NOTE 5 – COMMITMENTS AND CONTINGENCIES:

The Company is obligated to repay certain research and development grants received from the Government of Israel in the form of a royalty rate on future sales of products derived from the funded research and development activities. As of September 30, 2025, the Company had received approximately $14,373.

The aggregate amount of royalties to be paid is determined based on 100% of the total grants received for qualified projects plus interest. The Company may be required to pay royalties based on previous years funding in periods after September 30, 2025, for the future sale of product that includes technology developed and funded with these research and development grants received to date.

In October 2024, the company entered into a payment plan with the Israel Innovation Authority (“IIA”) to settle the outstanding amount as of the previous year. According to the agreement, the IIA agreed to offset a delayed payment of approximately $50 from the total outstanding amount. The company committed to making an immediate payment of $190 and to spread the remaining balance over two years, with quarterly installments of approximately $106 starting from October 2024. The outstanding debt will continue to accrue interest and linkage differences in accordance with legal requirements until fully settled. Additionally, the company is required to report and pay ongoing royalties starting from the first half of 2024. 

During the nine and three months ended September 30, 2025 the company repaid $340 and $104 respectively.

As of September 30, 2025, the total royalty amount that may be payable by the company is approximately $14,373 ($15,903 including interest) and the Company repaid amounts of approximately $10,961.

As of September 30, 2025, and December 31, 2024, the Company had a liability to pay royalties in the amount of approximately $660 and $839 respectively.