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 and uncertainties described
below and the other information in this Annual Report before making a decision to invest in our ordinary shares. The Company may not be
able to accurately predict, control or mitigate these risks. Statements in this section are based on the Company’s beliefs and opinions
regarding matters that could materially adversely affect the Company in the future and are not representations as to whether such matters
have or have not occurred previously. The risks and uncertainties described below are not exhaustive and should not be considered a complete
statement of all potential risks or uncertainties that the Company faces or may face in the future. Our business, financial condition,
results of operations, or strategic objectives could be materially and adversely affected by any of these risks and uncertainties. The
trading price and value of our ordinary shares could decline due to any of these risks and uncertainties, and you may lose all or part
of your investment. This Annual Report also contains forward-looking statements that involve risks and uncertainties. See “Cautionary
Statement Regarding Forward-Looking Statements.” Our actual results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including the risks and uncertainties faced by us described below and elsewhere in this Annual
Report.
5
Risks Relating to our Business and Industry
We have experienced rapid growth in recent periods and our recent
growth rates may not be indicative of our future growth.
We have experienced rapid growth in recent periods. Our revenue was $569.9 million,
$752.8 million and $962.2 million for the years ended December 31, 2023, 2024 and 2025, respectively, representing an annual growth of
39.3%, 32.1% and 27.8% for the years ended December 31, 2023, 2024, and 2025, respectively. GMV processed through our platforms during
the years ended December 31, 2023, 2024 and 2025 was $3,557 million, $4,858 million and $6,569 million, respectively, representing an
annual growth of 45.2%, 36.6% and 35.2% for the years ended December 31, 2023, 2024, and 2025, respectively. In future periods, we may
not be able to sustain revenue or GMV growth consistent with recent history, or at all.
We believe our revenue and GMV growth depends on a number of factors, including, but
not limited to, our ability to:
• increase the overall sales volume facilitated by our platforms;
• sustain and improve merchant retention rates;
• increase merchants’ e-commerce sales conversion rates;
• successfully expand our merchants into new geographies;
• attract new merchants to our platforms in existing and new geographies, segments and verticals;
• expand our platform offerings to address evolving market dynamics and merchants’ needs;
• successfully integrating or maintaining the technologies, platforms and business propositions, modalities or offerings of business we have acquired;
• successfully realize all the benefits from our third party partnerships and collaborations;
• provide integration with our merchants’ online e-commerce web-stores;
• maintain the security, reliability and integrity of our platforms;
• maintain compliance with existing and comply with new applicable laws and regulations, including new tax rates and tariffs;
• price our platforms effectively so that we are able to attract and retain merchants;
• successfully compete against our current and future competition and competing solutions; and
• maintain service levels and consistent quality of our platforms.
We have also encountered in the past, and expect to encounter in the future, risks
and uncertainties frequently experienced by growing companies in rapidly evolving industries. If our assumptions regarding these risks
and uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not address these risks successfully,
our growth rates may slow and our business could suffer. Further, our rapid growth may make it difficult to evaluate our future prospects.
In addition, a portion of our growth in recent or past periods may be attributed to trends and there is no assurance these trends will
continue.
If we are unable to retain our existing merchants, or the GMV generated
by merchants on our platforms declines or does not increase, our business, operating results and financial condition could be adversely
affected.
Our revenues are driven by GMV that is processed through our platforms and we expect
our future revenue growth to be partially driven by increases to our existing merchants’ GMV. We aim to sign contracts with merchants
for a minimum term of 12 months and with a minimum committed monthly volume, but our merchants typically have the right to terminate their
agreements for convenience by providing prior written notice, and have no obligation to renew their agreements with us after their terms
expire. Even if our agreements with the merchants are renewed or not terminated, they may not be renewed on the same or as profitable
terms, and may exclude utilization of our shipping services which may reduce our revenues, or may reduce the markets in which we provide
them our services (including by way of localizing their fulfilment and distribution model).
6
Although we typically maintain minimum fee arrangements with the merchants, we cannot
guarantee that such minimum fees will commensurate with revenues earned in previous periods. As a result, if existing merchants terminate
their agreements with us, renew them on less favorable terms, or otherwise reduce the scope of their activity through our platforms, our
operating results and financial condition could suffer.
The growth of our business depends on our ability to attract new
merchants and increase the GMV processed on our platforms.
Our growth strategies include attracting new merchants to our platforms and increasing
the GMV processed through our platforms. There is no guarantee that we can sustain our historical merchant acquisition rates and if we
do, that such new merchants will lead to an increase of the GMV processed through our platforms or to an increase in our revenues. Our
ability to attract new merchants depends on the success of our platforms with existing merchants and the success of our sales and marketing
efforts, which may not be successful. Merchants who are not currently engaged in cross-border e-commerce may not be familiar with our
solutions and those currently engaged in cross-border e-commerce may use other products or services for their cross-border e-commerce
needs. In addition, merchants may develop their own solutions to address their cross-border e-commerce needs, purchase competitive product
offerings, or engage third-party providers of services and solutions that do not or will not enable the use of our platforms and services.
It may be difficult to engage and market to merchants who either do not currently have cross-border e-commerce needs, are unfamiliar with
our platforms and services, or utilize competing solutions and services for their e-commerce needs. This requires us to spend substantial
time, effort and resources assisting merchants in evaluating our platforms and services, including providing demonstrations, conducting
gap analyses and substantiating the value of our platforms and services. Furthermore, engaging and marketing to merchants in segments,
verticals or new regions where we do not have a presence or where we do not have a long operating history since we have established our
presence may also require effort and resources and may not result in the acquisition of new merchants or in increase of GMV. If merchants
do not perceive our offerings to be of sufficiently high value and quality, we may not be able to attract new merchants or increase our
GMV and our business, operating results and financial condition could be adversely affected.
Additionally, even if we are successful in attracting new merchants, they may not
generate GMV or revenue at the same rate or scale as our current or historical merchants. If new merchants that we acquire fail to use
our platforms to the same extent that our existing merchants do, it would reduce the GMV processed on our platforms and therefore our
revenue, which could materially adversely affect our operating results and our growth.
We have acquired, and may acquire in the future, other businesses.
Acquisitions divert a substantial part of our resources and management attention and could in the future, adversely affect our financial
results.
We have acquired and may in the future acquire, complementary solutions, functionalities,
technologies or businesses. Seeking and negotiating potential acquisitions diverts our management’s attention from other business
concerns to a certain extent and is expensive and time-consuming. Acquisitions may expose us and our business to unforeseen liabilities
or risks associated with the business or assets acquired or with entering new markets. These risks include, but are not limited to, integrating
differing corporate cultures, aligning operational systems and business processes, retaining key employees, and managing geographically
dispersed operations or entering markets in which we have limited experience. Paying the purchase price for acquisitions in the form of
cash, debt or equity securities may weaken our cash position, increase our leverage or dilute our existing shareholders, as applicable.
Additionally, acquired businesses or assets may not perform as expected, may expose us to unforeseen legal or regulatory liabilities,
and may require significant capital investments or operational resources to achieve desired outcomes. There is also a risk that we may
not achieve the anticipated cost savings, synergies, or other benefits of acquisitions fully, in a timely fashion or at all.
If we fail to develop or integrate new functionalities, or enhance
our platforms to meet the needs of our current and future merchants, or if we fail to estimate the impact of developing and introducing
new functionalities or enhanced solutions in response to rapid market or technological changes, our revenue could decline and our expenditures
could increase significantly.
The e-commerce market is characterized by rapid technological changes, evolving operational
and omnichannel modalities, frequent new product and service introductions, evolving industry standards and regulations and changing merchant
and shopper preferences. To keep pace with technological, operational and regulatory developments, satisfy increasingly sophisticated
merchant and shopper needs, achieve market acceptance and maintain the performance and security of our platforms, we must continue to
adapt, enhance, integrate and improve our platforms and existing services and we must also continue to introduce new functionalities to
our platforms. Any new solution or functionality we develop or integrate, may not be introduced in a timely manner and may not achieve
the broad market acceptance necessary to generate significant revenue. If we are unable to successfully develop or integrate new solutions
or enhance our existing solutions, our business, operating results and financial condition could be adversely affected.
7
We expect to continue to incur significant expenses to develop, integrate and implement
additional solutions and functionalities and to integrate any acquired solutions or functionalities into our existing platforms to maintain
our competitive position. These efforts may not result in commercially viable solutions. We may experience difficulties with software
development, industry standards, threats to the security and integrity of our technological infrastructure, design, manufacturing or marketing
that could delay or prevent our development, introduction or implementation of new solutions and enhancements. If we do not receive significant
revenue from these investments, or fail to meet merchant and shopper expectations, our business, operating results and financial condition
could be adversely affected.
Merchants may require customized integrations, or features and functions that we do
not yet offer or do not intend to offer, or which we have yet fully integrated or implemented, any of which may cause them to choose a
competing solution. If we fail to develop or integrate and implement solutions that satisfy merchant and shoppers’ preferences in
a timely and cost-effective manner, our ability to renew our contracts with existing merchants and our ability to create or increase demand
for our platforms could be harmed, and our business, operating results and financial condition could be materially adversely affected.
The implementation of acquired solutions into the Global-e platform, alongside initiatives such as the development and launch of Borderfree.com,
and the execution of Shopify Managed Markets, involves inherent risks. These included, and may include in the future, potential delays,
additional feature or functionality developments (to cater for merchants or general product needs), unanticipated costs, and challenges
in achieving the anticipated technological advancements or economic benefits.
There is a risk that the technology we invest in may not achieve the expected level
of success or widespread market adoption. Market dynamics, competitive forces, regulatory changes, or unforeseen challenges may impede
the successful integration and acceptance of our new solutions.
We have invested, and expect to continue investing, significant
resources in adapting our platform and services for the Shopify platforms. If these platforms or services do not achieve expected market
acceptance, if our agreement and partnership with Shopify are terminated, or if the agreement is not renewed on favorable terms, or if
Shopify promotes alternative offerings, our business and growth could be adversely affected.
On April 12, 2021 we entered into a Services and Partnership Agreement with Shopify
Inc. and its affiliates (“Shopify”) (the “2021 Shopify Agreement”), and concurrently with the merger with Flow
Commerce Inc. (“Flow”), we entered into an Amended and Restated Master Services Agreement with Flow (the “2022 Shopify
Agreement” and together with the 2021 Shopify Agreement, the “Prior Shopify Agreements”), making our platform and services
and the Flow platform and services, respectively, available to certain Shopify merchants through Shopify’s e-commerce platform.
In September 2023, Shopify launched “Shopify Markets Pro”, which was rebranded in 2024 as “Shopify Managed Markets”,
a white-label cross-border Merchant of Record (“MoR”) offering, powered by Global-e and currently available to Shopify US-based
merchants. Shopify Managed Markets is based on the Flow platform, leveraging its API-based technology, and enables merchants of diverse
scales, encompassing small and emerging businesses, to extend their brand offerings globally with streamlined integration efforts. On
May 13, 2025, we entered into an Amended and Restated Services and Partnership Agreement with Shopify (the “2025 Shopify Agreement”),
which replaced the Prior Shopify Agreements, and currently governs our provision of MoR services for Shopify Managed Markets.
The success of Shopify Managed Markets is contingent upon widespread acceptance and
adoption in the market. In late 2025, we began the launch and rollout of an updated version of the offering (“Managed Markets version
2.0”), which further integrates our MoR services with Shopify’s native payment processing and suite of services. The ongoing
transition to Managed Markets version 2.0 may involve technical complexities and changes to our revenue recognition or margin profiles
within the Shopify channel. Factors such as evolving merchants’ preferences, competitive landscape dynamics, Shopify’s sales
and marketing efforts, and unforeseen market challenges may impact the rate at which customers embrace Shopify Managed Markets. Such variations
may lead to financial losses, a weakened competitive position, and possible setbacks in achieving our strategic objectives.
While the 2025 Shopify Agreement maintains our position as the exclusive provider
of MoR services for Shopify’s first-party (1P) Managed Markets solution, it transitioned our status from an exclusive provider to
a preferred partner for third-party (3P) solutions. This structural change allows Shopify to enable integration of additional MoR providers
into its ecosystem, introducing direct competition for 3P merchant volume that was not present under the Prior Shopify Agreements. If
competing providers offer more favorable terms to merchants, or if Shopify prioritizes alternative offerings, our transaction volume and
financial results could be impacted.
8
Furthermore, entering into such relationship with Shopify has required and may
continue to require us to incur certain charges, significantly increasing our near and long-term expenditures.
The potential benefits of our relationship with Shopify are hard to estimate or quantify at this time, and we cannot be certain
that our arrangement with Shopify will provide the revenue or net income that justifies such transaction.
The 2025 Shopify Agreement is terminable by either party immediately upon notice
of certain events, subject to applicable cure periods, or without cause upon prior notice. Termination of the 2025 Shopify Agreement could
have a material adverse effect on our business, financial condition or results of operations. These risks could apply to any similar arrangement
we may enter into in the future, and any potential future collaborations may be similarly terminable by our partners.
Failure to develop, implement, or evaluate effective demand generation
services mainly through Borderfree.com could result in financial losses.
We have made and continue to make significant investments in demand generation
services mainly through Borderfree.com, which encompass marketing activities aimed at increasing global awareness, driving traffic, and
stimulating interest in our merchants’ brands, ultimately converting potential customers into paying customers. However, there is
no guarantee that these efforts will achieve the desired results. If we fail to effectively design, implement, or evaluate these strategies,
or if we misjudge their impact on our business, we may fall short of generating the anticipated traffic and engagement for our merchants
and we may also incur significant financial losses from the resources and capital invested in these initiatives.
If we fail to effectively develop, implement, or integrate our demand generation
strategies, we may incur significant losses from the resources and capital invested in these initiatives without achieving the anticipated
return on investment. Additionally, if these efforts do not lead to the expected traffic, engagement, or sales growth, it could hinder
our ability to attract new merchants and retain existing ones, ultimately impacting our revenue.
The impact of imposed tariffs or other trade regulations and policies
could adversely affect our business and financial results.
Governments in various jurisdictions in which we operate may impose new or additional
tariffs, duties, trade restrictions, or other regulatory requirements, often unexpectedly and with little or no advance notice. While
the global trade environment has seen periods of heightened volatility, particularly during 2025, the impact on our transaction volumes
to date has remained relatively limited. However, trade policies in the United States and other key markets have not yet fully stabilized.
Any sudden or significant future changes in these requirements could increase the costs of goods sold, disrupt established supply chains,
reduce consumer purchasing sentiment, and require us to adjust our pricing models and operational strategies. Also, merchants may consider
different or alternative supply chains, reducing the dependency on cross-border e-commerce, for example, by preferring domestic supply
chain and local fulfilment.
For example, our business may be adversely impacted by shifts in U.S. trade policy,
which remains subject to ongoing adjustments, including changes to de minimis thresholds, modifications to Section 301 tariffs, or new
duties on cross-border e-commerce shipments. During 2025, U.S. policymakers continued to scrutinize the application of de minimis exemptions
to cross-border e-commerce, and there have been legislative and regulatory proposals that would reduce or eliminate these exemptions for
certain categories of goods or shipments from certain countries. Any reduction or elimination of de minimis exemptions applicable to our
merchants' shipments could materially increase landed costs for U.S. shoppers and reduce demand for international purchases. Any changes
in the global trade environment, including government policies on international trade, such as export controls, new or increased tariffs
for imported goods, new legislation or regulations on manufacturing or foreign investment, renegotiation of existing trade agreements
with U.S. trading partners, or any retaliatory trade actions due to existing or future trade tension, including escalating trade tensions
between the U.S. and other countries, could disrupt global supply chains and could materially increase our merchants’ costs, and
/ or may increase the costs of consumer goods and reduce our merchants’ e-commerce transaction volume. Any reduction in our merchants’
transaction volume directly impacts the revenue we derive from them and, if such reduction continues for a prolonged period, could have
a material adverse effect on our business, financial condition and results of operations. The United States is one of our largest destination
markets for cross-border shipments, and any adverse changes to U.S. trade policy could therefore have a disproportionate impact on our
business relative to policy changes in smaller destination markets.
9
Given the inherent uncertainty regarding both the duration and the extent of
these policy measures, we cannot assure that any mitigation strategies we or our merchants may adopt will be effective. If we fail to
adapt to these policies or regulatory changes, retaliatory actions, and shifting trade policies, and if we do not accurately recalibrate
our pricing structures, or if our merchants opt to change their supply chain in a way that reduces the need for our services, our competitive
position, customer satisfaction, anticipated margins and overall financial performance could be materially and adversely affected.
Our implementation and use of artificial intelligence and machine
learning technologies may not be successful, which may impair our ability to compete effectively, result in reputational harm and have
an adverse effect on our business.
We use machine learning, artificial intelligence and automated decision-making
technologies throughout our business, and are dedicating resources and efforts to continuously improve our use of such technologies. For
example, we use machine learning and artificial intelligence technologies to support our merchant and customer service inquires and to
assist in the research and development of our solutions. As with many technological innovations, there are significant risks and challenges
involved in developing, maintaining and deploying these technologies and there can be no assurance that the usage of such technologies
will always enhance our solutions or be beneficial to our business, including our efficiency or profitability.
Further, changes and ongoing development in how we use artificial intelligence
and machine learning technologies and how we train our models, may impact the performance of our platforms and business, as well as our
reputation and the reputations of our merchants, suppliers and business partners, and we could incur liability through the violation of
laws or contracts to which we are a party or through civil claims. This is especially the case if those artificial intelligence or machine
learning models are (i) incorrectly designed or implemented; (ii) trained or reliant on incomplete, inadequate, inaccurate, biased or
otherwise poor quality data; and/ or on data to which we do not have sufficient rights or in relation to which we and/or the providers
of such data have not implemented sufficient legal compliance measures; or (iii) are adversely impacted by unforeseen defects, technical
challenges, cybersecurity threats or material performance issues.
Furthermore, we use artificial intelligence and machine learning technologies
licensed from third parties in our technologies and our ability to continue to use such technologies at the scale we need may be dependent
on access to specific third-party software and infrastructure. We cannot control the availability or pricing of such third-party technologies,
especially in a highly competitive environment, and we may be unable to negotiate favorable economic terms with the applicable providers.
If any such third-party technologies become incompatible with our solutions, become unavailable for use, or the providers of such models
unfavorably change the terms on which their technologies are offered or terminate their relationship with us, our solutions may become
less appealing to our customers and our business will be harmed. In addition, to the extent any third party artificial intelligence or
machine learning technologies are used as a hosted service, any disruption, outage, or loss of information through such hosted services
could disrupt our operations or solutions, damage our reputation, cause a loss of confidence in our solutions, or result in legal claims
or proceedings, for which we may be unable to recover damages from the affected provider.
We face competition from other companies in our industry in relation to the development
and deployment of artificial intelligence and machine learning technologies. Those other companies may develop artificial intelligence
technologies that are similar or superior to ours and/or are more cost-effective and/or quicker to develop and deploy. If we cannot develop,
offer or deploy new artificial intelligence or machine learning technologies as effectively, as quickly and/ or as cost-efficiently as
our competitors, we could experience a material adverse effect on our operating results of operation, customer relationships and growth.
The increasing adoption of autonomous or artificial intelligence
driven commerce solutions may materially alter e-commerce transaction flows, disintermediate our role, and adversely affect our business,
financial condition and results of operations.
Advances in artificial intelligence, including the growing use of autonomous or semi-autonomous
software agents capable of searching, selecting, negotiating and executing online purchases on behalf of consumers (agentic commerce),
may significantly change how e-commerce transactions are initiated, structured and completed. These developments may reduce the role of
traditional merchant storefronts, checkout pages and payment flows, and may enable transactions to occur through alternative technical
architecture or interfaces that do not require, or are not compatible with, our platforms and services.
If AI-driven purchasing agents, operating systems, e-commerce platforms, marketplaces
or payment providers enable transactions to be executed in a manner that bypass or replace our offering, or we are unable to embed in
a timely manner our offering into AI-driven purchasing flows, our services may become less relevant, less valuable or technically unnecessary
for certain transaction types or merchant segments. In such scenarios, we may experience reduced GMV processed through our platforms,
lower demand for our services, pricing pressure, or erosion of our competitive positioning.
10
In addition, the legal and regulatory frameworks governing transactions executed by
autonomous or AI-driven systems or agents remain unsettled and continue to evolve. It is unclear how existing consumer protection laws,
payment regulations, liability regimes, or emerging AI-specific regulatory frameworks will allocate responsibility among consumers, merchants,
AI system providers, platform operators and payment processors in transactions executed without direct human interaction. Any regulatory
developments that shift responsibility or compliance obligations away from merchant-of-record structures, or that facilitate alternative
transaction architectures, could require operational adjustments and may affect how we provide certain services to merchants and consumers,
which could involve additional implementation, compliance or operational costs.
If we fail to effectively anticipate, adapt to and integrate emerging forms of AI-driven
commerce our business, financial condition and results of operations could suffer.
We may not be able to successfully compete against current and future
competition or other competing solutions, and we may need to change our pricing and model to remain competitive.
We face competition in the market of global e-commerce, and such competition and
alternative and competing solutions are likely to continue and could increase in the future. Competition could lead to a decrease in the
GMV processed through our platforms and could reduce our revenue or margins, any of which could negatively affect our business, financial
condition and results of operations. A number of competitive factors could cause merchants to cease using or decline to use our platforms
and services, or could reduce the transaction volume that they process through our platforms, including, among others:
• merchants may choose to develop global e-commerce capabilities internally or choose from a variety of alternative or competing solutions;
• merchants may merge with or be acquired by companies using a competing solution or an internally developed solution;
• competing or alternative solutions may be offered as part of a bundle of e-commerce services;
• current or potential global or regional competition and competing solutions, both in geographies where we already operate, and in geographies where we do not operate, may adopt more aggressive pricing policies, offer more attractive sales terms, adapt more quickly to new technologies and changes in merchant requirements or devote greater resources to the promotion and sale of their products and solutions than we can; and
• current and potential competition may merge or establish cooperative relationships among themselves or with third parties to enhance their products, solutions and expand their markets (or in new markets), forming alliances that rapidly acquire significant market share.
We cannot assure that we will be able to compete successfully against current and
future competition or competing solutions. If we cannot compete successfully against our current and future competition or such competing
solutions, our business, operating results and financial condition could be materially and negatively impacted.
In addition, as new or existing competing solutions may be offered in competitive
prices, we may be unable to retain existing merchants or attract new merchants. Merchants have in the past and may demand substantial
price discounts as part of the negotiation of contracts. As a result, we could be required to choose either to reduce our prices or otherwise
change our pricing model, or both, which could adversely affect our business, operating results, and financial condition.
We cannot be certain that we will realize the benefits of strategic
alliances, joint ventures or partnership arrangements, including with third-party e-commerce platforms. Any failure to manage such strategic
alliances, partnerships or joint ventures, or to integrate them with our existing or future business, could have a material adverse effect
on us.
We have entered into partnership arrangements, and in the future may consider opportunities
to enter into additional arrangements or strategic alliances that may be beneficial for our operations and the growth of our platform.
Our ability to grow through these types of partnerships is subject to a number of risks, including unanticipated costs associated with
strategic alliances, issues conforming to standards, procedures and contractual requirements, and diversion of management’s attention
from our existing business. Entering into such relationships may require us to incur certain charges and increase our near and long-term
expenditures, for example by requiring us to pay revenue shares or profit shares, issue securities
or otherwise compensate our partners in connection with those partnerships. Partnership agreements could be terminable by either party
immediately or upon notice. Any termination of an agreement could have an adverse effect on our business, financial condition or results
of operations.
11
The success of our business model is reliant on our ability to integrate
our platforms with third-party e-commerce platforms, our ability to operate according to such third parties’ terms of use and integration
requirements, and our ability to maintain any partnership that we have entered into or may enter into with such third parties. Inability
or failure to do so would reduce the attractiveness of our solutions for use by current and future merchants.
Merchants typically carry out e-commerce activity through third-party e-commerce platforms,
such as Salesforce Commerce Cloud, Shopify, BigCommerce, Adobe Magento, SAP/Hybris, WooCommerce, PrestaShop, Workarea, Wshop, and others.
Our ability to attract merchants that utilize such platforms to conduct their e-commerce activity is contingent on our ability to integrate
our solutions into the e-commerce platforms they use. Each of the companies that operates these e-commerce platforms dictates the terms
of use of its respective platform, including the manner and procedure by which we access and integrate to its platform. To the extent
any such operator offers or promotes alternative products or solutions or would limit or prevent merchants from utilizing our platform,
our business, financial condition or results of operations could be materially and adversely affected.
Some of these companies also demand that certain certification processes are satisfied
prior to implementing an integration into the e-commerce platform they operate. Compliance with such terms may subject us to waiting periods
due to certification and onboarding processes and may require us to modify aspects of our platforms’ functionality in order to fit
applicable technical standards. While we exert substantial efforts to maintain compliance, and although notice of changes and instructions
are typically provided in advance, the terms of use and requirements may change unilaterally at the discretion of the e-commerce platform,
and none of our efforts as a result would be sufficient. If we fail to maintain certification or compliance, the willingness of merchants
to adopt or continue to use our solutions may be reduced.
In addition, in the event that our solutions do not integrate optimally with third-party
e-commerce platforms, leading to errors, defects, disruption or other performance problems, shoppers’ experience will be adversely
affected, our reputation may be harmed and our ability to achieve and maintain growth among merchants on the e-commerce platforms would
be adversely affected.
If we are not successful in developing or maintaining the functionality
of our platforms or if we experience real or perceived errors, failures, vulnerabilities, or bugs in our platforms, our business, results
of operations, and financial condition could be adversely affected.
Any errors, defects, or disruptions in our platforms, or other performance problems
with our platforms could harm our reputation and may damage the businesses of our merchants. Our platforms could contain undetected errors,
“bugs” or misconfigurations that could adversely affect their performance. Additionally, we regularly update and enhance our
platforms and introduce new versions of our platforms and service. These updates may contain undetected errors when introduced or released,
which may cause disruptions in our services and may reduce merchants and shoppers satisfaction. Our continued growth depends in part on
our ability to maintain the existing functionality of our platforms and services (and implementing the functionality of our acquired platforms),
meet our service levels, prevent down time and degradation of services on our platforms for both merchants and shoppers. Failure to do
so may result in damage to our reputation which may have an adverse effect on our business and results of operation.
We have experienced in the past and may in the future experience, disruptions, data
loss, outages, and other performance problems with our infrastructure due to a variety of factors, including infrastructure changes, introductions
of new functionality, human or software errors, capacity constraints, denial-of-service attacks, ransomware attacks, cybersecurity breaches,
or other security-related incidents. In some instances, we may not be able to identify the cause or causes of these performance problems
immediately or in short order, which could delay remediation and further compound the adverse impact on our business. We may not be able
to maintain the level of service uptime and performance required by merchants, especially during peak usage times as traffic and volumes
increase. Since our merchants rely on our platforms to carry out global e-commerce on an ongoing basis, any outage on our platforms would
have a direct adverse impact on our merchants’ business. Our merchants may seek compensation from us for any losses they suffer
or cease conducting business with us altogether. Further, a merchant could share information about bad experiences, which could result
in damage to our reputation and loss of current and future sales. There can be no assurance that provisions typically included in our
contracts with our merchants that attempt to limit our exposure to claims would be enforceable or adequate or would otherwise protect
us from liabilities or damages with respect to any particular claim. Even if not successful, a claim brought against us by any of our
merchants would likely be time-consuming and costly to defend and could seriously damage our reputation and harm our ability to attract
new merchants to our platforms.
12
We have a history of net losses; we anticipate increasing operating
expenses in the future, and we may not be able to maintain profitability.
We incurred net losses of $133.8 million, $75.5 million and net profit of $68.3 million
for the years ended December 31, 2023, 2024 and 2025, respectively. Because the market for our platforms and services is rapidly evolving,
it is difficult for us to predict our future results of operations or the limits of our market opportunity. We expect our operating expenses
to continue to increase over the next several years as we hire additional personnel, expand into new geographies or invest in expanding
our operations in existing geographies, expand our partnerships, operations and infrastructure, continue to enhance our platforms, develop
and expand their features, integrations and capabilities, expand and improve our service offering and increase our spending on sales and
marketing. We intend to continue to build and enhance our platforms through internal research and development and we may also selectively
pursue acquisitions. In addition, as a public company, we will continue to incur additional significant legal, accounting, and other expenses.
If we are unable to maintain revenues high enough to offset the expected increases in our operating expenses, we will not be profitable
in future periods.
If we fail to manage our growth effectively, we may be unable to
execute our business plan or maintain high levels of service and merchant satisfaction.
We have experienced, and expect to continue to experience, rapid growth, which has
placed, and may continue to place, significant demands on our management and our technological, operational and financial resources. We
have established international offices, including offices in Israel, the U.S., the UK, Europe, Asia Pacific (“APAC”) and the
United Arab Emirates, and we plan to continue to expand our international operations into other
countries in the future. We have also experienced significant growth in both the number of merchants and the number of transactions facilitated
by our platforms. For example, during the year ended December 31, 2025, our platforms generated in the aggregate $6,569 million of GMV,
representing an increase of 35.2% relative to the GMV for the year ended December 31, 2024. Additionally, our organizational structure
is becoming more complex as we scale our technological, operational, financial and management controls as well as our reporting systems
and procedures.
To manage growth in our operations and personnel, we will need to continue to grow
and improve our operational, financial, and management controls and our reporting systems and procedures. We will require significant
capital expenditures and the allocation of valuable management resources to grow and adapt to our developing needs in these areas without
undermining our corporate culture, which has been central to our growth so far. If we fail to manage our anticipated growth and change
in a manner that preserves the key aspects of our corporate culture, the quality of our platforms and services may suffer, which could
negatively affect merchants and shoppers and as a result our reputation.
The focus and scrutiny of, and evolving expectations regarding,
environmental, social, governance and other sustainability practices could increase our costs, harm our reputation or customer acquisition
and retention, our access to capital and employee retention or otherwise adversely impact our financial results.
Focus by a variety of stakeholders (including regulators) on companies’ environmental,
social and governance, or ESG, and other sustainability matters and expectations regarding voluntary ESG initiatives and disclosures may
result in increased costs, including but not limited to increased costs related to compliance, stakeholder engagement, contracting and
insurance, changes in demand for certain products, enhanced compliance or disclosure obligations, or other adverse impacts to our business,
financial condition, or results of operations. Compliance with such regulations and the associated potential cost is complicated by the
fact that various countries and regions are following different approaches to the regulation of climate change and other ESG matters.
ESG regulations are not uniform, which may increase the cost and complexity of compliance for multinational corporations, and any associated
risks.
Simultaneously, other groups of regulators and stakeholders have sought to constrain
companies’ consideration of various ESG matters. Advocates and opponents of such matters have also increasingly turned to various
forms of activism to advance their views, including by means of litigation. Such outcomes could negatively impact our business, financial
condition, results of operations, and cash flows.
Further, achieving certain ESG initiatives or targets may prove challenging due to
factors such as technological limitations, cost constraints, or dependencies on third-party suppliers or business partners. Our suppliers
and partners may face similar ESG-related scrutiny or regulatory pressures, creating additional risks or disruptions in our operations.
For example, non-compliance by our suppliers with labor or environmental standards could harm our reputation or expose us to liability.
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If we are lagging or unsuccessful, or perceived to be lagging or unsuccessful, in
each case to meet the ESG standards or the expectations of our various stakeholders, or in successfully navigating divergent expectations,
it could negatively impact our reputation, customer acquisition and retention, and lead to increased costs as well as scrutiny that could
heighten all of the risks identified in this risk factor.
Focus on long-term ESG performance and meeting our goals and values
may adversely affect our short-term performance.
ESG goals and performance could affect the way we operate and require us to take certain
actions, long-term initiatives or goals or implement and maintain certain processes. We may therefore action in certain ways that we believe
will benefit our company, business and customers in the long-term or over a period of time, even if such actions may not adhere to or
maximize shorter-term operational or financial results. We may amend or adapt our policies in ways that we believe will be beneficial
to our customers, employees or investors in the long term even though the changes may be perceived unfavorably in the shorter-term. Moreover,
we may fail to meet longer-term goals or achieve benefits derived from such goals, or benefits may not materialize as and when we expected
or at all.
We are subject to a series of risks regarding climate change.
There are inherent climate-related risks wherever business is conducted. Certain of
our facilities, as well as our and third-party infrastructure on which we rely, are or may be located in areas that have experienced,
and are projected to or may continue to experience, various meteorological phenomena (such as drought, heatwaves, wildfire, storms, and
flooding, among others) or other catastrophic events that may disrupt our or our merchant or vendors’ operations, require us to
incur additional operating or capital expenditures including costs associated with energy, water and insurance, or otherwise adversely
impact our business, financial condition, or results of operations. Climate change may increase the frequency and/or intensity of such
events. Climate change may also contribute to various chronic changes in the physical environment, such as sea-level rise or changes in
ambient temperature or precipitation patterns, which may also adversely impact our or our suppliers’ operations. While we consider
and may take various actions to mitigate our business risks associated with climate change, this may require us to incur substantial costs
and may not be successful, due to, among other things, the uncertainty associated with the longer-term projections associated with managing
climate risk. For example, to the extent catastrophic events become more frequent, it may adversely impact the availability or cost of
insurance.
Additionally, we expect to be subject to risks associated with societal efforts to
mitigate or otherwise respond to climate change, including but not limited to increased regulations, evolving stakeholder expectations,
and changes in market demand. For more information, please see our risk factor titled “The increasing focus and scrutiny of, and
evolving expectations regarding, environmental, social, governance and other sustainability practices could increase our costs, harm our
reputation or customer acquisition and retention, our access to capital and employee retention or otherwise adversely impact our financial
results.” Changing market dynamics, global and domestic policy developments, and the increasing frequency and impact of meteorological
phenomena have the potential to disrupt our business, the business of our suppliers and/or customers, or otherwise adversely impact our
business, financial condition, or results of operations.
Our operations are subject to seasonal fluctuations. If we fail
to accommodate increased volumes during peak seasons and events, our results of operations may be adversely affected.
Our business is seasonal in nature and the fourth quarter is a significant period
for our operating results. Our revenue is driven by GMV that our merchants generate through our platform, and our merchants typically
process additional GMV in the fourth quarter, which includes Black Friday, Cyber Monday and the holiday season and other peak events included
in the e-commerce calendar, such as Chinese Singles’ Day and Thanksgiving. In the years ended December 31, 2023, 2024 and 2025,
fourth quarter GMV represented approximately 33%, 35% and 36%, respectively, of our total GMV. As a result, GMV and accordingly our revenue
has previously, and we expect will continue to generally, decline in the first quarter of each year relative to the fourth quarter of
the previous year.
Any disruption in our ability to process and ship orders, especially during the fourth
quarter, could have a negative effect on our quarterly and annual operating results. Surges in volumes during peak periods may strain
our technological infrastructure, logistics channels, shopper and merchant support activities as well as our third-party service providers.
Inability of any of these components to process increased volumes may prevent us from efficiently processing and shipping orders, which
may reduce our GMV and the attractiveness of our platform.
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Any disruption to our operations or the operations of our merchants, our shipping
and logistics partners, or other service providers could lead to a material decrease in GMV or revenues relative to our expectations for
the fourth quarter which could result in a significant shortfall in revenue and operating cash flows for the full year.
Our ability to forecast our revenue and evaluate our business and
future prospects is subject to a number of uncertainties.
Our ability to forecast future results of operations and plan for and model future
growth is subject to a number of uncertainties. We have encountered and expect to continue to encounter risks and uncertainties frequently
experienced by growing companies in rapidly evolving industries, such as the risks and uncertainties described herein. Accordingly, we
may face challenges in accurately preparing internal financial forecasts or replace anticipated revenue that we do not receive as a result
of these factors. If we do not address these risks successfully, our results of operations could differ materially from our estimates
and forecasts or the expectations of investors, causing our business to suffer and our ordinary share price to decline.
In addition, market-wide events, regulatory changes, changes in interest rates, inflation,
political uncertainty or instability, regional and global conflicts and military hostilities, global health crises, any of which are outside
of our control, could impact our revenue and operating results and makes it difficult to forecast our revenue and evaluate our business
and future prospects.
Failure to effectively expand our marketing and sales capabilities
could harm our ability to increase our merchant base and achieve broader market acceptance of our platform.
Our ability to increase our merchant base and achieve broader market acceptance of
our platforms will depend on our ability to expand our marketing and sales operations. We plan to continue expanding our sales force and
our reliance on strategic partners. Our business and operating results will be harmed if our sales and marketing efforts do not generate
a corresponding increase in GMV and revenue. We may not achieve anticipated GMV and revenue growth from expanding our sales force if we
are unable to hire, develop, and retain talented sales personnel, if our new sales personnel are unable to achieve desired productivity
levels in a reasonable period of time, or if our sales and marketing programs are not effective. Furthermore, if the cost of marketing
our platforms increases, our business and operating results could be adversely affected.
Lengthy sales cycles with enterprise merchants make it difficult
to predict our future revenue and cause variability in our operating results.
Our sales cycle can vary substantially from merchant to merchant, but with enterprise
merchants it typically requires 12 to 16 weeks on average. Our ability to accurately forecast revenue is affected by our ability to forecast
new merchant acquisition. Lengthy sales cycles make it difficult to predict the quarter in which revenue from a new merchant may first
be recognized. If we overestimate new merchant growth, our revenue will not grow as quickly as our estimates, our costs and expenses may
continue to exceed our revenue and our ability to become profitable will be harmed. In addition, we plan our operating expenses, including
sales and marketing expenses, and our hiring needs in part based on our forecasts of new merchant growth and future revenue. If new merchant
growth or revenue for a particular period is lower than expected, we may not be able to proportionately reduce our operating expenses
for that period, which could harm our operating results for that period. Delays in our sales cycles could cause significant variability
in our revenue and operating results for any particular period.
Our long-term success depends on our ability to operate internationally,
making us susceptible to risks associated with global sales and operations.
We currently support global transactions of merchants in multiple countries of origin
to shoppers in over 200 destinations markets and territories and settle transactions in more than 100 currencies. Our services and platforms
are available to merchants in over 30 countries, and we aim to expand our operations and workforce to support more outbound countries,
and reach new markets and geographies. Conducting international operations subjects us to risks and burdens which include:
• the need to localize our solutions, including product customizations and adaptation for local practices and regulatory requirements;
• lack of familiarity and burdens of ongoing compliance with local laws, legal standards, regulatory requirements, tariffs, local tax regimes and customs formalities and other barriers;
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• heightened exposure to fraud;
• legal uncertainty in foreign countries with less developed legal systems;
• potentially greater difficulty to execute and enforce contracts, including our terms of service and other agreements despite our efforts to adjust our contracts and service terms to local laws and regulations;
• unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or customs formalities, embargoes, exchange controls, government controls or other trade restrictions;
• differing technology standards;
• difficulties in managing and staffing international operations and differing employer/employee relationships;
• fluctuations in exchange rates that may increase our foreign exchange exposure;
• potentially adverse tax consequences, including the complexities of foreign tax laws (including with respect to value added taxes) and restrictions on the repatriation of earnings;
• potential or actual violations of domestic and international anti-money laundering laws and anticorruption laws, such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act;
• uncertain political, national and economic climates in foreign markets;
• geo-political or national conflicts and situations and heightened rates of inflation and recessionary pressures in various countries, that directly (e.g. by virtue of war zones not being serviceable at all) or indirectly affect our operations, consumer sentiment or e-commerce activities in general;
• rapidly rising inflation across the U.S. and global economy, driving up the costs of goods and services;
• managing and staffing operations over a broader geographic area with varying cultural norms and customs;
• varying levels of internet, e-commerce and mobile technology adoption and infrastructure;
• reduced or varied protection for intellectual property rights in some countries;
• new and different sources of competition;
• costs and liabilities related to compliance with the numerous and ever-growing landscape of international data privacy and cybersecurity regimes, many of which involve disparate standards and enforcement approaches; and
• data privacy and data protection laws which may require that merchant and/or shopper data be processed and stored in a designated territory.
These factors may require significant management attention and financial resources.
Any negative impact from our international business efforts could adversely affect our business, results of operations and financial condition.
We rely on third-party services, such as shipping and cross-docking
partners and payment providers, in our platforms and services.
We rely on third parties, such as our shipping partners and “cross-docking services”
partners, to collect, sort, prepare for cross-border shipping and deliver products from the merchants to the shoppers. Shortages of transportation
vessels, transportation disruptions or other adverse conditions in the transportation industry due to shortages of pilots and truck drivers,
strikes, slowdowns, piracy, terrorism, disruptions in rail service, closures of shipping routes, unavailability of ports and port service
for other reasons, increases in fuel prices and adverse weather conditions, or other adverse changes related to such third-party services,
could increase our costs and disrupt our operations and our ability to deliver products from the merchants to our shoppers on the timing
they expect or at all. The failure of our shipping partners to provide quality customer service when delivering products to shoppers would
adversely affect the merchants and our relationships with the merchants which in turn could negatively impact our business and operating
results.
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In some countries in which we operate, we rely on third-party providers of “cross-docking
services” to collect, sort and prepare for cross-border shipping the products sold by merchants through our platforms. We generally
employ a single provider of cross-docking services in such outbound markets due to a paucity of providers and minimum volume requirements
imposed by such providers. Our ability to ship products in a timely manner is dependent on our ability to secure cross-docking services
and in the event that we cannot secure them in specific geographies, or are unable to secure them at competitive prices or with adequate
service reliability and availability, our operations may be adversely affected. Moreover, if a cross-docking service provider fails to
provide the service, our operations will be adversely affected until such time that we are able to shift to an alternative provider.
Furthermore, we rely on third parties to process payments and we cannot guarantee
that such providers will perform adequately. Errors made by, or delays in service from, such third-party providers could adversely affect
our ability to process payments and process purchases by shoppers on our platforms in a timely manner or at all, which could adversely
affect our business, operating results and financial condition.
Our success will depend on our ability to build and maintain relationships with these
and other third-party service providers on commercially reasonable terms. If we are unable to build and maintain such relationships on
commercially reasonable terms, we may have to suspend or cease operations. Even if we are able to build and maintain such relationships,
if these third parties are unable to deliver their services on a timely basis, shoppers could become dissatisfied and decline to make
future purchases from the merchants, which would adversely affect our revenue. If the merchants become dissatisfied with the services
provided by these third parties, our reputation and our business could suffer.
Operating as merchant of record for sales conducted using our platforms
imposes certain obligations and subjects us to certain risks applicable to actors that make available or place products in the market
such as product liability, shipping compliance, and waste and packaging compliance.
Our business model and activities are predicated upon our operating as the MoR of
the products sold through our platforms. As a result of us being identified as a seller rather than the merchants, we could bear responsibility
for the products and may be liable for product related claims brought by our shoppers or other third parties, and we may be subject to
various regulatory compliance requirements, such as waste and packaging compliance. For example, emerging regulations like the EU’s
General Product Safety Regulation (GPSR) require actors placing products on the market to ensure product traceability and compliance,
which includes the requirement to have a designated "responsible person" located within the EU for safety purposes. Additionally, the
EU Deforestation Regulation (EUDR), currently scheduled to take effect for large operators on December 30, 2026, will require extensive
due diligence to ensure that products containing certain commodities - such as wood, rubber, or leather - are "deforestation-free". Failure
to adhere to these or similar rules could result in significant penalties, including fines of up to 4% of our annual EU turnover, and
reputational harm. Although we have policies in place crafted to ensure compliance and reduce risk of such liabilities, for example by
avoiding the sale of products that we determine to be “high risk” or by making proper disclosures in our ‘terms of sale’
and although our commercial arrangements with the merchants typically require the merchants to cover such liabilities, it is possible
that we may be subject to product liability or other compliance or similar regulations or litigation and may incur various related costs
which may or may not be fully covered by our contractual arrangements or insurance coverage. Furthermore, any actual or alleged non-compliance
on our part in a specific geography may not be treated by local authorities as an isolated event. Heightened scrutiny by local authorities
in a specific geography could impede our local activities, irrespective of the product vertical or merchant from which the products originated.
As MoR, or whenever we perform customs clearance or declaration functions, we could
be adversely affected if the packages provided by the merchants do not contain the correct articles ordered by the shopper, or if articles
and the packages provided by the merchants are not shipped in compliance with applicable rules or do not contain all requisite information
or documentation for international shipping. Failure to ensure such compliance may result in shipping delays or diminished shopper satisfaction,
result in confiscation or destruction of articles and payment of additional costs, fines or assessments from our fulfillment partners
and other third parties, which in turn may adversely affect our results of operations.
While merchandise is in our possession, we bear the risk of loss. While the majority
of merchants are responsible for transporting the goods to our facilities, certain of our merchant agreements require us to take possession
of products for an extended period of time. To the extent that products are damaged, lost or stolen during the period in which we bear
the risk of loss, our business may be adversely affected.
Payment transactions through our e-commerce platforms subject us
to regulatory requirements, additional fees, and other risks that could be costly and difficult to comply with or that could harm our
business.
Our business depends on our ability to process a wide range of payment methods, including
credit and debit cards, as well as other alternative payment methods and this ability is facilitated by the payment card and alternative
payment networks. We do not directly acquire the payment card networks that enable our acceptance of payment cards and alternative payment
methods. As a result, we must rely on banks, acquiring processors and other third-party payment processors to process transactions on
our behalf. These third parties perform the card processing, currency exchange, identity verification and fraud analysis services. These
third parties may fail or refuse to process transactions adequately, may breach their agreements with us, or may refuse to renegotiate
or renew these agreements on terms that are favorable or commercially reasonable. They might also take actions that degrade the functionality
of our services, impose additional costs or requirements on us, or give preferential treatment to competitive competing services, including
their own services. If we are unsuccessful in establishing, renegotiating or maintaining mutually beneficial relationships with these
payment card networks, banks and acquiring processors, our business may be harmed.
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We are required by our third-party payment processors to comply with payment card
network operating rules, including the Payment Card Industry Data Security Standard (“PCI DSS”), and we have agreed to reimburse
our payment processors for any fees or fines that they are assessed by payment card networks as a result of any rule violations by us
or our merchants. The payment card schemes have discretion to determine, change and interpret the card rules, and our third-party payment
processors are required to assess our compliance with the card scheme rules, and may make assessments or determinations that are unfavorable
to our business model. In past assessments of us operating as MoR, we demonstrated our compliance with MoR operating rules and demonstrated
that we should not be subject to compliance with other operating rules (e.g. such as those applicable to “payment facilitators”).
There is no assurance that the third-party payment processors or their payment card networks will not re-evaluate that conclusion, or
make a different determination in the future. If such third-party payment processors or their payment card networks were to determine
that we must comply with other operating rules, we may be subject to additional regulations, might incur higher compliance costs, and
may be required to modify certain aspects of our platforms and service offering in order to maintain compliance, which may have an adverse
impact on our business.
If we fail to comply with the payment card network rules, we would be in breach of
our contractual obligations to our third-party payment processors, financial institutions, partners and merchants. Such failure to comply
may subject us to fines, penalties, damages, higher transaction fees and civil liability, and could eventually prevent us from processing
or accepting payment methods or could lead to a loss of a third-party payment processor. Further, there is no guarantee that, even if
we are in compliance with such rules or requirements, such compliance will prevent illegal or improper use of our payment systems or the
theft, loss, or misuse of data pertaining to credit and debit cards, credit and debit card holders, and credit and debit card transactions.
In addition, we face the risk that one or more payment card networks or other third-party
payment processors may, at any time, assess penalties against us or our merchants, or terminate our ability to accept credit card payments
or other forms of online payments from shoppers, which would have an adverse effect on our business, financial condition and operating
results.
We are subject to anti-money laundering regulations and related
compliance costs and third-party risks.
We are or may be subject to anti-money laundering (“AML”) laws and regulations
that prohibit, among other things, involvement in receiving and/or transferring the proceeds of criminal activities, or doing business
with, or rendering service to, sanctioned individuals or organizations, and impose obligations on us to identify such persons (or their
ultimate beneficiaries) or users and request certain information and documentation that, in certain circumstances, must be shared with
third-party payment card networks or other third-party payment processors or by other third parties such as Shopify or other platforms,
or with government or regulators institutions. Because laws and regulations differ in each of the jurisdictions where we operate, and
because some requirements may be imposed by the card scheme or the payment processors in other countries, additional verification and
reporting requirements could apply. These regulations requirements, as well as any future regulation and any additional restrictions imposed
by credit card associations, could raise our costs significantly and reduce the attractiveness of our services or platform. Failure to
comply with anti-money laundering laws could result in significant criminal and civil lawsuits, penalties, and forfeiture of significant
assets.
We may be required by our third-party payment card networks or other third-party payment
processors or by other third parties such as Shopify or other platforms to check, confirm and assure the identity of beneficial owners
of our merchants, or to determine they are duly and legally organized, or perform other compliancy assessments, generally known and referred
to as ‘know your customer’ or ‘KYC’ or ‘know your business’ or ‘KYB’. Certain e-commerce
platforms may offer qualifying merchants to operate a D2C e-commerce store on such platforms, for example Shopify Managed Markets. Merchants
using such platforms may onboard directly through the platform operator (e.g. Shopify), and we may not collect the information required
to perform KYC or KYB directly. While we have effected internal control processes to perform compliancy assessments, if we are unable
to collect the information required to properly perform KYC or KYB, or if we are unable to obtain such collected information, or if we
collect or obtain such KYC/KYB data and are unable to conduct a proper assessment and validation, or if we have properly conducted an
assessment but failed to take action as needed, we face the risk that one or more payment card networks or other third-party payment processors
may, at any time, assess penalties against us or our merchants, or terminate our ability to accept credit card payments or other forms
of online payments from shoppers, which would have an adverse effect on our business, financial condition and operating results.
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We are subject to governmental sanctions and export controls that
may subject us to liability if we are not in full compliance with applicable economic sanctions and export control laws.
Our activities are subject to certain economic sanctions and export control laws and
regulations that prohibit or restrict transactions or dealings with certain countries, regions, governments and persons targeted by U.S.,
Israel, E.U. or other applicable jurisdictions’ embargoes or sanctions. As a result, we bear the responsibility for ensuring that
transactions processed through our platforms are conducted in compliance with such laws and regulations. U.S., Israel and E.U. sanctions
may change from time to time, and the countries, regions, governments and persons that are sanctioned by each jurisdiction may be different.
Ensuring compliance with applicable export control laws and regulations requires ongoing efforts and resources. Identifying commerce with,
or sales made to, sanctioned countries or denied parties and obtaining export licenses or other authorizations for a particular product
sale may be time-consuming and may result in the delay or loss of sales opportunities even if the export license ultimately may be granted.
We generally apply precautions to prevent sales to sanctioned countries and denied parties, such as screening against listed denied parties
and blocking sales at the point of checkout; however, we cannot guarantee that the precautions we take will prevent all violations of
applicable export control and sanctions laws. We are aware that certain sales of immaterial value and volume made by certain of our non-Israeli
merchants through our platforms, operated by one or more of our non-Israeli subsidiaries, to a specific country (not sanctioned under
U.S. or E.U. laws), as to which country we apply the foregoing precautions, are not in compliance with certain Israeli export laws. Violations
of U.S., Israeli or E.U. sanctions or export control laws may result in penalties and significant fines and possible incarceration of
responsible employees and managers could be imposed for criminal violations of these laws.
If our carriers and brokers fail to file or obtain appropriate import, export or re-export
declarations, licenses or permits, we may also be adversely affected, through reputational harm as well as other negative consequences,
including government investigations and penalties. We presently incorporate export control compliance requirements into our strategic
partner agreements; however, no assurance can be given that our partners will comply with such requirements.
Trade Controls by the U.S. and other governments enacted due to geopolitics or otherwise
(for example, the war in Ukraine has prompted the U.S. and other governments to impose new Trade Controls and sanctions on Russia, among
other countries), and any counter-sanctions enacted in response, could continue to disrupt international commerce and the global economy,
and could restrict our ability to operate, generate or collect revenue in certain other countries, which could adversely affect our business.
While, we do not have operations or a material customer base in either Russia or Ukraine, a future escalation of the conflict or expansion
of sanctions could further disrupt global supply chains, broaden inflationary costs, and have a material adverse effect on our customers,
vendors and financial markets.
We are subject to the import regulations and restrictions of each
country to which we ship merchandise and non-compliance with such regulations may subject us to liability and may impede our ability to
provide services in specific geographies in the future.
Import and export regulations and restrictions vary by country, product and quantity
and require costly resources in order to ensure compliance. While we take precautions in order to avoid non-compliance with these restrictions,
including focusing on products that carry lower inherent risk of being subject to import/export restrictions and avoiding highly regulated
industries, some of the products offered using our platforms may be subject to such restrictions. For example, the United States Food
and Drug Administration regulates the import of sunglasses as medical devices, and the Australian Department of Agriculture regulates
the import of timber, wood articles or bamboo related products. Non-compliance with the local import rules and restrictions applicable
to such products may cause our products to be detained, confiscated, or destroyed at the port of entry.
Additionally, there are increasing expectations in various jurisdictions that companies
monitor the environmental and social performance of their suppliers, including compliance with a variety of labor practices, as well as
consider a wider range of potential environmental and social matters, including ecolabelling or the end of life considerations for products.
Compliance can be costly, require us to establish or augment programs to diligence or monitor certain third parties. Failure to comply
with such regulations can result in fines, reputational damage, import ineligibility for products, or otherwise adversely impact our business
or the business of our merchants.
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In addition, because we operate as MoR (and, in certain markets, perform or operate
importation-related functions), in the event that we are flagged by a specific country due to non-compliance with import restrictions
applicable to a specific product or vertical our ability to continue to import such product in the future may be impeded, regardless of
the identity of the merchant from which the product originates. If our service offerings are curtailed to exclude the import of whole
verticals to specific countries, or if we are barred from importing products of any vertical to specific countries, our GMV attributable
to such destination markets may decrease, our reputation will be harmed, and our platforms will become less attractive to our current
and future merchants.
The vast majority of our business relies on the personal importation
model and its applicability to the products provided to shoppers. Any modification of the rules, requirements or applicability of this
model may adversely affect our business.
The products provided by the merchants to shoppers are shipped to and imported by
the shopper for personal rather than commercial use. Each country determines its own rules and criteria for an import to qualify as importation
for personal use, and determines which, if any, licenses, certifications, registrations, fees, quantity limitations and obligations apply
to such an import. In the event that certain countries modify their personal importation rules, or impose additional compliance requirements
or limitations related to this form of import, it could have an adverse effect on the cross-border e-commerce market as a whole, and may
reduce the demand for cross-border e-commerce purchases. This in turn would reduce the demand for our platforms and services and have
an adverse effect on our business and result of operations.
Additionally, we are witnessing an evolving and developing regulatory trend whereby
the burden to adhere to certain legislations and regulatory requirements shifts to or is shared by the distributors, platform providers
and other parties involved in the fulfilment chain of products (in addition to manufacturers), even if such parties are not established
in the country of importation and where the import is carried out by the shopper as a personal-import. For example, in the EU, the EU’s
General Product Safety Regulation (GPSR) has recently came into force and imposing certain additional requirements on our merchants and
on us. In some cases, we may be regarded as the ‘responsible person’ or offer to act as the ‘authorized representative’
or otherwise be or assume a role requiring us to ensure compliance with certain product safety or regulatory requirements. Acting in this
capacity may impose obligations, including monitoring product compliance, maintaining documentation, and serving as a contact point for
regulators and shoppers. Non-compliance by merchants could expose us to fines, penalties, or legal liability, even if we have no direct
or indirect control over product manufacturing and safety. Additionally, fulfilling this role may require investments in compliance infrastructure
and expertise, which may increase our operational costs. In the event that such regulations would nonetheless apply to the supply chain
we are part of, it could have an adverse effect on the e-commerce market as a whole, and may reduce the offering of e-commerce products
to such regulated destinations. This in turn would reduce the demand for our platforms and services and have an adverse effect on our
business and result of operations.
We store personal information of merchants and shoppers. To the
extent our security measures are compromised, our platforms may be perceived as not being secure. This may result in merchants curtailing
or ceasing their use of our platforms, our reputation being harmed, our incurring significant regulatory and monetary liabilities, and
adverse effects on our results of operations and growth prospects.
Our operations involve the storage and transmission of data, including personal information
and other confidential information of our third-party providers, merchants and shoppers, on our systems and the systems of third-party
service providers we rely on. Third-party applications that we rely on for provision of certain services, such as acquiring processors
also store personal information, payment card information, and other confidential information. We have experienced and expect to continue
to experience actual and attempted cyber-attacks in varying degrees of our IT networks, such as through phishing scams and ransomware.
For example, in December 2025, we identified unauthorized access to one of our cloud systems, and certain personal data, specifically
names and contact information, were impacted (“December 2025 Incident”). However, no payment information, account credentials
or other sensitive personal data were accessed. Although none of these actual or attempted cyber-attacks has had a material adverse impact
on our operations or financial condition to date, we cannot guarantee that such incidents will not reoccur, or will not have such an impact
in the future. We face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our
systems and information. Cyberattacks and other malicious internet-based activity continue to increase globally in frequency and magnitude,
and cloud-based platform providers of services are expected to continue to be targeted. Threats include traditional computer “hackers,”
malicious code (such as viruses, ransomware and worms), social engineering/phishing, employee malfeasance or misuse, human or technological
error, as a result of bugs, misconfigurations or exploited vulnerabilities in software or hardware and denial-of-service attacks. Sophisticated
nation-states and nation-state-supported actors now engage in such attacks, including advanced persistent threat intrusions. Although
we do not store payment card information, hackers and adverse third parties may mistake us for the merchants, causing them to target us
in order to obtain payment card information. Threat actors are becoming increasingly sophisticated in using techniques and tools - including
artificial intelligence - that circumvent security controls, evade detection and remove forensic evidence. As a result, we may be unable
to detect, investigate, remediate or recover from future attacks or incidents, or to avoid a material adverse impact to our information
technology systems, confidential information or business.
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We have implemented a variety of security protocols, network protection mechanisms
and other security measures into our internal systems, networks and physical facilities designed to protect confidentiality, integrity
and availability of our systems and information. However, there is no assurance that such measures, including our policies, controls or
procedures, will be fully implemented, complied with or adequate to prevent or detect service interruption, system failure, data loss
or theft, or other material adverse consequences, directly or through our vendors or that such measures will be fully implemented, complied
with at all times. Despite efforts to create security barriers to such threats, it is virtually impossible for us to entirely mitigate
these risks. If our security measures are compromised as a result of third-party action, human error, malfeasance, stolen or fraudulently
obtained log-in credentials, technical malfunction or otherwise, our reputation could be damaged, our business may be harmed, and we could
incur significant liability (including, but not limited to, fines imposed by data privacy authorities and costs related to litigation).
Additionally, because we rely on third-party and public-cloud infrastructure, we are
reliant in part on third-party security measures to protect against unauthorized access, cyberattacks, and the mishandling of shopper
and merchant data. Even if such a data breach did not arise out of our action or inaction, or if it were to affect our competition rather
than us, the resulting concern could negatively affect merchants, shoppers and our business. Because our products and services are integrated
with our merchants’ systems and processes, any circumvention or failure of our cybersecurity defenses or measures could compromise
the confidentiality, integrity, and availability of our merchants’ own systems and/or our merchants’ proprietary or other
sensitive information.
Further, remote and hybrid working arrangements at certain third-party providers may
increase cybersecurity risks due to the challenges associated with managing remote computing assets and the security vulnerabilities that
may exist in non-corporate or home networks. In addition, the integration of artificial intelligence in the operations, products or services
of third-party providers may pose new or unknown cybersecurity risks and challenges.
Concerns regarding data privacy and security may cause some of our merchants to stop
using our platforms and fail to renew their agreements with us. In addition, failures to meet merchants’ or shoppers’ expectations
with respect to security and confidentiality of their data and information could damage our reputation and affect our ability to retain
merchants, attract new merchants, and grow our business. Furthermore, failure to comply with legal or contractual requirements around
the security of personal information could lead to significant fines and penalties, as well as claims by merchants and shoppers. We cannot
guarantee that any costs and liabilities incurred in relation to an attack or incident will be covered by our existing insurance policies
or that applicable insurance will be available to us in the future on economically reasonable terms or at all. Regardless of merit, these
proceedings or violations could force us to spend money in defense or settlement of these proceedings, result in the imposition of monetary
liability or injunctive relief, divert management’s time and attention, increase our costs of doing business, and materially adversely
affect our reputation and the demand for our platform.
Interruptions or delays in the services provided by third-party
data centers or internet service providers could impair our platforms and our business could suffer.
We rely on the internet and, accordingly, depend upon the continuous, reliable, and
secure operation of internet servers, related hardware and software, and network infrastructure. Any damage to, failure or delay of our
systems would prevent us from operating our business.
We host our platforms using third-party data centers and providers of cloud infrastructure
services. We currently use one third-party provider for these data and cloud services. Our operations depend on protecting the virtual
cloud infrastructure hosted by this cloud services provider by maintaining its configuration, architecture, and interconnection specifications,
as well as the information stored in these virtual data centers and transmitted by third-party internet service providers. Furthermore,
we have no physical access to or control over the services provided by our cloud services provider. Although we have disaster recovery
plans that utilize multiple locations, the data centers that we use are vulnerable to damage or interruption from human error, intentional
bad acts, earthquakes, floods, fires, severe storms, war, terrorist attacks, power losses, hardware failures, systems failures, telecommunications
failures, and similar events, many of which are beyond our control, any of which could disrupt our service, destroy our data, or prevent
us from being able to continuously back up or record changes in our platforms. Certain of these events may become more frequent or intense
as a result of climate change. For more information, see our risk factor titled “We are subject to a series of risks regarding climate
change.” In the event of significant physical damage to one of these data centers, it may take a significant period of time to achieve
full resumption of our services, we may incur data loss during the service resumption process and our disaster recovery planning may not
account for all eventualities. Further, a prolonged service disruption to our cloud services provider, affecting our platforms could damage
our reputation with current and potential organizations, expose us to liability, cause us to lose merchants and shoppers, or otherwise
harm our business. We may also incur significant costs for using alternative equipment or taking other actions in preparation for, or
in reaction to, events that damage the systems we use. Damage or interruptions to these data centers could harm our business. Moreover,
negative publicity arising from these types of disruptions could damage our reputation and may adversely impact use of our solutions and
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. Further, the contractual commitments that we provide to merchants on our platforms as well as
our third-party providers with regard to data privacy and security are limited by the commitments that our third-party cloud infrastructure
services provider has provided us and these measures may not fully address the risks associated with the third-party processing, storage
and transmission of such information. Any violation of data or security laws by our third party providers could adversely impact our business.
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Our cloud services providers enable us to order and reserve server capacity in varying
amounts and sizes distributed across multiple regions. In addition, our cloud services providers provide us with computing and storage
capacity pursuant to terms of service that continue until terminated by either party. If we do not accurately predict our infrastructure
capacity requirements, merchants could experience service shortfalls which could interrupt the performance of our platforms, which could
adversely affect the perception of its reliability and our revenue and harm the sales and business of our merchants. We may also be unable
to effectively address capacity constraints, upgrade our systems as needed and continually develop our technology and network architecture
to accommodate actual and anticipated changes in technology.
Our platforms are utilized by a large number of merchants, and as we continue to expand
the number of merchants and shoppers, we may not be able to scale our technology to accommodate the increased capacity requirements, which
may result in interruptions or delays in service. Merchants often draw significant numbers of shoppers over short periods of time (typically
during events such as new product releases, holiday shopping season and flash sales). In the event that merchants conduct a high volume
of sales in a short period of time, we may not be capable of securing the then-necessary capacity for such traffic which may cause a degradation
in the quality of our platforms and services. Furthermore, if we are incapable of anticipating high traffic levels and reserving server
capacity accordingly, our platforms and services may be adversely affected. In addition, the failure of our cloud services provider’s
data centers or third-party internet service providers to meet our capacity requirements could impede our ability to scale our operations.
In some cases, our cloud services providers may terminate the agreement upon 30 days’ notice. Termination of the agreement may harm
our ability to access data centers we need to host our platforms or to do so on terms as favorable as those we currently have in place.
We currently rely exclusively on one cloud services provider for our cloud infrastructures and therefore a transition to an alternative
provider may take time, cause us to incur additional costs and reduce the quality and functionality of our platforms.
Increases in shipping rates could negatively impact our profits
generated through shipping services.
Shipping rates and surcharges are volatile and subject to market fluctuations. A portion
of our revenues is generated through shipping services provided through our shipping and logistics partners. Therefore, a substantial
increase in shipping rates may reduce our margins from shipping services. Although some of such cost would be borne by merchants and shoppers,
significant increases of costs may diminish demand for international e-commerce, reduce the attractiveness of our service among merchants
and adversely affect our results of operations.
Fluctuations in the exchange rate of foreign currencies have adversely
impacted our results of operation in certain periods, and may impact our results of operations in future periods.
A majority of our purchase and sale transactions are carried out in different currencies
and we bear the risk of a decrease in value of the shopper’s purchasing currency in the interim periods between the transaction
stages (e.g. placement/payment and returns/refund). We may incur additional costs and experience losses resulting from fluctuations in
exchange rates.
While our financial reporting currency is U.S. Dollars, a significant share of our
revenues is denominated in foreign currencies, including Pounds Sterling and Euros, and may in the future have significant sales denominated
in the currencies of additional countries, which may negatively impact our reported revenues as a result of fluctuations in currency exchange
rates vis-à-vis the U.S. Dollar. In addition, we incur a substantial portion of our operating expenses in New Israeli Shekels, Pounds
Sterling and U.S. Dollars, and to a lesser extent, other foreign currencies. We may incur additional costs and experience losses resulting
from fluctuations in exchange rates for revenues in foreign currencies or upon translation of New Israeli Shekels expenses incurred in
Israel, Euros expenses incurred in Europe or Pounds Sterling expenses incurred in the United Kingdom, to U.S. Dollars which may negatively
impact our operating results. For example, New Israeli Shekel appreciation against the USD has occurred at various points during 2025
and may result in higher USD denominated costs with respect to our Israeli operations and increase our overall USD denominated operating
expenses.
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During the year ended December 31, 2025, we did not hedge all of our foreign currency
exchange risk. If we determine to implement hedging strategies in the future, such strategies may not be effective in reducing our foreign
currency exchange risk exposure, and we may incur costs in connection with such hedging activities. Fluctuations in currency exchange
rates could have a material adverse effect on our results of operations and financial condition.
If we fail to offer high quality support, our business and reputation
could suffer.
Merchants rely on our personnel for support related to our platforms and services.
High-quality support is important for maintaining, renewing and expanding our agreements with existing merchants and maintaining our reputation
among merchants. As we expand our business and pursue engagements with new merchants, the importance of high-quality support will increase,
and we expect to incur additional support related costs in order to meet the requirements of our new and future merchants. If we do not
help merchants and shoppers quickly to resolve issues and provide effective ongoing support, our ability to retain existing merchants
and attract new merchants could suffer and our reputation could be harmed.
If we fail to enhance our reputation and awareness of our platforms,
our ability to expand the number of merchants using our platforms and increase our GMV will be impaired, our reputation may be harmed,
and our business, results of operations, and financial condition may suffer.
We believe that developing and maintaining awareness and a favorable reputation is
critical to achieving widespread acceptance of our platforms and services and is an important element in attracting new merchants to our
platforms, and retaining existing merchants. Furthermore, we believe that the importance of brand recognition will increase as competition
in our market increases. Our ability to increase awareness will depend largely on the effectiveness of our marketing efforts, our ability
to ensure that our platforms and services remain of high quality, reliable, and useful at competitive prices, our ability to maintain
our merchants’ trust, our ability to continue to develop new functionality and solutions, and our ability to successfully differentiate
our platforms.
Efforts to increase awareness may not yield increased revenue, and even if they do,
any increased revenue may not offset the expenses we incur. If we fail to successfully promote our platforms, incur substantial expenses
in an unsuccessful attempt to promote our platforms, or fail to successfully transition, execute and grow the offerings derived from the
acquired platforms into our business (for example, the Shopify Managed Markets offering), we may fail to attract new merchants, retain
existing merchants or grow or maintain the volume of sales facilitated by our platforms to the extent necessary to realize a sufficient
return on our marketing efforts, and our business, results of operations, and financial condition could suffer.
Our reputation may be harmed by our merchants’ or third-party
service providers’ unethical business practices.
Our emphasis on our values makes our reputation particularly sensitive to allegations
of unethical business practices by our merchants or third-party service providers. Our policies promote legal and ethical business practices.
However, we do not control our merchants or third-party service providers or their business practices and cannot ensure that they comply
with our policies. If our merchants or third-party service providers engage in illegal or unethical business practices or are perceived
to do so, we may receive negative publicity and our reputation may be harmed.
We are subject to stringent and changing laws, regulations, standards,
and contractual obligations related to privacy, data protection, and data security. Our actual or perceived failure to comply with such
obligations could harm our business.
We receive, collect, store, process, share, transfer, disclose, and use personal data
and other data relating to shoppers, customers, candidates, employees, website users, contractors and other persons. 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 data, the scope of which are changing,
subject to differing interpretations, and may be inconsistent among jurisdictions or conflict with other legal and regulatory requirements.
For example, the Israeli Privacy Protection Law 5741-1981 and its regulations, or the PPL, the EU and UK General Data Protection Regulation,
or the GDPR, U.S. state laws, and the data protection and security laws of other states and countries impose requirements with respect
to use, processing, disclosure and/or deletion of personal information of their residents, imposing penalties for violations and, in some
cases, private right of action for data breaches and certain violations. In addition, Government authorities, including the U.S. Department
of Justice, have issued, and may issue in the future, rules restricting the transfer of certain personal data to certain countries. Such
instructions could limit our ability to share such data and subject us to liability in case of noncompliance. These laws, rules, and similar
legislation in other states and countries that are developing, have been recently enacted or are in the process of being amended, impose
transparency obligations, stringent user consent requirements and permit data subjects to request that we discontinue using certain data,
amongst and other obligations with respect to personal data of their respective residents and provide residents with similar rights for
certain types of data processing activities, data breaches or violations. We are also subject to certain contractual obligations related
to privacy, data protection and data security. We strive to comply 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, and is likely to remain for the foreseeable future, uncertain and complex,
and 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 our other legal obligations or our practices. Further, any significant change to applicable laws, regulations or industry
practices could increase our costs and require us to modify our services and features, possibly in a material manner, which we may be
unable to complete, and may limit our ability to collect, use, process, store, share, transfer, or disclose shopper data or develop new
services and features.
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Certain data privacy legislation restricts the cross-border transfer of personal data
and some countries introduced data localization into their laws. We expect the existing legal complexity and uncertainty regarding international
personal data transfers to continue globally. As the regulatory guidance and enforcement landscape in relation to data transfers continue
to develop, we could incur additional costs, face complaints and/or become subject to regulatory investigations or fines; we may have
to stop using certain tools and vendors and make other operational changes; and we may have to implement alternative data transfer mechanisms
under data protection law and/ or take additional compliance and operational measures and/or it could otherwise affect the manner in which
we provide our services, and could adversely affect our business, operations and financial condition.
Laws relating to providers of digital services and new regulations relating to issues
such as e-commerce, information requirements for internet, digital services providers or other intermediatory providers, such as the EU
Digital Services Act, are also quickly evolving and often impose onerous compliance obligations. These laws create uncertainty and could
negatively affect our operations and use of our services, require us to change or adjust our platforms and could result in changes to
our operations or business model and we may incur significant expenses should we have to change our model or be subject to monetary penalties
or other corrective measures for noncompliance.
Any failure or perceived failure by us to comply with our posted privacy policies,
our privacy-related obligations to merchants, shoppers or other third parties, or any other legal obligations or regulatory requirements
relating to privacy, data protection, data security or digital services, 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 merchants 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, other obligations, and policies that are applicable to the businesses
of our merchants may limit the adoption and use of, and reduce the overall demand for, our platform. In addition, if a breach of data
security were to occur or to be alleged to have occurred, if any violation of laws and regulations relating to privacy, data protection
or data security were to be alleged, or if we had any actual or alleged defect in our safeguards or practices relating to privacy, data
protection, or data security, our platforms and services may be perceived as less desirable and our business, prospects, financial condition,
and results of operations could be materially and adversely affected. Additionally, if third parties we work with violate applicable laws,
regulations or contractual obligations, such violations may put our 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 merchants to lose trust in us, and otherwise materially and adversely affect our reputation and business. Lastly,
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.
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As the regulatory framework for machine learning technology and
generative artificial intelligence evolves, including with respect to unintentional bias and discrimination, our business, financial condition,
and results of operations may be adversely affected.
Our business increasingly relies on artificial intelligence, machine learning
and automated decision making. The regulatory framework for this technology is rapidly evolving, and we may not always be able to anticipate
how to respond to these laws or regulations. Many federal, state and foreign government bodies and agencies have introduced or are currently
considering additional laws and regulations governing the use of such technologies. There is also an increase in litigation in a number
of jurisdictions, including the United States, relating to the development, security and use of artificial intelligence.
There are significant risks involved in utilizing artificial intelligence and
no assurances can be provided that our use will enhance our solutions or services or produce the intended results. For example, artificial
intelligence algorithms may be flawed, insufficient, of poor quality, reflect unwanted forms of bias or contain other errors or inadequacies,
any of which may not be easily detectable; artificial intelligence has been known to produce false or “hallucinatory” inferences
or outputs. artificial intelligence can also present ethical issues and may subject us to new or heightened legal, regulatory, ethical
or other challenges and inappropriate or controversial data practices by developers and end-users, or other factors adversely affecting
public opinion of artificial intelligence, could impair the acceptance of artificial intelligence technologies. If the artificial intelligence
tools that we create or use, are or are alleged to be deficient, inaccurate, biased or controversial, we could incur operational inefficiencies,
competitive harm, legal liability, brand or reputational harm, or other adverse impacts on our business and financial results. If we do
not have sufficient rights to use the data or other material or content on which the artificial intelligence tools we use rely, or to
use the output of such artificial intelligence tools, we also may incur liability through the violation of applicable laws and regulations,
third-party intellectual property, data protection, data privacy or other rights, or contracts to which we are a party.
The technologies underlying artificial intelligence and its uses are subject
to a variety of laws and regulations, including those related to intellectual property, data protection, data privacy, cybersecurity,
consumer protection, competition and equal opportunity, and are expected to be subject to increased regulation and new laws or new applications
of existing laws and regulations. The artificial intelligence legal and regulatory landscape is rapidly evolving, and we are or may become
subject to numerous state, federal and foreign laws and regulations governing the use of artificial intelligence. Implementation of standards
and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws
and regulations may have on our business.
In the United States, and internationally, artificial intelligence is the subject
of evolving review by various governmental and regulatory agencies, including the SEC and the Federal Trade Commission, and changes in
laws and regulations governing the use of artificial intelligence may adversely affect the ability of our business to use or rely on artificial
intelligence and our ability to provide and to improve our solutions and services, may require additional compliance measures and changes
to our operations and processes, and may result in increased compliance costs and potential increases in civil claims against us. Many
federal, state and foreign government bodies and agencies have introduced or are currently considering additional laws and regulations
governing the use of such technologies. Any such changes at the federal level could require us to expend significant resources to modify
our products, services, or operations to ensure compliance or remain competitive. Additional regulations may impact our ability to develop,
use and commercialize artificial intelligence and machine learning technologies in the future.
In Europe, on August 1, 2024, the EU Artificial Intelligence Act (the “EU
AI Act”) entered into force, and establishes a comprehensive, risk-based governance framework for artificial intelligence in the
EU market. The majority of the substantive requirements will apply from August 2, 2026. Once fully applicable, the EU AI Act’s requirements,
particularly those around transparency and risk assessments, may directly impact the development and operation of our e-commerce risk
intelligence platform, requiring significant changes to our processes and potentially limiting the functionality of certain artificial
intelligence driven features. The European Commission’s Digital Omnibus Proposal, published in November 2025, includes proposed
amendments to certain EU laws and regulations, including (among others) the EU AI Act. However, the proposal remains at an early stage
of the EU legislative process.
In 2022 and 2023, China implemented a number of regulations to govern generative
artificial intelligence, algorithmic recommendation and deep synthesis technologies. Such regulations impose strict obligations on service
providers, among other entities, with respect to their provision and use of generative artificial intelligence, algorithmic recommendation
and deep synthesis technologies. The regulatory framework in China is expected to have a material impact on the way artificial intelligence
is regulated in China, and together with developing guidance and/or decisions in this area, may affect our use of artificial intelligence
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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It is possible that the EU AI Act and the US artificial intelligence laws and
regulations, along with the adoption of new laws and regulations in other jurisdictions, or the interpretation of existing laws and regulations,
may affect the operation of our e-commerce risk intelligence platform and the way in which we use artificial intelligence and machine
learning technology, including with respect to how we train our models, unintentional bias and discrimination. Failure to comply with
such laws or regulations could subject us to legal or regulatory liability. Further, the cost to comply with such laws or regulations
could be significant and would increase our operating expenses, which could adversely affect our business, financial condition and results
of operations.
The situation in Ukraine could materially adversely affect our business,
financial condition and results of operations.
In late February 2022, Russian military forces launched military action against
Ukraine, and sustained conflict and disruption in the region is likely. The impact to Ukraine, as well as actions taken by other countries,
including new and stricter sanctions by Canada, the United Kingdom, the European Union, the U.S. and other countries and organizations
against officials, individuals, regions, and industries, and each potential response to such sanctions, tensions, and military actions,
could lead to disruption, instability and volatility in global markets and industries that could have a material adverse effect on our
operations. As a result of this situation, our services into Ukraine and Russia were suspended until further notice.
In addition, some of our Research and Development team members are located in
several cities in Ukraine which have been disrupted by the outbreak of war. The conflict has impaired and may continue to impair their
ability to work, thereby adversely affecting our research and development and merchant support capacities. Due to this disruption, the
human cost to our employees as well as the potential for broader, adverse impacts of this war, including heightened operating risks in
Ukraine and Europe, additional sanctions or counter-sanctions, heightened inflation, cyber-attacks, higher energy costs and higher supply
chain costs, as well as broader impact on global and regional economies, is difficult to measure. The ultimate impact of such events on
our business is difficult to predict. Any disruption in the businesses of our customers or partners could have a significant adverse impact
on our results. All of the aforementioned risks may be further increased if our disaster recovery plans or those of our customers or partners
prove to be inadequate.
We are subject to anti-corruption, anti-bribery, anti-money laundering
and similar laws, and non-compliance with such laws can subject us to criminal penalties or significant fines and harm our business and
reputation.
We are subject to anti-corruption and anti-bribery and similar laws, such as the U.S.
Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, U.S.
Travel Act, the USA PATRIOT Act, the U.K. Bribery Act 2010, the Proceeds of Crime Act 2002, Chapter 9 (sub-chapter 5) of the Israeli Penal
Law, 57373-1977, the Israeli Prohibition on Money Laundering Law, 5760-2000 and other anti-corruption, anti-bribery and anti-money laundering
laws in countries in which we conduct activities. Anti-corruption and anti-bribery laws generally prohibit companies and their employees
and agents from promising, authorizing, making, or offering improper payments or other benefits to government officials and others in
the private sector. As we increase our international sales and business, our risks under these laws may increase.
In addition, we use, and may continue to use, third parties to sell access to
our platforms and conduct business on our behalf abroad, in particular carriers and other freight forwarders who perform customs-clearance
and related services and functions as our service providers, and in our own name and instructions. We or such current and future third-party
intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated
entities, and we can be held liable for the corrupt or other illegal activities of such third-party intermediaries, and our employees,
representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities. We have implemented an anti-corruption
compliance program but cannot assure you that all our employees and agents, as well as those companies to which we outsource certain of
our business operations, will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible.
Noncompliance with these laws could subject us to investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement
of profits, significant fines, damages, other civil and criminal penalties or injunctions, adverse media coverage, and other consequences.
Any investigations, actions or sanctions could harm our business, results of operations, and financial condition.
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We act as a service provider and take certain part of the fulfilment
chain of the merchants, and while our legal and functional roles are defined, third parties may confuse us with the merchants resulting
in claims and liabilities relating to the merchants’ activities.
We operate largely as a “white label” solution which enables the merchants
to offer their products through our platform, while maintaining their own brand experience. Due to our nearly transparent integration
with such merchants’ shopper experience, claims arising from the actions of the merchants may be unduly addressed to us by virtue
of our perceived affiliation with the merchants and our role in the shopper experience. To the extent that we are not successful in demonstrating
that we are distinct from such merchants, we may be subject to misdirected claims and associated liabilities. Although we include indemnification
provisions in the merchant agreements, such provisions may not be enforced in certain circumstances, certain jurisdictions or may not
be sufficient to fully cover potential liabilities arising from such claims.
If we fail to adequately maintain, protect or enforce our intellectual
property rights, our competitive position could be impaired and we may lose valuable assets, generate reduced revenue, and incur costly
litigation to protect our rights.
Our success is dependent, in part, upon protecting our intellectual property rights,
including those in our know-how and proprietary technology. We rely on a combination of copyrights, trade secret and other intellectual
property laws and contractual restrictions to establish and protect our intellectual property rights. While it is our policy to protect
and defend our rights to our intellectual property, we cannot predict whether steps taken by us will be adequate to prevent infringement,
misappropriation or other violation of our intellectual property rights.
Policing unauthorized use of our know-how, technology and intellectual property is
difficult and may not be effective. We will not be able to protect our intellectual property if we are unable to enforce our rights or
if we do not detect unauthorized use of our intellectual property. Despite our precautions, it may be possible for unauthorized third
parties to copy our platforms or technology and use information that we regard as proprietary to create products or services that compete
with our offerings. Some of the provisions of our employee, consultant and service agreements that protect us against unauthorized use,
copying, transfer, and disclosure of our platforms, may be unenforceable under the laws of certain jurisdictions and foreign countries.
Further, the laws of some countries do not protect intellectual property to the same extent as the laws of the United States, and mechanisms
for enforcement of intellectual property rights in some foreign countries may be inadequate. To the extent we expand our international
activities, our exposure to unauthorized copying and use of our platforms and proprietary information may increase. Further, our competition,
foreign governments, foreign government-backed actors, criminals, or other third parties may gain unauthorized access to our confidential
information and technology. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating
our intellectual property rights. If we are unable to protect our intellectual property rights or prevent unauthorized use, infringement
or misappropriation thereof by third parties, the value of our intellectual property and intellectual property rights may be diminished,
and our competition may be able to more effectively mimic our offerings and service. In addition, our know-how is derived in part from
insights we obtain from the historical individual and aggregate transactions that take place on our platform. If the availability, security
or integrity of such data is lost or compromised due to a technology failure, cyberattack or similar event, our know-how could be lost
or diminished, and this could materially adversely affect our ability to serve our merchants. For more information, see “Risk Factors-Risks
Relating to our Business and Industry- We store personal information of merchants and shoppers. To the extent our security measures are
compromised, our platforms may be perceived as not being secure. This may result in merchants curtailing or ceasing their use of our platform,
our reputation being harmed, our incurring of significant regulatory and monetary liabilities and adverse effects on our results of operations
and growth prospects.”
While software and other of our proprietary works may be protected under copyright
law, we have not registered any copyrights in these works, and instead, primarily rely on protecting our software as a trade secret. In
order to bring a copyright infringement lawsuit in the United States, the copyright must be registered. Accordingly, the remedies and
damages available to us for unauthorized use of our software may be limited.
In addition, we may experience difficulties in enforcing the intellectual property
rights in output generated by generative artificial intelligence technologies. The United States Copyright Office has previously denied
copyright protection for content generated by artificial intelligence technologies, and the United States Patent and Trademark Office
has similarly stated that an artificial intelligence tool cannot be an “inventor” of a patent, rendering it impossible to
obtain patent protection for inventions created solely by artificial intelligence. The Supreme Court of the United Kingdom has reached
a similar conclusion, stating that artificial intelligence systems cannot be named as an “inventor” for UK patent law purposes.
We may be required to spend significant resources to monitor and protect our intellectual
property rights, and we may or may not be able to detect infringement, misappropriation or other violation of our intellectual property
rights by third parties. Litigation may be necessary in the future to enforce our intellectual property rights and to protect our trade
secrets. Such litigation could be costly, time consuming, and distracting to management and could result in the impairment or loss of
portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses,
counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights. Our inability to protect
our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s
attention and resources, could delay further sales or the implementation of our platforms, impair their functionality, delay introductions
of new features, integrations, and capabilities, result in our substituting inferior or more costly technologies into our platforms, or
injure our reputation. In addition, we may be required to license additional technology from third parties to develop and market new features,
integrations, and capabilities, and we cannot assure you that we could license that technology on commercially reasonable terms or at
all, and our inability to license this technology could harm our ability to compete. Any one or more of the foregoing could harm our business,
results of operations, and financial condition.
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We may incur costs to defend against, face liability for or be vulnerable
to intellectual property infringement claims brought against us by others.
There is considerable intellectual property development and enforcement activity in
our industry. We expect that software developers in our industry will increasingly be subject to infringement claims as the number of
competing solutions grows and the functionality of platforms and services in different industries overlap. Our future success depends
in part on not infringing upon or misappropriating the intellectual property rights of others. There is a risk that our operations, platforms
and services may infringe or otherwise violate, or be alleged to infringe or otherwise violate, the intellectual property rights of third
parties. Other companies have claimed in the past, and may claim in the future, that we infringe upon or otherwise violate their intellectual
property rights. A claim may also be made relating to technology or intellectual property that we acquire or license from third parties.
If we were subject to a claim of infringement, regardless of the merit of the claim or our defenses, the claim could:
• require costly litigation to resolve and the payment of substantial royalty or license fees, lost profits or other damages;
• require and divert significant management time;
• cause us to enter into unfavorable royalty or license agreements;
• require us to discontinue some or all of the features, integrations, and capabilities available on our platforms;
• require us to indemnify our merchants or third-party service providers; and/or
• require us to expend additional development resources to redesign our platforms.
Any one or more of the above could harm our business, results of operations, and financial
condition.
We use open source software, which may pose particular risks to
our proprietary software, technologies, products and services in a manner that could negatively affect our business.
We use open source software in our platforms and expect to use more open source software
in the future. From time to time, there have been claims challenging both the ownership of open source software against companies that
incorporate open source software into their products and whether such incorporation is permissible under various open source licenses.
There is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability
to commercialize our platforms. As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open
source software, or breach of open source licenses. Litigation could be costly for us to defend, have a negative effect on our business,
results of operations, and financial condition, or require us to devote additional research and development resources to change our platforms.
In addition, if we were to combine our proprietary source code or software with open source software in a certain manner, we could, under
certain open source licenses, be required to release the source code of our proprietary software to the public. This would allow our competition
to create similar products with less development effort and time. If we inappropriately use open source software, or if the license terms
for open source software that we use change, we may be required to re-engineer our platforms, or certain aspects of it, incur additional
costs, discontinue the availability of certain features, or take other remedial actions.
In addition to risks related to license requirements, usage of open source software
can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties support,
indemnification, assurance of title or controls on origin of the software or other contractual protections regarding infringement claims
or the quality of the code. In addition, many of the risks associated with usage of open source software, such as the lack of warranties
or assurances of title, cannot be eliminated, and could, if not properly addressed, negatively affect our business. We have established
processes to help alleviate these risks, but we cannot be sure that all of our use of open source software is in a manner that is consistent
with our current policies and procedures, or will not subject us to liability.
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In addition, open source libraries incorporated in our platforms must be constantly
updated in order to avoid security vulnerabilities that may be present in an outdated version of the software. Updating the open source
libraries we use in a timely manner requires ongoing development efforts, and any delay relating to this process may expose us to risk
of security breach. To the extent that our platforms depend upon the successful operation of open source software, any undetected errors
or defects in this open source software could prevent the deployment or impair the functionality of our platforms, delay new solutions
introductions, result in a failure of our platforms, and injure our reputation. For example, undetected errors or defects in open source
software could render it vulnerable to breaches or security attacks, and, in conjunction, make our systems more vulnerable to data breaches.
In addition, the public availability of such software may make it easier for others to compromise our platforms.
We depend on our executive officers and other key employees, and
the loss of one or more of these employees could harm our business.
Our success depends largely upon the continued services of our executive officers
and other key employees. From time to time, there may be changes in our executive management team resulting from the hiring or departure
of executives, which could disrupt our business. We do not have employment agreements with our executive officers or other key personnel
that require them to continue to work for us for any specified period and, therefore, they could terminate their employment with us at
any time subject only to the notice periods prescribed by their respective executive agreements. The loss of one or more of our executive
officers, or key employees could harm our business.
Inability to attract and retain other highly skilled employees could
harm our business.
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. Competition in regions where we maintain offices is intense, especially for engineers experienced in designing and developing software
and experienced sales professionals. We have from time to time experienced, and we may experience in the future, difficulty in hiring
and retaining employees with appropriate qualifications.
In addition, certain domestic immigration laws restrict or limit our ability to recruit
internationally. Any changes to Israeli, United Kingdom, European, the U.S. or other immigration policies that restrain the flow of technical
and professional talent may inhibit our ability to recruit and retain highly qualified employees. Failure to retain or attract qualified
personnel could have a material adverse effect on our business, financial condition and results of operations.
Furthermore, job candidates and existing employees often consider the value of the
equity awards they receive in connection with their employment. If the perceived value of our equity awards declines, it may harm our
ability to recruit and retain highly skilled employees. Volatility or lack of appreciation in the price of our ordinary shares may also
affect our ability to attract and retain our key employees. Many of our senior personnel and other key employees have become, or will
soon become, vested in a substantial number of equity awards such as options or restricted share units. Employees may be more likely to
leave us if the equity awards they own or the shares underlying their vested options or restricted share units have significantly appreciated
in value relative to the original purchase price of the shares or the exercise price of the options, or conversely, if the exercise price
of the options that they hold are significantly above the market price of our ordinary shares.
While we may not be able to enforce non-compete agreements we enter
into with our employees, our current and future competition may attempt to enforce similar agreements with individuals we recruit or attempt
to recruit.
We generally enter into agreements with our employees which prohibit our employees,
if they cease working for us, from competing directly with us or working for our current and future competition for a limited period.
However, we may be unable to enforce these agreements under the laws of the jurisdictions in which our employees work, and it may be difficult
for us to restrict our current and future competition from benefiting from the expertise our former employees developed while working
for us. For example, Israeli labor courts have required employers seeking to enforce non-compete undertakings of a former employee to
demonstrate that the competitive activities of the former employee will harm one of a limited number of material interests of the employer
that have been recognized by the courts, such as the protection of a company’s trade secrets or other intellectual property.
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If we hire employees from our current and future competition or other companies, their
former employers may attempt to assert that these employees or we have breached their legal obligations, resulting in a diversion of our
time and resources. In a similar manner, should our current and future competition succeed in hiring some of our employees and executives,
and should some of these employees or executives breach their legal obligations and divulge commercially sensitive information to our
current and future competition, our ability to successfully compete with our current and future competition may be hindered.
We may be subject to litigation for a variety of claims, which could
harm our reputation and adversely affect our business, results of operations, and financial condition.
In the ordinary course of business, we may be involved in and subject to litigation
for a variety of claims or disputes and receive regulatory inquiries. These claims, lawsuits, and proceedings could include labor and
employment, wage and hour, commercial, antitrust, alleged securities law violations or other investor claims, and other matters. The number
and significance of these potential claims and disputes may increase as our business expands. Further, our general liability insurance
may not cover all potential claims made against us or be sufficient to indemnify us for all liability that may be imposed. Any claim against
us, regardless of its merit, could be costly, divert management’s attention and operational resources, and harm our reputation.
As litigation is inherently unpredictable, we cannot assure you that any potential claims or disputes will not have a material adverse
effect on our business, results of operations, and financial condition.
Contractual arrangements between merchants and local distributors,
as well as merchants’ operating preferences, may impede the adoption by merchants of a D2C model and diminish the adoption of our
platforms and services as a result.
A significant segment of our merchants are international brands with a strategic focus
on transitioning to a D2C model through the use of e-commerce. Despite making this transition, some brands maintain contractual relationships
with distributors of their products such as wholesalers, local webstore operators, marketplaces and franchises in various geographies
which our platforms make accessible for D2C sales. Contractual arrangements between brands and their local distributors that provide for
exclusivity terms, volume restrictions on alternate distribution channels or most favored client pricing may slow or restrict adoption
of our platforms and services. Even absent such contractual obligations, local distributors may still petition the brand to cease its
operations through our platforms if the brand’s D2C sales adversely impact their local distributor sales. Although we believe that
our platforms and services provide functionality, tools and advantages that match or outweigh the local distributor model and therefore
justify their use on a standalone or supplemental basis, resistance on behalf of such distributors and the resulting friction may slow
or restrict adoption of our platforms and services by such brands in certain locations and diminish our growth in this segment.
In addition, while we believe our platforms and services provide flexible and cost-effective
means for merchants to transact globally, as our merchants grow their international activity through the use of our services, or as market
trends change, they may decide that our platforms are too costly, or that they can utilize other modalities or operational flows, and
transition some, or even all of their activity, into one in which they transact directly with shoppers, rather than through us, and therefore
do not need to pay our service fees, e.g. by means or setting up and operating dedicated localized web stores for certain geographies.
Such transitions, should they occur, will negatively impact our financial condition and results of operations.
Our failure to raise additional capital or generate cash flows necessary
to expand our operations and invest in new technologies in the future could reduce our ability to compete successfully and harm our results
of operations.
Although we believe that the aggregation of our existing cash and cash equivalents,
short-term bank deposits and investments in marketable securities, together with cash flow from operations, will be sufficient to meet
our business needs for at least the next 12 months from the filing of this Annual Report, we may require additional financing, and we
may not be able to obtain debt or equity financing on favorable terms, if at all. If we raise equity financing to fund operations or on
an opportunistic basis, our shareholders may experience significant dilution of their ownership interests. If we need additional capital
and cannot raise it on acceptable terms, or at all, we may not be able to, among other things:
• develop new features, integrations, capabilities, and enhancements;
• continue to expand our product development, sales, and marketing organizations;
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• respond to competitive pressures or unanticipated working capital requirements; or
• pursue acquisition opportunities.
Furthermore, the Company maintains the majority of its cash and cash equivalents
in accounts with major and highly rated multi-national or local financial institutions, and our deposits at certain of these institutions
significantly exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any
of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access
uninsured funds 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.
Our corporate culture has contributed to our success, and if we
cannot maintain this culture as we grow, we could lose the innovative approach, creativity, and teamwork fostered by our culture and our
business could be harmed.
We believe that our corporate culture has been an important contributor to our success
by creating an environment that drives and perpetuates our strategy to create a better, more productive way to work and focuses on driving
success for our customers. As we continue to grow, including geographically, and continue to develop the infrastructure of a public company,
we may find it difficult to maintain our corporate culture. If we do not maintain and continue to develop our corporate culture as we
grow and evolve, it could harm our ability to foster the innovation, craftsmanship, teamwork, curiosity, and inclusion, we believe that
we need to support our growth. Any failure to preserve our culture could also harm our ability to retain and recruit personnel, innovate
and operate effectively, and execute our business strategy.
If we fail to maintain an effective system of disclosure controls
and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable
regulations could be impaired, which may adversely affect our stock price and our business.
The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) requires,
among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are
continuing to develop and refine our disclosure controls and procedures that are designed to ensure that information required to be disclosed
by us in the reports that we will file with the SEC is recorded, processed, summarized, and reported within the time periods specified
in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated
to our principal executive and financial officers as appropriate to allow timely decisions regarding required disclosure. Furthermore,
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. We are also required to disclose changes in internal control over financial reporting on an annual basis. Additionally,
we are required to include an attestation report on internal control over financial reporting issued by our independent registered public
accounting firm. If we are unable to continue to maintain effective internal control, we may not have adequate, accurate or timely financial
information, and we may be unable to meet our reporting obligations or to comply with the requirements of the SEC or the Sarbanes-Oxley
Act. To maintain compliance with Section 404, we continue to engage in a process to document and evaluate our internal control over financial
reporting, which is both costly and challenging. In this regard, we continue to dedicate internal resources and have engaged outside consultants
and adopted a detailed work plan to continue to assess and document the adequacy of our internal control over financial reporting, continue
to undertake steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and
implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is
a risk that we will not be able to maintain effective internal control over financial reporting as required by Section 404.
If any of these controls and systems do not perform as expected, we may experience
material weaknesses in our controls. Ineffective disclosure controls and procedures and internal control over financial reporting could
result in a restatement of our financial statements, the imposition of sanctions, or investigation by regulatory authorities and could
cause investors to lose confidence in our reported financial and other information, all of which could have a material negative effect
on the trading price of our ordinary shares. In addition, failure to meet these requirements could result in delisting from Nasdaq.
As part of our growth strategy, we may decide to make additional acquisitions
of privately held businesses. Prior to becoming part of our consolidated company, the acquired businesses would not be required to implement
or maintain the disclosure controls and procedures or internal control over financial reporting that are required of public companies.
We are required to integrate any acquired businesses into our consolidated company’s system of disclosure controls and procedures
and internal control over financial reporting, but we cannot provide assurance as to how long the integration process may take.
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In addition to our results determined in accordance with GAAP, we believe certain
non-GAAP measures and key metrics may be useful in evaluating our operating performance. We present certain non-GAAP financial measures
and key metrics in this Annual Report and intend to continue to present certain non-GAAP financial measures and key metrics in future
filings with the SEC and other public statements. Any failure to accurately report and present our non-GAAP financial measures and key
metrics could cause investors to lose confidence in our reported financial and other information, which could have a negative effect on
the trading price of our ordinary shares.
If our estimates or judgments relating to our critical accounting
policies prove to be incorrect, our results of operations could be adversely affected.
The preparation of consolidated financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the
reporting periods. Significant items subject to such estimates and assumptions include, but are not limited to, the allocation of transaction
price among various performance obligations, the estimated customer life on deferred contract acquisition costs, the allowance for credit
losses, the fair value of financial assets and liabilities; including accounting and fair value of derivatives, the fair value of acquired
intangible assets and goodwill, the useful lives of acquired intangible assets and property and equipment, share-based compensation, until
the Company’s IPO including the determination of the fair value of the Company’s Ordinary Shares, and the valuation of deferred
tax assets and uncertain tax positions. The Company bases these estimates on historical and anticipated results, trends and various other
assumptions that it believes are reasonable under the circumstances, including assumptions as to future events. Actual results could differ
from those estimates.
Changes in tax laws or regulations to which we are subject could
have an adverse effect on us, our merchants or their shoppers and could increase the costs and reduce the attractiveness of our platforms
and harm our business.
New income, sales, use or other tax laws, regulations, or ordinances could be enacted
and new interpretations of existing tax laws, regulations or ordinances could be adopted at any time. Those changes could adversely affect
our domestic and international business operations, and our business, results of operations, and financial condition. These events could
require us, our merchants or the shoppers to pay additional tax amounts on a prospective or retroactive basis, as well as require us,
our merchants or the shoppers to pay fines and/or penalties and interest for past amounts deemed to be due. If we are required to collect
such additional tax amounts from either our merchants or the shoppers and are unsuccessful in collecting such taxes due from our merchants
or the shoppers, we could be held liable for such costs, thereby adversely affecting our results of operations and harming our business.
If we raise our prices to offset the costs of these changes, merchants may elect not to use our platforms and services in the future.
Additionally, new, changed, modified, or newly interpreted or applied tax laws could increase our merchants’, our shoppers’
and our compliance, operating, and other costs. Further, these events could decrease the capital we have available to operate our business.
Any or all of these events could harm our business, results of operations, and financial condition. Compliance with these new reporting
requirements as well as the newly introduced VAT rules required and will continue to require significant resources and we cannot be certain
that we have fully complied with or applied the new requirements, and as a result we may face non-compliance assessments, calculation
or remittance gaps and other discrepancies. Further, governments, customs agencies and tax authorities may seek heightened scrutiny and
enforcement of the new regulations, which could result in delayed clearance, rejections of our tax submissions, refusal to assess taxes
in a timely manner and additional audits.
In addition, we are subject to taxation in several jurisdictions around the world
with increasingly complex tax laws, the application of which can be uncertain. The tax authorities in these jurisdictions could review
our tax returns and impose additional tax, interest, and penalties, assert that various withholding requirements apply to us or our subsidiaries
or that benefits of tax treaties are not available to us or our subsidiaries, any of which could harm us and our results of operations.
Our results of operations may be harmed if we are required to collect
sales or other taxes relating to the use of our platforms and services in jurisdictions where we have not historically done so.
States and local taxing jurisdictions may impose sales and use taxes, including on
services provided electronically or goods sold via the internet. The applicability of sales taxes related to the use of our platforms
in various jurisdictions is unclear. We collect and remit sales and value-added tax, or VAT or goods and services tax, or GST, in a number
of jurisdictions (including in the U.S.). It is possible, however, that we could face sales tax, VAT or GST audits and that our liability
for these taxes could exceed our estimates as state tax authorities could still assert that we are obligated to collect additional tax
amounts from merchants and remit those taxes to those tax authorities. Further, one or more U.S. state or non-U.S. authorities could seek
to impose additional sales, use or other tax collection and record-keeping obligations on us or may determine that such taxes should have,
but have not been, paid by us. We could also be subject to audits in U.S. states and non-U.S. jurisdictions for which we have not accrued
tax liabilities. A successful assertion that we should be collecting additional sales or other taxes on our services and/or on goods sold
in jurisdictions where we have not historically done so and do not accrue for sales taxes could result in substantial tax liabilities
for past sales (including substantial interest and penalties), discourage organizations from utilizing our platforms and services, or
otherwise harm our business, results of operations, and financial condition.
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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.
There can be no assurance that our effective tax rate will not increase over time
as a result of changes in corporate income tax rates or other changes in the tax laws in the jurisdictions in which we operate. Any changes
in tax laws could have an adverse impact on our financial results. 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. For example, there is growing pressure in many jurisdictions and from multinational organizations such as the Organization
for Economic Cooperation and Development (“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 (“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 European Union’s “Anti Tax Avoidance” Directives), it is still
difficult in some cases to assess to what extent these changes will have on 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.” In October 2021, 137 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 €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. Pillar Two Global Anti-Base Erosion (GloBE) is focused on developing a global minimum tax rate of at least 15% applicable
to in-scope multinational enterprises (with revenue in excess of €750 million). As of 2024, GloBE rules have been enacted (the legislation
entered into force on the financial year beginning January 1, 2024) in certain jurisdictions in which we operate through local entities.
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). In response to concerns raised by the United States, the OECD recently finalized
a “side-by-side” approach, under which certain U.S.-parented multinational enterprises may be exempt from certain Pillar Two
rules. It is not entirely clear how this side-by-side agreement will be implemented by each participating jurisdiction. As a result, Pillar
Two remains under negotiation and continues to evolve. While we do not currently anticipate GloBE (which generally applies to multinational
enterprise groups with consolidated annual revenue more than Euro 750 million) to cause us to incur a material tax liability in 2025 and
2026, we are monitoring developments from the OECD, governmental bodies, such as the EU, and tax authorities in the jurisdictions in which
we operate, to evaluate the future impact of changing global tax laws.
In addition, the U.S. Base Erosion and Anti-Abuse Tax (BEAT), a minimum tax on large
multinational corporations was enacted by the 2017 Tax Cuts and Jobs Act and modified by the "One Big Beautiful Bill" in 2025, designed
to prevent profit shifting to lower-tax jurisdictions through deductible payments (like royalties, interest) to foreign affiliates. It
generally applies to companies with average annual gross receipts of at least $500 million in the US and a base erosion percentage of
at least 3% and functions as a minimum tax, ensuring a baseline U.S. tax payment. The BEAT rate will stand at 10.5% for tax years beginning
after December 31, 2025. We are still analyzing the implications of BEAT on us. If BEAT becomes applicable to our U.S. subsidiary, it
may adversely affect our effective tax rate or result in higher tax liabilities. The U.S. tax system also remains subject to further change.
We are unable to predict which, if any, changes to the U.S. tax system will be enacted into law, and what effects any enacted legislation
might have on our tax liabilities. There have been proposals to impose retaliatory measures with respect to jurisdictions that have, or
are likely to, put in place tax rules that are extraterritorial or disproportionately affect U.S. companies. Although such proposals have
since been withdrawn, the likelihood of these changes being enacted or implemented is unclear. We are currently unable to predict whether
further changes will occur and, if so, the ultimate impact on our business. Any significant changes or developments in U.S. laws and policies,
such as laws and policies surrounding international trade, foreign affairs, manufacturing and development and investment in the territories
and countries where we or our customers operate, can materially adversely affect our business, results of operations, and financial condition.
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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 we will be subject to higher tax reporting requirements, which may adversely affect our effective tax rate or result in
higher cash tax liabilities in the future.
General Risks Affecting Our Business and Operations
Unfavorable conditions in our industry, the global economy, e-commerce
or particular verticals within e-commerce, could limit our ability to grow our business and negatively affect our results of operations.
Our results of operations may vary based on the impact of changes in our industry
or the global economy on us or our merchants or our shoppers. The revenue growth and potential profitability of our business depend on
demand for our platforms and services, as well as demand for the products offered by our merchants. Therefore, current or future economic
uncertainties or downturns could adversely affect our business and results of operations. Negative conditions in the global economy or
individual markets, including changes in gross domestic product growth, financial and credit market fluctuations, political turmoil, new
or increased tariffs and changes to trade policies (and retaliatory measures), trade route restrictions or challenges, natural catastrophes,
warfare, global pandemics and terrorist attacks, could cause a decrease in business investments, consumer spending, services availability
or e-commerce generally and negatively affect our business or result in cross border trading to be less attractive to merchants and shoppers
and affect the volume of sales on our platforms.
Some of our merchants are luxury fashion brands, and the adverse impact to our business
resulting from any of the foregoing factors could be magnified to the extent that it disproportionately affects merchants in verticals
from which our merchants derive a significant amount of their GMV.
During recent periods these and other factors have resulted in heightened inflation
rates as well as recessionary pressures in various countries. If economic conditions further deteriorate, shoppers may not have the financial
means to make purchases from our merchants and may delay or reduce discretionary purchases, negatively impacting our merchants and our
results of operations. Other disruptions, for example, the situation in Ukraine, rapid or uncertain changes to trade policies and retaliatory
measures, have caused and may continue to cause other heightened uncertainty in the global economy.
Such uncertainties may also cause prospective or existing merchants to defer investment
in e-commerce. Our smaller merchants may be more susceptible to general economic conditions than larger businesses, which may have greater
liquidity and access to capital. Uncertain and adverse economic conditions also may lead to increased refunds and chargebacks. Since the
impact of such uncertainties is ongoing, the effect on the global economy may not be fully reflected in our results of operations until
future periods. Volatility in the capital markets has been heightened during recent periods and such volatility may continue, which may
cause declines in the price of our ordinary shares.
To the extent our platforms are perceived by merchants as costly, or too difficult
to launch or migrate to, it would negatively affect our growth. Our revenue may be disproportionately affected by delays or reductions
in general IT spending and reduction in investments in cross-border expansion by merchants. Our competition may respond to market conditions
by lowering prices or otherwise bundling their competing solutions with other of their offerings which are widely used by merchants in
a way that may make it difficult to attract merchants to our platforms and services and may offer more competitive prices (including by
way of strategic partnerships, collaborations or otherwise), in order to lure away our merchants. We cannot predict the timing, strength,
or duration of any economic slowdown, instability or recovery, generally or within any particular industry. If the economic conditions
of the general economy or markets in which we operate worsen from present levels, our business, results of operations and financial condition
could be adversely affected.
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Moreover, persistent economic downturns may require us to undertake optimization and
cost saving initiatives, including streamlining our organization and adjusting the size and structure of our workforce. Any reduction
in force may yield unintended consequences and costs, such as attrition beyond the intended reduction in force, the distraction of employees
and reduced employee morale, which could, in turn, adversely impact productivity, including through a loss of continuity, loss of accumulated
knowledge or inefficiency during transitional periods. Any of these impacts could also adversely affect our reputation as an employer,
make it more difficult for us to hire new employees in the future and increase the risk that we may not achieve the anticipated benefits
from the restructuring.
Actions of activist shareholders may cause us to incur substantial
costs, disrupt our operations, divert management’s attention, or have other material adverse effects on us.
From time to time, activist investors may take a position in our shares. These activist
investors may disagree with decisions we have made or may believe that alternative strategies or personnel, either at a management level
or at a board level, would produce higher returns. Such activists may or may not be aligned with the views of our other shareholders,
may be focused on short-term outcomes, or may be focused on building their reputation in the market. These activists may not have a full
understanding of our business and markets and the alternative personnel they may propose may also not have the qualifications or experience
necessary to lead the company.
Responding to advances or actions by activist investors may be costly and time-consuming,
may disrupt our operations, and may divert the attention of our board of directors, management team, and employees from running our business
and maximizing performance. Such activist activities could also interfere with our ability to execute our strategic plan, disrupt the
functioning of our board of directors, or negatively impact our ability to attract and retain qualified executive leadership or board
members, who may be unwilling to serve with activist personnel. Uncertainty as to the impact of activist activities may also affect the
market price and volatility of our shares.
Risks Relating to Our Ordinary Shares
Our share price has been and may continue to be volatile.
The market price of our ordinary shares has been and could continue to 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 direct or indirect competition of significant business developments, changes in service provider relationships, acquisitions or expansion plans;
• changes or proposed changes in laws or regulations or differing interpretations or enforcement of laws or regulations affecting our business;
• changes in our pricing model;
• our involvement in litigation or regulatory actions;
• 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;
• publication of research reports or news stories about us, our competition or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts;
• changes in the estimation of the future size and growth rate of our markets; and
• general economic and market conditions.
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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.
We cannot guarantee that we will repurchase all of the ordinary
shares pursuant to our announced repurchase program or that our repurchase program will enhance long-term shareholder value.
In September 2025, our board of directors authorized our repurchase program under
which an amount of up to $200 million was made available to purchase our ordinary shares (the “Repurchase Program”). The Repurchase
Program, as authorized by our board of directors, provides the Company with the authority to make repurchases of our ordinary shares.
The specific timing and amount of repurchases under the Repurchase Program will depend upon several factors, including but not limited
to market and business conditions, the trading price of our ordinary shares, regulatory requirements and capital availability. The program
does not require the purchase of any minimum dollar amount or number of shares, and the program may be modified, suspended or discontinued
at any time.
Repurchases of our ordinary shares pursuant to our Repurchase Program could affect
the market price of our ordinary shares or its volatility. Additionally, our Repurchase Program could diminish our cash reserves, which
may impact our ability to finance future growth and to pursue possible future strategic opportunities and acquisitions. There is no assurance
that we will repurchase all the ordinary shares that could be potentially purchased under the Repurchase Program, that our Repurchase
Program will enhance long-term shareholder value, and short-term share price fluctuations could reduce the repurchase program’s
effectiveness.
The concentration of our share ownership with insiders may limit
your ability to influence corporate matters, including the ability to influence the outcome of director elections and other matters requiring
shareholder approval.
Our executive officers, directors, beneficial owners of greater than 5% of our ordinary
shares and affiliated entities together beneficially owned approximately 38% of our ordinary shares outstanding as of December 31, 2025.
Certain of such holders also have rights to acquire additional ordinary shares upon the exercise of options in the future. As a result,
these shareholders, acting together, will have control over most matters that require approval by our shareholders, including the appointment
and dismissal of directors, the terms of compensation of our directors and chief executive officer, certain other related party transactions,
capital increases, and amendments to our amended and restated articles of association. Corporate action might be taken even if other shareholders
oppose them. This concentration of ownership might also have the effect of delaying or preventing a change of control of us that other
shareholders may view as beneficial.
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.
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 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, and (2) 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 intend to furnish comparable quarterly information
on Form 6-K. The Holding Foreign Insiders Accountable Act was signed into law on December 18, 2025 and requires directors and officers
of “foreign private issuers” to make insider reports under Section 16(a) of the Exchange Act, effective March 18, 2026. Directors
and officers of “foreign private issuers” remain exempt from the short-swing profit disclosure and recovery provisions of
Section 16 of the Exchange Act. In addition, foreign private issuers are not required to file their annual report on Form 20-F until four
months 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, you may not have the same protections afforded to shareholders of a company that is not a foreign private issuer.
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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. In the future, we would lose our foreign private issuer status
if more than 50% of our outstanding voting securities are owned by U.S. residents and any of the following three circumstances applies:
(1) the majority of our directors or executive officers are U.S. citizens or residents, (2) more than 50% of our assets are located in
the United States, or (3) our business is administered principally in the United States. 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, 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 disclosure and recovery provisions
of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance rules
of Nasdaq. 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 corporate governance rules of Nasdaq.
As a foreign private issuer, we have the option to follow certain home country corporate
governance practices rather than those of Nasdaq, 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 Nasdaq 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 corporate governance rules of Nasdaq.
The market price of our ordinary shares has been and could in the
future be negatively affected by future issuances and sales of our ordinary shares.
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.
As of December 31, 2025, we had 169,049,616 ordinary shares outstanding,
and 8,008,635 ordinary shares are subject to outstanding awards such as options and restricted share units granted to employees under
our share incentive plans, of which 5,709,184 are ordinary shares issuable under currently exercisable share options. Upon issuance, such
shares may be freely sold in the public market, except for shares held by affiliates who have certain restrictions on their ability to
sell. Subject to compliance with applicable rules and regulations, we may issue ordinary shares or securities convertible into ordinary
shares from time to time in connection with a financing, acquisition, investment, our share incentive plans or otherwise. Any such issuance
could result in substantial dilution to our existing shareholders and cause the market price of our ordinary shares to decline.
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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 United States Holders of our ordinary
shares.
We would be classified as a passive foreign investment company (“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 (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. 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. For purposes of this test, 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. Based on our market capitalization and the composition of our income,
assets and operations, we believe that we were not a PFIC for the year ended December 31, 2025 and do not expect to be a PFIC for United
States federal income tax purposes for the current taxable year or in the foreseeable future. However, this is a factual determination
that must be made annually after the close of each taxable year. Moreover, the value of our assets for purposes of the PFIC determination
may be determined by reference to the trading value of our ordinary shares, which could fluctuate significantly. In addition, it is possible
that the Internal Revenue Service may take a contrary position with respect to our determination in any particular year, and therefore,
there can be no assurance that we were not a PFIC for the year ended December 31, 2025 or will not be classified as a PFIC in the current
taxable year or in the future. Certain adverse U.S. federal income tax consequences could apply to a United States Holder (as defined
in Item 10.E. “Taxation-U.S. Federal Income Tax Consideration”) if we are treated as a PFIC for any taxable year during which
such United States Holder holds our ordinary shares. United States 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 “Taxation-U.S. Federal Income Tax Consideration-Passive
Foreign Investment Company” in Item 10.E. below.
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:
• the Israeli Companies Law, 5759-1999 (the “Companies Law”) regulates mergers and requires that a tender offer be effected when more than a specified percentage of shares in a company are purchased;
• the Companies Law requires special approvals for certain transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions;
• the Companies Law does not provide for shareholder action by written consent for public companies, thereby requiring all shareholder actions to be taken at a general meeting of shareholders;
• our amended and restated articles of association 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 70% of our voting power;
• our amended and restated articles of association restrict us, subject to certain exceptions, from engaging in certain business combination transactions, with any shareholder who holds 20% or more of our voting power. The transactions subject to such restrictions include mergers, consolidations and dispositions of our assets with a market value of 10% or more of our assets or outstanding shares. Subject to certain exceptions, such restrictions will apply for a period of three years following each time a shareholder became the holder of 20% or more of our voting power;
• 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 70% of our voting power; and
• our amended and restated articles of association provide that director vacancies may be filled by our board of directors.
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Further, Israeli tax considerations may make potential transactions undesirable to
us or to some of our shareholders whose country of residence does not have a tax treaty with Israel granting tax relief to such shareholders
from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect
to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of numerous
conditions, including a holding period of two years from the date of the transaction during which certain sales and dispositions of shares
of the participating companies are restricted. Moreover, with respect to certain share swap transactions, the tax deferral is limited
in time, and when such time expires, the tax becomes payable even if no disposition of the shares has occurred.
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. Consequently, investors who purchase our ordinary shares may be unable to realize a gain on their investment except by selling
such shares after price appreciation, which may never occur.
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 Companies
Law imposes restrictions on our ability to declare and pay dividends.
Payment of dividends may also be subject to Israeli withholding taxes. See “Taxation”
in Item 10.E below for additional information.
Our amended and restated articles of association provide that unless
we consent to an alternate forum, the federal district courts of the United States shall be the exclusive forum of resolution of any claims
arising under the Securities Act which may impose additional litigation costs on our shareholders.
Our amended and restated articles of association provide that, unless the Company
consents in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive
forum for the resolution of any claims arising under the Securities Act or the rules and regulations promulgated pursuant to such statutes.
Notwithstanding the foregoing, we note that holders of our securities cannot waive compliance with the federal securities laws and the
rules and regulations thereunder. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce
any duty or liability created by the Exchange Act or the rules and regulations thereunder, and Section 22 of the Securities Act creates
concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities
Act or the rules and regulations thereunder. As a result, the exclusive jurisdiction provision may not preclude or contract the scope
of exclusive federal or concurrent jurisdiction for actions brought under the Securities Act or the Exchange Act, or the respective rules
and regulations promulgated thereunder. While the Federal Forum Provision does not restrict the ability of our shareholders to bring claims
under the Securities Act, nor does it affect the remedies available thereunder if such claims are successful, we recognize that it may
limit shareholders ability to bring a claim in the judicial forum that they find favorable and may increase certain litigation costs which
may discourage the filing of claims against the Company, its directors and officers.
If we were deemed to be an investment company under the Investment
Company Act of 1940, as amended (the “1940 Act”), applicable restrictions could make it impractical for us to continue our
business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.
Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed
to be an “investment company” for purposes of the 1940 Act if (1) it is, or holds itself out as being, engaged primarily,
or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (2) it engages, or proposes to
engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment
securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an
unconsolidated basis. We do not believe that we are an “investment company,” as such term is defined in either of those sections
of the 1940 Act.
Notwithstanding Sections 3(a)(1)(A) and (C) of the 1940 Act, we are a research and
development company and comply with the safe harbor requirements of Rule 3a-8 of the 1940 Act. We intend to conduct our operations so
that we will not be deemed an investment company. However, if we were to be deemed an investment company, restrictions imposed by the
1940 Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us
to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of
operations.
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Risks Relating to Our Incorporation and Location in Israel
Conditions in Israel, including Israel’s conflicts with parties
in the region, as well as political and economic instability, could materially and adversely affect our business.
We are incorporated under the laws of the State of Israel and some of our employees,
including our Chief Executive Officer, our Chief Financial Officer and other senior members of our management operate from our offices
that are located in Petah Tikva, Israel. In addition, a number of our officers and directors are residents of Israel. Accordingly, political,
economic, and military conditions in Israel and the surrounding region may directly affect our business and operations.
Since the establishment of the State of Israel in 1948 and in recent years, armed
conflicts between Israel and its neighboring countries and terrorist organizations active in the region have involved missile strikes,
hostile infiltrations, abduction of soldiers and citizens, and terrorism against civilian targets in various parts of Israel.
Following the October 7th 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.
In addition, since February 28, 2026, Israel and the United States have been engaged
in a large-scale military campaign against Iran, following a major escalation in regional tensions. On March 2, 2026, Hezbollah formally
joined the war against Israel. In response, the Israeli Defense Forces have conducted hundreds of strikes across southern Lebanon and
initiated new ground incursions into southern Lebanese territory.
Hostilities continue with various Iran-backed groups throughout the region, including
the Islamic Resistance in Iraq and the Houthi movement in Yemen, which have targeted Israeli and U.S. assets.
Also, the fall of the Assad regime in Syria may create geopolitical instability in
the region and Israel conducts operations to prevent the entrenchment of Iranian military assets and Hezbollah infrastructure in the border
region.
While our offices in Petah Tikva 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.
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. Since the commencement of these events, we have not experienced any material effect from the absence of employees that were called
to military service. However, the future absence of our employees or employees of our third-party service providers due to their military
service, may in the future materially and adversely affect our ability to conduct our operations.
The persistence of high-intensity conflict throughout the region, despite occasional
diplomatic efforts or partial ceasefires, offers no assurance of long-term stability. Insurance coverage for our operations in Israel
may become limited, more expensive, or unavailable. A change of government or regime in Iran, while potentially reducing long-term regional
tensions, could be accompanied by heightened instability during any transitional period, including civil unrest, the fragmentation of
Iranian-backed militias, and unpredictable security threats. We cannot predict the duration or outcome of these conflicts, any political
transitions in the region, or their ultimate effects on our business, operations, and financial condition.
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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
and enforcement of judgments obtained in the United States against us or our non-U.S. our directors and executive officers may be difficult
to obtain within the United States. We have been informed by our legal counsel in Israel that it may be difficult to assert claims under
U.S. securities laws in original actions instituted in Israel or obtain a judgment based on the civil liability provisions of U.S. federal
securities laws. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws against us or our non-U.S.
officers and directors reasoning that Israel is not the most appropriate forum to bring such a claim. In Israeli courts, the content of
applicable U.S. law must be proved as a fact by an expert witnesses, which can be a time-consuming and costly process and certain matters
of procedure may be governed by Israeli law. There is little binding case law in Israel addressing the matters described above. Israeli
courts might not enforce judgments rendered outside Israel, which may make it difficult to collect on judgments rendered against us or
our non-U.S. officers and directors.
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 will be governed
by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. corporations.
We are incorporated under Israeli law. The rights and responsibilities of holders
of our ordinary shares are governed by our amended and restated articles of association 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, her or
its rights and fulfilling his, her or its obligations toward the Company and other shareholders and to refrain from abusing his, her or
its power in the Company, including, among other things, in voting at the general meeting of shareholders, on amendments to a company’s
articles of association, increases in a company’s authorized share capital, mergers and certain transactions requiring shareholders’
approval under the Companies Law. In addition, a controlling shareholder of an Israeli company or a shareholder who knows that it possesses
the power to determine the outcome of a shareholder vote or who has the power to appoint or prevent the appointment of a director or officer
in the Company, or has other powers toward the Company has a duty of fairness toward the Company. 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.
Our amended and restated articles of association provide that unless
the Company consents otherwise, the competent courts of Tel Aviv, Israel shall be the sole and exclusive forum for substantially all disputes
between the Company and its shareholders under the Companies Law and the Israeli Securities Law, which could limit its shareholders ability
to brings claims and proceedings against, as well as obtain favorable judicial forum for disputes with the Company, its directors, officers
and other employees.
The competent courts of Tel Aviv, Israel shall be the exclusive forum for (i) any
derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of fiduciary duty owed by
any director, officer or other employee of the Company to the Company or the Company’s shareholders, or (iii) any action asserting
a claim arising pursuant to any provision of the Companies Law or the Israeli Securities Law. This exclusive forum provisions is intended
to apply to claims arising under Israeli Law and would not apply to claims brought pursuant to the Securities Act or the Exchange Act
or any other claim for which federal courts would have exclusive jurisdiction. Such exclusive forum provision in our amended and restated
articles of association will not relieve the Company of its duties to comply with federal securities laws and the rules and regulations
thereunder, and shareholders of the Company will not be deemed to have waived the Company’s compliance with these laws, rules and
regulations. This exclusive forum provision may limit a shareholders ability to bring a claim in a judicial forum of its choosing for
disputes with the Company or its directors or other employees which may discourage lawsuits against the Company, its directors, officers
and employees.
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