A. [Reserved]
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
You should carefully consider the risks described below before making
an investment decision. Our business, financial condition or results of operations could be materially and adversely affected by any of
these risks. The trading price and value of our ordinary shares could decline due to any of these risks, and you may lose all or part
of your investment. This Annual Report also contains forward-looking statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks
faced by us as described below and elsewhere in this Annual Report.
Risks relating to our business and industry
Our growth mainly depends on our ability to attract and retain a large community of
buyers and freelancers, and the loss of our buyers and freelancers, or failure to attract new buyers and freelancers, due to AI technologies
or otherwise, could materially and adversely affect our business.
The size of our community of users, including both buyers and freelancers, is critical
to our success. While we have experienced strong growth in the number of annual active buyers on our platform since inception, in the
past couple of years the number of annual active buyers has been declining, including as a result of AI technologies reducing demand for
simple and low-skilled services on our marketplace, and future growth could be volatile and differ significantly from one year to another.
Many factors impact buyer growth, and we cannot accurately predict or guarantee annual active buyer growth rates in the future. Freelancers
have many different ways of marketing their services and securing buyers, including meeting and contacting prospective buyers through
other platforms, advertising to prospective buyers online or offline through other methods, signing up for online or offline third-party
agencies or staffing firms or finding employment full-time or part-time through an agency or directly with a business. Buyers have similarly
diverse options to find freelancers, such as engaging freelancers directly, finding freelancers through other online or offline platforms
or through staffing firms and agencies or hiring temporary, full-time, or part-time employees, or otherwise use AI technologies instead
of simple and low-skilled services offered on our marketplace. Any decrease in the attractiveness of our platform relative to these other
options available to buyers and freelancers could lead to decreased engagement on our platform, which could result in a drop in revenue
on our platform. In addition, a drop in engagement from buyers, including due to the use of AI technologies, a general decrease in spending
or otherwise as a result of a global recession, could lead to diminished network effects and decrease the attractiveness of our platform
to freelancers. If we fail to attract new freelancers or our existing freelancers decrease their use of or cease using our platform, the
quality or types of services provided by freelancers that use our platform are not satisfactory to buyers, or freelancers increase their
fees for services beyond the level that buyers are willing to pay, buyers may decrease their use of, or cease using, our platform.
Key factors in attracting and retaining buyers include our ability to go upmarket by
offering complex high-skilled services in the marketplace, grow our brand awareness, attract and retain high-quality freelancers and increase
the quantity and quality of services posted on our marketplace. A key factor in attracting and retaining freelancers, in turn, is maintaining
and increasing the number of buyers using our platform. Thus, achieving growth in our community of buyers and freelancers will require
us to prioritize strategic initiatives by investing in the development and expansion of our business, including AI-driven capabilities,
product enhancements, marketplace efficiency and user experience, as well as to increasingly engage in sophisticated and costly sales
and marketing efforts that may not result in growth or additional users. We may also need to modify our pricing model to attract and retain
such users.
7
Users can generally decide to cease using our platform at any time. Users may stop using
our platform and related services if the quality of the user experience on our platform, including our support capabilities in the event
of a problem, does not meet their expectations or keep pace with the quality of the user experience generally offered by competitive products
and services, including AI technologies. Users may also choose to cease using our platform if they perceive that our pricing model is
not in line with the value they derive from our platform or for other reasons. In addition, expenditures by buyers may be cyclical and
be affected by adverse changes in overall economic conditions or budgeting patterns. If we fail to attract new users or fail to maintain
existing users, our revenue may grow more slowly than expected and our business could be materially and adversely affected.
We have incurred net losses in the past and may not be able to generate sufficient revenue
to maintain profitability or positive net cash flow generated by operating activities.
During 2025, we incurred $1.2 million operating loss, achieved net income of $21.0 million
and had operating net cash flow of $104.6 million. We may not be able to generate sufficient revenue to sustain profitability, or positive
net cash flow generated by operating activities. We expect to continue investing in the development and expansion of our business, including
AI-driven capabilities, product enhancements, marketplace efficiency and user experience. Our operating expenses may fluctuate over time,
including decreasing or increasing in absolute dollars, as we manage our cost structure, reallocate resources and prioritize strategic
initiatives. If our revenue declines or fails to grow at a rate sufficient to offset increases in our operating expenses, or interest
rates decrease, we may not be able to sustain profitability or to maintain positive cash flow from operating activities on a consistent
basis.
We face significant competition from AI technologies and online and offline platforms
and competitors, which may cause us to suffer from a weakened market position that could materially and adversely affect our results of
operations.
The rapid advancement in AI technologies presents challenges for our industry as the
evolving AI landscape has reduced the demand for simple and low-skilled services on our marketplace. This trend is expected to continue
and may accelerate as AI technologies become more sophisticated and widely adopted. If we are unable to successfully adapt our business
model to address these developments, for example by incorporating AI technologies and related services into our product offerings or focus
on higher-value, more complex services that cannot be easily replicated by AI in a timely manner, our revenue could materially decline.
In addition, successful execution of our strategy depends on our ability to attract
and retain users, expand the market for our platform, maintain a technological edge and provide value to our users. We face competition
from a number of online and offline platforms and competitors that offer freelance services as part of their broader services portfolio.
Our main competitors fall into the following categories:
● software companies focused on providing technological solutions driven by AI;
● traditional contingent workforce and staffing service providers and other outsourcing providers;
● online freelancer platforms that serve a diverse range of skill categories;
● other online and offline providers of products and services that allow freelancers to find work or to advertise their services, including personal and professional social networks, employment marketplaces, recruiting websites, job boards, classified ads and other traditional means of finding work;
● software and business services companies focused on talent acquisition, management or staffing management products and services; and
● businesses that provide specialized, professional services, including consulting, accounting, marketing and information technology services.
Internationally, we compete in most countries against online and offline channels and
products and services with a local presence. These local competitors might have greater brand recognition than we have in their local
country and a stronger understanding of the local culture and commerce. They may also offer their products and services in local languages
that we do not currently offer. As our business grows internationally, we may increasingly compete with these local and regional companies.
8
In addition, well-established internet companies, social networking websites and career-related
internet portals have entered or may decide to target the market for freelance services, and some of these companies have launched products
and services that directly compete with our platform. These or other powerful companies that have extensive and loyal user bases in the
geographic markets where we operate may decide to directly target our users, thereby intensifying competition in the freelance services
market. Although professional social networking businesses with online recruitment functions historically have not had significant market
positions in the market for freelance services, these businesses may dedicate resources to expand their operations and as a result, become
a significant competitive threat in the future. Social networks may benefit from access to large pools of potential purchasers of freelance
services and a broad range of user information that freelancers could leverage to tailor their services.
Current competitors may also consolidate or be acquired by an existing or prospective
competitor, which could result in the emergence of a stronger competitor, leading to a potential loss of our market share. There can be
no assurances that we will maintain our strong position among freelance services marketplaces, particularly if our key competitors consolidate
or if large search engines, social media companies or other online platforms successfully leverage their large user bases to penetrate
our markets. In addition, competitors that have not typically participated online may establish an online presence on their own or with
our existing competitors, which may create new competitors or strengthen our existing competitors.
Many of our current and potential competitors, both online and offline, enjoy substantial
competitive advantages, such as greater name recognition, longer operating histories, greater financial, technical and other resources,
and, in some cases, the ability to rapidly combine online platforms with traditional staffing and contingent worker solutions. These companies
may use these advantages to offer solutions similar to our platform at a lower price, develop different products and services to compete
with our platform, spend more on advertising and brand marketing, invest more in research and development, or respond more quickly and
effectively than we do to new or changing opportunities, technologies, standards, regulatory conditions or user preferences or requirements.
As a result, our users may decide to shift from utilizing our platform to utilizing our competitors’ products, services and solutions.
Adverse macroeconomic conditions can materially adversely affect the Company’s
business, results of operations and financial condition, due to impacts on consumer and business spending and demand for our services.
Adverse macroeconomic conditions, including inflation, slower growth or recession, changes
to fiscal and monetary policy, tighter credit, higher interest rates, high unemployment, currency fluctuations, increased geopolitical
risks, have affected the U.S. and global economy during 2025 and can adversely impact consumer and businesses confidence and spending
and materially adversely affect demand for the digital services offered on the Company’s platform.
The present conditions and state of the U.S. and global economies make it difficult
to predict whether, when and to what extent a recession has occurred or will occur in the near future. In the event of an occurring or
worsening recession, as the case may be, in which the U.S. economy contracts, our business may be negatively impacted, accordingly due
to less spending and reduced demand for our services. The Company has taken significant actions to shore up its resources and means in
order to weather a potential downturn in the economy; however, should a recession occur, or worsen in the future, one may expect either
scenario to have an adverse effect on the business of the Company.
In addition, there is current uncertainty about the future relationship between the United States and other
countries with respect to trade policies, taxes, government regulations, and tariffs and we cannot predict whether, and to what extent,
U.S. trade policies will change in the future, including as a result of changes by the U.S. administration.
If we fail to maintain and enhance our brand, our business, results of operations and
prospects may be materially and adversely affected.
We believe that maintaining and enhancing our brand are of significant importance to
the success of our business. A well-recognized brand is critical to increasing the number and the level of engagement of freelancers and,
in turn, enhancing our attractiveness to buyers. Successful promotion of our brand and our platform depends on, among other things, the
effectiveness of our marketing efforts, our ability to provide a reliable, trustworthy and useful platform, the perceived value of our
platform and our ability to provide quality support. In order to maintain and enhance our brand, we will need to continuously invest in
marketing programs that may not be successful in achieving meaningful awareness levels. Brand promotion activities may not yield increased
revenue, and even if they do, the increased revenue may not offset the expenses we incur in building and maintaining our brand. We have
conducted and may continue to conduct various marketing and brand promotion activities. We cannot assure you, however, that these activities
will be successful or that we will be able to achieve the brand awareness we expect. In addition, our competitors may increase the intensity
of their marketing campaigns, which may force us to increase our advertising spend to maintain our brand awareness.
9
In addition, any negative publicity relating to our platform, regardless of its veracity,
could harm our brand. In particular, in recent years, increasing attention has been given to corporate activities related to environmental,
social and governance (ESG) matters including increasing attention on climate change and diversity, equity and inclusion matters, from
stakeholders with varied views on these topics. Companies and brands that do not adapt to or comply with expectations, standards, and
regulations on ESG matters as they continue to evolve, are perceived to have not responded appropriately in relation to ESG issues, or
are alleged not to achieve the ESG standards, targets or commitments that they publicly state (often referred to as “greenwashing”),
may suffer from reputational damage. Regulation (including emerging regulation) may require additional ESG public disclosures, and this
may increase the risk of such damage. In addition, any unfavorable media coverage or negative publicity about our industry or Company
and any errors, defects, disruptions, security vulnerabilities, abuse of our system, or other performance problems with our products and
platforms may also cause us reputational damage. If our brand is harmed due to negative publicity we may not be able to grow or maintain
our freelancer base, and our business, prospects, financial condition and results of operations could be materially and adversely affected.
In addition, recent developments in certain jurisdictions have included increased political and regulatory scrutiny of ESG initiatives,
with some regulators or other stakeholders actively opposing or seeking to restrict the consideration of ESG factors in investment and
business decisions. Addressing stakeholder expectations and regulatory requirements globally, which at times may be conflicting, may entail
costs, and any failure to successfully navigate such expectations may adversely impact our reputation, our business, financial condition
and results of operations.
Further, activities of users, customers or suppliers or the content of our freelancers'
shops could damage our brand, subject us to liability, and harm our business and financial results. Activities of users that are deemed
to be hostile, offensive or inappropriate to other users, including users acting under false or inauthentic identities, could damage our
brand or harm our ability to expand our user base. We do not monitor or review the appropriateness of the content generated by users or
have control over the activities in which our users engage. While we have adopted policies regarding illegal or offensive use of our platform
by our users and retain authority to remove user generated content that violates our policies, users could nonetheless engage in these
activities. Users and suppliers using the platform may also operate businesses in regulated industries, which are subject to additional
scrutiny, increasing the potential liability we could incur. The safeguards we have in place may not be sufficient to avoid harm to our
brand, especially if such hostile, offensive or inappropriate use was high profile.
If the market for freelancers and the services they offer is not sustained or develops
more slowly than we expect, our growth may slow or stall.
The market for freelancers and the services they offer is rapidly evolving. Our future
success will depend in large part on the continued growth and expansion of this market and the willingness of businesses and individuals
to engage freelancers to provide services. It is difficult to predict the size or rate of expansion of this market, or the extent to which
technological or other developments will impact the overall demand for freelancers. Further, many businesses and individuals may be unwilling
to engage freelancers for a variety of reasons, including perceived negative connotations with outsourcing work, or security or quality
concerns. If the market for freelancers and the services they offer does not grow, or there is a reduction or change in demand for freelancer
services as a result of macroeconomic conditions, technological advancement, labor market fluctuation or otherwise, our marketplace business
could continue to decline.
If traffic to our websites declines for any reason, our growth may slow or stall.
Our ability to maintain the number of visitors directed to our websites is not entirely
within our control. We depend in part on various internet search engines and other channels, including AI-driven chat-based assistants
and generative search experiences, to direct a significant number of users to our website. Search engine companies change their natural
search engine algorithms periodically, and our ranking in natural searches may be adversely affected by those changes, as has occurred
from time to time. Search engine companies may also determine that we are not in compliance with their guidelines and may consequently
penalize us in their algorithms as a result. If search engines change or penalize us with their algorithms, terms of service, display
or featuring of search results, we may be unable to cost-effectively drive users to our platform. Also, an increasing share of users now
begins their queries with large language model (LLM) powered assistants rather than traditional web search engines, which may reduce referrals
to our websites and overall traffic. Generative engines and LLM platforms do not consistently provide links or attribution and may answer
user queries directly, which can diminish our visibility and click-through rates. The emerging practice of generative engine optimization
(GEO) is nascent, costly, and unpredictable, and we may be less effective than competitors at optimizing content for LLM ingestion and
retrieval or at structuring our content to be favored by AI assistants. If providers of LLMs or AI assistants modify their models, ranking
or retrieval methodologies, attribution practices, or commercial terms, or otherwise deprioritize our content, we may lose exposure and
traffic from those channels. We also rely on third-party distribution, data access, and APIs to make our content discoverable in AI ecosystems;
limitations or restrictions could further reduce traffic. Additionally, our competitors’ search engine optimization efforts and
GEO efforts may result in their websites receiving a higher search result page ranking than ours or being favored in AI-generated answers.
This could decrease user engagement on our website and adversely affect the growth in our user base, and our business, prospects, financial
condition and results of operations could be materially and adversely affected.
10
If we fail to maintain and improve the quality of our platform, we may not be able to
attract and retain buyers and freelancers.
The markets in which we operate are characterized by constant change and innovation.
In order to continue and evolve rapidly and in order to satisfy both buyers and freelancers, we need to continue to improve their user
experience as well as innovate and introduce features and services that users find useful and that cause them to use our platform more
frequently. This includes improving our technology to optimize search results, tailoring our database to additional geographic and market
segments and improving the user-friendliness of our platform and our ability to provide high-quality support. Our users depend on our
support organization to resolve issues relating to our platform. Our ability to provide effective support is largely dependent on our
ability to attract and retain employees who are well versed in our platform. As we continue to grow our international user base, our support
organization will face additional challenges, including those associated with continuing to deliver support in languages other than English.
Any failure to maintain high-quality support, or a market perception that we do not maintain high-quality support, could harm our reputation
or adversely affect our ability to market the benefits of our platform to existing and prospective users.
In addition, we need to adapt, expand and improve our platform and user interfaces to
keep up with changing user preferences. We invest substantial resources in researching and developing new features and enhancing our platform
by incorporating these new features, improving functionality and adding other improvements to meet our users’ evolving demands.
The success of any enhancements or improvements to our platform or any new features depends on several factors, including timely completion,
adequate quality testing, integration with technologies on our platform and third-party partners’ technologies and overall market
acceptance. Because further development of our platform is complex, challenging and dependent upon an array of factors, the timetable
for the release of new features and enhancements to our platform is difficult to predict, and we may not offer new features as rapidly
as users of our platform require or expect. For example, with the growing propensity of our users to use mobile devices as their main
devices, we will need to continue modifying and updating our mobile apps to successfully manage the transition of our users to mobile
devices. Additionally, the time, money, energy and other resources we dedicate to developing new features or enhancements to our platform
may be greater than the short-term, and potentially the total, returns from these new offerings.
It is difficult to predict the problems we may encounter in introducing new features
to our platform, and we may need to devote significant resources to the creation, support and maintenance of these features. We provide
no assurances that our initiatives to improve our user experience will be successful. We also cannot predict whether any new features
will be well received by users, or whether improving our platform will be successful or sufficient to offset the costs incurred to offer
these new features. If we are unable to improve or maintain the quality of our platform, our business, prospects, financial condition
and results of operations could be materially and adversely affected.
We or our third-party partners may experience a security breach, including unauthorized
parties obtaining access to our users’ personal or other data, or any other data privacy or data protection compliance issue.
Our business involves the collection, storage, processing and transmission of users’
proprietary, confidential and personal data as well as the use of third-party partners who store, process and transmit users’ proprietary,
confidential and personal data. We also maintain certain other proprietary and confidential data relating to our business and personal
data of our personnel and job applicants. We face evolving cybersecurity risks that threaten the confidentiality, integrity, and availability
of our information technology systems and confidential data, including from diverse threat actors, such as state-sponsored organizations,
opportunistic hackers and hacktivists, as well as through diverse attack vectors, such as social engineering/phishing, malware (including
ransomware), malfeasance by insiders, human or technological error, and as a result of bugs, misconfigurations or exploited vulnerabilities
in software or hardware. Remote and hybrid working arrangements at our Company (and at many third-party providers) also increase cybersecurity
risks due to the challenges associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate
and home networks. Additionally, any integration of AI in our or any third party’s operations, products or services is expected
to pose new or unknown cybersecurity risks and challenges. Any security breach or incident that we experience could result in unauthorized
access to, misuse of, or unauthorized acquisition of our or our users’ data, the loss, corruption, or alteration of this data, interruptions
in our operations, or damage to our computers or systems or those of our users. We have experienced such cybersecurity incidents in the
past and may experience incidents in the future. Furthermore, cyberattacks and security incidents are expected to accelerate in both frequency
and impact as the use of AI increases and attackers become increasingly sophisticated and utilize tools and techniques that are designed
to circumvent controls, avoid detection, and remove or obfuscate forensic evidence.
11
Any such incidents could expose us to claims, litigation (including class actions),
regulatory or other governmental investigations, enforcement actions, administrative fines, significant liability, a diminished ability
to retain or attract new customers, or disruption to our business. An increasing number of online services have disclosed breaches of
their security, some of which have involved sophisticated and highly targeted attacks on portions of their services. Because the techniques
used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and often are not foreseeable or
recognized until launched against a target, we and our third-party partners may be unable to anticipate these techniques or implement
adequate preventative measures. If an actual or perceived breach of our or our third-party partners’ security occurs, public perception
of the effectiveness of our security measures and brand could be harmed, and we could lose users. Any compromise of our or our third-party
partners’ security could result in a violation of applicable security, privacy or data protection, consumer and other laws, regulatory
or other governmental investigations, enforcement actions and legal and financial exposure, including potential contractual liability.
Any such compromise could also result in damage to our brand and a loss of confidence in our security and privacy or data protection measures.
Our and our third-party partners’ systems may be vulnerable to computer viruses
and other malicious software, physical or electronic break-ins, or weakness resulting from intentional or unintentional actions by us,
our third-party partners or our service providers, as well as similar disruptions that could make all or portions of our website or apps
unavailable for periods of time. While we currently employ various antivirus and computer protection software in our operations, we cannot
assure that such protections will in all cases successfully prevent hacking or the transmission of any computer virus or malware, which
could result in significant damage to our hardware and software systems and databases, disruptions to our business activities, including
to our e-mail and other communications systems, breaches of security and the inadvertent disclosure of personal, confidential or sensitive
data, interruptions in access to our website through the use of “denial of service” or similar attacks and other material
adverse effects on our operations.
Further, we may need to expend significant resources to protect against, and to address
issues created by, security breaches and other incidents. Security breaches and other security incidents, including any breaches of our
security measures or those of parties with which we have commercial relationships (e.g., third-party service providers who provide development
or other services to us) that result in the unauthorized access of users’ confidential, proprietary or personal data, or the belief
that any of these have occurred, could damage our reputation and expose us to a risk of loss or litigation and possible liability. Significant
unavailability of our platform due to attacks could cause users to cease using our platform and materially and adversely affect our business,
prospects, financial condition and results of operations. Although we maintain cybersecurity liability insurance, we cannot be certain
that our coverage will be adequate for liabilities actually incurred or will continue to be available to us on reasonable terms, or at
all.
Data security breaches could also expose us to liability under various laws and regulations
across jurisdictions and increase the risk of litigation (including class actions) and governmental or regulatory investigation. Many
jurisdictions have or are considering enacting privacy or data protection laws or regulations relating to the collection, use, storage,
transfer, disclosure and/or other processing of personal data. Such laws and regulations may include data residency or data localization
requirements (which generally require that certain types of data collected within a certain country be stored and processed within that
country), data export restrictions or international transfer laws (which prohibit or impose conditions upon the transfer of such data
from one country to another), requirements that companies implement privacy or data protection and security policies, or requirements
that companies grant individuals certain rights, such as the right to access, correct and delete personal data stored or maintained by
such companies, be informed of security breaches that affect their personal data or provide consent to use their personal data for other
purposes. We may need to notify governmental authorities and affected individuals with respect to data security breaches. For example,
laws in the EU and UK and all 50 U.S. states may require businesses to provide notice to individuals whose personal information has been
disclosed as a result of a data security breach. Complying with such numerous and complex regulations in the event of a data security
breach would be expensive and difficult, and failure to comply with these regulations could subject us to regulatory scrutiny and additional
liability. We may also be contractually required to notify customers or other counterparties of a security incident, including a data
security breach. Regardless of our contractual protections, any actual or perceived data 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. Additionally, while we have implemented various measures intended to
enable us to comply with applicable privacy or data protection laws, regulations and contractual obligations, these measures may not always
be effective and do not guarantee compliance. There can be no assurance that our cybersecurity risk management program and processes,
including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our information technology
systems and confidential data. In addition, privacy or data protection laws and regulations may be modified, interpreted and applied in
an inconsistent manner from one jurisdiction to another, and may conflict with one another, other requirements or legal obligations, or
our practices. Further, the existence and need to comply in certain markets could impact our ability to offer our platform in those markets
(without taking additional compliance steps). Cultural norms around privacy or data protection also vary from country to country and can
drive a need to localize or customize certain features of our platform in order to address varied privacy or data protection concerns,
which can add cost and time to our development of new features and platform enhancements.
12
Changes in laws or regulations relating to data privacy, data protection, or cybersecurity
or any actual or perceived failure by us to comply with such laws and regulations or our privacy policies, could materially and adversely
affect our business.
We receive, collect, store, process, transfer and use personal data and other user data,
including, but not limited to, our customers, users, employees, partners and vendors such as, name and contact details, identification
information, address, payment card information, tax information, details about orders and transactions, and biometric information for
verification. The effectiveness of our technology, including our AI and platforms, and our ability to offer our platform to users rely
on the collection, storage and use of this data concerning freelancers and other users, including personally identifying or other sensitive
data. We have legal and contractual obligations regarding the protection of confidentiality and appropriate use and protection of certain
data, including personal information. We are subject to numerous federal, state, local and international laws, directives and regulations
regarding privacy, data protection and data security and the collection, storing, sharing, use, processing, transfer, disclosure and protection
of personal information and other data, the scope of which are changing, are subject to differing interpretations, and may be inconsistent
among jurisdictions or conflict with other legal and regulatory requirements. We are also subject to the terms of our privacy policies
and certain contractual obligations to third parties related to privacy, data protection and data security. We are committed to complying
with our policies and applicable laws, regulations, contractual obligations and other legal obligations relating to privacy, data protection
and data security to the extent possible. However, the regulatory framework for privacy, data protection and data security worldwide is
changing constantly and is likely to remain uncertain and complex for the foreseeable future, and therefore it is possible that these
or other actual or alleged obligations may be interpreted and applied in a manner that we do not anticipate or that is inconsistent from
one jurisdiction to another, including across the various jurisdictions in which we operate remotely, and may conflict with other legal
obligations or our practices.
For example, in the European Economic Area, or the EEA, and the UK, we are subject to
the EU General Data Protection Regulation, or EU GDPR, and to the United Kingdom General Data Protection Regulation and Data Protection
Act 2018, together the UK GDPR (the EU GDPR and UK GDPR together referred to as the “GDPR”). The GDPR imposes stringent data
protection compliance requirements and provides for significant penalties for noncompliance in the EEA and UK. The GDPR creates compliance
obligations applicable to our business and users, which could cause us to change our business practices, and increases penalties for noncompliance.
Since we are subject to the supervision of relevant data protection authorities under both the EU GDPR and the UK GDPR, we could be fined
under each of those regimes independently in respect of the same breach (including possible fines of up to the greater of €20 million
/ £17.5 million and 4% of our global annual turnover for the preceding financial year for the most serious violations, as well as
the right to compensation for financial or non-financial damages claimed by any individuals under Article 82 of the GDPR and requirements
to change our processing operations). In addition to fines, a breach of the GDPR may result in regulatory investigations, reputational
damage, orders to cease/change our data processing activities, enforcement actions, assessment notices (for a compulsory audit) and/or
civil claims (including class actions). We have implemented measures designed to comply in all material respects with the GDPR, and we
continue to monitor and enhance our compliance program as regulatory guidance and expectations evolve, but this is an ongoing compliance
process. We are also subject to evolving EU and United Kingdom (UK) privacy laws on cookies, tracking technologies and e-marketing. Recent
European court and regulator decisions are driving increased attention to cookies and tracking technologies. If the trend of increasing
enforcement by regulators of the strict approach to opt-in consent for all but essential use cases, as seen in recent guidance and decisions
continues, this could lead to substantial costs, require significant systems changes, limit the effectiveness of our marketing activities,
divert the attention of our technology personnel, adversely affect our margins, and subject us to additional liabilities. In light of
the complex and evolving nature of EU, EU Member State and UK privacy laws on cookies and tracking technologies, there can be no assurances
that we will be successful in our efforts to comply with such laws; violations of such laws could result in regulatory investigations,
fines, orders to cease/change our use of such technologies, as well as civil claims including class actions, and reputational damage.
13
Additionally, a number of U.S states have adopted privacy and security laws. These laws
create a patchwork of legislation and regulation that impose heightened transparency obligations about data collection, use, and sharing
practices, add restrictions on the “sale” or transfer of personal information to third parties for purposes such as advertising
or analytics, create new data privacy rights for consumers including the ability to limit the use of personal information for advertising,
and carry significant enforcement penalties for non-compliance, including monetary and injunctive relief. This patchwork may also give
rise to conflicts or differing views of personal privacy rights. For example, certain state laws may be more stringent or broader in scope,
or offer greater individual rights, with respect to personal data than federal, international or other state laws, and such laws may differ
from each other, all of which may complicate compliance efforts. In particular, we are subject to U.S. data privacy laws that regulate
the processing of biometric information. There has been an increase in class actions filed under laws such as the Illinois Biometric Information
Privacy Act (“BIPA”). BIPA and similar biometric privacy laws may provide for a private right of action and statutory damages
on a per-violation basis and often impose stringent requirements. If one or more of our products, technologies, team members, third-party
service providers, or customers or users were alleged or determined to have violated any biometric privacy law, we could be subject to
enforcement actions, litigation, fines, penalties, adverse publicity, and loss of customers or users
Moreover, U.S. and other state laws, as well as other legal and regulatory developments
across jurisdictions are making it easier for individuals protected by those laws to opt-out of having their personal data processed and
disclosed to third parties through various opt-out mechanisms, and more generally, provide them more control of their data, which could
result in an increase to our operational costs to ensure compliance with such legal and regulatory changes. In recent years, there has
also been an increase in attention to and regulation of data protection and data privacy across the globe, including in the United States
with the increasingly active approach of the Federal Trade Commission, or the FTC, to enforcing data privacy under the FTC Act Section
5 of the Unfair and Deceptive Acts framework.
In addition, failure to comply with the Israeli Privacy Protection Law, 1981, or the
Israeli Privacy Law, and its regulations as well as the guidelines of the Israeli Privacy Protection Authority, may expose us to enforcement
actions, civil claims (including class actions), fines and penalties. Amendment 13 of the Israeli Privacy Law, which entered into effect
in August 2025, increases monetary sanctions significantly, that in certain cases may reach millions of NIS, for breaching the Israeli
Privacy Law and expands the Israeli Privacy Protection Authority investigation and enforcement authority.
Further, failure or perceived failure by us to comply with our posted privacy policies,
our privacy-related obligations to users or other third parties, or any other legal obligations or regulatory requirements relating to
privacy, data protection or information security may result in governmental investigations or enforcement actions, litigation, claims
or public statements against us by consumer advocacy groups or others and could result in significant liability, cause our users to lose
trust in us, and otherwise materially and adversely affect our reputation and business. Furthermore, the costs of compliance with, and
other burdens imposed by, the laws, regulations and policies that are applicable to the businesses of our users may limit the adoption
and use of, and reduce the overall demand for, our platform. Additionally, if third parties we work with violate applicable laws, regulations
or agreements, such violations may put our users’ data at risk, could result in governmental investigations or enforcement actions,
fines, litigation, claims, or public statements against us by consumer advocacy groups or others and could result in significant liability,
cause our users to lose trust in us and otherwise materially and adversely affect our reputation and business. Further, public scrutiny
of, or complaints about, technology companies or their data handling or data protection practices, even if unrelated to our business,
industry or operations, may lead to increased scrutiny of technology companies, including us, and may cause government agencies to enact
additional regulatory requirements, or to modify their enforcement or investigation activities, which may increase our costs and risks.
Additionally, certain actions of our users that are deemed to be a misuse or unauthorized
disclosure of another user’s personal data could negatively affect our reputation and brand and impose liability on us. While we
have adopted policies regarding the misuse or unauthorized disclosure of personal data obtained through our services by our users and
retain authority to put a hold on or permanently disable user accounts, users could nonetheless misuse or disclose another user’s
personal data. The safeguards we have in place may not be sufficient to avoid liability on our part or avoid harm to our reputation and
brand, especially if such misuse or unauthorized disclosure of personal data was high profile, which could adversely affect our ability
to expand our user base, and our business and financial results.
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If we were found in violation of any applicable privacy or data protection laws or regulations,
our business may be materially and adversely affected and we would likely have to change our personal data processing activities, internal
procedures or even our business practices and potentially the services and features available through our platform. In addition, these
laws and regulations could impose significant costs on us and could make it more difficult for us to use our current technology to promote
certain Gigs and connect freelancers with buyers. In addition, if a breach of data security were to occur, or other violation of privacy
or data protection laws and regulations were to be alleged, solutions may be perceived as less desirable and our business, prospects,
financial condition and results of operations could be materially and adversely affected. Finally, any court ruling or other governmental
action that imposes liability on providers of online services for the activities of their users and other third parties could harm our
business. In such circumstances, we may also be subject to liability under applicable law in a way which may not be fully mitigated by
the user terms of service we require our users to agree to. Any liability attributed to us could adversely affect our brand, reputation,
our ability to expand our user base and our financial position.
Currency exchange rate fluctuations affect
our results of operations, as reported in our financial statements.
We report our financial results in U.S. dollars. We collect our revenue primarily in
U.S. dollars. A portion of the cost of revenue, research and development, sales and marketing and general and administrative expenses
of our Israeli operations are incurred in NIS. As a result, we are exposed to exchange rate risks that may materially and adversely affect
our financial results. If the NIS appreciates against the U.S. dollar or if the value of the NIS declines against the U.S. dollar at a
time when the rate of inflation in the cost of Israeli goods and services exceeds the rate of decline in the relative value of the NIS,
then the U.S. dollar cost of our operations in Israel would increase and our results of operations could be materially and adversely affected.
Although we enter into hedging transactions from time to time, our Israeli operations also could be materially and adversely affected
if we are unable to effectively hedge against currency fluctuations in the future. We cannot predict any future trends in the rate of
inflation in Israel or the rate of appreciation (if any) of the NIS against the U.S. dollar. The Israeli annual rate of inflation amounted
to 2.6%, 3.2% and 3.0% for the years ended December 31, 2025, 2024 and 2023, respectively. During the year ended December 31, 2025, the
NIS appreciated in relation to the U.S. dollar by 12.5%, while during the years ended December 31, 2024, and 2023, the NIS depreciated
in relation to the U.S. dollar by 0.6% and 3.1%, respectively.
Evolving privacy laws and regulations related to cross-border data transfer restrictions
and data localization requirements may limit the use and adoption of our services, expose us to liability or otherwise adversely affect
our business.
Certain data privacy legislation restricts the cross-border transfer of personal data,
and some countries introduced data localization into their laws. Specifically, the GDPR and other European and UK data protection laws
generally prohibit the transfer of personal data from Europe, including the EEA, UK and Switzerland, to third party countries, unless
the transfer is to a country deemed to provide adequate protection (such as Israel, which was affirmed by the UK in December, 2020, and
re-affirmed by the EU Commission on January 15, 2024, confirming the adequacy of the level of protection of personal data in Israel as
an “adequate” country) or the parties to the transfer have implemented specific safeguards to protect the transferred personal
data. Where we transfer personal data outside the EEA to a country that is not deemed to be “adequate,” we rely on transfer
mechanisms available under applicable privacy law.
In addition, recent legal developments and regulatory guidance have created complexity
and uncertainty regarding such transfers of personal data, particularly to the United States. These developments may require us to review
and amend the legal mechanisms by which we make and/or receive personal data transfers to/in the U.S. and create uncertainty and increase
the risk around our international data transfers and operations. As enforcement supervisory authorities issue further guidance on personal
data export mechanisms, including circumstances where certain data transfer mechanisms cannot be used, and/or start taking enforcement
action, we could suffer additional costs, complaints and/or regulatory investigations or fines. If we are otherwise unable to transfer
personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services,
the geographical location or segregation of our relevant systems and operations and could adversely affect our financial results.
Our business may suffer if we do not successfully manage our current and potential future
growth.
We have grown significantly in scale since inception, and we intend to continue to expand
the scope and geographic reach of our platform. Potential future growth will likely place significant demands on our management and operations.
Our success in managing our growth will depend, to a significant degree, on the ability of our executive officers and other members of
senior management to operate effectively, and on our ability to improve and develop our financial and management information systems,
controls and procedures. In addition, we will likely have to successfully adapt our existing systems and introduce new systems, expand,
train and manage our employees and improve and expand our marketing capabilities.
If we are unable to properly and prudently manage our operations as they grow or if
the quality of our platform or support deteriorates due to mismanagement, our brand name and reputation could be severely harmed, and
our business, prospects, financial condition and results of operations could be materially and adversely affected.
Our user growth and engagement on mobile devices are dependent on decisions and developments
in the mobile device industry over which the Company has no control.
A growing portion of our users access our platform through mobile devices. The Company’s
ability to maintain and grow its business will be impaired if mobile connected devices, mobile operating systems, networks, standards
and content distribution channels, which run by operating system providers and app stores, develop in ways that prevent the Company’s
products and services from being delivered to their users.
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Parties that control operating systems, such as Apple or Google frequently introduce
new technology, and from time to time, they may introduce new operating systems or modify existing ones. Further, the Company and its
customers are also subject to the policies, practices, guidelines, certifications and terms of service of such parties’ platforms
on which we and our customers create, run and monetize applications and content. These policies, guidelines and terms of service govern
the promotion, distribution, content and operation generally of applications and content available through such parties. The parties that
control the operating systems have broad discretion to change and interpret their terms of service, guidelines and policies, and those
changes may have an adverse effect on us or our customers’ ability to use our services. A party that controls the operating system
may also change its fee structure, add fees associated with access to and use of its platform or app store, alter how customers are able
to advertise and monetize on their platform, change how the personal or other information of its users is made available to application
developers on their platform, limit the use of personal information and other data for advertising purposes or restrict how users can
share information on their platform or across other platforms. If any parties that control operating systems, including either Android
or iOS, stop providing us with access to their platform or infrastructure, fail to provide reliable access, cease operations, modify or
introduce new systems or otherwise terminate services, the delay caused by qualifying and switching to other operating systems could be
time consuming and costly and could materially and adversely affect our business, financial condition and results of operations. Any limitation
on or discontinuation of us or our customers’ access to any mobile operating system platform or app store could materially and adversely
affect our business, financial condition, results of operations or otherwise require us to change the way we conduct business.
Network carriers, such as Verizon, AT&T, Sprint, as well as other domestic and global
operators, may also affect the ability of users to download apps or access specified content on mobile devices.
Additionally, there is no guarantee that popular mobile devices will continue to support
our platform or that mobile device users will use our platform rather than competing products. In order to deliver a high-quality mobile
user experience, it is important that our platform is designed effectively and works well with a range of mobile technologies, systems,
networks and standards that we do not control. We may not be successful in developing relationships with key participants in the mobile
industry or in developing features that operate effectively with these technologies, systems, networks or standards. In the event that
it is more difficult for our users to access and use our platform on their mobile devices, our users find our mobile offering does not
effectively meet their needs, our competitors develop products and services that are perceived to operate more effectively on mobile devices,
our users choose not to access or use our platform on their mobile devices or our users use mobile products that do not offer access to
our platform, our user growth and user engagement could be adversely impacted.
Changes to our pricing model, including our marketplace take rate and fees for other
services, could reduce marketplace activity, harm our brand, and materially adversely affect our business, financial condition and results
of operations.
We currently primarily derive our revenue from marketplace commission and other services.
If we are unable to maintain a large community of users or we are unable to respond successfully to technological or industry developments,
or if for any other reason the perceived value of our platform to freelancers or buyers is adversely affected, we may be forced to lower
our marketplace take rate. Our marketplace take rate may also fluctuate from period to period.
In recent years, we implemented changes to our pricing model, including our marketplace
take rate. As a result, we have only limited experience with our current pricing model, which makes it difficult to evaluate our business
and future prospects and to plan for and model future growth. Our historical revenue growth should not be considered indicative of our
future performance. We have encountered, and will continue to encounter, risks and difficulties frequently experienced by growing companies
in rapidly changing industries, including difficulties in our ability to achieve market acceptance of our platform and attract and retain
users, as well as increasing competition and increasing expenses as we continue to grow our business. As a result, we may from time to
time decide to make further changes to our pricing model due to a variety of factors, including changes in the market for our platform
and competitors introducing new products and services. We may not be successful in addressing these and other challenges we may face in
the future and changes to our pricing model may, among other things, result in user dissatisfaction and could lead to a loss of users
on our platform.
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Errors, defects or disruptions in our platform could diminish our brand, subject us
to liability, and materially and adversely affect our business, prospects, financial condition and results of operations.
Any errors, defects, or disruptions in our platform, or other performance problems with
our platform could harm our brand and may damage the businesses of our users. Our online systems, including our website and mobile apps,
could contain undetected errors, or “bugs,” that could adversely affect their performance. Additionally, we regularly update
and enhance our website, platform and our other online systems and introduce new versions of our software products and apps. These updates
may contain undetected errors when first introduced or released, which may cause disruptions in our services and may, as a result, cause
us to lose market share, and our brand, business, prospects, financial condition and results of operations could be materially and adversely
affected.
In addition, we use both internally and third-party developed AI, generative, machine
learning, and automated decision-making technologies, including proprietary AI and machine learning algorithms and models, throughout
our business, and are constantly working on expanding our AI capabilities, internally and through collaborations with vendors, including
through improvements to our existing AI technologies, as well as through development of new products and features. For example, we use
AI technologies as part of our product offering, and to improve our internal workflows and development velocity. We also are developing
and deploying agentic AI systems that operate with greater autonomy, which presents additional risks, including unintended or unauthorized
actions and increased difficulty predicting, supervising, and controlling agentic behavior. If we are unable to put mechanisms in place
to prevent inaccurate or misleading content or other discriminatory or unexpected results or behaviors from our AI technologies our brand,
business, prospects, financial condition and results of operations could be materially and adversely affected.
Our platform contains open-source software components, and failure to comply with the
terms of the underlying licenses could restrict our ability to market or operate our platform.
We use open-source software in connection with our technology and services. Some open-source
software licenses require those who distribute open-source software as part of their software to publicly disclose all or part of the
source code (including proprietary code) to such software and/or make available any derivative works of the open-source code on unfavorable
terms or at no cost. The use of such open-source code may ultimately require us to replace certain code used on our platform or discontinue
certain aspects of our platform. From time to time, we may face claims from third parties claiming infringement of their intellectual
property rights or demanding the release or license of the open-source software or derivative works that we developed using such software
(which could include our proprietary source code) or otherwise seeking to enforce the terms of the applicable open-source license. These
claims could result in litigation and could require us to pay substantial damages, publicly release the affected portions of our source
code, be limited in or cease using the implicated software unless and until we can re-engineer such software to avoid infringement or
change the use of, or remove, the implicated open-source software.
In addition to risks related to license requirements, use of certain open-source software
can lead to greater risks than use of third-party commercial software, as the original developers of open-source code generally do not
provide warranties (with respect to, for example, non-infringement or functionality) or indemnities or other contractual protections.
Our use of open-source software may also present additional security risks because the source code for open source software is publicly
available, which may make it easier for hackers and other third parties to determine how to breach our website and systems that rely on
open source software. Any of these risks could be difficult to eliminate or manage.
Expansion into markets outside the United States is important to the growth of our business,
and if we do not manage the business and economic risks of international expansion effectively, it could materially and adversely affect
our business and results of operations.
We may continue to expand our international operations, which may include opening offices
in new jurisdictions and providing our platform in additional languages. Any new markets or countries into which we attempt to advertise
our platform may not be receptive. For example, we may not be able to expand further in some markets if we are not able to satisfy certain
government requirements. In addition, our ability to manage our business and conduct our operations internationally requires considerable
management attention and resources and is subject to the particular challenges of supporting a rapidly growing business in an environment
of multiple languages, cultures, customs, legal and regulatory systems, alternative dispute systems and commercial markets. International
expansion has required, and will continue to require, investment of significant funds and other resources. Operating internationally subjects
us to new risks and may increase risks that we currently face, including risks associated with:
● recruiting and retaining talented and capable employees and contractors outside of Israel and the United States, and maintaining our Company culture across all of our offices;
● recruiting and retaining contractors in Ukraine, which is currently affected by the war with Russia;
● providing our platform and operating our business across a significant distance, in different languages and among different cultures, including the potential need to modify our platform and features to ensure that they are culturally appropriate and relevant in different countries;
● compliance with applicable international laws and regulations, including laws and regulations with respect to privacy, data protection, consumer protection and unsolicited email, and the risk of penalties to our users and individual members of management or employees if our practices are deemed to be out of compliance;
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● operating in jurisdictions that do not protect intellectual property rights to the same extent as does the United States;
● compliance by us and our business partners with anti-corruption laws, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory limitations on our ability to provide our platform in certain international markets;
● political and economic instability;
● fluctuations in currency exchange rates;
● double taxation of our international earnings and potentially adverse tax consequences due to changes in the income and other tax laws of Israel, the United States or the international jurisdictions in which we operate; and
● higher costs of doing business internationally, including increased accounting, travel, infrastructure and legal compliance costs.
Compliance with laws and regulations applicable to our global operations could substantially
increase our cost of doing business in international jurisdictions. We may be unable to keep current with changes in laws and regulations
as they change. Although we are in the process of implementing policies and procedures designed to support compliance with these laws
and regulations, there can be no assurance that we will always be in compliance or that all of our employees, contractors, partners and
agents will comply at all times. Any violations could result in enforcement actions, fines, civil and criminal penalties, damages, injunctions,
or reputational harm. If we are unable to comply with these laws and regulations or manage the complexity of our global operations successfully,
our business, results of operations and financial condition could be materially and adversely affected.
If we are unable to maintain and expand our scale of operations and generate a sufficient
amount of revenue to offset the associated fixed and variable costs, our results of operations may be materially and adversely affected.
Online businesses like ours tend to involve certain fixed costs, and our ability to
achieve desired operating margins depends largely on our success in maintaining a scale of operations and generating a sufficient amount
of revenue to offset these fixed costs and other variable costs. Our fixed costs typically include compensation of employees, data storage
and related expenses and office rental expenses. Our variable costs typically include sales and marketing expenses and payment processing
fees. As we have established the technology and network infrastructure to support our platform, the incremental cost associated with sellers
adding new services is relatively insignificant. However, if we are unable to maintain economies of scale our operating margin may decrease
and our business, prospects, financial condition and results of operations could be materially and adversely affected.
Our operating results may fluctuate from quarter to quarter, which makes our future
results difficult to predict.
Our quarterly operating results have fluctuated in the past and may fluctuate in the
future. You should take into account the risks and uncertainties frequently encountered by companies in rapidly evolving markets. Our
operating results in any given quarter can be influenced by numerous factors, many of which are unpredictable or are outside of our control,
including:
● our ability to maintain and grow our community of users;
● the demand for and types of skills and services that are offered on our platform by freelancers;
● spending patterns of buyers, including whether those buyers who use our platform frequently, or for larger services, reduce their spend or stop using our platform;
● seasonal spending patterns by buyers or work patterns by freelancers and seasonality in the labor market;
● fluctuations in the prices that freelancers charge buyers on our platform;
● changes to our pricing model;
● our ability to introduce new features and services and enhance our existing platform and our ability to generate significant revenue from new features and services;
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● our ability to respond to competitive developments, including pricing changes and the introduction of new products and services by our competitors;
● the impact of outages of our platform and associated reputational harm;
● changes to financial accounting standards and the interpretation of those standards that may affect the way we recognize and report our financial results;
● increases in, and timing of, operating expenses that we may incur to grow and expand our business and to remain competitive;
● costs related to the acquisition of businesses, talent, technologies, or intellectual property, including potentially significant amortization costs and possible impairments;
● security or data privacy breaches and associated remediation costs;
● litigation, adverse judgments, settlements, or other litigation-related costs;
● changes in the common law, statutory, legislative, or regulatory environment, such as with respect to privacy and data protection, wage and hour regulations, worker classification (including classification of independent contractors or similar service providers and classification of employees as exempt or non-exempt), internet regulation, payment processing, global trade, or tax requirements;
● fluctuations in currency exchange rates, inflation and interest rates;
● general economic and political conditions and government regulations in the countries where we currently have significant numbers of users, or where we currently operate or may expand in the future;
● catastrophic or geopolitical events in countries where we currently have significant numbers of users, or where we currently operate, which could lead to power and Internet shortages, that could prevent users from the ability to use our platform;
● geopolitical risks, including armed conflicts, regional instability and international tensions; and
● pandemics, epidemics or global health emergencies.
The impact of one or more of the foregoing and other factors may cause our operating
results to vary significantly. As such, we believe that quarter-to-quarter comparisons of our operating results may not be meaningful
and should not be relied upon as an indication of future performance. If we fail to meet or exceed the expectations of investors or securities
analysts, the trading price of our ordinary shares could fall substantially, and we could face costly lawsuits, including securities class
action suits.
Our business is subject to a variety of laws and regulations, both in the United States
and internationally, many of which are evolving.
We are subject to a wide variety of laws and regulations. Laws, regulations and standards
governing issues such as worker classification, employment, payments, worker confidentiality obligations, intellectual property, consumer
protection, ESG issues, taxation, privacy, data security, and user safety are often complex and subject to varying interpretations, in
many cases due to their lack of specificity and, as a result, their application in practice may change or develop over time through judicial
decisions or as new guidance or interpretations are provided by regulatory and governing bodies, such as federal and state administrative
agencies. Many of these laws and regulations were adopted prior to the advent of the internet and mobile and related technologies and,
as a result, do not contemplate or address the unique issues of the internet and related technologies. Other laws and regulations may
be adopted in response to internet, mobile and related technologies. New and existing laws and regulations (or changes in interpretation
of existing laws and regulations) may also be adopted, implemented, or interpreted to apply to us and other online services marketplaces.
As our platform’s geographical scope expands, regulatory agencies or courts may claim that we, or our users, are subject to additional
requirements or that we are prohibited from conducting our business in or with certain jurisdictions. It is also possible that certain
provisions in agreements with our service providers or between buyers and freelancers may be found to be unenforceable or not compliant
with applicable law.
The adoption or modification of laws or regulations relating to the internet or other
areas of our business could limit or otherwise adversely affect the manner in which we currently conduct our business. On November 16,
2022, the Digital Services Act, or the DSA, came into force in the EU. The majority of the substantive provisions of the DSA have taken
effect on February 17, 2024, and govern, among other things, our potential liability for illegal services or content on our platform,
obligations around traceability of business users, and require enhanced transparency measures, including in relation to any recommendation
systems (including the main parameters used by such systems and any available options for recipients to modify or influence them). In
particular, if we present information about services in a way that would lead an average consumer to understand the service is provided
by us directly, rather than by a third-party merchant, we may be liable directly under consumer protection law. Further, the DSA contains
general requirements that user interfaces may not deceive or manipulate users which are yet to be clarified further by guidance. The DSA
may increase our compliance costs, require changes to our user interfaces, processes, operations, and business practices which may adversely
affect our ability to attract, retain and provide our services to users, and may otherwise adversely affect our business, operations and
financial condition. In particular our obligations to diligence the services offered on our platform could require significant additional
resources. Failure to comply with the DSA can result in fines of up to 6% of total annual worldwide turnover and recipients of services
have the right to seek compensation from providers in respect of damage or loss suffered due to infringement by the platform to comply
with the DSA. Similarly, in the UK, the Online Safety Act 2023, or the OSA, establishes an extensive regulatory framework for user-to-user
services and imposes obligations to protect users from illegal content which, if applicable, may increase compliance costs and may otherwise
adversely affect our business, operations and financial condition. Failure to comply with the OSA can result in fines of up to 10% of
total annual worldwide turnover or £18 million (whichever is greater).
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The Network and Information Systems Directive II, or NIS2, came into force in January
2023, and building on the original Network and Information Systems Directive, or NIS1, aims to improve the cyber security and resilience
capability of organizations that contribute towards critical national infrastructure by imposing obligations including cybersecurity risk
management, incident reporting, management responsibilities and registration requirements on in-scope entities. EU Member States were
required to adopt NIS2 into national law by October 17, 2024. Once fully in force, national laws implementing NIS2 may require us to modify
our cybersecurity practices and policies, and we could incur substantial costs as a result.
Recent financial, political and other events may increase the level of regulatory scrutiny
on larger companies, technology companies in general and, in particular, companies engaged in dealings with independent contractors or
payments. Regulatory agencies may enact new laws or promulgate new regulations that are adverse to our business, or they may view matters
or interpret laws and regulations differently than they have in the past or in a manner adverse to our business. Such regulatory scrutiny
or action may create different or conflicting obligations on us from one jurisdiction to another. In particular, we have received letters
from certain jurisdictions indicating that we may be required to register and pay taxes based on having certain minimum contacts in such
jurisdictions. We may become subject to taxation in additional jurisdictions in the future.
Any actual or perceived failure to comply with evolving regulatory frameworks around
the development and use of AI could adversely affect our business, results of operations, and financial condition.
We leverage new technologies and platforms to improve business effectiveness, including
use of AI technologies. The AI regulatory landscape is rapidly evolving, and we are or may become subject to numerous state, federal and
foreign laws, requirements and regulations governing the use of AI. Implementation standards and enforcement practices are likely to remain
uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or perception of their
requirements may have on our business.
In the United States and internationally, AI is the subject of evolving review by various
governmental and regulatory agencies, and changes in laws, rules, directives and regulations governing the use of AI may adversely affect
the ability of our business to use or rely on AI. For example, California and other states have implemented, or are in the process of
implementing, laws, rules, and regulations that impose obligations on the use of automated decision making.
In Europe, on August 1, 2024, the EU Artificial Intelligence Act, or the EU AI Act,
entered into force and established a comprehensive, risk-based governance framework for AI in the EU market. The majority of the substantive
requirements under the EU AI Act will apply from August 2, 2026. The EU AI Act applies to companies that develop, use and/or provide AI
in the EU and – depending on the AI use case – includes requirements around transparency, conformity assessments and monitoring,
risk assessments, human oversight, security, accuracy, general purpose AI and foundation models, and proposes fines for breach of up to
35 million EUR, or up to 7% of worldwide annual turnover (whichever is higher). In addition, the revised EU Product Liability Directive
came into force in December 2024, to be implemented into EU Member State national law by December 2026. This Directive extends the EU’s
existing strict product liability regime to AI technologies and AI-enabled products and facilitates civil claims in respect of harm caused
by AI. Once fully applicable, the EU AI Act and the EU Product Liability Directive will have a material impact on the way AI is regulated
in the EU, and together with developing guidance and/or decisions in this area, likely to affect our use of AI and our ability to provide
and to improve our services, require additional compliance measures and changes to our operations and processes, result in increased compliance
costs and potential increases in civil claims against us, and could adversely affect our business, operations and financial condition.
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Additionally, the cost to comply with such laws, regulations, or decisions and/or guidance
interpreting existing laws, could be significant and would increase our operating expenses (such as by imposing additional reporting obligations
regarding our use of AI technologies). We may need to expend resources to adjust our products or services in certain jurisdictions if
the laws, regulations, or decisions are not consistent across jurisdictions.
Competition for highly skilled technical and other personnel is intense, and as a result
we may fail to attract, recruit, retain and develop qualified employees, which could materially and adversely impact our business, financial
condition and results of operations.
We compete in a market marked by rapidly changing technologies and an evolving competitive
landscape. In order for us to successfully compete and grow, we must attract, recruit, retain and develop personnel with requisite qualifications
to provide expertise across the entire spectrum of our intellectual capital and business needs.
Our principal research and development as well as significant elements of our marketing
and general and administrative activities are conducted at our headquarters in Israel, where we face significant competition. We also
engage a talented team in the United States and Ukraine to benefit from the significant pool of talent that is available in such markets,
where we have also witnessed increased competition in those markets. Many of the companies with which we compete for qualified personnel
have significant resources, and we may not succeed in recruiting additional experienced or professional personnel, retaining personnel
or effectively replacing current personnel who may depart with qualified or effective successors. In addition, our employees may be increasingly
targeted for recruitment by competitors and other companies in the technology industry, which may make it more difficult for us to retain
employees and may increase retention costs. Training of new employees with no prior relevant experience could be time-consuming and require
a significant amount of resources.
In addition, as a result of the intense competition for qualified human resources, the
high-tech market has also experienced and may continue to experience significant wage inflation. Accordingly, our efforts to attract,
retain and develop personnel may also result in significant additional expenses, which could adversely affect our profitability. Furthermore,
in making employment decisions, particularly in the high-technology industry, job candidates often consider the value of the equity they
are to receive in connection with their employment. Employees may be more likely to leave us if the shares they own or the shares underlying
their equity incentive awards have significantly decreased in value.
Moreover, we believe our success has depended, and our future success depends, on the
efforts of our senior management, including Micha Kaufman, our Founder and Chief Executive Officer. There can be no assurance that the
services of any of these individuals will continue to be available to us in the future. We do not carry any key man life insurance policies
on any of our executive officers.
While we utilize non-competition agreements with our employees as a means of improving
our employee retention, those agreements may not be effective towards that goal. These agreements prohibit our employees, if they cease
working for us, from competing directly with us or working for our competitors for a limited period. We may be unable to enforce these
agreements under Israeli law, and it may be difficult for us to restrict our competitors from benefiting from the expertise our former
employees developed while working for us.
In light of the foregoing, there can be no assurance that qualified employees will remain
in our employ or that we will be able to attract and retain qualified personnel in the future. Failure to retain or attract qualified
personnel could have a material adverse effect on our business, financial condition and results of operations.
Our 2025 reduction in workforce may lead to workforce attrition and operational disruptions.
In 2025, we reduced our workforce by approximately 30%. This reduction in workforce
may yield unintended consequences and costs, such as the loss of institutional knowledge and expertise, employee attrition beyond our
intended reductions in force, a reduction in morale among our remaining employees, greater-than-anticipated costs incurred in connection
with the reduction in workforce and the risk that we may not achieve the benefits from the restructuring to the extent or as quickly as
we anticipate, all of which may have a material adverse effect on our results of operations or financial condition. Additionally, this
reduction in workforce may hurt our employer brand and make it more difficult to hire employees in the future.
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If we fail to protect our intellectual property rights, our business, prospects, financial
condition and results of operations could be materially and adversely affected.
We rely on a combination of confidentiality clauses, contractual commitments, trade
secret protection, copyrights, trademarks and other legal rights to protect our intellectual property and know-how. To date, we have not
sought patent protection for our platform or any portion of it. Third parties may obtain, copy, reverse engineer or use without our authorization
our intellectual property, which includes trademarks related to our brand, platform, registered domain names, trade secrets and other
intellectual property rights and licenses. If we cannot adequately protect and defend our intellectual property, we may not remain competitive,
and our business, operating results and financial condition may be adversely affected.
We enter into confidentiality and proprietary rights agreements with our employees,
consultants and business partners, and we control access to and distribution of our proprietary information. No assurance can be given
that these agreements will be effective in controlling access to our proprietary information or in effectively securing ownership of intellectual
property developed by our current or former employees and contractors. Further, our competitors could also independently develop technologies
like ours, and our intellectual property rights may not be broad enough for us to prevent competitors from selling products and services
incorporating those technologies.
In order to protect our brand, we register and defend our trademarks and expend resources
to prevent others from using the same or substantially similar marks. Despite these efforts, we may not always be successful in registering
and preventing misappropriation of our own marks or preventing registration of confusingly similar marks, and we may suffer dilution of
or other harm to our brand.
From time to time, we may discover that third parties are infringing, misappropriating
or otherwise violating our intellectual property rights. However, policing unauthorized use of our intellectual property and misappropriation
of our technology is difficult, and we may therefore not always be aware of such unauthorized use or misappropriation. Despite our efforts
to protect our intellectual property rights, unauthorized third parties may attempt to use, copy or otherwise obtain and market or distribute
our intellectual property rights or technology or otherwise develop solutions with the same or similar functionality as our platform.
If competitors infringe, misappropriate or otherwise misuse our intellectual property rights and we are not adequately protected, or if
such competitors are able to develop solutions with the same or similar functionality as our platform without infringing our intellectual
property, our competitive position could be harmed and our legal costs could increase, and our business, prospects, financial condition
and results of operations could be materially and adversely affected.
We may not be able to successfully halt the operations of copycat websites or misappropriation
of our data.
From time to time, third parties may misappropriate our data, through website scraping,
robots, web crawlers or other tools or means and aggregate this data on their websites with data from other companies. In addition, “copycat”
websites may attempt to imitate the functionality of our website.
If we become aware of such activities, we would employ technological and/or legal measures,
including initiating lawsuits, in an attempt to halt their operations. However, we may not be able to detect all such activities in a
timely manner and, even if we could, technological and legal measures may be insufficient. Regardless of whether we can successfully enforce
our rights against these websites or third parties, any measures that we may take could require us to expend significant financial or
other resources.
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 for us. Under the Israeli Patent Law, 5727-1967, or the Patent Law, inventions conceived by an employee
in the course and as a result of or arising from his or her employment with a company are regarded as “service inventions,”
which belong to the employer, absent a specific agreement between the employee and employer giving the employee service invention rights.
The Patent Law also provides that if there is no such agreement between an employer and an employee, the Israeli Compensation and Royalties
Committee, or the Committee, a body constituted under the Patent Law, shall determine whether the employee is entitled to remuneration
for his or her inventions. Case law clarifies that the right to receive consideration for “service inventions” can be waived
by the employee and that in certain circumstances, such waiver does not necessarily have to be explicit. The Committee will examine, on
a case-by-case basis, the general contractual framework between the parties, using interpretation rules of the general Israeli contract
laws. Further, the Committee has not yet determined one specific formula for calculating this remuneration, but rather uses the criteria
specified in the Patent Law. Although we generally enter into assignment-of-invention agreements with our employees pursuant to which
such individuals assign to us all rights to any inventions created in the scope of their employment or engagement with us, we may face
claims demanding remuneration in consideration for 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, or be forced to litigate such claims, which could negatively affect
our business.
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We may be vulnerable to intellectual property infringement claims brought against us
by others.
We may be subject to legal proceedings and claims from time to time relating to the
intellectual property of others in the ordinary course of our business. We rely to some extent on third-party intellectual property, such
as licenses to use software to operate our business and certain other copyrighted works. A successful infringement claim against us could
result in monetary liability or a material disruption in our business. Although we require our employees not to infringe others’
intellectual property, we cannot be certain that our platform and brand names do not or will not infringe on valid patents, trademarks,
copyrights or other intellectual property rights held by third parties. Additionally, third parties may assert that we are directly or
secondarily liable because a user of ours offered or sold products or services, or engaged in other conduct that infringes, misappropriates,
or otherwise violates their intellectual property or other proprietary rights.
We may incur substantial expenses in defending against third party infringement claims,
regardless of their merit. Additionally, due to diversion of management time, expenses required to defend against any claim and the potential
liability associated with any lawsuit, any significant litigation could significantly harm our business, financial condition and results
of operations. If we were found to have infringed on the intellectual property rights of a third party, we could be liable to that party
for license fees, royalty payments, lost profits or other damages, and the owner of the intellectual property may be able to obtain injunctive
relief to prevent us from using the technology, software or brand name in the future. If the amount of these payments were significant,
if we were prevented from incorporating certain technology or software into our platform or if we were prevented from using our brand
names, our business, prospects, financial condition and results of operations could be materially and adversely affected.
Buyers and freelancers may circumvent our platform.
Our business depends on buyers and freelancers transacting through our platform. Despite
our efforts to prevent them from doing so, users may circumvent our platform and engage with or pay each other through other means to
avoid the marketplace fees that we charge on our platform. In addition, our efforts to reduce circumvention by buyers and freelancers
may be costly or disruptive to implement and may fail to have the intended effect or have an adverse effect on our brand or user experience.
Additionally, such efforts may reduce the attractiveness of our platform, divert the attention of management or otherwise harm our business.
Additionally, freelancers, after utilizing our platform to build their reputation and
brand and grow their clientele base, could choose to market their services and skills and transact with buyers outside of our platform.
We rely on Amazon Web Services to operate our platform, and any disruption of service
from Amazon Web Services or material change to our arrangement with Amazon Web Services could adversely affect our business.
The operation of our platform depends on certain third-party service providers. In particular,
we currently host our platform, serve our users and support our operations using Amazon Web Services, or AWS, a provider of cloud infrastructure
services. We do not have control over the operations of the facilities of AWS that we use. AWS’ facilities are vulnerable to damage
or interruption from earthquakes, hurricanes, floods, fires, cyber security attacks, terrorist attacks, power losses, telecommunications
failures and similar events. In the event that AWS’ or any other third-party provider’s systems or service abilities are hindered
by any of the events discussed above, our ability to operate our platform may be impaired, resulting in missing financial targets for
a particular period. A decision to close the facilities without adequate notice, or other unanticipated problems, could result in lengthy
interruptions to our platform. All of the aforementioned risks may be augmented if our or our partners’ business continuity and
disaster recovery plans prove to be inadequate. The facilities also could be subject to break-ins, computer viruses, sabotage, intentional
acts of vandalism and other misconduct. Our platform’s continuing and uninterrupted performance is critical to our success. Users
may become dissatisfied by any system failure that interrupts our ability to provide our platform to them. We may not be able to easily
switch our AWS operations to another cloud or other data center provider if there are disruptions or interference with our use of AWS,
and, even if we do switch our operations, other cloud and data center providers are subject to the same risks. Sustained or repeated system
failures would reduce the attractiveness of our platform to users, thereby reducing revenue. Moreover, negative publicity arising from
these types of disruptions could damage our reputation and may adversely impact the use of our platform. We may not carry sufficient business
interruption insurance to compensate us for losses that may occur as a result of any events that cause interruptions in our service.
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AWS does not have an obligation to renew its agreements with us on commercially reasonable
terms, or at all. If we are unable to renew our agreements on commercially reasonable terms, our agreements are prematurely terminated,
or we add additional infrastructure providers, we may experience costs or downtime in connection with the transfer to, or the addition
of, new data center providers. If AWS or other infrastructure providers increase the cost of their services, we may have to increase the
fees to use our platform, and our business, prospects, financial condition and results of operations could be materially and adversely
affected.
Our reliance on third parties in connection with our dropshipping platform exposes us
to significant risks that could adversely affect our business operations.
The fulfillment of orders on our dropshipping platform is heavily dependent on third-party
suppliers and logistics providers. These partners are responsible for sourcing products and ensuring their timely delivery to the buyers
of our users. Any disruption in their operations can directly impact our ability to fulfill orders, leading to delays, cancellations,
and customer dissatisfaction. Several factors could contribute to fulfillment issues, including supply chain disruptions, inventory shortages,
shipping delays, and logistical challenges. If our suppliers face production or distribution problems, or if logistics providers encounter
transportation or delivery obstacles, our service quality could be compromised.
Additionally, if any of our partners decide to cease working with us or prioritize other
clients, we may struggle to find alternative solutions quickly.
Moreover, we rely on these partners to adhere to legal and regulatory standards related
to product quality and safety. Any failure on their part to comply with these standards could result in legal liabilities for us and damage
our reputation.
If we are unable to effectively manage our relationships with third-parties, or if these
partners fail to perform as expected, it could significantly affect our business operations.
We face payment and fraud risks that could materially and adversely affect our business.
Requirements on our platform relating to user authentication and fraud detection are
complex. If our security measures do not succeed, our business may be adversely affected. In addition, bad actors around the world use
increasingly sophisticated methods to engage in illegal activities involving personal data, such as unauthorized use of another’s
identity or payment information, unauthorized acquisition or use of credit or debit card details and other fraudulent use of another’s
identity or information. This could result in any of the following, each of which could adversely affect our business:
● we may be held liable for the unauthorized use of an account holder’s credit card or bank account number and required by card issuers or banks to pay a chargeback or return fee, and if our chargeback or return rate becomes excessive, credit card networks may also require us to pay fines or other fees;
● we may be subject to additional risk and liability exposure, including negligence, fraud or other claims, if employees or third-party service providers misappropriate user information for their own gain or facilitate the fraudulent use of such information;
● bad actors may use our platform, including our payment processing and disbursement methods, to engage in unlawful or fraudulent conduct, such as money laundering, terrorist financing, fraudulent sale of services, breaches of security, leakage of data, piracy or misuse of software and other copyrighted or trademarked content, and other misconduct;
● users of our platform who are subjected or exposed to the unlawful or improper conduct of other users or other third parties, including law enforcement, may seek to hold us responsible for the conduct of other users and may lose confidence in our platform, decrease or cease to use our platform, seek to obtain damages and costs, or impose fines and penalties;
● if, for example, freelancers misstate their qualifications or location, provide misinformation, perform services they are not qualified or authorized to provide, or produce insufficient or defective work product or work product with a viral or other harmful effect, users or other third parties may seek to hold us responsible for the freelancers’ acts or omissions and may lose confidence in our platform, decrease or cease use of our platform, or seek to obtain damages and costs; and
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● we may suffer reputational damage as a result of the occurrence of any of the above.
Despite measures we have taken to detect and reduce the risk of this kind of conduct,
we do not have control over users of our platform and cannot ensure that any of our measures will stop illegal or improper uses of our
platform. We have received in the past, and may receive in the future, complaints from users and other third parties concerning misuse
of our platform. We also may be required to bring claims against users and other third parties for their misuse of our platform. Even
if these claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve
them, could divert the resources of our management and materially and adversely affect our business, prospects, financial condition and
results of operations.
We may be subject to escrow, payment services and money transmitter regulations that
may materially and adversely affect our business.
We rely on third parties to collect funds from buyers, remit payments to sellers and
hold funds in connection with user balances. Although we believe that by working with a third party, our operations comply with existing
U.S. federal and state and applicable international laws and regulatory requirements related to escrow, money transmission and the handling
or moving of money, existing laws or regulations may change, and interpretations of existing laws and regulations may also change.
As a result, we could be required to be licensed as an escrow agent or a money transmitter
(or other similar licensee) in certain states in the U.S. or other jurisdictions or may choose to obtain such a license even if not required.
Such a decision could also require us to register as a money services business under applicable laws and regulations. It is also possible
that we could become subject to regulatory enforcement or other proceedings in those states or other jurisdictions with escrow, money
transmission or other similar statutes or regulatory requirements related to the handling or moving of money, which could in turn have
a significant impact on our business, even if we were to ultimately prevail in such proceedings. We may also be required to become licensed
as a payment institution (or other similar license) under the European Payment Services Directive or other international laws and regulations.
Any developments in the laws or regulations related to escrow, money transmission or the handling or moving of money or increased scrutiny
of our business may lead to additional compliance costs and administrative overhead.
The application of laws and regulations related to escrow, money transmission and the
handling or moving of money is complex and uncertain, particularly as they relate to new and evolving business models. If we are or have
at any point in time been in violation of one or more escrow or money transmitter or other similar statutes or regulatory requirements
related to the handling or moving of money in any jurisdiction, we may be subject to the imposition of fines, users in the relevant jurisdiction
may be unable to use our platform, we may be subject to civil liability or criminal liability and our business, prospects, financial condition
and results of operations could be materially and adversely affected.
If we are unable to maintain our payment partners and bank relationships, or if our
disbursement partners encounter business difficulties, our business could be materially and adversely affected.
Our payment partners consist of payment processors and disbursement partners. We rely
on banks and card processors to provide clearing, processing and settlement functions for the secure and timely funding of all transactions
on our platform. We also rely on a network of disbursement partners to hold and disburse funds to users.
Our payment partners are critical to our business. In order to maintain these relationships,
we have in the past been, and may in the future be, forced to agree to terms that are unfavorable to us. If we are unable to maintain
our agreements with current payment partners on favorable terms, or we are unable to enter into new agreements with new payment partners
on favorable terms, our ability to collect, hold and disburse funds and our revenue and business may be materially and adversely affected.
This could occur for a number of reasons, including the following:
● our payment partners may be unable to effectively accommodate changing service needs, such as those which could result from rapid growth or higher volume and the fact that some of our payment partners have a limited operating history;
● our payment partners could choose to terminate or not renew their agreements with us or only be willing to renew on different or less advantageous terms;
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● our payment partners could reduce the services provided to us, cease doing business with us, or cease doing business altogether;
● our payment partners could be subject to delays, limitations or closures of their own businesses, networks or systems, causing them to be unable to process payments or disburse funds for certain periods of time; or
● we may be forced to cease doing business with payment processors if card association operating rules, certification requirements and laws, regulations or rules governing electronic funds transfers to which we are subject to change or are interpreted to make it difficult or impossible for us to comply.
Having an international community of users exposes us to risks that may materially and
adversely affect our business, prospects, financial condition and results of operations.
Our users have a global footprint that subjects us to the risks of being found to do
business internationally. We have users located in over 160 countries, including some emerging markets where we have limited experience,
where challenges can be significantly different from those we have faced in more developed markets and where business practices may create
greater internal control risks. Because our platform is generally accessible by users worldwide, one or more jurisdictions may claim that
we or our users are required to comply with their laws. Laws outside of the United States and Israel regulating internet, digital services,
payments, escrow, privacy and data protection, AI, taxation, terms of service, website accessibility, consumer protection, intellectual
property ownership, services intermediaries, labor and employment, worker classification, background checks and recruiting and staffing
companies, among others, which could be interpreted to apply to us, are often less favorable to us than those in the United States and
Israel, giving greater rights to competitors, users and other third parties.
Compliance with international laws and regulations may be more costly than expected,
may require us to change our business practices or may restrict our service offerings, and the imposition of any such laws or regulations
on us, our users or third parties that we or our users utilize to provide services may adversely affect our business, prospects, financial
condition and results of operations. In addition, we may be subject to multiple overlapping legal or regulatory regimes that impose conflicting
requirements and enhanced legal risks.
Analysis of, and compliance with, global laws and regulations may substantially increase
our cost of doing business. We may be unable to keep current with changes in laws and regulations as they develop.
Although we are in the process of implementing policies and procedures designed to analyze
whether these laws apply and, if applicable, ensure compliance with these laws and regulations, there can be no assurance that we will
always be in compliance or that all of our employees, contractors, partners, users and agents will comply at all times. Any violations
could result in enforcement actions, fines, civil and criminal penalties, interest, costs and fees (including but not limited to legal
fees), injunctions, loss of intellectual property rights or reputational harm. If we are unable to comply with these laws and regulations
or manage the complexity of global operations and supporting an international user base successfully, our business, prospects, financial
condition and results of operations could be materially and adversely affected.
In addition, since we operate on a global basis, political, economic and security conditions
in countries in which we operate or have users may limit our ability to provide our services. Specifically, the war between Russia and
Ukraine and the war between Israel and its neighboring countries and regions may affect our business and operations in those regions.
Our business model may subject us to disputes between users of our platform.
Our business model involves connecting buyers and freelancers that contract directly
through our platform. Buyers and freelancers are free to negotiate any specific terms they choose through custom offers sent from the
conversation page. It is possible that disputes may arise between buyers and freelancers with regard to the terms of their order, service
standards, payment, confidentiality, work product and intellectual property ownership and infringement. If either party believes the terms
of their agreement were not met, our terms of service provide a mechanism for the parties to request assistance from us in resolving the
dispute through our resolution center and customer support team. Whether or not buyers and freelancers decide to seek assistance from
us, if these disputes are not resolved amicably, the parties might escalate to formal proceedings, such as by filing claims with a court.
Given our role in facilitating and supporting these arrangements, it is possible that
claims will be brought against us directly as a result of these disputes, or that freelancers or buyers may bring us into any claims filed
against each other. We include language in our terms of service disclaiming responsibility or liability for any disputes between users;
however, we cannot guarantee that these terms will, in all circumstances, be effective in preventing or limiting our involvement in user
disputes.
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Additionally, from time to time, we are the subject of user complaints filed on forums
such as the Better Business Bureau. We attempt to respond to all such complaints, although their mere presence may result in damage to
our reputation. Even if these claims do not result in litigation or are resolved in our favor, these claims, and the time and resources
necessary to resolve them, could divert the resources of our management.
We may not be able to successfully execute future acquisitions or efficiently manage
any acquired business.
We have acquired and may in the future acquire certain complementary businesses or technologies.
For example, during 2025 we acquired Yaballe Ltd. and the business of Bernstein, Dreyer & Mikulic GbR and during 2024 we acquired
AutoDS Ltd. and Praetolia Ltd. The success of any acquisition will depend upon several factors, including our ability to: identify and
cost-effectively acquire businesses; integrate acquired user data, operations, products and technologies into our organization effectively;
retain and motivate key personnel; and effectively retain acquired users. From time to time, we may also determine to divest or wind down
previously acquired businesses that no longer align with our strategic priorities or resource allocation plans; for example, in 2025 we
sold two businesses that we had acquired in 2020 and 2021.
Any such acquisition may require a significant commitment of management time, capital
investment and other resources. We may not be successful in identifying and negotiating acquisitions on terms favorable to us. Any such
acquisition could involve us taking on debt or give rise to new liabilities. In addition, we cannot be certain that any acquisition, if
completed, will be successfully integrated into our existing operations. Similarly, divestitures of previously acquired businesses may
result in separation costs, the loss of anticipated synergies, and other financial impacts, and may divert management attention. If we
are unable to effectively integrate an acquired business, our business, financial condition and results of operations may be materially
and adversely affected. In addition, if we use our equity securities as consideration for acquisitions, we may dilute the value of the
ordinary shares.
There may be adverse tax, legal and other consequences if the employment status of freelancers
that use our platform is challenged.
There is often uncertainty in the application of worker classification laws and, consequently,
there is risk that freelancers could be deemed to be misclassified under applicable law. The tests governing whether a service provider
is an independent contractor, or an employee, are typically highly fact sensitive and vary by governing law. Laws and regulations that
govern the status and misclassification of independent contractors are also subject to change and to divergent interpretations by various
authorities, which can create uncertainty and unpredictability. A misclassification determination or allegation creates potential exposure
with respect to users of our platform, including but not limited to: monetary exposure arising from or relating to failure to withhold
and remit taxes, unpaid wages and wage and hour laws and requirements (such as those pertaining to minimum wage and overtime); liquidated
damages; civil penalties and fines; claims for employee benefits, social security, workers’ compensation and unemployment; claims
of discrimination, harassment and retaliation under civil rights laws; claims under laws pertaining to unionizing, collective bargaining
and other concerted activity; and other claims, charges, or other proceedings under laws and regulations applicable to employers and employees,
including risks relating to allegations of joint employer liability. Such claims could result in monetary damages or other liability,
and any adverse determination, including potentially the requirement for us to indemnify a user, could also harm our brand, which could
materially and adversely affect our business, prospects, financial condition and results of operations.
The application of indirect taxes, other tax laws or regulation could adversely affect
our business and results of operations.
The application of indirect taxes, such as sales tax, use tax, value-added tax, gross
receipts tax, and digital services tax, to our business is an evolving issue that requires ongoing judgment to evaluate our applicable
tax obligations. As a result, amounts recorded may be subject to adjustments by the relevant tax authorities. In many cases, the ultimate
tax determination is uncertain because it is not clear how new and existing statutes might apply to our business. One or more states,
the U.S. federal government or other countries may seek to impose additional reporting, record-keeping or indirect tax collection obligations
on businesses like ours that facilitate e-commerce. For example, state and local taxing authorities in the United States and taxing authorities
in other countries have identified e-commerce platforms as a means to calculate, collect and remit indirect taxes for transactions taking
place over the internet. Multiple U.S. states have enacted related legislation, and other states are now considering such legislation.
Tax collection responsibility and the additional costs associated with indirect tax collection, remittance and audit requirements, in
addition to reporting requirements, could create additional tax exposure for us and additional burdens for users on our websites and mobile
platforms.
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We may face lawsuits or incur liability as a result of content published or made available
through our platform.
The nature of our business exposes us to claims related to defamation, infringement,
misappropriation or other violations of third-party intellectual property rights, rights of publicity and privacy and personal injury
torts. The law relating to the liability of providers of online products or services for activities of their users remains somewhat unsettled,
both within the United States and internationally. This risk is enhanced in certain jurisdictions outside the United States where our
protection from liability for third-party actions may be unclear and where we may be less protected under local laws than we are in the
United States. If a claim is brought against us due to the actions of our users, we could incur significant costs investigating and defending
such claims and, if we are found liable, significant damages.
Our business activities subject us to litigation risk that could materially and adversely
affect us by subjecting us to significant money damages and other remedies, causing unfavorable publicity or increasing our litigation
expense.
We are, from time to time, the subject of complaints or litigation, including user claims,
contract claims, employee allegations of improper termination and discrimination and claims related to violations of applicable government
laws regarding religious freedom, advertising and intellectual property. Any such claim could be expensive to defend and may divert time,
money and other valuable resources away from our operations and management, and, thereby, hurt our business. Additionally, a substantial
judgment against us could materially and adversely affect our business, prospects, financial condition and results of operations.
Our insurance may not provide adequate levels of coverage against claims.
We believe that we maintain insurance customary for businesses of our size and type.
However, there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure.
Moreover, any loss incurred could exceed policy limits and policy payments made to us may not be made on a timely basis.
We may be materially and adversely affected by natural disasters and other catastrophic
events that could disrupt our business operations, and our business continuity and disaster recovery plans may not adequately protect
us from a serious disaster.
A significant natural disaster, such as an earthquake, blizzard, hurricane, fire or
flood, the outbreak of a pandemic, such as COVID-19, or other catastrophic events, such as a power loss or telecommunications failure,
could have a material adverse impact on our business, financial condition and operating results. In the event of a natural disaster or
other catastrophic event, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in
development of our platform, lengthy interruptions in service, breaches of data security and loss of critical data, all of which could
have an adverse effect on our future operating results. Broadly accepted scientific projections predict that the frequency and/or intensity
of certain natural disasters are likely to increase in the future due to climate change, which may increase the magnitude of this risk.
In addition, natural disasters and other catastrophic events could affect the ability of sellers on our platform to perform Gigs on a
timely basis. If a natural disaster or other catastrophic event occurs in a region from which we derive a significant portion of our revenue,
users in that region may delay or forego the use of our platform, which may adversely impact our operating results. All of the aforementioned
risks may be augmented if our or our partners’ business continuity and disaster recovery plans prove to be inadequate.
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Our investment portfolio and other funds may be adversely affected by market conditions
and interest rates.
We maintain substantial balances of liquid investments, for purposes of financing our
operations and acquisitions. Our marketable securities totaled $117.7 million as of December 31, 2025. The performance of the capital
markets affects the values of funds that are held in marketable securities. These assets are subject to market fluctuations and various
developments, including, without limitation, rating agency downgrades that may impair their value. We generally buy and hold our portfolio
positions, while minimizing credit risk by setting limits for minimum credit rating and maximum concentration per issuer. Our investments
consist primarily of government and corporate debentures, which are primarily fixed-income securities.
Although we believe that we generally adhere to conservative investment guidelines,
the continuing turmoil in the financial markets, record high inflation rates and geopolitical instability, may result in impairments of
the carrying value of our investment assets. In addition, as our investment portfolio is invested primarily in fixed-income securities
it is affected by changes in interest rates. Interest rates are highly sensitive to many factors, including governmental monetary policies
and domestic and international economic and political conditions. Any significant decline in our financial income or the value of our
investments as a result of the changes in interest rates and interest rate expectations of the financial markets, deterioration in the
credit rating of the securities in which we have invested, or general market conditions, could have an adverse effect on our results of
operations and financial condition. We classify our investments as available-for-sale. Changes in the fair value of investments classified
as available-for-sale are not recognized as income during the period, but rather are recognized as other comprehensive income (loss),
or OCI, which is a separate component of equity until realized. Realized losses in our investments portfolio may adversely affect our
financial position and results.
In addition, we regularly maintain cash, cash equivalents and bank deposits at financial
institutions in the United States, Israel and other multinational institutions. Our funds at these institutions exceed insured limits
and some are not insured at all. Although we spread our cash, cash equivalents and bank deposits among several financial institutions
in order to reduce the risks associated with maintaining all of our balances at one financial institution, in the event of failure of
any financial institution where we maintain our cash and cash equivalents or bank deposits, there can be no assurance that we would be
able to access uninsured funds in such financial institution in a timely manner or at all. Any inability to access or delay in accessing
these funds could adversely affect our business and financial position.
The enactment of legislation implementing changes in taxation of international business
activities, the adoption of other corporate tax reform policies, or changes in tax legislation or policies could impact our future financial
position and results of operations.
Corporate tax reform, base-erosion efforts and tax transparency continue to be high
priorities in many tax jurisdictions where we have business operations. As a result, policies regarding corporate income and other taxes
in numerous jurisdictions are under heightened scrutiny and tax reform legislation is being proposed or enacted in a number of jurisdictions.
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For example, there is growing pressure in many jurisdictions and from multinational
organizations such as the Organization for Economic Cooperation and Development, or the OECD, and the EU to amend existing international
taxation rules in order to align the tax regimes with current global business practices. Specifically, in October 2015, the OECD published
its final package of measures for reform of the international tax rules as a product of its Base Erosion and Profit Shifting, or BEPS
initiative, which was endorsed by the G20 finance ministers. Many of the initiatives in the BEPS package required and resulted in specific
amendments to the domestic tax legislation of various jurisdictions and to existing tax treaties. We continuously monitor these developments.
Although many of the BEPS measures have already been implemented or are currently being implemented globally (including, in certain cases,
through adoption of the OECD’s “multilateral convention” (to which Israel is also a party) to effect changes to tax
treaties which entered into force on July 1, 2018 and through the EU’s “Anti Tax Avoidance” Directives), it is still
difficult in some cases to assess to what extent these changes will impact our tax liabilities in the jurisdictions in which we conduct
our business or to what extent they may impact the way in which we conduct our business or our effective tax rate due to the unpredictability
and interdependency of these potential changes. In January 2019 the OECD announced further work in continuation of the BEPS project, focusing
on two “pillars”. On October 8, 2021, 136 countries approved a statement known as the OECD BEPS Inclusive Framework, which
builds upon the OECD’s continuation of the BEPS project. The first pillar is focused on the allocation of taxing rights between
countries for in-scope large multinational enterprises (with revenue in excess of Euro 20 billion and profitability of at least 10%) that
sell goods and services into countries with little or no local physical presence. We do not expect to be within the scope of the first
Pillar. The second pillar, which includes two interlocking rules: (1) the Income Inclusion Rule, and (2) the Undertaxed Payment Rule,
that together comprise the Global Anti-Base Erosion, or the GloBE rules, is focused on developing a global minimum tax rate of at least
15% applicable to in-scope multinational enterprises (with revenue in excess of Euro 750 million). Israel is one of the 136 jurisdictions
that has agreed to the OECD/G20 Inclusive Framework on BEPS, including the second pillar framework. Israel has enacted domestic legislation,
effective January 1, 2026, implementing a Qualified Domestic Minimum Top-Up Tax (QDMTT), designed to ensure a minimum effective tax rate
of 15% on Israeli constituent entities of in-scope multinational enterprise groups, generally calculated in accordance with the Global
Anti-Base Erosion (GloBE). As of the date of this report, the IIR and the UTPR have not been enacted under Israeli law. While we do not
currently expect to be within the scope of the second pillar (which generally applies to multinational enterprise groups with consolidated
annual revenue more than Euro 750 million), we may become subject to these rules in the future if we meet the applicable thresholds. In
addition, various jurisdictions in which we operate have adopted, or are in the process of adopting, other elements of the second pillar
(including the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR)). We continue to monitor these developments. The adoption
and implementation of the second pillar and other tax reform and tax transparency initiatives may increase audit activity and disputes
with tax authorities in the jurisdictions in which we operate and could affect our tax liabilities and effective tax rate. We cannot predict
the timing, manner or extent of application of these rules to us, or their impact, if any, on our business, results of operations, cash
flows, or financial condition. Given these developments, it is generally expected that tax authorities in various jurisdictions in which
we operate may increase their audit activity and may seek to challenge some of the tax positions we have adopted. It is difficult to assess
if and to what extent such challenges, if raised, might impact our effective tax rate.
As progress on BEPS 2.0 advanced from 2019 into 2020, the world has been impacted by
the COVID-19 pandemic and countries have begun to seek new sources of revenue. As a result, there is a proliferation of new Digital Services
Taxes, or DSTs, and similar taxes on the digital economy as the interest in these sources of revenue has overtaken progress toward development
of fundamental reforms to the international tax architecture under BEPS 2.0 on a consensus basis. These new taxes include DSTs of the
type originally proposed plus, in certain jurisdictions, greatly expanded DSTs that apply to virtually all digital transactions, including
on multi-sided interfaces allowing users to connect. These taxes differ between jurisdictions in terms of thresholds, applicable tax rate
and scope.
Further, there have been changes to tax laws in the United States (such as the United
States Inflation Reduction Act of 2022, which, among other changes, introduced a 15% corporate minimum tax on certain United States corporations
and a 1% excise tax on certain stock redemptions by United States corporations, which apply to certain stock redemptions by a foreign
corporation funded by certain United States affiliates, and the One Big Beautiful Bill Act, enacted on July 4, 2025 (“OBBBA”),
which significantly changed the U.S. tax landscape by implementing revisions to key business tax provisions. The effect of these tax laws
on our operations and tax liabilities is unclear and could be material. Interpretations of existing legislation or the promulgation of
new legislation could create the potential for added volatility in our provision for income taxes and might have an adverse impact on
our future income tax provision and tax rate.
Risks relating to our ordinary shares
We may need to raise additional funds to finance our future capital needs, which may
dilute the value of our outstanding ordinary shares or prevent us from growing our business.
We may need to raise additional funds to finance our existing and future capital needs,
including developing new services and technologies, and to fund ongoing operating expenses. If we raise additional funds through the sale
of equity securities, these transactions may dilute the value of our outstanding ordinary shares. We may also decide to issue securities,
including protected securities, that have rights, preferences and privileges senior to our ordinary shares. Any debt financing would increase
our level of indebtedness and could negatively affect our liquidity and restrict our operations. We also can provide no assurances that
the funds we raise will be sufficient to finance any future capital requirements. We may be unable to raise additional funds on terms
favorable to us or at all. In addition, declines in the global economy, difficulties in the financial services sector and credit market,
continuing geopolitical uncertainties and other macroeconomic factors all may affect the spending behavior of potential investors. If
financing is not available or is not available on acceptable terms, we may be unable to fund our future needs. This may prevent us from
increasing our market share, capitalizing on new business opportunities or remaining competitive in our industry, which could materially
and adversely affect our business, prospects, financial condition and results of operations.
30
We are a foreign private issuer and, as a result, we are not subject to U.S. proxy rules
and are subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic
public company.
We report under the Securities Exchange Act of 1934, or the Exchange Act, as a non-U.S.
company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from
certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (1) the sections of the Exchange
Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (2)
the sections of the Exchange Act requiring major shareholders to file public reports of their share ownership and trading activities and
liability for major shareholders, directors and officers who profit from trades made in a short period of time and (3) the rules under
the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified
information, although we are subject to Israeli laws and regulations with regard to certain of these matters and furnish comparable quarterly
information on Form 6-K. In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days
after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on
Form 10-K within 75 days after the end of each fiscal year and U.S. domestic issuers that are large accelerated filers are required to
file their annual report on Form 10-K within 60 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation
FD, which is intended to prevent issuers from making selective disclosures of material information. As a result of all of the above, our
shareholders may not have the same protections afforded to shareholders of a company that is not a foreign private issuer.
We may lose our foreign private issuer status in the future, which could result in significant
additional costs and expenses.
As discussed above, we are a foreign private issuer, and therefore, we are not required
to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private
issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly,
the next determination will be made with respect to us on June 30, 2026. We may lose our foreign private issuer status in the future,
if (1) more than 50% of our outstanding voting securities are owned by U.S. residents and (2) a majority of our directors or executive
officers are U.S. citizens or residents, or we fail to meet additional requirements necessary to avoid loss of foreign private issuer
status. Additionally, in June 2025, the SEC issued a concept release soliciting public comment on potential changes to the definition
of a foreign private issuer. If the SEC amends the conditions to being a foreign private issuer and we cannot meet the new conditions,
or if the SEC substantially reduces the accommodations accorded to foreign private issuers, then even if we maintain our status as a foreign
private issuer, we may be subject to more stringent requirements. Either of those outcomes could significantly increase our compliance
costs and require substantial changes to our practices.
If we lose our foreign private issuer status, we will be required to file with the SEC
periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available
to a foreign private issuer. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors
and principal shareholders will become subject to the short-swing profit recovery provisions of Section 16 of the Exchange Act. In addition,
we will lose our ability to rely upon exemptions from certain corporate governance requirements under the listing rules of the New York
Stock Exchange, or the NYSE. As a U.S. listed public company that is not a foreign private issuer, we will incur significant additional
legal, accounting and other expenses that we will not incur as a foreign private issuer.
As we are a “foreign private issuer” and follow certain home country corporate
governance practices, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all
NYSE corporate governance requirements.
As a foreign private issuer, we have the option to follow certain home country corporate
governance practices rather than those of the NYSE, provided that we disclose the requirements we are not following and describe the home
country practices we are following. We rely on this “foreign private issuer exemption” with respect to the NYSE rules for
shareholder meeting quorums. We may in the future elect to follow home country practices with regard to other matters. As a result, our
shareholders may not have the same protections afforded to shareholders of companies that are subject to all NYSE corporate governance
requirements.
31
The market price of our ordinary shares has been and could in the future be negatively
affected by future sales of our ordinary shares.
As of December 31, 2025, there were 36,093,139 ordinary shares outstanding. Sales by
us or our shareholders of a substantial number of ordinary shares in the public market, or the perception that these sales might occur,
could cause the market price of our ordinary shares to decline or could impair our ability to raise capital through a future sale of,
or pay for acquisitions using, our equity securities. Of our issued and outstanding shares, all of our ordinary shares are freely transferable,
except for any shares held by our “affiliates,” as that term is defined in Rule 144 under the Securities Act of 1933, or the
Securities Act.
As of December 31, 2025, we had 4,080,503 ordinary shares available for future grant
under our share option plans and 4,472,059 ordinary shares were subject to share options and restricted share units that were granted
by us. Of this amount, 2,162,314 options were vested and exercisable as of December 31, 2025. In addition, as of December 31, 2025, we
had 1,564,027 shares available for sale under our 2020 Employee Share Purchase Plan.
There can be no assurance that we will not be classified as a passive foreign investment
company, which could result in adverse U.S. federal income tax consequences to U.S. Holders of our ordinary shares.
We would be classified as a passive foreign investment company, or PFIC, for any taxable
year if, after the application of certain look-through rules, either: (i) 75% or more of our gross income for such year is “passive
income” (as defined in the relevant provisions of the Internal Revenue Code of 1986, as amended, or the Code), or the income test;
or (ii) 50% or more of the value of our assets (generally determined on the basis of a quarterly average) during such year is attributable
to assets that produce or are held for the production of passive income, or the asset test. For these purposes, cash and other assets
readily convertible into cash or that do or could generate passive income are categorized as passive assets, and the value of goodwill
and other unbooked intangible assets is generally taken into account. Passive income generally includes, among other things, rents, dividends,
interest, royalties, gains from the disposition of passive assets and gains from commodities and securities transactions. In making this
determination, we will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any
other corporation of which we own, directly or indirectly, at least 25% (by value) of the stock. The legislative history of the relevant
Code provisions indicates that the total value of a publicly-traded foreign corporation’s assets generally will be treated as equal
to the sum of the aggregate value of its outstanding stock plus its liabilities for purposes of the asset test, and publicly-traded foreign
corporations often employ such market capitalization method to value their assets. However, the Internal Revenue Service, or the IRS,
has not issued guidance conclusively addressing how to value a publicly-traded foreign corporation’s assets for PFIC purposes. The
trading value of our ordinary shares has in the past and is likely to continue to fluctuate. Considering the volatile market conditions,
we believe it may be appropriate to employ alternative methods to determine the value of our assets other than the market capitalization
method. After considering the total value of our assets determined under an alternative valuation method that takes into account, in addition
to the trading value of our ordinary shares, a control premium, we believe that we were not a PFIC for the taxable year ended December
31, 2025. However, if the market capitalization method were determined to be the only appropriate method of valuing our assets, there
is a significant risk that we would be treated as a PFIC for the taxable year ended December 31, 2025. There can be no certainty that
the IRS will not challenge our position and determine that based on the IRS’s interpretation of the asset test, we were a PFIC for
the taxable year ended December 31, 2025. In addition, PFIC status is a factual determination that must be made annually after the close
of each taxable year. The trading value of our ordinary shares is likely to continue to fluctuate, which may affect the determination
of whether we will be considered a PFIC. In addition, we have a substantial balance of cash and other liquid investments, which are passive
assets for purposes of the PFIC determination. Whether we are treated as a PFIC in the current taxable year or in future taxable years
will depend in part on how, and how quickly, we spend or otherwise utilize these passive assets. Accordingly, as our market capitalization
and the composition of our income, assets, and operations are subject to change, we cannot assure you that we will not be considered a
PFIC for any taxable year. In addition, it is possible that the IRS may take a contrary position with respect to our determination in
any particular year. Certain adverse U.S. federal income tax consequences could apply to a U.S. Holder (as defined in Item 10.E. “Taxation—Taxation
and government programs—United States federal income taxation”) if we are treated as a PFIC for any taxable year during
which such U.S. Holder holds our ordinary shares, regardless of whether we continue to be a PFIC in subsequent taxable years. We are not
providing any U.S. tax opinion to any U.S. Holder concerning our potential PFIC status, and U.S. Holders should consult their tax advisors
about the potential application of the PFIC rules to their investment in our ordinary shares. For further discussion, see Item 10.E. “Taxation—
Taxation and government programs—United States federal income taxation—Passive Foreign Investment Company considerations.”
32
Provisions of Israeli law and our amended and restated articles of association may delay,
prevent or make undesirable an acquisition of all or a significant portion of our shares or assets.
Provisions of Israeli law and our amended and restated articles of association 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 different 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:
● Israeli corporate law regulates mergers and requires that a tender offer be effected when more than a specified percentage of shares in a company are purchased;
● Israeli corporate law does not provide for shareholder action by written consent, thereby requiring all shareholder actions to be taken at a general meeting of shareholders;
● our amended and restated articles of association divide our directors into three classes, each of which is elected once every three years;
● our amended and restated articles of association generally require a vote of the holders of a majority of our outstanding ordinary shares entitled to vote present and voting on the matter at a general meeting of shareholders (referred to as simple majority), and the amendment of a limited number of provisions, such as the provision dividing our directors into three classes, requires a vote of the holders of at least 65% of the total voting power of our shareholders;
● our amended and restated articles of association do not permit a director to be removed except by a vote of the holders of at least 65% of the total voting power of our shareholders and any amendment to such provision requires the approval of at least 65% of the total voting power of our shareholders; and
● our amended and restated articles of association provide that director vacancies may be filled by our board of directors.
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. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent
on the fulfilment 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.
We do not expect to pay any dividends in the foreseeable future.
We have never declared or paid any dividends on our ordinary shares. We do not anticipate
paying any dividends in the foreseeable future. We currently intend to retain future earnings, if any, to finance operations and expand
our business.
Our board of directors has sole discretion whether to pay dividends. If our board of
directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements
and surplus, general financial condition, contractual restrictions and other factors that our directors may deem relevant. The Israeli
Companies Law, 5759-1999, or the Companies Law, imposes restrictions on our ability to declare and pay dividends.
Payment of dividends may also be subject to Israeli withholding taxes. See Item 10.E. “Taxation—Taxation
and government programs—Israeli tax considerations and government programs” for more information.
We incur increased costs as a result of operating as a public company, and our management
is required to devote substantial time to new compliance initiatives and corporate governance practices.
As a public company we incur significant legal, accounting and other expenses that we
did not incur as a private company. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing
requirements of the New York Stock Exchange and other applicable securities rules and regulations impose various requirements on public
companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.
Our management and other personnel continue to devote a substantial amount of time to these compliance initiatives. Moreover, these rules
and regulations will continue to increase our legal and financial compliance costs and will make some activities more time-consuming and
costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director
and officer liability insurance, and could also make it more difficult for us to attract and retain qualified members of our board of
directors.
33
We continue to evaluate these rules and regulations and cannot predict or estimate the
amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations,
in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is
provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs
necessitated by ongoing revisions to disclosure and governance practices.
We are required to comply with the SEC’s rules implementing Sections 302 and 404
of the Sarbanes-Oxley Act, which require management to certify financial and other information in our annual reports and provide an annual
management report on the effectiveness of control over financial reporting. Additionally, as we qualify as a large accelerated filer,
we must include an attestation report on internal control over financial reporting issued by our independent registered public accounting
firm.
To maintain the effectiveness of our disclosure controls and procedures and our internal
control over financial reporting, we expect that we will need to continue enhancing existing, and implement new, financial reporting and
management systems, procedures and controls to manage our business effectively and support our growth in the future. The process of evaluating
our internal control over financial reporting requires an investment of substantial time and resources, including by our chief financial
officer and other members of our senior management. As a result, this process may divert internal resources and take a significant amount
of time and effort to complete. Additionally, as part of management assessments of the effectiveness of our internal control over financial
reporting required by Section 404(a), our management may conclude that our internal control over financial reporting is not effective
due to our failure to cure any identified material weakness or otherwise, which would require us to employ remedial actions to implement
effective controls. If we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with
the requirements of Section 404(a) or 404(b) in a timely manner or to assert that our internal control over financial reporting is effective,
or if our independent registered public accounting firm is unable to express an opinion or issues an adverse opinion in its attestation
as to the effectiveness of our internal control over financial reporting required by Section 404 (b), investors may lose confidence in
the accuracy and completeness of our financial reports and the trading price of our ordinary shares could be negatively affected. We could
also become subject to investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities,
which could require additional financial and management resources.
Irrespective of compliance with Sections 404(a) and 404(b), any failure of our internal
control could have a material adverse effect on our stated results of operations and harm our reputation. In order to implement changes
to our internal control over financial reporting triggered by a failure of those controls, we could experience higher than anticipated
operating expenses, as well as higher independent auditor fees during and after the implementation of these changes.
Risks relating to our incorporation and location in Israel
Conditions in Israel, including Israel’s conflicts with its neighboring countries,
as well as political and economic instability, may adversely affect our operations and limit our ability to market our products, which
would lead to a decrease in revenues.
We are incorporated under Israeli law, and many of our employees, including our senior
members of our management team, operate from our headquarters located in Israel. In addition, our officers and directors are residents
of Israel. Accordingly, our business and operations are directly affected by economic, political, geopolitical, and military conditions
in Israel.
Following the October 7, 2023, attacks by Hamas terrorists in Israel's southern border,
Israel declared war against Hamas and since then, Israel has been involved in military conflicts with Hamas, Hezbollah, a terrorist organization
based in Lebanon, and Iran, both directly and through proxies like the Houthi movement in Yemen and armed groups in Iraq and other terrorist
organizations. Additionally, following the fall of the Assad regime in Syria, Israel has conducted limited military operations targeting
the Syrian army, Iranian military assets and infrastructure linked to Hezbollah and other Iran-supported groups. Iran itself directly
entered the conflict, launching ballistic missile attacks against Israel in April 2024 and October 2024. In June 2025, following intelligence
assessments indicating imminent attacks, Israel conducted strikes against Iranian military and nuclear infrastructure together with the
United States, which led to Iranian counterattacks before a ceasefire was reached after 12 days of hostilities. Although certain ceasefire
agreements have been reached with Hamas, Lebanon (with respect to Hezbollah), and Iran, direct hostilities with Iran and some Iranian
proxies have since resumed and remain active as of March 2026. There is no assurance that ceasefire agreements will be reached, as military
activity and hostilities continue to exist at varying levels of intensity, and the situation remains volatile, with the escalation into
a broader regional conflict involving additional terrorist organizations and other countries in the Persian Gulf. Also, the fall of the
Assad regime in Syria may create geopolitical instability in the region. The intensity and duration of Israel’s war and hostilities
against Hamas, Hezbollah, Iran, and other neighboring countries and regions is difficult to predict, as are economic implications on our
business and operations and on Israel's economy in general.
34
While our facilities have not been damaged during the current war, the hostilities with
Hamas, Hezbollah, Iran and its proxies and others have caused and may continue to cause damage to private and public facilities, infrastructure,
utilities, and telecommunication networks, and potentially disrupting our operations and supply chains. In addition, Israeli organizations,
government agencies and companies have been subject to extensive cyber attacks. This could lead to increased costs, risks to employee
safety, and challenges to business continuity, with potential financial losses.
The continuation of the war has also led to a deterioration of certain indicators of
Israel’s economic standing, for instance, a downgrade in Israel’s credit rating by rating agencies (such as by Moody’s,
S&P Global, and Fitch).
In connection with the ongoing war, several hundred thousand Israeli military reservists
were drafted to perform immediate military service, and military reservists are expected to perform long reserve duty service in the coming
years. As of the date of this annual report, only several of our employees are called to active military duty. The absence of our employees
due to their military service in the current or future wars or other armed conflicts may materially and adversely affect our ability to
conduct our operations.
Our commercial insurance does not cover losses that may occur as a result of events
associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of certain direct damages
that are caused by terrorist attacks or acts of war, we cannot assure you that such government coverage will be maintained or that it
will sufficiently cover our potential damages. Any losses or damages incurred by us could have a material adverse effect on our business.
The global perception of Israel and Israeli companies, influenced by actions by international
judicial bodies, may lead to increased sanctions and other negative measures against Israel, as well as Israeli companies and academic
institutions. There is also a growing movement among countries, activists, and organizations to boycott Israeli goods, services and academic
research or restrict business with Israel, which could affect business operations. If these efforts become widespread, along with any
future rulings from international tribunals against Israel, they could significantly and negatively impact business operations.
Prior to the October 2023 war, the Israeli government pursued changes to Israel’s
judicial system and has recently renewed its efforts to effect such changes. In response to the foregoing developments, certain individuals,
organizations, and institutions, both within and outside of Israel, voiced concerns that such proposed changes, if adopted, may negatively
impact the business environment in Israel. Such proposed changes may also lead to political instability or civil unrest. If such changes
to Israel’s judicial system are pursued by the government and approved by the parliament, this may have an adverse effect.
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 are eligible for certain tax benefits provided to a “Preferred Technology Enterprise”
under the Israeli Law for the Encouragement of Capital Investments, 5719-1959, or the Investment Law. In order to remain eligible for
the tax benefits provided to a “Preferred Technology 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 Technology Enterprise would be subject to regular Israeli corporate tax rates. The standard corporate tax rate
for Israeli companies in 2025 was 23%.
See Item 10.E. “Taxation—Taxation
and government programs—Israeli tax considerations and government programs—Law for the Encouragement of Capital Investments,
5719-1959.”
35
It may be difficult to enforce a U.S. judgment against us, our officers and directors
named in this Annual Report in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve process on our
officers and directors.
Not all of our directors or officers are 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
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 a violation of U.S. securities laws against us or
our non-U.S. officers and directors because Israel may not be 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 proved as a fact, which can be a time-consuming and costly process. Certain
matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing the matters described
above. Additionally, Israeli courts might not enforce judgments obtained in the United States against us or our non-U.S. directors and
executive officers, which may make it difficult to collect on judgments rendered against us or our non-U.S. officers and directors.
Moreover, an Israeli court will not enforce a non-Israeli judgment if it was given in
a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject to exceptional cases), if its enforcement
is likely to prejudice the sovereignty or security of the State of Israel, if it was obtained by fraud or in the absence of due process,
if it is at variance with another valid judgment that was given in the same matter between the same parties, or if a suit in the same
matter between the same parties was pending before a court or tribunal in Israel at the time the foreign action was brought.
Your rights and responsibilities as our shareholder are 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 and the 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 or her rights
and fulfilling his or her obligations toward the company and other shareholders and to refrain from abusing his or her 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. However, Israeli law does not define the
substance of this duty of fairness. There is little case law available to assist in understanding the implications of these provisions
that govern shareholder behavior.
We may be exposed to liabilities under the U.S. Foreign Corrupt Practices Act and other
U.S. and foreign anti-corruption anti-money laundering, export control, sanctions and other trade laws and regulations, and any determination
that we violated these laws could have a material adverse effect on our business.
We are subject to export control and import laws and regulations, including the U.S.
Export Administration Regulations, U.S. Customs regulations and various economic and trade sanctions regulations administered by the U.S.
Treasury Department’s Office of Foreign Assets Control. We are also subject to the U.S. Foreign Corrupt Practices Act of 1977, as
amended, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, the United Kingdom
Bribery Act 2010, the Proceeds of Crime Act 2002, Chapter 9 (sub-chapter 5) of the Israeli Penal Law, 1977, the Israeli Prohibition on
Money Laundering Law—2000 and possibly other anti-bribery and anti-money laundering laws in countries outside of the United States
in which we conduct our activities. Compliance with these laws has been the subject of increasing focus and activity by regulatory authorities,
both in the United States and elsewhere, in recent years. Anti-corruption laws are interpreted broadly and prohibit companies and their
employees and third-party intermediaries from authorizing, promising, offering, providing, soliciting or accepting, directly or indirectly,
improper payments or benefits to or from any person whether in the public or private sector.
Further, we have taken steps to terminate accounts in sanctioned countries and have
implemented various control mechanisms designed to prevent unauthorized dealings with sanctioned countries. Although we endeavor to conduct
our business in accordance with applicable laws and regulations, we cannot guarantee compliance.
36
Noncompliance with anti-corruption, anti-money laundering, export control, sanctions
and other trade laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement
actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment
from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage and other collateral consequences.
If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible
civil or criminal litigation, our business, results of operations and financial condition could be materially harmed. Responding to any
action will likely result in a materially significant diversion of management’s attention and resources and significant defense
and compliance costs and other professional fees. In addition, regulatory authorities may seek to hold us liable for successor liability
for violations committed by companies in which we invest or that we acquire. As a general matter, enforcement actions and sanctions could
harm our business, results of operations and financial condition.
General risk factors
Our share price may be volatile, and you may lose all or part of your investment.
The market price of our ordinary shares could be highly volatile and may fluctuate substantially
as a result of many factors, including:
● actual or anticipated fluctuations in our results of operations;
● variance in our financial performance from the expectations of market analysts;
● announcements by us or our competitors of significant business developments, changes in service provider relationships, acquisitions or expansion plans;
● short selling activities;
● changes in our marketplace take rate;
● our involvement in litigation;
● our sale of ordinary shares or other securities in the future;
● market conditions in our industry;
● changes in key personnel;
● the trading volume of our ordinary shares;
● changes in the estimation of the future size and growth rate of our markets; and
● general economic and market conditions, including geopolitical risks, armed conflicts, regional instability and international tension.
In addition, the stock markets have experienced extreme price and volume fluctuations.
Broad market and industry factors may materially harm the market price of our ordinary shares, regardless of our operating performance.
In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has
often been instituted against that company. If we were involved in any similar litigation, we could incur substantial costs and our management’s
attention and resources could be diverted.
An active trading market for our ordinary shares may not be sustained to provide adequate
liquidity.
An active trading market may not be sustained for our ordinary shares. The lack of an
active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable.
An inactive market may also impair our ability to raise capital by selling ordinary shares and may impair our ability to acquire other
companies by using our shares as consideration.
If we do not meet the expectations of equity research analysts, if they do not publish
research or reports about our business or if they issue unfavorable commentary or downgrade our ordinary shares, the price of our ordinary
shares could decline.
The trading market for our ordinary shares relies in part on the research and reports
that equity research analysts publish about us and our business. The analysts’ estimates are based upon their own opinions and are
often different from our estimates or expectations. If our results of operations are below the estimates or expectations of public market
analysts and investors, the price of our ordinary shares could decline. Moreover, the price of our ordinary shares could decline if one
or more securities analysts downgrade our ordinary shares or if those analysts issue other unfavorable commentary or cease publishing
reports about us or our business.
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