansion, of 1,555,143 Series 1 Warrants. Each Series 1 Warrant is exercisable into one Ordinary Share of the Company,
at an exercise price of NIS 177.80 (paid in cash), which is subject to adjustments to changes in the NIS-to-USD exchange rate, and will
expire on March 31, 2027. Any future issuance of any additional ordinary shares or securities that are exercisable for or convertible
into our ordinary shares will have a dilutive effect on our shareholders by reducing the percentage ownership of our then-existing shareholders,
and these new securities may have rights, preferences or privileges senior to those of our existing securities. In addition, as of December
31, 2025, options to purchase 1,463,215 million of our ordinary shares were outstanding as well as 498,172 RSUs. See “Item 6. Directors,
Senior Management and Employees—B. Compensation—Share Option Plans.” Any additional options or RSUs that we grant under
our equity incentive plans would dilute the percentage ownership held by current shareholders.
29
If our existing shareholders sell ordinary shares,
the market price of our ordinary shares could decline.
The sale of substantial amounts of our ordinary shares in the public market, or the
perception that such sales could occur, could harm the prevailing market price of our ordinary shares on Nasdaq or the TASE. These sales,
or the perception that these sales could occur, also might make it more difficult for us to sell equity securities in the future at a
time and at a price that we deem appropriate. All of our outstanding shares are freely tradable without restriction or further registration
under the Securities Act of 1933, as amended (the “Securities Act”), except that any shares held by our affiliates may be
sold only in transactions registered under the Securities Act or in compliance with Rule 144 or another applicable exemption under the
Securities Act.
In March 2024, we completed an underwritten public offering that included, in part,
the offer and sale of a total of 1,000,000 ordinary shares held by Yair Nechmad, our Chief Executive Officer and Chairman of our board
of directors, David Ben-Avi, our Chief Technology Officer and a member of our board of directors, and Amir Nechmad, a former member of
our board of directors. Such selling shareholders have made from time to time additional sales of shares and may continue to do so in
the future, and they will receive the proceeds from such sales. We have also filed a registration statement on Form S-8 under the Securities
Act to register our ordinary shares or securities convertible into or exchangeable for our ordinary shares issued pursuant to our equity
incentive plans. The ordinary shares registered under the Form S-8, or any registration statements on Form S-8 that we file in the future,
will be available for sale in the open market subject to vesting arrangements and exercise of options and, in the case of our affiliates,
subject to compliance with applicable requirements of Rule 144 or another applicable exemption under the Securities Act.
As any applicable restrictions on resale end, the market price of our ordinary shares
could drop significantly if our affiliates sell their shares or are perceived by the market as intending to sell them. These factors could
also make it more difficult for us to raise additional funds through future offerings of our ordinary shares or other securities.
We do not anticipate paying dividends on our
ordinary shares in the foreseeable future. As a result, your ability to achieve a return on your investment will depend on appreciation
in the price of our ordinary shares.
We have never declared or paid any cash dividends on our ordinary shares and do not
anticipate paying any cash dividends on our ordinary shares in the foreseeable future. We anticipate that we will retain all of our available
funds and any future earnings for use in the operation and expansion of our business and the repayment of outstanding debt. Any future
determination as to the payment of cash dividends will be at the discretion of our board of directors and will depend on, among other
things, our business prospects, financial condition, results of operations, current and anticipated cash needs and availability, industry
trends and other factors that our board of directors may consider to be relevant. In addition, Israeli law imposes restrictions on our
ability to declare and pay dividends. Our ability to pay cash dividends on our ordinary shares in the future may also be limited by the
terms of any preferred securities we may issue or financial and other covenants in any instruments or agreements governing any additional
indebtedness we may incur in the future. Consequently, investors who purchase ordinary shares may be unable to realize a return on their
investment except by selling such shares after price appreciation, which may never occur. Our inability or decision not to pay dividends,
particularly when others in our industry have elected to do so, could also adversely affect the market price of our ordinary shares.
Our ordinary shares trade on different markets
and this may result in price variations.
Our ordinary shares have traded on the TASE since May 2021 and on Nasdaq since September
2022. Trading in our ordinary shares on these markets is conducted in different currencies (NIS on the TASE and U.S. dollars on Nasdaq)
and takes place at different times (resulting from different time zones and different public holidays in Israel and the United States).
The trading prices of our ordinary shares on these two markets may differ due to these and other factors. Any decrease in the price of
our ordinary shares on one of these markets could cause a decrease in the trading price of our ordinary shares on the other market. In
addition, market conditions in either market may affect the price of our ordinary shares on the other. Investors could seek to sell or
buy our ordinary shares to take advantage of any price differences between the markets through a practice referred to as arbitrage. Any
arbitrage activity could create unexpected volatility in the trading price of our ordinary shares.
30
Our management has devoted, and continues to
devote, substantial time to new compliance initiatives as well as to compliance with ongoing U.S. and Israeli reporting requirements.
As a public company in the United States, we have incurred and will continue to incur
additional significant accounting, legal and other expenses that we were not subject to before the listing of our ordinary shares on Nasdaq
in September 2022, including costs associated with complying with the requirements under Section 404 and other provisions of the U.S.
Sarbanes-Oxley Act of 2022 (the “Sarbanes-Oxley Act”). We expect these rules and regulations to increase our legal and financial
compliance costs and to make some activities more time consuming and costly. The implementation and testing of new compliance processes
and systems may require us to hire outside consultants and incur other significant costs. In addition, any future changes in the laws
and regulations affecting public companies in the United States and Israel, including Section 404 and other provisions of the Sarbanes-Oxley
Act, the rules and regulations adopted by the SEC and Nasdaq, such as new Section 16 reporting obligations for our directors and officers,
as well as applicable Israeli reporting requirements, could result in increased costs to us as we respond to such changes.
If we fail to maintain an effective system of
disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or
comply with applicable regulations could be impaired.
The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure
controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls
and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with
the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that information
required to be disclosed in reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is accumulated
and communicated to our principal executive and financial officers. We are also continuing to improve our internal control over financial
reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial
reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs
and significant management oversight, as well as outside consultants. If any of these controls and systems do not perform as expected,
we may experience material weaknesses in our controls.
In addition to our results determined in accordance with IFRS, we believe certain non-IFRS
financial measures and key operating and financial metrics may be useful in evaluating our operating performance. We present certain non-IFRS
financial measures and key operating and financial metrics in this annual report and intend to continue to present certain non-IFRS financial
measures and key operating and financial metrics in future filings with the SEC and other public statements. Any failure to accurately
report and present our non-IFRS financial measures and key operating and financial metrics could cause investors to lose confidence in
our reported financial and other information, which would likely have a negative effect on the trading price of our ordinary shares.
Our current controls and any new controls that we develop may become inadequate because
of changes in conditions in our business, as a result of our growth and expansion, changes to or additions of new products or otherwise.
Further, material weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future.
Any failure to develop or maintain effective controls could cause us to fail to meet our reporting obligations and may result in a restatement
of our consolidated financial statements for prior periods. Any failure to implement and maintain effective internal control over financial
reporting also could adversely affect the results of periodic management evaluations that we are required to include in our annual reports
that we file with the SEC as well as annual independent registered public accounting firm attestation reports regarding the effectiveness
of our internal control over financial reporting that we are required to include in our annual reports. Ineffective disclosure controls
and procedures and internal control over financial reporting could cause investors to lose confidence in our reported financial and other
information and we could become subject to investigations by the SEC or other regulatory authorities, which could have a material negative
effect on the trading price of our ordinary shares. In addition, if we are unable to continue to meet these requirements, our ordinary
shares may not be able to remain listed on Nasdaq.
We are required to furnish a report by management on, among other things, the effectiveness
of our internal control over financial reporting pursuant to Section 404(a) of the Sarbanes-Oxley Act in our annual reports. This assessment
must include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. The
rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex
and require significant documentation, testing and possible remediation. Testing and maintaining internal controls may divert our management’s
attention from other matters that are important to our business. Despite our efforts, there is a risk that we will not be able to conclude
that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses,
it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
Additionally, since we are no longer an “emerging growth company,” our independent registered public accounting firm is required
to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley
Act and our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the
level at which our internal control over financial reporting is documented, designed or operating.
31
Any failure to maintain effective disclosure controls and internal control over financial
reporting could adversely affect our business, financial condition and results of operations and could cause a decline in the price of
our ordinary shares.
As a foreign private issuer, we are permitted
to follow certain home country corporate governance practices instead of applicable SEC and Nasdaq requirements, which may result in less
protection than is afforded to investors under rules applicable to domestic issuers.
As a foreign private issuer, we are permitted to follow certain home country corporate
governance practices instead of those otherwise required by Nasdaq for domestic issuers. For instance, instead of Nasdaq rules applicable
to domestic issuers, we follow home country practices in Israel with respect to nominating directors to our board of directors and quorum
requirements for general meetings of shareholders. In addition, we follow our home country law, instead of Nasdaq rules applicable to
domestic issuers, which would require that we obtain shareholder approval for certain dilutive events, such as an issuance that will result
in a change of control of our Company, certain transactions other than a public offering involving issuances of a 20% or more interest
in our Company and certain acquisitions of the stock or assets of another company. Following our home country corporate governance practices
as opposed to the requirements that would otherwise apply to a U.S. company listed on Nasdaq may provide less protection than is afforded
to investors under Nasdaq rules applicable to domestic issuers. See “Item 16G. Corporate Governance” for further information.
In addition, as a foreign private issuer, we are exempt from the rules and regulations
under the Exchange Act related to the furnishing and content of proxy statements and the requirements of Regulation FD. In addition, we
are not required under the Exchange Act to file annual, quarterly and current reports and financial statements with the SEC as frequently
or as promptly as domestic companies whose securities are registered under the Exchange Act.
On June 4, 2025, the SEC published a concept release soliciting public comments on potential
changes to the definition of a foreign private issuer. This release is the first review of the foreign private issuer framework since
2008, and the SEC is considering revisions that could significantly impact which foreign companies qualify for the more-relaxed U.S. reporting
requirements available to foreign private issuers. Commencing on March 18, 2026, the disclosure requirements of Section 16(a) of the Exchange
Act will be extended also to foreign private issuers, and as a result our directors and executive officers will be required to publicly
disclose their equity holding and transactions involving our securities with the SEC. If we lose our status as a foreign private issuer
due to new requirements adopted by the SEC or because we no longer meet the current definition, we would be required to file periodic
reports and registration statements on more detailed U.S. domestic forms, comply with SEC requirements and Nasdaq corporate governance
rules from which we are currently exempt, which could adversely affect us by increasing our legal and financial compliance costs and making
some activities highly time-consuming and costly.
Changes to applicable tax laws and regulations
or exposure to additional income tax liabilities could affect our future business and profitability.
We are an Israeli company and thus subject to Israeli corporate income tax as well as
other applicable local taxes on our operations. Our subsidiaries are subject to the tax laws applicable in their respective jurisdictions
of incorporation. New local laws and policy relating to taxes, whether in Israel or in any of the jurisdictions in which our subsidiaries
operate, may have an adverse effect on our future business and profitability. Further, existing applicable tax laws, tax rates, statutes,
rules, regulations, treaties, administrative practices and principles, judicial decisions or ordinances could be interpreted, changed,
modified or applied to us or our subsidiaries in a manner that could adversely affect our after-tax profitability and financial results,
in each case, possibly with retroactive effect.
Additionally, there is also a high level of uncertainty in today’s tax environment
stemming from both global initiatives put forth by the Organization for Economic Co-operation and Development (“OECD”), and
unilateral measures being implemented by various countries due to a lack of consensus on these global initiatives. As an example, the
OECD has put forth two proposals, Pillar One and Pillar Two, that revise the existing profit allocation and nexus rules (profit allocation
based on location of sales versus physical presence) and ensure a minimal level of taxation. Under the OECD framework for Pillar One as
currently drafted, we do not expect to be subject to the regime. To date, more than 140 countries, including Israel and other countries
in which we operate, have agreed to enact legislation on Pillar Two and to enforce a minimum global tax rate of 15%. Many countries are
expected to continue to implement such legislation. Israel has enacted certain of the required measures, effective for tax years beginning
on or after January 1, 2026, and is considering additional legislation to align its tax regime with evolving international minimum tax
standards; however, not all such measures have been adopted, and future legislative developments, if any, remain uncertain. Under the
OECD framework for Pillar Two, we do not currently expect to be subject to the regime, but we are continuing to evaluate the potential
impact on future periods, which will depend in part on legislative adoption by individual countries. It is difficult to assess at the
present time to what extent such legislation, if and when finally adopted, might adversely impact our effective tax rate in the future.
32
Further, unilateral measures, such as digital services tax and corresponding tariffs
in response to such measures, are creating additional uncertainty. If an expanded version of the Pillar One initiatives or these unilateral
measures are implemented, they may negatively impact our financial condition, tax liability and results of operations and could increase
our administrative costs.
Our tax obligations may change or fluctuate,
become significantly more complex or become subject to greater risk of examination by taxing authorities, including as a result of plans
to expand our business operations, including to jurisdictions in which tax laws may not be favorable, any of which could adversely affect
our after-tax profitability and financial results.
We currently operate in several jurisdictions in addition to Israel, such as the United
States. In the event that our business expands to additional jurisdictions, our effective tax rates may fluctuate widely in the future.
Future effective tax rates could be affected by operating losses in jurisdictions where no tax benefit can be recorded under IFRS, changes
in deferred tax assets and liabilities, or changes in tax laws. Factors that could materially affect our future effective tax rates include,
but are not limited to: (i) changes in tax laws or the regulatory environment, (ii) changes in accounting and tax standards or practices,
(iii) changes in the composition of operating income by tax jurisdiction and (iv) pre-tax operating results of our business.
Outcomes from audits or examinations by taxing authorities could have an adverse effect
on our after-tax profitability and financial condition. Additionally, the Israel Tax Authority (“ITA”) and several foreign
tax authorities have increasingly focused attention on intercompany transfer pricing with respect to sales of products and services and
the use of intangibles. Tax authorities could disagree with our intercompany charges, cross-jurisdictional transfer pricing or other matters
and assess additional taxes. If we do not prevail in any such disagreements, our profitability may be affected.
Due to net operating loss carryforwards available to us, we do not expect to incur an
effective Israeli corporate income tax liability in the coming year. However, there can be no assurance that we will be able to utilize
these loss carryforwards in full or within the expected timeframe, including as a result of changes in applicable tax laws or their interpretation
or application by the ITA, statutory limitations on the use of losses, our operating results, or audits or examinations by taxing authorities,
any of which could adversely affect our effective tax rate and financial results.
There can be no assurance that we will not be
a passive foreign investment company (“PFIC”) for the current or any future year, which could result in adverse U.S. federal
income tax consequences to U.S. investors in our ordinary shares.
In general, a non-U.S. corporation will be a PFIC for any taxable year in which (i)
75% or more of its gross income consists of passive income or (ii) 50% or more of the value of its assets (generally determined on a quarterly
average basis) consists of assets that produce, or are held for the production of, passive income. For purposes of the above calculations,
a non-U.S. corporation that directly or indirectly owns at least 25% by value of the shares of another corporation is treated as if it
held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the
other corporation. Passive income generally includes interest, rents, dividends, certain gains and royalties (other than certain royalties
derived in the active conduct of a trade or business). Goodwill is generally characterized as a non-passive or passive asset based on
the nature of the income produced in the activities to which the goodwill relates. Cash is generally a passive asset.
Based on the manner in which we currently operate our business, the current and expected
composition of our income and assets and the estimated value of our assets (including the value of our estimated goodwill, which is based
on the price of our ordinary shares), we do not believe that we were a PFIC for the taxable year ended December 31, 2025. However, a company’s
PFIC status is an annual determination that can be made only after the end of each taxable year, and our PFIC status for each taxable
year will depend on the composition of our income and assets and the value of our assets from time to time, including estimated goodwill
(which may be determined by reference to the market value of our ordinary shares, which may be volatile). Our PFIC status is subject to
uncertainties. We may be or become a PFIC if our market capitalization declines.
33
Further, we may hold less than 25% minority stakes in other entities, which will generally
be treated as passive for purposes of the PFIC rules. Therefore, we may be a PFIC if the value of any such minority stakes becomes substantial.
Moreover, we may become a PFIC if we expand our business to include financing or similar transactions that may generate passive income.
Accordingly, we cannot assure you that we will not be a PFIC for any taxable year. If we were a PFIC for any taxable year during which
a U.S. taxpayer held our ordinary shares, the U.S. taxpayer generally would be subject to adverse U.S. federal income tax consequences,
including increased tax liability on disposition gains and certain distributions and additional reporting requirements. See “Item
10. Additional Information—E. Taxation—Material U.S. Federal Income Tax Consequences—Passive Foreign Investment Company
Rules.”
Our amended and restated articles of association
provide that, unless we consent to an alternate forum, the federal district courts of the United States shall be the exclusive forum of
resolution of any claims arising under the Securities Act.
Our amended and restated articles of association provide that, unless we consent in
writing to the selection of an alternative forum, the federal district courts of the United States shall be the sole and exclusive forum
for any claim asserting a cause of action arising under the Securities Act.
Section 22 of the Securities Act creates concurrent jurisdiction for federal and state
courts over all such Securities Act actions. Accordingly, both U.S. state and federal courts have jurisdiction to entertain such claims.
This choice of forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for
disputes with us or our directors, officers or other employees and may increase the costs associated with such lawsuits, which may discourage
such lawsuits against us and our directors, officers and employees.
Alternatively, if a court were to find these provisions of our amended and restated
articles of association inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings,
we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business
and financial condition. Any person or entity purchasing or otherwise acquiring any interest in our share capital shall be deemed to have
notice of and to have consented to the choice of forum provisions of our amended and restated articles of association described above,
provided, however, that nothing in this provision constitutes any waiver of compliance with U.S. federal securities laws and the rules
and regulations thereunder. This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act
or any other claim for which the U.S. federal courts have exclusive jurisdiction, and nothing in this provision constitutes any waiver
of compliance with the U.S. federal securities laws and the rules and regulations thereunder.
Risks Related to our Operations and Incorporation in Israel
After being subject to ceasefire arrangements
following an extended period of war, Israel has launched together with the United States a joint operation against Iran. The security
situation remains unstable and hostilities could escalate or resume at any time, and the duration, scope and effects of the war, the strike
against Iran and related instability are uncertain.
We are an Israeli company and many of our employees, including our founders and a majority
of our management team, are Israeli residents. Our headquarters in Herzliya, our research and development facilities and a large portion
of our operations are located in Israel. In addition, one contract manufacturer, from which we derive a substantial portion of our goods,
is situated in Israel.
On October 7, 2023, Hamas terrorists infiltrated Israel’s southern border from
the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on Israeli
targets. These attacks resulted in extensive deaths, injuries and kidnapping of civilians and soldiers. Following the attack, Israel’s
government declared war against Hamas. On October 10, 2025, Israel and Hamas entered into a ceasefire agreement. However, there are no
assurances that such an agreement will be maintained.
Following the attack by Hamas, other terrorist organizations and military forces such
as Hezbollah in Lebanon on Israel’s northern border, various rebel militia groups in Syria and Iraq, and the Islamic Republic
of Iran have launched attacks on Israel, prompting Israeli air defenses and various rounds of retaliatory strikes. In addition, the
Houthi movement, which controls parts of Yemen, has launched several missile and drone attacks on Israel and has targeted dozens of merchant
vessels in the Gulf of Aden and Red Sea. These actions have prompted airstrikes on Houthi military targets in Yemen by Israel and separately
by a U.S.-led coalition of nations. In October 2024, Israel began ground operations against Hezbollah in Lebanon. In June 2025, Israel
launched a preemptive military strike targeting military and nuclear-related infrastructure in Iran, intended to disrupt Iran’s
ability to coordinate or launch further hostilities against Israel and to degrade aspects of its nuclear program. In response, Iran launched
multiple waves of drones and ballistic missiles at Israeli cities.
34
A ceasefire was reached between Israel and Iran in June 2025 after 12 days of hostilities.
On February 28, 2026, Israel and the United States commenced a joint operation against Iran, which has led Iran to launch ballistic missiles
and drones against Israel and other countries in the region, including the United Arab Emirates, Bahrain and Qatar, as well as against
U.S. targets in the Middle East. In addition, Iran may close the Strait of Hormuz, leading to disruption of the global supply chain, including
in oil and gas, which could potentially destabilize the Israeli and global economies. As of the date of this annual report, this operation
is ongoing and its outcomes and the effects that it may have are uncertain. The security situation in the region remains unstable and
volatile, and hostilities could resume and/or escalate with little or no warning.
If the ongoing instability escalates, it may affect our operations and financial results
in several ways, including:
| • |
Human Resources: nearly 10% of our Israeli employees and managers were initially called to
active reserve duty; it is possible that an escalation will require additional reserve duty call-ups and more of our employees and managers
or their family members will be called to active reserve duty, which would prevent them from working or effectively performing their tasks
for us. |
| • |
Macro-economic effects: the war has led, and any future escalation may lead, to negative domestic
macro-economic effects in Israel that could materially impact our business and operations, such as inflation, depreciation of the Shekel,
bearish capital markets, reduced availability of credit and financing sources and decline in growth. |
| • |
Trade curtailment: any future escalation may lead to interruptions and curtailment of trade
between Israel and its trading partners, which could result in reductions in the demand for our offerings or disruptions in the supply
of components required for our products. Certain countries and organizations may impose trade or other trade or financial sanctions on
Israel, which could impact our ability to conduct our business. |
| • |
Shipping costs: the global shipping industry may experience disruptions due to various possible
factors, including the rerouting of shipping away from the Suez Canal due to attacks by Houthi militants from Yemen on commercial shipping
vessels in the Gulf of Aden and the Red Sea, which may cause a substantial increase in rates for some shipping routes. This and other
factors have caused a worldwide increase in shipping rates during the war, which has impacted the Company. |
| • |
Decrease in Israeli demand: during the war we have noticed an immaterial decrease in demand
in Israel for our products and services compared to our global demand, due to reduction in mobility and gatherings in public spaces, such
as for leisure and entertainment activities. Any future escalation may cause a similar effect at an unknown scale. |
| • |
Concern about transacting business with Israeli companies: during the war we have received
inquiries from customers concerned about our operations in Israel. While we do not believe that any significant orders have been withdrawn
or delayed as a result of such inquiries, we cannot rule out the possibility that a future escalation can lead to customers or business
partners that may stop doing business with us, nor can we predict the impact this might have on us. |
| • |
Damage to infrastructure: terror, drone and missile attacks may lead to infrastructure damage,
such as to various of our facilities located in Israel, including communications networks, computer infrastructure and other cyber assets,
which may lead to interruptions in our operations. Although the Israeli government may cover the reinstatement value of certain damages
that are caused by terrorist attacks or acts of war, we cannot be sure that such government coverage will be available to us or, if available,
will sufficiently cover our damages. |
| • |
Reputation and international relations: as a result of the war, public opinion in the international
community towards Israel, Israeli companies and Israeli industries has deteriorated, and may be further negatively affected in the future.
In January 2024 the International Court of Justice, or ICJ, issued an interim ruling in a case filed by South Africa against Israel alleging
genocide amid and in connection with the war in Gaza. On November 21, 2024, the International Criminal Court, or ICC, issued arrest warrants
to Israeli Prime Minister Benjamin Netanyahu and former Israeli Minister of Defense Yoav Gallant based on allegations of war crimes including
using starvation as a method of warfare, murder and other inhumane acts. It is hard to anticipate if and how such sentiments and other
political developments will impact our clients, backlog of orders or financial results; however, it is possible that a limited number
of customers will hold, delay or cancel existing or future orders as a result of the war and a shift in international relations and politics.
|
The ongoing instability could continue to disrupt our business and operations and affect
our financial results in material ways not discussed above, or to a degree that is not currently anticipated by us.
35
The impact of inflation and interest rate hikes
could negatively affect our business, industry and customer base.
Our own costs, including labor, hardware, services, technology providers and other variable
expenses, could be severely impacted by widespread inflation or significant interest rate hikes. Our customer base includes many small
businesses, some of which operate on tight margins. Our customers may not successfully navigate a rising cost environment, causing collection
issues or bankruptcies. Inflation or interest rate hikes could seriously erode the discretionary buying decisions of consumers, impacting
size of purchases or volumes at our automated self-service platforms.
We have a credit facility and a long-term loan provided by banks, both of which are
subject to floating rate interest. Rising interest rates could also impact the Company’s future borrowing costs. During 2025, various
rating agencies affirmed their 2024 downgrading of Israel’s credit rating, due in part to the effects of the unstable security situation:
Moody’s affirmed the 2024 downgrade of Israel’s credit rating from ‘A1’ to ‘Baa1’; Fitch Ratings affirmed
the 2024 downgrade of Israel’s credit ratings from ‘A+’ to ‘A,’ and maintained Israel’s negative outlook;
on November 7, 2025 S&P Global Ratings affirmed the 2024 downgrade of Israel’s credit ratings from ‘A+’ to ‘A,’
whilst updating the outlook from negative to stable; and on January 30, 2026, Moody’s affirmed Israel’s ‘Baa1’
credit rating, whilst updating the outlook from negative to stable. Due to the increased credit risk, businesses, including ours, will
likely be charged higher interest on borrowing activity and general inflation rates will remain higher than they otherwise would be.
We rely to a certain extent on access to the Israeli financial institutions as a significant
source of financing for our business. As of December 31, 2025, we have liabilities in respect of our outstanding borrowings from banks
and our bonds in the aggregate amount of approximately $327.7 million. If interest rates and inflation increase for any reason, this would
increase our future borrowing and other costs, negatively affecting our financial results.
It may be difficult to enforce a U.S. judgment
against us and our directors and executive officers named in this annual report, in Israel or the United States, or to serve process on
our directors and executive officers.
Most of our directors or officers are not residents of the United States, and most of
their and our assets are located outside the United States. Service of process upon us or our non-U.S. resident directors and officers
and enforcement of judgments obtained in the United States against us, or our non-U.S. directors and officers, may be difficult to obtain
within the United States. We have been informed by our legal counsel in Israel that it may be difficult to assert claims under U.S. securities
laws in original actions instituted in Israel or obtain a judgment based on the civil liability provisions of U.S. federal securities
laws. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws against us or our non-U.S. officers
and directors reasoning that Israel is not the most appropriate forum to bring such a claim. 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 to the claim. If U.S. law is found to be applicable,
the content of applicable U.S. law must be proven as a fact, which can be a time-consuming and costly process. Certain matters of procedure
may also be governed by Israeli law. There is little binding case law in Israel addressing these matters. Additionally, Israeli courts
might not enforce judgments rendered outside Israel, which may make it difficult to collect on judgments rendered against us or our non-U.S.
officers and directors.
Our amended and restated articles of association
provide that, unless we consent otherwise, the competent courts of Tel Aviv, Israel will be the sole and exclusive forum for substantially
all disputes between our company and our shareholders under the Israeli Companies Law and the Israeli Securities Law, which could limit
our shareholders’ ability to bring claims and proceedings against, as well as obtain a favorable judicial forum for disputes with,
us and our directors, officers and other employees.
Our amended and restated articles of association provide that, unless we consent in
writing to the selection of an alternative forum, the competent courts in Tel Aviv, Israel will be the exclusive forum for any derivative
action or proceeding brought on our behalf, any action asserting a breach of a fiduciary duty owed by any of our directors, officers or
other employees to us or our shareholders or any action asserting a claim arising pursuant to any provision of the Israeli Companies Law,
5759-1999 (the “Companies Law”) or the Israeli Securities Law, 5728-1968 (the “Israeli Securities Law”). Such
exclusive forum provision in our amended and restated articles of association does not relieve us of our duties to comply with U.S. federal
securities laws and the rules and regulations thereunder, and our shareholders will not be deemed to have waived our compliance with these
laws, rules and regulations. This exclusive forum provision may limit a shareholder’s ability to bring a claim in a judicial forum
of its choosing for disputes with us or our directors or other employees which may discourage lawsuits against us, our directors, officers
and employees.
36
Your rights and responsibilities as our shareholder
will be governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. corporations.
We are incorporated under Israeli law. The rights and responsibilities of holders of
our ordinary shares are governed by our amended and restated articles of association, as may be amended from time to time, and the Israeli
Companies Law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in typical
U.S. corporations. In particular, pursuant to the Companies Law each shareholder of an Israeli company has to act in good faith and in
a customary manner in exercising his, her or its rights and fulfilling his, her or its obligations toward the company and the other shareholders
and to refrain from abusing his, her or its power in the company, including, among other things, in voting at the general meeting of shareholders
on amendments to a company’s articles of association, increases in a company’s authorized share capital, mergers and certain
transactions requiring shareholders’ approval under the Companies Law. In addition, a controlling shareholder of an Israeli company
or a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or who has the power to appoint
or prevent the appointment of a director or officer in the company or has other powers toward the company has a duty of fairness toward
the company. Israeli law does not define the substance of this duty of fairness, and there is little case law available to assist in understanding
the implications of these provisions that govern shareholder behavior.
The tax benefits that are available to us require
us to continue to meet various conditions and may be terminated or reduced in the future, which could increase our costs and taxes.
We have been, and we believe that we currently are, eligible for certain tax benefits
provided to a “Preferred Technological Enterprise” under the Israeli Law for the Encouragement of Capital Investments, 5719-1959,
generally referred to as the “Investment Law.” In order to remain eligible for such tax benefits for a “Preferred Technological
Enterprise,” we must continue to meet certain conditions stipulated in the Investment Law and its regulations, as amended. If these
tax benefits are reduced, cancelled or discontinued, our Israeli taxable income from the Preferred Technological Enterprise would be subject
to different Israeli corporate tax rates. Additionally, if we increase our activities outside of Israel through acquisitions, for example,
our expanded activities may not be eligible for inclusion in future Israeli tax benefit programs. See “Item 10. Additional Information—E.
Taxation—Israeli Tax Considerations—Law for the Encouragement of Capital Investments, 5719-1959.”
We may become subject to claims for remuneration
or royalties for assigned service invention rights by our employees, which could result in litigation and adversely affect our business.
A significant portion of our intellectual property has been developed by our employees
in the course of their employment with us. Under the Israeli Patents Law, 5727-1967 (the “Patents Law”), inventions conceived
by an employee in the course and as a result of or arising from his or her employment are considered to be “service inventions,”
which belong to the employer, absent a specific agreement between the employee and employer giving the employee service invention rights.
The Patents Law also provides that if there is no agreement between an employer and an employee, the Compensation and Royalties Committee
in the Israel Ministry of Justice (the “Committee”), a body constituted under the Patents Law, has the authority to determine
whether the employee is entitled to remuneration for his or her service inventions and the scope of such remuneration. The Committee has
not determined one specific formula for calculating the remuneration that might be due the employee but rather uses the criteria specified
in the Patents Law. Israeli case law clarifies that there is no vested right to receive remuneration for “service inventions”,
and in any event this can be waived by the employee. Although we enter into assignment-of-invention agreements with our employees pursuant
to which such individuals waive any right they may have to remuneration for service inventions, we may face claims demanding remuneration
in respect of assigned inventions. As a consequence of such claims, we could be required to pay additional remuneration or royalties to
our current and/or former employees (subject to the statute of limitations), or be forced to litigate such claims, which could negatively
affect our business.
37
Provisions of Israeli law, in our amended and
restated articles of association and in certain of our agreements and licenses may delay, prevent or make undesirable an acquisition of
all or a significant portion of our shares or assets.
Provisions of Israeli law, in our amended and restated articles of association, and
certain of our agreements and licenses, could have the effect of delaying or preventing a change in control and may make it more difficult
for a third party to acquire us or our shareholders to elect individuals to our board of directors, even if doing so would be considered
to be beneficial by some of our shareholders, and may limit the price that investors may be willing to pay in the future for our ordinary
shares. Among other things:
| • |
the Companies Law regulates the methods and processes by which mergers may be consummated and requires tender offers to be effected
for acquisitions of shares above specified thresholds in a company; |
| • |
the Companies Law requires special approvals for certain transactions involving directors, officers or significant shareholders and
regulates other matters that may be relevant to these types of transactions; |
| • |
the Companies Law does not provide for shareholder action by written consent for public companies, thereby requiring all shareholder
actions to be taken at a general meeting of shareholders; |
| • |
our amended and restated articles of association provide that director vacancies may be filled by our board of directors; |
| • |
our amended and restated articles of association require a vote of the holders of our outstanding ordinary shares entitled to vote
present and voting on the subject matter at a general meeting of shareholders for the removal of directors (other than external directors
regarding whom special rules apply); |
| • |
We have undertaken in certain of our financing agreements not to have a change-of-control without the lender’s approval; and
|
| • |
Some of our licenses may be cancelled or suspended, or we may be subject to other sanctions for breaches of such licenses, if holders
of our shares cross certain prescribed ownership thresholds without the prior approvals of the relevant regulators. |
Further, Israeli tax considerations may make potential transactions undesirable to us
or to some of our shareholders whose country of residence does not have a tax treaty with Israel granting tax relief to such shareholders
from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect
to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of numerous
conditions, including a holding period of two years from the date of the transaction during which certain sales and dispositions of shares
of the participating companies are restricted. Moreover, with respect to certain share swap transactions, the tax deferral is limited
in time, and when such time expires, the tax becomes payable even if the shares have not been disposed.
General Risk Factors
We may need additional capital, and a failure
by us to raise additional capital on terms favorable to us, or at all, could limit our ability to grow our business and develop or enhance
our solutions to respond to market demand or competitive challenges.
In the future, we may require additional cash resources due to changed business conditions
or other future developments, including any investments or acquisitions we may decide to pursue. If these resources are insufficient to
satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale
of additional equity securities could result in dilution to our shareholders. The incurrence of indebtedness would result in debt service
obligations and could require us to agree to operating and financing covenants that would restrict our operations. Our ability to obtain
additional capital on acceptable terms or at all is subject to a variety of uncertainties, including, investors’ perception of,
and demand for, securities of peer companies; conditions of the United States, Israeli and other capital markets in which we may seek
to raise funds; our future results of operations and financial condition and cash flows; government regulation of foreign investment in
our industry; economic, political and other conditions; and government policies concerning external commercial borrowings.
38
If industry or financial analysts do not publish
research or reports about our business, or if they issue inaccurate or unfavorable research regarding our ordinary shares, the market
price and trading volume of our ordinary shares could decline.
The trading market for our ordinary shares is influenced by the research and reports
that industry or financial analysts publish about us and our business. We do not control these analysts, or the content and opinions included
in their reports. As a relatively new public company, we may be slow to attract research coverage and the analysts who publish information
about our ordinary shares will have had relatively little experience with our company, which could affect their ability to accurately
forecast our results and make it more likely that we fail to meet their estimates. In the event that any of the analysts who cover us
issues an inaccurate or unfavorable opinion regarding our company, the market price of our ordinary shares would likely decline. In addition,
the share prices of many companies in the technology industry have declined significantly after those companies have failed to meet, or
significantly exceed, the financial guidance they have publicly announced or the expectations of analysts and investors. If our financial
results fail to meet, or significantly exceed, our announced guidance or the expectations of analysts or investors, analysts could downgrade
our ordinary shares or publish unfavorable research about us. If one or more of these analysts cease coverage of our company or fail to
publish reports on us regularly, our visibility in the financial markets could decrease, which in turn could cause the market price or
trading volume of our ordinary shares to decline.
Our disclosure controls and procedures may not
prevent or detect all errors or acts of fraud.
We are subject to the periodic reporting requirements of the Exchange Act. We designed
our disclosure controls and procedures to provide reasonable assurance that information we must disclose in reports we file or submit
under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
These inherent limitations include the realities that judgments in decision making can
be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people or by an unauthorized override of such controls. Accordingly, because of the
inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.
If our estimates or judgments relating to our
critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below
the expectations of securities analysts and investors, resulting in a decline in the trading price of our ordinary shares.
The preparation of financial statements in conformity with IFRS requires management
to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. We
base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances,
as discussed in “Item 5. Operating and Financial Review and Prospects—E. Critical Accounting Estimates,” the results
of which form the basis for making judgments about revenue recognition that are not readily apparent from other sources. Our results of
operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which
could cause our results of operations to fall below our publicly announced guidance or the expectations of securities analysts and investors,
resulting in a decline in the market price of our ordinary shares.
|
ITEM 4.
INFORMATION ON THE COMPANY |
| A. |
History and Development of the Company |
We were incorporated in Israel in January 2005 under the name Cernkot Ltd., and changed
our name to Nayax Ltd. in May 2005. Our principal executive offices are located at 3 Arik Einstein St., Building B, 1st Floor,
Herzliya 4659071, Israel. Our telephone number at this address is +972 3 7694360.
Investors should contact us for any inquiries through the address and telephone number
of our principal executive office. Our principal website is www.nayax.com. The information contained on our website is not a part of this
annual report.
Our agent for service of process in the United States and North American office is Nayax
LLC, located at Executive Plaza 1, 11350 McCormick Road, Suite 1004, Hunt Valley, Maryland 21031.
Selected Recent Developments
In December 2025, the Company purchased Lynkwell, an EV Charging platform, for $25.9
million in cash at closing for 100% of the business, with an additional earnout based on certain profitability metrics within the first
12 months post-closing. This transaction has been reflected starting on December 4, 2025 in the Company’s financial statements appearing
elsewhere in this annual report on Form 20-F.
39
| B. |
Business Overview |
Our Mission
Nayax is a global commerce enablement, payments and loyalty platform designed to help
merchants scale their business, improve their revenue potential, and enhance their operational efficiency. Our mission is to empower merchants
with tools to manage growth and engage their customers, helping them boost their bottom line and turn casual consumers into loyal advocates.
Our integrated and adaptable solutions free businesses to focus on what matters—delivering exceptional service and becoming leaders
in their markets.
Overview
Nayax unifies payments, operations management, and customer engagement tools into a
powerful, adaptable platform for modern commerce. Our solutions empower businesses to enhance customer experience, accept cashless payments,
and manage their operations with a robust ‘Internet of Things’, or IoT, software platform, helping achieve long-term growth.
Nayax serves a global network of merchants, ranging from small operators to global enterprises in industries like vending, electric vehicle
(“EV”) charging, parking, amusements, ticketing machines, laundromats, car washes, arcades, and attended retail. As of December
31, 2025, 2024 and 2023, we served approximately 115,000, 95,000 and 72,000 customers, respectively, in more than 120 countries across
all continents, supporting 35 languages, more than 50 currencies and more than 80 payment methods.
Nayax’s platform rests upon four pillars: advanced POS devices, a robust management
software suite unique per the needs of each business, integrated loyalty and marketing tools, and versatile payment services. IoT-powered
POS devices support real-time telemetry, remote configurations, and a wide range of payment methods, with effortless installation in the
automated self-service, electric vehicle chargers and attended retail environments. Comprehensive management tools enable remote oversight
of devices, real-time inventory tracking, employee activity monitoring, and detailed reconciliation reporting, while features like route
planning and smart resupply scheduling streamline multi-site logistics. Customizable loyalty programs allow businesses to reward consumers
with exclusive perks like top-up bonuses, personalized product suggestions, and gift coupons, while in-depth performance metrics measure
campaign effectiveness and ROI. Seamless and secure payment processing across borders, currencies, and methods unifies our platform, enabling
businesses to thrive in a diverse yet highly connected global market.
Since our founding in 2005, we have experienced consistent, robust growth, with revenue
accelerating in recent years alongside an expanding installed base. Managed and connected devices grew from 1,044,000 in fiscal year 2023
to 1,260,000 in 2024 and 1,463,000 in 2025 achieving a compound annual growth rate, or CAGR, of 16%. Total revenue increased from $314
million in the fiscal year ended December 31, 2024 to $400 million in 2025, reflecting a CAGR of 28%. Gross profit also rose, climbing
from $141.5 million in 2024 to $193 million in 2025, representing a CAGR of 36%. Loss for the period improved over the same period,
shifting to a $35.5 million profit in 2025 from losses of $5.6 million in 2024 and $15.9 million in 2023.
Our Industry
We see significant untapped potential in cashless payment in both automated self-service
commerce and attended retail payment solutions, influenced by the following trends:
Digitization of Payments
We believe that digital payments are redefining the global economy, replacing cash and
unlocking new growth opportunities for players in the automated self-service and attended retail industries. Momentum towards a cashless
economy is building as digital payment systems expand and consumer preferences evolve, affecting almost every category and reflecting
a broader transformation in how transactions are conducted.
We expect cashless payment solutions to continue gaining market share, driven by increased
adoption of card-based, mobile, and digital payment options. We believe that the growing shift from cash to digital payments will reshape
payment infrastructure by fueling demand for automated self-service commerce and cashless machines like those we offer.
40
Shifting Consumer Behavior
Consumers are increasingly drawn to cashless automated self-service commerce, appreciating
its faster checkouts, reduced interaction, and shorter lines. COVID-19 highlighted the hygiene benefits of minimizing contact during transactions,
further boosting demand for these efficient and private solutions. We believe that cashless and unattended payment technologies are a
win-win for consumers and businesses, who both benefit from their additional speed, security, and convenience.
Increased Penetration of Cashless Payments
Retailers have increasingly begun to embrace digital payment technologies to meet consumer
expectations, deliver operational efficiencies, increase their margins, and mitigate the impacts of labor shortages, creating significant
opportunities for advanced payment technology providers like Nayax to retrofit the large base of automated self-service retail machines
that still lack digital payment capabilities.
Rise of Smart POS Devices
Retailers are increasingly adopting smart POS devices powered by integrated software
to simplify their operations and process digital payments, creating additional opportunities for solution providers who integrate hardware
and software into a single solution, like Nayax.
Proliferation of Omni-Channel Commerce
Consumers now demand a seamless omni-channel retail experience, expecting modern, personalized,
and convenient transactions across both in-store and online channels, regardless of their chosen payment method.
Limited Number of Scalable Solution Providers
With transaction volumes in automated self-service commerce increasing steadily, we
believe that only a few providers can offer the full suite of integrated commerce solutions, including reliable hardware, multifunctional
software, and robust payment infrastructure required to support large-scale deployments for global retailers. Platforms offering comprehensive,
scalable solutions are well positioned to succeed in this expanding market.
Significant Growth in the Number of Cashless Automated Self-Service
Market Machines
Key verticals in the automated self-service market include food and beverage vending
machines, photo booths, laundromats, amusement machines, electric vehicle charging stations, ticketing kiosks, and parking terminals.
According to our third-party data, the global number of automated self-service machines in these major addressable verticals will grow
at a CAGR of 5.8% from 2024 to 2029. While the total number of machines provides a long-term view of market opportunity, we believe the
proportion of cashless-enabled machines is a more relevant indicator of our current addressable market. Based on our third-party data,
cashless penetration of automated self-service machines worldwide is estimated to have reached approximately 32.8% in 2025.
Emerging Cashless Automated Self-Service
Verticals
We believe that new and emerging verticals, like electric vehicle charging stations,
are experiencing even more rapid growth as more charging stations are installed. Another growing vertical is micro market solutions, which
combine vending machines, shelves, and self-checkout systems to create self-service stores in spaces like offices and break rooms, offering
expanded product selections and boosting revenue compared to standard vending setups.
Our Market Opportunity
Retailers frequently rely on disconnected point solutions that are expensive, inefficient,
and fail to meet their operational needs. Our end-to-end technology platform addresses this gap, offering seamless digital payment acceptance
alongside tools to manage operations and engage consumers. We deliver value by driving revenue growth through stronger consumer engagement
and conversion, while lowering costs with optimized inventory, workforce efficiency, and real-time operational data.
Automated Self-Service Commerce
We serve the automated self-service retail market, which enables consumers to complete
transactions independently through self-service machines that automate sales, payments, and service interactions. We define key verticals
under the umbrella of automated self-service retail to include food and beverage vending, photo booths, laundromats, amusement and prize
machines, ticketing kiosks, and parking terminals. Our industry-agnostic solutions empower operators across each of these diverse verticals—from
small independent businesses to large enterprises managing extensive fleets of self-service machines—to enhance operational efficiency
and customer satisfaction.
41
While Nayax is among the leading providers of payment services and technology for automated
self-service commerce, we believe that we currently serve a small portion of the total automated self-service points of sale worldwide
and still have a large market left to penetrate. We define our TAM as the total number of automated self-service devices worldwide, which
we estimate based on our third-party market research to be approximately 45 million in 2024, and which we expect to grow at a 5.8% CAGR
to nearly 60 million devices by 2029.
We expect to see increasing payment volumes within this segment, driven by this increase
in the overall number of connected machines, increasing average transaction sizes, and greater adoption of cashless payments over time.
Our annual average transaction value has risen from $2.05 in 2024 to $2.25 in 2025, as we penetrate high-spend verticals like micro markets,
EV charging and attended retail. We have also seen across our machines a significant percentage still being processed in cash, which gives
us confidence that we will continue to convert to more cashless payments at existing machines. We expect to continue growing both our
network of managed and connected devices and transaction volume with the automated self-service segment, buoyed by these favorable market
trends.
Attended Retail for Omnichannel SMEs
We serve the attended retail market, which includes convenience stores, quick-service
restaurants, specialty retailers, hospitality businesses, and fuel stations. We offer a range of versatile and scalable POS devices for
this sector, including electronic cash registers, handheld devices, mobile POS systems, and modular setups. Our industry-agnostic solutions
support businesses of all sizes, from independent retailers to large multi-location enterprises.
We are poised to capture the growing demand for digital solutions in attended retail,
particularly among SMEs, eager to modernize and integrate their operations. Nayax enjoys two key advantages in attended retail which we
believe position us to gain market share rapidly:
Complete Payment Ecosystem: Nayax believes that
we can leverage our leadership in automated self-service commerce to consolidate a durable position as an omnichannel solution provider
in ecosystems where attended and self-service operations coexist, enabling businesses to manage diverse points of sale through one integrated
system. Ecosystems like gas stations and large retail stores thrive with unified solutions that enhance efficiency, unify consumer experiences,
and support data-driven decision-making. Positioning ourselves as a provider for these needs unlocks significant revenue potential while
deepening customer partnerships.
Expertise in SME Automation: We believe that
technologies like inventory management, automated POS systems, and self-checkout kiosks, which we offer, can empower retailers to redeploy
staff into customer-facing roles, reduce human error, improve quality control, and increase sales.
We built our position in automated self-service retail by making cutting-edge remote
management and automation tools, like machine monitoring, inventory management, resupply route planning, and loyalty programs, accessible
to even the smallest operators. We are similarly poised to disrupt attended retail by applying our deep expertise adapting sophisticated
automation tools for SMEs to rebalance the playing field with an accessible yet advanced, comprehensive retail management platform that
drives revenue, builds loyalty, and supercharges efficiency across diverse retail verticals and applications.
Energy and Fueling
We offer a comprehensive suite of solutions tailored to optimize and control every aspect
of energy and fueling network operations. Our integrated platform seamlessly combines cashless POS systems, payment integration, and specialized
management tools to meet the specific demands of both EV charging and traditional fueling sectors.
With the global shift toward electric mobility, and government policy tailwinds in card-present
payment devices for EV chargers, we are advantageously positioned to serve this expanding market through our comprehensive energy solution.
Our POS devices can integrate with any EV charger through proprietary and industry-standard protocols (including OCPP, the Open Charge
Point Protocol that is the shared language spoken between open EV chargers and charging station management systems) and accept most major
credit and debit cards, mobile wallets, and RFID-based transactions, ensuring a frictionless payment experience for drivers. We also empower
operators to seamlessly monitor and control their charging infrastructure, manage energy distribution through smart load balancing, automate
billing and clearing, and gain real-time insights into network performance with comprehensive management software.
42
Our solutions for fueling management are designed to enhance operational efficiency,
security, and profitability for fuel station operators and fleet managers with automatic vehicle identification technology, cashless payment
systems, and real-time monitoring tools to streamline refueling processes, prevent unauthorized fuel usage, and deliver comprehensive
performance insights. Our scalable architecture supports diverse fueling environments, from individual fleet depots to expansive retail
networks, ensuring adaptability to various operational needs.
Our Platform
We have developed a comprehensive, end-to-end platform designed to meet the diverse
needs of retailers, from large enterprises to SMEs. Our solutions enable customers to manage every aspect of their business, from points
of sale and payment processing to business operations and consumer engagement, through a unified platform which addresses the entire commerce
value chain. Our platform provides out-of-the-box loyalty experiences for retailers and consumers, advanced customer and cost analytics
for actionable business insights, and APIs for seamless integration with other technological solutions, ensuring flexibility and scalability.
During 2025, our platform supported, processed, or facilitated:
| • |
$6.4 billion of transaction value; |
| • |
approximately 2.9 billion transactions; and |
| • |
approximately 1,463,000 managed and connected devices across more than 120 countries on every inhabited continent. |
Our platform includes the following solutions:
43
Integrated
POS: Our integrated POS devices combine seamless digital payment acceptance with IoT-enabled telemetry capabilities. We design
our POS hardware and software in-house to precise specifications and closely supervise the manufacturing and production process to ensure
high functionality and reliability. Our devices are designed for easy installation in both new and retrofit automated self-service environments,
with a seamless process that allows customers to handle orders, shipments, and installations independently, without support from a technician
or Nayax employee.
Nayax offers a simplified onboarding process with a short activation cycle, allowing
most customers to start processing payments right after installation. Our devices feature distinct branding and custom designs that clearly
communicate cashless checkout to consumers, reducing confusion. We also now offer in-store POS and payment solutions, which retailers
can combine with our automated self-service devices to offer their customers a greater diversity of ways to pay without the hassle of
retaining another vendor.
Payments
Suite: Our global cashless payments infrastructure empowers our business customers to accept the local payment methods their consumers
prefer. Our integrated POS devices support more than 80 payment methods, including most major credit and debit cards, mobile wallets,
prepaid cards, QR-based payments, and alternative options. We enable payments in approximately 50 currencies across approximately 120
countries, leveraging our broad network of partnerships with global acquirers to facilitate seamless transactions across borders and optimize
revenue for our customers.
As a Payment Service Provider, we operate under a merchant-of-record model, working
directly with banks and payment card networks to navigate the complex systems, rules, and requirements of the payments industry on behalf
of our customers. We aggregate transactions to deliver better processing fees, a streamlined onboarding process for our customers, and
instant refunds for their end-consumers.
Management
Software Suite: Our management software suite serves as a central platform for retailers, delivering real-time insights to optimize
their operations. Customers can oversee their network of IoT connected devices, integrate external systems via APIs, and perform key tasks,
including monitoring inventory, adjusting prices, managing employees, and generating detailed business and reconciliation reports, all
in one place.
| • |
Remote Monitoring and Administration: Our system offers comprehensive 24/7 remote monitoring
and administration, featuring real-time error detection and alerts, remote price adjustments, software updates, inventory management,
promotion oversight, employee monitoring, and energy consumption control, without requiring onsite technical support or maintenance.
|
| • |
Inventory Management: Our inventory management system empowers customers to oversee stock
availability, control costs, and transfer inventory across various sites. With dynamic resupply routing, customers can streamline their
supply chains, minimize waste, and cut operational costs. |
| • |
Reporting and Analytics: Our platform collects and synthesizes data from all Nayax POS devices
a business owns, delivering real-time insights into sales, cash levels, and inventory status through automated reports, supported by powerful
business intelligence tools and customizable dashboards for data-driven decision-making. |
44
| • |
Product Management: We enable customers to create and manage product catalogs with customizable
parameters and offer dynamic pricing tools, including multiple price lists, currencies, and special pricing options. |
| • |
Employee Management: Our customers can manage roles, set permissions, and control access levels
across POS devices and activities, organized by hierarchies like global offices or regions. Automated self-service retailers can also
track employee visits, inventory refills, and cash collections to reduce fraud. |
Loyalty and Marketing Suite:
Our platform integrates sophisticated marketing and loyalty features, enabling businesses to engage their end-consumers across multiple
channels. Monyx, our digital wallet app, provides consumers with remote ordering capabilities and loyalty perks, including discounts,
coupons, and gifts. Businesses can also design, launch, and manage multiple marketing and loyalty campaigns. Our solutions integrate in-store
POS data with online marketing analytics, enabling retailers to track and optimize the efficiency of their campaigns.
| • |
Loyalty: Customers can design loyalty programs with attributes like price rules, cards, points,
and wallets. Our platform simplifies campaign creation with built-in templates and provides analytic tools to track performance and strengthen
brand loyalty. |
| • |
Promotions: Customers can set up promotions such as punch cards, discounts, cashback, bonus
credit, and happy hours, which we believe helps encourage repeat visits and strengthens consumer loyalty. |
| • |
Engagement Solutions: We provide omni-channel marketing tools that bridge online and in-store
consumer experiences, enabling businesses to target advertising, enhance engagement, maximize conversions, grow revenue, and attract returning
consumers. |
| • |
Marketing Solutions: We empower customers to execute marketing campaigns across social media,
SMS, and email channels, leveraging their own data to maximize impact and improve outcomes. |
CoinBridge: CoinBridge offers a patented Loyalty-to-Payments™
platform that can seamlessly convert loyalty assets—such as points, rewards, miles, vouchers, gift cards, and other digital assets—into
fiat currency spendable anywhere major payment cards are accepted worldwide. Consumers gain instant liquidity for their digital and stored-value
assets, while brands benefit from increased engagement, higher redemption rates, and enhanced data insights without requiring changes
to merchant infrastructure.
| • |
Universal Redemption Capability: Customers can convert points, rewards, miles, vouchers, gift
cards, and other digital assets into real currency, spendable at any merchant worldwide that accepts major credit cards. |
| • |
Seamless Integration: Brands can incorporate CoinBridge into their existing mobile applications
through a straightforward Software Development Kit, requiring no changes to point-of-sale systems or merchant infrastructures. |
| • |
Real-Time Transaction Processing: Instant verification and approval of transactions enable
customers to redeem loyalty assets effortlessly through a simple ‘Tap & Go’ experience. |
| • |
Comprehensive Data Analytics: CoinBridge provides brands with detailed transaction data and
consumer behavior insights, enabling personalized marketing strategies, improved customer retention, and optimized business operations.
|
| • |
Enhanced Customer Engagement: Flexible redemption options and a user-friendly payment experience
increase customer satisfaction and loyalty, allowing consumers to utilize rewards in ways that align with their spending habits.
|
| • |
Secure and Compliant Infrastructure: Operating under stringent security protocols and complying
with global financial regulations, CoinBridge ensures safe and reliable transactions for both brands and consumers. |
45
Benefits of our Platform
Our platform connects businesses with consumers through a business to business to consumer,
or B2B2C, model, helping our business customers meet their complex operational needs and providing their end-consumers with simple payment
solutions. We believe that our direct interface with both businesses and their end-consumers strengthens our strategic importance as an
indispensable operating and payment acceptance partner with superior stickiness.
Benefits of our Platform to Businesses
We leverage our expertise to innovate and address salient pain points for our business
customers, simplifying complex processes and replacing outdated technologies. Key benefits of our platform for our business customers
include:
| • |
Single, Integrated, End-to-End Platform: We offer
a comprehensive, integrated end-to-end platform that reduces the need for customers to manage multiple vendors and systems. Customers
benefit from a 360-degree, omni-channel platform that centralizes reporting and operational tracking in one location. |
| • |
Global Footprint: Our global presence allows us to offer solutions that span multiple regions
and geographies, saving our enterprise customers and SMEs from the hassle of engaging additional local providers. Our extensive network
of original equipment manufacturer, or OEM, partners pre-installs our products in machines like vending machines, EV chargers, and arcade
games, facilitating quick and efficient deployment across the globe. Our local offices span across large regions such as the United States,
the United Kingdom, Germany, Australia, Canada, China, Brazil and Japan. We also have more than 80 distributors in multiple countries
to provide local support in different languages for their local customers |
| • |
Increased Sales: Our solutions provide diverse payment options, improved consumer experience,
and dynamic pricing capabilities, helping our customers increase sales by responding nimbly to changing market conditions and making payments
more convenient. We provide a top of class acceptance rate and solution availability that result in increased revenue. Our platform allows
businesses to offer discounts based on hierarchy, times and inventory. |
| • |
Reduced operational Costs: Our solutions optimize operating costs by enabling better overhead
management and employee efficiency. Remote diagnostics and software updates eliminate third-party troubleshooting, while our customer
service platform improves customer experience and reduces the cost of ownership and maintenance. We streamline operations with 24/7 monitoring
of connected devices, employees, and business activities, while minimizing downtime through automated issue detection and resolution.
|
| • |
Enhanced Customer Engagement: Our platform helps businesses attract and retain consumers with
data-driven marketing, branded loyalty programs, and mobile solutions. Retailers gain access to valuable consumer insights and advanced
analytics, enabling them to build direct relationships and foster loyalty. Our omni-channel marketing engine allows businesses to tailor
personalized recommendations and deals, while our loyalty programs track every transaction, helping consumers earn rewards with each purchase.
|
Benefits of our Platform to End-Consumers
Our platform is designed to simplify the purchasing process for end-consumers, offering
seamless payment solutions and integrated services. Key benefits of our solutions for end-consumers include:
| • |
Diverse Payment Options: Our platform provides seamless, Europay, MasterCard, and Visa-, or
EMV-, certified payment processing in approximately 120 countries and approximately 50 currencies and supports more than 80 payment methods,
including most major credit and debit cards, mobile wallets, prepaid cards, and QR-based payments, allowing consumers to pay using their
preferred local method. Available methods vary by country and region. |
| • |
Advanced Loyalty Benefits: Our platform includes loyalty features such as discounts, gifts,
and special offers, providing consumers with immediate rewards at checkout that enhance the purchasing experience and encourage repeat
engagement. |
| • |
Enhanced Consumer Experience: Our platform elevates the consumer experience with features
such as mobile app feedback and ratings, while our integrated solutions streamline traditionally complex processes like instant refunds
for a smoother shopping journey. |
46
Our Competitive Strengths
We believe we have a differentiated position in the market, built on the following strengths:
Comprehensive Technology Platform: Nayax delivers
a proprietary, end-to-end technology platform that unifies consumer-facing and back-office operations for retail customers. Combining
payment processing, telemetry, management software, loyalty programs, and integrated POS devices, our platform addresses the complex demands
of modern retail. Ownership of the full commerce value chain sets us apart, enables flexible deployments, superior support, and seamless
integration into automated self-service environments, helping businesses transition to cashless models and expand their installed base.
Entrepreneurial Culture: Since 2005, our founding
team has cultivated a culture rooted in entrepreneurship, teamwork, accountability, and communication, all focused on delivering superior
results for customers. Our track record includes early market leadership in verticals like cashless massage chairs, novelty wash stations,
and EV charging. With a strong pipeline of new developments, we are positioned to drive innovation in automated self-service retail and
expand into the attended retail market.
Data-Driven Insights: Our platform processes
more than six million transactions daily across more than one million connected devices, generating vast datasets from orders, receipts,
and consumer interactions. We leverage this data to offer advanced analytics that help our customers optimize operations, improve efficiency,
and inform product development and customer satisfaction, creating a feedback loop that strengthens our business.
Extensive and Efficient Global Distribution Channels:
Our robust global go-to-market infrastructure effectively targets both large enterprise and SME customers with regional
offices in key markets like the United States, Canada, the United Kingdom, Germany, Japan, China, Australia, South Africa, Brazil and
Israel, distributor partnerships in more than 80 markets, more than 1,113 authorized global resellers, direct relationships with more
than 3,402 OEMs who embed our products, and online shops for nano-merchants (<35 devices) to facilitate seamless purchasing and onboarding.
Robust Global Compliance Infrastructure: Nayax
has built a strong compliance foundation in the heavily regulated global markets we serve, including a variety of essential licenses and
certifications including but not limited to: Electronic Money Institution Licenses in Europe and the United Kingdom; financial asset and
credit service licenses in Israel; Aggregator Registration in Mexico; MSB and PSP in Canada; FSPR in New Zealand; PCI-DSS 4.0; EMVCo (level
3); FeliCa; PTCRB; FC; CE; IC; RoHS; ACMA; SOC2; and ISO/IEC 27001. Expertise in regulatory compliance allows us to
expand seamlessly into new markets and sustain our international growth trajectory.
White Glove Customer Service: Our approach to
customer success combines tailored streamlined onboarding, ongoing support, and user-friendly product design. We foster strong, long-lasting
relationships by offering short sales cycles, a consultative sales approach, and extended support hours. Since we develop and manage most
elements of our end-to-end solution in-house, we have full control over product integration, technical support, and customer service,
allowing us to resolve customer concerns quickly and provide high-quality support that saves time and improves customer satisfaction.
Strong, Diversified Business Model: Our
business model integrates recurring SaaS and payment processing revenue with the sale of mission-critical POS devices, creating a balanced
and resilient foundation. In 2025, recurring SaaS and payment processing fees contributed 71.7% of total revenue, while 28.3% came from
sales of our integrated POS devices. Our integrated hardware-software platform is far stickier than standalone offerings, with high switching
costs and operational reliance yielding low revenue churn of just 2.8% in 2025, 2.7% in 2024, and 3.4% in 2023. We define revenue churn
as the proportion of revenue lost due to customer attrition over a 12-month period.
Plug and Play, easy to install and operate solution:
With our diverse API system it is easy to connect our solution to any unattended automated machine and data platform and to pass on highly
secured information from our system to a 3rd party. We offer an array of protocols to connect to any machine, with industry standards
from multiple verticals to our own developed API suite.
47
Our Customers
As of December 31, 2025, 2024 and 2023, we served approximately 115,000, 95,000
and 72,000 customers, respectively, who together operated approximately 1,463,000 managed and connected devices across more than 120 countries.
Our products serve a broad spectrum of customers, from single-location SMEs to large,
global enterprises operating tens of thousands of POS devices. Consequently, we are not reliant on any single customer or market segment.
Our solutions are deeply embedded in and mission-critical to our customers’ operations, which is visible in our strong dollar-based
net retention rate of 120% as of December 31, 2025, 129% in 2024 and 144% in 2023.
We maintain a strong presence in key markets where we have identified high immediate
potential, including the United States, Canada, the United Kingdom, Germany, Japan, China, Australia, South Africa, and our home market
of Israel. Over the fiscal year ended December 31, 2025, our revenue distribution was approximately 41% from the United States, 23% from
Europe (excluding the United Kingdom), 12% from the United Kingdom, 8% from Australia, 6% from LATAM, 6% from Israel, and 4% from other
regions.
Our Competition
We define and assess our competition using several methods, including by considering
the scope, type, and quality of solutions offered by similar companies in our target markets. We apply this framework to evaluate competitors
in both the automated self-service and attended retail sectors.
| • |
Automated Self-Service: Solutions for the automated self-service retail market vary widely,
from standalone payment, telemetry, or business intelligence products to integrated offerings that combine telemetry, payments, and operational
management tools. Our competitors include Cantaloupe, 365 Retail, CPI, Ingenico, Televend, Payter, Vendon, traditional cash payment vendors,
and numerous other providers operating in various geographic markets. We compete by offering comprehensive end-to-end solutions that integrate
cashless payment capabilities, remote operation and management services, telemetry, and payment processing on a global scale. Our platform
is designed to be scalable across different market segments and geographies. We face significant competition from both established companies
with substantial resources and newer entrants with innovative technologies. |
| • |
Attended Retail: Our competition includes large, established vendors and smaller startups,
spanning payment processors, POS providers, and peer-to-peer payment platforms. We compete by offering Nayax Attended, a unified retail
POS platform designed to serve both small and medium-sized businesses and enterprise-level retail chains and multi-brand operators. Our
platform integrates POS, payment processing, and loyalty management into a single solution, reducing operational complexity across retail
and hospitality environments. The platform is cloud-based and built on Android technology, enabling centralized management and deployment
at scale. We leverage our expertise in automated self-service commerce to provide attended retail operators with capabilities including
loyalty programs, real-time monitoring, and dynamic pricing tools. Our approach is to offer an integrated payment ecosystem that serves
both attended and self-service retail operations, providing operational consistency across hybrid retail environments. We seek to expand
our market share by cross-selling our attended retail solutions to our existing automated self-service customer base and by attracting
new customers in the attended retail sector who value integrated, scalable POS and payment solutions. |
Our Growth Strategies
We are focused on growing and scaling our business in a rapid yet sustainable and disciplined
fashion. We intend to drive significant growth by executing the following key strategies:
Retain and Grow with Existing Customers
Our current installed base is a cornerstone of revenue growth, given the critical nature
of our solutions, our low churn rates, and the considerable growth potential of our existing customers. We intend to continue investing
in our relationships with existing customers and grow revenue from our installed base by cross-selling and driving more transactions through
our platform. Our track record of organic growth with our customers is demonstrated by our dollar-based net retention rate, which was
approximately 120% as of December 31,2025, 129% in 2024 and 144% in 2023. Our end-to-end platform positions us to expand offerings to
existing customers, unlocking upselling and cross-selling opportunities. For the year ended December 31, 2025, approximately 80% of our
total revenue was attributable to existing customers.
We have developed additional solutions to grow our revenue within our existing customers’
market. Nayax now has the capability to help our customers increase their consumers revenue with our loyalty platform and earn more revenue
per customer with our banking capabilities.
48
Win New Large Enterprise and SME Customers Globally
Our strategy to win new customers globally prioritizes large enterprises and SMEs, building
on proven success across a range of industries and a scalable platform designed to address the distinct requirements of various verticals
and segments.
| • |
Large Enterprise: Our proven ability to secure large accounts spans multiple industries and
regions, with notable wins including Café+Co, Primo Water, Canteen, FiveStar, MOL Group, Synergy Energy—Western Australia’s
largest energy retailer and generator—and Turkey’s Düzey, part of Koç Holding. |
| • |
SMEs: Our automated and scalable go-to-market platform effectively reaches SMEs via digital
channels, distributors, and OEM partnerships. SMEs represent a significant share of our revenue, and we view this channel as integral
to our future growth strategy, driven by our strong track record in this space. |
For the year ended December 31, 2025, approximately 80% of our total revenue was attributable
to existing customers.
Continue Pursuing Innovation
Our ability to innovate is evident in our track record of launching new products and
enhancing existing solutions, such as our acquisition and development of in-store payment capabilities. We see near-term growth potential
in online payment capabilities and plan to enter the broader omni-channel payments space. Additionally, we are in the process of launching
several embedded banking products that we see as catalysts for mid-term growth potential.
Continue Pursuing Expansion to New Markets
We pursue geographic expansion through three key strategies: establishing subsidiaries
in key markets, engaging distributors and resellers, and targeted acquisitions. Our global presence includes subsidiaries in 13 strategic
markets—such as Israel, the United States, Canada, the United Kingdom, Germany, Brazil, China, Japan, Australia, New Zealand, South
Africa, Lithuania and Netherlands —and distribution agreements in more than 80 countries. We plan to expand our geographic footprint
by pursuing opportunities in new markets while leveraging online sales channels to reach regions that do not require a physical presence.
Enter Emerging, High-Growth Verticals
Our strategy focuses on leveraging our platform to expand efficiently into high-growth
verticals by identifying unmet needs and delivering tailored solutions that address these gaps. Our entry into the EV charging station
market, for example, focused on solving critical pain points, including cashless payment capabilities and tools for operators to monitor
and manage stations remotely. We identify arcade gaming machines, EV chargers, parking, and micro markets as key verticals for disruption
where our technology platform can unlock significant opportunities for growth and innovation.
Cross Sell
Nayax’s robust product portfolio, including retail POS and management solutions,
integrated loyalty programs, and an EV payment and management suite, positions us to capitalize on cross-selling opportunities within
our large existing customer base. Since many of our largest customers operate across multiple verticals and lines of business, we can
leverage our existing relationships to offer them expanded, integrated solutions which span their automated self-service and attended
retail needs. We believe our customers will value this offering for its ability to unify their operations, enhance efficiency, and eliminate
the challenges of managing multiple vendors across different parts of their business.
We execute this cross-selling strategy by addressing entire retail ecosystems with tailored
POS solutions and a unified management platform that simplifies operations and payments across all customer touchpoints. Businesses can
consolidate their payment infrastructure, reduce complexity, and streamline administration through a single system that integrates multiple
sales environments. For example, we allow gas stations and convenience store operators to connect and unify their POS devices for forecourt
transactions, such as their automated self-service POS devices for fuel pumps, airvacs, car washes, and vending machines, with in-store
checkout through a single management portal and payout. We similarly allow other complex retail ecosystems like hotels, shopping malls,
and arenas to manage their diverse mix of attended retail, self-service kiosks, parking, and EV charging stations under one centralized
system.
49
As we begin launching our embedded banking product suite through Nayax Capital, we expect
to unlock significant additional cross-sell opportunities within our existing customer base. Our merchants already rely on us to process
and manage their payments, giving us deep visibility into their transaction flows and financial needs. This positions us to naturally
extend our relationship by offering tailored financial services directly within the platforms they already use every day. By embedding
these financial tools into our existing ecosystem, we can deepen customer relationships and increase revenue per merchant, all while providing
our customers with a more seamless, integrated experience that reduces their need to engage with third-party financial institutions.
Pursue Targeted and Strategic M&A
Since 2014, Nayax has leveraged acquisitions to expand geographically, gain access to
strategic technology, broaden our solution portfolio, and expand our commercial reach. Along with organic growth, we strategically pursue
M&A opportunities where they align with our long-term objectives, guided by our successful track record and systematic pipeline. Our
M&A strategy rests upon three pillars:
| • |
Geographic Expansion: Nayax uses M&A to accelerate regional expansion, helping us enter
new markets faster, acquire strategic customers, mitigate regulatory challenges, and expand our product reach. We target unattended market
leaders with profitable operations, at least 10,000 connected devices, and strong growth potential. Examples include our
acquisitions of a leading Brazilian technology provider for the automated self-service industry, which significantly advanced our expansion
into Latin America and extended our service offerings across Brazil; and Retail Pro, a global retail POS software leader, which brought
130,000 POS licenses and a significant, global distribution network. |
| • |
Distribution Channel Consolidation: Nayax leverages M&A to consolidate distribution channels
to secure direct access to strategic customers, reduce costs and increase efficiency in key markets, enhance operational control, and
replace poorly performing distributors. We focus on unattended market leaders with profitable operations, at least 10,000 connected devices,
and a core TAM of at least 500,000 devices. Examples include InOne Technology, rebranded as Nayax LLC, a North American distributor now
responsible for more than 35% of Nayax’s global revenue, and VendCheck, rebranded as Nayax Australia to enhance marketing, sales,
and support while offering expanded solutions and innovations to the Australian market. |
| • |
Technological Advancement: Nayax pursues M&A to accelerate technological innovation and
prowess in strategic growth verticals such as EV charging, retail kiosks, and mass transit. Acquisitions allow us to fill technology gaps,
deliver value-added revenue, and integrate complementary solutions into our platform. We target market-leading or disruptive technologies
that can be integrated within 12–18 months. Examples include Weezmo, which we acquired in early 2021 to enhance our portfolio of
marketing tools for retailers; Tigapo, in which we acquired a majority stake in 2021 to expand our platform offering for US amusement
operators. In March 2025, we purchased additional shares in and have now gained control over Tipago, and in November 2025, we purchased
the remaining shares in Tigapo by exercising the call option; OTI, which we acquired in 2022 to strengthen our smart payment solutions
for automated self-service machines; Roseman Engineering, which we acquired in 2024 to strengthen our energy sector offerings with advanced
fleet management, cloud management, and AVI (Automatic Vehicle Identification) tools; and Lynkwell, which we acquired in 2025 to strengthen
our EV charging business with a robust Charge Point Management Software. |
Sales and Marketing
We rely upon a variety of direct and indirect sales channels, including local Nayax
offices in 13 countries, a broad network of resellers and distributors, online direct sales, and relationships with OEMs, who integrate
and embed Nayax products into their own product offerings. We have launched e-commerce websites in several countries, enabling new and
existing customers to purchase our products directly. Plans are underway to expand these platforms to additional countries and territories
in the near future.
Our marketing activities are designed to support customer acquisition and retention
across our global markets. We utilize a combination of digital advertising, search engine optimization, and targeted campaigns to reach
small, medium-sized, and enterprise business operators. We also engage prospective and existing customers through social media, webinars,
industry events, email marketing, and content tailored to our key vertical markets. In addition, we provide marketing support and co-branded
resources to our distribution and channel partners to help drive demand generation within their respective markets. We leverage marketing
technology, including automation tools, to track and analyze customer interactions across channels, enabling us to optimize our go-to-market
efforts and improve marketing effectiveness.
50
Components and Manufacturing
We view hardware sales as a strategic tool for gaining new customers, strengthening
existing relationships, and driving recurring revenue growth. Our approach to hardware manufacturing and component sourcing varies based
on the specific requirements of our automated self-service and attended retail use cases, as detailed below:
| • |
Automated Self-Service: We design and develop our integrated POS devices and software for
automated self-service customers in-house. We rely upon a limited number of manufacturing subcontractors, who purchase all necessary components
and supply us with POS devices as a finished product, with certain exceptions. We place manufacturing orders as necessary to fulfill purchases
by our customers, adjusting production volumes dynamically based upon our needs. |
| • |
Attended Retail: Nayax currently partners with four suppliers to procure standard, off-the-shelf
hardware for our attended retail customers. Although we customize color schemes, branding, and packaging to reflect our marketing strategy,
we do not make any major modifications to the underlying hardware to maximize scalability and reliability. We work with multiple suppliers,
each specializing in different product categories, to minimize our risks from supply chain disruptions or dependency on a single source.
|
Since we compete with a variety of other companies for components, we are exposed to
supply risks like shortages, price fluctuations, tariffs, and delivery delays. When the COVID-19 pandemic caused a global shortage of
essential components for our products, we faced an increase in costs during the latter half of FY 2021 and 2022, although the situation
improved considerably in 2023 and into today. We strive, however, to maintain the supply of our POS device products despite such challenges.
Technology
Our proprietary technology infrastructure is the foundation of our platform and business
operations. We rely upon a global network of data centers and physical servers, each capable of hosting more than 100 virtual machines,
to route transactions made on our devices to the proper processing channel or network. Our flexible infrastructure supports secure cashless
payments with more than 80 payment methods, including most debit and credit cards, NFC- and QR-based payments, and prepaid cards. As of
December 31, 2025, our infrastructure processed millions of transactions each day from more than 1,463,000 managed and connected devices,
and served more than 115,000 customers via our real-time, data-driven software management platform.
Our Networks Operation Center team monitors our services 24/7, leveraging automated
testing and thousands of alerts to detect and prevent potential infrastructure issues and downtime before they occur.
Our platform is built and maintained by a multidisciplinary development team of software,
hardware, database administrators, DevOps, mobile developers and other IT experts. Our agile approach to product development fosters innovation
and facilitates swift and frequent releases of new products and updates. Collaboration is central to our in-house development process,
allowing us to deliver impactful and functional updates quickly and accelerate timelines based on customer urgency.
51
The following diagram depicts a standard transaction flow, which is central to our business
operations:
*
Other transactions will have different flows.
Our robust back-end infrastructure allows us to process thousands of transactions per
second and handle hundreds of simultaneous processes. Our versatile API platform enables seamless integration across our solutions, supported
by extensive protocols that allow us to serve a variety of automated self-service points of sale with a “plug and play” setup.
Our API suite includes, but is not limited to:
| • |
Marshall, a simple serial protocol designed to connect our integrated POS devices to PC-based machines; |
| • |
Twizercom, a modern REST API Protocol designed to connect our POS Retail devices to any 3rd
party POS applicaiton; |
| • |
Nayax “Spark”, a remote integration API that allows server controlled machines to utilize Nayax Payment Devices via Server
to server integration; |
| • |
LYNX, which provides input / output data to third-party systems, such as machine information, sales summary, telemetry and Payment
related information, and allows third-party systems to manage and update such information; and |
| • |
Cortina, a collection of API methods which allows a third-party payment gateway to process payments via Nayax systems as depicted
in the following diagram: |
52
Research and Development
Nayax invests heavily in research and development to create new products, including
both hardware and software, and integrate new technologies, expanding our selection of products and services to better serve existing
target verticals and enter new ones. We strive to continuously improve and update our current products to include new functions, mechanisms,
and capabilities to reflect evolving customer needs and new technical capabilities. Our research and development capability is very flexible,
allowing Nayax to develop a wide range of solutions in-house and through collaboration with partners and customers, as well as to integrate
acquired technologies and products smoothly.
We invested $30 million, $25.3 million and $21.9 million in research and development
in 2025, 2024, and 2023, respectively.
Intellectual Property
Protecting our proprietary technology and intellectual property, including trade secrets,
know-how, software code, patents, and trademarks, is an important aspect of our business. We rely upon federal and state statutory and
common law, foreign law, licensing agreements, non-disclosure agreements, confidentiality agreements, and other contractual and technical
mechanisms to establish, maintain, and protect our intellectual property and proprietary technology. However, legal protections may not
always be effective at preventing unauthorized access to our intellectual property and proprietary technology. Intellectual property laws,
procedures, and restrictions provide limited protection, leaving our proprietary rights and technologies exposed to potential challenge,
invalidation, infringement, circumvention, misappropriation, and other forms of violation. In certain jurisdictions, weaker intellectual
property laws compared to the U.S. may leave our proprietary technology and rights unprotected.
While Nayax primarily relies upon its own intellectual property, developed and owned
by Nayax, to operate our business, we also use a combination of open-source and third-party licensed software in connection with our services.
Although we believe that these licenses adequately support our business operations, they typically limit our use of third-party intellectual
property to specific purposes and time periods.
As of December 31, 2025, we owned the following assets:
| • |
Patents: We own nine issued U.S. patents, eight issued Israeli patents, two issued patents
in Japan and one issued patent in each of the United Kingdom, Germany, Spain, Italy, Japan and Australia. We also have - seven active
patents applications in the U.S, five in Israel, six in Canada, seven in Europe, three in Honk Kong, and one application pending
in each of Australia, Brazil, Canada, China, India, Korea and Singapore. Additionally, we have one PCT application. |
53
| • |
Domain Names: We own eighteen registered website domains. |
| • |
Trademarks: We maintain trademarks and service marks on or in connection with our proprietary
technology and services, including both unregistered common law marks and issued trademark registrations, in jurisdictions including Israel,
the United States, Japan, Australia, New Zealand, Brazil, Canada, Turkey, Switzerland, Korea, Singapore, Ukraine, India, the European
Union, the United Kingdom, China and Mexico, and others. |
Our in-house expertise is a key component of our intellectual property and a barrier
to theft and replication by our competitors. Developing our sophisticated platform required years of complex coordination among highly
specialized employees, and we believe it would be immensely challenging, costly, and time-intensive for competitors to reverse engineer
or duplicate our accumulated years of knowledge and ongoing efforts. We safeguard our expertise, trade secrets, and confidential information
with IT security measures, limits on access to and distribution of sensitive information, and confidentiality agreements with employees,
consultants, developers, and vendors.
We intend to pursue additional intellectual property protections where we believe it
would advance our business objectives and support our competitive position, but we cannot guarantee that these efforts will adequately
safeguard our intellectual property or provide a competitive advantage. We have previously faced, and expect to face in the future, claims
from third parties, including competitors, alleging infringement, misappropriation or other violation of their trademarks, copyrights,
patents, or other intellectual property rights, or challenging the validity or enforceability of our intellectual property. We are not
currently a party to any such legal proceedings that, individually or collectively, management believes likely to have a material adverse
impact on our business, financial condition, operating results, or cash flows.
See “Item 3. Key Information—D. Risk Factors—Risks related to data
security, privacy, information technology and intellectual property” for a more comprehensive description of risks related to our
intellectual property.
Culture and Human Capital
Since Nayax was founded in 2005, we have grown from just three employees to more than
1,200 employees around the globe as of December 31, 2025, including team members in local offices and other countries, in Israel, the
United States, Canada, the United Kingdom, Germany, Brazil, China, Japan, Australia, New Zealand, South Africa, Lithuania and Netherlands.
Our culture is defined by four pillar principles, known collectively as OLAH:
| • |
Ownership: We empower employees to take responsibility for their decisions and outcomes, fostering
accountability, entrepreneurial thinking, and meaningful results for our customers. |
| • |
Listen: We listen closely to our customers and each other, uncovering opportunities to innovate,
building stronger relationships, and deliver solutions that solve customer pain points. |
| • |
Act: We encourage employees of all levels to be decisive, challenge the status quo, and take
calculated risks to better serve our customers and meet their needs quickly and effectively. |
| • |
Honesty: We place honesty and integrity at the heart of every action we take, sustaining collaboration
within our team and forging lasting, trust-based partnerships with our customers. |
Our innovative solutions are the direct result of closely collaborating with our customers
to understand their unique needs and challenges. We work closely with our customers to solve their most pressing problems, helping our
employees build expertise, cultivate a customer-centric mindset, and see the impact of their work each and every day. Nayax employees
are proud to help our clients compete and grow, improving their commercial wellbeing with innovative solutions that simplify their operations
and help them reach their target customers with flexible payment, loyalty, and customer engagement tools.
Nayax invests in its employees through frequent training and incentive-based compensation,
cultivating a capable, tight-knit, and motivated workforce eager to face new challenges, achieve greater goals, and sustain long-term
growth. Our employees think like founders and entrepreneurs, applying their natural creativity and deep expertise to provide outstanding
products and services for both new and existing customers. Nayax offers a training platform known as WIN, where employees can access a
wide variety of specially designed educational programs to familiarize themselves with our products and values.
54
Most research and development and product management activities are carried out in Israel
and Ukraine. Since war broke out in the Gaza Strip on October 7, 2023, and despite of the ceasefire that came into effect in October 2025,
the security situation in Israel remains unstable. Given the ongoing circumstances, Nayax has taken steps to support our Israeli employees
with increased flexibility for remote work, individual and group therapy support, babysitting allowances for partners of those serving
in the military, and donations to charitable and volunteer efforts. We are monitoring the situation in Ukraine and have offered relocation
assistance and accommodations to our employees there, as well. Neither the conflict in Israel or Ukraine, nor the response by the international
community, has to date had a material impact on our research and development and product management activities, nor on our results of
operations and financial condition.
Legal Proceedings
We are, from time to time, party to various legal proceedings arising out of our ordinary
course of business.
During 2023, the ICA requested from us certain documents and other information related
mainly to our acquisition of OTI. We cooperated fully and transparently with the ICA throughout its investigative process, and, on February
3, 2025, we entered into the Consent Decree with the ICA to settle allegations of anticompetitive practices and failing to obtain necessary
ICA consent in connection with the acquisition. Pursuant to the Consent Decree, we and Yair Nechmad, our CEO and Chairman, agreed to pay
a sum of NIS 2,500,000 (approximately $701,000) and NIS 240,000 (approximately $67,300), respectively, to the Israeli State Treasury,
and we agreed to provide up to 6,500 OTI POS kits, comprised of the Telebox hardware units paired with Uno 8/Uno Plus card readers, over
a period of five years, to third parties who may sell, distribute, and market the OTI POS kits under their own brands in the Israeli market.
The Consent Decree was approved by the Israeli Competition Court on June 4, 2025. We do not believe the terms of the settlement will have
a significant adverse effect on our business, financial condition or results of operations.
Currently, there are no claims or proceedings against us that we believe will have a
material adverse effect on our business, financial condition, results of operations or cash flows. However, the results of any current
or future litigation cannot be predicted with certainty, and regardless of the outcome, we may incur significant costs and experience
a diversion of management resources as a result of litigation.
Recent Developments in Our Business
During 2025, our offerings, engagements and global footprint have expanded. Here are
some examples:
| • |
We acquired UpPay Servicos De Tecnologia Da Infamramcao S.A., a provider of a seamless solution of payments and telemetry
located in Brazil, specializing in coffee machines. |
| • |
We acquired Inepro Pay, a Nayax distributor in the Benelux region. The acquisition expands our reach in the region, while improving
efficiency and bringing Nayax closer to its customers. |
| • |
We acquired Lynkwell, an EV Charging platform. This strategic acquisition marks a significant step in our expansion into the EV segment
leveraging Lynkwell’s strong software platform for both public and private locations.. |
| • |
We completed an offering in Israel of Series A Notes and Series 1 Warrants on March 10, 2025, for aggregate gross proceeds of approximately
$137.1 million (the “Notes” and the “Warrants”,
respectively). The Notes and Warrants were offered in units, with each unit consisting of NIS 1,000 principal amount of Notes and three
Warrants, with each such warrant exercisable into one ordinary share of the Company (the “Unit”).
The Notes are non-linked, bear a fixed annual interest rate of 5.9%, and will mature on September 30, 2030. The Notes principal will be
repaid in four annual unequal payments commencing in September 2027 through September 2030. Each Warrant is exercisable into one Ordinary
Share of the Company, at an exercise price of NIS 177.80 (paid in cash), which is subject to adjustments to changes in the NIS-to-USD
exchange rate, and will expire on March 31, 2027. |
| • |
We completed an offering in Israel by way of the expansion of the Series 1 Warrants and Series A Notes on December 10, 2025, for
aggregate gross proceeds of approximately $176 million. As the offering was made by way of expansion of our existing Series A Notes, the
Covenants, Restrictions on Distributions and Events of Default applicable to the Notes are identical to the original Series A Notes. Each
Warrant is exercisable into one Ordinary Share of the Company, at an exercise price of NIS 177.80 (paid in cash), which is subject to
adjustments to changes in the NIS-to-USD exchange rate, and will expire on March 31, 2027. |
55
Regulation
We are subject to laws and regulations, either directly or contractually, that apply
to payment processing as well as regulations that apply to businesses in general, such as those relating to worker classification, employment,
worker confidentiality obligations, consumer protection and taxation. As a digital technology business, we are also subject to laws and
regulations governing the internet, such as those relating to intellectual property ownership and infringement, trade secrets, the distribution
of electronic communications, search engines and internet tracking technologies, and could be affected by potential changes to laws and
regulations that affect the growth, popularity or use of the internet, including with respect to net neutrality and taxation on the use
of the internet or e-commerce transactions.
Payment Processing Regulation
Our payment processing services, which clear the payments of consumers that purchase
products without using cash on our POS devices, are dependent on a payment transfer system that operates through a chain of different
entities, including, but not limited to, clearing entities, banks and credit card companies. See “—Technology” above
for a depiction of a standard transaction flow. Payment processing activities are generally regulated by the various financial regulators
in each jurisdiction in which we conduct our operations. We must comply with many different regulatory and licensing requirements where
applicable, including the following:
Europe. We provide payment processing services
in the EEA through Nayax Europe UAB (“Nayax Europe”). Nayax Europe is incorporated in Lithuania and, as such, is subject to
the local implementation of the EU’s second Electronic Money Directive and the second Payment Services Directive 2. Pursuant to
these measures, Nayax Europe is required to obtain a license to operate in Lithuania and throughout the European Union on a cross-border
basis.
Nayax Europe holds a license through the Bank of Lithuania to operate as an Electronic
Money Institution (the “EU EMI License”) across the EEA on the basis of a single market passport. Pursuant to the EU EMI License,
we are able to provide services to business customers and end-users that enable us to charge and manage monetary values online. Prior
to obtaining the EU EMI License in April 2021, Nayax Europe held a license as an authorized payment institution pursuant to local measures
implementing the amended Payment Services Directive (“PSD II”) in Lithuania. Nayax Europe previously provided payment services
throughout the EEA on the basis of the PSD II cross-border services passport.
Our EU EMI License imposes significant ongoing compliance obligations. In particular,
Nayax Europe is subject to detailed rules on how electronic money is issued to customers, how customer funds must be safeguarded and how
electronic money may be redeemed. We are required to ensure funds received from customers for electronic money are either held in a segregated
account with an authorized credit institution, invested in secure, liquid assets or covered by an insurance policy or comparable guarantee.
We must also satisfy initial and ongoing regulatory capital requirements and maintain detailed internal compliance policies and procedures
that address, among other things, customer complaints handling, financial crime controls, anti-bribery and corruption and compliance with
applicable sanctions.
United Kingdom. On June 26, 2023, we received
our U.K. EMI License, which became effective in January 2024, replacing the temporary authorization to operate in the United Kingdom.
This license imposes significant compliance obligations. In particular, we are subject to detailed rules on how electronic money is issued
to customers, how customer funds must be safeguarded and how electronic money may be redeemed. We are required to ensure funds received
from customers for electronic money are either held in a segregated account with an authorized credit institution, invested in secure,
liquid assets or covered by an insurance policy or comparable guarantee. We must also satisfy initial and ongoing regulatory capital requirements
and maintain detailed internal compliance policies and procedures that address, among other things, handling of customer complaints, financial
crime controls, anti-bribery and corruption safeguards and compliance with applicable sanction regimes.
56
Israel. Nayax operates in Israel through an
Israeli subsidiary, Nayax Israel Ltd., as a payment aggregator and, as such is currently regulated under the Supervision of Financial
Services (Regulated Financial Services) Law, 5776-2016 (the “Supervision Law”). The Supervision Law imposes a licensing obligation
on and sets forth a comprehensive regulatory framework for the provision of certain financial services and credit in Israel, and provides
limitations on managing businesses engaged in such activities. Pursuant to the Supervision Law, the Company received a license to provide
financial asset services as well as a license to provide credit from CMISA. In accordance with the Supervision Law, Nayax holds an extended
license to provide financial asset services, which is valid until December 31, 2026, and holds a basic license to provide credit services,
which is valid until December 31, 2028. Additionally, pursuant to the Supervision Law, a controlling shareholder of a licensed entity
must hold a controlling permit issued by the CMISA. Accordingly, each of our controlling shareholders, Mr. Amir Nechmad, Mr. Yair Nechmad
and Mr. David Ben-Avi, currently holds a control permit pursuant to the Control Law.
As of June 6, 2024, the regulatory framework for the supervision and licensing of non-banking
payment services providers is based on the RPSL, which is based on the European Directives PSD II and EMD, a regulation designed to create
a more competitive and secure payments landscape in Europe. Under RPSL, as a general rule, entities providing payment services (including
payment aggregators) are supervised by the ISA and are required to obtain a payment company license. Controlling shareholders of a licensed
payment company are required to apply for a control permit. As a transitional provision, payment services providers holding a license
to provide financial asset services or a license to provide credit under the Supervision Law may continue to operate pursuant to the Supervision
Law until June 6, 2026, provided that they filed an application for a payment services license under RPSL by 6 December 2025. The Company
filed an application for a payment services license under RPSL within the required timeframe and is subsequently registered in the ISA’s Register
of Companies Operating under “continuation of operation” pursuant to the transitional provision of the RPSL.
In August 2025, the Company submitted an application to the ISA for a Payment Service
Provider license. The ISA is expected to deliver its decisions in relation to such application no later than June 2026. Until such time,
and in accordance with the transitional provisions of the RPSL, the Company continues to operate under the license it holds from the CMISA
pursuant to the Supervision Law, which remains in effect.
Canada. Nayax Canada Inc. is federally regulated
in Canada as both a Money Services Business (MSB) and a Payment Service Provider (“PSP”). On July 21, 2025, FINTRAC confirmed
Nayax Canada’s registration as an MSB under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), imposing
obligations related to customer identification, ongoing monitoring, sanctions screening, and mandatory reporting of suspicious transactions,
electronic funds transfers, and large virtual currency transactions. Under the Retail Payment Activities Act (RPAA), Nayax Canada is also
subject to federal oversight as a PSP, with the Bank of Canada publishing Nayax Canada’s PSP registration in the public registry
on October 17, 2025, completing the registration process and subjecting the company to requirements for operational risk management, incident
response, and safeguarding of end‑user funds, supported by an external safeguarding opinion confirming compliance with the trust
account requirements. Following a legal review by BLG (a leading Canadian law firm in financial regulation), Nayax Canada was confirmed
not to be subject to provincial MSB licensing regimes, including those in Quebec, and therefore its regulatory obligations arise exclusively
at the federal level. The company maintains comprehensive internal AML/CTF, sanctions, and compliance programs aligned with these federal
requirements, including governance controls, policy updates, and employee training.
Mexico. In November 2023, Nayax Mexico was registered
with the National Banking and Securities Commission (CNBV) as a supervised entity. This registration subjects Nayax Mexico to considerable
regulatory oversight in the payments sector, including reporting obligations and supervision by financial, consumer protection, tax, and
anti-money laundering (AML) authorities. Nayax Mexico is regulated under key financial laws, including the Law for the Ordering and Transparency
of Financial Services, the General Provisions for Participants of the Payment Methods Network, and the Credit Institutions Law (in connection
with its acquisition activities). Primary regulators include the CNBV, which oversees operational and regulatory compliance, and the Bank
of Mexico, which regulates fees and approves tariffs.
New Zealand. In February 2025, Nayax New Zealand
was approved for registration on the New Zealand Financial Service Providers Register (FSPR) as a Financial Service Provider (FSP). This
registration confirms Nayax New Zealand’s inclusion in the country’s formal regulatory framework for financial service providers.
In addition, NAYAX NZ Limited has been onboarded as a reporting entity under the Anti-Money Laundering and Countering Financing of Terrorism
Act 2009 and is supervised by the Department of Internal Affairs. As a reporting entity, the company is subject to AML/CFT obligations,
including customer due diligence, ongoing monitoring, recordkeeping, and regulatory reporting.
57
In some jurisdictions in which we operate, our activities do not fall within the scope
of the regulations applicable to payments processing services, including:
United States and Australia. In the United States
and Australia, we generally rely on relevant licenses held by financial services entities with which we have agreements. The laws, rules,
regulations, licensing schemes and standards applicable to the financial services industry are enforced by multiple authorities in the
United States, including the Department of the Treasury and state and local agencies, and similar organizations and authorities in Australia.
Currently, we do not possess any permits, licenses, registrations or other authorizations from financial services regulators in the United
States or Australia. Due to our reliance on relevant licenses held by financial services entities, we have taken the position that, as
of the filing date hereof, the licensing, registration or other authorization requirements of federal and state agencies in the United
States and Australia that regulate or monitor payments processing or other types of providers of electronic commerce services do not apply
to us. However, the applicable regulation could change and we could become subject to additional regulatory requirements in the future.
We continuously monitor local requirements to ensure compliance.
We are also subject to anti-money laundering laws and regulations set out by the jurisdictions
in which we operate, and we engage in standard “know-your-customer” diligence prior to initiating a customer relationship
that screens customers against sanctions lists including the Israeli Ministry of Defense Terror list, the U.S. Specially Designated Nationals
and Blocked Persons list, the U.K. Consolidated List of Designated Persons and a consolidated list of people, groups, and entities who
are subject to EU financial sanctions. This process must be completed before any payment relationship is established with a customer.
In Israel, because we are licensed as a financial services provider, it is subject to Israel’s Prohibition of Money Laundering Law,
5760-2000 (the “Prohibition of Money Laundering Law”) and to the Anti-Money Laundering Order (Duties of Identification, Reporting
and Record-Keeping of Financial Asset Services Providers and Credit Services Providers for the Prevention of Money Laundering and Terror
Financing) 5778-2018 promulgated thereunder (the “Order”). We are also subject to obligations under the Prohibition of Money
Laundering Law and Order. First, under the Order we are subject to various “know your customer” requirements, including identification
and verification of clients, as well as certain reporting, record-keeping and sanctions list screening requirements. Second, we are required
to have a dedicated officer who is responsible for fulfilling the requirements of the Prohibition of Money Laundering Law and Order.
Data Privacy
Because we collect, store, share, disclose, transfer, use and otherwise process (“Process”)
customers, consumers and employees information and other data, and engage in marketing and advertising activities to deliver our services
to our customers and our customers’ end users (consumers), we are also subject to laws, rules, regulations and industry standards
that address privacy and data protection. Each of these laws, rules, regulations and standards relating to privacy, data protection and/or
data security, and any other such changes or new laws, rules, regulations or standards could impose significant limitations, require changes
to our business, or restrict our Processing of personal information, which may increase our compliance expenses and make our business
more costly or less efficient to conduct.
In the U.S., various federal, state, and local laws, rules, and regulations apply to
the Processing of personal information. In addition to numerous privacy and cybersecurity laws, rules, and regulations already in place,
U.S. states are increasingly adopting laws imposing comprehensive privacy and cybersecurity obligations, which may be more stringent,
broader in scope, or offer greater individual rights with respect to personal information (including sensitive personal information) than
foreign, federal, or other state laws, rules, and regulations, and such laws, rules, and regulations may differ from or conflict with
each other. For example, the CCPA broadly defines personal information and requires companies that process information of California residents
to make disclosures to consumers about their data collection, use and sharing practices. The CCPA also gives California residents expanded
privacy rights and protections, such as affording them the right to opt out of certain data sharing with third parties, right to access
and request deletion of their information and provides a new cause of action for certain data breaches that result in the loss of personal
information. Additionally, the CCPA introduces additional obligations such as data minimization and storage limitations and granting additional
rights to California residents such as correction of personal information and additional opt-out rights, including the obligation to meet
Global Privacy Control requirement which allows consumers to opt-out of the sale of their personal information. It also establishes a
regulatory agency dedicated to enforcing the CCPA. The CCPA and other laws, rules, regulations and standards relating to privacy, data
protection and data security may require us to modify our data Processing practices and policies and may cause us to incur substantial
costs and expenses in order to comply.
58
In the EEA, we are subject to the GDPR and local European laws, and in the U.K., we
are subject to the U.K. GDPR, in each case in relation to our Processing of data relating to an identifiable living individual (personal
data). The GDPR, along with national implementing legislation in EEA member states, and the U.K. GDPR, impose strict data protection compliance
requirements including: providing detailed disclosures about how personal data is collected and processed (in a concise, intelligible
and easily accessible form); demonstrating that an appropriate legal basis is in place or otherwise exists to justify data Processing
activities; granting rights for data subjects in regard to their personal data (including data access rights, the right to be “forgotten”
and the right to data portability); introducing the obligation to notify data protection regulators or supervisory authorities (and in
certain cases, affected individuals) of significant data breaches; applying security measures, such as, inter alia, pseudonymized (i.e.,
key-coded) data; imposing limitations on retention of personal data; maintaining a record of data Processing; conduct due diligence and
assessment and execute data processing agreements with third parties with whom personal data is shared with, and complying with the principal
of accountability and the obligation to demonstrate compliance through policies, procedures, training and audit. However, U.K. GDPR will
not automatically incorporate changes made to the GDPR going forward (which would need to be specifically incorporated by the U.K. government),
which creates a risk of divergent parallel regimes and related uncertainty. We also cannot predict how the U.K. GDPR and other U.K. privacy
and cybersecurity laws, rules, or regulations may develop, including as compared to the GDPR, nor can we predict the effects of divergent
laws and related guidance. For example, the U.K.’s Data Use and Access Act of 2025, which makes several modifications to the U.K.
GDPR, received Royal Assent in June 2025, and implementation began in August 2025. Such modifications cause the U.K.’s data privacy
law to deviate from the GDPR and that of the EU, and permit further deviations in the form of regulatory guidance or secondary legislation.
Recent legal developments in Europe have created complexity and uncertainty regarding
data transfers from the EEA to countries outside of the EEA in respect of which the European Commission or other relevant regulatory body
has not issued an adequacy decision. Furthermore, the United Kingdom similarly restricts transfers of personal data to certain countries
outside of the United Kingdom. While we currently rely on the standard contractual clauses promulgated and recently substantially revised
by the European Commission and the United Kingdom’s International Data Transfer Agreement (or the United Kingdom’s approved
international data transfer addendum to the European Union’s standard contractual clauses) for such transfers, on July 10, 2023,
the European Commission adopted an adequacy decision concluding that the United States ensures an adequate level of protection for personal
data transferred from the European Union to United States companies participating in the EU-U.S. Data Privacy Framework (followed on October
12, 2023 with the adoption of an adequacy decision in the U.K. for the U.K.-U.S. Data Bridge). However, the EU-U.S. Data Privacy Framework
(and the U.K.-U.S. Data Bridge) may be in flux as such adequacy decision has been challenged a few times in the past, and is likely to
face additional challenges, including at the Court of Justice of the European Union.
We are also subject to evolving EU and U.K. privacy laws on cookies, tracking technologies
and e-marketing. In the EU and the U.K. under national laws derived from the ePrivacy Directive, informed consent is required for the
placement of a cookie or similar technologies on a user’s device and for direct electronic marketing. The GDPR also imposes conditions
on obtaining valid consent for cookies, such as a prohibition on pre-checked consents and a requirement to ensure separate consents are
sought for each type of cookie or similar technology.
In addition, we are subject to the PPL and the regulations promulgated thereunder, which
impose obligations with respect to the manner certain personal data is processed, maintained, transferred, disclosed, accessed and secured.
The burdens imposed by these and other laws and regulations that have been and may be
enacted relating to data privacy and security, or new interpretations of existing laws and regulations, may require us to modify our data
Processing practices and policies and to incur substantial costs in order to comply. We take a variety of technical and organizational
security measures and other measures to protect our data, including data pertaining to our end consumers, employees and business partners.
Despite any security measures we may put in place or that our third-party providers may implement on our behalf, our information technology
and infrastructure and that of our third-party providers may be vulnerable to unauthorized access to such data.
Our ability, like those of other advertising technology companies, to collect, augment,
analyze, use, share and otherwise process data relies upon the ability to uniquely identify devices across websites and applications,
and to collect data about user interactions with those devices for purposes such as serving relevant ads and measuring the effectiveness
of ads. The processes used to identify devices and similar and associated technologies are governed by U.S. and foreign laws and regulations
and are dependent upon their implementation within the industry ecosystem. Such laws, regulations and industry standards may change from
time to time, including those relating to the level of consumer notice and consent required before a company can employ cookies or other
electronic tools to collect data about interactions with users online.
Because the laws and regulations governing the internet, privacy, data security and
marketing are constantly evolving and striving to keep pace with innovations in technology and media, it is possible that we may need
to materially alter the way we conduct some parts of our business activities or be prohibited from conducting such activities altogether
at some point in the future. See “Item 3. Key Information—D. Risk Factors—Risks related to data security, privacy, information
technology and intellectual property” for a description of risks related to compliance with data privacy and security regulations.
59
| C. |
Organizational Structure |
Nayax Ltd. is the ultimate holding company for our subsidiaries. As of December 31,
2025, we had 40 (direct or indirect) subsidiaries. The following table sets out for the subsidiaries we consider significant as of December
31, 2025, the country of incorporation, and the percentage ownership and voting interest held by us.
|
Company |
Country of Incorporation |
Percentage Ownership and Voting Interest |
Main Activities | |||
|
Nayax LLC |
USA (Maryland) |
100% |
Sale of the Company’s products and services | |||
|
Nayax Europe UAB |
Lithuania |
100% |
Processing transactions on behalf of the Company’s customers in Europe
| |||
|
Nayax AU PTY Ltd. |
Australia |
100% |
Sale of the Company’s products and services | |||
|
Nayax (UK) Limited |
UK |
100% |
Sale of the Company’s products and services | |||
|
Nayax Financial Services LTD |
UK |
100% |
Sale of the Company’s products and services |
| D. |
Property, Plants and Equipment |
Facilities
Our principal executive office is located in Herzliya, Israel. In addition to our Herzliya
office, we also have offices in the United States, as well as eleven other countries. We lease each of our offices. We believe that our
current facilities are adequate to meet our immediate needs.
We are not aware of any environmental issues or other constraints that would materially
impact the intended use of our facilities.
| ITEM 4A. |
UNRESOLVED STAFF COMMENTS |
None.
| ITEM 5. |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
The following discussion of our financial condition and results
of operations should be read in conjunction with our consolidated financial statements, including the related notes thereto, included
elsewhere in this annual report. The following discussion contains forward-looking statements that involve risks and uncertainties. Our
actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including
those set forth in “Cautionary Statement Regarding Forward-Looking Statements” and “Item 3. Key Information—D.
Risk Factors.”
60
| A. |
Operating Results |
Overview
Nayax unifies payments, operations management, and customer engagement tools into a
powerful, adaptable platform for modern commerce. Our solutions empower businesses to enhance customer experience, accept cashless payments,
and manage their operations with a robust IoT, software platform, helping achieve long-term growth. Nayax serves a global network of merchants,
ranging from small operators to global enterprises in industries like vending, EV charging, parking, fuel, amusements, ticketing machines,
laundromats, car washes, arcades, and attended retail. As of December 31, 2025, 2024 and 2023, we served approximately 115,000, 95,000
and 72,000 customers, respectively, in more than 120 countries across all continents, supporting 35 languages, more than 50 currencies
and more than 80 payment methods.We serve a diverse range of self-service verticals, including vending machines, kiosks, self-checkouts,
ticketing machines, laundromats, gaming terminals, and EV charging stations. Our success in automated self-service commerce has enabled
us to expand into attended retail with in-store solutions designed to scale efficiently, deploy flexibly, provide a superior experience
for end-consumers, and integrate seamlessly with our suite of automated self-service solutions.
Our revenue growth depends on acquiring new customers, retaining existing ones, and
expanding sales across both groups by delivering essential solutions that drive business growth and cost efficiency. We cater to a broad
range of customers, from single-location SMEs to multinational enterprises managing extensive POS networks. Our strategy prioritizes both
market segments with a scalable and adaptable platform built to support the distinct needs of various industries and business models.
Our revenues can be divided into three categories:
| • |
Software and ongoing services, including SaaS solutions; |
| • |
Payment processing fees; and |
| • |
Hardware sales and other one-time revenues, such as professional services. |
SaaS solutions-based revenue (“SaaS Revenue”) is generated from monthly
recurring fixed fees charged to customers for access to our telemetry and management software solutions. Contract terms generally range
from 12 to 36 months. Our SaaS solutions pricing is primarily based on a monthly rate per connected device. We offer a variety of subscription
plans to customers depending on the features and functionality they require.
Payment processing fees (“Payment Processing Fees”) consist of fees paid
by our customers for transactions made at the point of sale and processed using our platform. This fee is generally calculated as a percentage
of the total transaction amount processed.
Together, our SaaS Revenue and Payment Processing Fees comprise what we refer to as
our recurring revenue. In the years ended December 31, 2025, 2024 and 2023, approximately 39%, 40% and 39% of our recurring revenue was
comprised of SaaS Revenue, and approximately 61%, 60% and 61% was comprised of Payment Processing Fees, respectively.
|
Year ended December 31, |
||||||||||||
|
2025 |
2024 |
2023 |
||||||||||
|
SaaS Revenue ($millions) |
113.1 |
88.5 |
58.9 |
|||||||||
|
YoY Growth |
28 |
% |
50 |
% |
30 |
% | ||||||
|
Payment Processing Fees ($millions) |
174.1 |
133.8 |
92.1 |
|||||||||
|
YoY Growth |
30 |
% |
45 |
% |
55 |
% | ||||||
61
Revenue from the sale of integrated POS devices is derived from one-time revenues from
the sale of our devices. Our integrated POS devices support businesses by streamlining transactions, increasing the likelihood that customers
complete purchases, and reducing costs through our end-to-end SaaS and payment processing platform.
Below is a breakout of revenue for the fiscal years 2025, 2024 and 2023:
|
Year ended December 31, |
||||||||||||||||||||||||
|
2025 |
2024 |
2023 |
||||||||||||||||||||||
|
Revenue ($ millions) |
Rate of total income |
Revenue ($ millions) |
Rate of total income |
Revenue ($ millions) |
Rate of total income |
|||||||||||||||||||
|
SaaS Revenue and Payment Processing Fees |
287.2 |
71.7 |
% |
222.3 |
70.8 |
% |
151.1 |
64.1 |
% | |||||||||||||||
|
Revenue from sale of integrated POS devices |
113.2 |
28.3 |
% |
91.7 |
29.2 |
% |
84.4 |
35.9 |
% | |||||||||||||||
We use a dollar-based net retention rate as a measurement of the loyalty of our customer
base. The net retention rate is measured as a percentage of revenue from returning customers in a given period as compared to the revenue
from such customers in the prior period, which reflects the increase in revenue and the rate of losses from customer churn. We have shown
a robust net retention rate of over 100% in each of 2025, 2024 and 2023, which was driven by our low customer churn and continued
growth of our customers’ businesses.
|
Year ended December 31, |
||||||||||||
|
2025 |
2024 |
2023 |
||||||||||
|
Net revenue retention |
120 |
% |
129 |
% |
144 |
% | ||||||
Our Business Model
We seek to drive growth by providing an integrated commerce platform that combines payment
processing, management software, loyalty and consumer engagement tools, and POS devices for both attended and unattended retail environments.
Our POS devices are designed for easy installation and are often integrated into OEM-manufactured equipment. Because we design and develop
most of our hardware and software internally, we can customize our solutions for specific verticals and customer requirements.
Global Payments Platform
Our cashless payment platform enables businesses to accept multiple payment methods
including major credit and debit cards, mobile wallets, prepaid cards, and QR-based payment options. We maintain connections to more than
80 merchant acquirers and payment method integrations, and process payments in multiple currencies across more than 120 countries.
Telemetry and Management Software
Our management software suite provides operational data analytics, remote device monitoring,
inventory management, pricing controls, and business reporting capabilities. The platform is designed to integrate with external systems
via APIs and provide businesses with tools to monitor device networks and operational metrics across their installed base.
Loyalty and Consumer Engagement Platform
We provide integrated loyalty and consumer engagement tools designed to increase customer
retention, transaction frequency, and average transaction value for merchants. Our loyalty platform includes Monyx Wallet, a mobile application
that enables operators to create and manage digital loyalty programs, implement punch card campaigns, offer tiered pricing structures,
distribute digital prepaid cards, and communicate directly with consumers. Monyx Wallet provides merchants with insights into purchasing
preferences, helping them to create more relevant rewards and better shopping experience for their consumers. We also offer Weezmo, a
digital receipt and marketing platform that connects online advertising with in-store purchases through customizable branded digital receipts
delivered via SMS or email. These loyalty and engagement tools are integrated with our payment processing and management platforms, enabling
merchants to implement and track loyalty campaigns, measure redemption rates, and analyze customer lifetime value from a unified system.
Our platform allows merchants to create closed-loop prepaid card programs, establish member pricing tiers, and configure automatic rewards
based on purchase frequency or spending thresholds.
62
Integrated POS Devices
Our POS devices combine payment acceptance capabilities with telemetry and data transmission
functionality. We design and engineer our hardware and software to support integration in both self-service automated environments and
attended retail locations. The devices are designed to support remote management and data collection as part of our integrated platform.
Factors Affecting our Performance
Acquisition of New Customers
Our long-term success depends on appealing to a diverse array of new customers across
both automated self-service and attended retail markets. Our flexible solutions allow us to refine our messaging and sales approach by
vertical, strengthening our ability to connect with a wide range of businesses as a differentiated and high-impact growth partner offering
both deep industry expertise and seamless scalability.
We have a proven track record of securing enterprise Requests for Proposals, or RFPs,
while operating an efficient, automated SME acquisition channel that minimizes costs and accelerates adoption. Since our ability to attract
new customers relies, among others, on the strength of our sales team, the effectiveness of our marketing, and referrals from satisfied
customers, we expect to increase investments in sales, marketing, and customer acquisition for our integrated POS devices and professional
services over time.
Revenue Retention and Expansion Within our Existing
Customer Base
Our ability to retain customers and grow revenue within our existing base is a key driver
of long-term success. We believe our flexible platform creates substantial upselling and cross-selling opportunities, and our strategy
focuses on expanding our footprint within customer operations, introducing value-added services that enhance efficiency and automation,
and capturing a greater share of transaction volume. Once deployed, our platform becomes an essential part of customer operations, with
high switching costs and the mission-critical nature of our solutions increasing stickiness and reducing churn. Approximately 80% of total
revenue for the year ending December 31, 2025, can be attributed to existing customers and our dollar-based net retention rate was approximately
120%.
Type of Business on our Platform
Our revenue depends, among others, upon the industries we serve, the total volume of
payments processed, and the currencies in which transactions occur. Since transaction sizes, payment preferences, and digital adoption
rates vary widely across verticals and geographies, we may see shifts in our revenue mix, average transaction size, and overall payment
volume as we continue to expand into new verticals, markets, and regions.
Industry Trends
Our financial performance has been influenced by the ongoing global
shift from cash to digital payment methods, which has increased demand for cashless payment acceptance solutions and driven growth in
our payment processing business. The expansion of the automated self-service retail market beyond traditional vending machines to include
micro markets, smart coolers, car washes, EV charging stations, and other unattended payment environments has increased our addressable
market; Additionally, small and medium-sized businesses in attended retail and hospitality sectors are increasingly adopting integrated
point-of-sale systems that combine payment processing, inventory management, and customer engagement tools, which has created opportunities
for our Nayax Attended platform. Our ability to continue benefiting from these trends is subject to various factors, including macroeconomic
conditions such as inflation and consumer spending; regulatory developments affecting payment processing and specific industries we serve;
competitive dynamics including pricing pressure and technological innovation; foreign currency fluctuations; and our ability to execute
our growth strategy, including successful integration of acquisitions and expansion into new geographies and verticals. There can be no
assurance that these industry trends will continue or that we will be able to capitalize on such trends to the same degree as in recent
periods.
63
Geographic Expansion
We may pursue entry into new geographic markets to hedge against region-specific economic
fluctuations, expand our addressable market, and fully leverage our existing global network of payment methods and multi-currency support.
Offering businesses in emerging markets access to our seamless, scalable payment infrastructure would bridge gaps in financial access,
unlock new revenue streams, and create long-term growth opportunities by establishing an early leadership position in high-potential regions
where digital commerce adoption is surging.
Customer Growth Rates
We believe our long-term revenue growth is closely tied to the success of our customers,
and we are committed to helping drive their expansion. Our platform enables businesses to scale efficiently and process greater transaction
volumes, allowing us to capture more payment processing revenue and reinforcing our role as a trusted partner. We will continue to invest
in solutions that help our customers grow, enhance their revenue potential, reduce their operational costs, and drive their continued
engagement with our platform.
We expect the number of locations on our platform to increase as our customers grow
their businesses and open new sites. Since our platform eliminates the need for multiple vendors, streamlines operations, and enhances
payment processing efficiency, we believe businesses will remain within our ecosystem as they expand.
Innovation and Solution Development
We believe continuous innovation is essential to maintaining our market leadership,
and we plan to invest in research and development to strengthen our existing solutions, evolve alongside our customers, and unlock strategic
opportunities in new markets. Although we expect increased research and development spending to affect operating margins in the short
term, these investments position us to develop and scale new products that drive adoption, strengthen customer relationships, and fuel
long-term revenue growth.
Economic Conditions
We believe that the following macroeconomic and geopolitical considerations are likely
to influence our future financial performance:
| • |
Global Economic Growth: Slower economic expansion may lead businesses to scale back or delay
investments in our integrated POS devices and services. Consumers could also reduce discretionary spending in response to slower growth,
reducing our overall transaction volumes. |
| • |
Supply Chain Disruptions: Component shortages, or anticipated or unanticipated logistical
disturbances could disrupt our ability to manufacture and fulfill orders on time, increasing the cost of essential components and shipping
or impacting our ability to meet contractual commitments. |
| • |
Interest Rates: Rising interest rates could increase borrowing costs for our customers, limiting
their ability to invest in new locations, upgrade payment infrastructure, or adopt our integrated POS solutions at the same pace.
|
| • |
Inflation: Volatility in component prices has already affected production costs for our integrated
POS devices, and prolonged inflation may further strain margins. While general inflation has not yet significantly impacted customer demand
for our solutions, persistent cost increases could require adjustments in pricing or supply chain strategies to maintain affordability
and competitiveness. |
| • |
Tariffs: Elevated tariffs on essential imported materials, including
steel and aluminium, could lead to higher manufacturing expenses for our integrated POS devices, potentially reducing our profit margins.
Suppliers also may attempt to renegotiate or terminate contracts if tariffs unexpectedly raise their operating costs or disrupt their
own supply chains. |
| • |
Political and Geopolitical Conditions: political or geopolitical conditions, trade disputes,
international boycotts and sanctions, political and social instability, acts of war, terrorist activity or other similar events could
disrupt our operations, increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional
capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition and results of operations.
|
Please refer to “Item 3. — D. Risk Factors” for a more comprehensive
and detailed discussion of trends and uncertainties that could impact our future financial performance and operating results.
64
Components of our Consolidated Income Statement
Revenues
We generate revenue from three primary sources:
| • |
SaaS Revenue: We charge monthly fees per billable device for access to our telemetry and management
software, with pricing based on a tiered subscription model. Customers can choose from multiple plans, each offering different levels
of functionality and support, ensuring flexibility for businesses of all sizes. Revenue is recognized over the subscription period once
service begins. |
| • |
Payment Processing Fees: We charge a transaction fee for payments processed through our platform,
typically calculated as a percentage of the total transaction amount. We recognize revenue from Payment Processing Fees as gross revenue
because we are responsible for facilitating, managing, and ensuring the completion of the transaction. We recognize fees paid to our acquiring
partners as cost of revenues because they are direct expenses incurred to deliver that service. |
| • |
Revenue from the sale of integrated POS devices: We generate one-time revenue from the sale
of integrated POS hardware. Although we believe that businesses can optimize their sales performance, cost efficiency, and customer experience
by deploying our integrated POS devices in conjunction with our SaaS solutions and payment processing infrastructure, our hardware supports
multiple functionalities and can be purchased as a standalone product. We recognize revenue from hardware sales when control of the device
transfers to the customer, as each sale is a distinct performance obligation separate from any related services. |
Cost of Revenues
Our Cost of Revenues can be divided into three primary categories:
| • |
Cost of integrated POS devices sales includes all expenses associated with the production,
sale, and distribution of our integrated POS devices, including hardware component costs, shipping and handling expenses, external manufacturing
services, salary-based and share-based compensation for employees, quality control, and infrastructure costs related to testing and production
oversight. |
We reduced hardware-related costs in 2025 by enhancing production efficiency and leveraging
improved global supply chain conditions to renegotiate supplier contracts, reduce material costs, and ensure more stable pricing for key
components. We will continue to identify opportunities over the coming year to expand our gross margin by optimizing hardware design,
refining cost controls, and improving overall operational efficiency.
We attribute approximately $73.3 million, or 35.3%, of our cost of revenues in 2025
to hardware, representing a 14.2% increase compared to 2024. We plan to continue investing in hardware products as the foundation of our
continued growth and gateway to our platform while maintaining our focus on reducing manufacturing costs.
| • |
Cost of processing includes interchange and flat fees paid to processing agencies, including
merchant acquirers and card networks, for payment processing services. |
We attribute approximately $107.4 million, or 51.8%, of our total cost of revenues in
2025 to payment processing expenses.
| • |
Cost of services includes all expenses associated with developing or maintaining our SaaS
platform and device communication network, expenses related to our Tier 1 customer support team, and relevant employee-related costs,
including salary-based and share-based compensation. |
We attribute approximately $26.8 million, or 12.9%, of our total cost of revenues in
2025, to our SaaS solutions. We plan to continue investing in SaaS and customer support as essential components of our overall value proposition,
which may negatively impact our gross margins in the short-term.
65
Research and Development Expenses
Research and development expenses consist primarily of employee and subcontractor expenses
and other related costs for research, development and product management, core development, product design, characterization and construction,
share-based compensation costs, depreciation of property plant and equipment and right of use assets and other corporate overhead allocations.
We anticipate that these costs will increase as we continue to invest in the development of new products and services and develop new
functionalities in our existing products including Nayax platform. However, we expect that research and development expenses will decrease
as a percentage of revenue over time as we continue to scale our business.
Depreciation and Amortization in Respect of Technology
and Capitalized Development Costs
Depreciation and amortization arise of internally developed technology and intangible
assets related to technology obtained through our business combination and acquisition activity.
Selling, Administrative and General Expenses
Selling, administrative and general expenses consist of general and administrative expenses
and expenses attributable to sales and marketing activities.
Sales and marketing expenses consist primarily of employee expenses and other related
costs derived from our sales, business development and marketing departments, including stock-based compensation costs, commission costs
to distributors, travel and hospitality-related expenses and other expenses associated with our sales and marketing efforts.
General and administrative expenses consist primarily of employee expenses and other
related costs derived from the following departments: finance, legal, administrative, human resources and information technology, including
related stock-based compensation costs, corporate overhead allocations, consulting, management and professional fees, computer and system
maintenance and other expenses incurred in connection with the day-to-day operation of our business.
We expect selling, administrative and general expenses to moderately increase as we
push to grow our customer base and product offering. However, we expect that selling, administrative and general expenses will decrease
as a percentage of revenue over time as we continue to scale our business.
Finance Income (Expense), Net
Financing income (expense), net include interest on bank loans, bonds, other long-term
loans, lease liabilities, exchange rate differences and other financing expenses incurred in connection with sustaining our operations.
Our functional currency is U.S. dollar, while our bonds and a material portion of our expenses are incurred in NIS and other foreign currencies.
Currency exchange differences may have a material impact on our finance income or expense. However, we entered into transactions and contracts
to hedges these differences, which have mitigated some of the effects of these differences. In addition, we receive payments in a significant
number of different currencies including U.S. dollar, Euro, Australian dollar, and British pound, consequently, we are exposed to fluctuations
in different exchange rates relative to the U.S. dollar. Financial income in respect of exchange rate differences in 2025 was partially
attributed to currency differences related to inter-company balances.
a. Financial
Income
|
Year ended December 31, |
||||||||||||
|
2025 |
2024 |
2023 |
||||||||||
|
U.S. Dollars in thousands |
||||||||||||
|
Interest income on cash and bank deposits |
6,217 |
3,110 |
1,685 |
|||||||||
|
Financial income in respect of change in fair value options |
- |
148 |
- |
|||||||||
|
Financial income in respect of shareholders and related companies |
224 |
150 |
24 |
|||||||||
|
Financial income in respect of finance sub-lease |
- |
- |
17 |
|||||||||
|
Financial income in respect of exchange rate differences |
4,231 |
- |
767 |
|||||||||
|
10,672 |
3,408 |
2,493 |
||||||||||
b. Financial
Expenses
|
Year ended December 31, |
||||||||||||
|
2025 |
2024 |
2023 |
||||||||||
|
U.S. Dollars in thousands |
||||||||||||
|
Interest expense on bank loans and bank fees |
(3,380 |
) |
(6,181 |
) |
(3,389 |
) | ||||||
|
Financial expenses in respect of change in fair value options |
(53 |
) |
- |
(310 |
) | |||||||
|
Financial expenses in respect of loans from others |
- |
(197 |
) |
(591 |
) | |||||||
|
Financial expenses in respect of other liabilities |
(997 |
) |
(1,552 |
) |
(161 |
) | ||||||
|
Financial expenses in respect of Bonds |
(8,892 |
) |
- |
- |
||||||||
|
Financial expenses in respect of leases liabilities |
(344 |
) |
(333 |
) |
(330 |
) | ||||||
|
Financial Expenses in respect of exchange rate differences |
- |
(2,634 |
) |
- |
||||||||
|
(13,666 |
) |
(10,897 |
) |
(4,781 |
) | |||||||
66
How we Assess the Performance of our Business
In addition to operational metrics such as number of customers, number of managed and
connected devices, number of transactions and financial measures determined in accordance with IFRS, we also use Adjusted EBITDA, a non-IFRS
financial measure, as a measure to evaluate our past results and future prospects.
Key Operating Metrics
We regularly monitor the following operating and financial metrics to help us evaluate
our business, identify trends affecting our business, formulate business plans and make strategic decisions. We believe the financial
and operating metrics presented below are useful in evaluating our business. Although these operating and financial metrics are frequently
used by investors and security analysts in their evaluation of companies, such metrics have limitations as analytical tools, and should
not be considered in isolation or as substitutes for analysis of our results of operations as reported under IFRS. In addition, our operating
and financial metrics may be calculated in a different manner than similarly titled metrics used by other companies. Note that our key
operating metrics presented below for 2025 include data as a result of the acquisition of UpPay, Inepro Pay and Lynkwell in the first,
second and last quarters of 2025, respectively, and gaining control over Tipago and IoT as a result of acquiring additional shares in
February and May 2025, respectively, for 2024 include data as a result of the acquisition of Roseman Engineering and VMT in the second
quarter of 2024, and for 2023 include data as a result of the acquisition of Retail Pro in the last quarter of 2023.
Number of Customers
We track the number of customers that use our products and services as a gauge for the
size and growth profile of our business. We define number of customers as the number of unique customers that have transacted using our
platform within the period presented.
The following table sets forth number of customers for the periods indicated:
|
As of December 31, |
||||||||||||
|
2025 |
2024 |
2023 |
||||||||||
|
Number of customers |
114,501 |
95,060 |
72,252 |
|||||||||
|
YoY growth |
20 |
% |
32 |
% |
52 |
% | ||||||
Number of Managed and Connected Devices
We track managed and connected devices as a measure of the fixed subscription base in
our business. We define the number of managed and connected devices as the number of integrated POS devices that were utilized by customers
within the period presented.
The following table sets forth managed and connected devices for the periods indicated:
|
As of December 31, |
||||||||||||
|
2025 |
2024 |
2023 |
||||||||||
|
Number of managed and connected devices (in thousands) |
1,463 |
1,260 |
1,044 |
|||||||||
|
YoY growth |
16 |
% |
21 |
% |
44 |
% | ||||||
67
Number of Transactions
We track the number of transactions executed using our integrated POS devices as a way
to track the growth of payment processing revenues in our business.
The following table sets forth the number of transactions for the periods indicated:
|
Year ended December 31, |
||||||||||||
|
2025 |
2024 |
2023 |
||||||||||
|
Number of transactions (in millions)
|
2,873 |
2,378 |
1,841 |
|||||||||
|
YoY growth |
21 |
% |
29 |
% |
41 |
% | ||||||
Non-IFRS Financial Measures
In addition to our results determined in accordance with IFRS issued by the IASB, we
believe the following non-IFRS financial measure is useful to investors in evaluating our operating performance. Management refers to
the following non-IFRS financial measure as a means to evaluate our ongoing operations and for internal planning and forecasting purposes.
We believe that non-IFRS financial information, when taken collectively with financial measures prepared in accordance with IFRS, may
be helpful to investors because it provides an additional tool for investors to use in evaluating our ongoing operating results and trends
and in comparing our financial results with other companies because it provides consistency and comparability with past financial performance.
However, our management does not consider this non-IFRS measure in isolation or as an alternative to financial measures determined in
accordance with IFRS.
Non-IFRS financial information is presented for supplemental informational purposes
only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented
in accordance with IFRS. Non-IFRS financial information may be different from similarly titled measures used by other companies. The principal
limitation of these non-IFRS financial measures is that they exclude significant expenses that are required by IFRS to be recorded in
our financial statements, as further detailed below. In addition, they are subject to inherent limitations as they reflect the exercise
of judgment by management about which expenses are excluded or included in determining these non-IFRS financial measures.
A reconciliation is provided below for the non-IFRS financial measure to the most directly
comparable financial measure prepared in accordance with IFRS. Investors are encouraged to review the related IFRS financial measures
and the reconciliation of non-IFRS financial measures to their most directly comparable IFRS financial measures included below and to
not rely on any single financial measure to evaluate our business.
Adjusted EBITDA
Adjusted EBITDA is a non-IFRS financial measure that we define as income (loss) for
the period excluding finance expenses, net, tax expense (benefit), depreciation and amortization, share-based compensation costs, Other
expenses (income) from a non‑recurring transaction, acquisition related costs and our share in losses of associates accounted by
the equity method.
We present Adjusted EBITDA in this annual report because it is a measure that our management
and board of directors utilize as a measure to evaluate our operating performance. Accordingly, we believe that Adjusted EBITDA provides
useful information to investors and others in understanding and evaluating our operating results in the same manner as our management
and board of directors.
68
The following is a reconciliation of Income (loss) for the period, the most directly
comparable IFRS financial measure, to Adjusted EBITDA for each of the periods indicated.
|
Year ended December 31, |
||||||||||||
|
2025 |
2024 |
2023 |
||||||||||
|
In USD thousands |
||||||||||||
|
Income (Loss) for the period
|
35,516 |
(5,631 |
) |
(15,887 |
) | |||||||
|
Finance expenses, net
|
2,994 |
7,489 |
2,288 |
|||||||||
|
Tax expenses (income)
|
(950 |
) |
1,247 |
1,215 |
||||||||
|
Depreciation and amortization
|
25,487 |
21,370 |
12,505 |
|||||||||
|
EBITDA |
63,047 |
24,475 |
121 |
|||||||||
|
Share-based payment costs
|
7,305 |
7,187 |
6,027 |
|||||||||
|
employment benefit cost(1)
|
773 |
541 |
- |
|||||||||
|
Other expenses (income)(2)
|
(10,257 |
) |
2,023 |
444 |
||||||||
|
Share of loss of equity method investee
|
226 |
1,270 |
1,555 |
|||||||||
|
Adjusted EBITDA |
61,094 |
35,496 |
8,147 |
|||||||||
| (1) |
Consists of other compensation arrangements provided to the shareholders of VMT. |
| (2) |
Consists primarily of (i) expenses incurred in connection with our listing on Nasdaq, (ii) professional fees and other expenses incurred
in connection with our acquisitions, (iii) fees and expenses, other than underwriter discount and commissions, incurred in connection
with our March 2024 underwritten public offering of 3,130,435 ordinary shares, (iv) settlement arrangement and legal expenses incurred
in connection with and throughout the ICA’s investigative process related to our acquisition of OTI, (v) gain recognized from remeasurement
of an equity accounted investee, upon obtaining control of Tigapo and Nayax Capital, and (vi) payroll expenses resulting from one-time
structural change made by the Company. |
Results of Operations
We have based the following discussion on our consolidated financial statements which
you should read in conjunction with these financial statements, as it is qualified in its entirety by reference to them. The following
tables set forth our results of operations. Note that our results of operations presented below for 2025 include data as a result of the
acquisition of UpPay, Inepro Pay and Lynkwell in the first, second and last quarters of 2025, respectively, and gaining control over Tipago
and IoT as a result of acquiring additional shares in February and May 2025, respectively, and for 2024 include data as a result of the
acquisition of Roseman Engineering and VMT in the second quarter of 2024.
Comparison of the Years Ended December 31, 2025
and 2024
The following table summarizes our results of operations for the years ended December
31, 2025 and 2024:
|
Year ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
In USD thousands |
||||||||
|
Revenues |
400,433 |
314,013 |
||||||
|
Cost of revenues |
207,471 |
172,479 |
||||||
|
Gross Profit |
192,962 |
141,534 |
||||||
|
Research and development expenses |
29,959 |
25,374 |
||||||
|
Selling, administrative and general expenses
|
121,307 |
98,196 |
||||||
|
Depreciation and amortization in respect of technology and capitalized development costs |
14,167 |
11,566 |
||||||
|
Other expenses (income) |
(10,257 |
) |
2,023 |
|||||
|
Share of loss of equity method investee
|
226 |
1,270 |
||||||
|
Profit (Loss) from ordinary operations
|
37,560 |
3,105 |
||||||
|
Financial Income |
10,672 |
3,408 |
||||||
|
Financial Expense |
(13,666 |
) |
(10,897 |
) | ||||
|
Profit (Loss) before taxes on income
|
34,566 |
(4,384 |
) | |||||
|
Tax income (expenses) |
950 |
(1,247 |
) | |||||
|
Profit (Loss) for the year
|
35,516 |
(5,631 |
) | |||||
69
Revenue
The following table provides a breakdown of our primary revenue streams.
|
Year ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
In USD thousands |
||||||||
|
Revenue from the sale of integrated POS devices
|
113,232 |
91,677 |
||||||
|
Recurring revenue |
287,201 |
222,336 |
||||||
|
Total revenue |
400,433 |
314,013 |
||||||
Total revenue for the year ended December 31, 2025 increased by $86.4 million, or 28%,
from $314 million for the year ended December 31, 2024. Revenue from the sale of integrated POS devices increased by $21.6 million, or
24%, from $91.7 million for the year ended December 31, 2024 as a result of a change in product mix that increased the average selling
price. Recurring revenue increased by $64.9 million, or 29%, from $222.3 million, of which $24.6 million was attributable to an increase
in SaaS Revenue primarily as a result of an increase in the number of managed and connected devices and $40.3 million was attributable
to an increase in processing activity as a result of a higher volume and value of transactions. Our revenue mix in 2025 continues to shift
moderately towards recurring revenue. In 2025, approximately 71.7% of our total revenue came from recurring revenue compared to 70.8%
in 2024. We expect that our revenue mix will continue shifting towards recurring revenue in coming years.
Cost of Revenues
The following table provides a breakdown of our cost of revenues attributable to our
primary revenue streams.
|
Year ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
In USD thousands |
||||||||
|
Cost of integrated POS devices sales
|
73,226 |
64,106 |
||||||
|
Cost of recurring revenue |
134,245 |
108,373 |
||||||
|
Total cost of revenue
|
207,471 |
172,479 |
||||||
Total cost of revenues for the year ended December 31, 2025 increased $35 million,
or 20%, from $172.5 million for the year ended December 31, 2024.
Costs attributable to integrated POS devices sales increased by $9.1 million, or 14%,
from $64.1 million, primarily as a result of change in products mix sold which was partially offset by lower manufacturing costs. Cost
of revenues attributable to our recurring revenue stream increased by $25.9 million, or 24%, from $108.4 million, primarily as a
result of a higher transaction volume and value and an increase in the number of managed and connected devices in the period.
70
Gross Profit
Total gross profit for the year ended December 31, 2025 increased by $51.4 million,
or 36%, from $141.5 million for the year ended December 31, 2024. Total gross profit margin increased to 48.2% from 45.1% for the year
ended December 31, 2024.
Gross profit relating to the sale of integrated POS devices increased by $12.4 million,
or 45%, from $27.6 million for the year ended December 31, 2024. This increase was primarily attributed to a favourable product mix notwithstanding
a decline in the number of POS devices sold. Gross margin from integrated POS devices sales increased by 5.2%, from 30.1% in 2024, largely
due to the improved product mix and a reduction in manufacturing costs.
Gross profit relating to recurring revenue increased by $39 million, or 34%, from $114
million for the year ended December 31, 2024, primarily as a result of an increase in SaaS Revenue attributable to a higher installed
device base and an increase in Payment Processing Fees from increased transaction volumes and value. Gross margin relating to recurring
revenue increased 2% from 51.3% for the year ended December 31, 2024, primarily stemming from optimizing key contracts with several bank
acquirers and improved our smart-routing capabilities.
Research and Development Expenses
Research and development expenses for the year ended December 31, 2025 were $30 million,
compared to $25.4 million for the year ended December 31, 2024, an increase of $4.6 million, primarily driven by a $5 million increase
in employee salary expense and related costs due to the growth in our headcount and the impact of our recent acquisitions of Roseman Engineering
and VMT, acquisitions in 2024 which did not contribute a full year of expense in 2024, as well as the effect of gaining control over Tipago
and IoT during 2025, offset by an increase of $0.5 million in capitalized development costs primarily stemming from continued investing
in new products and features.
Selling, Administrative and General Expenses
Total selling, administrative and general expenses for the year ended December 31, 2025
increased $23.1 million, or 24%, from $98.2 million for the year ended December 31, 2024, primarily due to $11.2 million increase in employee
salary expense and related costs due to the growth in our headcount, higher salary costs and the impact of our recent acquisitions of
Roseman Engineering and VMT, acquisitions in 2024 which did not contribute a full year of expense in 2024, the acquisition of Uppay Inepro
Pay and Lynkwell in 2025, as well as the effect of gaining control over Tipago and IoT during 2025; an increase of $4.5 million in IT
related costs, depreciation expenses and other office-related costs; an increase of $2.7 million in professional services; and an increase
of $2.1 million in marketing.
Depreciation and Amortization in Respect of Technology and Capitalized
Development Costs
Depreciation and amortization in respect of technology and capitalized development costs
for the year ended December 31, 2025 were $14.2 million, compared to $11.6 million for the year ended December 31, 2024, an increase of
$2.6 million, primarily driven by amortization of technology assets derived from our recent acquisition of Roseman Engineering and VMT
in 2024, for which we did not recognize a full year of expense in the prior period, as well as the amortization of technology assets associated
with our acquisitions of Uppay, Inepro Pay, Tigapo and IoT in 2025.
Other Expenses or Income
Other income for the year ended December 31, 2025 was $10.3 million, primarily attributable
to gain recognized from remeasurement of an equity accounted investee, upon obtaining control of Tigapo and IoT offset by professional
fees and other expenses related to our recent acquisition of Uppay, Inepro Pay and Lynkwell and payroll expenses resulting from a one-time
structural change made by the Company, compared to $2 million in other expenses for the year ended December 31, 2024, primarily attributable
to professional fees and other expenses, incurred in connection our March 2024 underwritten public offering of 3,130,435 ordinary shares,
and professional fees and other expenses incurred in connection with the acquisition of Roseman Engineering and VMT in the second quarter
of 2024, including other compensation arrangements provided to the shareholders of VMT, and amounts paid pursuant to the Consent Decree
entered into with the ICA including professional expenses arising in connection with and throughout the ICA’s investigative process
Equity Method Investee
Our share in losses of associates accounted for by the equity method amounted to $226
thousand for the year ended December 31, 2025. This loss is attributable to our investment in Tigapo.
71
Finance Expenses, Net
Finance expenses, net for the year ended December 31, 2025 were $3 million compared
to $7.5 million for the year ended December 31, 2024, a decrease of $4.5 million. This decrease was primarily driven by exchange rate
fluctuations, increase in interest income from bank deposits and decrease in interest and bank related expenses.These reductions were
partially offset by increased financial expenses associated with the bonds we issued in 2025, which contributed to an overall increase
in our total debt.
Geographic Distribution
Our corporate headquarters is located in Israel and serves as the central hub for the
Group’s core management, product strategy, research and development center, marketing center and other key corporate functions.
While these activities are directed from Israel, a significant portion of our sales and operations are carried out through our foreign
subsidiaries and third‑party distributors in Europe, North America, Latin America, Australia, and other regions worldwide.
The below table sets forth our revenue breakdown per geographic region for the years
indicated:
|
Year ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
In USD thousands |
||||||||
|
United States |
164,635 |
123,033 |
||||||
|
Europe (excluding United Kingdom) |
91,782 |
76,000 |
||||||
|
United Kingdom |
46,974 |
38,688 |
||||||
|
Australia |
31,896 |
27,521 |
||||||
|
Israel |
22,301 |
16,967 |
||||||
|
LATAM |
25,314 |
13, 719 |
||||||
|
Rest of the World |
17,532 |
18,085 |
||||||
|
Total |
400,433 |
314,013 |
||||||
See Note 5 to our consolidated financial statements included elsewhere in this annual
report for more information.
Comparison of the Years Ended December 31,
2024 and 2023
This analysis can be found in Item 5 of the Company’s annual report on Form 20-F
filed with the SEC on March 4, 2025.
Cash Flows
Comparison of the Years Ended December 31,
2025 and 2024
The following table summarizes our cash flows for the years ended December 31, 2025
and 2024:
|
Year ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
(in USD thousands) |
||||||||
|
Net cash generated from (used in): |
||||||||
|
Net cash generated from operating activities
|
40,288 |
42,902 |
||||||
|
Net cash flows used in investing activities
|
(78,740 |
) |
(45,906 |
) | ||||
|
Net cash flows generated from financing activities
|
265,824 |
50,844 |
||||||
|
Increase in cash and cash equivalents
|
227,373 |
47,840 |
||||||
72
Net Cash Generated from Operating Activities
Our cash flow from operating activities is generated primarily from our profit for the
period excluding non-cash items and changes in working capital. We use our cash flows generated from operating activities to provide working
capital for current and future operations.
For the year ended December 31, 2025, net cash generated from operating activities was
$40.3 million, representing a moderate decrease of $2.6 million compared to the $42.9 million generated in 2024. The decrease in cash
flow derived mainly from investment in inventory of new product lines, including build-up for future demand and orders from the manufacturer.
In addition, in connection with the acquisition of Nayax Capital, we strategically supported customers by providing more favourable payment
terms, to allow them to accelerate their growth and continue their engagement with our platform.
Despite the decrease, operating cash flow benefited from ongoing improvements in our
hardware infrastructure, including targeted investments and optimization measures that enhanced efficiency and improve operational leverage.
We also realized lower processing costs as a result of optimizing key contracts with several bank acquirers and improved our smart-routing
capabilities. Furthermore, revenue growth exceeded the rate of increase in operating expenses, contributing positively to operating cash
flow and underscoring the Company’s ability to maintain sustained profitability as it scales.
Net Cash Used in Investing Activities
Our investing activities have primarily consisted of acquisitions and investments in
technology.
For the year ended December 31, 2025, net cash used in investing activities was $78.7
million compared to net cash used in investing activities of $45.9 million for the year ended December 31, 2024, an overall change of
$32.8 million. The increase was primarily driven by $37.9 million used for the acquisitions of Uppay, Inepro Pay, Tigapo, IOT and Lynkwell
and additional cash outflow related to investment in capitalized development cost and technology aimed at expanding market reach and advancing
new product development, as well as strategic infrastructure investments, including purchase of property, plant, and equipment, to support
future growth. Further outflows included payments of deferred liabilities associated with the acquisitions of RPI, VMT and Tigapo, and
$9.5 million used to grant loans to business partners. These items were offset by $11.1 million generated from withdrawal of deposits
under liens and an increase in interest received from cash balances and bank deposits.
Net Cash generated from Financing Activities
Our financing activities in 2025 consisted primarily of proceeds from our March 2025
offering and our December 2025 expansion of Series A Notes and Series 1 Warrants.
For the year ended December 31, 2025, net cash generated from financing activities was
$265.8 million compared to $50.8 million for the year ended December 31, 2024, an overall change of $215 million. The increase was primarily
driven by $134.3 million of proceeds from our March 2025 offering of Series A Notes and Series 1 Warrants and $173.1 million from our
December 2025 expansion to the Series A Notes and Series 1 Warrants, These proceeds were partially offset by repayments of bank long term
loans, repayment of outstanding amount of credit facility and interest payment on notes.
Comparison of the Years Ended December 31,
2024 and 2023
This analysis can be found in Item 5 of the Company’s annual report on Form 20-F
filed with the SEC on March 4, 2025.
B. Liquidity
and Capital Resources
We fund our operations from our net cash flows generated from operating activities and
issuances of equity. In addition to these cash flows, we have entered into certain debt arrangements to provide additional liquidity and
to finance our operations.
Loans and Credit facilities
In July 2023, the Company entered into an additional short-term credit facility with
an Israeli bank in the amount of $9.75 million, which was later increased to $30 million. The short-term credit facility bears a prime
based variable interest rate. As of December 31, 2025, no amounts were outstanding under the short-term credit facility.
In November 2023, we acquired Retail Pro. We funded the cash portion of the consideration
payable at the closing, in the amount of approximately of $17 million, with a short-term credit facility we received earlier in the year.
This bridge loan bears a variable interest rate based on the secured overnight financing rate (SOFR). In parallel with the bridge loan,
the bank approved a long-term loan in the amount of approximately $17 million. The long-term loan was fully executed on February 25, 2024
and bears a SOFR based variable interest rates. As of December 31, 2025, a total of $13.7 million was outstanding under the long-term
loan.
We are a party to an additional short-term credit facility with an Israeli bank with
commitments totalling $15 million. This short-term credit facility bears a prime based variable interest rate. As of December 31, 2025,
no amounts were outstanding under the short-term credit facility.
73
In December 2024, we received a loan in an amount of NIS 21 million from an Israeli
bank. In March 2025, the Company repaid in full the outstanding principle under this loan and, accordingly, as of December 31, 2025 there
were no outstanding amounts under this loan.
The financing arrangements described above required us to accept customary restrictive
covenants that may limit our ability to pay dividends, repurchase our ordinary shares and incur or guarantee indebtedness.
In May 2020 we received a state-guaranteed long-term loan totalling NIS 15 million from
an Israeli bank. The loan bears a prime based variable interest rate and is repayable in 48 equal monthly installments beginning May 2021.
In March 2025, the Company repaid the last principal installment outstanding under the loan and, accordingly, as of December 31, 2025,
there were no outstanding amounts under this loan.
On March 10, 2025, we announced the completion of an offering of Series 1 Warrants and
Series A Notes (the “Securities”) in Israel. The Securities were offered in units, with each unit consisting of NIS 1,000
principal amount of Notes and three Warrants. The Company sold 486,291 units at a price of NIS 1,021 per unit, for aggregate gross proceeds
of NIS 496.5 million (approximately $137.1 million). The Notes are non-linked, bear a fixed annual interest rate of 5.9%, and will mature
on September 30, 2030. The Notes principal will be repaid in four annual unequal payments commencing in September 2027 through September
2030. Each Warrant is exercisable into one Ordinary Share of the Company, at an exercise price of NIS 177.80 (paid in cash), which is
subject to adjustments to changes in the NIS-to-USD exchange rate, and the Warrants will expire on March 31, 2027. In connection
with the offering, the Company undertook, for as long as the Notes are outstanding, customary restrictive covenants that limit our ability
to pay dividends, repurchase our ordinary shares and incur or guarantee indebtedness.
On December 10, 2025 we announced the completion of an offering in Israel by way
of expansion of the Series 1 Warrants and Series A Notes, for aggregate gross proceeds of approximately NIS 565.6 million (approximately
$176 million). As the offering was made by way of expansion of our existing Notes, the Covenants, Restrictions on Distributions and Events
of Default applicable to the Notes are identical to the original Notes. Each Warrant is exercisable into one Ordinary Share of the Company,
at an exercise price of NIS 177.80 (paid in cash), which is subject to adjustments to changes in the NIS-to-USD exchange rate in
relation to such rate on March 10, 2025, the date of issuance of the Notes, and will expire on March 31, 2027.
In August 2023, we filed with the ISA a shelf prospectus (the “Shelf Prospectus”).
Such Shelf Prospectus allows the Company to raise funds from time to time through the offering and sale of various securities including
debt and equity, in Israel, at the discretion of the Company. Any offering of these securities will be made pursuant to filing a supplemental
shelf offering report which will describe the terms of the securities being offered and the specific terms of the offering. On February
9, 2025, at the Company’s request, the ISA extended the term of the Shelf Prospectus through August 23, 2025, and on December
2, 2025, the ISA extended the term of the Shelf Prospectus through August 23, 2026.
In October 2023, we filed with the SEC a Registration Statement on Form F-3 (the
“Registration Statement”). Such Registration Statement allowed us to raise from time to time up to $70,000,000 through the
offering and sale of various securities including debt and equity, at the discretion of the Company. The Registration Statement also provided
for the offer and sale by certain selling shareholders of up to 1,294,219 ordinary shares, in the aggregate, from time to time in one
or more offerings, but we are not entitled to any funds raised from such sales. On March 12, 2024, we completed an underwritten public
offering of 3,600,000 ordinary shares under the Registration Statement, in which we sold 2,600,000 ordinary shares (including the overallotment
option), and certain selling shareholders offered and sold a total of 1,000,000 ordinary shares (the proceeds of which were paid to the
selling shareholders). The offering utilized approximately $67.6 million of the Company’s availability under the Registration Statement,
and resulted in net proceeds to the Company of approximately $62.4 million, after deducting the underwriting discount and fees and offering
expenses payable by the Company.
Any offering under either the Shelf Prospectus or the Registration Statement would
comply with the registration requirements under the Securities Act and any applicable U.S. state securities laws or, alternatively, utilize
an applicable exemption from any such registration, as the case may be.
We believe that our existing cash and cash equivalents and short-term bank deposits,
together with cash flow from operations, will be sufficient to support our liquidity and capital requirements for at least the next 12
months from the date of this Annual Report. Our future capital requirements will depend on many factors, including our revenue growth,
the expansion of sales and marketing activities, increases in general and administrative costs and many other factors, including those
described above in “Factors Affecting our Performance”. We may, in the future, enter into additional arrangements to acquire
or invest in complementary businesses, which could increase our cash requirements.
74
We may be required to seek additional equity or debt financing. In the event we require
additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional
capital when required or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able
to compete successfully, which would adversely affect our business, financial condition and results of operations.
| C. |
Research and Development, Patents and Licenses, etc. |
See “Item 4. Information on the Company—B. Business Overview—Intellectual
Property” and “Item 5. Operating and Financial Review and Prospects—A. Operating Results.”
| D. |
Trend Information |
See “Item 5. Operating and Financial Review and Prospects—A. Operating Results.”
| E. |
Critical Accounting Estimates |
Our consolidated financial statements are prepared in conformity with IFRS, as issued
by the IASB. In preparing our consolidated financial statements, we make judgements, estimates and assumptions about the application of
our accounting policies which affect the reported amounts of assets, liabilities, revenue and expenses. Our critical accounting judgements
and sources of estimation uncertainty are described in Note 3 to our consolidated financial statements, which are included elsewhere in
this annual report.
| ITEM 6. |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
| A. |
Directors and Senior Management |
The following table presents information about our current directors and executive officers.
|
Name |
Position(s) |
Age | ||
|
Directors |
| |||
|
Yair Nechmad |
Co-Founder, Chairman and Chief Executive Officer |
63 | ||
|
David Ben-Avi |
Co-Founder, Chief Technology Officer and Director |
52 | ||
|
Rina Shafir |
Director |
62 | ||
|
Vered Raz Avayo |
Director |
56 | ||
|
Nir Dor |
Director |
62 | ||
|
Reuven Ben Menachem |
Director |
65 | ||
|
Eran Havshush |
Director |
50 | ||
|
Executive Officers |
|
|||
|
Sagit Manor |
Chief Financial Officer |
53 | ||
|
Oren Tepper |
Chief Commercial Officer |
54 | ||
|
Keren Sharir |
President |
46 | ||
|
Michal Sever |
Chief Marketing Officer |
47 | ||
|
Tami Erel |
Chief Business Operations Officer |
50 | ||
|
Gal Omer |
Chief Legal Officer |
43 | ||
|
Carly Furman |
CEO Nayax LLC & Nayax Canada Inc. |
43 | ||
|
Yaron Aharon |
Chief Operating Officer |
59 | ||
|
Aaron Greenberg |
Chief Strategy Officer |
31 | ||
|
Erez Aminpour |
Chief Product Officer |
43 | ||
|
Eden Zafrani |
Chief Human Resources Officer |
44 |
The following is a brief summary of the business experience of our directors and executive
officers. Unless otherwise indicated, the current business address for our directors and executive officers is 3 Arik Einstein Street,
Bldg. B, 1st Floor, Herzliya 4659071, Israel.
Directors
Yair Nechmad. Mr. Nechmad
has served as our Chief Executive Officer and Chairman of our board of directors since 2005. Before co-founding Nayax in 2005, Mr. Nechmad
served as Managing Director at Eden Springs Israel from 2000 to 2004. Mr. Nechmad also previously served as Vice President of Marketing
at Eden Springs Group from 1998 to 2000, where he was responsible for the brand development across Israel and Europe. Prior to that, Mr.
Nechmad was the advertising manager at the Central Bottling Co. Ltd., a Coca-Cola manufacturer in Israel, from 1990 to 1998. Mr. Nechmad
holds a Bachelor of Science degree in political science from Tel Aviv University.
75
David Ben-Avi. Mr. Ben-Avi
has served as our Chief Technology Officer and a member of our board of directors since 2005. Prior to co-founding Nayax in 2005, Mr.
Ben-Avi served in and held various positions at a number of technology start-ups between 1998 and 2006. Mr. Ben-Avi holds a bachelor’s
degree in Business Administration from Derby University and has a certificate in real estate appraisal from The College of Management
Academic Studies.
Rina Shafir. Ms. Shafir has
served as a member of our board of directors since 2021. Ms. Shafir also currently serves as an independent director and chairperson of
the audit committee for IBI Investment House Ltd., Shlomo Real Estate Ltd and Biolight Life Sciences Ltd. She also serves as an independent
director and chairperson of the finance committee of Almeda Ventures, and as an independent director of Sunflower Sustainable Industries
Ltd., Ackerstein Group Ltd. and Yahav Educational Fund & Savings for Physicians Ltd. Ms. Shafir is a member of Investment Committee
of Israel’s Sovereign Wealth Fund (The Israeli Citizens’ Fund). Ms. Shafir has also previously served as an independent director
and chairperson of the investment committee at Analyst Provident Funds Ltd. and as an independent director of Biolight Life Sciences Ltd.,
Kesem ETFs Ltd., Clal Finance Ltd. and Gamatronic Industries Ltd. Ms. Shafir has previously served as senior vice president at the Tel
Aviv Stock Exchange Ltd, Head of the Trading Department and Clearing Houses until 2012 and CEO at Impact—Investments Portfolio Management
Ltd., a subsidiary of Union Bank. Ms. Shafir holds a Bachelor of Arts in economics and an MBA from the University of Tel Aviv.
Vered Raz Avayo. Ms. Avayo
has served as a member of our board of directors since 2021. Ms. Raz Avayo currently serves as CEO of AMOR Conscious Business Development
and Consulting LTD. and as an independent director and chairperson of all board committees for Shikun & Binui Energy Ltd. (SBEN),
as an independent director and chairperson of the finance committee for Apollo Power Ltd. (TASE: APLP) and as a director for Foresight
Autonomous Holdings Ltd. (Nasdaq: FRSX). She also served as an independent director and chairperson of the finance committee of Africa
Israel Residences Ltd. (AFRE.TA) And as an independent director and chairperson of the finance committee of Analyst I.M.S Mutual Funds
Management Ltd. And served as a member of the Investment Committee Analyst I.M.S Mutual Funds Management Ltd. Ms. Raz Avayo previously
served as chief financial officer of the Leviev Group, and as a director of several publicly traded companies, with managerial and consulting
experience in finance encompassing a wide range of industries in Israel and overseas, including real estate investment, capital markets,
retail, diamonds, jewelry, and aviation and from 2021 to January 2022 served as chief financial officer of Save Foods Inc. (Nasdaq: SVFD).
Ms. Raz Avayo holds a degree in Business Administration from The College of Management Academic Studies and a Master of Fine Arts from
the University of Tel Aviv.
Nir Dor. Mr. Dor has served
as a member of our board of directors since December 2022. Since 2014, Mr. Dor has served as Managing Partner of NET Capital Ventures,
a private investment fund focused on high-tech, start-up companies in the fields of health, tourism and software. He currently serves
on the board of directors of five of NET Capital Ventures’ privately owned portfolio companies. Mr. Dor previously served as chairman
of the board of Cargal Ltd., board member of BVR Systems and CEO and then board member of Eden Springs. He received an accounting and
finance degree from the College of Management Academic Studies in Rishon LeZion, Israel and is licensed as a CPA in Israel (inactive).
Reuven Ben Menachem. Mr.
Ben Menachem has served as a member of our board of directors since 2021. Mr. Ben Menachem is the founder and former chief executive officer
of Fundtech, a leading global provider of software to the fintech industry. Mr. Ben Menachem currently serves as the chairman of several
boards of directors of fintech companies as well as social ventures.
Eran Havshush. Mr.
Havshush has served as a member of our board of directors since July 2024. Mr. Havshush served
as an independent director at Boymelgreen Capital Ltd. (an Israeli public company) from 2012 until 2014. He has served as a partner in
A. Omer & Co., an Israeli accounting firm, since 2002, and has acted as a consultant to the Company since 2012, providing services
related to taxation, capital investments and other financial and accounting matters. Mr. Havshush also served as the Company’s auditor
from 2006 to 2009. Mr. Havshush is a certified public accountant and holds a Bachelor of Arts degree in Economics and Accounting and a
Master of Business Administration specializing in finance, both from Bar-Ilan University in Ramat Gan, Israel.
76
Executive Officers
Sagit Manor. Ms. Manor has
served as our Chief Financial Officer since 2021. Prior to joining Nayax, Ms. Manor served for four years as chief executive officer and
chief financial officer of Nyotron, an information-security company. Prior to Nyotron, Ms. Manor served as vice president of finance and
chief financial officer of Verifone, Inc., a financial technology manufacturing company. Ms. Manor currently serves as a director of Tigo
Energy Inc. (Nasdaq: TYGO) and at TAT Technology Ltd. (Nasdaq: TATT). Ms. Manor is a certified public accountant and holds a Bachelor
of Arts degree in Business and Accounting from the College of Management Academic Studies in Rishon LeZion, Israel.
Oren Tepper. Mr. Tepper has
served as our Chief Commercial Officer since January 2023. Mr. Tepper has over a decade of experience as sales executive at various companies.
Prior to joining us, he served as SVP Global Sales at Space Communications Ltd. (TSE: SCC) from January 2020 until January 2023, as Regional
Sales Director Latin America and Africa at CyberGym Control Ltd. in 2019, and as VP Sales Africa at Space Communications Ltd. from January
2017 until December 2018 (TSE: SCC).
Keren Sharir.
Ms. Sharir has served as our President since August 2024 and Chief Marketing Officer since 2014. Ms. Sharir holds a Bachelor of Science
degree in mathematics and computer science from the University of Haifa. Prior to that, Ms. Sharir served as a marketing executive in
a few high-tech companies and held strategic managerial role in an Israeli consulting company and Israeli Government office in New York.
Michal Sever.
Ms. Sever has served as our Chief Marketing Officer since November 2025, having previously served as our VP of Product Marketing
and Education since December 2021. Prior to joining Nayax, Ms. Sever served in senior marketing roles at Gentrack Group Limited (NZX/ASX:
GTK) from January 2021 until December 2021 and at Amdocs (Nasdaq: DOX) from December 2017 until January 2021. Ms. Sever has also worked
in product marketing at Microsoft and was an account manager/director at several advertising agencies, including Gitam BBDO and Grey Global
Group. Ms. Sever holds a Bachelor of Arts degree in Marketing, Communications and Political Science from Bar-Ilan University in Tel Aviv.
Tami Erel. Ms. Erel has served
as our Chief Business Operations officer since 2017. Ms. Erel previously served as our vice president of payment operations from 2015
to 2017. Prior to joining Nayax, she worked at Eden Springs as the group FP&A. Ms. Erel holds Bachelor of Arts degrees in business
and economics from the College of Management Academic Studies. She also holds a Master of Laws from Bar Ilan University.
Gal Omer. Ms. Omer has served
as our Chief Legal Officer since August 2023. Ms. Omer previously served as our Chief Compliance Officer and Co-Head of the Legal Department
from June 2021 until August 2023. Prior to joining Nayax, Ms. Omer served as a partner in Amit, Pollak, Matalon & co. law firm, specializing
in privacy protection, high-tech and intellectual property. Pro Bono, Ms. Omer served in several positions in the International Association
of Privacy Professionals. Ms. Omer holds a law degree from the Hebrew University of Jerusalem, a Bachelor of Arts degree in International
Relations and Philosophy from the Hebrew University of Jerusalem, and a Graduate Certificate in Cyber Security from Harvard Extension
School.
Carly Furman. Ms. Furman
has served as the CEO of Nayax North America since 2016. Prior to that, Ms. Furman was CFO of Nayax’s subsidiary companies beginning
in 2014. Prior to joining Nayax, Ms. Furman was in public accounting and also worked in private industry, focusing on the biotech, fintech
and real estate sectors. Ms. Furman has a Business Economics degree from the University of California, Santa Barbara (UCSB) and is licensed
as a CPA (inactive).
Yaron Aharon. Mr. Aharon
has served as our Chief Operating Officer since March 2023. Prior to joining Nayax, Mr. Aharon served as Chief Operating Officer at Orpak
Systems, part of the Gilbarco Veeder-Root Group, which specializes in payment solutions for fleet management, fuel and retail. Mr. Aharon
holds a Bachelor of Science in Industrial Management and an MBA from the Technion – Israeli Institute of Technology.
Aaron Greenberg. Mr. Greenberg
has served as our Chief Strategy Officer since February 2024. Mr. Greenberg spent his career on Wall Street with experience across a variety
of areas including investing, banking, trading, regulatory, risk, strategy and tax. Prior to joining Nayax, Mr. Greenberg spent two years
as managing partner of Tiberius Capital Markets, a division of Arcadia Securities (“Tiberius”), a strategic advisory and M&A
practice. While at Tiberius, Mr. Greenberg served as a financial and strategic advisor to Nayax, leading the Company’s recent acquisition
of Retail Pro as well as other strategic initiatives within the Company. Prior to Tiberius, Mr. Greenberg served on the investment team
of Lucerne Capital Management, a 20-year-old hedge fund specializing in European mid-cap equities. Concurrently, Mr. Greenberg was Chief
Strategy Officer of European Sustainable Growth Acquisition Corp., a U.S.-listed SPAC focused on ESG investing in Europe. Prior to this,
Mr. Greenberg held various positions at Wells Fargo Bank and its affiliates, most recently as a portfolio manager evaluating operational
inefficiencies and credit policy within the Corporate Investment Bank (CIB). Mr. Greenberg holds a Bachelor of Arts in Economics and History
from Yale University in New Haven, CT.
77
Erez Aminpour. Mr. Aminpour
has served as our Chief Product Officer since June 2024. Mr. Aminpour previously served as our VP Payment Solutions from 2022 to 2024,
and prior to that as our Head of Payment Solutions from 2019 to 2022. Prior to joining Nayax, Mr. Aminpour served as senior project manager
for SHVA, an automated bank services company, as a project and product manager, and analyst at Leumi Card and in various positions with
the Israeli Defense Forces, including product manager at HATAL, the ground forces’ technology unit. Mr. Aminpour holds a Master
of Business Administration from Tel Aviv University and a Bachelor of Science in both information system engineering and information technology
from the Technion – Israeli Institute of Technology in Haifa, Israel.
Eden Zafrani. Mr. Zafrani
has served as our Chief Human Resources Officer since June 2024. Prior to joining Nayax, Mr. Zafrani served as head of the commander’s
training department at the city of training bases of the Israeli Defense Forces from 2021 to 2024. Prior to that, Mr. Zafrani served various
human resources roles in the Israeli Defense Forces for approximately 20 years. Mr. Zafrani holds a Bachelor of Science in psychology,
sociology and anthropology from Bar-Ilan University in Tel Aviv and a Master of Business Administration in both business management and
technological entrepreneurship from Ono Academic College in Kiryat Ono, Israel.
| B. |
Compensation |
Compensation of Directors and Executive Officers
In the year ended December 31, 2025, we recorded aggregate compensation costs of approximately
$3.1 million, including share-based compensation, to all our directors and executive officers as a group.
Presented below is a description of the compensation payments made during the year ended
December 31, 2025, as recognized in our audited consolidated financial statements for the year then ended, to each of the five highest
compensated executive officers of the Company or of corporations under its control (in terms of cost to the Company):
|
Remuneration for services(1)
| ||||||||||||||||||||||||||||||
|
Name |
Position |
Scope of employment |
Salary |
Bonus |
Share-based payment |
Management fees |
Consulting fees |
Total |
||||||||||||||||||||||
|
In thousands | ||||||||||||||||||||||||||||||
|
Carly Furman |
General Manager, North America |
100 |
% |
$ |
620 |
— |
$ |
100 |
— |
— |
$ |
720 |
||||||||||||||||||
|
Yair Nechmad |
Co-Founder, Chairman and Chief Executive Officer |
100 |
% |
$ |
607 |
— |
$ |
— |
— |
— |
$ |
607 |
||||||||||||||||||
|
David Ben-Avi |
Co-Founder, Chief Technology Officer and Director |
100 |
% |
$ |
607 |
— |
$ |
— |
— |
— |
$ |
607 |
||||||||||||||||||
|
Oren Tepper |
Chief Customers Officer |
100 |
% |
$ |
512 |
— |
$ |
92 |
— |
— |
$ |
604 |
||||||||||||||||||
|
Sagit Manor |
Chief Financial Officer |
100 |
% |
$ |
352 |
— |
$ |
204 |
— |
— |
$ |
556 |
||||||||||||||||||
| (1) |
In accordance with Israeli law and practice, all amounts reported in the above table are in terms of cost to our Company, as recorded
in our audited consolidated financial statements. All of the executive officers listed in the above table are full-time employees, except
for Yair Nechmad and David Ben-Avi, whose compensation was paid under services agreements we have with them. See “—Services
Agreements with our Founders.” |
78
Services Agreements with our Founders
On May 4, 2021, our board of directors and our shareholders approved our entering into
services agreements with certain wholly-owned companies of two of our co-founders, Mr. Yair Nechmad, our chairman and chief executive
officer, and Mr. David Ben-Avi, a director and our chief technology officer (together, the “Founders Services Agreements”).
Pursuant to each such Founders Services Agreement, each of such founders shall provide the Company with consulting and management services
for 180 hours per month. Under each Founders Services Agreement, each of such founders is entitled to monthly management fees of NIS 140,000,
plus VAT.
Beginning on January 1, 2022, pursuant to the terms of the Founder Services Agreements,
the management fee paid to such founders was increased by 2.5% and, pursuant to the Founders Services Agreements, it shall increase each
year at such rate. In addition, we issued options to each of such founder (collectively, the “Options”) to purchase 725,000
ordinary shares under our 2018 Plan (as defined below) (as adjusted to give effect to the 2022 Reverse Share Split). The Options vest
over a period of five years, subject to satisfying certain Company performance goals related to growth in Company revenues and gross profit
as set forth in the Founders Services Agreements, and are exercisable during a five-year period from their vesting date. The exercise
price of the Options is NIS 105 per share (after giving effect to the 2022 Reverse Share Split), which was the public offering price of
the Company’s ordinary shares in its initial public offering on the TASE in May 2021. As of February 26, 2026, 290,000 of the Options
were outstanding and not vested.
In addition, under the Founders Services Agreements, Mr. Nechmad and Mr. Ben-Avi are
entitled to certain perquisites such as reimbursement for fuel and vehicle, mobile phone, certain travel and business newspaper expenses.
Mr. Nechmad and Mr. Ben-Avi, through their respective companies, are also entitled to a refund of certain other costs incurred in connection
with providing consulting and management services to the Company.
Either party can terminate the Founders Services Agreements upon six (6) months’
prior notice. During such notice period, the service provider is eligible to receive consideration, provided that during such period the
service provider continues to provide services to the Company, at the Company’s request.
In addition, each of our founders is entitled, at the Company’s expense, to directors
and officers liability insurance, and indemnification and exculpation from certain liabilities, as is customary with respect to officers
of the Company.
Compensation of our Directors
Our directors, including external directors but excluding directors who are also Officers
of the Company, are entitled to receive compensation in accordance with the fixed amounts provided in the Companies Regulations (Rules
Regarding the Compensation and Expenses of an External Director), 5760-2000, and as amended by the Companies Regulations (Relief for Public
Companies Traded in Stock Exchange Outside of Israel) 5760-2000, as in effect from time to time. In accordance with such regulations,
each such director currently receives an annual fee of NIS 105,842 (equal to approximately $33,600) and a per meeting fee of NIS 3,942
(equal to approximately $1,251). In addition, all of the Company's directors are entitled to benefit from coverage under the Company’s
directors and officers liability insurance policies and from the letter of indemnification provided to such directors by the Company.
For a discussion of our compensation committee, which we refer to as our remuneration
committee, and further discussion regarding the compensation of our directors and executive officers, see “Item 6. Directors, Senior
Management and Employees—C. Board Practices” below.
In addition to compensation as a director, Mr. Havshush provides certain services to
the Company pursuant to a services agreement. For a description of the terms of the services agreement entered into with Mr. Havshush,
see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Services Agreement with
Mr. Havshush” below.
Share Option Plans
Global Equity Incentive Plan (2018)
Our Global Equity Incentive Plan (2018), or the 2018 Plan, was adopted by our board
of directors in December 2018 and amended in May 2021 and in August 2025. The 2018 Plan provides for the grant of options and restricted
stock units (“RSUs”) to our employees, officers, directors, consultants and other service providers in order to incentivize
them to become, and to remain, employed or engaged by us, encouraging a sense of proprietorship and stimulating active interest in our
success. The U.S. Appendix to the Plan applies to residents of the United States or those who are deemed to be residents of the United
States for U.S. federal income tax purposes.
Authorized Shares. As of December 31, 2025,
there were options and RSUs outstanding under the 2018 Plan to purchase approximately 1.78 million ordinary shares and an additional 0.18
million ordinary shares under the U.S. Appendix to the 2018 Plan. Ordinary shares subject to options and RSUs granted under the 2018 Plan
that are not exercised by the grantee within the exercise period and in accordance with the terms of the 2018 Plan shall become available
again for future grant under the 2018 Plan.
79
Administration. Our board of directors, or a
duly authorized committee of our board of directors (if appointed) administers the 2018 Plan. Under the 2018 Plan, the board of directors
(or an authorized committee) has broad authority to interpret and operate the 2018 Plan, including any award granted thereunder, and any
agreements related thereto. In addition, the board of directors is authorized, among other things, to designate participants in the 2018
Plan, determine the type and number of equity based awards, determine the timing of the grants, the vesting schedule and other terms of
the awards, and determine any other matter which is necessary or desirable for, or incidental to, the administration of the 2018 Plan
and the granting of Awards.
Israeli Tax Routes. The Israeli appendix to
the 2018 Plan provides for granting awards under the Israeli tax regime, including, without limitation, in compliance with Section 102
(“Section 102”) of the Israeli Income Tax Ordinance (New Version), 5721-1961 (the “Ordinance”) and Section 3(i)
of the Ordinance. Section 102 of the Ordinance allows employees, directors and officers who are not controlling shareholders and are considered
Israeli residents to receive favorable tax treatment for compensation in the form of shares or options. Our non-employee service providers
and controlling shareholders who are considered Israeli residents may only be granted options under section 3(i) of the Ordinance, which
does not provide for similar tax benefits. Section 102 includes two alternatives for tax treatment involving the issuance of options or
shares to a trustee for the benefit of the grantees and also includes an additional alternative for the issuance of options or shares
directly to the grantee. Section 102(b)(2) of the Ordinance, the most favorable tax treatment for the grantee, permits the issuance to
a trustee under the “capital gain track.”
U.S. Tax. Grants of Nonqualified Stock Options
(“NQSOs”) under the U.S. Appendix to the 2018 Plan (i) do not generally require to recognize income at the time of grant;
(ii) When NQSOs are exercised ordinary income is recognized to the extent the fair market value of the shares on the exercise date is
greater than the sum of the acquisition price paid to acquire the NQSOs, if any, and the exercise price paid; (iii) If exercised by a
non-employee at the time of exercise, the Company will receive a corresponding tax deduction equal to the amount of ordinary income recognized
upon exercise of the share option and the ordinary income recognized will be subject to tax withholding; (iv) When selling or exchanging
the shares acquired upon exercise of NQSO, any gain or loss recognized will generally be treated as capital gain or loss, which will be
long-term or short-term capital gain or loss depending on whether the shares were held for more than 1 year after the exercise date. The
amount of such gain or loss on sale or exchange will be the excess of the amount realized upon the sale or exchange of the shares, over
the value of the shares on the exercise date.
Grants of Incentive Stock Options (“ISOs”) under the U.S. Appendix to the
2018 Plan (i) do not generally require to recognize income at the time of grant; (ii) When ISOs are exercised generally may not lead
to recognize income even if the fair market value of the shares on the exercise date is greater than the sum of the acquisition price
paid to acquire the share option, if any, and the exercise price extent paid. However, the amount by which the fair market value of the
Ordinary Shares at the time of exercise exceeds the option price will be an “item of adjustment” for purposes of alternative
minimum tax, unless the Ordinary Shares are sold or otherwise disposed of in the same year the ISO is exercised; (iii) When selling or
exchanging the Ordinary Shares acquired upon exercise of share option, any gain realized on the sale of Ordinary Shares underlying an
ISO are taxable at capital gains rates, and no tax deduction is available to the Company, unless disposed of the Ordinary Shares within
(a) two years after the date of grant of the ISO or (b) within one year of the date the Ordinary Shares were transferred. If the Ordinary
Shares are sold or otherwise disposed of before the end of the one-year and two-year periods specified, the difference between the option
exercise price and the fair market value of the Ordinary Shares on the date of the ISO’s exercise (or the date of sale, if less)
will be taxed at ordinary income rates, and the Company will be entitled to a deduction to the extent that you must recognize ordinary
income; (iv) If ISOs are exercised more than three months after termination of employment, other than by reason of death or disability,
the ISOs are taxed as NQSO, and will be deemed to have received income on the exercise taxable at ordinary income rates. The Company will
be entitled to a tax deduction equal to the ordinary income, if any, that were realized in exercising the ISO after the applicable three-month
period.
Grants. All options granted pursuant to the
2018 Plan are evidenced by an option agreement in a form approved by the board of directors, which sets forth the terms and conditions
of the option grant, and any other documents required by the Company. Unless otherwise explicitly provided in an award agreement, if any
option has not been exercised (including where the shares covered thereby not paid for) within five years after the grant date, as set
forth in the award agreement, such option shall terminate and all interests and rights in connection with such options shall expire.
Vesting. Awards for Options shall be exercisable
pursuant to the terms under which they were awarded, including the vesting schedule, and subject to the terms and conditions of the 2018
Plan, any applicable appendix and the respective award agreement.
Exercise. An option under the 2018 Plan may
be exercised by providing the Company with a written notice of exercise and full payment of the exercise price for such shares with respect
to which the option is exercised, in accordance with procedures and payment method determined by the board of directors. In addition,
the board of directors may, at its sole discretion, allow grantees a cashless exercise option.
80
Transferability. Other than by will or the laws
of descent or as otherwise provided under the 2018 Plan, neither the options nor any right in connection with such options are assignable
or transferable.
Termination of Employment. Upon the termination
of a grantee’s employment or service for any reason, all unvested options shall immediately expire and terminate and the shares
covered by such options shall again be available for issuance under the 2018 Plan. In the event of termination of a grantee’s employment
or service for any reason other than cause or disability (as such terms are defined in the 2018 Plan), or death, all vested and exercisable
options held by such grantee as of the relevant date shall remain exercisable until the earlier of: (a) a period of 90 days from the date
of termination; or (b) expiration of the term of the option. If a grantee’s employment or services with the Company is terminated
for “cause,” all outstanding options held by such grantee (whether vested or unvested) will immediately terminate. If a grantee’s
employment or services with the Company is terminated due to such grantee’s death, all vested and exercisable options shall remain
exercisable by the grantee’s estate or by a person who acquires the right to exercise the option by bequest or inheritance until
the earlier of: (a) a period of 12 months following the grantee’s death; or (b) expiration of the term of the option.
Adjustments. In the event of a share split,
reverse share split, share dividend, combination or reclassification of our shares, or distribution of bonus shares, the board of directors
shall make a proportionate adjustment in the number of shares related to each outstanding option and to the number of shares reserved
for issuance under the 2018 Plan. Such adjustment shall be made by the board of directors, whose determination shall be final and binding.
Except as expressly provided herein, no issuance by the Company of shares of any class, or securities convertible into shares of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to an option.
Merger or Acquisition. In the case of certain
transactions such as certain mergers, acquisitions or reorganizations, or sales or dispositions of all or substantially all of the shares
or assets of the Company, the outstanding (including the unexercised, vested, unvested or restricted in any manner) portion of each outstanding
award shall be assumed or substituted with an equivalent award or the right to receive consideration from the acquiring or successor corporation
or an affiliate thereof, as shall be determined by such entity and/or the board of directors, subject to the terms of the 2018 Plan. In
the event that the successor corporation or any affiliate thereof does not provide for such an assumption and/or substitution of outstanding
awards and/or the provision of consideration for outstanding awards, then the board of directors shall have sole and absolute discretion
to determine the effect of the transaction on the portion of awards outstanding immediately prior to the effective time of the transaction.
Nayax Ltd. 2013 Share Option Plan
In February 2013 we adopted the Nayax Ltd. 2013 Share Option Plan, or the 2013 Plan,
which was amended in May 2021. We currently do not grant, and since 2017 we have not granted, awards under our 2013 Plan. In October 2020
the board of directors extended an offer to participants in our 2013 Plan to roll over their outstanding awards to the 2018 Plan. Following
that offer, the board of directors cancelled 249,340 options under the 2013 Plan and replaced them with 246,000 options under the 2018
Plan, as adjusted for the 2022 Reverse Share Split. As of December 31, 2025, there were no options to purchase ordinary shares outstanding
under the 2013 Plan.
Employment Agreements
We have written employment or service agreements with each of our executive officers.
These agreements provide for notice periods of varying duration for termination of the agreement by us or by the relevant executive officer,
during which time the executive officer will continue to receive salary and benefits. These agreements also contain customary provisions
regarding non-competition, non-solicitation, confidentiality of information and assignment of inventions. However, the enforceability
of the non-competition provisions may be limited under applicable law.
| C. |
Board Practices |
Board of Directors
Under the Companies Law and our amended and restated articles of association, our business
and affairs are managed under the direction of our board of directors. Our board of directors may exercise all powers and may take all
actions that are not specifically granted to our shareholders or to executive management. Our chief executive officer (referred to as
a “general manager” under the Companies Law) is responsible for our day-to-day management. Our chief executive officer is
appointed by, and serves at the discretion of, our board of directors, subject to the employment or services agreement that we have entered
into with him. All other executive officers are appointed by the chief executive officer, subject to applicable corporate approvals, and
are subject to the terms of any applicable employment or services agreements that we may enter into with them.
81
Under our amended and restated articles of association, the number of directors on our
board of directors (including external directors) is to be no less than three and no more than seven directors.
Our directors, other than external directors, for whom special election requirements
apply under the Companies Law, are appointed by a vote of holders of our ordinary shares, participating and voting at an annual general
meeting of our shareholders. Each director, aside from our external directors, will hold office until the next annual general meeting
of our shareholders, unless the tenure of such director expires earlier pursuant to the Companies Law or unless such director is removed
from office as described below.
Rina Shafir and Vered Raz Avayo have served as our external directors since August 2021,
and their current terms of office expire in July 2027.
Under our amended and restated articles of association, the approval of the holders
of at least a majority of the total voting power of our shareholders is generally required to remove any of our directors (other than
the external directors) from office and any amendment to this provision shall require the approval of at least a majority of the total
voting power of our shareholders. In addition, vacancies on our board of directors, including a vacancy due to the number of directors
being less than the maximum number of directors stated in our amended and restated articles of association, may be filled by our board
of directors. A director so appointed will hold office until the next annual general meeting of our shareholders.
Our board of directors has determined that each of Rina Shafir, Vered Raz Avayo, Nir
Dor and Reuven Ben Menachem qualifies as an independent director within the meaning of applicable independence standards of Nasdaq and
the SEC. We are considered a “foreign private issuer” as such term is defined in Section 405 under the Securities Act and
qualify as a “controlled company” as such term is defined in applicable Nasdaq listing rules. Although we do not currently,
nor do we presently intend to, rely on either the “foreign private issuer” or the “controlled company” exemption
from the Nasdaq listing rule requiring us to maintain a majority of independent directors on our board, we may elect to rely on either
exemption in the future.
Chairperson of the Board
Our amended and restated articles of association provide that the chairperson of the
board of directors is appointed by the members of the board of directors from among them. Under the Companies Law, the chief executive
officer of a public company, or a relative of the chief executive officer, may not serve as the chairperson of the board of directors,
and the chairperson of the board of directors, or a relative of the chairperson, may not be vested with authorities of the chief executive
officer, unless approved by a special majority of the company’s shareholders. The shareholders’ approval can be provided for
a period of five years following an initial public offering, and subsequently, for additional periods of up to three years. Such shareholder
approval was obtained prior to our initial public offering on the TASE and therefore Mr. Yair Nechmad may serve as both our chairperson
of the board of directors and chief executive officer for a period of five years until May 2026.
In addition, a person who is a subordinate, directly or indirectly, to the chief executive
officer may not serve as the chairperson of the board of directors; the chairperson of the board of directors may not be vested with authorities
that are granted to the chief executive officer, except as may be allowed under the Israeli Companies Law, or to persons who are subordinate
to the chief executive officer; and the chairperson of the board of directors may not serve in any other position in the company or in
a controlled subsidiary of the company, but may serve as a director or chairperson of a controlled subsidiary.
External Directors
Under the Companies Law, companies incorporated under the laws of the State of Israel
that are “public companies,” including companies with shares listed on Nasdaq and who have a controlling shareholder, are
required to appoint at least two external directors.
82
The provisions of the Companies Law set forth special approval requirements for the
election of external directors. External directors must be elected by a majority vote of the shares present and voting at a meeting of
shareholders, provided that either:
| • |
such majority includes at least a majority of the shares held by all shareholders who are not controlling shareholders and do not
have a personal interest in the election of the external director (other than a personal interest not deriving from a relationship with
a controlling shareholder) that are voted at the meeting, excluding abstentions; or |
| • |
the total number of shares voted by non-controlling shareholders and by shareholders who do not have a personal interest in the election
of the external director against the election of the external director does not exceed 2% of the aggregate voting rights in the company.
|
The term “controlling shareholder” as used in the Companies Law for purposes
of all matters related to external directors and for certain other purposes (such as the requirements related to the composition of the
audit committee or compensation committee, as described below), means a shareholder with the ability to direct the activities of the company,
other than by virtue of being an office holder. A shareholder is presumed to be a controlling shareholder if the shareholder holds 50%
or more of the voting rights in a company or has the right to appoint the majority of the directors of the company or its general manager.
With respect to certain matters (including various related party transactions), a controlling shareholder is deemed to include a shareholder
that holds 25% or more of the voting rights in a public company if no other shareholder holds more than 50% of the voting rights in the
company. For the purpose of determining the holding percentage stated above, two or more shareholders who have a personal interest in
a transaction that is brought for the company’s approval are deemed as joint holders.
The initial term of an external director is three years and he or she may be re-elected,
subject to certain circumstances and conditions, by the shareholders to serve in that capacity for up to two additional three-year terms.
Thereafter, the term of office for external directors for Israeli companies traded on certain foreign stock exchanges, including Nasdaq,
may be extended indefinitely in increments of additional three-year terms, in each case provided that the audit committee and the board
of directors of the company confirm that, in light of the external director’s expertise and special contribution to the work of
the board of directors and its committees, the re-election for such additional period(s) is beneficial to the company, and provided that
the external director is re-elected subject to the same shareholder vote requirements (as described below regarding the re-election of
external directors). Prior to the approval of the re-election of the external director at a meeting of shareholders, the company’s
shareholders must be informed of the term previously served by him or her and of the reasons why the board of directors and audit committee
recommend the extension of his or her term.
Re-election of an external director may be effected through one of the following mechanisms:
(i) his or her service for each such additional term is recommended by the board of
directors and is approved at a meeting of shareholders by the same majority required for the initial election of an external director
(as described above);
(ii) his or her service for
each such additional term is recommended by one or more shareholders holding at least 1% of the company’s voting rights and is both
(a) approved by a majority that includes at least a majority of the shares held by all shareholders who are not controlling shareholders
and do not have a personal interest in the election of the external director (other than a personal interest not deriving from a relationship
with a controlling shareholder) that voted at the meeting, excluding abstentions, and (b) the total number of shares held by non-controlling,
disinterested shareholders voting for such re-election exceeds 2% of the aggregate voting rights in the company, subject to additional
restrictions set forth in the Companies Law with respect to affiliations of external director nominees; or
(iii) the external director
proposed his or her own nomination, and such nomination was approved in accordance with the requirements described in the paragraph above.
External directors may be removed from office by an extraordinary meeting of shareholders
called by the board of directors, which approves such dismissal by the same shareholder vote percentage required for their election or
by a court, in each case, only under limited circumstances where the external director ceased to meet the statutory qualifications for
appointment or violated his or her duty of loyalty to the company.
If an external directorship becomes vacant and there are fewer than two external directors
on the board of directors at the time, then the board of directors is required under the Companies Law to call a meeting of the shareholders
as soon as practicable to appoint a replacement external director. Each committee of the board of directors that exercises the powers
of the board of directors must include at least one external director, except that the audit committee and the compensation committee
must include all external directors then serving on the board of directors and an external director must serve as chairperson thereof
and external directors must constitute a majority of the members of the compensation committee. Under the Companies Law, external directors
of a company are prohibited from receiving, directly or indirectly, any compensation from the company other than for their services as
external directors pursuant to the Companies Law and the regulations promulgated thereunder. Compensation of an external director is determined
prior to his or her appointment and, subject to certain exceptions, may not be changed during his or her term.
83
The Companies Law provides that a person is not qualified to be appointed as an external
director if (i) the person is a controlling shareholder of the company, or (ii) if that person is a relative of a controlling shareholder,
or if such person, his or her relative, partner, employer, another person to whom he or she was directly or indirectly subordinate or
any entity under the person’s control, has or had during the two years preceding the date of appointment as an external director:
(a) any affiliation or other disqualifying relationship with the company, with any person or entity controlling the company or a relative
of such person or with any entity controlled by or under common control with the company; or (b) in the case of a company with no controlling
shareholder or any shareholder holding 25% or more of its voting rights, had at the date of appointment as an external director any affiliation
or other disqualifying relationship with a person then serving as chairman of the board or chief executive officer, a holder of 5% or
more of the issued share capital or voting power in the company or the most senior financial officer.
The term “relative” is defined in the Companies Law as a spouse, sibling,
parent, grandparent or descendant, a spouse’s sibling, parent or descendant and the spouse of each of the foregoing persons. Under
the Companies Law, the term “affiliation” and the similar types of disqualifying relationships include (subject to certain
exceptions):
| • |
an employment relationship; |
| • |
a business or professional relationship even if not maintained on a regular basis (excluding insignificant relationships);
|
| • |
control; and |
| • |
service as an office holder, excluding service as a director in a private company prior to the initial public offering of its shares
if such director was appointed as a director of the private company in order to serve as an external director following the initial public
offering. |
The term “office holder” is defined in the Companies
Law as a general manager (i.e., chief executive officer), chief business manager, deputy general manager, vice general manager, any other
person assuming the responsibilities of any of these positions regardless of that person’s title, a director and any other manager
directly subordinate to the general manager.
In addition, no person may serve as an external director if that person’s position
or professional or other activities create, or may create, a conflict of interest with that person’s responsibilities as a director
or otherwise interfere with that person’s ability to serve as an external director or if the person is an employee of the ISA or
an Israeli stock exchange. A person may also not continue to serve as an external director if he or she received direct or indirect compensation
from the company including amounts paid pursuant to indemnification or exculpation contracts or commitments and insurance coverage for
his or her service as an external director, other than as permitted by the Companies Law and the regulations promulgated thereunder.
Following the termination of an external director’s service on a board of directors,
such former external director and his or her spouse and children may not be provided a direct or indirect benefit by the company, its
controlling shareholder or any entity under its controlling shareholder’s control. This includes engagement as an office holder
of the company or a company controlled by its controlling shareholder or employment by, or provision of services to, any such company
for consideration, either directly or indirectly, including through a corporation controlled by the former external director. This restriction
extends for a period of two years with regard to the former external director and his or her spouse or child and for one year with respect
to other relatives of the former external director.
If at the time at which an external director is appointed all members of the board of
directors who are not controlling shareholders or relatives of controlling shareholders of the company are of the same gender, the external
director to be appointed must be of the other gender. A director of one company may not be appointed as an external director of another
company if a director of the other company is acting as an external director of the first company at such time.
According to the Companies Law and the regulations promulgated thereunder, a person
may be appointed as an external director only if he or she has professional qualifications or if he or she has accounting and financial
expertise (each, as defined below); provided that at least one of the external directors must be determined by our board of directors
to have accounting and financial expertise. However, if at least one of our other directors (i) meets the independence requirements under
the Exchange Act, (ii) meets the independence requirements of rules for membership on the audit committee and (iii) has accounting and
financial expertise as defined under the Companies Law, then neither of our external directors is required to possess accounting and financial
expertise as long as each possesses the requisite professional qualifications. A director with accounting and financial expertise is a
director who, due to his or her education, experience and skills, possesses an expertise in, and an understanding of, financial and accounting
matters and financial statements, such that he or she is able to understand the financial statements of the company and initiate a discussion
about the presentation of financial data. A director is deemed to have professional qualifications if he or she has any of the following:
(i) an academic degree in economics, business management, accounting, law or public administration, (ii) an academic degree or has completed
another form of higher education in the primary field of business of the company or in a field which is relevant to his or her position
in the company or (iii) at least five years of experience serving in one of the following capacities or at least five years of cumulative
experience serving in two or more of the following capacities: (a) a senior business management position in a company with a significant
volume of business, (b) a senior position in the company’s primary field of business or (c) a senior position in public administration
or service. The board of directors is charged with determining whether a director possesses financial and accounting expertise or professional
qualifications.
84
Committees of the Board of Directors
Audit Committee
Under the Companies Law, the board of directors of a public company must appoint an
audit committee. The audit committee must be comprised of at least three directors, including all of the external directors, one of whom
must serve as chairperson of the committee. The audit committee may not include the (i) chairperson of the board; (ii) a controlling shareholder
of the company; (iii) a relative of a controlling shareholder; (iv) a director employed by or providing services on a regular basis to
the company, to a controlling shareholder or to an entity controlled by a controlling shareholder; or (v) a director who derives most
of his or her income from a controlling shareholder. In addition, under the Companies Law, the audit committee of a publicly traded company
must consist of a majority of unaffiliated directors. In general, an “unaffiliated director” under the Companies Law is defined
as either an external director or as a director who meets the following criteria:
| • |
he or she meets the qualifications for being appointed as an external director, except for the requirement (i) that the director
be an Israeli resident (which does not apply to companies such as ours whose securities have been offered outside of Israel or are listed
for trading outside of Israel) and (ii) for accounting and financial expertise or professional qualifications; and |
| • |
he or she has not served as a director of the company for a period exceeding nine consecutive years. For this purpose, a break of
less than two years in his or her service as a director shall not be deemed to interrupt the continuity of the service. |
Each member of our audit committee (each, as identified in the second paragraph under
“—Listing Requirements” below) is an unaffiliated director under the Companies Law, thereby fulfilling the foregoing
Israeli law requirement for the composition of the audit committee.
Listing Requirements
Under the corporate governance rules of Nasdaq, we are required to maintain an audit
committee consisting of at least three independent directors, each of whom is financially literate and one of whom has accounting or related
financial management expertise.
Our audit committee consists of Vered Raz Avayo, Rina Shafir and Nir Dor, with Vered
Raz Avayo serving as the chairperson of the committee. All members of our audit committee meet the requirements for financial literacy
under the applicable rules and regulations of the SEC and the corporate governance rules of Nasdaq. Our board of directors has determined
that each member of our audit committee is an audit committee financial expert as defined by the SEC rules and has the requisite financial
experience as defined by the corporate governance rules of Nasdaq.
Our board of directors has determined
that each member of our audit committee is “independent” as such term is defined in Rule 10A-3(b)(1) under the Exchange Act,
which is in addition to the general test for independence of board and committee members, which is described in “Item 16G. Corporate
Governance”.
85
Audit Committee Role
Our board of directors has adopted an audit committee charter setting forth the responsibilities
of the audit committee, consistent with the Companies Law, SEC rules and the corporate governance rules of Nasdaq, which include among
others:
| • |
retaining and terminating our independent auditors, subject to ratification by the board of directors, and in the case of retention,
to ratification by the shareholders; |
| • |
pre-approving audit and non-audit services to be provided by the independent auditors and related fees and terms; |
| • |
overseeing the accounting and financial reporting processes of the Company and audits of our financial statements, the effectiveness
of our internal control over financial reporting and making such reports as may be required of an audit committee under the rules and
regulations promulgated under the Exchange Act; |
| • |
reviewing with management and our independent auditor our annual and interim financial statements prior to publication or filing
(or submission, as the case may be) to the SEC; |
| • |
recommending to the board of directors the retention and termination of the internal auditor and the internal auditor’s engagement
fees and terms, in accordance with the Companies Law, approving the yearly or periodic work plan proposed by the internal auditor and
examining whether the internal auditor was afforded all required resources to perform its role; |
| • |
reviewing with our general counsel and/or external counsel, as deemed necessary, legal and regulatory matters that could have a material
impact on the financial statements; |
| • |
identifying irregularities in our business administration by, among other things, consulting with the internal auditor or with the
independent auditor, and suggesting corrective measures to the board of directors; |
| • |
reviewing policies and procedures with respect to transactions between the Company and officers and directors (other than transactions
related to the compensation or terms of service of the officers and directors), or affiliates of officers or directors, or transactions
that are not in the ordinary course of the Company’s business and deciding whether to approve such acts and transactions if so required
under the Companies Law; and |
| • |
establishing procedures for the handling of employees’ complaints as to the management of our business and the protection to
be provided to such employees. |
Remuneration Committee
Companies Law Requirements
Under the Companies Law, the board of directors of a public company must appoint a compensation
committee. The Companies Law provides that a compensation committee be comprised of at least three directors, including all of the external
directors, who must constitute a majority of the members of the compensation committee. The chairperson of the compensation committee
must be an external director. Each compensation committee member who is not an external director must be a director whose compensation
does not exceed an amount that may be paid to an external director. The compensation committee is subject to the same Companies Law restrictions
as the audit committee as to who may not be a member of the compensation committee. Each member of our compensation committee, which we
refer to as our remuneration committee (each, as identified in the second paragraph under “—Listing Requirements” below),
fulfills the foregoing Israeli law requirements related to the composition of the compensation committee.
Listing Requirements
Under the corporate governance rules of Nasdaq, we are required to maintain a compensation
committee consisting of at least two independent directors.
Our remuneration committee consists of Rina Shafir, Vered Raz Avayo and Nir Dor, with
Rina Shafir serving as chairperson of the committee. Our board of directors has determined that each member of our remuneration committee
is independent under the corporate governance rules of Nasdaq, including the additional independence requirements applicable to the members
of a compensation committee.
86
Remuneration Committee Role
In accordance with the Companies Law, the roles of our remuneration committee are, among
others, as follows:
| • |
recommending to the board of directors the approval of the compensation policy for office holders and, once every three years, regarding
any extensions to a compensation policy that was adopted for a period of more than three years; |
| • |
monitoring the implementation of the compensation policy and periodically making recommendations to the board of directors with respect
to any amendments or updates of the compensation policy; |
| • |
resolving whether or not to approve arrangements with respect to the terms of office and employment of office holders; and
|
| • |
exempting, under certain circumstances, transactions with our chief executive officer from the approval of our shareholders.
|
Our board of directors has adopted a remuneration committee charter setting forth the
responsibilities of the committee, consistent with the Companies Law and the corporate governance rules of Nasdaq, which include among
others:
| • |
from time to time, reviewing the implementation of our compensation policy in accordance with the requirements of the Companies Law
as well as other compensation policies, incentive-based compensation plans and equity-based compensation plans (insofar as these relate
to office holders in the Company), and overseeing the development and implementation of such policies and recommending to our board of
directors any amendments or modifications the committee deems appropriate, including as required under the Companies Law; |
| • |
reviewing and approving the employment terms of our office holders, including granting of options and other incentive awards and
reviewing and approving corporate goals and objectives relevant to the compensation of our executive officers, including evaluating their
performance in light of such goals and objectives; and |
| • |
approving and exempting certain transactions regarding office holders’ compensation pursuant to the Companies Law. |
Compensation Policy under the Companies Law
Under the Companies Law, a public company must have a compensation policy approved by
its board of directors after receiving and considering the recommendations of the compensation committee. In addition, the compensation
policy must be approved at least once every three years, first, by the board of directors, upon recommendation of the compensation committee,
and second, by a simple majority of the ordinary shares present, in person or by proxy, and voting at a shareholders meeting, provided
that either:
| • |
such majority includes at least a majority of the shares held by shareholders who are not controlling shareholders and shareholders
who do not have a personal interest in such compensation policy which voted at the meeting, disregarding abstentions; or |
| • |
the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in the compensation
policy and who vote against the policy, does not exceed 2% of the aggregate voting rights in the company. |
Under special circumstances, the board of directors may approve the compensation policy
despite the objection of the shareholders provided that the compensation committee and then the board of directors decide, on the basis
of detailed grounds and after further discussion of the compensation policy, that approval of the compensation policy, despite the objection
of the shareholders, is for the benefit of the company.
If a company adopts a compensation policy in advance of its initial public offering,
and describes it in its prospectus for such offering, then such compensation policy shall be deemed a validly adopted policy in accordance
with the Companies Law requirements described above, and it will remain in effect for a term of five years from the date such company
becomes a public company. In connection with our initial public offering on the TASE, we adopted a compensation policy, which will be
in effect for five years ending in May 2026.
The compensation policy must be based on certain considerations, include certain provisions
and reference certain matters as set forth in the Companies Law.
87
The compensation policy serves as the basis for decisions concerning the financial terms
of employment or engagement of office holders, including exculpation, insurance, indemnification or any monetary payment or obligation
of payment in respect of employment or engagement. The compensation policy must be determined and later reevaluated according to certain
factors, including: the advancement of the company’s objectives, business plan and long-term strategy; the creation of appropriate
incentives for office holders, while considering, among other things, the company’s risk management policy; the size and the nature
of the company’s operations; and with respect to variable compensation, the contribution of the office holder towards the achievement
of the company’s long-term goals and the maximization of its profits, all with a long-term objective and according to the position
of the office holder. The compensation policy must furthermore consider the following additional factors:
| • |
the education, skills, experience, expertise and accomplishments of the relevant office holder; |
| • |
the office holder’s position and responsibilities; |
| • |
prior compensation agreements with the office holder; |
| • |
the ratio between the cost of the terms of employment of an office holder and the cost of the employment of other employees of the
company, including employees employed through contractors who provide services to the company, in particular the ratio between such cost
to the average and median salary of such employees of the company, as well as the impact of disparities between them on the work relationships
in the company; |
| • |
if the terms of employment include variable components—the possibility of reducing variable components at the discretion of
the board of directors and the possibility of setting a limit on the value of non-cash variable equity-based components; and |
| • |
if the terms of employment include severance compensation—the term of employment or office of the office holder, the terms
of the office holder’s compensation during such period, the company’s performance during such period, the office holder’s
individual contribution to the achievement of the company goals and the maximization of its profits and the circumstances under which
he or she is leaving the company. |
The compensation policy must also include, among other things:
| • |
with regard to variable components: |
| • |
with the exception of office holders who report to the chief executive officer, a means of determining the variable components on
the basis of long-term performance and measurable criteria; provided that the company may determine that an immaterial part of the variable
components of the compensation package of an office holder shall be awarded based on non-measurable criteria, or if such amount is not
higher than three months’ salary per annum, taking into account such office holder’s contribution to the company; and
|
| • |
the ratio between variable and fixed components, as well as the limit of the values of variable components at the time of their payment,
or in the case of equity-based compensation, at the time of grant. |
| • |
a claw-back provision under which the office holder will return to the company, according to conditions to be set forth in the compensation
policy, any amounts paid as part of the office holder’s terms of employment, if such amounts were paid based on information later
discovered to be wrong, and such information was restated in the company’s financial statements; |
| • |
the minimum holding or vesting period of variable equity-based components to be set in the terms of office or employment, as applicable,
while taking into consideration long-term incentives; and |
| • |
a limit to retirement grants. |
Our compensation policy is designed to promote retention and motivation of directors
and executive officers, incentivize superior individual excellence, align the interests of our directors and executive officers with our
long-term performance and provide a risk management tool. To that end, a portion of our executive officer compensation package is targeted
to reflect our short- and long-term goals, as well as the executive officer’s individual performance. On the other hand, our compensation
policy includes measures designed to reduce the executive officer’s incentives to take excessive risks that may harm us in the long-term,
such as limits on the value of cash bonuses and equity-based compensation, limitations on the ratio between the variable and the total
compensation of an executive officer and minimum vesting periods for equity-based compensation.
88
Our compensation policy also addresses our executive officers’ individual characteristics
(such as their respective position, education, scope of responsibilities and contribution to the attainment of our goals) as the basis
for compensation variation among our executive officers and considers the internal ratios between compensation of our executive officers
and directors and other employees. Pursuant to our compensation policy, the compensation that may be granted to an executive officer may
include: base salary, annual bonuses and other cash bonuses (such as a signing bonus and special bonuses with respect to any special achievements,
such as outstanding personal achievement, outstanding personal effort or outstanding company performance), equity-based compensation,
benefits and retirement and termination of service arrangements. All cash bonuses are limited to a maximum amount linked to the executive
officer’s base salary.
An annual cash bonus may be awarded to executive officers upon the attainment of pre-set
periodic objectives and individual targets. The annual cash bonus that may be granted to our executive officers other than our chief executive
officer will be based on performance objectives and a discretionary evaluation of the executive officer’s overall performance by
our chief executive officer and may be subject to minimum thresholds. The annual cash bonus that may be granted to executive officers
other than our chief executive officer may alternatively be based entirely on a discretionary evaluation. Furthermore, our chief executive
officer will be entitled to approve performance objectives for executive officers who report to him.
The measurable performance objectives of our chief executive officer will be determined
annually by our remuneration committee and board of directors. A non-material portion of the chief executive officer’s annual cash
bonus, as provided in our compensation policy, may be based on a discretionary evaluation of the chief executive officer’s overall
performance by our remuneration committee and the board of directors.
The equity-based compensation under our compensation policy for our executive officers
(including members of our board of directors) is designed in a manner consistent with the underlying objectives in determining the base
salary and the annual cash bonus, with its main objectives being to enhance the alignment between the executive officers’ interests
with our long-term interests and those of our shareholders and to strengthen the retention and the motivation of executive officers in
the long term. Our compensation policy provides for executive officer compensation in the form of share options or other equity-based
awards, such as restricted shares and RSUs, in accordance with our equity incentive plan then in place. All equity-based incentives granted
to executive officers shall be subject to vesting periods in order to promote long-term retention of the awarded executive officers. The
equity-based compensation shall be granted from time to time and be individually determined and awarded according to the performance,
educational background, prior business experience, qualifications, role and the personal responsibilities of the executive officer.
In addition, our compensation policy contains compensation recovery, or claw-back, provisions
which allow us under certain conditions to recover bonuses paid in excess, enables our chief executive officer to approve an immaterial
change to the terms of employment of an executive officer who reports directly to him or her (provided that the changes of the terms of
employment are in accordance with our compensation policy) and allows us to exculpate, indemnify and insure our executive officers and
directors to the maximum extent permitted by Israeli law, subject to certain limitations set forth therein.
Our compensation policy also provides for compensation to the members of our board of
directors as follows:
(i) to the external directors, in accordance with the amounts provided in the Companies
Regulations (Rules Regarding the Compensation and Expenses of an External Director) 5760-2000, and as amended by the Companies Regulations
(Relief for Public Companies Traded in Stock Exchange Outside of Israel) 5760-2000, as in effect from time to time, and
(ii) to the non-employee directors, in accordance with the amounts determined in our
compensation policy.
Our compensation policy is filed as an exhibit to this annual report.
Clawback Policy
The Company has adopted a policy for recovery of erroneously awarded compensation, or
clawback policy, that complies with the SEC rules for Nasdaq listed companies. Our clawback policy was filed as Exhibit 97.1 to the Company’s
Annual Report on Form 20-F for the fiscal year ended December 31, 2023.
89
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee consists of Yair Nechmad, David Ben-Avi
and Reuven Ben Menachem, with Yair Nechmad serving as chairperson of the committee. Our board of directors has adopted a nominating and
corporate governance committee charter setting forth the responsibilities of the committee, which include among others:
| • |
overseeing and assisting our board in reviewing and recommending nominees for election as directors; |
| • |
assessing the performance of the members of our board; and |
| • |
establishing and maintaining effective corporate governance policies and practices. |
Compensation of Directors and Executive Officers
Directors. Under the Companies Law, the compensation
of our directors requires the approval of the compensation committee, the subsequent approval of the board of directors and, unless exempted
under regulations promulgated under the Companies Law, the approval of our shareholders at a general meeting. If the compensation of our
directors is inconsistent with our stated compensation policy, then, those provisions that must be included in the compensation policy
according to the Companies Law must have been considered by the compensation committee and board of directors, and shareholder approval
will also be required, provided that:
| • |
at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest
in such matter, present and voting on such matter, are voted in favor of the compensation package, excluding abstentions; or |
| • |
the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in such matter voting
against the compensation package does not exceed 2% of the aggregate voting rights in the Company. |
Executive officers other than the Chief Executive Officer.
The Companies Law requires the approval of the compensation of a public company’s executive officers (other than the chief executive
officer) in the following order: (i) the compensation committee, (ii) the company’s board of directors, and (iii) if such compensation
arrangement is inconsistent with the company’s stated compensation policy, the company’s shareholders (by a special majority
vote as discussed above with respect to the approval of director compensation that is inconsistent with the compensation policy). However,
if the shareholders of the company decline to approve a compensation arrangement with an executive officer that is inconsistent with the
company’s stated compensation policy, the compensation committee and board of directors may override the shareholders’ decision
if each of the compensation committee and the board of directors provide detailed reasons for their decision.
An amendment to an existing arrangement with an office holder requires only the approval
of the compensation committee, if the compensation committee determines that the amendment is not material in comparison to the existing
arrangement. However, according to regulations promulgated under the Companies Law, an amendment to an existing arrangement with an office
holder (who is not a director) who is a subordinate to the chief executive officer shall not require the approval of the compensation
committee, if (i) the amendment is approved by the chief executive officer, (ii) the company’s compensation policy provides that
a non-material amendment to the terms of service of an office holder (other than the chief executive officer) may be approved by the chief
executive officer and (iii) the engagement terms are consistent with the company’s compensation policy.
Chief Executive Officer. Under the Companies
Law, the compensation of a public company’s chief executive officer is required to be approved by: (i) the company’s compensation
committee; (ii) the company’s board of directors, and (iii) the company’s shareholders (by a special majority vote as discussed
above with respect to the approval of director compensation). The approval of each of the compensation committee and the board of directors
should be in accordance with the company’s stated compensation policy; however, in special circumstances, they may approve compensation
terms for the company’s chief executive officer that are inconsistent with such policy provided that they have considered those
provisions that must be included in the compensation policy according to the Companies Law and that shareholder approval was obtained
(by a special majority vote as discussed above with respect to the approval of director compensation). However, if the shareholders of
the company decline to approve the compensation arrangement with the chief executive officer, the compensation committee and board of
directors may override the shareholders’ decision if each of the compensation committee and the board of directors provide a detailed
report for their decision. In addition, the compensation committee may waive the shareholder approval requirement with regard to the approval
of the engagement terms of a candidate for the chief executive officer position if they determine that the compensation arrangement is
consistent with the company’s stated compensation policy, that the chief executive officer candidate did not have a prior business
relationship with the company or a controlling shareholder of the company and that subjecting the approval of the engagement to a shareholder
vote would impede the company’s ability to employ the chief executive officer candidate. In the event that the chief executive officer
candidate also serves as a member of the board of directors, his or her compensation terms as chief executive officer will be approved
in accordance with the rules applicable to approval of compensation of directors.
90
Internal Auditor
Under the Companies Law, the board of directors of a public company must appoint an
internal auditor based on the recommendation of the audit committee. The role of the internal auditor is, among other things, to examine
whether a company’s actions comply with applicable law and orderly business procedure. Under the Companies Law, the internal auditor
cannot be an interested party or an office holder or a relative of an interested party or an office holder, nor may the internal auditor
be the company’s independent auditor or its representative. An “interested party” is defined in the Companies Law as:
(i) a holder of 5% or more of 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 or to designate the chief executive officer of the company, or (iii) any person who serves as a director or as a
chief executive officer of the company. Our internal auditor is presently Doron Cohen, of Fahn Kane (Grant Thornton Israel).
Approval of Related Party Transactions under Israeli Law
Fiduciary Duties of Directors and Executive Officers
The Companies Law codifies the fiduciary duties that office holders owe to a company
consisting of a duty of care and a duty of loyalty. The duty of care requires an office holder to act with the level of care with which
a reasonable office holder in the same position would have acted under the same circumstances. The duty of care includes, among other
things, a duty to use reasonable means, in light of the circumstances, to obtain:
| • |
information on the advisability of a given action brought for his, her or its approval or performed by virtue of his or her position;
and |
| • |
all other important information pertaining to such action. |
The duty of loyalty requires that an office holder act in good faith and in the best
interests of the company and includes, among other things, to:
| • |
refrain from any act involving a conflict of interest between the performance of his or her duties in the company and his or her
other duties or personal affairs; |
| • |
refrain from any activity that is competitive with the business of the company; |
| • |
refrain from exploiting any business opportunity of the company for the purpose of gaining a personal advantage for himself, herself
or others; and |
| • |
disclose to the company any information or documents relating to the company’s affairs which the office holder received as
a result of his or her position as an office holder. |
Under the Companies Law, a company may approve an act specified above which would otherwise
constitute a breach of the office holder’s duty of loyalty, provided that the office holder acted in good faith, neither the act
nor its approval harms the company, and the office holder discloses his or her personal interest a sufficient amount of time before the
discussion for approval of such act. Any such approval is subject to the terms of the Companies Law setting forth, among other things,
the appropriate bodies of the company required to provide such approval and the methods of obtaining such approval.
Disclosure of Personal Interests of an Office
Holder and Approval of Certain Transactions
The Companies Law requires that an office holder promptly disclose to the board of directors
any personal interest that such office holder may have and all related material information known to such office holder concerning any
existing or proposed transaction of the company. A personal interest includes an interest of any person in an act or transaction of a
company, including a personal interest of one’s relative or of a corporate body in which such person or a relative of such person
is a 5% or greater shareholder, director or general manager or in which such person has the right to appoint at least one director or
the general manager, but excluding a personal interest stemming solely from one’s ownership of shares in the company. A personal
interest includes the personal interest of a person for whom the office holder holds a voting proxy or the personal interest of the office
holder with respect to the office holder’s vote on behalf of a person for whom he or she holds a proxy even if such shareholder
has no personal interest in the matter.
91
If it is determined that an office holder has a personal interest in a non-extraordinary
transaction, meaning any transaction that is in the ordinary course of business, on market terms or that is not likely to have a material
impact on the company’s profitability, assets or liabilities, approval by the board of directors is required for the transaction,
unless the company’s articles of association provide for a different method of approval. Any such transaction that is adverse to
the company’s interests may not be approved by the board of directors.
Approval first by the company’s audit committee and subsequently by the board
of directors is required for an extraordinary transaction (meaning a transaction that is not in the ordinary course of business, not on
market terms or that is likely to have a material impact on the company’s profitability, assets or liabilities) in which an office
holder has a personal interest.
A director and any other office holder who has a personal interest in a transaction
which is considered at a meeting of the board of directors or the audit committee may generally (unless it is with respect to a transaction
which is not an extraordinary transaction) not be present at such a meeting or vote on that matter, unless a majority of the directors
or members of the audit committee, as applicable, have a personal interest in the matter.
If a majority of the members of the audit committee or the board of directors have a
personal interest in the matter, then all of the directors may participate in the deliberations of the audit committee or board of directors,
as applicable, with respect to such transaction and vote on the approval thereof and, in such case, shareholder approval is also required.
Certain disclosure and approval requirements apply under Israeli law to certain transactions
with a controlling shareholder or in which a controlling shareholder has a personal interest and certain arrangements regarding the terms
of service or employment of a controlling shareholder. For these purposes, a controlling shareholder is any shareholder that has the ability
to direct the company’s actions, including any shareholder holding 25% or more of the voting rights if no other shareholder owns
more than 50% of the voting rights in the company. Two or more shareholders with a personal interest in the approval of the same transaction
are deemed to be one shareholder for these purposes.
For a description of the approvals required under Israeli law for compensation arrangements
of officers and directors, see “—Compensation of Directors and Executive Officers” above.
| D. |
Employees |
As of December 31, 2025, we had more than 1,200 full-time employees, of whom more than
600 are in Israel, with the remainder in various countries including the United States, Ukraine, Australia, the United Kingdom, Japan,
China, Germany and Canada. We value our employees and invest in them through training and compensation, including incentive compensation.
Most of our research and development and product management activities are carried out in Israel and the Ukraine. Since the outbreak of
the war in Israel on October 7, 2023, and despite of the ceasefire that came into effect in October 2025, the security situation in Israel
remains unstable. In addition, we are actively monitoring the situation in Ukraine and have extended our employees there assistance should
they choose to relocate as we care deeply for the safety and well-being of our Ukrainian work force. To date, neither the Israel nor Ukraine
conflict, nor the responsive measures taken by the global community in each case, have had a material impact on our research and development
and product management activities, nor on our results of operations and financial condition.
We believe that our culture facilitates an enjoyable and meaningful work environment,
permitting our employees to feel confident and see the impact of their accomplishments, all of which provide them a greater sense of ownership.
| E. |
Share Ownership |
See “Item 7. Major Shareholders and Related Party Transactions—A. Major
Shareholders.”
| F. |
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation |
Not applicable.
92
| ITEM 7. |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
| A. |
Major Shareholders |
The following table presents the beneficial ownership of our ordinary shares as of February
26, 2026 for:
| • |
each person, or group of affiliated persons, known by us to own beneficially 5% or more of our outstanding ordinary shares;
|
| • |
each of our executive officers and members of our board of directors; and |
| • |
all of our executive officers and members of our board of directors as a group. |
Beneficial ownership is determined in accordance with the rules of the SEC and generally
includes voting or investment power with respect to securities. Under those rules, beneficial ownership includes any shares as to which
the individual or entity has sole or shared voting power or investment power. Except as otherwise indicated, and subject to community
property laws where applicable, we believe, based on the information provided to us, that the persons and entities named in the table
below have sole voting and investment power with respect to all ordinary shares shown as beneficially owned by them.
The percentage of beneficial ownership for the following table is based on 37,359,195
ordinary shares outstanding as of February 26, 2026. Options to purchase shares that are exercisable within 60 days are deemed to be beneficially
owned by the persons holding these options for the purpose of computing percentage ownership of that person, but are not treated as outstanding
for the purpose of computing any other person’s ownership percentage.
Unless otherwise indicated, the address for each listed shareholder is: 3 Arik Einstein
Street, Bldg. B, 1st Floor Herzliya 4659071, Israel.
As of February 26, 2026, there were three record holders of our ordinary shares located
in the United States, holding shares representing approximately 14% of our outstanding ordinary shares. The actual number of shareholders
is greater than this number of record holders and includes shareholders who are beneficial owners but whose shares are held in “street
name” by brokers and other nominees. This number of holders of record also does not include shareholders whose shares may be held
in trust or by other entities.
|
Name of Beneficial Owner |
Number of
Ordinary Shares Beneficially Owned |
Percentage of Ordinary Shares Beneficially Owned |
||||||
|
5% or Greater Shareholders |
||||||||
|
Amir Nechmad(1)
|
6,231,400 |
16.68 |
% | |||||
|
Yair Nechmad(2)
|
9,021,257 |
23.81 |
% | |||||
|
David Ben-Avi(3)
|
6,864,572 |
18.26 |
% | |||||
|
Harel Insurance Investments & Financial Services Ltd.(4) |
2,089,662 |
5.59 |
% | |||||
|
Other Executive Officers and Board Members |
||||||||
|
Rina Shafir |
* |
* |
||||||
|
Vered Raz Avayo |
* |
* |
||||||
|
Nir Dor |
* |
* |
||||||
|
Reuven Ben Menachem |
* |
* |
||||||
|
Eran Havshush |
* |
* |
||||||
|
Sagit Manor |
* |
* |
||||||
|
Oren Tepper |
* |
* |
||||||
|
Keren Sharir |
* |
* |
||||||
|
Michal Sever |
* |
* |
||||||
|
Tami Erel |
* |
* |
||||||
|
Gal Omer |
* |
* |
||||||
|
Carly Furman |
* |
* |
||||||
|
Yaron Aharon |
* |
* |
||||||
|
Aaron Greenberg |
* |
* |
||||||
|
Erez Aminpour |
* |
* |
||||||
|
Eden Zafrani |
* |
* |
||||||
|
All executive officers and Board members as a group (18 individuals) |
16,019,381 |
42.03 |
% | |||||
| * |
Represents beneficial ownership of less than 1% of our total outstanding ordinary shares. |
93
| (1) |
Consists of 6,231,400 ordinary shares held of record by Mr. Amir Nechmad. |
| (2) |
Consists of (i) 8,499,517 ordinary shares held of record by Mr. Yair Nechmad or a company wholly owned by Mr. Yair Nechmad;
(ii) 235,605 ordinary shares subject to options held by Mr. Yair Nechmad that are exercisable; and 286,135 ordinary shares subject to
warrants held by Mr. Yair Nechmad that are exercisable. |
| (3) |
Consists of (i) 6,628,967 ordinary shares held of record by Mr. Ben-Avi and (ii) 235,605 ordinary shares subject to options held
by Mr. Ben-Avi that are exercisable. |
| (4) |
Pursuant to a Schedule 13G filed by Harel Insurance Investments & Financial Services Ltd. (“Harel”)
with the SEC on January 20, 2026, consists of 2,089,662 Ordinary Shares as of January 14, 2026, beneficially owned by Harel and entities
under its control. The address of Harel is 3 Aba Hillel Street, Ramat Gan 52118, Israel. |
| B. |
Related Party Transactions |
Unless otherwise noted, the following is a description of related party transactions
we have entered into since January 1, 2025 with any of the members of our board of directors, any executive officer and any holder of
more than 5% of our ordinary shares at the time of such transaction, or any immediate family members of the above individuals, where such
family members or individuals had or will have a direct or indirect material interest, other than compensation arrangements with the Company,
which are described under “Item 6. Directors, Senior Management and Employees—B. Compensation” and “Item 6. Directors,
Senior Management and Employees—C. Board Practices.”
Approval of Related Party Transactions
See “Item 6. Directors, Senior Management and Employees—C. Board Practices—Approval
of Related Party transactions under Israeli Law” for more information.
Shareholders’ Agreement
On March 9, 2021, Mr. Amir Nechmad, Mr. Yair Nechmad and Mr. David Ben- Avi (our “Controlling
Shareholders”) entered into a shareholders’ agreement (the “Shareholders’ Agreement”), as amended by Amendment
No.1 to the Shareholders Rights Agreement entered into on March 6, 2026. According to the terms of the Shareholders’ Agreement,
it shall be in effect for so long as no single shareholder of the Company holds a greater number of shares than the aggregate number of
shares held by the Controlling Shareholders. The following is a summary of certain terms of the Shareholders’ Agreement, which summary
is not intended to be complete and is qualified in its entirety by the full text of the Shareholders’ Agreement, a copy of which
is filed as an exhibit to this annual report.
94
Board Nomination Rights
Pursuant to the Shareholders’ Agreement, the Controlling Shareholders have agreed
as follows: (1) each of the Controlling Shareholders that holds at least 15% of issued and outstanding share capital of the Company shall
be entitled to recommend the identity of one director; (2) the identity of up to two directors shall be recommended by the Controlling
Shareholders in accordance with the provisions of the next paragraph, provided that one of such director shall qualify as an independent
director (as such term is defined in the Companies Law); and (3) the Controlling Shareholders shall recommend, in accordance with the
provisions of the next paragraph, the identity of the external directors (as such term is defined in the Companies Law) (according to
the provisions of the Companies Law, the number of external directors serving on the board shall be at least two).
The identity of the Controlling Shareholders’ recommendee(s) to serve on the board
in accordance with sections (2) and (3) above shall be determined by a unanimous consent of the Controlling Shareholders. However, in
the event that one of the Controlling Shareholders (in this paragraph: the “Minority Shareholder”) shall hold less than two-thirds
of the number of shares held by each of the other two Controlling Shareholders (in this paragraph: the “Majority Shareholders”),
and the Controlling Shareholders are not able to reach a unanimous consent, then the identity of the Shareholders’ recommendee(s)
to serve on the board in accordance with sections (2) and (3) above shall be determined by the unanimous consent of the Majority Shareholders.
To the extent they cannot reach a unanimous consent, then to the fullest extent allowed by law, the Controlling Shareholders shall vote
for the reappointment to the board of the directors already serving on the board.
Each Controlling Shareholder undertook to vote all of the Company’s shares held
by him/it in the general meeting in favor of the appointment of members of the board whose identities have been determined in accordance
with the above provisions, and against the appointment of members of the board whose identities have not been determined in accordance
with the above provisions.
Preliminary Meetings
The Controlling Shareholders shall hold a preliminary meeting in advance of each general
meeting of the Company and, at such meeting, shall reach a consensus on how to vote their shares at the general meeting of shareholders
of the Company. If the Controlling Shareholders are unable to reach consensus with respect to the resolutions, they shall vote in a way
that will maintain the Company’s status quo. Notwithstanding the above, in the event that one of the Controlling Shareholders (in
this paragraph: the “Minority Shareholder”) shall hold less than two-thirds (2/3) of the number of shares held by each of
the other two Controlling Shareholders (in this paragraph: the “Majority Shareholders”), and the Controlling Shareholders
do not reach a unanimous decision at the preliminary meeting as to how the Controlling Shareholders shall vote their shares in respect
of a certain resolution on the agenda of the general meeting, then: (a) if the Majority Shareholders reach an agreement as to how the
Controlling Shareholders shall vote their shares in respect of a certain resolution on the agenda of the general meeting, each Controlling
Shareholder (including the Minority Shareholder) will vote all of his/its Shares at the relevant general meeting, in accordance with the
decision reached by the Majority Shareholders; and (b) if the Majority Shareholders do not reach an agreement as to how the Controlling
Shareholders shall vote their shares in respect of a certain resolution on the agenda of the General Meeting, then each Controlling Shareholder
(including the Minority Shareholder) will vote all of his/its Shares at the relevant general meeting in a manner which preserves the Company’s
status quo.
Limitation on Transfer of Shares
Each of the Controlling Shareholders holds a right of first offer with regard to the
other Controlling Shareholders who may wish to sell shares of the Company, provided the Controlling Shareholder wishes to sell shares
in excess of 5%, in the aggregate in a given year, of the shares held by such Controlling Shareholder, on the TASE or to a third party.
Additionally, if any of the Controlling Shareholders wishes to sell or transfer shares of the Company to a third party outside of the
TASE in a single transaction or in a series of transactions constituting the lower of: (x) 10% of the Company’s issued and outstanding
ordinary shares, or (y) 50% of such Controlling Shareholders’ holdings in the Company, and the other Controlling Shareholder decline
to exercise their right of first offer, the selling Controlling Shareholders must offer the other Controlling Shareholders to tag along
to the sale and sell shares they hold to the third party on the same terms. Furthermore, if Controlling Shareholders holding a majority
of the Company’s shares held by all Controlling Shareholders wish to accept an offer to sell all of such shares to a third party,
and the purchaser of such shares conditions its offer upon the acquisition of all shares held by the Controlling Shareholders, the non-selling
Controlling Shareholders must sell their shares to the purchaser at the same price and on the same terms offered to the selling Controlling
Shareholders, provided that the price per share actually paid to the non-selling Controlling Shareholder shall be at least 10% greater
than the average closing price of the Company’s share on the stock exchange during the 30 trading days preceding the day on which
the sale transaction was offered to the non-selling Controlling Shareholder.
95
Notwithstanding the above, each Controlling Shareholder is entitled to sell or transfer,
in every calendar year, up to two percent of the Company’s issued and outstanding ordinary shares as of immediately following the
completion of the Company’s initial public offering on the TASE, without implicating the transfer restrictions described in the
preceding paragraph.
Registration Rights Agreement
We are party to a registration rights agreement (the “Registration Rights Agreement”)
with the Controlling Shareholders. Pursuant to the Registration Rights Agreement, the Controlling Shareholders are entitled to request
that we register their ordinary shares under the Securities Act, subject to cutback for marketing reasons and certain other conditions.
The Controlling Shareholders are also entitled to certain “piggyback” registration rights, which are also subject to cutback
for marketing reasons and certain other conditions. Registration of such shares under the Securities Act would result in such shares becoming
freely tradable without restriction under the Securities Act, except for shares purchased by affiliates, immediately upon the effectiveness
of such registration.
Services Agreement with Mr. Havshush
Mr. Havshush, who became a director of the Company in July 2024, acted as a consultant
to the Company since 2012, providing services related to taxation, capital investments and other financial and accounting matters. Fees
paid by the Company to Mr. Havshush were $87,000, $91,000 and $88,000 in 2025, 2024 and 2023, respectively. Also, A. Omer & Co., an
Israeli accounting firm where Mr. Havshush serves as a partner, has provided payroll and bookkeeping services to the Company and its Israeli
subsidiaries since 2018. Fees paid by the Company (and its Israeli subsidiaries) to A. Omer & Co. were $46,000, $63,000 and $64,000
in 2025, 2024 and 2023, respectively.
On May 29, 2024, the Company, Mr. Havshush and A. Omer & Co. entered into a new
service agreement (the “New Service Agreement”), pursuant to which Mr. Havshush will continue provide services to the Company
related to accounting, tax reporting and compliance and other tax issues of the Company and its Israeli subsidiaries, mergers and acquisitions
in Israel, and employee stock option plans, among others, for which he will receive a monthly fee of between NIS 20,000 to NIS 30,000
(equal to approximately $6,200 to $9,400, respectively), depending on hours worked, and additional compensation for services rendered
in connection with completed acquisitions, offerings or additional special projects, equal to up to three times his monthly fees. In addition,
under the New Service Agreement, A. Omer & Co. will continue to provide services to the Company and affiliated entities related to
payroll, bookkeeping and tax matters, among others, with fees to be paid based on hourly rates of between NIS 200 and NIS 250 (equal to
approximately $54 and $68, respectively), subject to a 25% discount. The foregoing is a summary of certain terms of the New Service Agreement,
which summary is not intended to be complete and is qualified in its entirety by the full text of the New Service Agreement, a copy of
which is filed as an exhibit to this annual report.
The fees paid to Mr. Havshush and A. Omer & Co. pursuant to the New Service Agreement
are in addition to director fees paid to Mr. Havshush for his service as a director of the Company.
In addition, Mr. Havshush also provides audit, tax and consulting services on an ongoing
basis to our founders, Mr. Yair Nechmad, Mr. Amir Nechmad and Mr. David Ben-Avi.
Family Employment Relationships
Oded Frenkel, formerly - the brother-in-law of David Ben-Avi, served in 2025 as the
Chief Customer Officer of the Company and received compensation of approximately $265,000, $204,000 and $212,000 in 2025, 2024 and 2023,
respectively. Additionally, in 2024 Mr. Frenkel received 2,500 RSUs, in 2023 options to purchase 2,500 ordinary shares at the exercise
price of $18.83 per share; and in 2022 options to purchase 2,500 ordinary shares at the exercise price of NIS 65.7 per share.
Reuven Amar, the brother-in-law of David Ben-Avi, is an employee of the Company and
received compensation of approximately $176,000, $172,000 and $177,000 in 2025, 2024 and 2023, respectively. Additionally, Mr. Amar received
options in 2023 to purchase 2,500 ordinary shares at the exercise price of $18.83 per share; and options in 2022 to purchase 2,500 ordinary
shares at the exercise price of NIS 65.7 per share.
Arnon Nechmad, the son of Yair Nechmad, was an employee of EV Meter Ltd., a wholly-owned
subsidiary of the Company, from November 2021 and until October 2025. Prior to that, Mr. Arnon Nechmad was an employee of another wholly-owned
subsidiary of the Company and in 2023 he became an employee of the Company. Mr. Arnon Nechmad received compensation of approximately $87,000
for the period from January through October 2025, upon the termination of his employment with the Company, and $91,000 and $81,000 in
2024 and 2023, respectively. Mr. Arnon Nechmad has departed from the Company in October 2025, and he currently provides consulting services
in a minor extent in the context of transferring his responsibilities to his successor.
96
Tal Tannenbaum, who became the daughter-in-law of Yair Nechmad in August 2022, has been
a part-time employee of the Company since December 2021. Mrs. Tannenbaum received compensation of approximately $76,000, $80,000 and $55,000
in 2025, 2024 and 2023, respectively.
See “Item 6. Directors, Senior Management and Employees—B. Compensation—Compensation
of Directors and Executive Officers” for additional information concerning agreements with certain of our executive officers.
Indemnification Agreements
We have entered into agreements with each of our directors and executive officers exculpating
them in advance, to the fullest extent permitted by law, from liability to us for damages caused to us as a result of a breach of duty
of care, and undertaking to indemnify them to the fullest extent permitted by law. This indemnification is limited to events determined
as foreseeable by the board of directors based on our activities and to an amount or according to criteria determined by the board of
directors as reasonable under the circumstances.
| C. |
Interests of Experts and Counsel |
Not applicable.
| ITEM 8. |
FINANCIAL INFORMATION |
| A. |
Consolidated Statements and Other Financial Information |
Financial Statements
See “Item 18. Financial Statements,” which contains our financial statements
prepared in accordance with IFRS.
Legal Proceedings
We are, from time to time, party to various legal proceedings arising out of our ordinary
course of business.
During 2023, the ICA requested from us certain documents and other information related
mainly to our acquisition of OTI. We cooperated fully and transparently with the ICA throughout its investigative process, and, on February
3, 2025, we entered into the Consent Decree with the ICA to settle allegations of anticompetitive practices and failing to obtain necessary
ICA consent in connection with the acquisition. Pursuant to the Consent Decree, we and Yair Nechmad, our CEO and Chairman, agreed to pay
a sum of NIS 2,500,000 (approximately $701,000) and NIS 240,000 (approximately $67,300), respectively, to the Israeli State Treasury,
and we agreed to provide up to 6,500 OTI POS kits, comprised of the Telebox hardware units paired with Uno 8/Uno Plus card readers, over
a period of five years, to third parties who may sell, distribute, and market the OTI POS kits under their own brands in the Israeli market.
The Consent Decree was approved by the Israeli Competition Court on June 4, 2025. We do not believe the terms of the settlement will have
a significant adverse effect on our business, financial condition or results of operations.
Currently, there are no claims or proceedings against us that we believe will have a
material adverse effect on our business, financial condition, results of operations or cash flows. However, the results of any current
or future litigation cannot be predicted with certainty, and regardless of the outcome, we may incur significant costs and experience
a diversion of management resources as a result of litigation.
Dividend Policy
To date, we have not paid any cash dividends on our ordinary shares and we currently
do not intend to pay cash dividends on our ordinary shares in the foreseeable future. However, we may, in the future, decide to pay dividends
on our ordinary shares. We have not adopted a dividend policy. Any declaration and payment of cash dividends in the future, if any, will
be at the discretion of our board of directors and will depend upon such factors as Company earnings levels, cash flows, capital requirements,
levels of indebtedness, any other restrictions imposed by applicable law, our overall financial condition, restrictions in our debt agreements
and any other factors deemed relevant by our board of directors. In addition, Israeli law imposes restrictions on our ability to declare
and pay dividends. Dividends may also be subject to Israeli withholding taxes. See “Item 10. Additional Information—E. Taxation—Israeli
Tax Considerations” for additional information.
97
| B. |
Significant Changes |
Not applicable.
| ITEM 9. |
THE OFFER AND LISTING |
| A. |
Offering and Listing Details |
Our ordinary shares have traded on the TASE since May 2021, under the symbol “NYAX”,
and on Nasdaq since September 2022, under the symbol “NYAX”.
| B. |
Plan of Distribution |
Not applicable.
| C. |
Markets |
See “—Offering and Listing Details” above.
| D. |
Selling Shareholders |
Not applicable.
| E. |
Dilution |
Not applicable.
| F. |
Expenses of the Issue |
Not applicable.
| ITEM 10. |
ADDITIONAL INFORMATION |
| A. |
Share Capital |
Not applicable.
| B. |
Memorandum and Articles of Association |
For a description of provisions of our articles of association relating to the power
of directors; rights, preferences and restrictions attaching to each class of the shares; changes in control of the company; and other
information required under Item 10.B, please see Exhibit 2.1 “Description of Securities,” which is incorporated herein by
reference.
| C. |
Material Contracts |
Please see “Item 4. Information on the Company—A. History and Development
of the Company,” “Item 4. Information on the Company—B. Business Overview,” “Item 5. Operating and Financial
Review and Prospects—B. Liquidity and Capital Resources,” and “Item 7. Major Shareholders and Related Party Transactions—B.
Related Party Transactions” for a discussion of material contracts entered into outside of the ordinary course of business in the
preceding three years. Except as otherwise disclosed in this annual report (including the exhibits), we are not currently, and have not
been in the last two years, party to any material contract, other than contracts entered into in the ordinary course of business.
| D. |
Exchange Controls |
There are currently no Israeli currency control restrictions on remittances of dividends
on our ordinary shares, proceeds from the sale of the ordinary shares or interest or other payments to non-residents of Israel, except
that such restrictions may exist with respect to shareholders who are deemed enemies of the State of Israel under Israeli law.
98
| E. |
Taxation |
The following summary contains a description of certain Israeli
and U.S. federal income tax consequences of the ownership and disposition of our ordinary shares, but it does not purport to be a comprehensive
description of all the tax considerations that may be relevant to a decision to purchase our ordinary shares. The summary is based upon
the tax laws of Israel and regulations thereunder and on the tax laws of the United States and regulations thereunder as of the date hereof,
which are subject to change.
You should consult your own tax adviser concerning the tax consequences
of your particular situation, as well as any tax consequences that may arise under the laws of any state, local, or other taxing jurisdiction.
Israeli Tax Considerations
The following is a brief summary of the material Israeli tax laws applicable to us.
This section also contains a discussion of material Israeli tax consequences concerning the ownership and disposition of our ordinary
shares. This summary does not discuss all the aspects of Israeli tax law that may be relevant to a particular investor in light of its,
his or her personal circumstances or to some types of investors subject to special treatment under Israeli law. Examples of such investors
include Israeli residents, partnerships, trusts or traders in securities who are subject to special tax regimes not covered in this discussion.
To the extent that the discussion is based on tax legislation that has not yet been subject to judicial or administrative interpretation,
we cannot assure you that the appropriate tax authorities or the courts will accept the views expressed in this discussion. The discussion
below is subject to change, including due to amendments under Israeli law or changes to the applicable judicial or administrative interpretations
of Israeli law, which change could affect the tax consequences described below. The discussion should not be construed as legal or professional
tax advice and does not cover all possible tax considerations.
General Corporate Tax Structure in Israel
Israeli companies are generally subject to corporate tax. The current corporate tax
rate is 23%. However, the effective tax rate payable by a company that derives income from a Preferred Enterprise or a Preferred Technological
Enterprise (as discussed below) may be considerably lower. Capital gains derived by an Israeli resident company are generally subject
to the regular corporate tax rate. Under Israeli tax law, a company will be considered as an “Israeli resident” if: (a) it
was incorporated in Israel; or (b) the control and management of its business are operated from Israel.
During 2025, Israel enacted a number of amendments to the Israeli Income Tax Ordinance
intended to address companies used to accumulate profits and defer shareholder-level taxation under Israel’s two-tier tax regime
(commonly referred to as “wallet companies” and certain “closely held companies”). Among other things, these amendments
expanded the scope of the existing regime to apply, in certain circumstances, to operating companies with high profitability and strengthened
the rules applicable to closely held companies with passive income sources that do not distribute dividends, including through mechanisms
designed to impose additional tax on undistributed profits and thereby reduce the ability to avoid or defer dividend taxation. In accordance
with the provisions of the law and the position of the ITA as reflected in the circulars published by it, the Company believes that these
amendments do not apply to it, among other reasons, because the Company is a public company and because the Company believes that it operates
as a “Preferred Technological Enterprise” under the Israeli Law for the Encouragement of Capital Investments and taking
into account the Company’s level of revenues. However, there can be no assurance that the ITA or the courts will accept this interpretation,
and the application, interpretation or future developments relating to these amendments could change and may adversely affect the Company’s
tax position in the future
Tax Benefits and Grants for Research and Development
Israeli tax law allows, under certain conditions, a tax deduction for expenditures,
including capital expenditures, related to scientific research and development for the year in which they are incurred. Expenditures are
deemed related to scientific research and development projects, if:
| • |
the expenditures are approved by the relevant Israeli government authority, determined by the field of research; |
| • |
the research and development are for the benefit of the company; and |
| • |
the research and development are carried out by or on behalf of the company seeking such tax deduction. |
The amount of such deductible expenses is reduced by the sum of any funds received through
government grants for the finance of such scientific research and development projects. Under these research and development deduction
rules, no deduction is allowed for any expense invested in an asset depreciable under the general depreciation rules of the Income Tax
Ordinance (New Version), 5721-1961 (the “Ordinance”). Expenditures that do not qualify for this special deduction are deductible
in equal amounts over three years.
99
We do not currently claim tax deductions for such expenditures for the year in which
they are incurred but rather claim deductions in equal amounts over three years. From time to time, we may apply to the IIA for approval
to allow a tax deduction for all research and development expenses during the year incurred. There can be no assurance that such request,
if made, will be granted.
Law for the Encouragement of Capital Investments,
5719-1959 (the “Investment Law”)
The Investment Law provides certain incentives for capital investments in production
facilities (or other eligible assets).
The Investment Law was significantly amended effective as of April 1, 2005, as of January
1, 2011 (the “2011 Amendment”), and as of January 1, 2017 (the “2017 Amendment”). The 2011 Amendment introduced
new benefits to replace those granted in accordance with the provisions of the Investment Law in effect prior to the 2011 Amendment. However,
companies entitled to benefits under the Investment Law as in effect prior to January 1, 2011, were entitled to choose to continue to
enjoy such benefits, provided that certain conditions are met, or elect instead, irrevocably, to forego such benefits and have the benefits
of the 2011 Amendment apply. The 2017 Amendment introduces new benefits for Technological Enterprises, alongside the existing tax benefits.
The Preferred Enterprise Incentives Regime –
the 2011 Amendment
The 2011 Amendment introduced new benefits for income generated by a “Preferred
Company” through its “Preferred Enterprise” (as such terms are defined in the Investment Law). The definition of a Preferred
Company includes a company incorporated in Israel that is not fully owned by a governmental entity, and that has, among other things,
Preferred Enterprise status and is controlled and managed from Israel. Pursuant to the 2011 Amendment, a Preferred Company is entitled
to a reduced corporate tax rate of 16% with respect to its income derived by its Preferred Enterprise, unless the Preferred Enterprise
is located in development zone “A”, in which case the rate will be 7.5%. Income derived by a Preferred Company from a “Special
Preferred Enterprise” (as such term is defined in the Investment Law) would be entitled, during a benefits period of 10 years, to
further reduced tax rates of 8%, or 5% if the Special Preferred Enterprise is located in a development zone “A”.
Dividends distributed from income which is attributed to a “Preferred Enterprise”
will be subject to Israeli tax at the following rates: (i) Israeli resident corporations—0% (although, if such dividends are subsequently
distributed to individuals or a non-Israeli company, a tax rate of 20% or such lower rate as may be provided in an applicable tax treaty
will apply), (ii) Israeli resident individuals—20% and potentially a 3% or 5% surtax, as discussed below, (iii) non-Israeli residents
(individuals and corporations)—20%, non-Israeli individuals - and potentially a 3% or 5% surtax, as discussed below, subject to
a reduced tax rate under the provisions of an applicable tax treaty. Claim of tax benefits afforded by an applicable tax treaty is subject
to the receipt in advance of a valid certificate from the ITA allowing for a reduced tax rate.
The Technological Enterprise Incentives Regime
– the 2017 Amendment
The 2017 Amendment was enacted as part of the Economic Efficiency Law that was published
on December 29, 2016, and is effective as of January 1, 2017. The 2017 Amendment provides new tax benefits for two types of “Technological
Enterprises” – “Preferred Technological Enterprises”, or PTEs and “Special Preferred Technological Enterprise”
or SPTEs, as described below.
According to the 2017 Amendment, a company that complies with the terms under the PTE
or SPTE regime may be entitled to certain tax benefits with respect to its “Preferred Technological Income”, which is income
that is generated during the company’s regular course of business and derived from a benefited intangible asset (as determined in
the Investment Law), excluding income derived from intangible assets used for marketing and income attributed to production activity.
In order to calculate the preferred technological income, the PTE or the SPTE is required
to take into account the income and the research and development expenses that are attributed to each single preferred intangible asset,
product or group of products (as defined in the Investment Law). Nevertheless, it should be noted that the transitional provisions allow
companies to take into account all the income and research and development expenses attributed to all of the benefitted intangible assets
they have.
100
The 2017 Amendment applies to PTEs that meet certain conditions, including: (1) the
enterprise's research and development expenses in the three years preceding the relevant tax year were at least 7% on average of the total
revenue of the company that owns the enterprise or exceeded NIS 75 million (approximately $24 million) in each such year and (2) one of
the following: (a) at least 20% of the workforce (or at least 200 employees) are employees whose full salary has been paid and reported
in the company’s financial statements as research and development expenses; (b) a venture capital investment approximately equivalent
to at least NIS 8 million (approximately $2.5 million) was previously made in the company and the company did not change its line of business;
(c) growth in sales by an average of 25% or more over the three years preceding the relevant tax year, provided that the turnover was
at least NIS 10 million (approximately $3.2 million), in the relevant tax year and in each of the preceding three years; or (d) growth
in workforce by an average of 25% or more over the three years preceding the relevant tax year, provided that the company employed at
least 50 employees in the relevant tax year and in each of the preceding three years.
A SPTE is an enterprise that meets conditions 1 and 2 above, and in addition is part
of a group of companies having aggregate annual revenues above NIS 10 billion (approximately $3.2 billion).
Preferred Technological income of a PTE, which is the portion of technological income
derived from the benefitted intangible asset developed in Israel according to the NEXUS approach, satisfying the required conditions,
will be subject to a reduced corporate tax rate of 12%. The tax rate is further reduced to 7.5% for a PTE located in development zone
“A”.
In addition, a PTE will enjoy a reduced corporate tax rate of 12% on capital gain derived
from the sale of certain “Benefitted Intangible Assets” (as defined in the Investment Law) to a related foreign company if
the Benefitted Intangible Assets were acquired from a foreign company on or after January 1, 2017, for at least NIS 200 million (approximately
$63 million), and the sale receives prior approval from the IIA.
SPTEs, satisfying the required conditions, are subject to a reduced corporate tax rate
of 6% on “Preferred Technological Income” regardless of the company’s geographic location within Israel. In addition,
a SPTE will enjoy a reduced corporate tax rate of 6% on capital gain derived from the sale of certain “Benefitted Intangible Assets”
to a related foreign company if the Benefitted Intangible Assets were either developed by the SPTE or acquired from a foreign company
on or after January 1, 2017, and the sale received prior approval from the IIA. A SPTE that acquires Benefitted Intangible Assets from
a foreign company for more than NIS 500 million (approximately $159 million) will be eligible for these benefits for at least ten years,
subject to certain approvals as specified in the Investment Law.
The Regulations for the Encouragement of Capital Investments (Preferred Technological
Income and Capital Profits for a Technological Enterprise), 2017 (the “Regulations”), describe, inter alia, the mechanism
used to determine the calculation of the benefits under the PTE and SPTE Regimes. According to the Regulations, a company that complies
with the terms under the PTE/SPTE regimes may be entitled to certain tax benefits with respect to income generated during the company’s
regular course of business and derived from the preferred benefitted intangible asset (as determined in the Investment Law), excluding
income derived from intangible assets used for marketing and income attributed to production activity.
In the event that intangible assets used for marketing purposes generate income, which
exceeds 10% of the technological income from the benefitted intangible asset, the relevant portion, calculated using a transfer pricing
study, would be subject to regular corporate income tax. If such income does not exceed 10%, the PTE or SPTE will not be required to attribute
income to the marketing intangible asset.
The Regulations set a presumption of direct production expenses plus 10% with respect
to income related to production, which can be countered by the results of a supporting transfer pricing study. Tax rates applicable to
such production income expenses will be similar to the tax rates under the Preferred or special preferred Enterprise regimes, to the extent
such income would be considered as eligible (as discussed above).
Dividends distributed to individuals or non-Israeli shareholders by a PTE or a SPTE,
paid out of Preferred Technological Income or capital gain derived from the sale of certain “Benefited Intangible Assets”,
are generally subject to tax at the rate of 20% or such lower rate as may be provided in an applicable tax treaty, which, in each case,
will be withheld at source (non-Israeli shareholders are required to present, in advance of payment, a valid withholding certificate from
the ITA allowing for such 20% tax rate or lower treaty rate), and potentially a 3% or 5% surtax, as discussed below. However, dividends
distributed to an Israeli company are not subject to tax. If such dividends are distributed to a foreign corporation (holding, solely
or together with other non-Israeli companies, directly at least 90% in the Preferred Company or holding indirectly such 90% in the Preferred
Company, subject to certain conditions) and other conditions are met, the applicable tax rate will be 4%, or such lower rate as may be
provided in an applicable tax treaty (in each case, subject to the receipt in advance of a valid withholding certificate from the ITA
allowing for such 4% rate or lower treaty tax rate).
101
We believe that we are eligible for tax benefits under the Investment Law. We also received
a ruling from the ITA which determined that we qualify as a PTE under the 2017 Amendment subject to compliance with certain terms and
to certain limitations. The ruling applies from the 2020 tax year until the 2024 tax year. We are in the process of obtaining a new ruling
from the ITA confirming that we continue to qualify as a PTE. We expect to be able to enjoy tax benefits under the Investment Law after
this period as well, but there can be no assurance that we will meet all the terms and conditions required under the Investment Law that
will allow us to enjoy tax benefits under the Investment Law.
Taxation of Non-Israeli Resident Shareholders
Capital Gains Tax
Israeli capital gains tax is imposed on the disposition of capital assets by a non-Israeli
resident if those assets (i) are located in Israel, (ii) are shares or a right to shares in an Israeli resident corporation or (iii) represent,
directly or indirectly, rights to assets located in Israel, unless a specific exemption is available or unless a tax treaty between Israel
and the seller’s country of residence provides otherwise. Israeli tax law distinguishes between “Real Capital Gain”
and “Inflationary Surplus.” Inflationary Surplus is a portion of the total capital gain which is equivalent to the increase
in the relevant asset’s price that is attributable to the increase in the Israeli consumer price index or, in certain circumstances,
a foreign currency exchange rate, between the date of purchase and the date of disposition. Inflationary Surplus is currently not subject
to tax in Israel. Real Capital Gain is the excess of the total capital gain over the Inflationary Surplus. Generally, Real Capital Gain
accrued by individuals on the sale of our ordinary shares will be taxed at the rate of 25% and potentially a 3% or 5% surtax, as discussed
below. However, if the shareholder is a “substantial shareholder” at the time of sale or at any time during the preceding
12-month period, such gain will be taxed at the rate of 30% and potentially a 3% or 5% surtax, as discussed below. A “substantial
shareholder” is generally a person who alone or together with such person’s relative or another person who collaborates with
such person regarding the material affairs of the company on a permanent basis, holds, directly or indirectly, at least 10% of any of
the “means of control” of the corporation. “Means of control” generally include the right to vote, receive profits,
nominate a director or an executive officer, receive assets upon liquidation, or the power to direct the actions of someone who holds
any of the aforesaid rights, regardless of the source of such right. Real Capital Gain derived by corporations will be generally subject
to a corporate tax, currently at a rate of 23%.
A non-Israeli resident who derives capital gains from the sale of shares of an Israeli
resident company that were purchased after the company was listed for trading on a stock exchange outside of Israel will be exempt from
Israeli capital gains tax subject to certain conditions, inter alia that the shares were not held through or attributable to a permanent
establishment that the non-Israeli resident maintains in Israel. However, non-Israeli “body of persons” (as defined in the
Ordinance, which includes corporate entities, partnerships, and other entities) will not be entitled to the foregoing exemption if Israeli
residents (i) have, directly or indirectly, alone or together with such person’s relatives or another person who, according to an
agreement, collaborates with such person on a permanent basis regarding material affairs of the company, or with another Israeli tax resident,
a controlling interest of more than 25% in any of the means of control of such non-Israeli body of persons or (ii) are the beneficiaries
of, or are entitled to, 25% or more of the revenues or profits of such non-Israeli body of persons, whether directly or indirectly.
In addition, such exemption is not applicable to a person whose gains from selling or
disposing the shares are deemed to be business income.
Additionally, a sale of shares by a non-Israeli resident may be exempt from Israeli
capital gains tax under the provisions of an applicable tax treaty. For example, under the tax treaty between the Government of the United
States of America and the Government of the State of Israel with respect to Taxes on Income, as amended (the “United States-Israel
Tax Treaty”), the sale, exchange or other disposition of shares by a shareholder who is a United States resident (for purposes of
the treaty) holding the shares as a capital asset and is entitled to claim the benefits afforded to such a resident by the United States-Israel
Tax Treaty (a “Treaty U.S. Resident”) is generally exempt from Israeli capital gains tax unless: (i) the capital gain arising
from such sale, exchange or other disposition is attributed to real estate located in Israel; (ii) the capital gain arising from such
sale, exchange or other disposition is attributed to royalties; (iii) the capital gain arising from the such sale, exchange or other disposition
is attributed to a permanent establishment in Israel, under certain terms; (iv) such Treaty U.S. Resident holds, directly or indirectly,
shares representing 10% or more of the voting capital during any part of the 12-month period preceding the sale, exchange or other disposition,
subject to certain conditions; or (v) such Treaty U.S. Resident is an individual and was present in Israel for 183 days or more during
the relevant taxable year. In any such case, the sale, exchange or other disposition of such shares would be subject to Israeli tax, to
the extent applicable.
102
Regardless of whether non-Israeli shareholders may be liable for Israeli capital gains
tax on the sale of our ordinary shares, the payment of the consideration for such sale may be subject to withholding of Israeli tax at
source and holders of our ordinary shares may be required to demonstrate that they are exempt from tax on their capital gains in order
to avoid withholding at source at the time of sale. Specifically, the ITA may require shareholders who are not liable for Israeli capital
gains tax on such a sale to sign declarations on forms specified by the ITA, provide documents (including, for example, a certificate
of residency) or obtain a specific exemption from the ITA to confirm their status as non-Israeli residents (and, in the absence of such
declarations or exemptions, the ITA may require the purchaser of the shares to withhold tax at source).
Individual shareholders whose income from the sale of securities considered as business
income are taxed at the marginal tax rates applicable to business income – up to 47% in 2026 and potentially a 3% surtax, as discussed
below.
Either the purchaser, the Israeli stockbrokers or financial institution through which
the shares are held, is obliged to withhold tax in the amount of consideration paid upon the sale of securities (or the Real Capital Gain
realized on the sale, if known) at the Israeli corporate tax rate (23% in 2026) or 25% in case the seller is an individual. The individual
or the company may provide an approval from the ITA for a reduced tax withholding rate, according to the applicable rate.
At the sale of securities traded on a stock exchange, a detailed return, including a
computation of the tax due, must be filed and an advance payment must be made on January 31 and July 31 of every tax year in respect of
sales of securities made within the previous six months. However, if all tax due was withheld at source according to applicable provisions
of the Ordinance and regulations promulgated thereunder, the aforementioned return is not required to be filed, and no advance payment
must be paid. Capital gain is also reportable on the annual income tax return.
Taxation on Receipt of Dividends
A distribution of dividends from income, which is not attributed to a Preferred Enterprise,
to an Israeli resident individual, will generally be subject to income tax at a rate of 25% and potentially a 3% or 5% surtax, as discussed
below. However, a 30% tax rate will apply if the dividend recipient is a “Substantial Shareholder” at the time of distribution
or at any time during the preceding 12 months period and potentially a 3% or 5% surtax, as discussed below.
If the recipient of the dividend is an Israeli resident corporation, such dividend will
be exempt from income tax provided the income from which such dividend is distributed was derived or accrued within Israel.
Non-Israeli residents (whether individuals or corporations) are generally subject to
Israeli income tax on the receipt of dividends paid from income, which is not attributed to Preferred (including Preferred Technological)
Enterprise at the rate of 25% (or 30% in the case such shareholder is considered a “substantial shareholder” at the time of
the distribution or at any time during the preceding 12- month period) and for Non-Israeli individuals – potentially a 3% or 5%
surtax as discussed below, which tax will be withheld at source, unless relief is provided in an applicable tax treaty between Israel
and the shareholder’s country of residence (provided that a certificate from the ITA allowing for such relief is obtained in advance).
Dividends paid on publicly traded shares, like our ordinary shares, are generally subject to Israeli withholding tax at a rate of 25%
so long as the shares are registered with a nominee company (whether or not the recipient is a substantial shareholder), unless a lower
rate is provided under an applicable tax treaty (provided that a certificate from the ITA allowing for such reduced withholding tax rate
is obtained in advance). However, if the dividend is distributed from income attributed to a Preferred Enterprise or a Preferred Technological
Enterprise, such distribution of dividends to non-Israeli residents is subject to withholding tax at source at a rate of 20% (subject
to the receipt in advance of a certificate from the ITA allowing for such reduced tax rate). If the dividend is attributable in part to
income derived from a Preferred Enterprise or a Preferred Technological Enterprise, the withholding rate will be a blended rate reflecting
the relative portions of the types of income.
As noted above, a reduced tax rate may be provided under the Investment Law. In addition,
a reduced tax rate may be provided under an applicable tax treaty. For example, under the United States-Israel Tax Treaty, the maximum
rate of tax withheld at source in Israel on dividends paid to a holder of our ordinary shares who is a Treaty U.S. Resident is 25%. However,
generally, the maximum rate of withholding tax on dividends that are paid to a United States corporation holding 10% or more of the outstanding
voting capital throughout the tax year in which the dividend is distributed as well as during the previous tax year, is 12.5%, provided
that not more than 25% of the gross income for such preceding year consists of certain types of dividends and interest. If dividends are
distributed from income that was subject to a reduced corporate tax rate under the Investment Law and the foregoing conditions are met,
such dividends are subject to a withholding tax rate of 15% for a shareholder that is a United States corporation. The aforementioned
rates under the United States-Israel Tax Treaty will not apply if the dividend income was derived through or attributed to a permanent
establishment of the Treaty U.S. Resident in Israel. Application for this reduced tax rate requires appropriate documentation presented
to and specific instruction received from the ITA. We cannot assure you that we will designate the profits that we may distribute in a
way that will reduce shareholders’ tax liability.
103
A non-Israeli resident who receives dividends from which tax was duly withheld is generally
exempt from the obligation to file tax returns in Israel with respect to such income, provided that (i) such income was not generated
from business conducted in Israel by the taxpayer; (ii) the taxpayer has no other taxable sources of income in Israel with respect to
which a tax return is required to be filed; and (iii) the taxpayer is not liable for surtax (as further explained below).
Surtax
Individuals who are subject to tax in Israel (whether any such individual is an Israeli
resident or non-Israeli resident and with respect to a non-Israeli resident, subject to tax treaties not otherwise limiting the applicable
tax rate to such non-Israeli resident) are also subject to an additional tax at a rate of 3% on annual income (including, but not limited
to, dividends, interest and capital gain) exceeding a certain threshold (currently NIS 721,560 for years 2025 through 2027, which amount
will be updated annually starting January 1, 2028, based on the annual change in the Israeli consumer price index) (the “Threshold
Amount”).
According to new legislation effective as of January 1, 2025, an additional 2% excess
tax will be imposed on “Capital-Sourced Income” (defined as income from any source other than employment income, business
income or income from “personal effort”), provided that the Individual’s Capital Sourced Income exceeds the Threshold
Amount. This additional excess tax applies, among other things, to income from capital gains, dividends, interest, rental income, or the
sale of real property.
Estate and Gift Tax
Israeli law currently does not impose estate or gift taxes.
Material U.S. Federal Income Tax Consequences
The following is a description of material U.S. federal income tax consequences to the
U.S. Holders described below of the ownership and disposition of our ordinary shares, but it does not purport to be a comprehensive description
of all tax considerations that may be relevant to a particular person’s decision to acquire our ordinary shares. This discussion
applies only to U.S. Holders that acquire our ordinary shares and hold them as capital assets. In addition, this discussion does not describe
all of the tax consequences that may be relevant to U.S. Holders in light of their particular circumstances, including alternative minimum
tax consequences, any aspect of the Medicare contribution tax on “net investment income,” special tax accounting rules under
Section 451 of the Internal Revenue Code of 1986, as amended (the “Code”) and tax consequences applicable to U.S. investors
subject to special rules, such as:
| • |
certain financial institutions; |
| • |
insurance companies; |
| • |
dealers or certain traders in securities that mark their securities to market for U.S. income tax purposes; |
| • |
persons holding ordinary shares as part of a straddle, integrated or similar transaction; |
| • |
persons who acquire ordinary shares in connection with employment; |
| • |
persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar; |
| • |
entities classified as partnerships for U.S. federal income tax purposes and their partners; |
| • |
tax-exempt entities, individual retirement accounts, or “Roth IRAs”; |
| • |
persons that own or are deemed to own 10% or more of the Company’s stock by vote or value; or |
| • |
persons holding ordinary shares in connection with a trade or business outside the United States. |
104
If you are a partnership for U.S. federal income tax purposes, the U.S. federal income
tax treatment of the ownership and disposition of ordinary shares with respect to you and your partners generally will depend on the status
of the partners and your activities. If you are a partnership owning ordinary shares or a partner in such partnership, you should consult
your tax adviser as to your particular U.S. federal income tax consequences of owning and disposing of ordinary shares.
This discussion is based on the Code, administrative pronouncements, judicial decisions,
final, temporary and proposed Treasury regulations, and the Israel-U.S. Tax Treaty (the “Treaty”), all as of the date hereof.
These laws are subject to change, possibly with retroactive effect.
You are a “U.S. Holder” for purposes of this discussion if you are, for
U.S. federal income tax purposes, a beneficial owner of ordinary shares eligible for the benefits of the Treaty and:
| • |
a citizen (other than a resident of Israel) or individual resident of the United States; |
| • |
a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state
therein or the District of Columbia; or |
| • |
an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source. |
Certain Treasury regulations (the “Foreign Tax Credit Regulations”) may
in some circumstances prohibit a U.S. person from claiming a foreign tax credit with respect to certain non-U.S. taxes that are not creditable
under applicable income tax treaties. However, the U.S. Internal Revenue Service (the “IRS”) has released notices which indicate
that the Treasury Department and the IRS are considering amendments to the Foreign Tax Credit Regulations and provide temporary relief
from certain of their provisions until such time as the IRS issues a subsequent notice or other guidance withdrawing or modifying the
temporary relief (or any later date specified in the relevant notice or guidance). The rules governing the calculation and timing of foreign
tax credits and the deduction of foreign taxes are complex and depend upon a U.S. person’s particular circumstances. Accordingly,
U.S. investors that are not eligible for Treaty benefits should consult their tax adviser regarding the creditability or deductibility
of any non-U.S. taxes imposed on dividends on, or dispositions of, ordinary shares. This discussion does not apply to investors in this
special situation.
This discussion does not address the effects of any state, local or non-U.S. tax laws,
or any U.S. federal taxes other than income taxes (such as U.S. federal estate or gift tax consequences). You should consult your tax
adviser with regard to the application of the U.S. federal tax laws to your particular situation, as well as any tax consequences that
may arise under the laws of any state, local or non-U.S. taxing jurisdiction.
Taxation of Distributions
The following discussion is subject to the discussion under “—Passive Foreign
Investment Company Rules” below.
Distributions paid on ordinary shares (including the amount of Israeli taxes withheld),
other than certain pro rata distributions of ordinary shares to all shareholders, will be treated as dividends to the extent paid out
of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Because we do not maintain
calculations of our earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be
reported to you as dividends. Subject to applicable limitations, if you are a non-corporate U.S. Holder, dividends paid to you generally
may be eligible for taxation as “qualified dividend income” and therefore may be taxable at a favorable rate provided that
we are not (and were not treated with respect to you as) a PFIC for the taxable year of the distribution or the preceding taxable year.
You should consult your tax adviser regarding the availability of the favorable tax rate on dividends. Dividends will not be eligible
for the dividends-received deduction generally available to U.S. corporations in respect of dividends received from other U.S. corporations.
Dividend income will include any amounts withheld in respect of Israeli taxes, will
be treated as foreign-source income and will generally constitute passive category income for foreign tax credit purposes. Dividends will
generally be included in your income on the date of receipt. The amount of any dividend income paid in NIS will be the U.S. dollar amount
calculated by reference to the spot rate in effect on the date of receipt, regardless of whether the payment is in fact converted into
U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, you should not be required to recognize foreign currency
gain or loss in respect of the amount received. You may have foreign currency gain or loss if the dividend is converted into U.S. dollars
after the date of receipt, and any such gain or loss will be U.S.-source ordinary income or loss.
105
Subject to applicable limitations, some of which vary depending upon the U.S. Holder’s
particular circumstances, and the discussion below regarding the Foreign Tax Credit Regulations, Israeli taxes withheld from dividends
on ordinary shares (at a rate not exceeding the rate provided by the Treaty, in the case of a U.S. Holder eligible for a reduced rate
under the Treaty) generally will be creditable against the U.S. Holder’s U.S. federal income tax liability. As discussed under “Taxation—Israeli
Tax Considerations” above, Israel requires special procedures to be followed by U.S. Holders eligible for a reduced rate under the
Treaty to obtain the benefit of such reduced rate. The rules governing foreign tax credits are complex. For example, the Foreign Tax Credit
Regulations provide that, in the absence of an election to apply the benefits of an applicable income tax treaty, in order for foreign
income taxes (including foreign withholding taxes treated as income taxes) to be creditable, the relevant foreign jurisdiction’s
income tax rules must be consistent with certain U.S. federal income tax principles, and we have not determined whether the Israeli income
tax system meets these requirements. However, under the temporary relief in the notices described above, certain of the requirements for
making this determination would not apply until such time as the IRS withdraws or modifies this temporary relief (or any later date specified
in the relevant notice or guidance). Whether the IRS will withdraw this relief for 2026 or future years is inherently uncertain. You should
consult your tax adviser regarding your eligibility for benefits under the Treaty and the creditability of any Israeli taxes in your particular
circumstances.
Subject to applicable limitations, in lieu of claiming a foreign tax credit, you may
elect to deduct foreign taxes, including any Israeli taxes, in computing your taxable income. An election to deduct otherwise creditable
foreign taxes instead of claiming foreign tax credits applies to all creditable foreign taxes paid or accrued in the relevant taxable
year.
Sale or Other Taxable Disposition of Shares
The following discussion is subject to the discussion under “Passive Foreign Investment
Company Rules” below.
You generally will recognize capital gain or loss on a sale or other taxable disposition
of ordinary shares equal to the difference between the amount realized on the sale or disposition and your tax basis in the ordinary shares,
each as determined in U.S. dollars. Such capital gain or loss will be long-term capital gain or loss if at the time of sale or disposition
the ordinary shares have been held for more than one year. Any gain or loss will generally be U.S.-source for foreign tax credit purposes.
The deductibility of capital losses is subject to limitations.
As described in “Taxation—Israeli Tax Considerations” above, gains
realized on the sale or other disposition of our ordinary shares may be subject to Israeli taxes, and as also described under “Taxation—Israeli
Tax Considerations” above, Israel requires special procedures to be followed by U.S. Holders eligible for a reduced rate under the
Treaty to obtain the benefit of such reduced rate. The rules governing foreign tax credits are complex, and you may not be eligible to
claim a foreign tax credit with respect to any Israeli taxes imposed on gains realized on the sale or other disposition of our ordinary
shares. For example, the Foreign Tax Credit Regulations provide that, in the absence of an election to apply the benefits of an applicable
income tax treaty, in order for foreign income taxes to be creditable, the relevant foreign jurisdiction’s income tax rules must
be consistent with certain U.S. federal income tax principles, and we have not determined whether the Israeli income tax system meets
these requirements. However, under the temporary relief in the notices described above, certain of the requirements for making this determination
would not apply until such time as the IRS withdraws or modifies this temporary relief (or any later date specified in the relevant notice
or guidance). Whether the IRS will withdraw this relief for 2026 or future years is inherently uncertain.
In addition, any gain or loss recognized by a U.S. Holder resident in the United States
generally will be treated as U.S. source gain or loss. Consequently, such a person may not be able to use any foreign tax credit arising
from any such Israeli taxes imposed on the disposition of our ordinary shares unless such credit can be applied (subject to applicable
limitations) against tax due on other income treated as derived from foreign sources.
Rather than claiming a credit, a U.S. Holder may be able to elect to deduct such Israeli
taxes in computing taxable income, subject to applicable limitations. An election to deduct otherwise creditable foreign taxes instead
of claiming foreign tax credits applies to all creditable foreign taxes paid or accrued in the relevant taxable year. If such Israeli
tax is not a foreign income tax eligible for a foreign tax credit, the non-creditable Israeli taxes may reduce the amount realized on
the sale, exchange or other taxable disposition of our ordinary shares.
You should consult your tax adviser regarding your eligibility for benefits under the
Treaty, the creditability of any Israeli taxes, and whether any such tax can reduce the amount realized on the sale or other taxable disposition
of our ordinary shares in your particular circumstances.
106
Passive Foreign Investment Company Rules
In general, a non-U.S. corporation will be a PFIC for any taxable year in which (i)
75% or more of its gross income consists of passive income or (ii) 50% or more of the value of its assets (generally determined on a quarterly
average basis) consists of assets that produce, or are held for the production of, passive income. For purposes of the above calculations,
a non-U.S. corporation that directly or indirectly owns at least 25% by value of the shares of another corporation is treated as if it
held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the
other corporation. Passive income generally includes interest, rents, dividends, certain gains and royalties (other than certain royalties
derived in the active conduct of a trade or business). Goodwill is generally characterized as a non-passive or passive asset based on
the nature of the income produced in the activities to which the goodwill relates. Cash is a passive asset.
Based on the manner in which we currently operate our business, the current composition
of our income and assets and the estimated value of our assets (including the value of our estimated goodwill, which is based on the current
price of our ordinary shares), we do not believe we were a PFIC for the taxable year ended December 31, 2025. However, a company’s
PFIC status is an annual determination that can be made only after the end of each taxable year, and our PFIC status for each taxable
year will depend on the composition of our income and assets and the value of our assets from time to time, including estimated goodwill
(which may be determined by reference to the market value of our ordinary shares, which may be volatile). Our PFIC status is subject to
uncertainties. We may be or become a PFIC if our market capitalization declines. Further, we may hold less than 25% minority stakes in
other entities, which will generally be treated as passive for purposes of the PFIC rules. Therefore, we may be a PFIC if the value of
any such minority stakes becomes substantial. Moreover, we may become a PFIC if we expand our business to include financing or similar
transactions that may generate passive income. Accordingly, we cannot assure you that we will not be a PFIC for any taxable year.
If we were a PFIC for any taxable year and any entity in which we own or are deemed
to own equity interests were also a PFIC (any such entity, a “Lower-tier PFIC”), you would be deemed to own a proportionate
amount (by value) of the equity interests of each Lower-tier PFIC and would be subject to U.S. federal income tax according to the rules
described in the next paragraph on (i) certain distributions by a Lower-tier PFIC and (ii) dispositions of equity interests of Lower-tier
PFICs, in each case as if you held such shares directly, even though you did not receive any proceeds of those distributions or dispositions.
Generally, if we were a PFIC for any taxable year during which you held ordinary shares,
gains recognized upon a disposition (including, under certain circumstances, a pledge) of ordinary shares by you would be allocated ratably
over your holding period for such ordinary shares. The amounts allocated to the taxable year of disposition and to years before we became
a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate
in effect for that taxable year for individuals or corporations, as applicable, and an interest charge would be imposed on the resulting
tax liability for each such taxable year. Further, to the extent that distributions you receive on your ordinary shares during a taxable
year exceeded 125% of the average of the annual distributions on such ordinary shares received during the preceding three years or your
holding period, whichever is shorter, the excess distribution would be subject to taxation in the same manner. If we were a PFIC for any
year during which you owned ordinary shares, we would generally continue to be treated as a PFIC with respect to you for all succeeding
years during which you owned the ordinary shares, even if we ceased to meet the threshold requirements for PFIC status.
Alternatively, if we were a PFIC and if our ordinary shares were “regularly traded”
on a “qualified exchange,” a U.S. Holder could make a mark-to-market election that would result in tax treatment different
from the general tax treatment described in the preceding paragraph. The ordinary shares will be treated as “regularly traded”
in any calendar year in which more than a de minimis quantity of the ordinary shares are traded on a qualified exchange on at least 15
days during each calendar quarter. Nasdaq, on which the ordinary shares are listed, is a qualified exchange for this purpose. Generally,
if you make a mark-to-market election, you will recognize as ordinary income any excess of the fair market value of the ordinary shares
at the end of each taxable year over their adjusted tax basis, and will recognize an ordinary loss in respect of any excess of the adjusted
tax basis of the ordinary shares over their fair market value at the end of the taxable year (but only to the extent of the net amount
of income previously included as a result of the mark-to-market election). If you make the election, your tax basis in the ordinary shares
will be adjusted to reflect these income or loss amounts. Any gain recognized on the sale or other disposition of ordinary shares in a
year in which we are a PFIC will be treated as ordinary income and any loss will be treated as an ordinary loss (but only to the extent
of the net amount of income previously included as a result of the mark-to-market election, with any excess treated as a capital loss).
If you make the mark-to-market election, distributions paid on the ordinary shares will generally be treated as discussed under “—Taxation
of Distributions” above. You should consult your tax adviser regarding the availability and advisability of making a mark-to-market
election in your particular circumstances. In particular, you should consider the impact of a mark-to-market election with respect to
your ordinary shares given that we may have Lower-tier PFICs, and there is no provision in the Code, Treasury regulations or other official
guidance that would give U.S. Holders the right to apply a mark-to-market treatment to any Lower-tier PFIC the shares of which are not
publicly traded.
107
We do not intend to provide information necessary for U.S. Holders to make qualified
electing fund elections which, if available, would result in tax treatment different from the general tax treatment for PFICs described
above.
If you own ordinary shares during any year in which we are a PFIC, you generally will
be required to file annual reports on IRS Form 8621 (or any successor form) together with your U.S. federal income tax returns, subject
to certain exceptions. You should consult your tax adviser regarding whether we are a PFIC for any taxable year and the potential application
of the PFIC rules to your ownership of ordinary shares.
Backup Withholding and Information Reporting
Payments of dividends and sales proceeds that are made within the United States or through
U.S. or certain U.S.-related financial intermediaries will generally be subject to information reporting and backup withholding, unless
(i) you are an exempt recipient or (ii) in the case of backup withholding, you provide a correct taxpayer identification number and certify
that you are not subject to backup withholding. Any amounts withheld under the backup withholding rules will be allowed as a refund or
a credit against your U.S. federal income tax liability, provided that the required information is timely furnished to the Internal Revenue
Service.
Certain U.S. investors who are individuals (or certain specified entities) may be required
to report information relating to their ownership of ordinary shares, or non-U.S. accounts through which ordinary shares are held. You
should consult your tax adviser regarding your reporting obligations with respect to the ordinary shares.
| F. |
Dividends and Paying Agents |
Not applicable.
| G. |
Statement by Experts |
Not applicable.
| H. |
Documents on Display |
We are subject to the informational requirements of the Exchange Act. Accordingly, we
are required to file or furnish reports and other information with the SEC, including annual reports on Form 20-F and reports on Form
6-K.
As a foreign private issuer, we are exempt under the Exchange Act from, among other
things, the rules prescribing the furnishing and content of proxy statements, and our executive officers, directors and principal shareholders
are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we
are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as
U.S. companies whose securities are registered under the Exchange Act. See “Item 16G. Corporate Governance” for further information. We
are required to make certain filings with the SEC. The SEC maintains an internet website that contains reports, proxy statements and other
information about issuers, like us, that file electronically with the SEC. The address of that site is www.sec.gov.
In addition, since our ordinary shares are traded on the TASE, we have filed periodic
and immediate reports with, and furnish information to, the TASE and the ISA, as required under Chapter F of the Israeli Securities Law.
Our Israeli reporting requirements are governed by Chapter E’3 of the Israeli
Securities Law, which generally requires filing with the ISA only copies of the English-language reports filed with the SEC.
We will send our transfer or tabulation agent a copy of all notices of shareholders’
meetings and other reports, communications and information that are made generally available to shareholders. The transfer or tabulation
agent has agreed to mail to all shareholders a notice containing the information (or a summary of the information) contained in any notice
of a meeting of our shareholders received by the transfer or tabulation agent and will make available to all shareholders such notices
and all such other reports and communications received by the transfer or tabulation agent.
| I. |
Subsidiary Information |
For information on our subsidiaries, see “Item 4. Information on the Company—C.
Organizational Structure,” and Exhibit 8.1 to this annual report.
| J. |
Annual Report to Security Holders |
If we are required to provide an annual report to security holders in response to the
requirements of Form 6-K, we will submit the annual report to security holders in electronic format in accordance with the EDGAR Filer
Manual.
108
| ITEM 11. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Interest Rate Sensitivity
Our cash and cash equivalents are held primarily in checking accounts and cash deposits.
The fair value of our cash and cash equivalents would not be significantly affected by either an increase or decrease in interest rates
due mainly to the short-term nature of these instruments. Interest on various of our credit facilities (excluding our bonds which are
subject to a fixed interest rate) accrue at a floating rate based on a formula tied to certain market rates at the time of incurrence.
We do not expect that any change in prevailing interest rates will have a material impact on our results of operations. We currently do
not hedge interest rate exposure. We may in the future hedge our interest rate exposure and may use swaps, caps, collars, structured collars
or other common derivative financial instruments to reduce interest rate risk. It is difficult to predict the effect that future hedging
activities would have on our operating results.
Foreign Currency Exchange Rate Risk
Our customers are located throughout the world, including Europe, North America,
Latin America, Australia, the United Kingdom, Asia and Africa. Although our consolidated financial statements are reported in U.S. dollars,
we conduct business in, and our revenue is earned in, multiple currencies, mainly U.S. dollar, euro, Australian dollar and British pound.
We are also exposed to risks of currency volatility in certain emerging markets, and such volatility might be more pronounced. A significant
portion of our costs is denominated in NIS and EUR. Consequently, we are exposed to foreign currency exchange risk relative to the U.S.
dollar, and our results of operations could be affected due to fluctuations in currencies in which we operate. During 2025 the U.S. dollar
devaluated against NIS and EUR by approximately 12.5% and 11.7%, respectively. Our outstanding bonds are denominated in NIS; they are
partially hedged by a natural hedge as we keep some cash balances in NIS and are partially hedged by a Cross-Currency Swap (CCS).
To mitigate our risk, we hedge our exposure using currency forward contracts, currency options or other common derivative financial instruments.
However, the effect of future hedging activities on our operating results remains difficult to predict.
Credit Risk
We maintain deposits of our cash and cash equivalents with several foreign and Israeli
banks. In addition, substantially all of our cash and cash equivalents, as well as our marketable securities, are held by financial institutions
that we believe are of high credit quality. We have not experienced any losses on our deposits of cash and cash equivalents and our accounts
are monitored by our management team to mitigate risk. We are exposed to credit risk in the event of default by the financial institution
holding our cash and cash equivalents.
In the ordinary course of our business, we provide credit to our customers for purchasing
our products and services. As of December 31, 2025, account receivables amounted to approximately $104 million. In addition, from time
to time we extend loans to certain customers and partners. As of December 31, 2025, an aggregate of approximately $7.3 million was outstanding
under such loans. We are exposed to the risk that our customers or partners will fail to repay such credit or loans, as applicable, on
the terms such credit or loans were provided.
Liquidity Risk
Liquidity risk relates to maintaining sufficient cash and securities through an adequate
amount of committed credit facilities to meet obligations when due and to close out market positions. We aim to ensure a minimum level
of liquidity considered adequate by our management. We consider a variety of actions to be taken in the event of liquidity contingencies
in order to maintain cash within required minimum liquidity limits.
| ITEM 12. |
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
| A. |
Debt Securities |
Not applicable.
| B. |
Warrants and Rights |
Not applicable.
| C. |
Other Securities |
Not applicable.
| D. |
American Depositary Shares |
Not applicable.
109
PART II
| ITEM 13. |
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
Not applicable.
| ITEM 14. |
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
Not applicable.
| ITEM 15. |
CONTROLS AND PROCEDURES |
| A. |
Disclosure Controls and Procedures |
As required by Rule 13a-15(b) under the Exchange Act, our management, with the participation
of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures
(as defined in Rule 13a-15(e) under the Exchange Act), as of December 31, 2025. Based on such evaluation, each of our Chief Executive
Officer and Chief Financial Officer has concluded that, as of December 31, 2025, our disclosure controls and procedures were effective
at the reasonable assurance level.
In designing and evaluating our disclosure controls and procedures, management recognizes
that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired
control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.
| B. |
Management’s Annual Report on Internal Control Over Financial Reporting |
Our management is responsible for establishing and maintaining adequate internal control
over our financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act). Our management conducted
an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in “Internal
Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on
this assessment, our management concluded that, as of December 31, 2025, our internal control over financial reporting was effective.
Kesselman & Kesselman, an independent registered public accounting firm in Israel and a member of PricewaterhouseCoopers International
Limited, to which we refer as PwC, which audited the financial statements included in this annual report containing the disclosure required
by this Item 15 has issued an attestation report regarding the effectiveness of our internal control over financial reporting.
| C. |
Attestation Report of the Registered Public Accounting Firm |
The attestation report of Kesselman & Kesselman, a member firm of PricewaterhouseCoopers,
is included with our consolidated financial statements included elsewhere in this Annual Report and is incorporated herein by reference.
| D. |
Changes in Internal Control Over Financial Reporting |
There were no changes in our internal control over financial reporting during the year
ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
| ITEM 16. |
[RESERVED] |
| ITEM 16A. |
AUDIT COMMITTEE FINANCIAL EXPERT |
Our board of directors has determined that each of Vered Raz Avayo, Rina Shafir and
Nir Dor, each of whom serves on our audit committee and who meets the “independence” definition under applicable Nasdaq listing
rules, qualifies as an “audit committee financial expert” as defined by SEC rules.
| ITEM 16B. |
CODE OF ETHICS |
We have adopted a code of ethics that applies to all our directors, officers and employees,
including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing
similar functions. This code of ethics is posted on our website, https://www.nayax.com/. The information contained on our website
is not a part of this annual report.
We intend to post on our website all disclosures that are required by the rules and
regulations of the SEC or by applicable Nasdaq listing rules concerning any substantive amendments to, or waivers from, any provision
of the code of business conduct or the code of ethics, within the applicable required timeframe.
110
| ITEM 16C. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Fees Paid to Independent Registered Public Accounting Firm
The following table sets forth, for each of the years indicated, the aggregate fees
billed by our independent registered public accounting firm for professional services.
|
Year ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
(in USD thousands) |
||||||||
|
Audit (1) |
618 |
470 |
||||||
|
Audit-related fees (2) |
82 |
45 |
||||||
|
Tax fees (3) |
91 |
83 |
||||||
|
All other fees (4) |
2 |
2 |
||||||
|
Total |
793 |
600 |
||||||
| (1) |
Audit fees consist of services that would normally be provided in connection with statutory and regulatory filings or engagements,
including services that generally only the independent accountant can reasonably provide. |
| (2) |
Audit-related fees for assurance and related services that were reasonably related to the performance of the audit not reported under
“Audit Fees”. |
| (3) |
Tax fees consist of fees for professional services for tax compliance, tax advice and tax audits. |
| (4) |
“All other fees” consist of all other fees in the years ended December 31, 2025 and 2024 related to services in
connection with non-audit compliance and review work. |
Audit Committee Pre-Approval Policies and Procedures
Our audit committee has adopted a pre-approval policy for the engagement of our independent
accountant to perform certain audit and non-audit services. Pursuant to this policy, which is designed to ensure that such engagements
do not impair the independence of our auditors, the audit committee pre-approves each type of audit, audit-related, tax and other permitted
services, subject to the ability of the audit committee to delegate certain pre-approval authority to one or more of its members. All
of the fees listed in the table above were approved by our audit committee.
| ITEM 16D. |
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
None.
| ITEM 16E. |
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
None.
| ITEM 16F. |
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT |
Not applicable.
111
| ITEM 16G. |
CORPORATE GOVERNANCE |
As an Israeli company, we are subject to various corporate governance requirements under
the Companies Law, including relating to matters such as external directors, the audit committee, the compensation committee and an internal
auditor.
We are a “foreign private issuer” (as such term is defined in Rule 405 under
the Securities Act). As a foreign private issuer we are permitted to comply with certain Israeli corporate governance practices instead
of the corporate governance rules of Nasdaq, provided that we disclose which requirements we are not following and the equivalent Israeli
requirement. We also qualify as a “controlled company” as such term is defined in applicable Nasdaq listing rules. Although
we do not intend to rely on any “controlled company” exemption from Nasdaq corporate governance rules, we may elect to rely
on such exemptions in the future.
We rely on this “foreign private issuer exemption” with respect to (i) the
quorum requirement for shareholder meetings, (ii) shareholder approval requirements and (iii) the requirement that director nominees be
selected or recommended for selection by either a majority of the independent directors or a nominations committee composed solely of
independent directors. Whereas under the corporate governance rules of Nasdaq, a quorum requires the presence, in person or by proxy,
of holders of at least 331⁄3% of the total issued
outstanding voting power of our shares at each general meeting of shareholders, pursuant to our amended and restated articles of association,
and as permitted under the Companies Law, the quorum required for a general meeting of our shareholders consists of at least two shareholders
present in person or by proxy in accordance with the Companies Law who hold or represent at least 25% of the total outstanding voting
power of our shares (and if the meeting is adjourned for a lack of quorum, the quorum for such adjourned meeting will be, subject to certain
exceptions, any number of shareholders). As to shareholder approval, we will seek shareholder approval whenever required under the Companies
Law rather than when required for a domestic U.S. issuer under Nasdaq rules. Further, although we have a nominating and corporate governance
committee, our director nominees are not selected by a majority of the independent directors, and our nominating and corporate governance
committee is not composed solely of independent directors, in each case as permitted under the Companies Law. We otherwise comply with
the rules generally applicable to U.S. domestic companies listed on Nasdaq. We may, however, in the future decide to use the “foreign
private issuer exemption” and opt out of some or all of the other corporate governance rules.
The SEC is currently considering revisions that could significantly impact which foreign
companies qualify for the more-relaxed U.S. reporting requirements available to foreign private issuers. If the SEC adopts rules amending
the definition of foreign private issuer, we may no longer qualify as a foreign private issuer and may be required to adjust our corporate
governance practices in accordance with various rules and regulations. In addition, commencing on March 18, 2026, the disclosure
requirements of Section 16(a) of the Exchange Act will be extended also to foreign private issuers, and as a result our directors and
executive officers will be required to publicly disclose their equity holding and transactions involving our securities with the SEC.
See “Item 6. Directors, Senior Management and Employees” and “Item
3. Key Information—D. Risk Factors—Risks Related to our Ordinary Shares—As a foreign private issuer, we are permitted
to follow certain home country corporate governance practices instead of applicable SEC and Nasdaq requirements, which may result in less
protection than is afforded to investors under rules applicable to domestic issuers” for further information.
| ITEM 16H. |
MINE SAFETY DISCLOSURE |
Not applicable.
| ITEM 16I. |
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
Not applicable.
112
|
ITEM 16J.
|
INSIDER TRADING POLICIES
|
The Company has adopted an insider trading policy governing the purchase, sale and other dispositions of the Company’s securities by directors, senior management, and employees that it believes is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and any listing standards applicable to the Company. Our insider trading policy is filed as an exhibit to this annual report.
| ITEM 16K. |
CYBERSECURITY
|
As a provider of various payment processing and operations solutions, sensitive credit provider information, personal information, personally identifiable information and other financial data are transferred through our products and services, either within execution of transactions or within remote management services we offer. The processing of the information we acquire in connection with our customers’ use of our services is subject to numerous privacy, data protection, cybersecurity and other laws, rules, regulations and standards in a number of jurisdictions. Information security failures and leaking of financial data of our customers or their consumers, as well as passage of information between different territories in violation of privacy protection laws, could harm our results and reputation.
Nayax is certified and compliant for various information security standards and regulations such as PCI SSC (DSS, PTS & Pin), ISO 27001:2022, SOX and SOC2. Our information security domain is maintained by industry-standard best practice frameworks, including adoption of an information security management system, and is managed in accordance with applicable laws, rules regulations and standards addressing data privacy and cybersecurity. We also have an information security policy (“IS Policy”) in place that defines the procedures we follow when assessing, identifying and managing cybersecurity threats and incidents, and applies to all Company employees, including employees of our subsidiaries, as well as partners, service providers and contractors with access to Company information assets. Our IS Policy addresses control of records, data classification, managing information system change, addressing nonconformities, password requirements, data storage, backup and retention, encryption, access permission management, physical security, disaster recovery and communication of sensitive or personal data to external parties, among others. Information asset “owners” within the Company are assigned responsibility under our IS Policy to review access privileges, implement and maintain the asset, advise of any new system or change to existing systems and make data classification decisions. Additionally, we review or update our policies relating to cybersecurity annually, or more frequently on an as-needed basis, to account for changes in the evolving cybersecurity threat landscape as well as legal and regulatory developments. We also maintain an information security risk assessment document for internal use that lists the various risks that we have identified and ways to mitigate them. This document is updated on a regular basis at least annually to account for our business requirements, global events and cybersecurity threats and is aligned with our organizational risk management program.
As part of our risk management procedures, we conduct regular risk assessments of our various information systems designed to identify, document and mitigate cybersecurity risk. For high-risk systems, risk surveys and penetration tests are conducted at least annually and following a major system change or data breach event. Other systems are tested at different time periods according to their sensitivity. These regular risk assessments are conducted either internally or by qualified third-party service providers. In addition, at least once a quarter, information systems that are open to public communication connections are subject to internal and external network vulnerability scans conducted by qualified third-party service providers. Results of these surveys and assessments are communicated to Company management and nonconformities are mapped, remediated and tracked.
We aim to minimize exposure of Company data and systems to external parties by operating on a “need-to-know” basis for access to our data and systems. Any communication with an external party involving exposure to sensitive Company information is based on an appropriate preliminary risk assessment process. The preliminary risk assessment includes, among other measures, the examination of the external party’s experience in processing sensitive information, its reputation and background and the potential for conflict of interests. Although we have continued to invest in our due diligence, onboarding, and monitoring capabilities over critical external parties with whom we do business, including our third-party vendors and service providers , our control over the security posture of, and ability to monitor the cybersecurity practices of, such third parties remains limited, and there can be no assurance that we can prevent, mitigate or remediate the risk of any compromise or failure in the cybersecurity infrastructure owned or controlled by such third parties. When we do become aware that a third-party vendor or service provider has experienced such compromise or failure, we attempt to mitigate our risk, including by terminating such third party’s connection to our information systems and networks where appropriate.
Employees receive information security training upon hiring and at least quarterly, with additional dedicated training regularly for employees with access to sensitive Company systems and information. Employees are required to confirm in writing that they have read and understand the Company’s information security policies. In addition, we require employees and third-party contractors to sign non-disclosure agreements as part of our practices seeking to protect the confidentiality of our information.
113
Management reviews the IS Policy at least annually. A review may be performed more frequently if there are changes to our business or other factors that impact the IS Policy.
Mr. Alex Yeretsky has served as the Company’s Chief Information Security Officer (the “CISO”) since 2018. As CISO, Mr. Yeretsky has overall responsibility for information security controls and regulations and provides regular reports to our management.
In addition, the Company maintains a high-level management committee that meets monthly (Cyber Security Steering Committee) that is dedicated to cybersecurity. The Cyber Security Steering Committee is comprised of the CISO, CTO, CFO, CLO, head of R&D and other relevant managers and employees. This steering committee plays an important role in ensuring the effective management and implementation of cybersecurity measures within the organization. The committee is responsible for overseeing and guiding cybersecurity initiatives designed to protect the organization’s sensitive information, systems and infrastructure.
The CISO provides an annual report to the board of directors directly. The Cyber Security Steering Committee covers both cybersecurity and related compliance matters. In addition to such regular updates, and as part of our incident response processes, our CISO also provides updates on certain cybersecurity threats and incidents to the Cyber Security Steering Committee and, as necessary, to the full board of directors, based on the steering committee’s assessment of risk.
Before we engage any technology third-party vendor or service provider, we perform a thorough due diligence process to evaluate their cybersecurity risks and the compatibility of their cybersecurity systems with ours. The due diligence process involves the Information Security, Privacy, Legal and Information Systems departments.
Our board of directors oversees our cybersecurity and ensures that we take steps to adequately address and mitigate the risk from evolving cybersecurity threats we face. The board’s responsibilities include setting the overall cybersecurity strategy, assessing risks and providing oversight to ensure our resiliency against cybersecurity threats and incidents. The key aspect of the board’s role is to remain updated and make necessary determinations on the following topics:
| • |
IS Policy development and approval,
|
| • |
Risk management,
|
| • |
Budgetary approval,
|
| • |
Leadership and culture,
|
| • |
Compliance oversight,
|
| • |
Crisis management, and
|
| • |
Continuous improvement.
|
114
PART III
| ITEM 17. | FINANCIAL STATEMENTS |
We have responded to Item 18 in lieu of this item.
| ITEM 18. | FINANCIAL STATEMENTS |
Financial Statements are filed as part of this annual report, beginning on page F-1.
| ITEM 19. | EXHIBITS |
The following documents are filed as part of this annual report.
EXHIBIT INDEX
Exhibit No. | Description | |
1.1 | Amended and Restated Articles of Association of Nayax Ltd. (incorporated by reference to Exhibit 1.1 to the Registration Statement on Form 20-F (File No. 001-41491), filed with the SEC on September 2, 2022) | |
2.1* | Description of Securities | |
4.1 | Shareholders’ Agreement among Amir Nechmad, Yair Nechmad, Yair Nechmad Ltd. and David Ben-Avi, dated March 9, 2021 (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form 20-F (File No. 001-41491), filed with the SEC on September 2, 2022) | |
4.2* | Amendment No.1 to the Shareholders Rights Agreement among Amir Nechmad, Yair Nechmad, Yair Nechmad Ltd. and David Ben-Avi, dated March 6, 2026 | |
4.3 | Registration Rights Agreement, among Nayax Ltd., Amir Nechmad, Yair Nechmad and David Ben-Avi, dated as of May 4, 2021 (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form 20-F (File No. 001-41491), filed with the SEC on September 2, 2022) | |
4.4 | Form of Indemnification Agreement (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form 20-F (File No. 001-41491), filed with the SEC on September 2, 2022) | |
4.5 | Nayax Ltd. 2013 Share Option Plan (incorporated by reference to Exhibit 99.1 to the Registration Statement on Form S-8 (File No. 333-267542), filed with the SEC on September 21, 2022) | |
4.6 | Nayax Ltd. Global Equity Incentive Plan (2018) (incorporated by reference to Exhibit 99.2 to the Registration Statement on Form S-8 (File No. 333-267542), filed with the SEC on September 21, 2022) | |
4.7 | Remuneration Policy of Nayax Ltd. (incorporated by reference to Exhibit 4.4 to the Registration Statement on Form 20-F (File No. 001-41491), filed with the SEC on September 2, 2022) | |
8.1* | List of subsidiaries | |
11.1* | Insider Trading Policy | |
12.1* | Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
12.2* | Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
13.1* | Certification by Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
13.2* | Certification by Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
15.1* | Consent of Kesselman & Kesselman, a member of PricewaterhouseCoopers International Limited | |
97.1 | Policy for Recovery of Erroneously Awarded Compensation (incorporated by reference to Exhibit 97.1 to the Annual Report on Form 20-F (File No. 001-41491), filed with the SEC on February 28, 2024) | |
101 | The following financial statements from the Company’s 20-F for the fiscal year ended December 31, 2025 formatted in Inline XBRL: (i) Inline Consolidated Statements of Comprehensive Loss, (ii) Inline Consolidated Statements of Financial Position, (iii) Inline Consolidated Statements of Changes in Equity, (iv) Inline Consolidated Statements of Cash Flows, and (v) Inline Notes to the Consolidated Financial Statements. | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * | Filed herewith. |
115
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
Nayax Ltd. | |||
Date: | By: | /s/ Yair Nechmad | |
Name: Yair Nechmad | |||
Title: Chief Executive Officer | |||
By: | /s/ Sagit Manor | ||
Name: Sagit Manor | |||
Title: Chief Financial Officer | |||
116
NAYAX LTD.
Consolidated Financial Statements
2025 Annual Report
TABLE OF CONTENTS
|
Page
|
|
|
Report of Independent Registered Public Accounting Firm (PCAOB ID
|
F-3 - F-4
|
|
Consolidated financial statements – in thousands of US Dollars:
|
|
|
Consolidated balance sheets
|
F-5 - F-6
|
|
Consolidated statements of profit or loss
|
F-7
|
|
Consolidated statements of comprehensive income (loss)
|
F-8
|
|
Consolidated statements of changes in equity
|
F-9
|
|
Consolidated statements of cash flows
|
F-10 - F-11
|
|
Notes to the consolidated financial statements
|
F-12 - F-76
|
F - 2
Report of Independent Registered Public Accounting Firm
To the board of directors and shareholders of Nayax Ltd.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Nayax Ltd. and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of profit or loss, comprehensive income (loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
F - 3
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Goodwill Impairment Assessment
As described in Notes 2, 3 and 12 to the consolidated financial statements, the Company’s goodwill balance was $64.4 million at December 31, 2025. Management conducts an impairment test as of December 31 of each year, or more frequently if events or circumstances indicate that the carrying value of goodwill may be impaired. Potential impairment is identified by comparing the recoverable amount of the cash generating unit to which goodwill belongs to its carrying value. If the carrying value exceeds the recoverable amount of the cash generating units, an impairment loss is recognized in an amount equal to such excess. Recoverable amounts of cash generating units are estimated by management using a discounted cash flow model. Management’s cash flow projections included significant judgments and assumptions relating to the amount and timing of projected future cash flows, nominal growth rates and the discount rates.
The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment is a critical audit matter are (i) the significant judgment by management when developing the recoverable amount of the cash generating units; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s significant assumptions related to the amount and timing of projected future cash flows, nominal growth rates and the discount rates; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others (i) testing management’s process for developing the recoverable amount estimate; (ii) evaluating the appropriateness of the discounted cash flow model used by management; (iii) testing the completeness and accuracy and relevance of underlying data used in the discounted cash flow model; and (iv) evaluating the reasonableness of the significant assumptions used by management related to the amount and timing of projected future cash flows, nominal growth rates and the discount rates. Evaluating management’s assumptions related to the amount and timing of projected future cash flows, nominal growth rates and discount rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the cash generating units, and (ii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the discounted cash flow model and (ii) the reasonableness of the discount rates assumption.
|
|
/s/
|
|
March 9, 2026
|
Certified Public Accountants (Isr.)
|
|
A member firm of PricewaterhouseCoopers International Limited
|
We have served as the Company’s auditor since 2015.
F - 4
NAYAX LTD.
CONSOLIDATED BALANCE SHEETS
|
December 31
|
||||||||||||
|
2025
|
2024
|
|||||||||||
|
Note
|
U.S. dollars in thousands
|
|||||||||||
|
ASSETS
|
||||||||||||
|
CURRENT ASSETS:
|
||||||||||||
|
Cash and cash equivalents
|
7
|
|
|
|||||||||
|
Restricted cash transferable to customers for processing activity
|
8
|
|
|
|||||||||
|
Short-term bank deposits
|
|
|
||||||||||
|
Receivables in respect of processing activity
|
|
|
||||||||||
|
Trade receivable, net
|
9
|
|
|
|||||||||
|
Inventory
|
|
|
||||||||||
|
Other current assets
|
|
|
||||||||||
|
Total current assets
|
|
|
||||||||||
|
NON-CURRENT ASSETS:
|
||||||||||||
|
Long-term bank deposits
|
|
|
||||||||||
|
Other long-term assets
|
|
|
||||||||||
|
Investment in associates
|
|
|
||||||||||
|
Right-of-use assets, net
|
10
|
|
|
|||||||||
|
Property and equipment, net
|
11
|
|
|
|||||||||
|
Goodwill and intangible assets, net
|
12
|
|
|
|||||||||
|
Deferred income tax assets
|
|
|
||||||||||
|
Total non-current assets
|
|
|
||||||||||
|
TOTAL ASSETS
|
|
|
||||||||||
The accompanying notes are an integral part of these financial statements.
F - 5
NAYAX LTD.
CONSOLIDATED BALANCE SHEETS
|
December 31
|
||||||||||||
|
2025
|
2024
|
|||||||||||
|
Note
|
U.S. dollars in thousands
|
|||||||||||
|
LIABILITIES AND EQUITY
|
||||||||||||
|
CURRENT LIABILITIES:
|
||||||||||||
|
Short-term bank credit and short term loan
|
13a.
|
|
|
|||||||||
|
Current maturities of long-term bank loans
|
13b.
|
|
|
|||||||||
|
Current maturities of other long-term liabilities
|
|
|
||||||||||
|
Current maturities of leases liabilities
|
10
|
|
|
|||||||||
|
Payables in respect of processing activity
|
|
|
||||||||||
|
Trade payables
|
|
|
||||||||||
|
Other payables
|
|
|
||||||||||
|
Total current liabilities
|
|
|
||||||||||
|
NON-CURRENT LIABILITIES:
|
||||||||||||
|
Long-term bank loans
|
13b.
|
|
|
|||||||||
|
Other long-term liabilities
|
14
|
|
|
|||||||||
|
Debentures
|
13c.
|
|
|
|||||||||
|
Lease liabilities
|
10
|
|
|
|||||||||
|
Deferred income taxes
|
15
|
|
|
|||||||||
|
Total non-current liabilities
|
|
|
||||||||||
|
TOTAL LIABILITIES
|
|
|
||||||||||
|
EQUITY:
|
16
|
|||||||||||
|
Shareholders Equity:
|
||||||||||||
|
Share capital
|
|
|
||||||||||
|
Additional paid in capital
|
|
|
||||||||||
|
Capital reserves
|
|
|
||||||||||
|
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||||||
|
TOTAL EQUITY
|
|
|
||||||||||
|
TOTAL LIABILITIES AND EQUITY
|
|
|
||||||||||
The accompanying notes are an integral part of these financial statements.
F - 6
NAYAX LTD.
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
|
Year ended December 31
|
||||||||||||||||
|
2025
|
2024
|
2023
|
||||||||||||||
|
U.S. dollars in thousands
|
||||||||||||||||
|
Note
|
(Excluding loss per share data)
|
|||||||||||||||
|
Revenues
|
17
|
|
|
|
||||||||||||
|
Cost of revenues
|
18
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||
|
Gross Profit
|
|
|
|
|||||||||||||
|
Research and development expenses
|
19
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||
|
Selling, general and administrative expenses
|
20
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||
|
Depreciation and amortization in respect of technology and capitalized development costs
|
12
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||
|
Other income (expenses)
|
|
(
|
)
|
(
|
)
|
|||||||||||
|
Share of losses of equity method investees
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||
|
Operating Income (Loss)
|
|
|
(
|
)
|
||||||||||||
|
Financial Income
|
21
|
|
|
|
||||||||||||
|
Financial Expense
|
21
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||
|
Profit (loss) before taxes on income
|
|
(
|
)
|
(
|
)
|
|||||||||||
|
Tax benefits (expenses)
|
15
|
|
(
|
)
|
(
|
)
|
||||||||||
|
Profit (loss) for the period
|
|
(
|
)
|
(
|
)
|
|||||||||||
|
Earnings (loss) per share attributed to shareholders of the Company:
|
22
|
|||||||||||||||
|
Basic earnings (loss) per share
|
|
(
|
)
|
(
|
)
|
|||||||||||
|
Diluted earnings (loss) per share
|
|
(
|
)
|
(
|
)
|
|||||||||||
The accompanying notes are an integral part of these financial statements.
F - 7
NAYAX LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
Year ended December 31
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
U.S. dollars in thousands
|
||||||||||||
|
Profit (loss) for the period
|
|
(
|
)
|
(
|
)
|
|||||||
|
Other comprehensive income (loss) for the year:
|
||||||||||||
|
Items that will not be reclassified to profit or loss:
|
||||||||||||
|
Gain from remeasurement of liabilities (net) in
|
||||||||||||
|
respect of post-employment benefit obligations
|
|
|
|
|||||||||
|
Items that may be reclassified to profit or loss:
|
||||||||||||
|
Loss from translation of financial statements of foreign operations
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Gains on cash flow hedges
|
|
|
|
|||||||||
|
Total other comprehensive income (loss) for the period
|
|
(
|
)
|
(
|
)
|
|||||||
|
Total comprehensive income (loss) for the period
|
|
(
|
)
|
(
|
)
|
|||||||
The accompanying notes are an integral part of these financial statements.
F - 8
NAYAX LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
|
Equity attributed to shareholders of the Company
|
||||||||||||||||||||||||||||
|
Share
capital |
Additional paid in capital
|
Remeasurement of post-employment benefit obligations
|
Other capital reserves
|
Foreign currency translation reserve
|
Accumulated
deficit |
Total
equity |
||||||||||||||||||||||
|
U.S. dollars in thousands
|
||||||||||||||||||||||||||||
|
Balance at January 1, 2023
|
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||||
|
Changes during the year;
|
||||||||||||||||||||||||||||
|
Loss for the year
|
|
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
|
Other comprehensive income (loss) for the year
|
|
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||||||
|
Employee options exercised and vesting of RSUs
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Share-based payment
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Balance at December 31, 2023
|
|
|
|
|
(
|
)
|
(
|
)
|
|
|||||||||||||||||||
|
Balance at January 1, 2024
|
|
|
|
|
(
|
)
|
(
|
)
|
|
|||||||||||||||||||
|
Changes during the year;
|
||||||||||||||||||||||||||||
|
Loss for the year
|
|
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
|
Other comprehensive income (loss) for the year
|
|
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||||||
|
Issuance of ordinary shares
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Employee options exercised and vesting of RSUs
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Share-based payment
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Balance at December 31, 2024
|
|
|
|
|
(
|
)
|
(
|
)
|
|
|||||||||||||||||||
|
Balance at January 1, 2025
|
|
|
|
|
(
|
)
|
(
|
)
|
|
|||||||||||||||||||
|
Changes during the year;
|
||||||||||||||||||||||||||||
|
Profit for the period
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Issuance of warrants, net
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Issuance of options due acquisition
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Other comprehensive income (loss) for the year
|
|
|
|
|
(
|
)
|
|
|
||||||||||||||||||||
|
Employee options exercised and vesting of RSUs
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Share-based payment
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Balance at December 31, 2025
|
|
|
|
|
(
|
)
|
(
|
)
|
|
|||||||||||||||||||
*Presents less than 1 thousand
The accompanying notes are an integral part of these financial statements.
F - 9
NAYAX LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Year ended December 31
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
U.S. dollars in thousands
|
||||||||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
|
Net profit (loss) for the period
|
|
(
|
)
|
(
|
)
|
|||||||
|
Adjustments required to reflect the cash flow from operating activities (see Appendix A)
|
|
|
|
|||||||||
|
Net cash provided by operating activities
|
|
|
|
|||||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
|
Capitalized development costs
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Acquisition of property and equipment
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Loans granted to related companies and others
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Decrease (Increase) in bank deposits
|
|
(
|
)
|
(
|
)
|
|||||||
|
Interest received
|
|
|
|
|||||||||
|
Investments in financial assets and other asset
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Proceeds from sub-lessee
|
|
|
|
|||||||||
|
Payments for acquisitions of subsidiaries, net of cash acquired
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Payment of deferred consideration and contingent liability due consideration of subsidiary acquisition
|
(
|
)
|
(
|
)
|
|
|||||||
|
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
|
Issuance of ordinary shares
|
|
|
|
|||||||||
|
Proceeds from issue of debentures and warrants, net
|
|
|
|
|||||||||
|
Interest paid
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Changes in short-term bank credit and short term loan
|
(
|
)
|
(
|
)
|
|
|||||||
|
Receipt of long-term bank loans
|
|
|
|
|||||||||
|
Repayment of long-term bank loans
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Repayment of long-term loans from others
|
|
(
|
)
|
(
|
)
|
|||||||
|
Repayment of other long-term liabilities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Employee options exercised
|
|
|
|
|||||||||
|
Principal lease payments
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Net cash provided by financing activities
|
|
|
|
|||||||||
|
Increase in cash and cash equivalents
|
|
|
|
|||||||||
|
Balance of cash and cash equivalents at beginning of year
|
|
|
|
|||||||||
|
Gains (losses) from exchange differences on cash and cash equivalents
|
|
(
|
)
|
|
||||||||
|
Gains (losses) from translation of cash and cash equivalents of foreign operation
|
(
|
)
|
(
|
)
|
|
|||||||
|
Balance of cash and cash equivalents at end of year
|
|
|
|
|||||||||
The accompanying notes are an integral part of these financial statements.
F - 10
NAYAX LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Year ended December 31
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
U.S. dollars in thousands
|
||||||||||||
|
Appendix A – adjustments required to reflect the cash flows from operating activities:
|
||||||||||||
|
Adjustments in respect of:
|
||||||||||||
|
Depreciation and amortization
|
|
|
|
|||||||||
|
Post-employment benefit obligations, net
|
(
|
)
|
(
|
)
|
|
|||||||
|
Deferred taxes
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Finance expenses, net
|
|
|
|
|||||||||
|
Expenses in respect of long-term employee benefits
|
|
|
|
|||||||||
|
Income from gaining control in subsidiary
|
(
|
)
|
|
|
||||||||
|
Share of loss of equity method investee
|
|
|
|
|||||||||
|
Long-term deferred income
|
|
|
(
|
)
|
||||||||
|
Expenses in respect of share-based compensation
|
|
|
|
|||||||||
|
Total adjustments
|
|
|
|
|||||||||
|
Changes in operating asset and liability items:
|
||||||||||||
|
Increase in restricted cash transferable to customers for processing activity
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Increase in receivables from processing activity
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Increase in trade receivables
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Increase in other current assets
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Decrease (Increase) in inventory
|
(
|
)
|
|
|
||||||||
|
Increase in payables in respect of processing activity
|
|
|
|
|||||||||
|
Increase in trade payables
|
|
|
|
|||||||||
|
Increase in other payables
|
|
|
|
|||||||||
|
Total changes in operating asset and liability items
|
(
|
)
|
|
|
||||||||
|
Total adjustments required to reflect the cash flow from operating activities
|
|
|
|
|||||||||
|
Appendix B – Information regarding investing and financing activities not involving cash flows:
|
||||||||||||
|
Purchase of property and equipment on credit
|
|
|
|
|||||||||
|
Recognition of right-of-use assets through lease liabilities
|
|
|
|
|||||||||
|
Recognition of Sub lease asset
|
|
|
|
|||||||||
|
Share based payments costs attributed to development activities, capitalized as intangible assets
|
|
|
|
|||||||||
The accompanying notes are an integral part of these financial statements.
F - 11
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
| a. |
Background
|
| 1. |
Nayax Ltd. (hereafter – the “Company”) was incorporated in January 2005. The Company provides processing and software as a service (SaaS) business operations solutions via a global platform. The Company is marketing its POS devices and SaaS solutions it develops in more than 120 countries worldwide through subsidiaries (the Company and the subsidiaries, hereafter – the “Group”) and through local distributors.
|
| 2. |
In August 2023, the company filed with the Israel Securities Authority a shelf prospectus (the “Shelf Prospectus”). Such Shelf Prospectus allows the Company to raise from time to time funds through the offering and sale of various securities including debt and equity, in Israel, at the discretion of the Company. In October 2023, the company filed with the SEC a Registration Statement on Form F-3 (the “Registration Statement”). Such Registration Statement allows the company to raise funds from time to time through the offering and sale of various securities including debt and equity, at the discretion of the Company. Under the Registration Statement, certain selling shareholders may also offer and sell ordinary shares from time to time in one or more offerings, but the Company is not entitled to any funds raised from such sales.
|
| 3. |
On March 12, 2024, the Company successfully concluded an offering of
|
| 4. |
On March 11, 2025, the Company completed a public offering of
|
| 5. |
On December 11, 2025, the Company expanded its bond series, raising approximately NIS
|
| b. |
War in Israel
|
In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of coordinated attacks on civilian and military targets, accompanied by extensive rocket fire on Israeli cities. Following the attacks, Israel’s security cabinet declared war against Hamas and commenced a military campaign. Since the commencement of these events, additional hostilities have occurred, including with Hezbollah in Lebanon, the Houthi movement which controls parts of Yemen, and with Iran. In October 2024, Israel began ground operations against Hezbollah in Lebanon, culminating in a 60-day ceasefire agreed between Israel and Lebanon on November 27, 2024. In January 2025, Israel and Hamas agreed to a three-phase ceasefire in Gaza, with the first six-week phase commencing on January 19, 2025. On February 28, 2026, Israel launched a pre-emptive strike, known as “Shaagat Ha’ari” (“Lion’s Roar”), against strategic targets in Iran, carried out in coordination with the United States. This operation marked a further escalation in the regional conflict, though its direct impact on the Company’s operations remained limited. The “Swords of Iron” war and “Shaagat Ha’ari”, has significant economic and social implications in Israel. However, during the financial year ended December 31, 2025, the Company’s operations and financial performance were not materially impacted by the conflict. Management has assessed the potential risks and consequences related to the geopolitical environment and has determined that no adjustments to the financial statements or additional disclosures are necessary. The Company continues to monitor developments and remains committed to ensuring business continuity and risk management.
F - 12
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - MATERIAL ACCOUNTING POLICY INFORMATION
| a. |
Basis of presentation:
|
The financial statements of the Group as of December 31, 2025 and 2024 and for each of the three years ended December 31, 2025, are in compliance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IASB”) (hereinafter “IFRS”) and were approved for issuance by the Board of Directors (the “Board”) of the Company on March 8, 2026.
In connection with the presentation of these financial statements, the following is stated:
| 1) |
The principal accounting policies set out below have been consistently applied to all periods presented, unless otherwise stated.
|
| 2) |
The preparation of financial statements in conformity with IFRS Accounting Standards requires the use of certain critical accounting estimates. It also requires the Group’s management to exercise its judgment in the process of applying the Group’s accounting policies. Areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3. Actual results may differ materially from estimates and assumptions used by the Group’s management.
|
| 3) |
The Group’s operating cycle is 12 months.
|
| b. |
Consolidated financial statements
|
| 1) |
Subsidiaries and business combinations
|
Subsidiaries are all entities over which the Company has control. Subsidiaries are fully consolidated from the date on which control is obtained by the Company. They are deconsolidated from the date that control ceases.
When assessing control, the Company considers its potential voting rights, as well as such rights held by other parties to determine whether it has power over an investee. Potential voting rights are rights to obtain voting rights of an investee, such as those arising from convertible instruments or options, including forward contracts. Those potential voting rights are considered only if the rights are substantive. Business combinations are accounted for using the acquisition method.
F - 13
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - MATERIAL ACCOUNTING POLICY INFORMATION (continued):
| b. |
Consolidated financial statements (continued):
|
Goodwill represents the excess of the acquisition consideration and the amount of non-controlling interests and acquisition-date fair value of any previous equity interest in the acquired entity over the net identifiable assets acquired and liabilities assumed.
Intra-group transactions and balances, including revenues, expenses and dividends in respect of transactions between Group entities were eliminated. Gains and losses on intra-group transactions that are recognized as assets (such as inventory and property and equipment) are also eliminated.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognized in profit or loss.
| 2) |
Transactions with non-controlling interests’ owners which do not result in loss of control
|
Transactions with non-controlling interests’ owners which do not result in loss of control are accounted for as transactions with shareholders. In such transactions, the difference between the fair value of any consideration paid or received and the amount in which the non-controlling interests are adjusted to reflect the changes in their proportional interest in a subsidiary are recognized directly in equity and attributed to the owners of the Company.
| 3) | Associates |
An associate is an entity over which the Group exercises significant influence, but not control. The investment in an associate is accounted for by the equity method.
| 4) |
The equity method |
According to the equity method of accounting, the investment is initially recognized at cost and its carrying amount varies such that the Group recognizes its share of the associate’s earnings or losses from acquisition date. Goodwill relating to associates is included in the investment’s carrying amount and tested for impairment as part of the entire investment.
The Group’s share of post-acquisition profit or loss is recognized in the statements of profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group’s share of losses in an associate equal or exceeds its interest in the associate (including any other unsecured long-term receivables), the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
The Group determines at each reporting date whether there are any indications that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the investment (the higher of the value in use and the fair value less costs to sell) and its carrying amount and recognizes the impairment amount in the consolidated statement of profit or loss.
| c. |
Translation of foreign currency balances and transactions:
|
| 1) |
Functional and presentation currency
|
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (hereafter - the “Functional Currency”). When determining the functional currency of Group companies and whether their functional currency is identical to that of the Company, the materiality of the foreign operations as an extension of the reporting entity was taken into account. The consolidated financial statements are presented in US Dollars which is the functional and presentation currency of the Company and Group entities, except Nayax Retail, Weezmo and Roseman whose functional currency is the NIS and VM tecnologia and Uppay whose functional currency is the BRL.
F - 14
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - MATERIAL ACCOUNTING POLICY INFORMATION (continued):
| c. |
Translation of foreign currency balances and transactions (continued):
|
| 2) |
Transactions and balances
|
Transactions made in a currency which is different from the functional currency (“foreign currency”) are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or revaluation, if the items are revalued. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the end-of-year exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of profit or loss. Gains and losses from changes in exchange rates are presented in the statement of profit or loss and presented within financial income or financial expenses, as appropriate.
| 3) |
Translation of financial statements of Group entities:
|
The results and financial position of Group entities, whose functional currency is different than the presentation currency, are translated into the presentation currency as follows:
| (a) |
Assets and liabilities for each statement of financial position statement presented are translated at the closing rate at the date of the statement of financial position;
|
| (b) |
Income and expenses for each statement of profit or loss are translated at average exchange rates for the period (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions), and;
|
| (c) |
All resulting exchange differences are recognized in other comprehensive income.
|
On consolidation, exchange differences arising from the translation of the net investment in foreign operations whose functional currency is different than that of the Company are recognized in other comprehensive income. When a foreign operation is fully disposed of, exchange differences that were recorded in other comprehensive income are recognized in the statement of profit or loss as part of the gain or loss on sale.
Goodwill and fair value adjustments arising from acquisition of foreign operations, are accounted for as assets and liabilities of the foreign operations and translated at closing rate. Exchange differences arising from the translation as aforesaid are carried to other comprehensive income.
| d. |
Cash and cash equivalents
|
Cash and cash equivalents include cash on hand and short-term bank deposits, which are not restricted by liens, with original maturities of three months or less, and investments in money market funds. For additional information about the restricted cash to be transferred to customers in respect of processing activity, see note 8 below.
F - 15
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - MATERIAL ACCOUNTING POLICY INFORMATION (continued):
| e. |
Inventory
|
Inventories are stated at the lower of cost and net realizable value. Cost is determined on a moving average basis. The cost of inventory includes all acquisition costs, conversion costs and other direct costs incurred in bringing the inventory to its current location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. The Group periodically reviews the condition and age of the inventory, and makes impairment provisions if necessary.
| f. |
Property and equipment
|
Property, plant and equipment items are initially recognized at acquisition cost. Subsequent costs are included as incurred in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. When a part of a property, plant and equipment item is replaced, its’ carrying amount is derecognized.
All other repair and maintenance costs are charged to the statement of profit or loss during the financial period in which they are incurred. Depreciation on assets is calculated using the straight-line method to depreciate their cost to their residual value over their estimated useful lives, as follows:
|
%
|
||
|
Computers and peripheral equipment
|
|
|
|
Rental of POS devices
|
|
|
|
Machinery and equipment
|
|
Leasehold improvements are depreciated by the straight-line method over the earlier of the term of the lease or the estimated useful life of the improvements.
| g. |
Intangible assets:
|
| 1) |
Capitalized development Costs
|
Intangible assets arising from development projects or from internally-developed new products, development of internally-used operational systems and integration of external systems with the Group’s existing systems, are recognized as intangible assets, subject to the following conditions being met:
| a) | The technical feasibility of completing the intangible asset so that it will be available for use exists; |
| b) | Management intends to complete the intangible asset and use or sell it; |
| c) |
There is an ability to use or sell the intangible asset;
|
| d) |
The way the intangible asset will generate probable future economic benefits is demonstrable;
|
| e) |
The technical, financial and other resources to complete the development and to use or sell the intangible asset are available; and
|
| f) |
The expenditure attributable to the intangible asset during its development can be reliably measured.
|
The Group monitors all its development projects to identify costs for recognition as an expense in profit or loss and costs for capitalization as an asset in the statement of financial position by making a distinction between:
(1) Investments in new products (hardware and software), as opposed to expenses aimed at maintaining normal functionality;
(2) Investment in integrations and opening markets; and
(3) Investment in software for own use.
F - 16
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - MATERIAL ACCOUNTING POLICY INFORMATION (continued):
| g. |
Intangible assets (continued):
|
| 1) |
Capitalized development Costs (continued):
|
The Group reviews, in relation to each investment, whether it is designed to substantially enhance the functionality in a way that would increase the economic benefit flowing to the Group (i.e. higher revenue and/or cost savings).
Investments designed to enhance functionality in a way that would increase the economic benefit flowing to the Group are capitalized as an asset and presented within “goodwill and intangible assets, net” in the statement of financial position (subject to satisfying of the terms as instructed in IAS38 and listed in an extract above).
The main types of costs that capitalized as an intangible asset as of December 31, 2025 and 2024 are:
| (1) |
Payroll costs and related expenses, which are attributed by the Group to the different projects that meet the conditions for capitalization;
|
| (2) |
Cost of subcontractors, which are specifically identified to projects that meet the conditions for capitalization.
|
| (3) |
Share-based payment expenses attributed apportionately to payroll and related suppliers expenses arises from development.
|
Research costs are expensed as incurred to the “research and development expenses” item in the statement of profit or loss. Research costs of the Group in the reported periods are immaterial to its financial statements.
Development costs designed to maintain normal functionality or insignificantly enhance functionality, as well as development costs that are not identified with a project that can be capitalized, are expensed as incurred to “research and development expenses” in profit or loss.
Research and development expenses that were previously expensed to profit and loss are not recognized as intangible assets in subsequent reporting periods. Development costs presented as intangible assets are amortized from the point in time in which the asset is available for use, on a straight-line basis, over their useful lives (5 years ). Development assets which have not yet reached the point in which the asset is available for use are tested for impairment every year.
| 2) |
Distribution rights and brands
|
Distribution rights and brands purchased as part of a business combination are recognized at fair value on the acquisition date. Separately purchased distribution rights and brands are recognized at cost, plus directly attributable acquisition costs. The distribution rights and brands have a definite useful life (3 -20 years ), and they are presented net of accumulated amortization on a straight-line basis.
| 3) |
Customer relationships
|
Customer relationships purchased as part of a business combination are recognized at fair value on the acquisition date. Separately purchased customer relationships are recognized at cost, plus directly attributable acquisition costs. The customer relationships have a definite useful life (4 -10 years ), and they are presented net of accumulated amortization on a straight-line basis.
F - 17
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - MATERIAL ACCOUNTING POLICY INFORMATION (continued):
| g. |
Intangible assets (continued):
|
| 4) |
Technology
|
Technology purchased as part of a business combination is recognized at fair value on the acquisition date. Technology has a definite useful life (5 -7 years ) and is presented net of accumulated amortization on a straight-line basis.
| 5) |
Goodwill
|
Goodwill arising from the acquisition of a business represents the overall excess of: (1) the consideration transferred; (2) the amount of any non-controlling interests in the acquiree; (3) in a business combination achieved in stages, also the existing fair value as of the acquisition date of the Group’s previously held equity interest in the acquiree, over the net amount as of the acquisition date, of the identifiable assets acquired and the acquiree’s liabilities and contingent liabilities assumed.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated, as from the acquisition date to each of the cash generating units or groups of cash generating units of the Group that are expected to benefit from the synergies of the combination.
Impairment testing of a cash generating unit to which goodwill was allocated is undertaken annually and whenever there is any indication of impairment of the cash generating unit, by comparing the carrying amount of the cash generating unit, including the goodwill, to its recoverable amount, which is the higher of its value in use and the fair value less costs to sell.
| h. |
Impairment of non-financial assets
|
Intangible assets that have an indefinite useful life, such as goodwill, as well as intangible assets that are not yet available for use, are not amortized and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that such assets might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less selling costs and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels of identifiable cash flows (cash-generating units).
F - 18
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - MATERIAL ACCOUNTING POLICY INFORMATION (continued):
| i. |
Leases:
|
The Group accounts for a contract as a lease contract if the contract conveys the right to control the use of an identified asset for a period of time in exchange for a consideration:
| 1) |
The Group as a lessee: |
In transactions in which the Group acts as lessee, the Group recognizes a right-of-use asset against a lease liability on the commencement date of the lease contract, except in the case of lease transactions with a lease term of up to 12 months and lease transactions for which the underlying asset value is low; in those cases, the Group recognizes the lease payments on a straight-line basis as an operating cost over the lease period.
As part of the measurement of the lease liability, the Group does not separate between lease and non-lease components, such as: management services, maintenance services and more, which are included in the relevant transaction.
The lease liability on the commencement date includes outstanding lease payments discounted by the interest rate implicit in the lease, if that rate can be readily determined, or by the lessee’s incremental borrowing rate. The Group used the incremental borrowing rate, which is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. Subsequent to the commencement date, the Company measures the lease liability using the effective interest method.
The right-of-use asset is measured using the cost model and depreciated over the shorter of its useful life and the lease period. When there are indications for impairment, the Group tests the right-of-use asset for impairment in accordance with the provisions of IAS 36.
| 2) |
The Group as a lessor: |
Amounts due from finance leases are recognized as receivables at the amount of the Group’s net investment in the leases. Interest income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases.
Subsequent to initial recognition, the Group regularly reviews the estimated unguaranteed residual value and applies the impairment requirements of IFRS 9, recognizing an allowance for expected credit losses on the lease receivables.
Interest income is calculated with reference to the gross carrying amount of the lease receivables, except for credit-impaired financial assets for which interest income is calculated with reference to their amortized cost (i.e. after a deduction of the loss allowance).
| 3) |
Subleases
|
In transactions where the Group leases an underlying asset (a head lease) and sub-leases that underlying asset to a third party (sublease), the Group checks whether the risks and rewards relevant to the right-of-use asset were transferred by, among other things, checking the sub-lease period in reference to the useful life of the right-of-use asset arising from the head lease.
F - 19
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - MATERIAL ACCOUNTING POLICY INFORMATION (continued):
i. Leases (continued):
| 3) |
Subleases (continued):
|
When substantially all the risks and rewards incidental to ownership of the right-of-use asset were transferred, the Group accounts for the sub-lease as a finance lease. At sublease commencement date, the leased asset is derecognized and a “receivable in respect of finance lease” is recognized in an amount equal to the present value of the lease proceeds discounted by the lease’s implicit interest rate. Any difference between the balance of the leased asset prior to derecognition and the receivable balance in respect of the lease is recognized in profit and loss.
| j. |
Financial instruments:
|
Hedge Accounting
Cash flow hedges
The objective of hedge accounting is to represent in the financial statements the effect of risk management activities that use financial instruments to manage the exposures arising from certain risks that could affect profit or loss or other comprehensive income. The Company reduces its exposure by entering into forward foreign exchange contracts with respect to operating expenses that are forecasted to be incurred in currencies other than the US Dollars. Certain operating expenditures are incurred in or exposed to other currencies, primarily the New Israeli Shekel. in addition, the company designated NIS 332 million of its bond liability as a hedged item, effectively converting it into USD exposure, and used a cross-currency swap covering both principal and interest as the hedging instrument. The Company has established forecasted transaction currency risk management programs to protect against fluctuations in fair value and the volatility of future cash flows caused by changes in exchange rates. The Company’s currency risk management program includes foreign exchange contracts designated as cash flow hedges.
Changes in the fair value of derivatives used to hedge cash flows, in accordance with the effective portion of the hedge, are recorded through other comprehensive income directly in a other capital reserve. With respect to the non‑effective part, changes in the fair value are recognized in the statement of income. The amount recognized in the capital reserve is reclassified in the statement of income in the same period as the hedged cash flows affected profit or loss under the same line item in the statement of income as the hedged item. If the hedging instrument no longer meets the criteria for hedge accounting, expires or sold, terminated or exercised, then hedge accounting is discontinued. If cash flow hedge accounting is discontinued, the amount that has been accumulated in OCI remains in accumulated OCI if the hedged future cash flows are still expected to occur. Otherwise, the amount will be immediately reclassified to profit or loss as a reclassification adjustment. After discontinuation, once the hedged cash flow occurs, any amount remaining in accumulated OCI must be accounted for depending on the nature of the underlying transaction as described above.
Classification of financial assets
The Group classifies its financial assets into the following categories: financial assets at fair value through profit or loss and financial assets at amortized cost. The classification depends on the business model for managing the financial assets and the contractual terms of the cash flows in respect thereof.
F - 20
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - MATERIAL ACCOUNTING POLICY INFORMATION (continued):
| j. |
Financial instruments (continued):
|
Classification of financial assets (continued):
Financial assets at amortized cost are financial assets held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and their contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial assets at fair value through profit or loss are financial assets not classified into one of the categories of financial assets at amortized cost or financial assets at fair value through other comprehensive income.
The Group’s financial assets at amortized cost are included in the following items: “receivables in respect of processing activity”, “trade receivable”, “other current assets”, “cash and cash equivalents”, “short- term bank deposits”, “restricted cash transferable to customers in respect of processing activity”, “Other long-term assets”, “long-term bank deposits” in the statement of financial position.
Recognition and measurement
Ordinary course purchase and sales of financial assets are recorded in the Group’s books of accounts on the date on which the asset is delivered to the Group or by the Group.
Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership associated with these assets. Financial assets at fair value through profit or loss are presented in subsequent periods at fair value. In subsequent periods, financial assets at amortized cost are measured based on the effective interest method.
Financial assets measured at fair value through profit or loss are initially recognized at fair value and transaction costs are carried to profit or loss. Gains or losses arising from changes in the fair value of financial assets at fair value through profit or loss are presented in profit or loss under “finance expenses, net”, in the period in which they are incurred.
Impairment of financial assets measured at amortized cost
The Group recognizes a provision for loss in respect of expected credit losses on debt instruments measured at amortized cost and lease receivables.
At each statement of financial position date, the Group assesses whether the credit risk of the financial asset has increased significantly since it was initially recognized, whether assessed on an individual or collective basis. For that purpose, the Group compares the risk of default at the reporting date with the risk of default on the initial recognition date, taking into account all reasonable and supportable information that is available, including forward-looking information.
For financial assets that experience a significant increase in their credit risk since initial recognition, the Group measures expected credit loss provision at the amount of expected credit losses over the entire life of the instrument. Otherwise, the provision for loss is measured at the expected credit loss in a 12-month period.
However, the Group measures the provision for loss at an amount equal to expected credit losses over the instrument’s life for trade receivables or assets in respect of contract with customers arising from transactions within the scope of IFRS 15, and for receivables in respect of lease, stemming from transactions within the scope of IFRS 16.
F - 21
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - MATERIAL ACCOUNTING POLICY INFORMATION (continued):
| j. |
Financial instruments (continued):
|
Offsetting of financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial position, only when there is an immediate legally enforceable right (which is not conditional upon the occurrence of a future event) to offset the recognized amounts under all of the following circumstances: in the ordinary course of business, in the event credit default, insolvency or bankruptcy of the entity and of all counterparties, and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.
Financial liabilities
Financial liabilities are classified as measured at amortized cost or at fair value through profit or loss.
Financial liabilities measured at amortized cost:
Upon initial recognition, the Group measures the financial liabilities at fair value, net of transaction costs. Any differences between the amount of initial recognition (net of transaction costs) and the redemption value are recognized in the statement of profit or loss over the term of the financial liability, in accordance with the effective interest method.
Fees paid in respect of receipt of a credit facility are recognized as transaction costs attributed to the relevant loan, to the extent that it is probable that a portion or all of the credit facility amount shall be utilized. In such a case, the recognition of fees is deferred until the funds are actually withdrawn as part of the loan. If there is no evidence that a portion or all of the credit facility will be utilized, the fee is capitalized as a prepaid payment in respect of financing services and amortized over the term of the relevant credit facility.
Financial liabilities measured at fair value through profit or loss:
The Group measures these financial liabilities at fair value each reporting period. Transaction costs are recognized in profit or loss.
Financial liabilities are classified as current liabilities unless, at the end of the reporting period, the Group has a right to defer settlement of the liability for at least 12 months after the reporting period.
| k. |
Trade receivables
|
Trade receivables are amounts due from customers for sales of POS devices or services performed in the ordinary course of business.
| l. |
Trade payables
|
Trade payables are the Group’s obligations to pay for goods or services that have been rendered by suppliers in the ordinary course of business.
| m. |
Income taxes
|
Income tax expenses or benefit for the reported years include current and deferred taxes. Taxes are recognized in profit or loss, except for taxes arising from business combination and taxes relating to items carried to other comprehensive income or directly to equity, which are also recognized in other comprehensive income or equity, respectively, together with the item in respect of which they were created.
F - 22
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - MATERIAL ACCOUNTING POLICY INFORMATION (continued):
| m. |
Income taxes (continued):
|
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted in the countries in which Group companies operate and generate taxable income at the statement of financial position date. The Group periodically evaluates the tax aspects applicable to its taxable income based on the relevant tax laws and makes provisions in accordance with the amounts expected to be paid to the tax authorities.
The Group recognizes deferred income tax using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
The amount of deferred taxes is determined using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred tax assets are recognized for temporary differences that are tax deductible, up to the amount of the differences that are expected to be utilized in the future, against taxable income. Deferred tax assets are recognized in respect of unused carryforward losses, if it is probable that future taxable profit will be available against which the unused tax losses can be utilized.
The Group does not recognize deferred taxes on temporary differences arising on investments in subsidiaries, since the timing of the reversal of the temporary differences is controlled by the Group and it is probable that these temporary differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are off set only if: (a) An enforceable legal right exists to set off current tax assets against current tax liabilities; and; (b) Deferred tax assets and liabilities relate to income tax imposed by the same tax authority on the same entity or on different entities that intend to settle the balances on a net basis.
| n. |
Revenue recognition
|
The Group has revenues from sales of Point of Sales (POS) devices, software as a service (SaaS) and payment processing fees.
| 1) |
Revenue measurement
|
The revenue of the Group is measured at the amount of the consideration to which the Group expects to be entitled in exchange for transferring promised terminals or services to a customer, excluding amounts collected on behalf of third parties, such as certain selling taxes. Revenue is presented net of VAT and after elimination of intra-group revenue.
| 2) |
Timing of revenue recognition
|
The Group recognizes revenue when the customer obtains control of the promised goods or service under the contract with the customer. For each performance obligation, the Group determines, when entering into a contract, if it satisfies the performance obligation over time or at a point in time.
The group satisfies a performance obligation over time if one of the following criteria is met: (1) the customer is receiving and consuming the benefits of the Group’s performance as the Group performs; (2) the Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or (3) the Group’s performance does not create an asset with an alternative use to the Group, and the Group has an enforceable right to payment for performance completed to that date.
F - 23
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - MATERIAL ACCOUNTING POLICY INFORMATION (continued):
| n. |
Revenue recognition (continued):
|
| 3) |
Types of revenues of the Group
|
Revenue from sales of POS devices
The Group sells POS devices to customers.
Pursuant to IFRS 15, goods or services promised to a customer are distinct if the customer can benefit from the good or service supplied (either on its own or together with other resources that are readily available); and the Group’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.
The POS devices sold to the Group’s customers enable multiple functionalities. The sale of the POS device does not oblige the customer to purchase a full solution or to make a further purchase of the Group’s services. Accordingly, the POS devices constitute a performance obligation that is separate from the service component, and the Group recognizes revenues from sales of POS devices at a point in time, when control of the POS devices is transferred to its customers.
SaaS revenue and payment processing fees (hereafter –"Recurring revenue")
The Group provides management services and payment processing services. The consideration for the management services includes monthly fees in respect of each POS device. The consideration for the payment processing fees includes processing services, which are mostly calculated as a percentage of the transaction’s value and/or a defined fee for each processed transaction. Payment is made per the normal payment terms of the Company, which are generally 15 to 60 days from the date of the invoice. The revenue from those services is recognized in the period the services are rendered.
The Group recognizes the payment processing fees collected from its customers on a gross basis, since the Group controls the specified services before it is transferred to the customers, in accordance with the provisions of IFRS 15. In particular, the Group is primarily responsible for fulfilling the promise to provide the payment processing services to the customer, and the Group has discretion in establishing the price for the specified services. As a payment service provider, the Group acts as a merchant of record for its merchants. The Group bears the risk of chargebacks if amounts cannot be recovered from the customer. The fees paid to the processing companies are recognized as expenses under cost of revenue.
Allocation of the consideration in transactions that include the sale of POS devices and the above related services is based on the relative stand-alone selling price of each performance obligation based on the price at which a good or service is sold separately.
F - 24
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - MATERIAL ACCOUNTING POLICY INFORMATION (continued):
| o. |
Share-based payments
|
From time to time, the Group’s Board of Directors approves plans for the award of options or RSUs to the Group’s employees and suppliers, whereby the Group receives services from its employees and/or suppliers in consideration for equity instruments (options) of the Group.
The amount recognized for share-based payments to employees is determined in reference to the fair value of the options or RSUs granted on the grant date. Non-market vesting terms are included among the assumptions used to estimate the number of options expected to vest, such that the expense is recognized during the vesting period. As to other service providers, the cost of the transactions is measured in accordance with the fair value of the goods or services received in return for the equity instruments that were granted. Where it is not possible to measure reliably the fair value of the goods or services received in consideration for equity instruments, they are measured at the fair value of the granted equity instruments. At each statement of financial position date, the Group revises its estimates as to the number of options expected to vest, based on the non-market vesting conditions, and recognizes the impact of the change compared to the original estimates, if any, in the statement of profit or loss, with a corresponding adjustment to equity.
| p. |
Earnings (Loss) per share
|
The computation of basic earnings (loss) per share is based on the profit (loss) attributable to holders of ordinary shares, divided by the weighted average number of ordinary shares outstanding during the period. When calculating the diluted earnings (loss) per share, the Group adds to the average number of ordinary shares outstanding, that was used to calculate the basic earnings per share, the weighted average of the number of shares to be issued assuming that all shares that have a potentially dilutive effect would be converted into shares. Potential Ordinary Shares are only taken into account in cases where their effect is dilutive (reducing the earnings per share or increasing the loss per share).
| q. |
Provisions
|
Provisions are recorded when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.
| r. |
New IFRS Accounting Standards:
|
On April 9, 2024, the International Accounting Standards Board (IASB) issued IFRS 18, Presentation and Disclosure in Financial Statements, which will replace IAS 1. The new standard introduces significant changes to the presentation of Financial Statements:
| 1. |
New categories and subtotals in the statement of profit or loss: The standard requires entities to classify income and expenses into operating, investing, and financing categories, enhancing comparability across entities.
|
| 2. |
Management-defined performance measures (MPMs): Entities must disclose MPMs in a single note to the financial statements, providing transparency about measures that management uses to assess financial performance.
|
| 3. |
Enhanced aggregation and disaggregation principles: The standard provides guidance to ensure that financial information is presented in a way that is useful to users, preventing the obscuring of material information.
|
In addition, certain amendments have been made to IAS 7, Statements of cash flows. The standard is effective for annual periods beginning on or after January 1, 2027, with earlier application permitted. The Company is currently evaluating the potential impact of IFRS 18 on its financial statements, including whether to adopt the standard earlier than its mandatory effective date.
F - 25
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - MATERIAL ACCOUNTING POLICY INFORMATION (continued):
| r. |
New IFRS Accounting Standards (continued):
|
In May 2024, the IASB issued an amendment to IFRS 9, Financial Instruments, clarifying the timing of recognition and derecognition of financial assets and liabilities. Among other aspects, the amendment introduces a new exception for the derecognition of financial liabilities when settled through electronic payment systems.
Under the revised guidance, an entity may derecognize a financial liability when it has initiated an irrevocable payment instruction via an electronic payment system. The conditions for the exception are that the entity making the payment does not have: (a) the practical ability to withdraw, stop or cancel the payment instruction; (b) the practical ability to access the cash, and; (c) significant settlement risk.
The amendment is effective for annual reporting periods beginning on or after January 2026, with earlier application permitted. The Company has assessed the impact of this amendment on its financial statements. Based on the assessment, no material effect is expected.
NOTE 3 - CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
As part of financial reporting, the Group’s management makes assumptions and estimates that impact the value of assets, liabilities, income, expenses, and disclosures in the consolidated financial statements. These estimates are based on historical experience and expectations of future events, but may differ from actual results. The Group regularly reviews these estimates, considering relevant facts, historical data, external factors, and other reasonable assumptions in light of current circumstances. Below are the key accounting estimates and judgments, which involve significant uncertainty. The Group takes into account, as applicable, the relevant facts, historical experience, impact of external factors and reasonable assumptions in accordance with the circumstances.
| 1) |
Capitalized development costs
|
The Group capitalizes development costs as intangible assets when specific conditions are met (as outlined in note 2(g)), while costs that do not meet these conditions are expensed as incurred. Management exercises judgment to determine if each project meets the criteria for capitalization, and eligible costs are recognized as development assets. The estimated useful life and amortization of these assets are based on the expected period for marketing the products developed. These estimates may change due to technological advancements or market conditions. If the useful life is revised, amortization may increase, or development assets may be impaired or written off if they become obsolete.
| 2) |
Distribution rights, customer relationship and technology
|
Distribution rights, customers relationship and technology recognized as a result of business combinations carried out by the Group are amortized on an ongoing basis on a straight-line basis in accordance with expected useful life. The Company assesses the need to change the intangible assets’ useful lives on an ongoing basis.
F - 26
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
| 3) |
Deferred tax assets
|
Deferred tax assets are recognized in respect of carryforward losses and unused deductible temporary differences, if it is probable that future taxable income will exist against which they can be utilized. A management estimate is required to determine the amount of the deferred tax asset that can be recognized based on the timing, amount of expected taxable income, its origin and tax planning strategy.
4) Impairment of goodwill
|
The Company tests goodwill for impairment at least annually. The test requires management to estimate the future cash flow expected to arise from the continuing use of the cash-generating unit (or group of cash-generating units) to which the goodwill has been allocated. Management is also required to estimate an appropriate discount rate for these cash flows. The possible consequences for the financial statements are the attribution of impairment losses to profit or loss in the period in which they arise.
|
F - 27
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk and cash flow interest rate risk), credit risk and liquidity risk. The Group's risk management plan focuses on the uncertainty of the financial markets seeking to minimize potential negative impacts on the Group’s financial performances. Group’s risk management is carried out under policies approved by senior management. This policy relates to management of market risks, credit risks, liquidity risks and capital risks (cash management risks).
| 1) |
Market risks:
|
| a) |
Foreign exchange risks
|
The Group operates internationally and is exposed to fluctuations in exchange rates of various currencies, primarily with respect to the exchange rates of the NIS, Euro, GPB and AUD against the US Dollar.
Foreign exchange risks arise from commercial transactions, assets or liabilities, or net investments in foreign operations which are denominated in a currency which is not the entity’s functional currency. The following table presents a sensitivity test as of December 31, 2025, 2024 and 2023 to reasonably possible changes in the exchange rates, when all other variables remain unchanged. The impact on pre-tax income of the Group is due to changes in financial assets and liabilities.
|
Sensitivity test for changes in exchange rate
|
||||||||||
|
Foreign currency
|
Years
|
Income (loss) from change
|
||||||||
|
10% increase in exchange rate
|
10% decrease in exchange rate
|
|||||||||
|
US Dollars in thousands
|
||||||||||
|
NIS
|
2025
|
|
(
|
)
|
||||||
|
2024
|
(
|
)
|
|
|||||||
|
2023
|
(
|
)
|
|
|||||||
|
EUR
|
2025
|
|
(
|
)
|
||||||
|
2024
|
(
|
)
|
|
|||||||
|
2023
|
(
|
)
|
|
|||||||
|
GPB
|
2025
|
|
(
|
)
|
||||||
|
2024
|
|
(
|
)
|
|||||||
|
2023
|
|
(
|
)
|
|||||||
|
AUD
|
2025
|
|
(
|
)
|
||||||
|
2024
|
|
(
|
)
|
|||||||
|
2023
|
|
(
|
)
|
|||||||
| b) |
Risk in respect of interest rate change
|
Risks related to interest rates stem from changes in interest rates, which may have an adverse effect on the Group’s net income or cash flows. Changes in interest rates trigger changes in the Group’s interest income and expenses in respect of interest-bearing assets and liabilities.
The Company has loans from an Israeli bank which have the variable interest rate.
F - 28
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued):
Financial risk factors (continued):
2) Credit risks
Credit risk is managed on a Group level. Credit risks arise mainly from cash and cash equivalents, bank deposits, and credit exposures to receivables. The Group carries out a risk assessment by assessing the credit quality of each customer, taking into account the customer's financial position, past experience, and other factors. The Group settles the processing fee before remitting funds to the customers.
The loss allowance for trade receivables as of December 31, 2025 and 2024 was determined as follows:
|
December 31, 2025
|
Not overdue
|
Over 30 days overdue
|
Over 60 days overdue
|
Over 120 days overdue
|
Total
|
|||||||||||||||
|
US Dollar in thousands
|
||||||||||||||||||||
|
Gross carrying amount – trade receivables
|
|
|
|
|
|
|||||||||||||||
|
Less – provision of allowance for credit loss
|
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||
|
Trade receivable
|
|
|
|
|
|
|||||||||||||||
|
December 31, 2024
|
Not overdue
|
Over 30 days overdue
|
Over 60 days overdue
|
Over 120 days overdue
|
Total
|
|||||||||||||||
|
US Dollar in thousands
|
||||||||||||||||||||
|
Gross carrying amount – trade receivables
|
|
|
|
|
|
|||||||||||||||
|
Less – provision of allowance for credit loss
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||
|
Trade receivable
|
|
|
|
|
|
|||||||||||||||
Most of the Group’s cash and cash equivalents as of December 31, 2025 and 2024 were deposited with Israeli, European and American banks. In the opinion of the Group, the credit risk arising from those balances with banks is low. In respect of the processing activity, the Group has a restricted cash balance for transfer to customers and is also entitled to receive proceeds from international processing companies. In the opinion of the Group, the credit risk arising from the balances with those processing companies is low.
| 3) |
Liquidity risk
|
Prudent liquidity risk management implies maintaining sufficient cash and credit facilities to fund operations. In view of the dynamic nature of its business activity, the Group maintains financing flexibility through maintaining the availability of credit facilities from banks and investments in share capital.
F - 29
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued):
| 3) |
Liquidity risk (continued):
|
The table below analyzes the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities. The amounts presented in the table represent undiscounted cash flows.
|
Less than one year
|
Between 1 and 2 years
|
Between 3 and 5 years
|
More than 5 years
|
Total
|
||||||||||||||||
|
US Dollars in thousands
|
||||||||||||||||||||
|
December 31, 2025:
|
||||||||||||||||||||
|
Long-term bank loans
|
|
|
|
|
|
|||||||||||||||
|
Lease liabilities
|
|
|
|
|
|
|||||||||||||||
|
Other long-term liabilities, including current maturities
|
|
|
|
|
|
|||||||||||||||
|
Debentures
|
|
|
|
|
|
|||||||||||||||
|
Payables in respect of processing activity
|
|
|
|
|
|
|||||||||||||||
|
Trade payables
|
|
|
|
|
|
|||||||||||||||
|
Other payables
|
|
|
|
|
|
|||||||||||||||
|
Total
|
|
|
|
|
|
|||||||||||||||
|
Less than one year
|
Between 1 and 2 years
|
Between 3 and 5 years
|
More than 5 years
|
Total
|
||||||||||||||||
|
US Dollars in thousands
|
||||||||||||||||||||
|
December 31, 2024:
|
||||||||||||||||||||
|
Short-term loans
|
|
|
|
|
|
|||||||||||||||
|
Long-term bank loans
|
|
|
|
|
|
|||||||||||||||
|
Lease liabilities
|
|
|
|
|
|
|||||||||||||||
|
Payables in respect of processing activity
|
|
|
|
|
|
|||||||||||||||
|
Trade payables
|
|
|
|
|
|
|||||||||||||||
|
Other payables
|
|
|
|
|
|
|||||||||||||||
|
Total
|
|
|
|
|
|
|||||||||||||||
Group Management periodically reviews the ratio between future cash flows that will arise from maturities of its liabilities and the future cash flows that will arise from maturities of its financial assets; where necessary, the Group changes its liability mix and the timing of their maturity.
| 4) |
Capital risk:
|
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stockholders and to maintain an optimal capital structure to reduce the cost of capital.
From time to time the Group assesses, as applicable, the need to raise funds from external investors.
F - 30
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - FINANCIAL INSTRUMENTS AND FINANICAL RISK MANAGEMENT (continued):
| 4) |
Capital risk (continued):
|
Changes in financial liabilities, the cash flows in respect of which are classified as cash flows from financing activities:
|
Short-term credit
|
Long-term bank loans
|
Loans from others
|
Lease liabilities
|
Debentures
|
Other liabilities
|
Total
|
||||||||||||||||||||||
|
US Dollars in thousands
|
||||||||||||||||||||||||||||
|
Balance at January 1, 2025
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Changes in 2025:
|
||||||||||||||||||||||||||||
|
Liabilities added in respect of new leases
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Liabilities added in respect of debentures
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Liabilities added in respect of acquisitions
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Cash flows paid
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||
|
Amounts recognized in profit or loss and other changes
|
(
|
)
|
(
|
)
|
|
|
|
|
|
|||||||||||||||||||
|
Balance at December 31, 2025:
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
-
|
-
|
|||||||||||||||||||||||||||
|
Balance at January 1, 2024
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Changes in 2024:
|
||||||||||||||||||||||||||||
|
Liabilities added in respect of new leases
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Liabilities added in respect of loans from banks and others
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Liabilities added in respect of acquisitions
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Cash flows paid
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||||||||
|
Amounts recognized in profit or loss and other changes
|
|
|
(
|
)
|
|
|
(
|
)
|
|
|||||||||||||||||||
|
Balance at December 31, 2024:
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Balance at January 1, 2023
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Changes in 2023:
|
||||||||||||||||||||||||||||
|
Liabilities added in respect of new leases
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Liabilities added in respect of loans from banks and others
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Cash flows paid
|
|
(
|
)
|
(
|
)
|
(
|
)
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
|
Amounts recognized in profit or loss and other changes
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|
||||||||||||||||||
|
Balance at December 31, 2023:
|
|
|
|
|
|
|
|
|||||||||||||||||||||
F - 31
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - FINANCIAL INSTRUMENTS AND FINANICAL RISK MANAGEMENT (continued):
| 5) |
Fair Value Measurement:
|
The Company measures certain financial instruments and non-financial assets at fair value on a recurring or non-recurring basis in accordance with IFRS 13. The fair value hierarchy categorizes the inputs used in valuation techniques into three levels, as defined below:
| • |
Level 1: Quoted prices in active markets for identical assets or liabilities.
|
| • |
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
|
| • |
Level 3: Inputs for the asset or liability that are not based on observable market data.
|
The following table shows the fair value hierarchy of financial instruments measured at fair value as of December 31, 2025 and 2024:
|
Assets
|
Level 2
|
Level 3
|
Total
|
|||||||||
|
January 1, 2025
|
|
|
|
|||||||||
|
Business combination
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Changes in fair value
|
|
|
|
|||||||||
|
December 31, 2025
|
|
|
|
|||||||||
|
January 1, 2024
|
|
|
|
|||||||||
|
Initially recognized
|
|
|
|
|||||||||
|
changes in fair value
|
|
(
|
)
|
(
|
)
|
|||||||
|
December 31, 2024
|
|
|
|
|||||||||
|
Liabilities
|
Level 2
|
Level 3
|
Total
|
|||||||||
|
January 1, 2025
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Business combination
|
|
|
|
|||||||||
|
Changes in fair value
|
|
(
|
)
|
(
|
)
|
|||||||
|
Settlements
|
|
|
|
|||||||||
|
December 31, 2025
|
|
(
|
)
|
(
|
)
|
|||||||
|
January 1, 2024
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Initially recognized
|
|
(
|
)
|
(
|
)
|
|||||||
|
changes in fair value
|
|
(
|
)
|
(
|
)
|
|||||||
|
December 31, 2024
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
| • |
As of December 31, 2025, the balance of Level 2 assets includes amounts related to hedging.
|
| • |
As of December 31, 2025, the balance of Level 3 liabilities includes contingent consideration liability related to VM and RPI earnout.
|
For each level, the following key assumptions were applied:
| • |
Level 2: The fair value of Level 2 instruments is derived using observable inputs, including interest rates, yield curves, credit spreads, and foreign exchange rates. Valuation techniques such as discounted cash flow models, Black and Scholes and comparable market transactions are utilized, with inputs obtained from reputable market data sources.
|
| • |
Level 3: Instruments classified under Level 3 are valued using models that incorporate significant unobservable inputs. These may include company's assumptions regarding future cash flows, discount rates, market liquidity, and counterparty credit risk. The valuation process involves management judgment, and sensitivity analyses are conducted to assess the impact of changes in key assumptions.
|
F - 32
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - SEGMENT REPORTING
|
For the year ended December 31
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
US Dollars in thousands
|
||||||||||||
|
USA
|
|
|
|
|||||||||
|
Europe (excluding UK)
|
|
|
|
|||||||||
|
UK
|
|
|
|
|||||||||
|
Australia
|
|
|
|
|||||||||
|
Israel
|
|
|
|
|||||||||
|
LATAM
|
|
|
|
|||||||||
|
Rest of the world
|
|
|
|
|||||||||
|
|
|
|
||||||||||
|
Set forth below is a breakdown of the non-current assets, excluding deferred tax assets and financial assets, by geographic regions:
|
|
As of December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
US Dollars in thousands
|
||||||||
|
Israel
|
|
|
||||||
|
USA
|
|
|
||||||
|
Rest of the world
|
|
|
||||||
|
|
|
|||||||
In 2025, 2024 and 2023, the Group did not have any single customer representing 10 % or more of its sales.
F - 33
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS
| a. |
Acquisition of Lynkwell
|
On December 4, 2025, (hereinafter "the acquisition date") the Company completed the acquisition of the entire share capital of EVRedi, Inc (hereinafter "Lynkwell"), a private entity incorporated under the laws of Delaware. Lynkwell is a leading energy ecosystem platform focused on supporting developers and operators of electric vehicle charging equipment, with a full suite of products and services. The purchase consideration comprises of (a) cash settlement in the amount of approximately $
|
US Dollars in thousands
|
||||
|
Cash
|
|
|||
|
Settlement of pre-existing relationship (*).
|
|
|||
|
Total consideration
|
|
|||
|
Amounts recognized on acquisition date:
|
||||
|
Cash and cash equivalents
|
|
|||
|
Trade receivables
|
|
|||
|
Inventory
|
|
|||
|
Other receivables
|
|
|||
|
Property and equipment
|
|
|||
|
Right of use
|
|
|||
|
Other payables
|
(
|
)
|
||
|
Trade payables
|
(
|
)
|
||
|
Lease liability
|
(
|
)
|
||
|
Total
|
|
|||
|
Goodwill (**)
|
|
|||
|
Total consideration
|
|
|||
|
Cash paid upon the acquisition of a subsidiary
|
|
|||
|
Cash and cash equivalents consolidated for the first time
|
(
|
)
|
||
|
As reported in cash flows from investing activities for the acquisition
|
|
|||
(*) Including intercompany balances that were eliminated in the consolidated financial statements.
F - 34
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS (continued)
| a. |
Acquisition of Lynkwell (continued)
|
The excess of the purchase consideration over the fair value of the net identifiable assets has been recorded as Goodwill. Goodwill represents the expected synergies and intangible assets that do not qualify for separate recognition.
The following is information about revenues and profits or losses of the Group under the assumption that Lynkwell transaction was completed on January 1, 2025: (1) The Group’s revenues for the annual period ended December 31, 2025, would have been $418,524 thousands, compared to $400,433 thousands as reported, and; (2) The Group's profit for reported period ended December 31, 2025, would have been $25,071 thousands compared to $35,516 thousand as reported.
The additional revenue included in the consolidated income statement since the acquisition date resulting from consolidating Lynkwell 's results was $3,146 thousands during the reported period. Additionally, the consolidation of Lynkwell resulted in a increase of $1,081 thousands in the profit for the reported period ended December 31, 2025.
The accounting for the business combination is incomplete at the reporting date. The provisional amounts recognized for the acquired identifiable assets, liabilities and consideration are based on the information available at the date of the issuance of these financial statements. The Company is still in the process of finalizing the fair value assessments of these items. In accordance with IFRS 3, the measurement period is up to one year from the acquisition date, during which adjustments may be made to the provisional amounts as new information is obtained about facts and circumstances that existed as of the acquisition date.
(**) The elements and factors that the Company paid above the fair value of net identifiable assets recognized, represented as goodwill for Lynkwell's expressed by synergy of good reputation and an especially talented workforce. Thus, the Goodwill resulted from the acquisition of Lynkwell represents the excess of the acquisition consideration on the acquisition date in fair value over the net identifiable assets acquired and liabilities assumed.
F - 35
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS (continued)
| b. |
Acquisition of Uppay
|
On February 28, 2025, (hereinafter "the acquisition date") the Company completed the acquisition of the entire share capital of Uppay Serviços De Tecnologia Da Informação S.A. (hereinafter "Uppay"). Uppay, a private entity incorporated under the laws of Brazil engaged in the provision of IT services and digital transformation solutions mainly for coffee machines. Its core operations include the development, implementation, maintenance of hardware and software platforms, and primarily serving clients in the public and private sectors across Latin America. The purchase consideration and remuneration comprises of (a) cash settlement in the amount of approximately $4,696 thousands (BRL 27,430 thousands); (b) deferred consideration in the amount of approximately $495 thousands (BRL 2,892 thousands) which presents its fair value at the closing date and. In addition, the Company is committed to a contingent payments structured as an earnout of approximately $471 thousands (BRL 2,750 thousands) which shall be paid to former controlling share-holder pursuant to certain terms and conditions as stated in the share purchase agreement that is not part of the consideration of the acquisition. The consideration amount transferred on the closing date is based on certain assumptions, including that the Uppay's working capital falls within a specific negative to neutral range. The acquisition has been accounted for using the acquisition method. The identifiable assets acquired, and liabilities assumed have been measured at fair values as of the acquisition date. The following table summarizes the fair values of the identifiable assets and liabilities at the acquisition date:
|
US Dollars in thousands
|
||||
|
Cash
|
|
|||
|
Deferred consideration
|
|
|||
|
Total consideration
|
|
|||
|
Amounts recognized on acquisition date:
|
||||
|
Cash and cash equivalents
|
|
|||
|
Segregated account
|
|
|||
|
Trade receivables
|
|
|||
|
Inventory
|
|
|||
|
Other receivables
|
|
|||
|
Customer relations
|
|
|||
|
Technology
|
|
|||
|
Property and equipment
|
|
|||
|
Trade payables
|
(
|
)
|
||
|
Other payables
|
(
|
)
|
||
|
Deferred tax liability
|
(
|
)
|
||
|
Total
|
|
|||
|
Goodwill (*)
|
|
|||
|
Total consideration
|
|
|||
|
Cash paid upon the acquisition of a subsidiary
|
|
|||
|
Cash and cash equivalents consolidated for the first time
|
(
|
)
|
||
|
As reported in cash flows from investing activities for the acquisition
|
|
|||
F - 36
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS (continued)
| b. |
Acquisition of Uppay (continued)
|
The excess of the purchase consideration over the fair value of the net identifiable assets has been recorded as Goodwill. Goodwill represents the expected synergies and intangible assets that do not qualify for separate recognition.
The following is information about revenues and profits or losses of the Group under the assumption that Uppay transaction was completed on January 1, 2025: (1) The Group’s revenues for the annual period ended December 31, 2025, would have been $400,664 thousands, compared to $400,433 thousands as reported, and; (2) The Group's profit for reported period ended December 31, 2025, would have been $35,642 thousands compared to $35,516 thousand as reported.
The additional revenue included in the consolidated income statement since the acquisition date resulting from consolidating Uppay's results was $1,374 thousands during the reported period. Additionally, the consolidation of Uppay resulted in an increase of $376 thousands in the profit for the reported period ended December 31, 2025.
(*) The elements and factors that the Company paid above the fair value of net identifiable assets recognized, represented as goodwill for Uppay's expressed by synergy of good reputation and an especially talented workforce. Thus, the Goodwill resulted from the acquisition of Uppay represents the excess of the acquisition consideration on the acquisition date in fair value over the net identifiable assets acquired and liabilities assumed.
(**) From the acquisition date, management determined that Uppay's business activity is fully integrated into an existing cash‑generating unit. Accordingly, and in line with IAS 36, the goodwill arising from the acquisition was allocated to the Unattended group of CGUs, which is expected to benefit from the synergies of the transaction.
| c. |
Acquisition of Inepro Pay.
|
On April 1, 2025, the Company successfully completed the acquisition of the entire share capital of Inepro Pay B.V., a limited liability company incorporated and existing under the laws of the Netherlands. (hereinafter "Inepro"), Inepro has been providing successful, modular solutions for authentication, payment, and telemetry utilizing Nayax equipment in several verticals in the Benelux region.
The purchase consideration comprised of approximately $2,705 thousands in cash on the date of the closing (EUR 2,500 thousands) reduced by the estimated working capital which comprises primarily of estimated indebtedness, cash and inventory, which all are subject to adjustments to final working capital (as defined in the purchase agreement).
F - 37
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS (continued)
| c. |
Acquisition of Inepro Pay. (continued)
|
The acquisition has been accounted for using the acquisition method. The identifiable assets acquired, and liabilities assumed have been measured at fair values as of the acquisition date. The following table summarizes the fair values of the identifiable assets and liabilities at the acquisition date:
|
US Dollars in thousands
|
||||
|
Cash
|
|
|||
|
Total consideration
|
|
|||
|
Amounts recognized on the acquisition date:
|
||||
|
Cash and cash equivalents
|
|
|||
|
Trade receivables
|
|
|||
|
Other receivables
|
|
|||
|
Inventory
|
|
|||
|
Customer relations
|
|
|||
|
Technology
|
|
|||
|
Trade payables
|
(
|
)
|
||
|
Other payables
|
(
|
)
|
||
|
Deferred tax liability
|
(
|
)
|
||
|
Total identifiable assets, net
|
|
|||
|
Goodwill (*)
|
|
|||
|
Total consideration
|
|
|||
|
Cash paid upon the acquisition of a subsidiary
|
|
|||
|
Cash and cash equivalents consolidated for the first time
|
(
|
)
|
||
|
As reported in cash flows from investing activities for the acquisition
|
|
|||
The excess of the purchase consideration over the fair value of the net identifiable assets has been recorded as Goodwill. Goodwill represents the expected synergies and intangible assets that do not qualify for separate recognition.
The following is information about revenues and losses of the Group under the assumption that Inepro's transaction was completed on January 1, 2025: (1) The Group’s revenues for the reported period ended December 31, 2025, would have been $401,736 thousands, compared to $400,433 thousands as reported, and; (2) The Group's profit for reported period ended December 31, 2025, would have been $35,618 thousands compared to $35,516 thousands as reported.
The additional revenue included in the consolidated income statement since the acquisition date resulting from consolidating Inepro's results was $3,892 thousands during the reported period. Additionally, the consolidation of Inepro resulted in an decrease of $209 thousands in the profit for the reported period ended December 31, 2025.
(*) The elements and factors that the Company paid above the fair value of the net identifiable assets recognized, represented as goodwill for Inepro's expressed by synergy of good reputation, and an especially talented workforce. Thus, the Goodwill resulted from the acquisition of Inepro represents the excess of the acquisition consideration on the acquisition date in fair value over the net identifiable assets acquired and liabilities assumed
(**) From the acquisition date, management determined that Inepro Pay's business activity is fully integrated into an existing cash‑generating unit.
Accordingly, and in line with IAS 36, the goodwill arising from the acquisition was allocated to the Unattended group CGUs, which is expected to benefit from the synergies of the transaction.
F - 38
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS (continued)
| d. |
Business Combination of IOT Capital Technology Holdings LTD.
|
On May 31, 2025, (the "Closing Date") the Company completed the acquisition of the entire equity interest in IOT Capital Technology Holdings Ltd. (hereinafter "IoT"), a company engaged in financing solutions for smart connectivity platforms for vending, retail, and industrial equipment. The total consideration and previously held interests for the acquisition amounted to $14,986 thousands.
Prior the closing date, the Company held 49 % of IoT and measured the investment through equity method with accordance to IAS 28. On the Closing Date, the total consideration transferred and previously held interests was comprised of several components, all measured at fair value in accordance with IFRS 3 Business Combinations; (a) cash settlement of approximately $5,690 thousands transferred upon the remaining shares; (b) Replacement of awards held by former employees of IoT was made through the grant of fully vested options on Company's shares. As the replacement formed was part of the purchase agreement and related solely to past services, the fair value of the awards was included in the consideration transferred. Accordingly, equity instruments over the Company’s shares with a total fair value of $1,222 thousand, each exercisable into one ordinary share, fully vested and exercisable immediately following the Closing date, were measured in accordance with IFRS 2 Share-based Payment and included as part of the purchase consideration (c) The Put and Call options arising from pre‑existing arrangements with the former associate, which had a net fair value of $602 thousand (eliminated as a result of gaining control over the investee), were classified and measured as financial instruments in accordance with IFRS 9 until the Closing Date. Their measurement reflected the contractual terms and the relevant market inputs prevailing as of that date. Following the acquisition of control over the investee, these balances were eliminated in consolidation, and; (d) The fair value of the Company's previously held equity investee in IoT, which prior the obtaining control had been accounted for the equity method in accordance with IAS 28. Pursuant IFRS 3, this equity investee was remeasured to its fair value of approximately $6,063 thousands as of the closing date, resulted as gain in profit or loss due obtaining control, which was recorded under ‘Other income (expenses)’ in the consolidated statement of profit or loss, (e) Settlement of pre-existing relationship amounting to $2,613 thousands.
F - 39
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS (continued)
d. Business Combination of IOT Capital Technology Holdings LTD. (continued)
The acquisition has been accounted for using the acquisition method, The identifiable assets acquired, and liabilities assumed have been measured at fair values as of the acquisition date. The following table summarizes the fair values of the identifiable assets and liabilities at the acquisition date:
|
US Dollars in thousands
|
||||
|
Cash
|
|
|||
|
Settlement in options
|
|
|||
|
Financial instruments, net
|
(
|
)
|
||
|
Fair value of the equity investee
|
|
|||
|
Settlement of pre-existing relationship (*)
|
|
|||
|
Total consideration and previously held interests
|
|
|||
|
Amounts recognized on the acquisition date:
|
||||
|
Cash and cash equivalents
|
|
|||
|
Other receivables
|
|
|||
|
Capitalized development costs
|
|
|||
|
Property and equipment
|
|
|||
|
Rented units
|
|
|||
|
Customer relations
|
|
|||
|
Technology
|
|
|||
|
Short-term bank loans
|
(
|
)
|
||
|
Accrued expenses
|
(
|
)
|
||
|
Trade payables
|
(
|
)
|
||
|
Other payables
|
(
|
)
|
||
|
Deferred tax liability
|
(
|
)
|
||
|
Total identifiable assets, net
|
|
|||
|
Goodwill (**)
|
|
|||
|
Total consideration and previously held interests
|
|
|||
|
Cash paid upon the acquisition of a subsidiary
|
|
|||
|
Cash and cash equivalents consolidated for the first time
|
(
|
)
|
||
|
As reported in cash flows from investing activities for the acquisition
|
|
|||
(*) Including intercompany balances that were eliminated in the consolidated financial statements.
F - 40
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS (continued)
d. Business Combination of IOT Capital Technology Holdings LTD. (continued)
The excess of the aggregate of the purchase consideration and the fair value of the Company’s previously held equity interest over the fair value of the net identifiable assets has been recorded as Goodwill. Goodwill represents the expected synergies and intangible assets that do not qualify for separate recognition.
The following is an information about revenues and losses of the Group under the assumption that IoT gain of control was completed on January 1, 2025: (1) The Group’s revenues for the reported period ended December 31, 2025, would have been $400,707 thousands, compared to $400,433 thousands as reported, and; (2) The Group's profit for reported period ended December 31, 2025, would have been $34,853 thousands compared to $35,516 thousands as reported.
The additional revenue included in the consolidated income statement since the date of obtaining control resulting from consolidating IoT's results was $469 thousands during the reported period. Additionally, the consolidation of IoT resulted in an decrease of $717 thousands in the profit for the reported period ended December 31, 2025.
(**) The elements and factors that the Company paid above the fair value of the net identifiable assets recognized, represented as goodwill for IoT, are mainly attributable to expected synergies, good reputation, and an especially talented workforce. Thus, the Goodwill resulting from the acquisition of IoT represents the excess of the aggregate of the acquisition consideration and the fair value of the Company’s previously held equity interest at the acquisition date over the net identifiable assets acquired and liabilities assumed.
(***) From the acquisition date, management determined that IOT Capital Technology Holdings Ltd's business activity is fully integrated into an existing cash‑generating unit.
Accordingly, and in line with IAS 36, the goodwill arising from the acquisition was allocated to the Unattended group of CGUs, which is expected to benefit from the synergies of the transaction.
| e. |
Business Combination of Tigapo Ltd.
|
On February 28, 2025 (the “Date of Gaining Control”), the Company obtained control over Tigapo Ltd., a company incorporated in Israel and governed by the laws of the State of Israel (hereafter "Tigapo"). Tigapo develops and provides cloud-based management, analytics, and consumer engagement solutions tailored for amusement and entertainment venue operators. Prior to the date of gaining control, the Company held 54 % of the equity investee in Tigapo but did not consolidate Tigapo in its financial statements due to substantive veto rights held by the former shareholders, which prevented the Company from exercising control under IFRS 10 Consolidated Financial Statements. On the date of gaining control, followed by settlement in cash and the agreement between the Company and former shareholders of Tigapo, the acquired additional 30 % of Tigapo's shares made concurrently with their waiver over the veto rights.
As a result, Company's voting rights increased to 84 %, and gained control over Tigapo.
Up until that date, the investment in Tigapo was accounted for using the equity method in accordance with IAS 28 Investments in Associates and Joint Ventures. Upon obtaining control, in accordance with IFRS 3 Business Combinations, the Company remeasured its previously held equity investee at its fair value. As part of this step acquisition, the resulting gain from the remeasurement was recognized in profit or loss in the amount of approximately $6,089 thousands. Prior to the date of gaining control, the Company held Call options to acquire the remaining shares of 46 % interest in Tigapo but only 30% of these options lapsed as the agreement signed with the former shareholders. Additionally, prior to the date of gaining control, the former shareholders also held Put option which obliged the Company to acquire the remaining shares of 46 % interests in Tigapo. Simultaneously, these Put options for the former shareholders held 30 % were also lapsed once the agreement signed with former shareholders. As the remaining put options obligated the Company to acquire the remaining 16 % interest in Tigapo, options that were exercisable at any time and granted the holders the right to sell their remaining voting rights as of the date control was obtained, these put options were initially classified as a financial liability in accordance with IAS 32 Financial Instruments and IFRS 9. In November 2025, the put options were exercised, and as a result, the Company now owns 100 % of Tigapo.
F - 41
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS (continued)
| e. |
Business Combination of Tigapo Ltd. (continued)
|
The total consideration and previously held interests on the date control was obtained comprised of: (a) Cash settlement of $3,782 thousands transferred on the date of gaining control; (b) Deferred liability of $2,244 thousands, representing the redemption amount of written Put option held by Tigapo's minority shareholders; (c) The fair value of the call options and the Put options, net, was eliminated as a result of gaining control over the investee amounted to approximately $2,885 thousands, and; (d) The fair value of the Company's previously held equity investee in Tigapo, which prior the obtaining control had been accounted for the equity method in accordance with IAS 28. Pursuant IFRS 3, this equity investee was remeasured to its fair value of approximately $9,618 thousands as of the closing date, resulted as gain in profit or loss due obtaining control, which was recorded under ‘Other income (expenses)’ in the consolidated statement of profit or loss, (e) Settlement of pre-existing relationship amounting to $4,127 thousands.
The acquisition has been accounted for using the acquisition method. The identifiable assets acquired, and liabilities assumed have been measured at fair values as of the acquisition date. The following table summarizes the fair values of the identifiable assets and liabilities at the acquisition date:
|
|
US Dollars in thousands
|
|||
|
Cash
|
|
|||
|
Deferred liability
|
|
|||
|
Fair value of the call option
|
|
|||
|
Fair Value of the equity investee
|
|
|||
|
Settlement of pre-existing relationship (*)
|
|
|||
|
Total consideration and previously held interests
|
|
|||
|
Amounts recognized on merger date:
|
||||
|
Cash and cash equivalents
|
|
|||
|
Trade receivables
|
|
|||
|
Other receivables
|
|
|||
|
Property and equipment
|
|
|||
|
Inventory
|
|
|||
|
Customer relations
|
|
|||
|
Technology
|
|
|||
|
Trade payables
|
(
|
)
|
||
|
Other payables
|
(
|
)
|
||
|
Deferred tax liability
|
(
|
)
|
||
|
Total identifiable assets, net
|
|
|||
|
Goodwill (**)
|
|
|||
|
Total consideration and previously held interests
|
|
|||
|
Cash paid upon the acquisition of a subsidiary
|
|
|||
|
Cash and cash equivalents consolidated for the first time
|
(
|
)
|
||
|
As reported in cash flows from investing activities for the acquisition
|
|
|||
(*) Including intercompany balances that were eliminated in the consolidated financial statements.
The excess of the aggregate of the purchase consideration and the fair value of the Company’s previously held equity interest over the fair value of the net identifiable assets has been recorded as Goodwill. Goodwill represents the expected synergies and intangible assets that do not qualify for separate recognition.
F - 42
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS (continued)
| e. |
Business Combination of Tigapo Ltd. (continued)
|
The following is information about revenues and losses of the Group under the assumption that Tigapo transaction was completed on January 1, 2025: (1) The Group’s revenues for the reported period ended December 31, 2025, would have been $400,689 thousands, compared to $400,433 thousands as reported, and; (2) The Group's losses for reported period ended December 31, 2025, would have been $34,999 thousands compared to $35,516 thousands as reported.
The additional revenue included in the consolidated income statement since the acquisition date resulting from consolidating Tigapo's results was $2,283 thousands during the reported period. Additionally, the consolidation of Tigapo resulted in an decrease of $1,579 thousands in the profit for the reported period ended December 31, 2025.
(**) The elements and factors that the Company paid above the fair value of the net identifiable assets recognized, represented as goodwill for Tigapo, are mainly attributable to expected synergies, good reputation, and an especially talented workforce. Thus, the Goodwill resulting from the acquisition of Tigapo represents the excess of the aggregate of the acquisition consideration and the fair value of the Company’s previously held equity interest at the acquisition date over the net identifiable assets acquired and liabilities assumed.
(***) From the acquisition date, management determined that Tigapo's business activity is fully integrated into an existing cash‑generating unit.
Accordingly, and in line with IAS 36, the goodwill arising from the acquisition was allocated to the Unattended group of CGUs, which is expected to benefit from the synergies of the transaction.
f. Acquisition of VMtecnologia LTDA.
On April 30, 2024, the company successfully completed the acquisition of the entire share capital of VM tecnologia LTDA. (hereinafter "VM"), a Brazilian entity incorporated under the laws of Brazil and operates in the unattended retail market with an easy-to-use, technology for cashless payment hardware and software.
VM's solution simplifies and enables the operation of autonomous stores with hardware, point-of-sale software, and payment solutions. The purchase consideration and remuneration comprised of (1) approximately $12,762 thousands in cash on the closing date (BRL 66,000 thousands) reduced by the Estimated Indebtedness and increased by the Estimated Cash, amounted to $11,345 thousands (BRL 58,653 ) (2) Deferred and contingent consideration of approximately $8,508 thousands (BRL 44,000 thousands) where an amount of $3,414 (BRL 17,887 thousands) recognized as consideration of the acquisition at fair value and the remaining amount will be recognized as remuneration. The contingent consideration of approximately $1,209 thousand (BRL 6,252 thousands) measured at fair value through profit and loss and subject to VM’s revenue performance, and the deferred consideration of approximately $2,205 thousands (BRL 11,401 thousands) measured in amortized cost and subject to final Cash, Indebtedness and Working Capital adjustments (as defined in the purchase agreement).One individual seller will receive his portion by cash, the other sellers may receive, in company's sole discretion, up to 50 % of the consideration in company's shares, all to be paid in installments up to April 30, 2027 and subject to certain revenue growth conditions (3) Contingent liability structured as an earnout of approximately $5,317 thousands (BRL 27,500 thousands) where $4,834 thousands (BRL 25,000 thousands) treated as share based compensation that is not part of the consideration of the acquisition and shall be paid by the Company's shares, at the share price of the Company determined at the closing date and the remaining amount of approximately $483 thousands (BRL 2,500 thousands) will be recognized as a liability, both are due on April 30, 2027.
F - 43
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS (continued)
f. Acquisition of VMtecnologia LTDA. (continued)
The acquisition has been accounted for using the acquisition method. The identifiable assets acquired, and liabilities assumed have been measured at fair values as of the acquisition date. The following table summarizes the fair values of the identifiable assets and liabilities at the acquisition date:
|
US Dollars in thousands
|
||||
|
Cash
|
|
|||
|
Deferred consideration
|
|
|||
|
Contingent consideration
|
|
|||
|
Total consideration
|
|
|||
|
Amounts recognized on the acquisition date:
|
||||
|
Cash and cash equivalents
|
|
|||
|
Trade receivables
|
|
|||
|
Other receivables
|
|
|||
|
Property and equipment
|
|
|||
|
Right of use
|
|
|||
|
Brand
|
|
|||
|
Customer relations
|
|
|||
|
Technology
|
|
|||
|
Trade payables
|
(
|
)
|
||
|
Other payables
|
(
|
)
|
||
|
Other liabilities
|
(
|
)
|
||
|
Lease liability
|
(
|
)
|
||
|
Long term liabilities
|
(
|
)
|
||
|
Deferred Tax Liability
|
(
|
)
|
||
|
Total identifiable assets, net
|
|
|||
|
Goodwill (*)
|
|
|||
|
Total consideration
|
|
|||
|
Cash paid upon the acquisition of a subsidiary
|
|
|||
|
Cash and cash equivalents consolidated for the first time
|
(
|
)
|
||
|
As reported in cash flows from investing activities for the acquisition
|
|
|||
The excess of the purchase consideration over the fair value of the net identifiable assets has been recorded as Goodwill. Goodwill represents the expected synergies and intangible assets that do not qualify for separate recognition.
The following information is about revenues and losses of the Group under the assumption that VM transaction was completed on January 1, 2024: (1) The Group’s revenues for the reported period ended December 31, 2024, would have been $317,421 thousand, compared to $314,013 thousand as reported, and; (2) The Group's losses for reported period ended December 31, 2024, would have been $4,740 thousand compared to $5,631 thousand as reported.
The additional revenue included in the consolidated income statement since the acquisition date resulting from consolidating VM's results was $8,117 thousand during the reported period ended December 31, 2024. Additionally, the consolidation of VM resulted in a decrease by $797 thousand in the loss for the reported period ended December 31, 2024.
(*) The elements and factors that the Company paid above the fair value of the net identifiable assets recognized, represented as goodwill for VM's expressed by synergy of good reputation, an especially talented workforce. Thus, the Goodwill resulted from the acquisition of VM represents the excess of the acquisition consideration on the acquisition date in fair value over the net identifiable assets acquired and liabilities assumed.
F - 44
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS (continued)
| g. |
Acquisition of Roseman Engineering Ltd.
|
On April 1, 2024, (hereinafter "the acquisition date") the Company completed the acquisition of the entire share capital of Roseman Engineering Ltd. and Roseman Holdings Ltd. (hereinafter, together, "Roseman"). Roseman, a private entity incorporated under the laws of Israel, manage smart systems in the fields of refueling, charging stations and management systems for forecourts and vehicle fleets. The purchase consideration comprises of cash in amount of approximately $4,089 thousands (NIS 15,200 thousands), deferred consideration in amount of approximately $555 thousands (NIS 2,100 thousands) and the issuance of 19,722 Ordinary Shares worth of approximately $505 thousands (NIS 1,900 thousands) which presents their fair value through Company's equity transferred at the closing date.
The acquisition has been accounted for using the acquisition method. The identifiable assets acquired, and liabilities assumed have been measured at fair values as of the acquisition date. The following table summarizes the fair values of the identifiable assets and liabilities at the acquisition date:
|
US Dollars in thousands
|
||||
|
Cash
|
|
|||
|
Deferred consideration
|
|
|||
|
Issuance of Ordinary Shares
|
|
|||
|
Total consideration
|
|
|||
|
Amounts recognized on the acquisition date:
|
||||
|
Cash and cash equivalents
|
|
|||
|
Trade receivables
|
|
|||
|
Inventory
|
|
|||
|
Other receivables
|
|
|||
|
Right of use assets
|
|
|||
|
Property and equipment
|
|
|||
|
Customer relations
|
|
|||
|
Technology
|
|
|||
|
Deferred Income
|
(
|
)
|
||
|
Trade payables
|
(
|
)
|
||
|
Other liabilities
|
(
|
)
|
||
|
Other payables
|
(
|
)
|
||
|
Lease liabilities
|
(
|
)
|
||
|
Deferred Tax Liability
|
(
|
)
|
||
|
Total identifiable assets, net
|
|
|||
|
Goodwill (*)
|
|
|||
|
Total consideration
|
|
|||
|
Cash paid upon the acquisition of a subsidiary
|
|
|||
|
Cash and cash equivalents consolidated for the first time
|
(
|
)
|
||
|
As reported in cash flows from investing activities for the acquisition
|
|
|||
F - 45
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS (continued)
| g. |
Acquisition of Roseman Engineering Ltd. (continued)
|
The excess of the purchase consideration over the fair value of the net identifiable assets has been recorded as Goodwill. Goodwill represents the expected synergies and intangible assets that do not qualify for separate recognition.
The following is information about revenues and losses of the Group under the assumption that Roseman transaction was completed on January 1, 2024: (1) The Group’s revenues for the reported period ended December 31, 2024, would have been $315,847 thousand, compared to $314,013 thousand as reported, and; (2) The Group's losses for reported period ended December 31, 2024, would have been $5,827 thousand compared to $5,631 thousand as reported.
The additional revenue included in the consolidated income statement since the acquisition date resulting from consolidating Roseman's results was $7,488 thousand during the reported period ended December 31, 2024. Additionally, the consolidation of Roseman resulted in a decrease of $1,090 thousand in the loss for the reported period ended December 31, 2024.
(*) The elements and factors that the Company paid above the fair value of net identifiable assets recognized, represented as goodwill for Roseman's expressed by synergy of good reputation, brand identity, an especially talented workforce. Thus, the Goodwill resulted from the acquisition of Roseman represents the excess of the acquisition consideration on the acquisition date in fair value over the net identifiable assets acquired and liabilities assumed.
| h. |
Acquisition of Retail Pro
|
On November 30, 2023, (hereinafter “The Closing Date”) the company successfully concluded its acquisition of Retail Pro International, LLC (hereinafter “RPI”), a leading global entity in retail Point of Sale (POS) software. RPI owns an intellectual property catering to both mid-size and global retailers with a full-featured, flexible product designed to navigate the complexities of the global retail landscape. The purchase price for the transaction represents an implied enterprise value of $34.5 million on a cash-free debt-free basis, to be paid partially in cash and the remainder in cash or equity, subject to certain earnout targets being met (refer to note 14). The remaining amount of approximately $14.6 million will be paid over a three-year period, since the specific earnout targets were met as of the date of these financial statements, and may be settled in either cash or equity at the company's discretion (hereinafter "Contingent consideration"). It will be broken up into 5 payments, with the first payment of 33% of the contingent consideration (approximately $5.5 million) being due January 2025, and the rest being broken up into 4 semi-annual payments of 16.67% of the contingent consideration (approximately $2,768 thousand each) beginning July 2025. The first payment of the contingent consideration will include a reduction of $2 million due to a portion of deferred revenues to be recognized subsequent to the acquisition.
F - 46
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS (continued)
| h. |
Acquisition of Retail Pro (continued)
|
The following table presents the consideration for RPI's acquisition, and the amounts recognized for assets acquired and liabilities assumed at fair value:
|
US Dollars in thousands
|
||||
|
Consideration paid in cash
|
|
|||
|
Contingent Consideration
|
|
|||
|
Total consideration
|
|
|||
|
Amounts recognized on the acquistion date:
|
||||
|
Cash and cash equivalents
|
|
|||
|
Trade receivables
|
|
|||
|
Other receivables
|
|
|||
|
Property and equipment
|
|
|||
|
Technology
|
|
|||
|
Customer relations
|
|
|||
|
Brand
|
|
|||
|
Trade payables
|
(
|
)
|
||
|
Other payables
|
(
|
)
|
||
|
Deferred Tax Liability
|
(
|
)
|
||
|
Total identifiable assets, net
|
|
|||
|
Goodwill (*)
|
|
|||
|
Total consideration
|
|
|||
|
Cash paid upon the acquisition of a subsidiary
|
|
|||
|
Cash and cash equivalents consolidated for the first time
|
(
|
)
|
||
|
As reported in cash flows from investing activities for the acquisition
|
|
|||
The following information is about revenues and losses of the Group under the assumption that the RPI transaction was completed on January 1, 2023: (1) The Group’s revenues for the year ended December 31, 2023, would have been $251,391 thousand, compared to $235,491 thousand as reported, and; (2) The Group's losses for year ended December 31, 2023, would have been $8,910 thousand compared to $15,887 thousand as reported.
The additional revenue included in the consolidated 2023 income statement since Acquisition Date resulting from consolidating RPI's results was $503 thousand during the year. Additionally, the consolidation of RPI resulted in an increase by $310 thousand in the loss for the year.
(*) The elements and factors that the Company paid above the fair value of the net identifiable assets recognized, represented as goodwill for RPI's expressed by synergy of good reputation, and an especially talented workforce. Thus, the Goodwill resulted from the acquisition of RPI represents the excess of the acquisition consideration on the acquisition date in fair value over the net identifiable assets acquired and liabilities assumed.
F - 47
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - CASH AND CASH EQUIVALENTS:
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Below is the composition of cash and cash equivalents by US Dollar and other currencies:
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
US Dollars in thousands
|
||||||||
|
US Dollar
|
|
|
||||||
|
New Israeli Shekel
|
|
|
||||||
|
Euro
|
|
|
||||||
|
British pound sterling
|
|
|
||||||
|
Australian Dollar
|
|
|
||||||
|
Other currencies
|
|
|
||||||
|
|
|
|||||||
NOTE 8 - RESTRICTED CASH TRANSFERABLE TO CUSTOMERS FOR PROCESSING ACTIVITY
Some of our entities within the Group that hold Payment Institution Licenses in various jurisdictions are subject to regulations which according to client funds are held in segregated accounts prior to being transferred or processed as part of the Group’s payment activities.
As of December 31, 2025 and 2024, $91,965 and $60,299 thousand, respectively, were held in segregated accounts for the Group's customers.
F - 48
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 - TRADE RECEIVABLES
Trade receivables are recognized initially at the amount of consideration that is unconditional, unless they contain significant financing components then they are recognized at fair value. The balance subsequently measured at amortized cost less allowance for credit losses. Below is the composition of trade receivables in net values:
a. Composed as follows:
|
|
December 31,
|
|||||||
|
2025
|
2024
|
|||||||
|
US Dollars in thousands
|
||||||||
|
Open accounts
|
|
|
||||||
|
Less - provision of allowance for credit loss
|
(
|
)
|
(
|
)
|
||||
|
Trade receivables - net
|
|
|
||||||
For information about receivable aging and calculating the impairment of accounts receivables in 2025 and 2024, see note 4(2).
b. Changes in provision of allowance for credit loss:
|
US Dollars in
thousands
|
||||
|
Balance as of January 1, 2025
|
|
|||
|
Amounts provided against profit or loss in respect of receivables for which
the provision for loss is measured over the entire life of the receivable balance
|
||||
|
|
||||
|
Balance as of December 31, 2025
|
|
|||
|
Balance as of January 1, 2024
|
|
|||
|
Amounts provided against profit or loss in respect of receivables for which
the provision for loss is measured over the entire life of the receivable balance
|
||||
|
|
||||
|
Balance as of December 31, 2024
|
|
|||
F - 49
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - LEASES
| a. |
General
|
As of December 31, 2025, the Group had right of use assets related to leased buildings used as the Group’s used for operating activities. Set forth below are the right-of-use asset years of depreciation and the interest rates used to discount the lease payments:
|
Years of depreciation
|
Interest
rate
|
|||||||
|
Buildings
|
|
|
%
|
|||||
| b. |
Composition and movement of right-of-use assets:
|
The following is the composition of right-of-use asset balances as of December 31, 2025:
|
Buildings
|
||||
|
US Dollars in thousands
|
||||
|
Cost:
|
||||
|
Balance as of January 1, 2025
|
|
|||
|
Additions during the year
|
|
|||
|
Additions in respect of acquisition
|
|
|||
|
Other changes
|
|
|||
|
Balance as of December 31, 2025
|
|
|||
|
Depreciation and amortization:
|
||||
|
Balance as of January 1, 2025
|
|
|||
|
Depreciation during the year
|
|
|||
|
Balance as of December 31, 2025
|
|
|||
|
Right-of-use assets - net
|
|
|||
The following is the composition of right-of-use asset balances as of December 31, 2024:
|
Buildings
|
||||
|
US Dollars in thousands
|
||||
|
Cost:
|
||||
|
Balance as of January 1, 2024
|
|
|||
|
Additions during the year
|
|
|||
|
Additions in respect of acquisition
|
|
|||
|
Other changes
|
|
|||
|
Balance as of December 31, 2024
|
|
|||
|
Depreciation and amortization:
|
||||
|
Balance as of January 1, 2024
|
|
|||
|
Depreciation during the year
|
|
|||
|
Balance as of December 31, 2024
|
|
|||
|
Right-of-use assets - net
|
|
|||
F - 50
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - LEASES (continued):
b. Composition and changes in right-of-use assets (continued):
The following is the composition of right-of-use asset balances as of December 31, 2023:
|
Buildings
|
Technological equipment
|
Total
|
||||||||||
|
US Dollars in thousands
|
||||||||||||
|
Cost:
|
||||||||||||
|
Balance as of January 1, 2023
|
|
|
|
|||||||||
|
Additions during the year
|
|
|
|
|||||||||
|
Disposals
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Other changes
|
|
|
|
|||||||||
|
Balance as of December 31, 2023
|
|
|
|
|||||||||
|
Depreciation and amortization:
|
||||||||||||
|
Balance as of January 1, 2023
|
|
|
|
|||||||||
|
Depreciation during the year
|
|
|
|
|||||||||
|
Disposals
|
|
(
|
)
|
(
|
)
|
|||||||
|
Balance as of December 31, 2023
|
|
|
|
|||||||||
|
Right-of-use assets - net
|
|
|
|
|||||||||
c. Composition and changes in lease liabilities
The following table summarizes the composition of lease liability balances as of December 31, 2025:
|
Buildings
|
||||
|
US Dollars in thousands
|
||||
|
Balance as of January 1, 2025
|
|
|||
|
Additions during the year
|
|
|||
|
Additions in respect of acquisition
|
|
|||
|
Interest expenses
|
|
|||
|
Lease payments
|
(
|
)
|
||
|
Other changes
|
|
|||
|
Balance as of December 31, 2025
|
|
|||
|
Current maturities of lease liabilities
|
|
|||
|
Long-term lease liabilities
|
|
|||
|
Balance as of December 31, 2025
|
|
|||
F - 51
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - LEASES (continued):
c. Composition and changes in lease liabilities (continued):
The following table summarizes the composition of lease liability balances as of December 31, 2024:
|
Buildings
|
||||
|
US Dollars in thousands
|
||||
|
Balance as of January 1, 2024
|
|
|||
|
Additions during the year
|
|
|||
|
Additions in respect of acquisition
|
|
|||
|
Interest expenses
|
|
|||
|
Lease payments
|
(
|
)
|
||
|
Other changes
|
|
|||
|
Balance as of December 31, 2024
|
|
|||
|
Current maturities of lease liabilities
|
|
|||
|
Long-term lease liabilities
|
|
|||
|
Balance as of December 31, 2024
|
|
|||
The following table summarizes the composition of lease liability balances as of December 31, 2023:
|
Buildings
|
Technological equipment
|
Total
|
||||||||||
|
US Dollars in thousands
|
||||||||||||
|
Balance as of January 1, 2023
|
|
|
|
|||||||||
|
Additions during the year
|
|
|
|
|||||||||
|
Interest expenses
|
|
|
|
|||||||||
|
Lease payments
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Other changes
|
(
|
)
|
|
(
|
)
|
|||||||
|
Balance as of December 31, 2023
|
|
|
|
|||||||||
|
Current maturities of lease liabilities
|
|
|
|
|||||||||
|
Long-term lease liabilities
|
|
|
|
|||||||||
|
Balance as of December 31, 2023
|
|
|
|
|||||||||
| d. |
The Group incurred expenses in the amounts of $
|
F - 52
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - PROPERTY, PLANT AND EQUIPMENT
Composition of property and equipment and accumulated depreciation thereon, grouped by major classifications, and changes therein in 2025, are as follows:
|
Leasehold improvements
|
Computers and peripheral equipment
|
Rented POS devices
|
Machines and equipment
|
Total
|
||||||||||||||||
|
US Dollars in thousands
|
||||||||||||||||||||
|
Cost:
|
||||||||||||||||||||
|
Balance as of January 1, 2025
|
|
|
|
|
|
|||||||||||||||
|
Additions
|
|
|
|
|
|
|||||||||||||||
|
Acquired through business combinations
|
|
|
|
|
|
|||||||||||||||
|
Disposals
|
(
|
)
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|||||||||||
|
Translation differences
|
|
|
|
(
|
)
|
|
||||||||||||||
|
Balance as of December 31, 2025
|
|
|
|
|
|
|||||||||||||||
|
Accumulated depreciation:
|
||||||||||||||||||||
|
Balance as of January 1, 2025
|
|
|
|
|
|
|||||||||||||||
|
Depreciation during the year
|
|
|
|
|
|
|||||||||||||||
|
Disposals
|
(
|
)
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|||||||||||
|
Translation differences
|
|
|
|
(
|
)
|
|
||||||||||||||
|
Balance as of December 31, 2025
|
|
|
|
|
|
|||||||||||||||
|
Net book value:
|
||||||||||||||||||||
|
As of December 31, 2025
|
|
|
|
|
|
|||||||||||||||
Composition of property and equipment and accumulated depreciation thereon, grouped by major classifications, and changes therein in 2024, are as follows:
|
Leasehold improvements
|
Computers and peripheral equipment
|
Rented POS devices
|
Machines and equipment
|
Total
|
||||||||||||||||
|
US Dollars in thousands
|
||||||||||||||||||||
|
Cost:
|
||||||||||||||||||||
|
Balance as of January 1, 2024
|
|
|
|
|
|
|||||||||||||||
|
Additions
|
|
|
|
|
|
|||||||||||||||
|
Acquired through business combinations
|
|
|
|
|
|
|||||||||||||||
|
Disposals
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||
|
Translation differences
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||
|
Balance as of December 31, 2024
|
|
|
|
|
|
|||||||||||||||
|
Accumulated depreciation:
|
||||||||||||||||||||
|
Balance as of January 1, 2024
|
|
|
|
|
|
|||||||||||||||
|
Depreciation during the year
|
|
|
|
|
|
|||||||||||||||
|
Disposals
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||
|
Translation differences
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||
|
Balance as of December 31, 2024
|
|
|
|
|
|
|||||||||||||||
|
Net book value:
|
||||||||||||||||||||
|
As of December 31, 2024
|
|
|
|
|
|
|||||||||||||||
F - 53
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - PROPERTY AND EQUIPMENT (continued):
Composition of property and equipment and accumulated depreciation thereon, grouped by major classifications, and changes therein in 2023, are as follows:
|
Leasehold improvements
|
Computers and peripheral equipment
|
Rented POS devices
|
Machines and equipment
|
Total
|
||||||||||||||||
|
US Dollars in thousands
|
||||||||||||||||||||
|
Cost:
|
||||||||||||||||||||
|
Balance as of January 1, 2023
|
|
|
|
|
|
|||||||||||||||
|
Additions
|
|
|
|
|
|
|||||||||||||||
|
Acquired through business combinations
|
|
|
|
|
|
|||||||||||||||
|
Disposals
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||
|
Translation differences
|
|
(
|
)
|
(
|
)
|
|
(
|
)
|
||||||||||||
|
Balance as of December 31, 2023
|
|
|
|
|
|
|||||||||||||||
|
Accumulated depreciation:
|
||||||||||||||||||||
|
Balance as of January 1, 2023
|
|
|
|
|
|
|||||||||||||||
|
Depreciation during the year
|
|
|
|
|
|
|||||||||||||||
|
Disposals
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||
|
Translation differences
|
|
(
|
)
|
(
|
)
|
|
(
|
)
|
||||||||||||
|
Balance as of December 31, 2023
|
|
|
|
|
|
|||||||||||||||
|
Net book value:
|
||||||||||||||||||||
|
As of December 31, 2023
|
|
|
|
|
|
|||||||||||||||
F - 54
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 - GOODWILL AND INTANGIBLE ASSETS
Composition of intangible assets and accumulated amortization thereon, grouped by major classifications, and changes therein in 2025 are as follows:
|
|
Capitalized development costs ** |
|
Distribution rights and brand* |
|
Customer relationships purchased * |
|
Technology ** |
|
Goodwill (a) |
|
Patents ** |
|
Total |
|||||||||||||||
|
US Dollars in thousands
|
||||||||||||||||||||||||||||
|
Cost:
|
||||||||||||||||||||||||||||
|
Balance as of January 1, 2025
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Additions
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Acquired through business combinations
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Translation differences
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Balance as of December 31, 2025
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Accumulated amortization:
|
||||||||||||||||||||||||||||
|
Balance as of January 1, 2025
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Amortization
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Translation differences
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Balance as of December 31, 2025
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Net book value:
|
||||||||||||||||||||||||||||
|
As of December 31, 2025
|
|
|
|
|
|
|
|
|||||||||||||||||||||
F - 55
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 - GOODWILL AND INTANGIBLE ASSETS (continued):
Composition of intangible assets and accumulated amortization thereon, grouped by major classifications, and changes therein in 2024 are as follows:
|
Capitalized development costs **
|
Distribution rights and brand*
|
Customer relationships purchased *
|
Technology **
|
Goodwill (a)
|
Patents **
|
Total
|
||||||||||||||||||||||
|
US Dollars in thousands
|
||||||||||||||||||||||||||||
|
Cost:
|
||||||||||||||||||||||||||||
|
Balance as of January 1, 2024
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Additions
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Acquired through business combinations
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Translation differences
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
|
Balance as of December 31, 2024
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Accumulated amortization:
|
||||||||||||||||||||||||||||
|
Balance as of January 1, 2024
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Amortization
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Translation differences
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||
|
Balance as of December 31, 2024
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Net book value:
|
||||||||||||||||||||||||||||
|
As of December 31, 2024
|
|
|
|
|
|
|
|
|||||||||||||||||||||
F - 56
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 - GOODWILL AND INTANGIBLE ASSETS (continued):
Composition of intangible assets and accumulated amortization thereon, grouped by major classifications, and changes therein in 2023 are as follows:
|
Capitalized development costs **
|
Distribution rights and brand *
|
Customer relationships purchased *
|
Technology **
|
Goodwill (a)
|
Patents **
|
Total
|
||||||||||||||||||||||
|
US Dollars in thousands
|
||||||||||||||||||||||||||||
|
Cost:
|
||||||||||||||||||||||||||||
|
Balance as of January 1, 2023
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Additions
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Acquired through business combinations
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Disposals
|
(
|
)
|
|
|
|
|
|
(
|
)
|
|||||||||||||||||||
|
Translation differences
|
(
|
)
|
|
(
|
)
|
(
|
)
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
|
Balance as of December 31, 2023
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Accumulated amortization:
|
||||||||||||||||||||||||||||
|
Balance as of January 1, 2023
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Amortization
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Disposals
|
(
|
)
|
|
|
|
|
|
(
|
)
|
|||||||||||||||||||
|
Translation differences
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||
|
Balance as of December 31, 2023
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Net book value:
|
||||||||||||||||||||||||||||
|
As of December 31, 2023
|
|
|
|
|
|
|
|
|||||||||||||||||||||
*Amortization of customer relationship and distribution rights are included under selling, general and administrative expenses.
**Amortization of technology, patents and development costs are included in “Depreciation and amortization in respect of technology and capitalized development costs”.
F - 57
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 - GOODWILL AND INTANGIBLE ASSETS (continued):
| (a) |
Goodwill
|
The group tests whether goodwill has suffered any impairment on an annual basis. For the 2025 reporting period, the recoverable amount of the cash-generating units (CGUs or groups of CGUs) was determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management. The discount rate was a pre-tax measure using a rate of return that reflects the relative risk of the investment, as well as the time value of money. Five years of cash flows were included in the discounted cash flow model. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. These growth rates are consistent with forecasts included in industry reports specific to the industry in which each CGU operates.
During 2025, the Group reviewed its CGUs in light of acquisitions completed during the year and concluded that there are four CGUs or groups of CGUs: Unattended, Fuel, Retail, Lynkwell. Each CGU or groups of CGUs includes the related goodwill arising from past acquisitions.
| 1. |
Unattended group of CGUs
|
In light of the acquisitions completed in 2025, the Group allocates the goodwill arising from the acquisitions of Uppay, Inepro Pay, IoT and Tigapo, acquired during the year, together with the goodwill relating to the existing acquisitions VM, OTI, Weezmo and Vendsys, to a group of CGUs comprising the Unattended activity. In addition, as additional impairment testing, each of the existing acquisitions assigned to the group of CGUs comprising the Unattended activity, which had previously been allocated goodwill separately, was tested individually for goodwill impairment immediately prior to being combined into the Unattended activity.
|
Unattended group of CGUs
|
|
|
Growth rate
|
|
|
Discount rate
|
|
Management has concluded that no impairment of goodwill was required in respect of the Unattended group of CGUs.
The following acquisitions, were tested separately in accordance with IAS 36:
| 1. |
VMtecnologia LTDA. - As part of the business combination for the purchase of VM Technologia LTDA (hereinafter – "VM") the company recognition of goodwill in the total amount of $
|
|
VM
|
|
|
Growth rate
|
|
|
Discount rate
|
|
The recoverable amount is greater than the carrying amount, and no impairment of goodwill was required.
| 2. |
On Track Innovations Ltd. - As part of the business combination for the purchase of On Track Innovations Ltd. (hereinafter – "OTI") the Company recognized goodwill in the total amount of $
|
|
OTI
|
|
|
Growth rate
|
|
|
Discount rate
|
|
The recoverable amount is greater than the carrying amount, and no impairment of goodwill was required.
F - 58
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 - GOODWILL AND INTANGIBLE ASSETS (continued):
| (a) |
Goodwill (continued):
|
| 1. |
Unattended group of CGUs (continued)
|
| 3. | Weezmo - As part of the business combination related to the acquisition of Weezmo, a goodwill in the amount of $ |
|
Weezmo
|
|
|
Growth rate
|
|
|
Discount rate
|
|
The recoverable amount is greater than the carrying amount, and no impairment of goodwill was required.
| 4. |
Vendsys - As part of the business combination related to the acquisition of Greenhithe Software Solutions Ltd (hereinafter – "Vendsys") the Company recognized goodwill in the total amount of $
|
|
Vendsys
|
|
|
Growth rate
|
|
|
Discount rate
|
|
The recoverable amount is greater than the carrying amount, and no impairment of goodwill was required.
| 2. |
Fuel
|
| a. |
Roseman Holdings Ltd. and Roseman Engineering Ltd. - As part of the business combination for the purchase of Roseman Holdings Ltd. and Roseman Engineering Ltd. (hereinafter – "Roseman") the company recognition of goodwill in the total amount of $
|
|
Roseman
|
|
|
Growth rate
|
|
|
Discount rate
|
|
The recoverable amount is greater than the carrying amount, and no impairment of goodwill was required.
| 3. |
Lynkwell - During the fiscal year 2025, the Company completed the acquisition of the entire share capital of EVRedi, Inc (hereinafter "Lynkwell"), resulting in the recognition of goodwill (see note 6a). Under IAS 36 Impairment of Assets, the company is required to perform an annual impairment test on goodwill. As part of the business combination for the purchase of Lynkwell, the Company recognized goodwill in the total amount of $
|
|
Lynkwell
|
|
|
Growth rate
|
|
|
Discount rate
|
|
The recoverable amount is greater than the carrying amount, and no impairment of goodwill was required.
| 4. |
Retail CGU - As part of the business combination for the purchase of Nayax Retail Ltd. (hereinafter "Nayax Retail") and Retail Pro LLC., the Company recognized goodwill in the total amount of $
|
|
Retail
|
|
|
Growth rate
|
|
|
Discount rate
|
|
The recoverable amount is greater than the carrying amount, and no impairment of goodwill was required.
F - 59
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 - Liabilities to Banks and debentures
| a. |
Short-term bank credit(*)
|
| 1) |
The Company is a party to a short-term credit facility with an Israeli bank with commitments totaling $
|
| 2) |
In May 2023 the company received a short-term credit facility in the amount of NIS
|
| 3) |
In July 2023, the Company entered into an additional short-term credit facility with an Israeli bank in the amount of $
|
(*) Under the credit facilities above of the financing agreements, the Company is required to meet certain financial covenants. As of December 31, 2025, the Company met all the covenants.
| b. |
Long-term bank loans
|
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
US Dollars in thousands
|
||||||||
|
Total bank loans
|
|
|
||||||
|
Less - current maturities
|
(
|
)
|
(
|
)
|
||||
|
Total long-term bank loans
|
|
|
||||||
| 1. |
In May 2020, the Company received a long-term loan from an Israeli Bank, backed by a government guarantee, in the amount of NIS
|
| 2. |
In February 25, 2024, the Company fully repaid the bridge loan disclosed under note 13a(3) and received from the same bank an approval for a long-term loan. The long-term loan bears a SOFR based variable interest rates. As of December 31, 2025, the Company met all the covenants.
|
| 3. |
On December 18, 2024, a loan principal of NIS
The carrying amount of the credit and loans from banks reasonably approximate their fair value.
|
F - 60
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 - Liabilities to Banks and debentures (continued)
| c. |
Issuance of debentures and warrants
|
On March 11, 2025, the Company completed a public offering of 486,291 units, each consisting of NIS 1,000 principal amount of non-linked debentures and three warrants, at a price of NIS 1,021 per unit. The offering generated gross proceeds of approximately NIS 496.5 million (approximately $137.1 million). The net proceeds of approximately NIS 485.8 million (approximately $133 million) are intended for general corporate purposes, including debt repayment and potential acquisitions. The debentures bear a fixed annual interest rate of 5.9% , maturing on September 30, 2030, with principal repayments in four unequal annual installments from 2027 to 2030 .
The debentures were classified as a financial liability and measured at amortized cost in accordance with IFRS 9, as they represent a contractual obligation to deliver cash and do not contain equity conversion features. The warrants, on the other hand, were classified as an equity instrument under IAS 32, as they are settled in the Company’s own equity instruments for a fixed amount of cash and meet the “fixed-for-fixed” criterion. Out of the total proceeds received, an amount of NIS 20.7 million (approximately $5.7 million) was allocated to the warrants and recognized in equity. The debentures and warrants are listed separately on the Tel-Aviv Stock Exchange.
On December 11, 2025, the Company expanded its bond series, raising approximately NIS 565.5 million (approximately $176 million) at a price of NIS 1,091 per unit, based on full allocation at the closing price. The offering comprised 518,381 units, each consisting of NIS 1,000 principal amount of non-linked debentures and three warrants. The net proceeds amounted to approximately NIS 558.6 million (approximately $173.9 million). Out of the total proceeds received in the December 2025 expansion, an amount of NIS 34.9 million (approximately $10.8 million) was allocated to the warrants and recognized in equity.
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
US Dollars in thousands
|
||||||||
|
Debentures
|
|
|
||||||
F - 61
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 - OTHER LONG-TERM LIABILTIES
Composition of other long-term liabilities, net of current maturities
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
US Dollars in thousands
|
||||||||
|
Contingent consideration, see note 6 (*)
|
|
|
||||||
|
Deferred consideration, see note 6 (*)
|
|
|
||||||
|
Other
|
|
|
||||||
|
|
|
|||||||
Current maturities of other long-term liabilities of $5,538 are included in current liabilities.
(*) With regards to liability for deferred and contingent payments as of December 31, 2025, the company recognized a deferred and contingent liabilities as part of the acquisitions of Retail Pro International LLC, VMtecnologia LTDA and Uppay Serviços De Tecnologia Da Informação S.A, see note 6.
F - 62
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 - INCOME TAXES
| a. |
Taxation of the Company in Israel
|
| 1) |
Tax rates:
|
The Company’s income in Israel (except for income qualifying for reduced tax rates under Israel encouragement law, see paragraph 2 below) is taxed at regular rates. The Israeli corporate tax rate in 2018 and thereafter is 23 %. Capital gains of the Company in Israel are subject to tax at the regular corporate tax rate applicable during the tax year.
| 2) |
In December 2020, the Company received an in-agreement tax ruling, indicating that the enterprise of the Company meets the definition of a Technological Preferred Enterprise, and that the income of the Company from selling POS devices, provision of processing SaaS are deemed "technology income" as defined by Section 51 to the Encouragement of Capital Investment Law, 1959 (hereinafter - "the Law"), which are subject to
|
| b. |
Taxation of subsidiaries outside of Israel
|
Subsidiaries that are incorporated outside Israel are assessed for tax under the tax laws applicable in their countries of residence. The principal tax rates applicable in 2025 to subsidiaries outside Israel are as follows:
Companies incorporated in the United States – tax rate of 34.7 % (including federal, state and branch profits tax). The company incorporated in the UK – tax rate of between 19 % to 25 %. The company incorporated in Australia – tax rate of 30 %. The company incorporated in Lithuania –corporate tax rate of 16 % for 2025 tax period, and 17% for the 2026 and subsequent tax periods, In Mexico 30 %, in Germany 15.5 % (including solidarity surcharge) plus 14 % trade tax. The companies incorporated in Brazil 34 %. Generally, inter-company transactions between the Company and subsidiaries outside Israel are subject to the provisions and reporting requirements set out in the Income Tax Regulations (Determination of Market Terms), 2006.
| c. |
Carry forward losses
|
Deferred tax assets on carryforward losses are recognized if the exercise of the relevant tax benefit is expected in the foreseeable future against a taxable income.
As of December 31, 2025 and 2024, the Company’s carryforward tax losses in Israel amounted to $188,893 thousand and $28,433 thousand, respectively. The 2025 balance includes carryforward tax losses absorbed from an Israeli subsidiary merged into the Company during the year.
The Group recognizes deferred taxes in respect of carryforward losses stemming from the Group only up to the amount of the liability for deferred tax, since the utilization of those losses is not expected in the foreseeable future. Carryforward tax losses accrued in Israel may be offset over an unlimited time.
d. Tax assessments
The limitation period in Israel of tax assessments filed by taxpayers in respect of tax year 2013 and thereafter is 4 years from the end of the tax year in which a tax return was filed.
Accordingly, the Company’s tax assessments through tax year 2019 are considered to be final.
F - 63
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 - INCOME TAXES (continued):
| e. |
Tax rate reconciliation:
|
The reconciliation of the theoretical tax benefit (expense) by the Israeli statutory tax rate to the Company's effective benefit (expense) taxes are as follows:
|
For the year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
US Dollars in thousands
|
||||||||||||
|
Profit (Loss) before taxes on income
|
|
(
|
)
|
(
|
)
|
|||||||
|
Statutory tax rate
|
|
%
|
|
%
|
|
%
|
||||||
|
Theoretical income tax benefit (expenses)
|
(
|
)
|
|
|
||||||||
|
Share-based payment expenses which are not deductible
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Carry forward losses without deferred taxes recognition
|
|
(
|
)
|
(
|
)
|
|||||||
|
Accounting gain arising from obtaining control, not taxable
|
|
|
|
|||||||||
|
Other
|
|
(
|
)
|
(
|
)
|
|||||||
|
Effective tax benefit (expenses)
|
|
(
|
)
|
(
|
)
|
|||||||
| f. |
Deferred income tax:
|
The composition of deferred taxes as of statement of financial position dates and the change thereof in those years is:
|
Intangible assets
|
Provisions for employee rights
|
Other
|
Losses for tax purposes
|
Total
|
||||||||||||||||
|
US Dollars in thousands
|
||||||||||||||||||||
|
Balance at January 1, 2025
|
(
|
)
|
|
|
|
(
|
)
|
|||||||||||||
|
Change in 2025:
|
||||||||||||||||||||
|
Recognized in income statement
|
|
|
|
|
|
|||||||||||||||
|
Deferred taxes created in acquisition of subsidiary
|
(
|
)
|
|
|
|
(
|
)
|
|||||||||||||
|
Recognized in translation currency difference reserve
|
(
|
)
|
|
|
|
(
|
)
|
|||||||||||||
|
Balance at December 31, 2025
|
(
|
)
|
|
|
|
(
|
)
|
|||||||||||||
|
Balance at January 1, 2024
|
(
|
)
|
|
|
|
(
|
)
|
|||||||||||||
|
Change in 2024:
|
||||||||||||||||||||
|
Recognized in income statement
|
|
|
|
|
|
|||||||||||||||
|
Deferred taxes created in acquisition of subsidiary
|
(
|
)
|
|
|
|
(
|
)
|
|||||||||||||
|
Recognized in translation currency difference reserve
|
|
|
|
|
|
|||||||||||||||
|
Balance at December 31, 2024
|
(
|
)
|
|
|
|
(
|
)
|
|
Balance at January 1, 2023
|
(
|
)
|
|
|
|
(
|
)
|
|||||||||||||
|
Change in 2023:
|
||||||||||||||||||||
|
Recognized in income statement
|
(
|
)
|
|
(
|
)
|
|
|
|||||||||||||
|
Deferred taxes created in acquisition of subsidiary
|
(
|
)
|
|
|
|
(
|
)
|
|||||||||||||
|
Recognized in translation currency difference reserve
|
|
|
|
|
|
|||||||||||||||
|
Balance at December 31, 2023
|
(
|
)
|
|
|
|
(
|
)
|
F - 64
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 - INCOME TAXES (continued):
| f. |
Deferred income tax (continued):
|
Deferred taxes are presented in the statement of financial position as follows:
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
US Dollars in thousands
|
||||||||
|
Non-current assets
|
|
|
||||||
|
Non-current liabilities
|
(
|
)
|
(
|
)
|
||||
|
(
|
)
|
(
|
)
|
|||||
| g. |
Taxes on income included in profit or loss:
|
|
For the year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
US Dollars in thousands
|
||||||||||||
|
Current tax expenses
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Deferred tax income
|
|
|
|
|||||||||
|
|
(
|
)
|
(
|
)
|
||||||||
NOTE 16 - CAPITAL AND RESERVES
| a. |
Composition:
|
The share capital as of December 31, 2025, is composed of Ordinary shares, all having ILS 0.001 par value, as follows:
|
Number of shares |
In thousands |
|||||||||||||||
|
Authorized
|
Issued and paid
|
Authorized
|
Issued and paid
|
|||||||||||||
|
December 31, 2025
|
December 31, 2025
|
|||||||||||||||
|
Ordinary shares
|
|
|
||||||||||||||
The share capital as of December 31, 2024, is composed of Ordinary shares, all having ILS 0.001 par value, as follows:
|
Number of shares |
In thousands |
|||||||||||||||
|
Authorized
|
Issued and paid
|
Authorized
|
Issued and paid
|
|||||||||||||
|
December 31, 2024
|
December 31, 2024
|
|||||||||||||||
|
Ordinary shares
|
|
|||||||||||||||
The share capital as of December 31, 2023, is composed of Ordinary shares, all having ILS 0.001 par value, as follows:
|
Number of shares
|
In thousands
|
|||||||||||||||
|
Authorized
|
Issued and paid
|
Authorized
|
Issued and paid
|
|||||||||||||
|
December 31, 2023
|
December 31, 2023
|
|||||||||||||||
|
Ordinary shares
|
|
|||||||||||||||
F - 65
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 - CAPITAL AND RESERVES (continued):
| a. |
Composition (continued):
|
In April 2021, all ordinary A shares of NIS 0.001 par value and all ordinary B shares of NIS 0.001 par value – both issued shares and shares included in the Company’s authorized capital – were converted into ordinary shares of NIS 0.001 par value each based on a 1:1 ratio , such that subsequent to the conversion, the Company’s capital comprises only ordinary shares.
In April 2021, the Company increased the registered share capital by 32,000,000 Ordinary shares par value NIS 0.001 each.
On May 13, 2021, the Company completed an initial public offering (IPO) on the Tel Aviv stock exchange (TASE) in which it sold 4.4 million ordinary shares of NIS 0.001 par value for a gross amount, before issuance costs, of $141.6 million and $132.5 million, net of issuance costs. The IPO was a non-uniform offering, as this term is defined by Israeli Securities Regulations (Manner of Offering Securities to the Public), 2007, to institutional investors in Israel and outside of Israel.
On March 12, 2024, the Company completed an issuance of ordinary shares under an underwriting agreement. The Company issued and sold 2,600,000 ordinary shares, which included 469,565 shares sold upon the full exercise of the underwriters’ option to purchase additional shares and apart from that 1,000,000 ordinary shares were sold by existing shareholders. The net proceeds to the company from this sale amounted to approximately $62.7 million. The expenses incured in company's profit or loss report for the year ended December 31, 2024 from this sale are $506 thousands.
| b. |
Share-based payment:
|
| 1. |
December 17, 2025 award: the company granted
|
| 2. |
December 9, 2025 award: the company granted
|
| 3. |
August 11, 2025 award: the company granted
|
| 4. |
June 3, 2025 award: the company granted
|
| 5. |
On May 12, 2025, the Company granted
|
| 6. |
September 6, 2024 award: In October 2021,
|
September 3, 2024 award: the company allotted 1,415 RSUs to an employee of the Company. The vesting period of these RSUs is 4 years, with 25% of the RSUs vesting on the first anniversary of the grant date and after that, an additional 6.25% of the RSUs vesting on the last day of each subsequent calendar quarter.
| 7. |
August 6, 2024 award: the company allotted
|
F - 66
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 - CAPITAL AND RESERVES (continued):
| b. |
Share-based payment (continued):
|
| 8. |
June 25, 2024 award: the company allotted
|
| 9. |
May 12, 2024 award: the company allotted
|
| 10. |
February 27, 2024 award: the company allotted
|
| 11. |
February 1, 2024 award: the company allotted
|
| 12. |
November 30, 2023 award: the Company allotted
|
| 13. |
June 26, 2023 award: the Company allotted
|
F - 67
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 - CAPITAL AND RESERVES (continued):
| b. |
Share-based payment (continued):
|
|
Allotment date
|
Share
price
|
Exercise
price
|
Expected
option life
|
Risk-free
interest rate
|
Average standard
deviation (**)
|
Option fair
value
|
|
The weighted average for 2025
|
$
|
|
|
|
|
$
|
|
The weighted average for 2024
|
$
|
|
|
|
|
$
|
|
The weighted average for 2023
|
$
|
|
|
|
|
$
|
|
December 17, 2025 - RSU
|
$
|
|
|
|
|
$
|
|
December 9, 2025 - RSU
|
$
|
|
|
|
|
$
|
|
August 11, 2025- RSU |
$ |
$ |
||||
|
June 3, 2025 - Options
|
$
|
$
|
|
|
|
$
|
|
June 3, 2025 - RSUs
|
$
|
|
|
|
|
$
|
|
May 12, 2025 - Options
|
$
|
$
|
|
|
|
$
|
|
May 12, 2025 - RSUs
|
$
|
|
|
|
|
$
|
|
September, 6, 2024 – RSUs
|
$
|
|
|
|
|
$
|
|
September, 6, 2024 – Options
|
$
|
$
|
|
|
|
$
|
|
August 6, 2024 - RSU
|
$
|
|
|
|
|
$
|
|
June 25, 2024 - RSUs
|
$
|
|
|
|
|
$
|
|
May 12, 2024 - RSUs
|
$
|
|
|
|
|
$
|
|
February 27, 2024 - RSUs
|
$
|
|
|
|
|
$
|
|
February 1, 2024 - RSUs
|
$
|
|
|
|
|
$
|
|
November, 2023 – RSUs
|
$
|
|
|
|
|
$
|
|
June 26, 2023 – Options
|
$
|
$
|
|
|
|
$
|
|
June 26, 2023 – RSUs
|
$
|
|
|
|
|
$
|
(**) The Average standard deviation was determined based on historical volatility of the company.
All allotments to employees and offices in Israel carried out as part of the plan are subject to the terms set out in Section 102 of the Income Tax Ordinance. The allotments to Israelis who are not employees are subject to Section 3(i) to the Income Tax Ordinance. Foreign employees and service providers are subject to the tax law in the relevant countries.
F - 68
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 - CAPITAL AND RESERVES (continued):
| b. |
Share-based payment (continued):
|
Below is a breakdown of the RSUs and options by their weighted average exercise price during the reported periods:
|
December 31, 2025
|
December 31, 2024
|
December 31, 2023
|
||||||||||||||||||||||
|
Number of awards
|
Weighted average exercise price
|
Number of awards
|
Weighted average exercise price
|
Number of awards
|
Weighted average exercise price
|
|||||||||||||||||||
|
Number of awards outstanding at beginning of year
|
|
|
|
|
|
|
||||||||||||||||||
|
New granted
|
|
|
|
|
|
|
||||||||||||||||||
|
Exercised awards
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|
|||||||||||||||
|
Forfeited awards
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|
|||||||||||||||
|
Expired awards
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|
|||||||||||||||
|
Outstanding awards at end of year
|
|
|
|
|
|
|
||||||||||||||||||
|
Exercisable options at end of year
|
|
|
|
|
|
|
||||||||||||||||||
As of December 31, 2025, 2024 and 2023, the weighted-average remaining contractual life of exercisable options were 1.7 , 1.5 and 3.5 years, respectively.
As of December 31, 2025, 2024 and 2023, the range of exercise prices for share options outstanding at the end of the period is NIS 0.001 41.00
The expenses related to share base compensation for each of the three years in the period ended December 31, 2025, 2024 and 2023 are $7,305 , $7,187 , and $6,027 thousand, respectively.
The amounts of expense recognized as capitalized development costs and included as intangible assets for each of the three years in the period ended December 31, 2025, 2024 and 2023 are $855 , $718 and $825 , respectively.
The balance of unrecognized benefit as of December 31, 2025, assuming that all conditions set were met, is $9,868 thousand.
F - 69
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 - REVENUES
|
For the year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
US Dollars in thousands
|
||||||||||||
|
Revenue from the sale of integrated POS devices
|
|
|
|
|||||||||
|
Recurring revenue:
|
||||||||||||
|
SaaS revenue
|
|
|
|
|||||||||
|
Payment processing fee
|
|
|
|
|||||||||
|
|
|
|
||||||||||
|
|
|
|
||||||||||
NOTE 18 - COST OF REVENUES
|
For the year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
US Dollars in thousands
|
||||||||||||
|
Cost of integrated POS devices sales
|
|
|
|
|||||||||
|
Cost of recurring revenue:
|
||||||||||||
|
Cost of services
|
|
|
|
|||||||||
|
Cost of processing
|
|
|
|
|||||||||
|
|
|
|
||||||||||
As of the periods ended December 31, 2025, 2024 and 2023, cost of revenue includes employee related costs and share based compensation in the amount of $11,282 , $9,890 and $7,385 thousand, respectively.
NOTE 19 - RESEARCH AND DEVELOPMENT EXPENSES
|
For the year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
US Dollars in thousands
|
||||||||||||
|
Payroll and related expenses
|
|
|
|
|||||||||
|
Suppliers and subcontractors
|
|
|
|
|||||||||
|
Office and maintenance
|
|
|
|
|||||||||
|
Share-based payment
|
|
|
|
|||||||||
|
Depreciation and amortization
|
|
|
|
|||||||||
|
|
|
|
||||||||||
F - 70
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 20 - SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
|
For the year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
US Dollars in thousands
|
||||||||||||
|
Payroll and related expenses
|
|
|
|
|||||||||
|
Share-based payment
|
|
|
|
|||||||||
|
Office and maintenance
|
|
|
|
|||||||||
|
Advertising and sales promotion
|
|
|
|
|||||||||
|
Depreciation and amortization
|
|
|
|
|||||||||
|
Computers and IT systems maintenance
|
|
|
|
|||||||||
|
Professional fees
|
|
|
|
|||||||||
|
Provision for credit losses and bad debts
|
|
|
|
|||||||||
|
Other expenses
|
|
|
|
|||||||||
|
|
|
|
||||||||||
NOTE 21 - FINANCIAL EXPENSES OR INCOME
a. Financial Income
|
|
For the year ended December 31,
|
|||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
US Dollars in thousands
|
||||||||||||
|
Interest income on cash and bank deposits
|
|
|
|
|||||||||
|
Financial income in respect of change in fair value options
|
|
|
|
|||||||||
|
Financial income in respect of shareholders and related companies
|
|
|
|
|||||||||
|
Financial income in respect of finance sub-lease
|
|
|
|
|||||||||
|
Financial income in respect of exchange rate differences
|
|
|
|
|||||||||
|
|
|
|
||||||||||
b. Financial Expenses
|
|
For the year ended December 31,
|
|||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
US Dollars in thousands
|
||||||||||||
|
Interest expense on bank loans and bank fees
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Financial expenses in respect of change in fair value options
|
(
|
)
|
|
(
|
)
|
|||||||
|
Financial expenses in respect of loans from others
|
|
(
|
)
|
(
|
)
|
|||||||
|
Financial expenses in respect of other liabilities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Financial expenses in respect of debentures
|
(
|
)
|
|
|
||||||||
|
Financial expenses in respect of leases liabilities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Financial Expenses in respect of exchange rate differences
|
|
(
|
)
|
|
||||||||
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||
F - 71
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 22 - PROFIT (LOSS) PER SHARE
| a. |
Basic
|
Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue.
|
For the year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Profit (Loss) for the year attributed to holders of
|
||||||||||||
|
ordinary shares (US Dollars in thousands)
|
|
(
|
)
|
(
|
)
|
|||||||
|
Weighted average number of ordinary shares issued
|
||||||||||||
|
(in thousands)
|
|
|
|
|||||||||
|
Basic profit (Loss) per ordinary share (in dollars)
|
|
(
|
)
|
(
|
)
|
|||||||
| b. |
Diluted
|
Diluted earnings per share are calculated by adjusting the weighted average number of outstanding shares while including potential ordinary shares with dilutive effect:
|
Thousands of shares
|
||||||||||||
|
As of December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Profit (Loss) for the year attributed to holders of ordinary shares (US Dollars in thousands)
|
|
(
|
)
|
(
|
)
|
|||||||
|
Weighted average number of ordinary shares issued and used for the calculation of basic earnings per share (US Dollars in thousands)
|
|
|
|
|||||||||
|
Adjustment for weighted average number of additional shares from dilutive effect of options and RSUs (in thousands)
|
|
|
|
|||||||||
|
Weighted average number of shares for calculation of diluted earnings per share (in thousands)
|
|
|
|
|||||||||
|
Diluted profit (Loss) per ordinary share (in dollars)
|
|
(
|
)
|
(
|
)
|
|||||||
F - 72
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 23 - RELATED PARTIES
| a. |
Transactions with related parties:
|
|
For the year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
US Dollars in thousands
|
||||||||||||
|
Payroll, options and payments to related parties employed by the Company
|
|
|
|
|||||||||
|
Payroll to directors
|
|
|
|
|||||||||
|
Transactions - associated companies
|
|
|
|
|||||||||
| b. |
Balances with related parties:
|
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
US Dollars in thousands
|
||||||||
|
Receivables – associated companies
|
|
|
||||||
|
Trade payables – related companies and parties
|
|
|
||||||
|
Other payables – related companies and parties
|
|
|
||||||
F - 73
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 23 - RELATED PARTIES (continued):
| c. |
Related parties' employment terms:
|
| 1. |
Employment terms of controlling shareholder and director – Mr. Yair Nechmad – for his service as the Company’s CEO:
|
Payments of management and consulting fee to Mr. Yair Nechmad for serving as CEO are made under a November 2016 agreement (in this paragraph (1), the "Agreement"). Under the Agreement, the services are provided by Mr. Nechmad through Yair Nechmad Ltd., which is fully controlled by Mr. Yair Nechmad, in consideration for a management fee at a monthly cost of NIS 50 thousand ($14.5 thousand), and reimbursement of various expenses.
On March 10, 2021, the Board of Directors and the general meeting of the shareholders of the Company approved a revision to the terms of engagement between the Company and Mr. Yair Nechmad, effective January 1, 2021, as follows: The management fee of Mr. Yair Nechmad, CEO of the Company, through Yair Nechmad Ltd, was changed to a monthly cost of NIS 150 thousand ($46 thousand), instead of NIS 50 thousand ($15 thousand).
On May 4, 2021, the Board of Directors and general meeting of the Company approved engagement in revised service agreements with Mr. Yair Nechmad, in which the monthly management fee was revised to NIS 140 thousand ($43 thousand), beginning on the date completing the IPO on the Tel Aviv Stock Exchange, i.e. May 13, 2021. This amount is to increase each calendar year by 2.5% so the payment for each of the 12 months during the year ended December 31, 2025 accounted to NIS 155 thousand ($45 thousand).
Arnon Nechmad, the son of Yair Nechmad, was hired by a wholly-owned subsidiary of the Company, in November 2021, prior to that he was an employee of another wholly-owned subsidiary of the Company and, in 2023 became an employee of the Company. Mr. Nechmad received compensation of approximately $87 thousands, $91 thousands and $81 thousands in 2025, 2024 and 2023, respectively. The company granted to Mr. Nechmad 32 RSUs in the May 12, 2025 grant. As of October 2025, Arnon no longer serves as an employee of the company.
Tal Tannenbaum, who became the daughter-in-law of Yair Nechmad in August 2022, has been a part-time employee of the Company since December 2021. Ms. Tannenbaum received compensation of approximately $76 thousand, $80 thousand and $55 in 2025, 2024 and 2023 respectively. The company granted to Ms. Tannenbaum 53 RSUs in the May 12, 2025 grant.
| 2. |
The employment terms of controlling shareholder and director, Mr. David Ben Avi, for his service as the Company’s CTO:
|
Payment of management and consulting fees to Mr. David Ben Avi for his services as the Company’s CTO is governed by a November 2016 agreement, under which services are provided through David Ben Avi Holdings Ltd., a company fully controlled by Mr. Ben Avi. The monthly management fee was initially set at NIS 50 thousand ($14.5 thousand) and was revised, following approvals by the Board of Directors and shareholders, to NIS 150 thousand ($46 thousand) effective January 1, 2021. Subsequently, on May 4, 2021, the engagement was further revised to a monthly fee of NIS 140 thousand ($43 thousand), effective upon completion of the Company’s IPO on May 13, 2021, with an annual increase of 2.5%. Accordingly, the monthly fee for each of the 12 months ended December 31, 2025 amounted to NIS 155 thousand ($45 thousand).
F - 74
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 23 - RELATED PARTIES (continued):
| c. |
Related parties' employment terms (continued):
|
The total expenses related to Oded Frenkel, Mr. Ben Avi’s brother-in-law, who is employed by the Company as Chief Customer Officer in 2025, 2024 and 2023 was $265 thousand, $204 thousand and $212 thousand, respectively. In 2025 Mr. Frenkel received 1,383 RSUs, In 2024 Mr. Frenkel received 2,500 RSUs, and in 2023 options to purchase 2,500 ordinary shares at the exercise price of $18.83 2,500 ordinary shares at the exercise price of NIS 65.7 per share.
The total expenses related to Reuven Amar, Mr. Ben Avi’s brother-in-law, who is employed by the Company as Engineering Lab Manager in 2025, 2024 and 2023 was $176 thousand, $172 thousand and $177 thousand, respectively. The company granted to Mr. Amar 66 RSUs in the May 12, 2025 grant. In 2023 Mr. Amar received options to purchase 2,500 ordinary shares at the exercise price of $18.83 per share, and in 2022 options to purchase 2,500 ordinary shares at the exercise price of NIS 65.7 per share.
| 3. |
Payments to Mr. Eran Havshush - Director of the board
|
On July 2024, Mr. Havshush was appointed as a member of the Board of the Company. Mr. Havshush, has been acting as a consultant to the Company since 2012, providing services related to taxation, capital investments, and other financial and accounting matters. Previously, he served as the Company’s auditor from 2006 to 2009. Furthermore, Mr. Havshush provides audit, tax, and consulting services on an ongoing basis to the Company’s controlling shareholders, Mr. Yair Nechmad, Mr. Amir Nechmad, and Mr. David Ben-Avi. During years 2025, 2024, and 2023, the fees paid by the Company to Mr. Havshush were $87 thousands, $82 thousands, and $88 thousands, respectively.
A. Omer & Co., an Israeli accounting firm where Mr. Havshush serves as a partner, has provided payroll and bookkeeping services to the Company and its Israeli subsidiaries since 2018. During the years 2025, 2024 and 2023 the fees paid by the Company to A. Omer & Co. were $46 , $32 , and $64 , respectively. On May 29, 2024, the Company, Mr. Havshush, and A. Omer & Co. entered into a new service agreement (the “New Service Agreement”), under which Mr. Havshush will continue to provide services related to accounting, tax reporting and compliance, mergers and acquisitions in Israel, employee stock option plans, and other tax-related matters. Under this agreement, he will receive a monthly fee ranging from approximate amounts of $5 thousands to $8 (NIS 20 thousands to NIS 30 thousands, respectively), depending on hours worked. Additionally, he will receive compensation for services rendered in connection with completed acquisitions, offerings, or other special projects, equal to up to three times his monthly fees. Under the New Service Agreement, A. Omer & Co. will continue to provide payroll, bookkeeping, and tax-related services to the Company and affiliated entities. Fees for these services will be based on hourly rates of approximately $54 to $68 (between NIS 200 and NIS 250 , respectively), subject to a 25 % discount. The fees paid to Mr. Havshush and A. Omer & Co. pursuant to the New Service Agreement are in addition to the director fees paid to Mr. Havshush for his service as a director of the Company.
F - 75
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 23 - RELATED PARTIES (continued):
| c. |
Related parties' employment terms (continued):
|
| 4. |
Directors insurance:
|
The Company has a directors and office holders insurance policy with limit of liability of NIS 69 million ($20 million) for any one occurrence and in the aggregate plus excess limit of $5 million side A Insurance for the directors & officers only.
NOTE 24 - LIENS, GUARANTEES AND COMMITMENTS
Liens
As of the approval date of these financial statements, the Company has established charges in favor of local Israeli banks to secure its credit facilities and related banking activities. In addition, in connection with bank guarantees, the Company has granted specific fixed charges, including liens of approximately USD 17 million and USD 1.1 million to several Israeli banks, along with additional fixed charges registered in recent years with uncapped secured amounts.
NOTE 25 - SUBSEQUENT EVENTS:
No significant events have occurred after the reporting period that would require adjustment or disclosure in these financial statements.
F - 76
FAQ
What does Nayax (NYAX) do and where are its shares listed?
Nayax provides integrated point-of-sale devices, payment processing and SaaS-based management tools for attended and self-service merchants. It is incorporated in Israel and its ordinary shares trade on the Nasdaq under symbol NYAX and are also listed on the Tel Aviv Stock Exchange.
What financial reporting framework and period does Nayax use in its 2025 20-F?
Nayax prepares consolidated financial statements in IFRS as issued by the IASB, with books and records in U.S. dollars. The 20-F covers audited results for the three years ended December 31, 2025, with PwC member firm Kesselman and Kesselman as the independent auditor.
Did Nayax report profitability in 2025 and how does it compare with prior years?
Nayax reports its first annual net profit in 2025, after net losses of $5.6 million in 2024 and $15.9 million in 2023. Management notes rapid customer growth and warns that sustaining profitability will require controlling expenses while expanding devices, payment processing and SaaS revenues.
How many Nayax ordinary shares were outstanding at December 31, 2025?
As of December 31, 2025, Nayax had 37,301,367 ordinary shares outstanding, each with a par value of NIS 0.001. This share count provides context for assessing ownership stakes, potential dilution from future actions and the scale of the company’s equity base.
What are the main strategic growth drivers highlighted by Nayax in its 2025 report?
Nayax focuses on expanding its installed base of integrated POS devices, scaling SaaS subscriptions and payment processing, and pursuing acquisitions such as Retail Pro, Roseman Engineering, VMT and Lynkwell. It is also rolling out embedded financial services, including the Yellow Account and hardware financing and rental offerings.
What key risks to Nayax’s business and stock does the 2025 20-F describe?
The report cites intense competition in POS and payments, dependence on limited suppliers and processors, cyber and data-privacy exposure, FX volatility, and geopolitical instability. New embedded financial services and hardware-as-a-service models introduce added credit, regulatory and operational risks that could pressure results and reputation.
What is Nayax’s new Yellow Account offering and what risks are associated with it?
Yellow Account is an embedded financial service giving merchants integrated deposit-account capabilities via a third-party sponsor bank. Risks include dependence on that bank, regulatory and compliance obligations across jurisdictions, potential service disruption, reputational impact from partner issues, and higher operational complexity in managing merchant funds and support.
Nayax Ltd
NASDAQ:NYAX
NYAX Rankings
NYAX Latest News
NYAX Latest SEC Filings
Mar 9, 2026
[6-K] Nayax Ltd. Current Report (Foreign Issuer)
Dec 8, 2025
[6-K] Nayax Ltd. Current Report (Foreign Issuer)
Nov 19, 2025
[6-K] Nayax Ltd. Current Report (Foreign Issuer)
Aug 13, 2025
[6-K] Nayax Ltd. Current Report (Foreign Issuer)