The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this annual report on Form 20-F. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the section titled “Item 3. Key Information—D. Risk Factors” and in other parts of this annual report on Form 20-F. Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The functional currency of NANO-X IMAGING LTD is the U.S. dollar. A. Operating Results Overview Nanox is focused on driving the world’s transition to preventive health care by delivering an integrated, end-to-end medical imaging and healthcare services platform. Nanox combines affordable imaging hardware, advanced AI-based solutions, cloud-based software, access to remote radiology, health IT solutions, and a marketplace to enable earlier detection, improved clinical efficiency, and broader access to care. Nanox’s vision is to expand the reach of medical imaging both within and beyond traditional hospital settings by providing a seamless solution from scan to interpretation and beyond. By leveraging proprietary digital X-ray technology, AI-driven analytics, and a clinically driven approach, Nanox aims to enhance the efficiency of routine imaging workflows, support early detection of disease, and improve patient outcomes. The Nanox ecosystem includes Nanox.ARC, a cost-effective, 3D multi-source digital tomosynthesis imaging system designed for ease of use and scalability; Nanox.AI, a suite of AI-based algorithms that augment the interpretation of routine CT imaging to identify early signs often associated with chronic disease; Nanox.CLOUD, a cloud-based platform for secure data management, storage, and advanced imaging analytics; Nanox.MARKETPLACE and USARAD Holdings, which provides access to remote radiology and cardiology experts and comprehensive teleradiology services; and Nanox Health IT combines deep healthcare IT expertise with leading technology partners to deliver RIS, PACS, AI, dictation, and secure infrastructure solutions that streamline workflows and support safer, more efficient care delivery. By integrating imaging technology, AI, cloud infrastructure, clinical expertise, a marketplace, and health information technology, Nanox seeks to lower barriers to adoption, improve utilization, and advance preventive care worldwide. Following receipt of clearances from the FDA and the CE mark for the Nanox.ARC (including the Nanox.CLOUD) and clearances from the FDA to market the Nanox.ARC X (including the Nanox.CLOUD), we are marketing and deploying Nanox Systems broadly across the globe at a substantially lower cost compared to currently available medical imaging systems, such as CT. We believe that our technology’s relatively low cost will enable us to increase accessibility and affordability of early-detection medical imaging systems globally, substantially reduce wait-times for imaging results and increase early detection rates compared to currently employed imaging process protocol. On April 28, 2023, the Company received clearance from the FDA to market the Nanox.ARC (including the Nanox.CLOUD) as a stationary X-ray system intended to produce tomographic images of the human musculoskeletal system adjunctive to conventional radiography, on adult patients. On December 4, 2024 the Company received 510(k) clearance from the FDA for its Nanox.ARC (including the Nanox.CLOUD) as a stationary X-ray system intended to produce tomographic images for general use including human musculoskeletal system, pulmonary, intra-abdominal, and paranasal sinus indications, adjunctive to conventional radiography, on adult patients. This device is intended to be used in professional healthcare facilities or radiological environments, such as hospitals, clinics, imaging centers and other medical practices by trained radiographers, radiologists and physicians. The current FDA-cleared version of the Nanox.ARC is not intended for mammographic, angiographic, cardiac, pulmonary, intra-abdominal, intra-cranial, interventional, or fluoroscopic applications, or for imaging pediatric or neonatal patients. On February 25, 2025, the Company received its CE (Conformité Européenne) mark certification to market the multi-source Nanox.ARC system, including the Nanox.CLOUD, its accompanying cloud-based infrastructure in Europe. 105 The Nanox.ARC X, an AI-ready, multi-source digital tomosynthesis system that makes advanced 3D imaging possible in more places at significantly lower radiation dose than CT, received FDA 510(k) clearance in April 2025 for general use, including musculoskeletal, pulmonary, intra-abdominal and paranasal indications. On February 3, 2026, we received a 510(k) clearance from the FDA for TAP2D, a new cloud enabled image enhancement capability for the Nanox.ARC and Nanox.ARC X. We have devoted substantially all of our financial resources to acquiring the base technology for our X-ray source and related know-how, our AI solutions and our teleradiology services, conducting research and development activities, organizing and staffing our company, developing our business plan, securing related intellectual property rights and raising capital. Historically, we have funded our operations primarily with proceeds from the sale of our ordinary shares and warrants (after September 3, 2019) and those of our predecessor company (prior to September 3, 2019). During the years ended December 31, 2025, 2024 and 2023, we received net cash proceeds of $21.3 million, $39.5 million and $28.0 million, respectively, from the sales of our ordinary shares, warrants and options. The Company generated revenue through teleradiology services, the sales of its Imaging devices and services and the sale of its AI solutions. We have incurred significant operating losses since our inception. Our ability to achieve profitability depends on the successful development and commercialization of our technology and our products. We incurred net losses of $75.0 million, $53.5 million and $60.8 million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025 and 2024, we had an accumulated deficit of $448.8 million and $373.7 million, respectively. We expect to continue to incur significant expenses for at least the next several years as we advance the Nanox System through further development, regulatory approval and commercial deployment. We expect to incur significant capital expenditures and commercialization expenses related to product manufacturing, marketing, sales, regulation, distribution and support. In addition, we continue to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses. In 2024 we jumpstarted the MSaaS-based medical imaging market by deploying an initial wave of Nanox.ARC (including the Nanox.CLOUD) units. We expect to incur significant expenses for the deployment, manufacturing, installation, repairs, and maintenance of the Nanox Systems. As a result, we may need substantial funding to support our continuing operations and pursue our business strategy before we can generate significant revenues. Until such time as we can generate significant revenues from sales of services, we expect to finance our operations through the sale of equity, debt financings or other capital sources, including collaborations, strategic partnerships or marketing, distribution or licensing arrangements with third parties. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our systems and products or delay our pursuit of potential in-licenses or acquisitions. As of December 31, 2025, we had cash, cash equivalents, short-term and long-term deposits, restricted deposits and marketable securities of $60.0 million. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our capital resources sooner than we expect. See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources.” 106 Recent Developments During 2025, we issued (i) 87,012ordinary shares upon the exercise of options and RSUs and (ii) an additional 5,624,989 of the Company’s ordinary shares at an average purchase price of $3.93 per share. The net proceeds of the issuance were approximately $21.4 million. Components of Our Results of Operations Revenue The Company generated revenue through teleradiology services, the sales of its imaging devices and services and the sale of its AI solutions. The majority of our revenues are derived from our teleradiology services, which consist primarily of fees received from various payors based on established billing rates, and also of fees from hospitals and healthcare providers. We recognize revenue in the period in which performance obligations are satisfied by providing services to our customers and record the amount of revenue that reflects the consideration that we expect to receive in exchange for those services. During 2024 and 2025, we began to generate revenue from sales of the Nanox.ARC systems. Cost of Revenue Cost of the sale of teleradiology services mainly consists of the cost of radiologists, the cost of picture archiving and communication software (a medical imaging technology used to securely store and digitally transmit electronic images and clinical reports) and amortization of intangible assets. The cost of the sale of AI solutions mainly consists of the cost of labor and amortization of intangible assets. The cost of revenue through the sale of scan services and sale of Nanox.CONNECT consisted mainly of cost of labor and cost of materials. Operating Expenses Research and Development Expenses Research and development expenses consist primarily of costs incurred in connection with the research and development of our products. These expenses include: ● employee-related expenses, including salaries, related benefits and share-based compensation expenses for employees engaged in research and development activities; ● expenses incurred in connection with the development of our systems and solutions, including payments made pursuant to agreements with third parties, such as external manufacturers, vendors and consultants related to process development and manufacturing activities, as well as patent registrations; ● costs of components and materials that are used to develop our systems, including payments made pursuant to agreements with third parties; ● facilities, laboratories, depreciation and other expenses, including direct or allocated expenses for rent and maintenance of facilities, as well as insurance costs; and ● costs related to compliance, testing and validations with clinical and regulatory requirements. 107 We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our suppliers and service providers. Upfront payments, and annual maintenance fees under license agreements are expensed in the period in which they are incurred. Research and development activities are central to our business. We expect that our research and development expenses will increase substantially over the next several years as we continue the development and improvement of the Nanox Systems. We expect to continue to devote a substantial portion of our resources to the Nanox.ARC multi-source system, the Nanox.CLOUD, the Nanox.MARKETPLACE, our AI solutions and our future systems and solutions for the foreseeable future. The successful development and commercialization of our systems are highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the development for commercialization of any of our products. This uncertainty is due to the numerous risks and uncertainties associated with product development and commercialization, including the uncertainty of: ● the timing and progress of activities to improve our products; ● our ability to maintain our current research and development programs and to establish new ones; ● the receipt of regulatory approvals from applicable regulatory authorities, especially if there will be a need for independent clinical trials or validation; ● the timing, receipt and terms of any marketing approvals from applicable regulatory authorities; ● our ability to establish new licensing or collaboration arrangements; ● the performance of our future collaborators, if any; ● establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers; ● obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights; ● launching commercial sales of our products, including the Nanox.ARC, the Nanox.ARC X, the Nanox.CLOUD and our AI solutions, whether alone or in collaboration with others; and ● maintaining a continued acceptable safety profile of the products following approval. Any changes in the outcome of any of these variables with respect to the development or improvement of our products could result in a significant change in the costs and timing associated with the deployment of these products. Marketing and Selling Expenses Marketing and selling expenses consist of cost of labor, public relations, participation in conferences and other general marketing and selling expenses. We anticipate that our selling and marketing expenses will increase as we progress with the commercial deployment of our systems. 108 General and Administrative Expenses General and administrative expenses consist primarily of salaries, related benefits and share-based compensation expense for personnel in general and administrative functions. General and administrative expenses also include facilities, depreciation and other expenses, which include among others, direct or allocated expenses for rent and maintenance of facilities and insurance, as well as professional fees for legal, patent, consulting, investor and public relations, accounting and audit services. We anticipate that our general and administrative expenses will increase as we increase our headcount to support our continued research and development activities and commercialization of our products. We also incur accounting, audit, legal, regulatory, compliance, directors’ and officers’ liability insurance and investor and public relations costs associated with being a public company. Results of Operations Comparison of the years ended December 31, 2025 and 2024 The table below summarizes the results of operations for the years ended December 31, 2025 and 2024, respectively: Revenue The table below summarizes our revenue incurred during the periods presented: Year Ended December 31, 2025 2024 ($ in thousands) Teleradiology services $ 11,585 $ 10,275 Scan services and sale of Nanox.ARC and Nanox.CONNECT 478 281 AI 958 727 Total $ 13,021 $ 11,283 For the year ended December 31, 2025, we reported revenue of $13.0 million, compared to $11.3 million for the year ended December 31, 2024. During the year ended December 31, 2025, we generated revenue through the sale of teleradiology services in the amount of $11.6 million, the sale of scan services and sale of Nanox.CONNECT in the amount of $0.5 million, and the sale of AI solutions in the amount of $1.0 million. The increase in the revenue through the sale of teleradiology services in the amount of $1.3 million was mainly attributable to customer retention, increased rates and increased volume of the Company’s reading services during the weekdays shifts. The increase in the revenue through the AI services in the amount of $0.2 million was mainly due to the acquisition of Nanox Health IT, which added revenue of $0.4 million since the completion of its acquisition. 109 Cost of Revenue The table below summarizes our cost of revenue incurred during the periods presented: Year Ended December 31, 2025 2024 ($ in thousands) Teleradiology services $ 9,020 $ 8,664 Nanox. ARC 8,104 4,926 AI and software solutions 8,685 8,302 Total $ 25,809 $ 21,892 For the year ended December 31, 2025, we reported cost of revenue of $25.8 million, compared to $21.9 million for the year ended December 31, 2024. During the year ended December 31, 2025, we incurred cost of revenue through the sale of teleradiology services in the amount of $9 million, the sale of scan services and sale of Nanox.CONNECT in the amount of $8.1 million and the sale of AI solutions in the amount of $8.7 million. During the year ended December 31, 2024, we incurred cost of revenue through the sale of teleradiology services in the amount of $8.7 million, the sale of scan services and sale of Nanox.CONNECT in the amount of $4.9 million and the sale of AI solutions in the amount of $8.3 million. In 2025, the cost of revenue through the sale of teleradiology services consisted mainly of the cost of radiologists and the cost of picture archiving and communication software in the amount of $6.9 million and amortization of intangible assets of $2.1 million. In 2024, the cost of revenue through the sale of teleradiology services consisted mainly of the cost of radiologists and the cost of picture archiving and communication software in the amount of $6.4 million and amortization of intangible assets of $2.2 million. The amortization of the intangible assets is the periodic amortization expense with regards to the acquisition of the shares of Nanox AI, USARAD Holdings Inc. and the purchase of the assets of MDW LLC since the date of acquisition through the year end. In 2025, the cost of revenue through the sale of scan services and sale of Nanox.CONNECT consisted mainly of cost of labor in the amount of $1.9 million and cost of materials in the amount of $4.4 million. In 2024, the cost of revenue through the sale of scan services and sale of Nanox.CONNECT consisted mainly of cost of labor in the amount of $1.3 million and cost of materials in the amount of $2.7 million. In 2025, the cost of revenue through the sale of AI solutions consisted mainly of salaries and wages expense in the amount of $0.3 million, amortization of intangible assets of $8.0 million, and software subscription and support of $0.3 million. In 2024, the cost of revenue through the sale of AI solutions consisted mainly of salaries and wages expense in the amount of $0.2 million, and amortization of intangible assets of $8.0 million. The amortization of the intangible assets is the periodic amortization expense with regards to the acquisition shares of Nanox AI. 110 Research and Development Expenses The table below summarizes our research and development expenses incurred during the periods presented: Year Ended December 31, 2025 2024 ($ in thousands) Research and Development Expenses: Salaries and wages $ 11,211 $ 9,965 Share-based compensation 1,182 2,450 R&D expenses 3,310 4,825 Other 3,533 2,942 Total $ 19,236 $ 20,182 Research and development expenses decreased by $1.0 million to $19.2 million for the year ended December 31, 2025, from $20.2 million for the year ended December 31, 2024. The decrease in research and development expenses was primarily attributable to decrease in share-based compensation of $1.3 million and decrease in the R&D expenses of $1.5 million which was mitigated by an increase in salaries and wages of $1.2 million and an increase of $0.6 million in other expenses. The table below summarizes our Research and development expenses per segment of operation incurred during the periods presented: Year Ended December 31, 2025 2024 ($ in thousands) Nanox ARC $ 14,552 $ 16,223 AI and software solutions 4,550 3,856 Radiology services 134 103 Total $ 19,236 $ 20,182 Research and development expenses through our Nanox ARC segment of operation decreased by the amount of $1.6 million to $14.6 million for the year ended December 31, 2025, from $16.2 million for the year ended December 31, 2024. The decrease was primarily attributable to the decrease in share-based compensation of $0.9 million, a decrease in the R&D expenses of $1.5 million and other expenses of $0.4 million, which was mitigated by an increase of $1.1 million in salaries and wages. Research and development expenses through our AI and software solutions segment of operation increased by the amount of $ 0.7 million to $4.6 million for the year ended December 31, 2025, from $3.9 million for the year ended December 31, 2024. The increase was primarily attributable to the increase in salaries and wages of $0.1 million, and a decrease in grants received of $1.0 million, which was mitigated by a decrease of $0.4 million in share-based compensation. 111 Sales and Marketing Expenses The table below summarizes our sales and marketing expenses incurred during the periods presented: Year Ended December 31, 2025 2024 ($ in thousands) Sales and Marketing Expenses: Salaries and wages $ 2,675 $ 1,040 Share-based compensation 355 717 Sales and marketing activities 2,635 1,653 Total $ 5,665 $ 3,410 Sales and marketing expenses increased by $2.3 million to $5.7 million for the year ended December 31, 2025, from $3.4 million for the year ended December 31, 2024. The increase in sales and marketing expenses was primarily attributable to the increase in salaries in wages in the amount of $1.6 million and sales and marketing activities in the amount of $1 million which was mitigated by a decrease of $0.4 million in share-based compensation. The table below summarizes our sales and marketing expenses per segment of operation incurred during the periods presented: Year Ended December 31, 2025 2024 ($ in thousands) Nanox ARC $ 4,866 $ 2,808 AI and software solutions 314 170 Teleradiology services 485 432 Total $ 5,665 $ 3,410 Sales and Marketing expenses through our Nanox ARC segment of operation increased by the amount of $2.1 million to $4.9 million for the year ended December 31, 2025, from $2.8 million for the year ended December 31, 2024. The increase was primarily attributable to the increase in salaries and wages of $1.5 million and marketing expenses of $0.9 million which was mitigated by a decrease in share-based compensation of $0.3 million. Sales and Marketing expenses through our AI Solution segment of operation increased by the amount of $0.1 million to $0.3 million for the year ended December 31, 2025, from $0.2 million for the year ended December 31, 2024. The increase is attributable to the increase in salaries and wages, share-based compensation and subcontractors expenses in the amount of $0.2 million. Sales and Marketing expenses through our Teleradiology services segment of operation increased by the amount of $0.1 million to $0.5 million for the year ended December 31, 2025, from $0.4 million for the year ended December 31, 2024. The increase is attributable to the increase in salaries and wages and marketing expenses in the amount of $0.1 million. 112 General and Administrative Expenses The table below summarizes our general and administrative expenses incurred during the periods presented: Year Ended December 31, 2025 2024 ($ in thousands) General and Administrative Expenses: Salaries and wages $ 8,328 $ 7,453 Share-based compensation 2,528 3,870 Directors’ and officers’ insurance 821 1,448 Professional services 2,567 2,085 Legal fees in connection with the SEC investigation and class actions 57 81 Legal fees 863 1,816 Rent and Maintenance 1,470 1,692 Depreciation and Amortization 153 116 Other 4,800 3,894 Total $ 21,587 $ 22,455 General and administrative expenses decreased by $0.9 million to $21.6 million for the year ended December 31, 2025, from $22.5 million for the year ended December 31, 2024. The decrease in general and administrative expenses was primarily attributable to decrease in share-based compensation in the amount of $1.3 million, a decrease of $0.6 million in our directors’ and officers’ liability insurance premium, and a decrease of $1 million in legal fees, which was mitigated by an increase in salaries in the amount of $0.9 million, an increase in other general and administrative expenses of $0.9 million. The table below summarizes our general and administration expenses per segment of operation incurred during the periods presented: Year Ended December 31, 2025 2024 ($ in thousands) Nanox ARC $ 16,967 $ 17,825 AI and software solutions 439 491 Teleradiology services 4,181 4,139 Total $ 21,587 $ 22,455 General and administration expenses through our Nanox ARC segment of operation decreased by the amount of $0.8 million to $17 million for the year ended December 31, 2025, from $17.8 million for the year ended December 31, 2024. The decrease was primarily attributable to decrease in share-based compensation in the amount of $0.9 million, a decrease of approximately $1.2 million in legal fees and a decrease of $0.6 million in our directors’ and officers’ liability insurance premium. Nevertheless, salaries and wages increased by $0.3 million, professional fees increased by $0.6 million, software and IT expenses increased by $0.2 million and HR and recruiting expenses increased by $0.3 million in 2025. 113 General and administration expenses through our AI Solution segment of operation decreased by the amount of $0.1 million to $0.4 million for the year ended December 31, 2025, from $0.5 million for the year ended December 31, 2024. The decrease is attributable to the decrease in rent and maintenance in the amount of $0.2 due to the Company’s moving to the new office during 2024. General and administration expenses through our Teleradiology services segment of operation increased by the amount of $ 0.1 million to $4.2 million for the year ended December 31, 2025, from $4.1 million for the year ended December 31, 2024. The increase is attributable to the increase in salaries and wages in the amount of $0.5 million, which was mitigated by a decrease in share-based compensation by $0.4 million. Other Income (expenses) Other expenses were $1.4 million for the year ended December 31, 2025, and other income was $0.0 million for the year ended December 31, 2024. The increase of $1.4 million was mainly due to the settlement with a shareholder. Net loss was $75 million for the year ended December 31, 2025, and $53.5 million for the year ended December 31, 2024. The increase of $21.5 million was largely due to an impairment of long-lived assets in the amount of $17.5 million which was recorded during the reported period in relation to the Company’s restructuring of operations at Nanox’ Korean facility that is intended to better align the Company’s manufacturing cost structure and support gross margin improvement to the Company’s target financial model. The increase was also due to an increase of $2.1 million in the gross loss, increase of $2.2 million in the sales and marketing expenses and increase of $1.4 million in other expenses mitigated by an increase of $1.6 million in income tax benefit. Recently we adopted a restructuring plan intended to better align our manufacturing cost structure with our long-term financial model, support our path toward improved gross margins, and align our manufacturing capabilities with current and anticipated business needs and the Company’s strategic priorities. As part of this plan and our broader cost reduction efforts, we are restructuring our manufacturing footprint to improve gross margins, reduce capital expenditures, and enhance operational efficiency. This includes transitioning away from certain manufacturing activities at our facility in South Korea, starting in the fourth quarter of 2025, and moving from a company-owned manufacturing model to a more fully outsourced approach. In connection with this transition, we expect to utilize our existing emitter inventory as it shifts to a more efficient outsourced production model that is better aligned with current and anticipated demand. As part of the restructuring, we will close our chip manufacturing line in South Korea, downsize its fabrication facilities, and transfer certain production activities to third-party international manufacturing partners, including the Swiss Center for Electronics and Microtechnology (CSEM). Following these changes, we intend to focus our operations in South Korea on research and development (R&D) and tube production activities that support the Nanox.ARC platform. The restructuring is expected to be substantially completed during fiscal year 2026. In connection with the restructuring, we expect to incur total restructuring and related charges of approximately $18.0 million, consisting primarily of costs related to the impairment of machinery and equipment associated with our chip manufacturing line. Accordingly, we recorded a non-cash impairment charge of approximately $17.5 million during the reported period, related to the write-down of long-lived assets associated with the Korean fabrication facility’s chip manufacturing line and the remainder restructuring charges of approximately $0.5 million is expected to be in cash. 114 For a discussion of our results of operations for the year ended December 31, 2024, including a year-to-year comparison between 2024 and 2023, and a discussion of our liquidity and capital resources for the year ended December 31, 2024, refer to Item 5. “Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2024. Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our audited consolidated financial statements, included elsewhere in this annual report on Form 20-F. B. Liquidity and Capital Resources From our inception and prior to November 2021, we did not generate any revenue from product sales or otherwise and have incurred significant operating losses and negative cash flows from our operations. Beginning in the year ended December 31, 2021 and continuing in the year ended December 31, 2022, we generated revenue through the sale of teleradiology services and the sale of AI solutions following the completion of the merger with Nanox AI, and the acquisitions of USARAD in November 2021. Beginning in the year ended December 31, 2023 we generated revenue through the sale of Nanox.CONNECT and scan services. During the year ended December 31, 2023, we did not generate any revenue from sales of imaging services from the Nanox System. As of December 31, 2024, we have generated revenue from sales of imaging services from the Nanox System and other services. As of December 31, 2025, we have generated revenue from sales of imaging services from the Nanox System, AI and software products, teleradiology and other services. Historically, we have funded our operations primarily with proceeds from the sale of our and our predecessor company’s ordinary shares. Since incorporation through December 31, 2025, we accumulated deficit of $448,767 and our activities have been funded mainly by the sale of our ordinary shares and positive cash flow from the Teleradiology business segment. We expect to continue to incur significant costs related to our commercializing efforts and our ongoing operations. We estimated that the Company’s cash and cash equivalents, and deposits as of December 31, 2025, will not be sufficient to support our operations under the current operating plans for at least one year from the issuance date of this annual report. The Company is exploring the use of mitigating actions such postponing expenses that are not based on firm commitments. We are exploring opportunities to fundraise by means of private equity or otherwise, and management is looking for the most favorable deal, taking into consideration the Company’s needs and market conditions. However, there is no assurance that we will be able to obtain such funding or secure it with favorable terms. Our consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern. Cash Flows The following table provides information regarding our cash flows for the periods presented: Year Ended December 31, 2025 2024 2023 ($ in thousands) Net cash used in operating activities $ (40,793 ) $ (36,598 ) $ (44,777 ) Net cash from (used in) investing activities 29,373 (20,051 ) 35,433 Net cash provided by financing activities 21,368 39,504 27,252 Effect on changes in exchange rates on cash balances in foreign currencies (101 ) 72 (60 ) Net change in cash and cash equivalents and restricted cash equivalents $ 9,847 $ (17,073 ) $ 17,848 Net Cash used in Operating Activities During the years ended December 31, 2025, 2024 and 2023, net cash used in operating activities was $40.8 million, $36.6 million and $44.8 million, respectively, resulting from our net loss of $75.0 million, $53.5 million and $60.8 million, respectively, adjusted for stock-based compensation changes of $4.2 million, $7.3 million and $6.8 million, respectively, amortization of intangible assets of $10.5 million, $10.6 million and $10.6 million, respectively, goodwill impairment of $0.0 million, $0.0 million and $7.4 million, respectively, impairment of long-lived asset of $17.5 million, $0.0 million and $0.0 million, respectively, change in contingent earnout liability of $0 million, 0 million and ($4.5) million, respectively, non-cash charges of $(0.8) million, $0.2 million and $3.1 million, respectively, and changes in components of working capital of $2.8 million, ($1.1) million and ($7.4) million, respectively. 115 Net Cash provided by (used) in Investing Activities During the years ended December 31, 2025, 2024 and 2023, net cash provided by (used in) investment activities was $29.4 million, $(20.1) million and $35.4 million, respectively. The increase in cash provided by investing activities during the year ended December 31, 2025, was primarily due to proceeds from the sale and maturities of marketable securities in the amount of $18.3 million, release of short-term deposits in the amount of $15.5 million, that was offset in part by purchase of property and equipment in the amount of $4.2 million. Net Cash provided by Financing Activities During the years ended December 31, 2025, 2024 and 2023, net cash provided by financing activities was $21.4 million, $39.5 million and $27.3 million, respectively, primarily due to proceeds from the issuance of ordinary shares and warrants, net of issuance costs, and from the issuance of ordinary shares upon exercise of options and warrants. On November 23, 2025, we entered into a securities purchase agreement with a single institutional investor for the purchase and sale of 3,826,530 of the Company’s ordinary shares at a purchase price of $3.92 per share, in a registered direct offering. The gross proceeds from the offering were approximately $15 million, before deducting placement agent fees and other offering expenses payable by the Company. On June 7, 2024, we entered into the Sales Agreement with the Agents relating to the issuance and sale from time to time of our ordinary shares. In accordance with the terms of the Sales Agreement, we may offer and sell our ordinary shares having an aggregate offering price of up to $100 million from time to time through the Agents pursuant to the sales agreement. The Agents will be entitled to compensation at a commission rate of up to 2.5% of the aggregate gross proceeds from each sale of ordinary shares. As of December 31, 2025, we have raised $44.9 million net under the Sales Agreement. On July 26, 2023, the Company raised $30 million in a registered direct offering by selling 2,142,858 of the Company’s ordinary shares, together with warrants to purchase up to 2,142,858 ordinary shares at a combined purchase price of $14.00 per share. The net proceeds of the offering were approximately $27.1 million, excluding any proceeds that may be received upon the exercise of the warrants, after deducting placement agent fees and other offering expenses payable by the Company. The warrants have an exercise price of $19.00 per share, are exercisable immediately upon issuance and will expire five years from issuance. The Company accounted for the issued warrants as an equity in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. Contractual Obligations Our long-term contractual obligations mainly consist of our lease agreements for our offices and other facilities in Israel and the United States. For details regarding these lease agreements, see “Item 4. Information on the Company—D. Property, Plants and Equipment.” In addition, we have lease agreements for the lease of vehicles for certain of our employees in Israel, which are effective through March 2028. As of December 31, 2025, we had non-current operating leases liabilities of $3.8 million. For additional details regarding our operating lease agreements, see Note 7 to our audited consolidated financial statements, which are included elsewhere in this annual report on Form 20-F. 116 Funding Requirements We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the commercialization of the Nanox systems following the clearances from the FDA to market the Nanox.ARC (including the Nanox.CLOUD) and the Nanox.ARC X as a stationary X-ray systems, our AI products and the resale of third parties’ software in the U.S. market. and our research and development and improvement of the Nanox Systems. In addition, we incur additional costs associated with operating as a public company. Our expenses will also increase if, and as, we: ● seek regulatory approvals for any additional products; ● seek to discover and develop additional products; ● establish a manufacturing, sales, marketing, commercialization, medical affairs and distribution infrastructure to commercialize the Nanox Systems for which we may obtain marketing approval and intend to commercialize on our own or jointly; ● hire additional quality control and scientific personnel; ● expand our operational, financial and management systems and increase personnel, including personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a public company; ● operate our manufacturing facility in South Korea for the purpose of manufacturing MEMs X-ray chips; ● maintain, expand and protect our intellectual property portfolio; and ● acquire or in-license other products and technologies. Because of the numerous risks and uncertainties associated with manufacture, research, development, and commercialization of products, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on, and could increase significantly as a result of, many factors, including: ● the scope, progress, results and costs of researching and developing the Nanox Systems; ● the costs, timing and outcome of regulatory review of the Nanox.ARC and the Nanox.ARC X (including the Nanox.CLOUD); ● the costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution, for the Nanox Systems for which we receive marketing approval; ● commercial manufacturing, shipping, installation and deployment of the Nanox Systems and sufficient inventory to support commercial launch; ● the revenue received from commercial sale of the Nanox Systems; 117 ● the cost and timing of hiring new employees to support our continued growth; ● the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; ● the ability to establish and maintain collaborations on favorable terms, if at all; ● the costs incurred with respect to and the outcome of the securities and other litigations we are currently subject to and any similar or other claims, litigation and inquiries we may be subject to in the future; and ● the timing, receipt and amount of sales of the Nanox Systems. A change in any of these or other variables with respect to the development of any of our products could significantly change the costs and timing associated with the development of that product. Further, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans. We expect that we will need to obtain additional financing to implement our business plan such as the financing we consummated with institutional investors in November 2025 and the utilization of our Sales Agreement. Any inability to raise adequate funds on commercially reasonable terms could have a material adverse effect on our business, financial condition, results of operation and prospects. To date, we have principally financed our operations through the sale of our ordinary shares. Nevertheless, management anticipates that our current cash and cash equivalents position and generating revenue will provide us limited financial resources for the near future to continue implementing our business strategy of further developing our products. Management plans to secure additional financing sources, including but not limited to the sale of our ordinary shares in future financings. There can be no assurance, however, that we will be successful in raising additional capital or that we will have net income from operations to fund our business plan for the near future or long term. On a preliminary unaudited basis, the Company estimates that its cash and cash equivalents net of a short-term bank loan to be approximately $35.0 million as of the date of issuance of this Annual Report. These conditions raise substantial doubt about the Company’s ability to continue as a going concern as of December 31, 2025. Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic partnerships or marketing, distribution or licensing arrangements with third parties. Therefore, we anticipate that our business will require substantial additional investments that have not yet been secured. We are continuing in the process of fund raising in the private equity and capital markets as the Company will need to finance future activities. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect your rights as an ordinary shareholder. Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specified actions, such as incurring additional debt, making capital expenditures or declaring dividends. In addition, debt financing would result in increased fixed payment obligations. If we raise funds through collaborations, strategic partnerships or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or products or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, reduce or eliminate our product development or future commercialization efforts, or grant rights to develop and market products that we would otherwise prefer to develop and market ourselves. C. Research and Development, Patents and Licenses, etc. Research and Development Expenses Research and development expenses are charged to the statement of operations as incurred and consist primarily of personnel, materials and supplies for research and development activities. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Critical Accounting Policies and Significant Judgments and Estimates—Research and Development Expenses.” 118 Intellectual Property As of March 31, 2026, we and our subsidiaries had 31 issued patents and 7 pending patent applications in the United States. We also had 5 issued patents and 1 pending patent application in Israel, 3 issued patent and 4 pending patent applications in the European Patent Office, 1 granted Germany Utility Model, 3 issued patents in China, 3 issued patents in Korea and 2 issued patents in Hong Kong. Our issued patents generally expire between the years 2032 and 2041, and some are directed to various features and combinations of features of the Nanox.ARC, the Nanox.ARC X and the others for AI and teleradiology. We also have 4 trademarks registered in the United States, 9 trademarks registered in Israel, 1 trademark registered in China, 1 trademark registered in India, 2 trademark registered in Japan, 3 trademarks registered in the European Union, 3 trademarks registered in Great Britain and 3 International trademarks. We intend to continue filing for patents on new technologies as they are developed and to actively pursue any infringement upon our patents. We believe that our know-how and trade secrets represent de facto barriers to potential competition. D. Trend Information We are an initial launch-stage company and cannot predict with any degree of accuracy the outcome of our research and development efforts. As such, we cannot predict with any degree of accuracy any significant trends, uncertainties or events that are reasonably likely to have a material effect on our net loss, liquidity or capital resources, or cause financial information to not be indicative of future operating results or financial condition. However, to the extent possible, certain trends, uncertainties, demands, commitments and events are described in this “Item 5. Operating and Financial Review and Prospects.” E. Critical Accounting Estimates We have provided a summary of our significant accounting policies, estimates and judgments in Note 2 to our consolidated financial statements. The following critical accounting estimates discussion pertain to accounting policies management believes are most critical to the portrayal of our historical financial condition and results of operations and that require significant, difficult, subjective or complex judgments. The Company regularly reviews its accounting estimates and assumptions to determine whether any should be disclosed as critical accounting estimates or whether sensitivities should be updated for those critical accounting estimates already disclosed. The preparation of financial statements in accordance with GAAP requires management to make certain estimates and assumptions based on our historical experience and on various other assumptions which we believe to be reasonable under the circumstances. Because of the uncertainty inherent in these matters, actual results could differ materially from the estimates we use in applying these policies. Goodwill Goodwill reflects the excess of the consideration transferred plus the fair value of any non-controlling interest in the acquiree at the business combination date over the fair values of the identifiable net assets acquired. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. We allocate goodwill to our reporting units based on the reporting unit expected to benefit from the business combination. The primary items that generate goodwill include the value of the synergies between the acquired companies and the Company and the acquired assembled workforce, neither of which qualifies for recognition as an intangible asset. ASC 350 allows an entity to first assess qualitative factors to determine whether a quantitative goodwill impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that a reporting unit’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. Examples of events or circumstances that may be indicative of impairment include but are not limited to: macroeconomic and industry conditions, overall financial performance and adverse changes in legal, regulatory, market share and other relevant entity specific events. An entity has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to the quantitative goodwill impairment test. This would not preclude the entity from performing the qualitative assessment in any subsequent period. The quantitative assessment compares the fair value of the reporting unit to its carrying value, including goodwill. 119 We determine the fair value of our reporting units using a discounted cash flow model, which utilizes key assumptions such as projected revenues, cost of revenues and operating expenses. These assumptions were determined by management utilizing our internal operating plan, growth rates for revenues and operating expenses and margin assumptions. An additional key assumption under this approach is the discount rate, based on the weighted average cost of capital, which is adjusted for current risk-free rates of capital, current market interest rates, and the evaluation of a risk premium relevant to the business segment. If our assumptions relative to revenue growth rates, cost of revenues and operating expenses were to change, our fair value calculation may change, which could result in impairment. If our assumptions relative to the discount rate and the evaluation of risk premium growth rates were to change, our fair value calculation may change, which could result in impairment. Management uses the income approach to determine the fair value of the reporting units because it considers the anticipated future financial performance of the reporting units. Accordingly, changes in the assumptions described above could have a material impact on our consolidated results of operations. Our goodwill is tested for impairment at least on an annual basis, on the last day of the fourth quarter of the fiscal year and whenever events or changes in circumstances indicate the carrying value of a reporting unit may not be recoverable. When necessary, we record charges for impairments of goodwill for the amount by which the carrying amount of the respective reporting unit exceeds its fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The goodwill is assigned to the reporting units of the AI Solutions segment (which was recorded in the acquisition of Nanox AI) and the Radiology Services segment (which was recorded in the acquisition of USARAD). The carrying value of each reporting unit is determined by assigning the assets and liabilities, including the existing goodwill, to those reporting units. Goodwill impairment assessment for the year ended December 31, 2023 AI solutions reporting unit During 2023, in light of triggering events arising from the increase of the discount rate and changes in our estimates as a result of business specific considerations, we performed a quantitative interim assessment for goodwill impairment for our AI solutions reporting unit. The amount of goodwill assigned to the AI solutions reporting unit on the interim testing date was $0.4 million. When evaluating the fair value of the AI solutions reporting unit under the income approach, we used a discounted cash flow model which utilized Level 3 measures that represent unobservable inputs. Key assumptions used to determine the estimated fair value include: (a) internal cash flows forecasts for 7 years following the assessment date, including expected revenue growth, costs to sales and operating expenses; (b) an estimated terminal value using a terminal year long-term future growth rate of 3.0% determined based on the growth prospects of the reporting unit; and (c) a discount rate of 22.7% which reflects the weighted-average cost of capital adjusted for the relevant risk associated with the AI solutions reporting unit’s operations and the uncertainty inherent in our internally developed forecasts. Specifically, as part of our interim impairment test, in making the assumptions mentioned in clauses (a) and (b) above, we considered (1) the efforts and time required for the AI solutions reporting unit to achieve financial stability, (2) its estimate that it would take approximately one year for such unit to generate any material revenue and two years to achieve profitability; and (3) its estimate that it would take longer than we originally expected for such unit to generate material revenues, gross profit, and positive operating cash flows, especially from its population health applications. As a result of the impairment assessment, we concluded that the fair value of the AI solutions reporting unit decreased below its carrying value and therefore we recorded a goodwill impairment charge of $365 thousand. As a result, the goodwill assigned to the AI solutions reporting unit was fully impaired. 120 Radiology services reporting unit During 2023, in light of triggering events arising from the increase of the discount rate and changes in our estimates as a result of business specific considerations, we performed a quantitative interim assessment for goodwill impairment for our radiology services reporting unit. The amount of goodwill assigned to the AI solutions reporting unit on the interim testing date, which had not changed from the amount assigned to such unit on the acquisition date, was $7.1 million. When evaluating the fair value of the Radiology services reporting unit under the income approach, we used a discounted cash flow model which utilized Level 3 measures that represent unobservable inputs. Key assumptions used to determine the estimated fair value include: (a) internal cash flows forecasts for 8 years following the assessment date, including expected revenue growth, costs to sales and operating expenses; (b) an estimated terminal value using a terminal year long-term future growth rate of 3.0% determined based on the growth prospects of the reporting unit; and (c) a discount rate of 27.9% which reflects the weighted-average cost of capital adjusted for the relevant risk associated with the Radiology services reporting unit’s operations and the uncertainty inherent in our internally developed forecasts. Specifically, as part of our interim impairment test, in making the assumptions mentioned in clauses (a) and (b) above, we considered (1) the efforts and time required for the Radiology services reporting unit to achieve financial stability, (2) its estimate that it would take approximately one year for such unit to generate any material revenue and two years to achieve profitability; and (3) its estimate that it would take longer than we originally expected for such unit to generate material revenues, gross profit, and positive operating cash flows, especially from its population health applications. As a result of the impairment assessment, we concluded that the fair value of the Radiology services reporting unit decreased below its carrying value and therefore we recorded a goodwill impairment charge of $7,055 thousand. As a result, the goodwill assigned to the Radiology services reporting unit was fully impaired. Impairment of Long-Lived Assets Our long-lived assets, such as property, plant and equipment, operating lease right-of-use asset and identifiable intangible assets, are reviewed for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment indicators which could trigger an impairment may include, among others, any significant changes in the manner of our use of the assets or the strategy of our overall business, certain reorganization initiatives, significant negative industry or economic trends or when we conclude that it is more likely than not that an asset will be disposed of or sold. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset with the future undiscounted cash flows expected to be generated by such assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. This measurement includes significant estimates and assumptions inherent in the estimate of the fair value of identifiable intangible assets and property and equipment such as assumptions associated with forecasting profitability, including operational margins and capital expenditures. Accordingly, changes in the assumptions described above could have a material impact on our consolidated results of operations. As further described under Note 6 in the financial statements, in the fourth quarter of 2025, we recorded a non-cash impairment charge of $17,528 in respect of the chip production line in Korea. This charge was recorded under “Impairment of long-lived assets” line item in the consolidated statements of operations and comprehensive income (loss). During 2024 and 2023, we did not record any impairment charge related to our definite life intangible assets. 121 Legal and Other Contingencies We are involved in claims and other legal proceedings that arise from time to time in the ordinary course of business. We record accruals for these types of contingencies to the extent that we conclude their occurrence is probable and that the related liabilities are estimable. When accruing these costs, we recognize an accrual in the amount within a range of loss that is the best estimate within the range. When no amount within the range is a better estimate than any other amount, we accrue the minimum amount within the range. We record anticipated recoveries under existing insurance contracts that are virtually certain of occurring at the gross amount that is expected to be collected. Management applies the guidance in ASC 450-20-25 when assessing losses resulting from contingencies. If the assessment of a contingency indicates that it is probable that a material loss would be incurred and the amount of the liability can be estimated, then the Company records an accrued expense in the Company’s consolidated financial statements based on its best estimate. Loss contingencies considered by management to be remote are generally not disclosed unless material. We review the adequacy of the accruals on a periodic basis and may determine to alter our reserves at any time in the future if we believe it would be appropriate to do so. As such accruals are based on management’s judgment as to the probability of losses and, where applicable, actuarially determined estimates, accruals may materially differ from actual verdicts, settlements or other agreements made with regards to such contingencies. Litigation outcomes and contingencies are unpredictable and excessive verdicts can occur. Accordingly, management’s assessments involve complex judgments concerning future events and often rely heavily on estimates and assumptions. The Company entered into a term sheet on April 28, 2023, to settle all shareholder class action litigation related to the McLaughlin Action and the consolidated White Action. On June 2, 2023, the Company entered into a formal settlement agreement to settle the McLaughlin Action and the consolidated White Action for $8 million. On October 31, 2023, Magistrate Judge Kuo preliminarily approved the settlement. Due to the settlement agreement, during December 2023 the Company deposited $5 million and the D&O insurance carrier deposited $3 million in a trust account in connection with the settlement agreement. On February 15, 2024, the court held a final approval hearing, during which she requested that the parties submit updated settlement claims information by letter on or before February 29, 2024 for incorporation into a final report and recommendation. The parties submitted the letter on February 29, 2024, and on April 17, 2024, Magistrate Judge Kuo issued a report and recommendation recommending that Judge Kovner grant the motion for final approval of the settlement. On May 7, 2024, Judge Kovner entered an order adopting Magistrate Judge Kuo’s report and recommendation and finally approving the settlement. On May 10, 2024, the judgment was entered, and the case was dismissed with prejudice. On May 1, 2023, the Company received a notice alleging several causes of action, including breach of a consulting agreement between the plaintiff and Gibraltar Entity that was entered into in 2015. The plaintiff’s demand from the Company is for the payment of approximately $1.26 million for unpaid consulting fees from the Gibraltar Entity and approximately $25 million connection with his claimed entitlement to securities in the Gibraltar Entity. On or about December 21, 2023, a claim was filed in Israel against the Company, the Gibraltar Entity, and the late Mr. Ran Poliakine, based on allegations previously dismissed in the First Gibraltar Judgment. The Company submitted its statement of defense on September 15, 2024 and so did the estate of the late Mr. Ran Poliakine (the “Estate”). In its statement of defense, the Company reiterated its strong denial of the plaintiff’s baseless claims and emphasizes that the Company was never a party to the consulting agreement with the plaintiff. In addition, the Company is not responsible for any potential liabilities of Gibraltar Entity, which is a separate legal entity. Furthermore, the plaintiff has no right to a bonus or consulting fees from the Gibraltar entity. Lastly, the Company stated there is no basis for piercing the corporate veil between the Gibraltar entity and the Company so as to attribute the acts or omissions or knowledge of the Gibraltar entity to the Company. The Company stated that it acted in good faith and that all its actions were conducted in a legal and proper manner. On April 5, 2024, the Gibraltar entity filed an amended claim and a request for an anti-suit injunction (“ASI”) in Gibraltar against the plaintiff. On November 18, 2024, the Gibraltar court granted the Gibraltar entity’s request and issued an ASI, preventing the plaintiff from continuing to pursue the present claim against the Gibraltar entity in Israel. As a result, the dispute between the plaintiff and the Gibraltar entity will be adjudicated before the Gibraltar court, in accordance with Gibraltar law. In January 2025, the plaintiff filed a new claim against the Company with the Gibraltar court, which was dismissed due to procedural defects. The plaintiff filed an additional claim against the Company, which was served on the Company on December 25, 2025. The Company decided not to contest the jurisdiction of the Gibraltar court and consent to the Gibraltar Jurisdiction, and will therefore submit a statement of defense in Gibraltar court. In light of the above, on February 1, 2026, the plaintiff filed with the court in Israel a motion seeking to dismiss the claim submitted against the Company in Israel and thereby close the proceedings in Israel. The Company has submitted its response to the motion, together with a request for an award of costs, on April 26, 2026, in which it argued that there was no basis to file the claim against it in the first place, as its adjudication is contingent upon a prior determination of the date of termination of the engagement between the Plaintiff and Gibraltar Entity, before the court in Gibraltar, and only thereafter, to the extent it is determined that a breach occurred (which is denied), could the claims against the Company, which are wholly denied, be addressed. On December 11, 2025, we received a letter from a shareholder detailing certain purported concerns and allegations relating to representations made during negotiations regarding a certain asset transaction. On April 19, 2026, we entered into a settlement agreement with said shareholder, pursuant to which the alleging shareholder, on its own behalf and on behalf of its shareholders, fully released us from any and all claims, including those mentioned in the shareholder’s letter, claims relating to the asset transaction, and claims relating to the relationship with the shareholder and its affiliates and shareholders. In return for the release, and without admission of any liability, the Company agreed to issue to the shareholder 450,000 ordinary shares. As of December 31, 2025, we accrued an amount of $1,260 thousand in connection with the above referenced complaint. The accrual was recorded against other expenses, net in the consolidated statements operations and comprehensive loss. 122 Income Tax Valuation allowances are provided unless it is more likely than not that the deferred tax asset will be realized. In the determination of the appropriate valuation allowances, we consider future reversals of existing taxable temporary differences and the most recent projections of future business results that may enhance the likelihood of realization of a deferred tax asset. Assessments for the realization of deferred tax assets made at a given balance sheet date are subject to change in the future, particularly if our earnings or earnings of the subsidiaries are significantly higher or lower than expected, or if we take operational or tax positions that could impact the future taxable of our earnings or the subsidiaries earnings. Accordingly, changes in the assumptions described above could have a material impact on our consolidated results of operations.