Senstar Technologies (NASDAQ: SNT) outlines 2025 performance and €10.4M Blickfeld acquisition
Filing Impact
Filing Sentiment
Form Type
20-F
Rhea-AI Filing Summary
Senstar Technologies Corporation files its annual report describing a global security technology business focused on perimeter intrusion detection systems, video management, security management software and access control. The company reports 23,331,653 Common Shares outstanding as of December 31, 2025 and consolidated revenues of $36,374 thousand for 2025, with most sales generated outside Canada.
Management highlights that Senstar was profitable in 2025 and 2024 but recorded a loss in 2023, and warns that seasonal demand, currency swings and government budget cycles can make results volatile. The company spent $3.3 million on research and development in 2025 to enhance its product portfolio, including AI-powered sensor fusion and video analytics.
In December 2025 Senstar agreed to acquire Munich-based Blickfeld GmbH for €10.4 million in cash plus €1 million in potential earnouts, expanding into 3D LiDAR sensing and volumetric applications. The report also details the completed redomiciliation from Israel to Ontario, extensive international operations, supply-chain and trade risks, cybersecurity threats, and the possibility that Senstar could be treated as a passive foreign investment company for U.S. tax purposes.
Positive
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Negative
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Insights
Senstar grows modestly, adds LiDAR via Blickfeld, and flags macro and FX risks.
Senstar positions itself as a niche provider of perimeter intrusion detection and video/security management software, with 2025 revenue of $36,374 thousand and a strong international mix (94.5% of revenue from outside Canada). Profitability in 2025 and 2024 after a 2023 loss shows some earnings recovery, but management emphasizes seasonality and contract timing make results volatile.
The €10.4 million cash acquisition of Blickfeld GmbH, plus up to €1 million in earnouts, broadens Senstar into 3D LiDAR and volumetric sensing, complementing its AI-based MultiSensor and Symphony platforms. While funded from cash, the deal size is modest relative to the business and is framed as strategic rather than transformative.
Risks are heavily macro-driven: exposure to government security budgets, global supply chains, currency swings (including a $0.2 million FX loss in 2025), and evolving tariffs and trade barriers. The filing also underscores cybersecurity, ESG scrutiny, and potential PFIC tax status for U.S. holders, which could affect after-tax returns even if operating performance remains stable.
Key Figures
Shares outstanding: 23,331,653 Common Shares
Total revenue: $36,374 thousand
North America revenue: $17,959 thousand
+5 more
8 metrics
Shares outstanding
23,331,653 Common Shares
As of December 31, 2025
Total revenue
$36,374 thousand
Year ended December 31, 2025
North America revenue
$17,959 thousand
Year ended December 31, 2025
Europe revenue
$12,830 thousand
Year ended December 31, 2025
R&D expenses
$3.3 million
Year ended December 31, 2025
FX result
$0.2 million net loss
Foreign exchange, net, year ended December 31, 2025
Blickfeld purchase price
€10.4 million cash
Acquisition agreed December 9, 2025
Blickfeld earnouts
€1 million performance-based
Additional consideration for Blickfeld acquisition
Key Terms
perimeter intrusion detection systems, sensor fusion engine, Foreign Corrupt Practices Act, passive foreign investment company, +2 more
6 terms
perimeter intrusion detection systems financial
"We offer comprehensive solutions for critical sites, which leverage our broad portfolio of homegrown Perimeter Intrusion Detection Systems (“PIDS”)"
Perimeter intrusion detection systems are networks of sensors, cameras, or fences that monitor the boundary of a property to detect and alert on unauthorized entry—think of them as a high-tech alarm that watches the edges of a site rather than just doors and windows. For investors, they matter because they represent recurring revenue and service opportunities, affect cost and liability for asset owners, and signal demand in security spending that can drive sales and long-term contracts for suppliers.
sensor fusion engine technical
"what truly sets Senstar Symphony apart from other systems is its sensor fusion engine"
Foreign Corrupt Practices Act regulatory
"we are subject to the regulations imposed by the Foreign Corrupt Practices Act (“FCPA”)"
A U.S. law that makes it illegal for companies and their employees to bribe foreign government officials or fail to keep honest financial records; think of it as anti-bribery and accounting rules that travel with a business overseas. It matters to investors because violations can lead to large fines, criminal charges, damaged reputation and costly compliance programs, all of which can reduce a company’s value and disrupt operations.
passive foreign investment company financial
"we may not be classified as a “passive foreign investment company”, or PFIC, for the 2025 taxable year"
A passive foreign investment company (PFIC) is a foreign corporation that, under U.S. tax rules, earns mostly passive income (like dividends, interest, rents, or royalties) or holds mostly passive assets. For U.S. investors, owning stock in a PFIC can trigger special, often punitive tax treatment and extra reporting requirements, which can raise the investor’s tax bill and reduce after‑tax returns—think of an unexpected tax surcharge that changes the real payoff of the investment.
video management software technical
"We offer a broad portfolio of homegrown PIDS, VMS and SMS combined with EAC, and IVA"
Environmental, Social and Governance financial
"Increasing scrutiny and changing expectations from investors, lenders, customers and other market participants with respect to our Environmental, Social and Governance, or ESG, policies"
Environmental, social and governance (ESG) describes how a company manages its impact on the planet, how it treats people and how it is governed. Investors treat ESG like a report card—companies that score well tend to face fewer regulatory, legal and reputational surprises, attract customers and employees more easily, and may deliver steadier long‑term returns, while poor ESG performance can signal added risk to investment value.
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 20-F
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31 , 2025
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Date of event requiring this shell company report .................
Commission file number: 001-41980
(Exact Name of Registrant as specified in its charter and translation of Registrant’s name into English)
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
Senstar Technologies Corporation
Tel: +1 -613-839-5572
Securities registered or to be registered pursuant to Section 12(b) of the Act.
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 23,331,653 Common Shares, no par value, as of December 31, 2025.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of "accelerated filer", "large accelerated filer" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer ☐
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Accelerated filer ☐ |
| Emerging growth company |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
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International Financial Reporting Standards as issued
by the International Accounting Standards Board ☐
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Other ☐
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If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:
Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
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TABLE OF CONTENTS | |||
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Page No | |||
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PART I |
1 | ||
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ITEM 1. |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
1 | |
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ITEM 2. |
OFFER STATISTICS AND EXPECTED TIMETABLE |
1 | |
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ITEM 3. |
KEY INFORMATION |
1 | |
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A. |
[Reserved]. |
1 | |
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B. |
Capitalization and Indebtedness. |
1 | |
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C. |
Reasons for the Offer and Use of Proceeds. |
1 | |
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D. |
Risk Factors. |
1 | |
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ITEM 4. |
Information on the Company |
17 | |
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A. |
History and Development of the Company. |
17 | |
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B. |
Business Overview. |
17 | |
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C. |
Organizational Structure. |
28 | |
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D. |
Property, Plants and Equipment. |
28 | |
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ITEM 4A. |
Unresolved Staff Comments |
28 | |
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ITEM 5. |
Operating and Financial Review and Prospects |
29 | |
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A. |
Operating Results. |
29 | |
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B. |
Liquidity and Capital Resources |
34 | |
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C. |
Research and Development, Patents and Licenses. |
36 | |
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D. |
Trend Information. |
36 | |
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E. |
Critical Accounting Estimates. |
37 | |
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ITEM 6. |
Directors, Senior Management and Employees |
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A. |
Directors and Senior Management. |
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B. |
Compensation |
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C. |
Board Practices |
42 | |
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D. |
Employees |
46 | |
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E. |
Share Ownership. |
47 | |
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F. |
Disclosure of a registrant’s action to recover erroneously awarded compensation
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48 | |
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ITEM 7. |
Major Shareholders and Related Party Transactions |
48 | |
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A. |
Major Shareholders |
48 | |
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B. |
Related Party Transactions. |
48 | |
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C. |
Interests of Experts and Counsel. |
48 | |
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ITEM 8. |
Financial Information |
49 | |
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A. |
Consolidated Statements and Other Financial Information. |
49 | |
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B. |
Significant Changes. |
49 | |
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ITEM 9. |
The Offer and Listing |
49 | |
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A. |
Offer and Listing Details. |
49 | |
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B. |
Plan of Distribution. |
49 | |
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C. |
Markets. |
49 | |
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D. |
Selling Shareholders. |
49 | |
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E. |
Dilution. |
49 | |
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F. |
Expenses of the Issue. |
49 | |
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ITEM 10. |
Additional Information |
50 | |
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A. |
Share Capital. |
50 | |
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B. |
Articles and By-laws. |
50 | |
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C. |
Material Contracts. |
50 | |
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D. |
Exchange Controls. |
50 | |
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E. |
Taxation. |
51 | |
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F. |
Dividends and Paying Agents. |
58 | |
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G. |
Statements by Experts. |
58 | |
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H. |
Documents on Display. |
59 | |
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I. |
Subsidiary Information. |
59 | |
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J. |
Annual Report to Security Holders |
59 | |
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ITEM 11. |
Quantitative and Qualitative Disclosures about Market Risk
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59 |
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ITEM 12. |
Description of Securities Other Than Equity Securities
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59 |
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PART II |
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ITEM 13. |
Defaults, Dividend Arrearages and Delinquencies |
60 |
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ITEM 14. |
Material Modifications to the Rights of Security Holders and Use
of Proceeds |
60 |
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ITEM 15. |
Controls and Procedures |
60 |
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ITEM 16A. |
Audit Committee Financial Expert |
61 |
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ITEM 16B. |
Code of Ethics |
61 |
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ITEM 16C. |
Principal Accountant Fees and Services |
61 |
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ITEM 16D. |
Exemptions from the Listing Standards for Audit Committees
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62 |
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ITEM 16E. |
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
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62 |
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ITEM 16F. |
Changes in Registrant’s Certifying Accountant |
62 |
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ITEM 16G. |
Corporate Governance |
63 |
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ITEM 16H. |
Mine Safety Disclosure |
63 |
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ITEM 16I. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
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63 |
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ITEM 16J. |
Insider Trading Policies |
64 |
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ITEM 16K. |
Cybersecurity |
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PART III |
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ITEM 17. |
Financial Statements |
65 |
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ITEM 18. |
Financial Statements |
65 |
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ITEM 19. |
Exhibits |
65 |
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INTRODUCTION
We are a leading international provider of comprehensive physical,
video security products and solutions. We offer comprehensive solutions for critical sites, which leverage our broad portfolio of homegrown
Perimeter Intrusion Detection Systems (“PIDS”), advanced Video Management Software (‘VMS”) and Security Management
Software (“SMS”) with native Intelligent Video Analytics (“IVA”) security solutions, as well as access control
products and technologies.
Based on our industry experience and interaction with customers
for over 40 years, we have developed a comprehensive set of solutions and products, optimized for perimeter, outdoor, and general security
applications. Our broad portfolio of critical infrastructure protection and site protection technologies includes a variety of fence mounted
sensors, buried and concealed detection systems, and sophisticated sensors for sub-surface intrusion such as to secure pipelines, as well
as advanced video analytics software, security management software and video management systems. We have successfully delivered customized
solutions and products in more than 100 countries worldwide.
We were incorporated under the laws of the State of Israel on March
27, 1984 under the name Magal Security Systems Ltd., and on September 30, 2021, we changed our name to Senstar Technologies Ltd. On September
26, 2023, Senstar Technologies Ltd., Senstar Technologies Corporation, a newly established Ontario corporation, and Can Co Sub Ltd., a
company organized under the laws of the State of Israel and a wholly-owned subsidiary of Senstar Technologies Corporation entered into
a merger agreement (the “Merger Agreement”), pursuant to which Senstar Technologies
Corporation became the parent company of Senstar Technologies Ltd., with Senstar Technologies Ltd. surviving the Merger as a wholly-owned
subsidiary of Senstar Technologies Corporation (the “Merger”). Pursuant to the Merger
Agreement, Senstar Technologies Ltd. agreed to become domiciled in Ontario and become Senstar Technologies Corporation, an Ontario organized
company (the “Redomiciliation”).
Effective March 18, 2024, as a result of the Merger, (a) the separate
corporate existence of Can Co Sub Ltd. ceased and Senstar Technologies Ltd. continued as the surviving company; (b) all the properties,
rights, privileges, powers and franchises of Senstar Technologies Ltd. and Can Co Sub Ltd. vested in Senstar Technologies Ltd. (as the
surviving company); (c) all debts, liabilities and duties of Senstar Technologies Ltd. and Can Co Sub Ltd. became the debts, liabilities
and duties of Senstar Technologies Ltd. (as the surviving company); and (d) all the rights, privileges, immunities, powers and franchises
of Senstar Technologies Ltd. continued unaffected by the Merger in accordance with the Israeli Companies Law, 5759-1999.
Each Senstar Technologies Ltd. ordinary share issued and outstanding
immediately prior to the consummation of the Merger represented the right to receive, less any applicable withholding taxes, one (1) validly
issued, fully paid and non-assessable common share of Senstar Technologies Corporation, representing the same proportional equity interest
in Senstar Technologies Corporation as that shareholder held in Senstar Technologies Ltd.. The number of Common Shares of Senstar Technologies
Corporation outstanding immediately after the Redomiciliation continued to be the same as the number of ordinary shares of Senstar Technologies
Ltd. outstanding immediately prior to the Redomiciliation. Upon effectiveness of the Redomiciliation, the name of our company became Senstar
Technologies Corporation. Following the Redomiciliation, the Common Shares of Senstar Technologies Corporation as the successor to Senstar
Technologies Ltd., continued to be listed for trading on Nasdaq under the ticker symbol “SNT”. On December 15, 2025, the predecessor
entity, Senstar Technologies Ltd., was dissolved.
Our website is www.senstar.com.
The information on our website is not incorporated by reference into this annual report. As used in this annual report, the terms “we,”
“us,” “our,” and “Senstar” mean Senstar Technologies Corporation and its subsidiaries, and, with respect
to periods prior to the effective date of the Redomiciliation, Senstar Technologies Ltd. and its subsidiaries, unless the context requires
otherwise.
Our fully registered marks are FIBERPATROL®, FLEXZONE®,
OMNITRAX®, SENSTAR® (INCLUDING LOGO DESIGN), XFIELD®, FLEXPS®, ultraWave Design®, FLEXPI®, PINPOINTER®.All
other marks used to identify particular products and services associated with our business are trademarks, including but not limited to
SENSTAR SYMPHONY™, SENSTAR MULTISENSOR™, SENSOR FUSION™, SENSTAR ULTRAWAVE™, SENSTAR CARE™, SENSTAR FLOW™.
Any other trademarks and trade names appearing in this annual report are owned by their respective holders.
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Our consolidated financial statements appearing in this annual
report are prepared in U.S. dollars and in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.
All references in this annual report to “dollars” or “$” are to U.S. dollars, all references to “CAD”
are to Canadian dollars.
Statements made in this annual report concerning the contents of
any contract, agreement or other document are summaries of such contracts, agreements or documents and are not complete descriptions of
all of their terms. If we filed any of these documents as an exhibit to this annual report or to any registration statement or annual
report that we previously filed, you may read the document itself for a complete description of its terms.
This Annual Report on Form 20-F contains various “forward-looking
statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, and within the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements
reflect our current view with respect to future events and financial results. Forward-looking statements usually include the verbs, “anticipates,”
“believes,” “estimates,” “expects,” “intends,” “plans,” “projects,”
“understands” and other verbs suggesting uncertainty. We remind readers that forward-looking statements are merely predictions
and therefore inherently subject to uncertainties and other factors and involve known and unknown risks that could cause the actual results,
performance, levels of activity, or our achievements, or industry results, to be materially different from any future results, performance,
levels of activity, or our achievements expressed or implied by such forward- looking statements. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly release any
revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events. We have attempted to identify additional significant uncertainties and other factors affecting forward-looking statements
in the Risk Factors section which appears in Item 3.D “Key Information - Risk Factors.”
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PART I
| ITEM 1. |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
Not applicable.
| ITEM 2. |
OFFER STATISTICS AND EXPECTED TIMETABLE |
Not applicable.
| ITEM 3. |
KEY INFORMATION |
| A. |
Reserved |
| B. |
Capitalization and Indebtedness. |
Not applicable.
| C. |
Reasons for the Offer and Use of Proceeds. |
Not applicable.
| D. |
Risk Factors. |
Investing in our Common Shares involves a high degree of risk and
uncertainty. You should carefully consider the risks and uncertainties described below before investing in our Common Shares. If any of
the following risks actually occurs, our business, prospects, financial condition and results of operations could be harmed. In that case,
the value of our Common Shares could decline, and you could lose all or part of your investment. These risks include, but are not limited
to, the following:
Risks Related to Our Business and Our Industry
| • |
While we were profitable in 2025 and 2024, we incurred a loss in 2023 and have incurred losses in past years and may not operate
profitably in the future. |
| • |
Our operating results may fluctuate from quarter to quarter and year to year. |
| • |
Our financial results may be significantly affected by currency fluctuations. |
| • |
M&A, which requires the integration of multiple acquired companies and their respective businesses, operations and employees
with our own, involves significant risks. |
| • |
Our revenues depend in great measure on government procurement procedures and practices. |
| • |
Because competition in our industry is intense, our business, operating results and financial condition may be adversely affected.
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Our business involves significant risks and uncertainties that may not be covered by indemnities or insurance. |
| • |
The markets for our products may be affected by changing technology, requirements, standards and products. |
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| • |
Increasing scrutiny and changing expectations with respect to our ESG policies may impose additional costs on us or expose us to
additional risks. |
| • |
Our failure to retain and attract personnel could harm our business, operations and product development efforts. |
| • |
We face risks associated with doing business in international markets. |
| • |
Our failure to comply with anti-corruption laws and regulations could adversely affect our reputation, business, financial condition
and results of operations. |
| • |
We may be vulnerable to physical and electronic security breaches and cyber-attacks which could disrupt our operations. |
| • |
We may not be able to protect our proprietary technology and unauthorized use of our proprietary technology by third parties may
impair our ability to compete effectively. |
| • |
Claims that our products infringe upon the intellectual property of third parties may require us to incur significant costs, enter
into licensing agreements or license substitute technology. |
| • |
Undetected defects in our products may increase our costs and harm the market acceptance of our products. |
| • |
If suppliers terminate our arrangements with them, or amend them in a manner detrimental to us, we may experience delays in production
and implementation of our products. |
| • |
We currently benefit from government programs and tax benefits that may be discontinued or reduced in the future, which would increase
our future tax expenses. |
| • |
We may fail to maintain effective internal control over financial reporting, which could result in material misstatements in our
financial statements. |
| • |
We may be adversely affected by regulations and market expectations related to sourcing and our supply chain, including conflict
minerals. |
Risks Relating to our Technology and Intellectual Property
| • |
Our success depends on our ability to develop and maintain advanced security technologies, and failure to keep pace with rapid technological
changes could make our solutions less competitive. |
| • |
We rely on proprietary technology, software, and intellectual property, and any inability to protect these rights or unauthorized
use by third parties could harm our business. |
| • |
Our products incorporate third-party technologies and components, and disruptions in access to these technologies or licensing issues
could affect our ability to deliver solutions. |
| • |
We may face intellectual property infringement claims, which could result in costly litigation, damages, or the need to redesign
products. |
| • |
Cybersecurity threats, including hacking, data breaches, or vulnerabilities in our software or systems, could damage our reputation
and expose us to liability. |
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| • |
Our solutions must integrate with complex customer environments, and failures, defects, or performance issues in our systems could
result in customer dissatisfaction, contract penalties, or loss of future business. |
| • |
We may not be able to successfully develop, introduce, or commercialize new technologies, including AI-driven or analytics-based
security solutions, in a timely or cost-effective manner. |
| • |
Our intellectual property protections (including patents, trade secrets, and copyrights) may be limited in certain jurisdictions,
particularly in countries where enforcement is weaker. |
Risks Relating to Our International Operations
| • |
We are exposed to political, economic, and security instability in certain regions, which may disrupt our operations, projects, and
supply chains. |
| • |
Our international operations expose us to foreign currency exchange rate fluctuations, which can materially affect our revenues and
operating results. |
| • |
We are subject to complex and changing regulatory environments, including export controls, trade sanctions, and anti-corruption laws,
which may limit our ability to sell products in certain jurisdictions or increase compliance costs. |
| • |
A significant portion of our revenues is derived from government and critical infrastructure customers worldwide, making us vulnerable
to changes in government budgets, procurement policies, and geopolitical tensions affecting cross-border contracts. |
| • |
Our global operations require us to manage logistics, supply chains, and third-party partners across multiple jurisdictions, which
may be impacted by trade restrictions, tariffs, or disruptions in international transportation. |
| • |
We may face restrictions on the repatriation of earnings, taxation complexities, and differing legal systems, which could adversely
impact our financial condition and cash flows. |
| • |
Operating internationally exposes us to cultural, language, and operational challenges, as well as risks related to hiring, retaining,
and managing personnel across diverse regions. |
Risks Relating to Our Common Shares
| • |
Volatility of the market price of our Common Shares could adversely affect our shareholders and us. |
| • |
We may not pay dividends in the future. |
| • |
As a foreign private issuer whose shares are listed on the NASDAQ Global Market, we may follow certain home country corporate governance
practices instead of certain NASDAQ requirements. |
| • |
We may in the future be classified as a passive foreign investment company, or PFIC, which would subject our U.S. investors to adverse
tax rules. |
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Risks Relating to Our Existence as an Ontario Corporation
| • |
The rights and obligations of a holder of Common Shares will be governed by Ontario law and may differ from the rights and obligations
of shareholders of companies organized under the laws of other jurisdictions. |
| • |
The Articles, together with the By-Laws, and Canadian laws and regulations applicable to us may adversely affect our ability to take
actions that could be deemed beneficial to holders of our Common Shares, or the ability of another party to acquire control of the Company.
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Canadian take-over bid laws may discourage take-over bids being made for the Company and may discourage the acquisition of large
numbers of our Common Shares. |
| • |
Canadian issuer bid laws restrict our ability to purchase our Common Shares. |
| • |
We are able to issue an unlimited amount of additional Common Shares, which may cause our shareholders to experience dilution in
the future. |
| • |
Our Common Shares are subject to Canadian insolvency laws which may offer less protection to its shareholders compared to U.S. insolvency
laws. |
Risks Related to Our Business and Our Industry
While we were profitable in 2025 and 2024, we incurred a loss in 2023 and have incurred
losses in past years and may not operate profitably in the future.
We may not be able to sustain profitable operations in the future
due to a number of factors. If we do not generate sufficient cash from operations, we may be required to obtain financing or reduce our
level of expenditures. Such financing may not be available in the future, or, if available, may not be on terms favorable to us. If adequate
funds are not available to us, our business, results of operations and financial condition will be materially and adversely affected.
Our operating results may fluctuate from quarter to quarter and
year to year.
Our sales and operating results may vary significantly from quarter
to quarter and from year to year in the future. Our operating results are characterized by a seasonal pattern, with different volumes
of revenues towards the end of the year compared with the first part of the year. In addition, our operating results are affected by a
number of factors, many of which are beyond our control. Factors contributing to these fluctuations include the following:
| • |
changes in customers’ or potential customers’ budgets as a result of, among other things, government funding (influenced
by long shutdowns) and procurement policies; |
| • |
changes in demand for our existing products and services; |
| • |
our long and variable sales cycle; |
| • |
our ability to maintain sales volumes at a level sufficient to cover fixed manufacturing and operating costs; and |
| • |
the timing of the introduction and market acceptance of new products, product enhancements and new applications. |
Our expense levels are based, in part, on expected future sales.
If the level of sales in a particular quarter does not meet expectations, we may be unable to adjust operating expenses quickly enough
to compensate for the shortfall of sales, and our results of operations may be adversely affected. Due to these and other factors, we
believe that quarter to quarter and year to year comparisons of our past operating results may not be meaningful. You should not rely
on our results for any quarter or year as an indication of our future performance. Our operating results in future quarters and years
may be below expectations, which would likely cause the price of our Common Shares to fall.
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Our financial results may be significantly affected by currency
fluctuations.
Most of our sales are made in North America, Europe, Middle East
and Africa, APAC and Latam. Our revenues are primarily denominated in U.S Dollars and Euros while a portion of our expenses, primarily
labor expenses, is incurred in Canadian Dollars and Euros. As a result, fluctuations in exchange rates between the dollar and non-dollar
currencies may affect our operating results and financial condition. The dollar cost of our operations in Canada may be adversely affected
by the appreciation of the CAD against the dollar. In addition, the value of our non-dollar revenues could be adversely affected by the
depreciation of the dollar against such currencies. Our financial expenses may also be adversely affected by the depreciation of a currency
in which we maintain our monetary assets.
We recorded a foreign exchange, net loss of $0.2 million and of
$0.1 million in the years ended December 31, 2025 and 2023, respectively and foreign exchange gain, net of $0.5 million in the year ended
December 31, 2024. This is due to the adjustment of monetary assets and liabilities, denominated in currencies, other than the functional
currency of the operational entities in the group. At the end of each period, a change in currency valuation of monetary assets and liabilities
is recorded as a non-cash financial expense or income. The Canadian dollar depreciated by 4.8% and 2.3% against the U.S. dollar in 2025
and 2023, respectively and appreciated by 8.7% against the U.S. dollar in 2024. We may incur exchange losses in the future which may materially
affect our operating results.
The implementation of M&A, which requires the integration of
acquired companies and their respective businesses, operations and employees with our own, involves significant risks, and the failure
to integrate successfully may adversely affect our future results..
We have made a number of acquisitions in the past, including our
recent acquisition of Blickfeld GmbH announced in December 2025 and completed February 13, 2026. Future acquisitions by us could result
in potentially dilutive issuances of our equity securities, the incurrence of debt and contingent liabilities and amortization expenses
related to identifiable intangible assets, any of which could materially adversely affect our operating results and financial position.
Mergers and acquisitions of companies are inherently risky and subject to many factors outside of our control and no assurance can be
given that our future acquisitions will be successful and will not adversely affect our business, operating results, or financial condition.
In the future, we may seek to acquire or make strategic investments in complementary businesses, technologies, services or products, or
enter into strategic partnerships or alliances with third parties in order to expand our business. Failure to manage and successfully
integrate such acquisitions could materially harm our business and operating results. Prior acquisitions have resulted in a wide range
of outcomes, from successful introduction of new products, technologies and professional services to a failure to do so. Even when an
acquired company has previously developed and marketed products, there can be no assurance that new product enhancements will be made
in a timely manner or that pre-acquisition due diligence will have identified all possible issues that might arise with respect to such
products. If we acquire other businesses, we may face difficulties, including:
| • |
Difficulties in integrating the operations, systems, technologies, products, and personnel of the acquired businesses or enterprises;
|
| • |
Diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and
more widespread operations resulting from acquisitions; |
| • |
Integrating financial forecasting and controls, procedures and reporting cycles; |
| • |
Difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets have
stronger market positions; |
| • |
Insufficient revenue to offset increased expenses associated with acquisitions; and |
| • |
The potential loss of key employees, customers, distributors, vendors and other business partners of the companies we acquire following
and continuing after announcement of acquisition plans. |
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The benefits we expect to realize from these acquisitions are, necessarily, based
on projections and assumptions about the combined businesses of our company, and assume, among other things, the successful integration
of these acquired entities into our business and operations. Our projections and assumptions concerning our acquisitions may be inaccurate,
however, and we may not successfully integrate the acquired companies and our operations in a timely manner, or at all. We may also be
exposed to unexpected contingencies or liabilities of the acquired companies. If we do not realize the anticipated benefits of these transactions,
our growth strategy and future profitability could be adversely affected.
Our revenues depend in great measure on government procurement
procedures and practices. A substantial decrease in our end-users’ budgets would adversely affect our results of operations.
Many of our products are sold to governmental agencies, governmental
authorities and government-owned companies, many of which have complex and time-consuming procurement procedures. A substantial
period of time often elapses from the time we begin marketing a product until we actually sell that product to a particular end-user.
In addition, our sales to governmental agencies, authorities and companies are directly affected by these customers’ budgetary constraints
and the priority given in their budgets to the procurement of our products. A decrease in governmental funding for our end-users’
budgets would adversely affect our results of operations. This risk is heightened during periods of global economic slowdown or government
shutdowns. Accordingly, governmental purchases of our systems, products and services may decline in the future as the governmental
purchasing agencies may terminate, reduce or modify contracts or subcontracts if:
| • |
their requirements or budgetary constraints change; |
| • |
they cancel multi-year contracts and related orders if funds become unavailable; or |
| • |
they shift spending priorities into other areas or for other product. |
Any such event may have a material adverse effect on us.
Because competition in our industry is intense, our business, operating
results and financial condition may be adversely affected.
The global market for security, safety, site management solutions
and products are highly fragmented and intensely competitive. We compete principally in the market for perimeter intrusion detection systems,
PIDS, Video Management Software, VMS, Security Management Software, SMS and Intelligent Video Analytics, or IVA. Some of our competitors
and potential competitors have greater research, development, financial and personnel resources, including governmental support, as well
as established greater penetration into certain vertical markets or geographical market segments. We cannot assure you that we will be
able to compete effectively relative to our competitors or continue to develop and market new products effectively. Continued competitive
pressures could cause us to lose significant market share or erode profitability margins.
Our business involves significant risks and uncertainties that
may not be covered by indemnity or insurance.
A significant portion of our business relates to designing, developing,
and manufacturing advanced security, systems and products. New technologies may be untested or unproven. Failure of some of these products
and services could result in extensive loss of life or property damage. Accordingly, we also may incur liabilities that are unique to
our products and services. In some, but not all circumstances, we may be entitled to certain legal protections or indemnifications from
our customers, either through regulatory protections, contractual provisions or otherwise. The insurance coverage that we maintain may
not be adequate to cover all claims or liabilities, and it is not possible to obtain insurance to protect against all operational risks
and liabilities.
Substantial claims resulting from an accident, failure of our products
or services, or other incident, or liability arising from our products and services in excess of any indemnity and our insurance coverage
(or for which indemnity or insurance is not available or not obtained) could adversely impact our financial condition, cash flows, or
operating results. Any accident, even if fully indemnified or insured, could negatively affect our reputation among our customers and
the public, and make it more difficult for us to compete effectively. It also could affect the cost and availability of adequate insurance
in the future.
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The markets for our products may be affected by changing technology,
requirements, standards and products, and we may be adversely affected if we do not respond promptly and effectively to these changes.
The markets for our products may be affected by evolving technologies,
changing industry standards, changing regulatory environments, new product introductions and changes in customer requirements. The introduction
of products embodying new technologies and the emergence of new industry standards and practices can render existing products obsolete
and unmarketable. Our future success will depend on our ability to enhance our existing products and to develop and introduce, on a timely
and cost-effective basis, new products and product features that keep pace with technological developments and emerging industry standards.
In the future:
| • |
we may not be successful in developing and marketing new products or product features that respond to technological change or evolving
industry standards; |
| • |
we may experience difficulties that could delay or prevent the successful development, introduction and marketing of these new products
and features; or |
| • |
our new products and product features may not adequately meet the requirements of the marketplace and achieve market acceptance.
|
If we are unable to respond promptly and effectively to changing
technologies and market requirements, we will be unable to compete effectively in the future.
Increasing scrutiny and changing expectations from investors, lenders,
customers and other market participants with respect to our Environmental, Social and Governance, or ESG, policies may impose additional
costs on us or expose us to additional risks.
Companies across all industries are facing increasing scrutiny
relating to their ESG policies. Investors, lenders and other market participants are increasingly focused on ESG practices and in recent
years have placed increasing importance on the implications and social cost of their investments. The increased focus and activism related
to ESG may hinder our access to capital, as investors and lenders may reconsider their capital investment allocation as a result of their
assessment of our ESG practices. If we do not adapt to or comply with investor, lender or other industry shareholder expectations and
standards, which are evolving, or if we are perceived to have not responded appropriately to the growing concern for ESG issues, regardless
of whether there is a legal requirement to do so, we may suffer from reputational damage and the business, financial condition and the
price of our company’s shares could be materially and adversely affected.
Our failure to retain and attract personnel could harm our business,
operations and product development efforts.
Our products require sophisticated research and development, marketing
and sales and technical customer support. Our success depends on our ability to attract, train and retain qualified research and development,
marketing and sales and technical customer support personnel. Competition for personnel in all of these areas is intense and we may not
be able to hire adequate personnel to achieve our goals or support the anticipated growth in our business. Competition may be amplified
by evolving restrictions on immigration, travel, or the availability of visas for skilled technology workers. If we fail to attract and
retain qualified personnel, our business, operations and product development efforts would suffer.
We may be vulnerable to physical and electronic security breaches
and cyber-attacks which could disrupt our operations and have a material adverse effect on our financial performance and operating results.
A party who is able to compromise the security measures on our
networks or the security of our infrastructure could, among other things, misappropriate our proprietary information and the personal
information of our customers and employees, cause interruptions or malfunctions in our or our customers’ operations, cause delays
or interruptions to our ability to meet customer needs, cause us to breach our legal, regulatory or contractual obligations, create an
inability to access or rely upon critical business records or cause other disruptions in our operations. These breaches may result from
human errors, equipment failure, or fraud or malice on the part of employees or third parties. Our exposure to cybersecurity threats and
negative consequences of cybersecurity breaches will likely increase as we store increasing amounts of customer data. Additionally, as
we increasingly market the security features in our data centers, our data centers may be targeted by computer hackers seeking to compromise
data security.
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We have experienced and defended against certain threats to our
systems and security (such as phishing attempts), none of which have had a material adverse effect on our business or operations to date.
However, we could incur significant costs in order to investigate and respond to future attacks, to respond to evolving regulatory oversight
requirements, to upgrade our cybersecurity systems and controls, and to remediate security compromise or damage. In response to past threats
and attacks, we have implemented further controls and planned for other preventative actions to further strengthen our systems against
future attacks. However, we cannot assure that such measures will provide absolute security, that we will be able to react in a timely
manner, or that our remediation efforts following past or future attacks will be successful. Consequently, our financial performance and
results of operations would be materially adversely affected.
In the event of a breach resulting in loss of data, such as personally
identifiable information or other such data protected by data privacy or other laws, we may be liable for damages, fines and penalties
for such losses under applicable regulatory frameworks despite not handling the data. Furthermore, if a high-profile security breach or
cyber-attack occurs with respect to another provider of mission-critical data center facilities, our customers and potential customers
may lose trust in the security of these business models generally, which could harm our reputation and brand image as well as our ability
to retain existing customers or attract new ones. We could incur significant costs in order to investigate and respond to future attacks,
to respond to evolving regulatory oversight requirements, to upgrade our cybersecurity systems and controls, and to remediate security
compromise or damage. In addition, the regulatory framework around data custody, data privacy and breaches varies by jurisdiction and
is an evolving area of law. We cannot assure that we will be able to react in a timely manner in the future, or that our remediation efforts
following past or future attacks will be successful. Consequently, our financial performance and results of operations would be materially
adversely affected. We may not be able to limit our liability or damages in the event of such a loss.
Undetected defects in our products may increase our costs and harm
the market acceptance of our products.
Despite our regular quality assurance testing, the development,
enhancement and implementation of our complex systems entail substantial risks of product defects or failures. Undetected errors or “bugs”
may be found in existing or new products, resulting in delays, loss of revenues, warranty expense, loss of market share, failure to achieve
market acceptance, adverse publicity, product returns, loss of competitive position or claims against us by customers. Any such problems
could be costly to remedy and could cause interruptions, delays, or cessation of our product sales, which could cause us to lose existing
or prospective customers and could negatively affect our results of operations. Moreover, the complexities involved in implementing our
systems entail additional risks of performance failures. We may encounter substantial difficulties due to such complexities which could
have a material adverse effect upon our business, financial condition and results of operations.
If suppliers terminate our arrangements with them, or amend them
in a manner detrimental to us, we may experience delays in production and implementation of our products and our business may be adversely
affected.
We acquire most of the components utilized in our products from
a limited number of suppliers. We may not be able to obtain such items from these suppliers in the future or we may not be able to obtain
them on satisfactory terms. Temporary disruptions of our manufacturing operations would result if we were required to obtain materials
from alternative sources, which may have an adverse effect on our financial results.
We currently benefit from government programs and tax benefits
that may be discontinued or reduced in the future, which would increase our future tax expenses.
We benefit from tax credits we receive pursuant to the Scientific
Research and Experimental Development Tax Incentive Program in Canada and from research grant programs such as the “Industrial Research
Assistance Program” (IRAP). If we fail to comply with the conditions imposed by these Canadian tax programs in the present or future,
the benefits we receive could be cancelled and we could be required to refund any payments previously received under these programs, including
any accrued interest, or pay increased taxes or royalties. Canadian research grant programs are dependent on the Government’s continued
commitment to support R&D, on availability of funding, and may be more difficult to realize or may not be available in the future.
Such a result would adversely affect our results of operations and financial condition. Further, if the Canadian government resolves to
end these programs and benefits, our business, financial condition, results of operations and net income could be materially adversely
affected.
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We may fail to maintain effective internal control over financial
reporting, which could result in material misstatements in our financial statements.
The Sarbanes-Oxley Act of 2002 imposes certain duties on us and
our executives and directors. Our efforts to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 governing internal
controls and procedures for financial reporting have resulted in increased general and administrative expense and a diversion of management
time and attention, and we expect these efforts to require the continued commitment of significant resources. Section 404 of the Sarbanes-Oxley
Act requires management’s annual review and evaluation of our internal control over financial reporting in connection with the filing
of the annual report on Form 20-F for each fiscal year. We may identify material weaknesses or significant deficiencies in our internal
control over financial reporting. Failure to maintain effective internal control over financial reporting could result in material misstatements
in our financial statements. Any such failure could also adversely affect the results of our management’s evaluations and annual
auditor reports regarding the effectiveness of our internal control over financial reporting. We have documented and tested our internal
control systems and procedures in order for us to comply with the requirements of Section 404. While our assessment of our internal control
over financial reporting resulted in our conclusion that as of December 31, 2025, our internal control over financial reporting was effective,
we cannot predict the outcome of our testing in future periods. If we fail to maintain the adequacy of our internal controls, we may not
be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting. Failure
to maintain effective internal control over financial reporting could result in investigation or sanctions by regulatory authorities and
could have a material adverse effect on our operating results, investor confidence in our reported financial information and the market
price of our Common Shares.
Regulations related to “conflict minerals” may force
us to incur additional expenses, may make our supply chain more complex and may result in damage to our reputation with customers.
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection
Act of 2010, or the Dodd-Frank Act, the SEC has adopted requirements for companies that use certain minerals and metals, known as conflict
minerals, in their products, whether or not these products are manufactured by third parties. These requirements require companies to
perform due diligence, disclose and report whether or not such minerals originate from the Democratic Republic of the Congo and adjoining
countries. These requirements could adversely affect the sourcing, availability and pricing of minerals used in the manufacture of our
products. While these requirements continue to be subject to administrative uncertainty, we have incurred, and may continue to incur,
costs to comply with the disclosure requirements, including costs related to determining the source of any of the relevant minerals and
metals used in our products. Since our supply chain is complex, we may not be able to sufficiently verify the origins for these minerals
and metals used in our products through the due diligence procedures that we implement, which may harm our reputation. In such event,
we may also face difficulties in satisfying customers who require that all of the components of our products be certified as conflict
mineral free.
Risks
Relating to Protecting Our Technology and Intellectual Property
We may not be able to protect our proprietary technology and unauthorized
use of our proprietary technology by third parties may impair our ability to compete effectively.
Our success and ability to compete depend in large part upon protecting
our proprietary technology. We have a patent application pending. We also rely on a combination of trade secret and copyright law and
confidentiality, non-disclosure and assignment-of-inventions agreements to protect our proprietary technology. It is our policy to protect
our proprietary rights in our products and operations through contractual obligations, including confidentiality and non-disclosure agreements
with certain employees, distributors and agents, suppliers and subcontractors. These measures may not be adequate to protect our technology
from third-party infringement, and our competitors may independently develop technologies that are substantially equivalent or superior
to ours. Additionally, our products may be sold in foreign countries that provide less protection to intellectual property than that provided
under U.S. and Canadian laws.
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Claims that our products infringe upon the intellectual property
of third parties may require us to incur significant costs, enter into licensing agreements or license substitute technology.
Third parties may in the future assert infringement claims against
us or claims asserting that we have violated a patent or infringed upon a copyright, trademark or other proprietary right belonging to
them. Any infringement claim, even one without merit, could result in the expenditure of significant financial and managerial resources
to defend against the claim. In addition, we purchase components for our products from independent suppliers. Certain of these components
contain proprietary intellectual property of these independent suppliers. Third parties may in the future assert claims against our suppliers
that such suppliers have violated a patent or infringed upon a copyright, trademark or other proprietary right belonging to them. If such
infringement by our suppliers or us were found to exist, a party could seek an injunction preventing the use of their intellectual property.
Moreover, a successful claim of product infringement against us or a settlement could require us to pay substantial amounts or obtain
a license to continue to use such technology or intellectual property. Infringement claims asserted against us could have a material adverse
effect on our business, operating results and financial condition.
Risks Relating to International Operations
We face risks associated with doing business in international markets.
A large portion of our sales is to markets outside of Canada. For
the years ended December 31, 2025, 2024 and 2023 approximately 94.5%, 95.4% and 93.6%, respectively, of our revenues were derived from
sales to markets outside of Canada. A key component of our strategy is to continue to expand in such international markets. Our international
sales efforts are affected by costs associated with the shipping of our products and risks inherent in doing business in international
markets, including:
| • |
different and changing regulatory requirements in the jurisdictions in which we currently operate or may operate in the future;
|
| • |
fluctuations in foreign currency exchange rates; |
| • |
export restrictions, tariffs and other trade barriers; |
| • |
difficulties in staffing, managing and supporting foreign operations; |
| • |
longer payment cycles; |
| • |
difficulties in collecting accounts receivable; |
| • |
political and economic changes, hostilities and other disruptions in regions where we currently sell our products or may sell our
products in the future; and |
| • |
seasonal changes in business activity. |
Negative developments in any of these areas in one or more countries
could result in a reduction in demand for our products, the cancellation or delay of orders already placed, difficulty in collecting receivables,
and a higher cost of doing business, any of which could adversely affect our business, results of operations or financial condition.
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Geopolitical uncertainties and increasing trade
protectionism, including the escalation of international conflicts, trade wars and economic sanctions, may negatively impact global economic
conditions. These factors could have a material adverse effect on our business, results of operations and financial condition.
The ongoing war between Russia and Ukraine continues to affect international operations.
In response to Russia’s invasion of Ukraine, the European Union, the U.K. and the U.S. introduced extensive sanctions on Russia
and Belarus, including targeted restrictions on individuals and entities, export controls, restrictions on economic relations, trade and
financial transactions. These sanctions have had and may continue to have a disruptive effect on global markets.
On February 28, 2026, the United States and Israel launched a joint military operation
against Iran-codenamed “Operation Epic Fury”-targeting the country’s leadership, nuclear facilities, missile sites,
and security forces, Iran launched hundreds of ballistic missiles and drones against Israel, United Arab Emirates, Qatar, and U.S. military
bases in the region. Ongoing geopolitical tensions, including the potential for military escalation and broader regional conflict, may
adversely affect economic conditions and create uncertainty that could negatively impact our business, financial condition and results
of operations. In addition, the virtual closure of shipping through the Strait of Hormuz has raised concerns about broader disruptions
to global supply chains, which could in turn contribute to elevated inflation and slower economic growth in major economies.
In addition to the ongoing conflict in the Middle East, on January 3, 2026, United
States military forces conducted a large-scale operation in Venezuela known as “Operation Absolute Resolve,” which resulted
in the capture of Venezuelan President Nicolás Maduro and his wife, Cilia Flores, in Caracas and their transfer to the United States
to face federal charges. The intervention has elicited strong international reactions and underscored the potential for rapid shifts in
political dynamics in the region, which could influence investor perceptions of risk and volatility in emerging markets.
We cannot predict the progress, outcome or consequences of the conflicts in Ukraine
or Israel, or their broader impacts in Ukraine, Russia, Belarus, Europe, the U.S., the Middle East, Iran or Venezuela. The duration and
effects of military conflicts are highly unpredictable and could lead to significant market and other disruptions, including significant
volatility in prices, instability in financial markets, supply chain disruptions, political and social instability, trade disputes or,
changes in consumer or purchaser preferences, as well as an increase in cyberattacks and espionage. These geopolitical tensions may affect
our profitability. Sanctions, trade disputes, or other governmental action related to tariffs or international trade agreements, could
have a material adverse effect, on our business and financial results.
The current state of the world financial market
and current economic conditions could have a material adverse impact on our results of operations, financial condition and cash flows.
Various macroeconomic factors, including rising inflation, higher interest rates,
global supply chain constraints and the effects of overall economic conditions and uncertainties such as those resulting from the current
and future conditions in the global financial markets, could adversely affect our results of operations, financial condition and supply
chains. Inflation and rising interest rates may negatively impact us by increasing our operating costs and our cost of borrowing. Interest
rates, the liquidity of the credit markets and the volatility of the capital markets could also affect the operation of our business and
our ability to raise capital on favorable terms, or at all.
In Europe, concerns regarding the possibility of sovereign debt defaults by European
Union (“EU”), member countries, although generally alleviated, have in the past disrupted financial markets throughout the
world, and may lead to weaker consumer demand in the European Union, the U.S. and other parts of the world. The withdrawal of the UK from
the European Union (“Brexit”), further increases the risk of additional trade protectionism. Brexit, or similar events in
other jurisdictions, could impact global markets, including foreign exchange and securities markets; any resulting changes in currency
exchange rates, tariffs, treaties and other regulatory matters could in turn adversely impact
our business, operating results, cash flows and financial condition.
In addition, the recent economic slowdown in the Asia Pacific region, particularly
in China, may exacerbate the effect of the weak economic trends in the rest of the world. Before the global economic financial crisis
that began in 2008, China had one of the world’s fastest growing economies in terms of gross domestic product, or GDP, which had
a significant impact on shipping demand. China’s GDP growth rate for the year ended December 31, 2022, was approximately 3.0%, one
of its lowest rates in 50 years, thought to be mainly caused by the country’s zero-COVID policy and strict lockdowns. China claims
that its GDP growth rate for each of the years ended December 31, 2024 and 2025 was approximately 5.0%. Although the Chinese government
has implemented economic stimulus measures, it is possible that China and other countries in the Asia Pacific region will continue to
experience volatile, slowed or even negative economic growth in the near future. Changes in the economic conditions of China, and changes
in laws or policies adopted by its government or the implementation of these laws and policies by local authorities, including with regards
to tax matters and environmental concerns (such as achieving carbon neutrality), could affect vessels that are either chartered to Chinese
customers or that call to Chinese ports, vessels that undergo drydocking at Chinese shipyards and Chinese financial institutions that
are generally active in ship financing, and could have a material adverse effect on our business, operating results, cash flows and financial
condition.
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Furthermore, governments have and may continue to turn to trade barriers to protect
their domestic industries against foreign imports, thereby depressing shipping demand. In April 2025, the U.S. government announced a
baseline tariff of 10% on products imported from all countries and an additional individualized reciprocal tariff on the countries with
which the United States has the largest trade deficits. Many of these reciprocal tariffs went
into effect in August 2025. Some of these tariffs, including the 10% baseline tariff, were imposed
under the International Emergency Economic Powers Act (the “IEEPA”). In February 2026, the Supreme Court of the United States
struck down the tariffs imposed under the IEEPA. Although the IEEPA tariffs
were ruled illegal, tariffs imposed through other measures still remain in effect. Further, President
Trump, using the Trade Act of 1974, has implemented a temporary, 150-day, 10% tariff on all imports. The tariff imposed under the Trade
Act of 1974 is set to expire on July 24, 2026, and the Trump administration may increase the tariff to 15%. The scope and durability of
current and future tariff measures are uncertain. Increased tariffs by the United States have
led and may continue to lead to the imposition of retaliatory tariffs by foreign jurisdictions.
Additionally, the U.S. government has announced and rescinded multiple tariffs on several foreign
jurisdictions, which has increased uncertainty regarding the ultimate effect of the tariffs on
economic conditions. Although we are continuing to monitor the economic effects of such announcements, as well as opportunities to mitigate
their related impacts, costs and other effects associated with the tariffs remain uncertain.
Protectionist developments, or the perception that they may occur, may have a material
adverse effect on global economic conditions, and may significantly reduce global trade. Moreover, increasing trade protectionism may
cause an increase in (i) the cost of materials exported from regions globally, particularly from the Asia-Pacific region, (ii) the length
of time required to transport materials and (iii) the risks associated with exporting products. Such increases may further reduce the
quantity of materials to be shipped, shipping time schedules, voyage costs and other associated costs, which could have an adverse impact
on our operating results and financial condition.
Our international operations require us to comply with anti-corruption
laws and regulations of various governments and different international jurisdictions, and our failure to comply with these laws and regulations
could adversely affect our reputation, business, financial condition and results of operations.
Doing business on a worldwide basis requires us and our subsidiaries to comply with
the laws and regulations of various governments and different international jurisdictions, and our failure to successfully comply with
these rules and regulations may expose us to liabilities. These laws and regulations apply to companies, individual directors, officers,
employees and agents, and may restrict our operations, trade practices, investment decisions and partnering activities. In particular,
as a company registered with the Securities and Exchange Commission, or the SEC, we are subject to the regulations imposed by the Foreign
Corrupt Practices Act (“FCPA”). The FCPA prohibits us from providing anything of value to foreign officials for the purposes
of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment and requires companies
to maintain adequate record-keeping and internal accounting practices to accurately reflect the transactions of the company. As part of
our business, we deal with state-owned business enterprises, the employees and representatives of which may be considered foreign officials
for purposes of the FCPA. If our efforts to screen third-party agents and detect cases of potential misconduct fail, we could be held
responsible for the noncompliance of these third parties under applicable laws and regulations, which may have a material adverse effect
on our reputation and our business, financial condition and results of operations. In addition, some of the international locations in
which we operate lack a developed legal system and have elevated levels of corruption. As a result of the above activities, we are exposed
to the risk of violating anti-corruption laws. We have established policies and procedures designed to assist us and our personnel to
comply with applicable U.S. and international laws and regulations. However, there can be no assurance that our policies and procedures
will effectively prevent us from violating these regulations in every transaction in which we may engage, and such a violation could adversely
affect our reputation, business, financial condition and results of operations.
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Our operations have been negatively impacted by the global supply-chain
challenges.
Our operations have been negatively affected by the worldwide shortage of various
materials and sub-components required to produce certain products. We acquire most of the components utilized in our products, and certain
services from a limited number of suppliers and subcontractors. The disruption to global supply chains has led to longer supplier delivery
times and an increase in material prices. Despite the supply chain said disruptions we were able to source the material and sub-components
needed to continue manufacturing and deliveries to our customers, we cannot assure you that we will continue to be able to obtain such
items from our suppliers on satisfactory terms. Alternative sources of supply may be difficult to obtain. Therefore, temporary disruptions
of our manufacturing operations would result if we were required to obtain materials from alternative sources, which may have an adverse
effect on our financial results. We also maintain an inventory of systems and spare parts in order to enable us to overcome potential
temporary supply shortages until an alternate source of supply is available. Nevertheless, temporary disruptions of our manufacturing
operations would result if we were required to obtain materials from alternative sources, which may have an adverse effect on our financial
results. We have seen improvements in the supply chain during 2024 and 2025, and we continue to monitor the impact of the supply chain
shortage on our ongoing and forecasted manufacturing requirements, while implementing various procurement methodologies to meet current
and forecast demand for our products. Our ability to continue to meet the demand for our products is dependent among others, on our ability
to maintain an effective procurement plan and support from our suppliers, and when needed establish a contractual relationship with alternative
suppliers. Our failure to do so, or continued increases in goods prices, could have a material adverse effect on our business.
Our business may be materially affected by
future pandemics.
Potential future pandemics may disrupt our business and operational plans. In
the past, the COVID 19 pandemic led to disruption to global supply chains and to longer supplier delivery times and an increase in material
prices. Despite the supply chain disruptions we were able to source the needed material and sub-components to continue manufacturing and
deliveries to our customers. In such cases in the future, alternative sources of supply may be difficult to obtain. We also maintain an
inventory of systems and spare parts in order to enable us to overcome potential temporary supply shortages until an alternate source
of supply is available. These disruptions may include disruptions resulting from (i) shortages of employees, (ii) unavailability of contractors
and subcontractors, (iii) interruption of, or price fluctuations in, supplies from third parties upon which we rely, (iv) restrictions
that governments impose to address the pandemic, and (v) restrictions that we and our contractors and subcontractors impose to ensure
the safety of employees and others. Any such pandemic may adversely affect our ability to produce goods or purchase goods from third parties
as well as consumer demand for such goods.
Inflation could adversely affect our financial
results.
The market prices of certain materials and components used by us and our suppliers
in manufacturing our products can be volatile. Significant increases in inflation, particularly those related to wages and increases in
the cost of raw materials, may have an adverse impact on the business, financial condition, and results of operations of us or our suppliers,
and our suppliers may in turn pass such increases along to us by raising the cost of our inventories. In addition, customers often finance
their purchases. Inflation, along with a rise in interest rates, could translate into an increased cost of ownership. If inflation continues
to occur and if agencies like the Federal Reserve fail to cut interest rates further or raises interest rates again, prospective consumers
may choose to forego or delay their purchases or buy a less expensive product in the event credit is not available to finance their purchases.
Risks Relating to Our Common Shares
Volatility of the market price of our Common Shares could adversely affect our shareholders
and us.
The market price of our Common Shares has been, and is likely to be, highly volatile
and could be subject to wide fluctuations in response to numerous factors, including the following:
| • |
actual or anticipated variations in our quarterly operating results or those of our competitors; |
| • |
announcements by us or our competitors of technological innovations or new and enhanced products; |
| • |
developments or disputes concerning proprietary rights; |
| • |
introduction and adoption of new industry standards; |
| • |
changes in financial estimates by securities analysts; |
| • |
market changes or trends in our industry; |
| • |
changes in the market valuations of our competitors; |
| • |
announcements by us or our competitors of significant acquisitions; |
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| • |
entry into strategic partnerships or joint ventures by us or our competitors; |
| • |
additions or departures of key personnel; |
| • |
political and economic conditions, such as a recession or interest rate or currency rate fluctuations or political events;
|
| • |
general economic conditions, including conditions related to the banking industry or caused by pandemics and high inflation, and
slow or negative market growth; and |
| • |
other events or factors in any of the countries in which we do business, including those resulting from war, incidents of terrorism,
natural disasters or responses to such events. |
In addition, the stock market in general, and the market for homeland
security companies in particular, has been highly volatile. Many of these factors are beyond our control and may materially adversely
affect the market price of our Common Shares, regardless of our performance. In the past, following periods of market volatility, shareholders
have often instituted securities class action litigation relating to the stock trading and price volatility of the company in question.
If we were involved in any securities litigation, it could result in substantial cost to us to defend and divert resources and the attention
of management from our business.
The FIMI partnerships owned approximately 42.2% of our outstanding
Common Shares as of April 29, 2026. For as long as FIMI has a controlling interest in our Company, it will have the ability to exercise
a controlling influence over our business and affairs, including any determinations with respect to potential mergers or other business
combinations involving us, our acquisition or disposition of assets, our incurrence of indebtedness, our issuance of any additional Common
Shares or other equity securities, our repurchase or redemption of Common Shares and our payment of dividends. Because the interests of
FIMI may differ from the interests of our other shareholders, actions taken by FIMI with respect to us may not be favorable to our other
shareholders.
We may not pay dividends in the future.
We have not paid any dividend since September 2021 and currently
expect to retain our earnings in the future to finance operations and expand our business. The declaration of dividends is subject to
the discretion of our board of directors, and would depend on various factors, including our operating results, financial condition, future
prospects and any other factors deemed relevant by our board of directors. You should not rely on an investment in our company if you
require dividend income from your investment.
As a foreign private issuer whose shares are listed on the NASDAQ Global Market, we
may follow certain home country corporate governance practices instead of certain NASDAQ requirements. We follow Ontario law and practice
instead of NASDAQ rules regarding the director nomination process, compensation of executive officers and the requirement that our independent
directors have regularly scheduled meetings at which only independent directors are present.
As a foreign private issuer listed on the NASDAQ Global Market, we may also follow home
country practice with regards to, among other things, the composition of the board of directors and quorum at shareholders’ meetings.
In addition, we may follow home country practice instead of the NASDAQ requirement to obtain shareholder approval for certain dilutive
events (such as for the establishment or amendment of certain equity-based compensation plans, an issuance that will result in a change
of control of the company, certain transactions other than a public offering involving issuances of a 20% or more interest in the company
and certain acquisitions of the stock or assets of another company). A foreign private issuer that elects to follow a home country practice
instead of NASDAQ requirements must submit to NASDAQ in advance a written statement from an independent counsel in such issuer’s
home country certifying that the issuer’s practices are not prohibited by the home country’s laws. In addition, a foreign
private issuer must disclose in its annual reports filed with the SEC, each such requirement that it does not follow and describe the
home country practice followed by the issuer instead of any such requirement. We currently have elected to follow Ontario corporate law
instead of the Nasdaq Listing Rule 5635(c), which requires that we obtain shareholder approval for the establishment or amendment of certain
equity based compensation plans and arrangements. Under Ontario corporate law and practice, in general, the approval of the board of directors
is required for the establishment or amendment of equity based compensation plans and arrangements. Accordingly, our shareholders may
not be afforded the same protection as provided under NASDAQ’s corporate governance rules.
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We may be classified as a passive foreign investment company, or
PFIC, which would subject our U.S. investors to adverse tax rules.
U.S. holders of our Common Shares may face income tax risks. Based
on the composition of our income, assets (including the value of our goodwill, going-concern value or any other unbooked intangibles,
which may be determined based on the price of the Common Shares, and operations, [we believe we will not be classified as a “passive
foreign investment company”, or PFIC, for the 2025 taxable year. However, because PFIC status is based on our income, assets and
activities for the entire taxable year, it is not possible to determine whether we will be characterized as a PFIC for our current taxable
year or future taxable years until after the close of the applicable taxable year. Moreover, we must determine our PFIC status annually
based on tests that are factual in nature, and our status in the current year and future years will depend on our income, assets and activities
in each of those years and, as a result, cannot be predicted with certainty as of the date hereof. Furthermore, fluctuations in the market
price of our Common Shares may cause our classification as a PFIC for the current or future taxable years to change because the aggregate
value of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, generally will be determined
by reference to the market price of our shares from time to time (which may be volatile). The IRS or a court may disagree with our determinations,
including the manner in which we determine the value of our assets and the percentage of our assets that are passive assets under the
PFIC rules. Therefore, there can be no assurance that we will not be a PFIC for the current taxable year or for any future taxable year.
Our treatment as a PFIC could result in a reduction in the after-tax return to U.S. Holders (as defined below under Item 10E. “Additional
Information – Taxation”) of our Common Shares and would likely cause a reduction in the value of such shares. A foreign corporation
will be treated as a PFIC for U.S. federal income tax purposes if either (1) at least 75% of its gross income for any taxable year consists
of certain types of “passive income,” or (2) at least 50% of the average value of the corporation’s gross assets produce,
or are held for the production of, such “passive income.” For purposes of these tests, “passive income” includes
dividends, interest, gains from the sale or exchange of investment property and rents and royalties other than rents and royalties that
are received from unrelated parties in connection with the active conduct of a trade or business. If we are treated as a PFIC, U.S. Holders
of our Common Shares would be subject to a special adverse U.S. federal income tax regime with respect to the income derived by us, the
distributions they receive from us, and the gain, if any, they derive from the sale or other disposition of their Common Shares. U.S.
Holders should carefully read Item 10E. “Additional Information – Taxation” for a more complete discussion of the U.S.
federal income tax risks related to owning and disposing of our Common Shares.
Risks Relating to Our Existence as an Ontario Corporation
The rights and obligations of a holder of Common Shares will be
governed by Ontario law and may differ from the rights and obligations of shareholders of companies organized under the laws of other
jurisdictions.
We are a corporation incorporated and existing under Ontario law.
Accordingly, the rights and obligations of the holders of our Common Shares may be different from, and may be less favorable to, the rights
and obligations of shareholders of companies incorporated or organized under the laws of other jurisdictions. See Item 10B. “Additional
Information – Certificate and Articles of Incorporation and By-Laws”.
The Articles, together with the By-Laws, and Canadian laws and
regulations applicable to us may adversely affect our ability to take actions that could be deemed beneficial to holders of our Common
Shares, or the ability of another party to acquire control of the Company.
As a corporation incorporated under the laws of the Province of
Ontario, the Articles, the By-Laws as well as the Business Corporations Act (Ontario) (the “OBCA”),
set forth various rights and obligations that are unique to us as an Ontario corporation. These requirements may limit or otherwise adversely
affect our ability to take actions that could be beneficial to our shareholders.
Provisions of the laws of the Province of Ontario and the federal
laws of Canada may also have the effect of delaying or preventing a change of control or changes in our management. For example, under
the OBCA, in order for a proposal to include nominations of directors, it must be signed by one or more holders of shares representing
not less than 5% of the shares or 5% of the shares of a class or series of shares of the corporation entitled to vote at the meeting to
which the proposal is to be presented.
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In addition, the Investment
Canada Act (Canada) may impose limitations on the ability of a non-Canadian to acquire and hold Senstar Common Shares. The
Investment Canada Act (Canada) requires that where prescribed financial thresholds are exceeded,
a non-Canadian must file an application for review with the responsible Minister and obtain approval prior to acquiring control of a “Canadian
business”. The responsible Minister is required to determine whether the acquisition of control is likely to be of net benefit to
Canada with reference to certain statutory factors. Where a non-Canadian acquires control of a Canadian business and the prescribed financial
thresholds are not exceeded, there is a reporting obligation only. The Investment Canada Act (Canada)
also provides that any investment by a non-Canadian in a Canadian business, including where control is not acquired, can be reviewed on
national security grounds. Where an investment is determined to be injurious to national security, the
applicable Minister can negotiate undertakings to address the national security concern, or federal Cabinet can issue a prohibition or
divestiture order or impose terms or conditions on the investment to address the national security concern.
Furthermore, the Competition
Act (Canada) may impose limitations on the ability to acquire and hold our Common Shares. This legislation permits the Commissioner
of Competition to review any “merger” which is defined as the acquisition or establishment, direct or indirect, including
through the acquisition of shares, of control over or of a significant interest in the whole or a part of a business. Where the Commissioner
of Competition is of the view that a merger prevents or lessens or is likely to prevent or lessen competition substantially, they may
within one year of substantial completion of the merger apply to the Competition Tribunal for a remedial order (where the merger was not
notified to the Commissioner of Competition, the period to apply for a remedial order is three years following substantial completion).
In addition, Part IX of the Competition Act (Canada) requires that certain classes of transactions
that exceed certain prescribed thresholds be notified to the Commissioner of Competition prior to closing. Where a merger is subject to
notification, the applicable statutory waiting period must expire or be terminated early or waived before the merger can be completed.
Canadian take-over bid laws may discourage take-over bids being
made for the Company and may discourage the acquisition of large numbers of our Common Shares.
We are subject to the Canadian take-over bid regime which requires
a party seeking to acquire 20% or more of the outstanding shares of any class of voting or equity securities to do so by way of a formal
public tender offer, unless an exemption from that requirement is available. These rules may discourage take-over bids being made for
the Company and the ability of holders of our Common Shares to realize a potential premium for the sale of their shares. See “Provisions
Restricting a Change in Control of the Company – Take-Over Bids” in Exhibit 2.1 to this Annual Report.
Canadian issuer bid laws restrict our ability to purchase our Common
Shares.
We are subject to the Canadian issuer bid regime, which requires
an issuer seeking to repurchase its own securities to do so by way of a formal public self-tender offer, unless an exemption from that
requirement is available. These rules and the available exemption for ordinary course market repurchases made on a stock exchange outside
Canada will generally limit us to purchase no more than 5% of the outstanding Common Shares in any 12-month period on a published market
(such as the Nasdaq Global Market) for not more than their market price plus reasonable brokerage fees or commissions actually paid. See
“Description of the rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934 –
Common Shares – Purchases” in Exhibit 2.1 to this Annual Report.
We are able to issue an unlimited amount of additional Common Shares,
which may cause our shareholders to experience dilution in the future.
As is conventional for public companies in Canada, our constating
documents authorize us to issue an unlimited number of Common Shares. Our board of directors has the authority to cause the Company to
issue additional Common Shares without the consent of our shareholders. We may issue additional Common Shares or other securities that
are dilutive to existing shareholders in the future. The issuance of any such securities may result in a reduction of the book value or
market price of our Common Shares.
Our Common Shares are subject to Canadian insolvency laws which
may offer less protection to its shareholders compared to U.S. insolvency laws.
As a corporation incorporated under the laws of the Province of
Ontario, we are subject to Canadian insolvency laws and may also be subject to the insolvency laws of other jurisdictions in which we
conduct business or hold assets. These laws may apply where any insolvency proceedings or procedures are to be initiated against or by
us. Canadian insolvency laws may offer our shareholders less protection than they would have had under U.S. insolvency laws and it may
be more difficult (or even impossible) for shareholders to recover the amount they could expect to recover in a liquidation under U.S.
insolvency laws.
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| ITEM 4. |
INFORMATION ON THE COMPANY |
| A. |
History and Development of the Company. |
We are a leading international provider of products and solutions
for physical security. We commenced operations in 1969 as a department of Israel Aircraft Industries Ltd., specializing in perimeter security
systems and have delivered products, tailor-made solutions and turnkey projects to thousands of satisfied customers in over 100 countries
in some of the world’s most demanding locations. We offer a broad portfolio of homegrown PIDS, VMS and SMS combined with EAC, and
IVA.
Our strategy is to increase our revenues from our products segment,
which includes our PIDS, VMS, SMS, EAC and IVA products by (i) focusing our efforts on our strategic verticals; (ii) locating new channels
to promote and market our products; (iii) investing in research and development thus maintaining technology leadership; (iv) entering
into OEM agreements which will increase our offerings for the verticals on which we focus; and (v) acquiring new technologies relevant
to our target verticals independently or through mergers and acquisitions.
We were incorporated under the laws of the State of Israel on March
27, 1984 under the name Magal Security Systems Ltd., and on September 30, 2021, we changed our name to Senstar Technologies Ltd.
On September 26, 2023, Senstar Technologies Ltd., Senstar Technologies Corporation, a newly established Ontario corporation, and Can Co
Sub Ltd., a company organized under the laws of the State of Israel and a wholly-owned subsidiary of Senstar Technologies Corporation,
entered into a Merger Agreement, pursuant to which Senstar Technologies Corporation became the parent company of Senstar Technologies
Ltd., with Senstar Technologies Ltd. surviving the Merger as a wholly-owned subsidiary of Senstar Technologies Corporation. Pursuant to
the Merger Agreement, Senstar Technologies Ltd. agreed to become domiciled in Ontario and become Senstar Technologies Corporation, an
Ontario organized company.
Effective March 18, 2024, as a result of the Merger, (a) the separate
corporate existence of Can Co Sub Ltd. ceased and Senstar Technologies Ltd. continued as the surviving company; (b) all the properties,
rights, privileges, powers and franchises of Senstar Technologies Ltd. and Can Co Sub Ltd. vested in Senstar Technologies Ltd. (as the
surviving company); (c) all debts, liabilities and duties of Senstar Technologies Ltd. and Can Co Sub Ltd. became the debts, liabilities
and duties of Senstar Technologies Ltd. (as the surviving company); and (d) all the rights, privileges, immunities, powers and franchises
of Senstar Technologies Ltd. continued unaffected by the Merger in accordance with the Israeli Companies Law, 5759-1999.
Each Senstar Technologies Ltd. ordinary share issued and outstanding
immediately prior to the consummation of the merger represented the right to receive, less any applicable withholding taxes, one (1) validly
issued, fully paid and nonassessable common share of Senstar Technologies Corporation, representing the same proportional equity interest
in Senstar Technologies Corporation as that shareholder held in Senstar Technologies Ltd. The number of Common Shares of Senstar Technologies
Corporation outstanding immediately after the Redomiciliation continued to be the same as the number of ordinary shares of Senstar Technologies
Ltd. outstanding immediately prior to the Redomiciliation. Upon effectiveness of the Redomiciliation, the name of our company became Senstar
Technologies Corporation. Following the Redomiciliation, the Common Shares of Senstar Technologies Corporation as the successor to Senstar
Technologies Ltd., continued to be listed for trading on Nasdaq under the ticker symbol “SNT”. On December 15, 2025, Senstar
Technologies Ltd. was dissolved.
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On December 9, 2025, we entered into a definitive agreement to
acquire Munich-based Blickfeld GmbH, a pioneer in 3D LiDAR sensors and software. The transaction, which closed on February 13, 2026, was
valued at €10.4 million in cash, with an additional €1 million in performance-based earnouts, fully funded from our cash reserves.
This strategic acquisition follows a fruitful partnership, including a December 2024 announcement to expand our collaboration globally,
allowing us to integrate Blickfeld's high-precision 3D LiDAR technology into our existing security portfolio. By acquiring Blickfeld,
we strengthened our position in critical infrastructure security and expanded our capabilities into high-growth verticals such as 3D traffic
management and volume monitoring. Post-acquisition, Blickfeld GmbH and its North American subsidiary have continued to operate under their
current names as our subsidiaries, maintaining their Munich headquarters while utilizing our global sales and support network to accelerate
market penetration.
Our principal executive offices are located at 119 John Cavanaugh
Drive, Ottawa, ON, Canada K0A 1L0, and our telephone number is +1-613-839-5572. Our agent for service of process in the United States
is Senstar Inc., 13800 Coppermine Road, Second Floor, Herndon, Virginia 20171.Our website address is www.senstar.com.
The information on, or that can be accessed through, our website is not incorporated by reference into this annual report.
| B. |
Business Overview. |
Overview and Strategy
We develop, manufacture, market and sell comprehensive lines of
perimeter intrusion detection sensors, video analytics and video and security management systems, as well as security video observation
and surveillance systems to high profile customers. Our systems are used in more than 100 countries to protect sensitive facilities, including
national borders, military bases, power plants, airports, seaports, prisons, industrial sites, large retailer organizations, banks, oil
and gas facilities, solar farms, data centers, telecom infrastructure, logistic premises such as warehouses, sporting events including
athlete villages and stadiums, and municipalities from intrusion, terror, crime, sabotage or vandalism to infrastructure, assets and personnel.
Our objective is to become a leading international provider of security products and solutions.
Based on our decades of experience and interaction with customers,
we have developed a comprehensive set of solutions and products, optimized for perimeter, outdoor and general security applications. Our
portfolio of mission critical infrastructure and site protection technologies includes a variety of fence mounted sensors, fence mounted
sensors with perimeter lighting, virtual (volumetric) fences and gates, buried and concealed detection systems and tunneling sensors to
secure prisons, bank vaults and pipelines. We deliver comprehensive IP technology and traditional closed-circuit television, or CCTV,
solutions, supported by our own advanced Security Management Software, Video Management Software, or VMS solutions, which include Video
Motion Detection, or VMD and Intelligent Video Analytics, or IVA.
We acquired Aimetis in April 2016 to integrate our VMS with its
perimeter security portfolio. Since the addition of Aimetis’ products and expertise, we have been able to address new markets and
offer solutions incorporating advanced video analytics and VMS for physical indoor and outdoor security applications. In addition, we
were able to expand our overall solutions, offer a wider range of products in addition to our PIDS solutions, and address new markets.
We plan to leverage our industry-leading position in the security
sector as a technology platform to optimize future strategic acquisitions and achieve incremental growth in our global markets. To achieve
this objective, we have initiated a business strategy incorporating the following key elements:
| • |
Leverage existing customer relationships. We believe that we have the capability to offer
certain of our customers a comprehensive security package. As part of our product development process, we seek to maintain close relationships
with our customers to identify market needs and to define appropriate product specifications. We intend to expand the depth and breadth
of our existing customer relationships while initiating similar new relationships. Our Software (SMS,VMS) offering is an excellent opportunity
to revisit our existing customers. |
| • |
Refine and broaden our product portfolio. We have identified the security needs of our customers
and intend to enhance our current products’ capabilities, develop new products, acquire complementary technologies and products
and enter into OEM agreements with third parties in order to meet those needs. The extension of our solution might broaden our addressable
market by using our sensors and information management to offer vertical solutions outside of the strict security applications.
|
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| • |
Develop and enhance our presence in verticals which we have identified as strategic. We intend
to enhance our presence in our target vertical markets: utilities, correctional facilities logistics and energy (among other, oil and
gas terminals as well as oil and gas pipelines infrastructure), airports and military /border sites. Many if not all, of the verticals
are highly regulated and require unique security solutions. As a solution provider with a wide selection of security technologies and
products, we believe that we can offer a comprehensive security solution that meets the standards required by the applicable regulations.
|
| • |
Enhance our presence in emerging markets. We intend to enhance our presence in emerging markets
such as Asia, Latam and eastern Europe in order to increase our exposure and sales. |
| • |
Strengthen our presence in existing markets. We intend to increase our marketing efforts
in our existing markets mainly in North America, the EMEA Union, and APAC region and to acquire or invest in complementary businesses
and joint ventures. |
Emerging Opportunities
We believe that the proliferation of digital communication and
information technology into the security market provides us with the opportunity to consolidate safety and site management with security
applications. Air and seaports, chemical factories, green energy plants and distribution facilities, oil and gas terminals and pipeline
infrastructure, large logistics warehouses, telecom infrastructure and data centers and critical infrastructure sites are currently utilizing
the benefits of this approach to security management. This integration allows users to share diverse sensors (such as cameras and intrusion
detection sensors), IT systems, traffic management tools and other resources and feed them into a single command and control platform.
Users from different departments within organizations can now share the same information, allowing for improved communication and coordination,
whether it is a routine operation or crisis situation. [We believe that we are well positioned and are in the forefront of this emerging
market opportunity. In addition, our Senstar MultiSensor when used in a standalone version, together with our recently acquired
LiDar solutions, will provide advanced intrusion detection solutions for critical spots of non-critical infrastructure, broadening our
addressable market.
Products and Services
General
Our principal physical (PIDS), VMS, SMS and EAC products and solutions
include:
| • |
Perimeter Intrusion Detection Systems (PIDS), fence mounted, buried and free standing; |
| • |
PIDS fence sensor with intelligent perimeter LED based lighting; |
| • |
A common operating platform for VMS and SMS, including IVA applications, PIDS applications |
| • |
Surveillance systems and LIDAR solutions |
| • |
Pipeline security, third party interference (TPI) and fiber infrastructure monitoring |
Perimeter security products enable customers to monitor, limit
and control access by unauthorized personnel to specific regions or areas. High-end perimeter products are sophisticated in nature and
are used for correctional facilities, borders, nuclear and conventional power plants, solar farms, air and seaports, military installations,
logistics centers, data centers and Telecom infrastructure and other high-security installations. We do assist to detect, deter, delay
and defend potential threats to those critical infrastructure.
Our line of perimeter security products utilizes sophisticated
sensor devices to detect and locate intruders and identify the nature of intrusions. Our perimeter security products have been installed
along tens of thousands of kilometers of borders and facility boundaries throughout the world, including hundreds of correctional institutions
and prisons in the United States and several other countries.
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Our line of outdoor perimeter security products consists of the
following:
| • |
Fence mounted detection systems – “microphonic” wire sensors, fiber optic sensors and electronic ranging sensors;
|
| • |
Buried sensors – buried coaxial cable volumetric sensors and buried fiber sensors to secure pipelines, borders and critical
assets against intrusion by targets on the surface and excavation; |
| • |
Electrical field disturbance sensors (volumetric); |
| • |
Microwave sensors; |
| • |
Hybrid perimeter intrusion detection and intelligent lighting system; |
| • |
MultiSensor – next generation of sensors, using multiple sensing technologies, processed by intelligent algorithms (AI software):
and |
| • |
Lidar sensors |
Fence Mounted Detection Systems
We offer various types of detection systems. The adaptability of
these systems to a wide range of pre-existing barrier structures makes these products viable and effective alternatives for cost-conscious
customers. Our detection devices are most effective when installed on common metal fabric perimeter systems, such as chain link or welded
mesh. Once attached to the fence, each sensor detects vibrations in the underlying structures. The sensor system’s built-in electro-mechanical
filtering combines with system input from a weather analysis component to minimize the rate of alarms from wind, hail or other sources
of nuisance vibrations.
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FlexZone, our coaxial cable based fence mounted ranging sensor
can pinpoint intrusions to within ±3 m (±10 ft); it provides long physical cable lengths (up to 600 m (1,968 ft) per processor)
configurable through software to many smaller virtual zones for site operations. Power and data between processors is supported through
the sensor cable significantly reducing the requirement for supporting infrastructure. A novel wireless gate sensor module is available
with FlexZone providing an accelerometer based gate sensor integrated via wireless communications into a FlexZone network eliminating
the need to have sensor cables attached to sliding gates.
FiberPatrol, our advanced FP1150 product, is a perimeter intrusion
detection system that can be fence-mounted, buried, or deployed in a wall-top configuration. Featuring long distance ranging to 80 Km
(50 mi) via a fence mounted fiber optic cable detects and locates fence cut and climb events with an accuracy of approximately 4m (13
ft). Released in 2019 our FP400 product zone-based fiber optic cable PIDS solution replaces the IntelliFiber product line. Its advanced
features include the processing of 4 detection zones from a single remote processor with an alarm given for each zone independently with
up to 300 m (984 ft) per zone.
Buried Sensors
Omnitrax is a fifth generation covert outdoor perimeter security
intrusion detection sensor that generates an invisible radar detection field around buried sensor cables. The exact location of an intruder
is identified within approximately one meter when an intruder disturbs the detection field. Targets are detected by their conductivity,
size and movement and the digital processor is able to filter out nuisance alarms that could be caused by environmental conditions and
small animals.
FiberPatrol, our advanced FP1150 product featuring long distance
ranging fiber optic cable based detection technology in a single rack mount unit is also offered as a buried solution detecting surface
intrusion and to protect pipelines*, as well as providing Data Conduit protection against sabotage or accidental third party interference
(TPI) for example by manual or machine excavation. FiberPatrol has the capability to protect distances of up to 80 Km (50 mi) or up to
100 Km (62 mi) for Pipeline TPI and Data Conduit protection with a single processor. FiberPatrol is also being used to monitor health
check or Fiber cable between telecom infrastructure, such as Data Centers by detecting and localizing excavation and sabotage attempts
to cable infrastructure.
Electro-static Field Disturbance Sensors
Terrain following volumetric sensors detect intrusions without requiring an intruder
to touch the sensor. They can be installed on buildings, free-standing posts, existing fences, walls or rooftops, and will sense changes
in the electrostatic field when events, such as intruders penetrating through the wires take place. The system’s tall, narrow, well
contained detection zone allows the sensor to be installed in almost any application and minimizes nuisance alarms caused by nearby moving
objects. Our product X-Field; consists of a set of four to as many as eight parallel field generating and sensing wires that form a volumetric
detection height as much as 6m (20 ft) in height for free standing and wall applications and up to 7.3m (24 ft) for fence installations.
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Microwave Products
Ultrawave is our K-band all digital bi-static microwave beam perimeter
intrusion detection system designed for reliable operation in extreme outdoor environments. Coverage distance range from 5 meters to 200
meters (16 to 656 ft). Older generations of X band microwaves are retired but still supported.
Hybrid Perimeter Intrusion Detection and Intelligent Lighting System
The Senstar LM100 is the world’s first 2-in-1 perimeter intrusion
detection and intelligent lighting system. Combining high performance LED lighting with accelerometer-based vibration sensors, the LM100
deters potential intruders by detecting and illuminating them at the fence line.
Video Products
VMS / IVA Solutions - Senstar Symphony Common Operating Platform
The Senstar Symphony Common Operating Platform with Sensor Fusion
Engine or "Senstar Symphony" is a modular solution for security management and data intelligence. In addition to being an open, highly
scalable video management system with built-in video analytics, it includes full-featured access control and perimeter intrusion detection
modules. We believe that what truly sets Senstar Symphony apart from other systems is its sensor fusion engine. By intelligently combining
low-level sensor data with video analytics, the sensor fusion engine achieves the highest levels of performance, far beyond that of the
individual devices. Senstar Symphony seamlessly incorporates sensor fusion, event algorithms, and rule-based actions to provide unmatched
capabilities, flexibility, and performance.
Senstar Symphony’s Sensor Fusion Engine synthesizes data
from separate systems to generate actionable information. More than just a simple Boolean logic integration, the sensor fusion engine
accesses low level data to intelligently characterize potential risks. Data synthesis enables the system to achieve levels of performance
that exceed those of the individual sensors. For security applications, this has direct, practical benefits, namely the ability to maximize
the strengths of individual sensor technologies while avoiding their shortcomings. When signal response data from outdoor sensors is synthesized
with video analytic data, nuisance alarms generated by wind, debris, or background activity are virtually eliminated while maintaining
the system’s high probability of detection.
The Senstar Symphony Common Operating Platform includes a full-featured
Windows®-based client, a HTML5-client web client, a thin client hardware appliance, and mobile apps (iOS and Android). With Senstar
Symphony’s camera-based licensing scheme, our customers and end-users can install and use as many clients as they need. The Windows®
client includes on-screen camera hotlinks, a full-featured alarm console that integrates alarms with video feeds and sensor data, timeline
view, and intuitive graphical maps with precise alarm location data. Senstar Symphony installs on standard commercial off-the-shelf hardware
and supports thousands of network devices as well as ONVIF profiles S and T (H.265 and metadata). Senstar Symphony integrates with a wide
variety of security and access control products, while its RESTful API and TCP/IP listener services enable it to interact with virtually
any network-based device.
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22 -
The Senstar Symphony Common Operating Platform is highly scalable,
easy to set up and use, and can be used in both single server installations and multi-server deployments. Senstar Symphony can meet any
business requirements, both today and in years to come. Functionality sets including video management, video analytics, security management,
, and data intelligence can be used individually, added when needed, or combined together as a complete integrated solution. It is a highly
cost-effective solution, licensed per security device (camera,), so that our customers only license what they need. All managed devices
report to a shared rules and alarms management system, enabling operators to perform site security or operational functions from a ‘single
pane of glass’.
The Senstar Symphony solution offers web-based administrator capabilities,
centralized cloud management, native analytics applications which include motion tracking, auto-PTZ (pan–tilt–zoom) tracking,
people counting, and high security and server and storage failover reducing the need for costly Microsoft clustering and extra servers.
We intend to expand the Symphony product line over time to address a broad new market of applications.
Our intelligent video analytics (IVA) transforms IP video into
more than a passive monitoring tool with video analytics that are seamlessly incorporated into Senstar Symphony. Each video analytic is
specially designed for physical security and business intelligence applications, providing value across many vertical markets.
Next generation sensors
MultiSensor™
MultiSensor is our compact, AI-powered system that leverages the
power of sensor fusion to intelligently detect and characterize intrusions while virtually eliminating nuisance alarms. MultiSensor collects
data from several technologies sensors and processes them simultaneously via the use of AI technologies. In order to provide full situational
awareness and to eliminate nuisance alarms. When used in a standalone version, the MultiSensor will target critical points of non-critical
infrastructure such as hospital, warehouses, universities and schools, office building, by providing unrivaled intrusion solutions using
a single device.
Thermal Cameras and LiDar
In order to complete our range of sensors to provide the strongest
performance and latest technology, we added to our sensor range LiDar sensing technology by partnering and eventually acquiring Blickfeld,
Founded in 2017 and headquartered in Munich, Blickfeld is an international company that develops LiDAR sensors with integrated software.
Blickfeld’s solutions provide real-time 3D data for a wide range of innovative use cases – from volume monitoring and security
system enhancement to privacy-compliant people counting and functions in traffic applications.
Our intelligent video analytics (IVA) capabilities include:
| • |
Face Recognition - Senstar Symphony-based video analytic identifies known and unknown individuals. Using a combination of patented
2D to 3D pose correction technology, this analytic is designed for fast, reliable identification under real-world challenges, including
lighting, angles, facial hair, pose, glasses and other occlusions, motion, crowds, and expression. |
| • |
Automatic License Plate Recognition - Senstar Symphony-based video analytic reads license plates and other vehicle markings and seamlessly
integrates the data into the site’s security and operational processes. The analytic can be used for automating vehicle access systems
such as gates and other barriers, flag vehicle in/out times in surveillance footage, notifying customer management systems of client arrivals,
and track vehicles crossing toll and border checkpoints. |
| • |
Outdoor People and Vehicle Tracking - Senstar Symphony-based video analytic optimized for detecting and monitoring the movement of
vehicles and people in outdoor environments. Typical applications include perimeter intrusion detection, parking lot monitoring, public
safety, and wrong-way detection. The analytic retains its extremely high tracking and object classification accuracy even in the presence
of challenging weather and lighting conditions. Organizations can use tracked events to trigger alarms and direct operators to specific
concerns, making it the perfect addition to any video surveillance system. |
| • |
Left and Removed Item Detection - Monitor changes in an environment to detect when objects are added or removed from a scene. Set
alarms to notify security staff when an item has been removed from an area or left unattended for a designated amount of time. This solution
is designed for use in airports, train stations, and other public spaces. |
| • |
Indoor People Tracking - Detect and track people moving within the frame of a camera. Alarms can be set when unauthorized entry into
an area is detected and dwell times can be tracked and recorded for the detection of unwanted loitering. Heat maps can also be created
in retail stores and public spaces to determine areas of highest traffic and interest. |
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23 -
| • |
Crowd Detection - Real-time occupancy estimation for indoor and outdoor deployments, ideal for monitoring public spaces, event venues,
and capacity restricted environments. Crowd Detection also offers numerous business intelligence applications. |
| • |
PTZ Auto-Tracking (Auto PTZ) - Auto PTZ can automatically control a PTZ camera, enabling it to zoom in and follow moving people and
vehicles within the field of the camera. This is designed for use in outdoor perimeter monitoring and provides a closer look at people
and vehicles for future forensic purposes. |
| • |
Hardware solutions supporting our VMS software products are an “R series” of preconfigured servers, “E series”
of physical appliances for smaller applications and a novel POE powered "Thin Client" device for convenient network access for monitors
or other applications. |
| • |
The Senstar Thin Client - is a simple and cost-effective device designed to display 1080p video from 30+ network video camera manufacturers
via ONVIF Profile S, as well as from the Senstar Symphony VMS or any RTSP-compatible video source. The device is ideal for space-constrained
environments due to its compact design while its web-based interface makes it easy to configure and manage. |
| • |
The R-Series Operator Station complements the R-Series Network Video Recorders (NVR). Featuring validated hardware, the Operator
Station is ideal for customers looking for a preconfigured video surveillance client. "Senstar Fusion, is a software solution that neutralizes
false alarms using sophisticated AI techniques analyzing simultaneously detection signals from PIDS and video sensors. |
| • |
We do not provide high availability functionalities on our Symphony servers. |
| • |
In December 2025, we announced our acquisition of Blickfeld. Blickfeld offers both hardware and perception software solutions
for security, traffic, industrial automation, and logistic applications. Blickfeld offers security and safety solutions as well as volumetric
and industrial applications: |
| • |
Security and safety solutions |
| • |
We sell primarily through system integrators, security solution providers, and selected distributors who integrate our LiDAR sensors
and perception software into perimeter protection and surveillance systems. For strategic projects and key accounts, our sales and application
engineering teams engage directly with end customers to support system design and ensure proper implementation. |
Volumetric and industrial applications:
Our LiDAR-based volumetric solutions for bulk material measurement
and automation are sold through direct channels as well as through selected OEM and technology partners. Blickfeld’s sales
organization operates internationally with a primary hub in Germany and direct representation in key markets across EMEA, North America,
and Asia. The team is trained to cross-sell both sensor and software solutions across our core verticals.
Command and Control Systems
The development of communication and IT technology has significantly
affected the security market. Multiple security systems and technologies, sometimes supplied by different vendors, can now be integrated
into a unified command and control system. We offer two types of command and control systems:
| • |
Senstar Symphony Common Operating Platform - Video, Security and Data Intelligence Platform with Sensor Fusion Engine; and
|
| • |
Network Manager - a middleware (software) package interfacing between our family of PIDS sensors and any command and control solution,
be it our own system or an external third party application. It is provided to integrators with a full software development kit to enable
fast integration of our PIDS into any other SMS and physical security information system. It offers an entry level operator display system
called the Alarm Information Module (AIM), typically for management of a single PIDS sensor. |
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Marketing, Sales and Distribution
We believe that our reputation as a leading global vendor of sophisticated
security products and our global presence provide us and our sales representatives with access to decision-makers in all of our main four
verticals: energy, corrections, utilities and logistics.
Our sales efforts focus on:
| • |
PIDS products are sold indirectly through system integrators and distribution or VAR channels. Due to the sophistication of our products,
we often need to approach end-users directly and be in contact with system integrators; however, sales are directed through third parties.
Our sales team is trained on cross-selling PIDS, VMS, SMS, IVA . |
| • |
VMS, and IVA. Video management system software and Intelligent Video Applications licenses, the associated maintenance and support
services, are sold primarily through locally based distributor or VAR partners. Some key accounts are managed directly with the end-users.
Our sales team is trained on cross-selling PIDS, VMS, SMS, IVA. |
In addition to our global corporate office in Canada and our principal
facilities in Canada, the United States and Germany, we have sales and technical support offices in China and other countries.
Customers
The following table shows the geographical breakdown of our consolidated
revenues with respect to our continuing operations for the three years ended December 31, 2025, 2024 and 2023:
|
Year ended in December 31, |
||||||||||||
|
2025 |
2024 |
2023 |
||||||||||
|
(in thousands) |
||||||||||||
|
North America |
$ |
17,959 |
$ |
16,262 |
$ |
14,835 |
||||||
|
Europe |
12,830 |
12,763 |
11,393 |
|||||||||
|
APAC |
4,942 |
5,410 |
3,863 |
|||||||||
|
South and Latin America |
467 |
975 |
2,197 |
|||||||||
|
Others |
176 |
343 |
504 |
|||||||||
|
Total |
$ |
36,374 |
$ |
35,753 |
$ |
32,792 |
||||||
Installation, Support and Maintenance
Our systems are generally installed by an integration partner or
in some cases by the customer after appropriate training, depending on the size of the specific project and the location of the customer’s
facilities, as well as prior experience with our systems. We generally provide our customers with training on the use and maintenance
of our systems, design and commissioning assistance which we conduct either on-site or at our facilities. In addition, some of our local
perimeter security products customers have signed maintenance contracts with us. The life expectancy of a high-security perimeter system
is approximately ten years. Consequently, many miles of perimeter systems need to be replaced each year. We also provide services, maintenance
and support on an “as needed” basis, as well as on a subscription basis, through the Senstar
Care Program - our multi-year maintenance and support program. During the years ended December 31, 2025, 2024 and 2023, we derived
approximately 16.6%, 15.2% and 16.2% of our total revenues, respectively, from maintenance and services.
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Research and Development; Royalties
We place considerable emphasis on research and development to improve
our existing products and technology and to develop new products and technology. We believe that our future success will depend upon our
ability to enhance our existing products and technology and to introduce on a timely basis new commercially viable products and technology
addressing the needs of our customers. We intend to continue to devote a significant portion of our personnel and financial resources
to research and development. As part of our product development process, we seek to maintain close relationships with our customers to
identify market needs and to define appropriate product specifications. Our development activities are a direct result of the input and
guidance we receive from our sales and marketing personnel during our annual or regular meetings with such personnel. In addition, the
heads of research and development for each of our development centers discussed below meet annually to identify market needs for new products.
We have centralized most of our development centers in Canada,
in Carp near Ottawa and Waterloo near Toronto, each of which develops products and technologies based on its area of expertise. Our research
and development expenses during 2025, 2024 and 2023 were $3.3 million, $4.2 million and $4.0 million, respectively. In addition to our
own research and development activities, we also acquire know-how from external sources. We cannot assure you that any of our research
and development projects will yield profitable results in the future.
Manufacturing and Supply
Our manufacturing operations consist of engineering, fabricating,
assembly, quality control, final testing and shipping of finished products. Substantially all of our manufacturing operations are currently
performed at our facilities in Canada. In 2018 we launched a “Made in USA” version of our FlexZone product to better serve
our U.S. - based partners and customers. See Item 4D. “Information on the Company – Property, Plants and Equipment.”
Senstar is undertaking efforts to establish domestic production of FibrePatrol and FlexZone within the United States in order to mitigate
potential impacts from future tariffs.
We acquire most of the components utilized in our products, and
certain services from a limited number of suppliers and subcontractors. We maintain an inventory of systems and spare parts in order to
enable us to overcome potential temporary supply shortages until an alternate source of supply is available. Nevertheless, temporary disruptions
of our manufacturing operations would result if we were required to obtain materials from alternative sources, which may have an adverse
effect on our financial results.
Our operations across Canada, the U.S., EMEA, and APAC expose us
to risks arising from changes in U.S. trade policies, including the imposition of tariffs and other trade restrictions, which may adversely
affect our business, financial condition, and results of operations. The U.S. government has implemented various trade measures, including
tariffs and import restrictions, that have affected and may continue to affect the flow of goods across borders. These measures, as well
as retaliatory tariffs from other jurisdictions, could increase the cost of imported materials, components, and finished products, particularly
those sourced from or sold into the APAC region (notably China), Europe, and Canada.
| • |
Canada: As a close trading partner with the U.S., our operations in Canada may be directly impacted by changes in U.S. tariffs and
trade agreements, such as revisions to the USMCA. These measures may disrupt cross-border supply chains, impact pricing, and introduce
regulatory complexities that could increase compliance costs. |
| • |
EMEA (Europe, the Middle East, and Africa): Ongoing trade tensions between the U.S. and the European Union, as well as post-Brexit
trade uncertainties, may increase customs duties, delay shipments, or result in regulatory misalignments. If the U.S. expands tariffs
on EMEA-sourced products or components, or if reciprocal trade actions are introduced, it could affect our cost structure and sales strategy
in the region. |
| • |
USA: As a significant market and operating base, any expansion of protectionist trade policies within the U.S., including sector-specific
tariffs (e.g., on steel, aluminum, or technology products), could raise input costs or limit sourcing options. Additionally, regulatory
unpredictability may hinder long-term supply planning and pricing stability. |
| • |
APAC: The Asia-Pacific region plays a critical role in our global supply chain, especially in manufacturing and sourcing. Escalating
U.S.-China trade tensions, as well as tariffs on key APAC-origin goods, could lead to increased material costs, longer lead times, and
potential reconfiguration of supplier relationships. This could negatively affect product availability, pricing, and competitiveness in
both domestic and international markets. |
Trade restrictions and geopolitical tensions may also lead to broader
market volatility, impact demand, and necessitate strategic shifts in our global sourcing and distribution networks. While we continue
to monitor developments and diversify our supply base where feasible, the unpredictable nature of trade policy changes creates significant
operational uncertainty.
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Competition
PIDS Sensors. The principal
factors affecting competition in the market for security systems are a system’s high probability for detection and low probability
of false and nuisance alarms. We believe that a manufacturer’s reputation for reliable equipment is a major competitive advantage,
and that such a reputation will usually be based on the performance of the manufacturer’s installed systems. Additional competitive
factors include quality of customer support, maintenance and price.
The PIDS market is very fragmented. Our most frequently encountered
competitors include Southwest Microwave Inc., AVA (formerly named Future Fibre Technologies Pty. Ltd.), Fiber Sensys Inc. (an Optex Company),
CIAS Elettronica Srl, Vitaprotech (now known as Hirsch), in France and Gallagher (New Zealand). We believe that our principal competitors
for our pipeline security products (FiberPatrol) are AVA, Optasense, a Luna Innovations company, Sintela, Omnisens SA, Febus, Hik Vision,
Hanwha and Fotas. The video management software market is well developed internationally with several large manufacturers. Our most frequently
encountered competitors are Genetec Inc., Milestone Systems A/S, Cognify part of the Hexagon Group, Digifort and Network Optix. We also
face indirect competition from competing technologies such as ground based radar, LiDar and thermal and optical cameras with IVA as PIDS
sensors with principal competitors being, SpotterRF, Navtech, Magos, FLIR, SightLogix, Axis, Hanwha, Hik Vision, Dahua, PureTech and Quanergy.
In LiDar we also face competition from Hesia, Quanergy, Opsys, Ouster, Seyond, and Sick.
Some of our competitors and potential competitors have greater
research, development, financial and personnel resources, including governmental support, or more extensive business experience than we
do. We cannot assure you that we will be able to maintain the quality of our products relative to those of our competitors or continue
to develop and market new products effectively.
Intellectual Property Rights
We have one patent application pending in a number of different
global jurisdictions and have obtained licenses to use proprietary technologies developed by third parties.
We cannot assure you:
| • |
that patents will be issued from any pending applications, or that the claims allowed under any patents will be sufficiently broad
to protect our technology; |
| • |
that any patents issued or licensed to us will not be challenged, invalidated or circumvented; or |
| • |
as to the degree or adequacy of protection any patents or patent applications may or will afford. |
In addition, we claim proprietary rights in various technologies,
know-how, trade secrets and trademarks relating to our principal products and operations. We cannot assure you as to the degree of protection
these claims may or will afford. It is our policy to protect our proprietary rights in our products and operations through contractual
obligations, including confidentiality and non-disclosure agreements with certain employees and distributors. We cannot assure you as
to the degree of protection these contractual measures may or will afford. Although we are not aware that we are infringing upon the intellectual
property rights of others, we cannot assure you that an infringement claim will not be asserted against us in the future. We believe that
our success is less dependent on the legal protection that our patents and other proprietary rights may or will afford than on the knowledge,
ability, experience and technological expertise of our employees. We cannot provide any assurance that we will be able to protect our
proprietary technology. The unauthorized use of our proprietary technology by third parties may impair our ability to compete effectively.
We could become subject to litigation regarding intellectual property rights, which could seriously harm our business.
Our fully registered marks are FIBERPATROL®, FLEXZONE®,
OMNITRAX®, SENSTAR® (INCLUDING LOGO DESIGN), XFIELD®, FLEXPS®, ultraWave Design®, FLEXPI®, PINPOINTER®.
All other marks used to identify particular products and services associated with our business are trademarks, including but not limited
to SENSTAR SYMPHONY™, SENSTAR MULTISENSOR™, SENSOR FUSION™, SENSTAR ULTRAWAVE™, SENSTAR CARE™, SENSTAR FLOW.
Any other trademarks and trade names appearing in this annual report are owned by their respective holders.
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27 -
Government Regulations
At present, none of our products require a permit or license for
export at the exception of our thermal camera range. We cannot assure that we will receive all the required permits and licenses for which
we may apply in the future. Furthermore, solicitations for procurements by governmental purchasing agencies are usually governed by laws,
regulations and procedures relating to procurement integrity, including avoiding conflicts of interest and corruption in the procurement
process.
In addition, antitrust laws and regulations in countries in which
we operate may require governmental approvals for transactions that are considered to limit competition. Such transactions may include
cooperative agreements for specific programs or areas, as well as mergers and acquisitions.
| C. |
Organizational Structure. |
Set forth below are our significant operational subsidiaries.
|
Subsidiary Name |
Country of Incorporation/Organization |
Ownership Percentage | ||
|
Senstar Corporation |
Canada |
100% | ||
|
Senstar Inc. |
United States (Delaware) |
100% | ||
|
Senstar GmbH. |
Germany |
100% | ||
|
Blickfeld GmbH |
Germany |
100% Senstar GMBH | ||
|
Blickfeld North America Inc. |
United States |
100% Blickfeld GMBH |
| D. |
Property, Plants and Equipment. |
We own a 33,000 square foot facility in Carp, Ontario, Canada.
Approximately 9,000 square feet are devoted to administrative, marketing and management functions, and approximately 8,000 square feet
are used for engineering, system integration and customer service. We use the remaining area of approximately 16,000 square feet for production
operations, including cable manufacturing, assembly, testing, warehousing, shipping and receiving. We own an additional 4.2 acres of vacant
land adjacent to this property, which is being held for future expansion. We also lease 8.2 acres of land near this facility for use as
an outdoor sensor test and demonstration site for our products including the Omnitrax buried cable intrusion detection system, Fiber Patrol,
the X-Field volumetric system, the FlexZone microphonic fence detection system and various perimeter monitoring and control systems. The
lease expense for this site is approximately $5,200 per year plus taxes under a lease that expires in November 2030. We lease office space
in Waterloo, Canada, which houses our video management software operations. We also lease other sites worldwide. The aggregate annual
rent for such offices was approximately $264,000 in 2025.
We believe that our facilities are suitable and adequate for our
current operations and the foreseeable future.
| ITEM 4A. | Unresolved Staff Comments |
Not applicable.
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28 -
| ITEM 5. |
Operating and Financial Review and Prospects |
The following discussion of our results of operations and financial condition should
be read in conjunction with our consolidated financial statements and the related notes thereto included elsewhere in this annual report.
This discussion contains forward‑looking statements that involve risks and uncertainties. Our actual results may differ materially
from those anticipated in these forward‑looking statements as a result of certain factors, including, but not limited to, those
set forth in Item 3.D. “Key Information–Risk Factors.”
| A. |
Operating Results. |
Overview
Effective March 18, 2024, we redomiciled as an Ontario organized
company. The operating and financial review of our results in with respect to periods prior to the effective time of the Redomiciliation,
refers to the financial results of Senstar Technologies Ltd. and its subsidiaries. Historically, we had two operating segments, which
also represented our reportable segments and reporting units. Magal Integrated Solutions (“Projects” segment) and Senstar
Product division (“Products” segment). On June 30, 2021, the Projects segment was sold. Therefore, the results of the Projects
segment were classified as discontinued operations in our consolidated statements of operations and thus excluded from both continuing
operations and segment results for all periods presented. Accordingly, we have one reportable segment with the change reflected in all
periods presented. Our consolidated revenues for the years ended December 31, 2025, 2024 and 2023 for our continuing operations were approximately
$36.4 million, $35.8 million and $32.8 million, respectively.
Products (PIDS, VMS, IVA )
We sell our products worldwide. Our products include Video Management
Software (VMS), Security Management Software (SMS), Intelligent Video Analytics (IVA) and PIDS products. The PIDS, SMS, VMS and IVA activities
offer an unmatched portfolio of PIDS technologies, as well as integrated intelligent video and security management solutions for security
surveillance and business intelligence applications worldwide.
Business Challenges/Areas of Focus
Our primary business challenges and areas of focus include:
| • |
continuing the growth of revenues and profitability of our perimeter security systems and video and security management systems lines
of products; |
| • |
enhancing the introduction and recognition of our new products; |
| • |
penetrating new markets and strengthening our presence in existing markets; |
| • |
strengthening our presence in our strategic verticals; |
| • |
cross selling at existing customers security and non -security applications provided thanks to our suite of sensors and information
management systems; |
| • |
succeeding in selling our comprehensive PIDS, VMS, SMS products as a combined solution; |
| • |
expand our addressable market with the introduction of the Senstar MultiSensor and LIDAR solutions, designed to provide intrusion
detection systems dedicated to critical spots of non-critical infrastructure; and |
| • |
deliver technological and functional innovation to compete techno competition and address future needs. |
Our business is subject to the effects of general global economic
conditions. If general economic conditions or economic conditions in key markets will be uncertain or weaken further, demand for our products
could be adversely affected.
Key Performance Indicators and Sources of Revenues
Our management believes that our revenues and operating income
are the two key performance indicators for our business.
Key Factors Affecting Our Business
Our operations and the operating metrics discussed below have been
and will likely continue to be affected by certain key factors as well as certain historical events and actions. The key factors affecting
our business and results of operations include, among others, reliance on public sector projects, and competition. For further discussion
of the factors affecting our results of operations, see “Risk Factors.”
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29 -
Growth Strategy
During 2025 we continued to implement our strategic growth plan
focusing on the sale of our products and solutions. Pursuant to this plan, we streamlined our product sales activity in our three main
regions, the Americas (including LATAM), EMEA, and APAC. We are continuing to focus on our strategic verticals: Utilities, Energy (oil
and gas), logistics, correctional facilities, airports and military and borders applications. We intend to continue to expand our sales
to these verticals through allocation of resources and funds, including the acquisition of complementary technologies that will increase
our offerings to these targeted verticals.
If we are successful in the implementation of our strategic plan,
we may be required to hire additional employees in order to meet customer demands. If we are unable to attract or retain qualified employees,
our business could be adversely affected. We may not be able to implement our growth strategy plan and may not be able to successfully
expand our business activity and increase our sales. Our failure to successfully integrate the operations of an acquired business or to
retain key employees of acquired businesses and integrate and manage our growth may have a material adverse effect on our business, financial
condition, results of operation or prospects. We may not be able to realize the anticipated benefits of any acquisition. Moreover, future
acquisitions by us could result in potentially dilutive issuances of our equity securities, the incurrence of debt and contingent liabilities
and amortization expenses related to identifiable intangible assets, any of which could materially adversely affect our operating results
and financial position. Acquisitions also involve other risks, including risks inherent in entering markets in which we have no or limited
prior experience.
Reliance on government contracts
Our products are primarily sold to end-users such as governmental
agencies, government authorities, and government-owned companies, many of which have complex and time-consuming procurement procedures.
A substantial period of time often elapses from the time we begin marketing a product until we actually sell that product to a particular
customer. In addition, our sales to government agencies', authorities' and companies' projects are directly affected by these end-users
budgetary constraints and the priority given in their budgets to the procurement of our products. A decrease in governmental funding for
our end-users’ budgets would adversely affect our results of operations. This risk is heightened during periods of global economic
slowdown. Accordingly, governmental purchases of our systems, products and services may decline in the future if governmental purchasing
agencies terminate, reduce or modify contracts.
Competition
The global market for safety, security, video and security management
software, site management solutions and products is highly fragmented and intensely competitive. It is characterized by changing technology,
new product introductions and changing customer requirements. We compete principally in the market for perimeter intrusion detection systems,
or PIDS and security and video management software. Some of our competitors and potential competitors have greater research, development,
financial and personnel resources, including governmental support. We cannot assure you that we will be able to maintain the quality of
our products relative to those of our competitors or continue to develop and market new products effectively. Continued competitive pressures
could cause us to lose significant market share.
Functional Currency and Financial Statements in U.S. Dollars
While our functional currency during 2025 is the CAD, our reporting
currency is the U.S. dollar. Translation adjustments resulting from translating our financial statements from CAD and other local operation
currencies to the U.S. dollar are reported as a separate components in shareholders’ equity.
The first step in the translation process is to identify the functional
currency for each entity included in the financial statements. The accounts of each entity are then “re-measured” in its functional
currency. All transaction gains and losses from the re-measurement of monetary balance sheet items are reflected in the statement of operations
as financial income or expenses, as appropriate. Non-monetary assets and liabilities denominated in foreign currency and measured at cost
are translated at the exchange rate at the date of the transaction.
After the re-measurement process is complete the financial statements
are translated into our reporting currency, which is the U.S. dollar, using the current rate method. Equity accounts are translated using
historical exchange rates. All other balance sheet accounts are translated using the exchange rates in effect at the balance sheet date.
The statement of operations amounts have been translated using the average exchange rate for the year. The resulting translation adjustments
are reported as a component of shareholders’ equity. For the years ended December 31, 2025, 2024 and 2023, our foreign currency
translation adjustments totaled $9.7 million, $8.4 million and $9.6 million, respectively. We recorded foreign exchange loss net of $0.2
million, and $0.1 million in the years ended December 31, 2025 and 2023, respectively and a foreign exchange gain, net of $0.5 million
in the year ended December 31, 2024. This is due to the adjustment of monetary assets and liabilities, denominated in currencies, other
than the functional currency of the operational entities in the group. At the end of each period, a change in currency valuation of monetary
assets and liabilities is recorded as a non-cash financial expense or income. The Canadian dollar depreciated by 4.8% and 2.3% against
the U.S. dollar in 2025 and 2023, respectively and appreciated by 8.7% against the U.S. dollar in 2024.
-
30 -
Concentrations of Credit Risk
Financial instruments that are potentially subject to concentrations
of credit risk consist principally of cash and cash equivalents, short and long-term bank deposits, unbilled accounts receivable, trade
receivables, long-term trade receivables and long-term loans.
As of December 31, 2025, our cash and cash equivalents and restricted
cash and short-term deposits were invested in major Canadian, U.S. and European banks. We are exposed to credit risk in the event of default
by financial institutions to the extent of the amounts recorded on the accompanying consolidated balance sheets exceed insured limits.
Generally, these deposits may be redeemed upon demand and therefore, bear low risk.
The trade receivables and the unbilled accounts receivable of our
company and our subsidiaries are derived from sales to large and solid organizations located mainly the U.S., Canada, Europe and APAC.
We perform ongoing credit evaluations of our customers and to date have generally not experienced any material losses. An allowance for
credit losses is recognized with respect to those amounts that we have determined to be doubtful of collection. In certain circumstances,
we may require letters of credit, other collateral or additional guarantees. We also use credit insurance in some cases. During each of
the years ended December 31, 2025, 2024 and 2023 we recorded less than $0.1 million of credit losses. As of December 31, 2025, our allowance
for credit losses amounted to $0.2 million.
We have no significant off-balance sheet concentration of credit
risks, such as foreign exchange contracts or foreign hedging arrangements.
Explanation of Key Income Statement Items
Cost of revenues.
Our cost of revenues for perimeter products consists of component and material costs, direct labor costs, subcontractor costs,
shipping expenses, overhead related to manufacturing and depreciation. Our cost of revenues for Video Security sales consists primarily
of direct labor costs, some component, material and subcontractor costs and overhead related to those sales.
Research and
development expenses, net. Research and development expenses, net consists primarily of expenses for on-going research and development
activities.
Selling and
marketing expenses. Selling and marketing expenses consist primarily of commission payments, compensation and related expenses
of our sales teams, attendance at trade shows and advertising expenses and related costs for facilities and equipment.
General and
administrative expenses. Our general and administrative expenses consist primarily of salary and related costs associated with
our executive and administrative functions, public company related expenses, legal and accounting expenses, allowances for credit losses
and other miscellaneous expenses. Staff costs include direct salary costs and related costs, such as severance pay, social security and
retirement fund contributions, vacation and other pay.
Depreciation
and Amortization and impairment of goodwill. The amount of depreciation and amortization
for the years ended December 31, 2025, 2024 and 2023 were approximately $0.7 million, $0.7 million and $0.9 million, respectively.
-
31 -
Financial Expenses,
Net. Financial expenses, net include exchange rate differences arising from changes in the value of monetary assets and monetary
liabilities stated in currencies other than the functional currency of each entity, currency transactions as well as interest income on
our cash and cash equivalents and short term investments.
The following table presents certain financial data expressed as
a percentage of revenues for the periods indicated for the continuing operations:
|
Year Ended December 31 |
||||||||||||
|
2025 |
2024 |
2023 |
||||||||||
|
Revenues |
100 |
% |
100 |
% |
100 |
% | ||||||
|
Cost of revenues |
34 |
% |
36 |
% |
43 |
% | ||||||
|
Gross profit |
66 |
% |
64 |
% |
57 |
% | ||||||
|
Operating expenses: |
||||||||||||
|
Research and development, net |
9 |
% |
12 |
% |
12 |
% | ||||||
|
Selling and marketing, net |
27 |
% |
25 |
% |
30 |
% | ||||||
|
General and administrative |
22 |
% |
16 |
% |
19 |
% | ||||||
|
Operating income (loss) |
8 |
% |
11 |
% |
(4 |
)% | ||||||
|
Financial income (expenses), net |
- |
2 |
% |
- |
||||||||
|
Income (loss) before income taxes |
9 |
% |
13 |
% |
(4 |
)% | ||||||
|
Taxes on income (tax benefit) |
- |
% |
6 |
% |
- |
|||||||
|
Income (loss) from continuing operations |
9 |
% |
7 |
% |
(4 |
)% | ||||||
Year Ended December 31, 2025 Compared with Year Ended December
31, 2024
Revenues. Revenues increased
by 1.7% to $36.4 million for the year ended December 31, 2025 from $35.8 million for the year ended December 31, 2024. The modest
increase relates to a 10% growth in North America largely from the Corrections vertical and a 1% sales growth from EMEA offset by a 9%
decline in APAC.
Cost of revenues. Cost of
revenues decreased by 2.3% to $12.5 million for the year ended December 31, 2025 from $12.8 million for the year ended December 31, 2024.
Cost of revenues as a percentage of revenues decreased to 34.5% in 2025 from 35.9% in 2024, primarily due to our revenue mix. A favorable
foreign exchange environment has had a positive impact on gross margin, primarily driven by cost of goods sold associated with manufacturing
operations in Canada. The weakening of the Canadian dollar relative to key reporting currencies has effectively reduced production costs
when translated, enhancing margin performance by approximately 1%.
Research and development expenses,
net. Research and development expenses decreased by 19.3% to $3.3 million for the year ended December 31, 2025 from $4.2 million
for the year ended December 31, 2024. The reduction in expenses during 2025 was attributable to $538,000 of funding from the Industrial
Research Assistance Program in Canada compared to $17,000 in funding in 2024.
Selling and marketing expenses.
Selling and marketing expenses increased by 7.1% to $9.6 million for the year ended December 31, 2025 from $9.0 million for the
year ended December 31, 2024. The increase was primarily driven by continued investment in business development initiatives. As a percentage
of revenue, selling and marketing expenses rose to 26.5% in 2025 from 25.2% in the prior year, reflecting the Company’s focus on
supporting growth.
General and administrative expenses.
General and administrative expenses increased by 33.3% to $7.8 million for the year ended December 31, 2025 from $5.9 million for the
year ended December 31, 2024, primarily due to costs associated with due diligence activities and the closure of our Israeli entity. These
items resulted in higher professional fees and one-time administrative charges during the period, contributing to the overall increase
in General and administrative expenses. General and administrative expenses amounted to 21.6% and 16.5% of revenues in 2025 and 2024,
respectively.
Operating income . We reported
operating income of $3.0 million for the year ended December 31, 2025, compared to $3.9 million for the year ended December 31, 2024.
The decrease in operating income was primarily attributable to higher general and administrative and selling expenses incurred to support
future growth, including costs related to the acquisition of Blickfeld. These factors were partially offset by increased revenues, improved
gross margins and funding received under the IRAP program.
-
32 -
Financial income (expenses), net.
Our financial income, net was less than of $0.1 million for the year ended December 31, 2025 compared to financial income, net,
for the year ended December 31, 2024 was $0.7 million. The financial income in 2025 were primarily attributable to income from interest
on our bank deposits net, offset by bank charges and foreign exchange loss during the year.
Taxes on income (tax benefit).
We recorded a tax benefit of $0.1 million for the year ended December 31, 2025, compared to net income taxes of $2.0 million for
the year ended December 31, 2024. The tax benefit in 2025 was primarily driven by a reduction resulting from the settlement of uncertain
tax positions associated with the final liquidation of the Israeli entity. This benefit was partially offset by changes in the geographic
mix of pre-tax income and the impact of deferred tax assets.
For a discussion of our results of operations for the year ended
December 31, 2024, including a year-to-year comparison between the years ended December 31, 2024 and December 31, 2023, as well as 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, filed with the SEC on April 23, 2025.
Seasonality
Our operating results are characterized by a seasonal pattern,
with typically a higher volume of revenues towards the end of the year and lower revenues in the first part of the year. This pattern,
which is expected to continue, is mainly due to two factors:
| • |
our customers are mainly budget-oriented organizations with lengthy decision processes, which tend to mature late in the year; and
|
| • |
due to harsh weather conditions in certain areas in which we operate during the first quarter of the calendar year, certain projects
and services are put on hold and consequently revenues are delayed. |
Our revenues are partly dependent on government procurement procedures
and practices therefore our revenues and operating results are subject to substantial periodic variations.
Impact of Currency Fluctuations on Results of Operations, Liabilities
and Assets
We sell most of our products in North America, Europe and APAC.
Our financial results, which are reported in U.S. dollars, are affected by changes in foreign currency. Our revenues are primarily denominated
in U.S. dollars and Euros, while a portion of our expenses, primarily labor expenses, is incurred in CAD and Euros. Additionally, certain
assets, especially cash, trade receivables and other accounts receivables, as well as part of our liabilities are denominated in CAD.
As a result, fluctuations in rates of exchange between the U.S. dollar and non-U.S. dollar currencies may affect our operating results
and financial condition. The dollar cost of our operations in Canada may be adversely affected by the appreciation of the CAD against
the U.S. dollar. In addition, the value of our non-U.S. dollar revenues could be adversely affected by the depreciation of the U.S. dollar
against such currencies.
The appreciation of the CAD and the Euro in relation to the U.S.
dollar has the effect of increasing the U.S. dollar value of any unlinked assets and the U.S. dollar amounts of any unlinked liabilities
and increasing the U.S. dollar value of revenues and expenses denominated in other currencies. Conversely, the depreciation of the CAD
and the Euro in relation to the U.S. dollar has the effect of reducing the U.S. dollar value of any of our liabilities which are payable
in Canadian dollars and Euro (unless such costs or payables are linked to the U.S. dollar). Such depreciation also has the effect of decreasing
the U.S. dollar value of any asset that is denominated in CADs and Euros, or receivables payable in CAD and Euro (unless such receivables
are linked to the U.S. dollar). In addition, the U.S. dollar value of revenues and expenses denominated in CAD and Euro would increase.
Because foreign currency exchange rates fluctuate continuously, exchange rate fluctuations may have an impact on our profitability and
period-to-period comparisons of our results. The effects of foreign currency re-measurements are reported in our consolidated financial
statements in current operations.
-
33 -
The following table presents the rate of devaluation or appreciation
of the CAD against the dollar. These metrics provide insight on the impact of currency fluctuations on our financial results.
|
Year ended
December
31, |
CAD appreciation
(devaluation)
rate % |
|||
|
2021 |
(0.1 |
) | ||
|
2022 |
6.4 |
|||
|
2023 |
(2.3 |
) | ||
|
2024 |
8.7 |
|||
|
2025 |
(4.8 |
) | ||
In 2025 and 2023 foreign currency fluctuations had a negative impact
on our results of operations as we recorded foreign exchange loss, net of $0.2 million and $0.1 million, respectively. In 2024, foreign
currency fluctuations had a positive impact on our results of operations as we recorded a foreign exchange gain, net of $0.5 million.
We expect that our results of operations will continue to be affected by currency fluctuations in the future.
Effective Corporate Tax Rate
We are a Canadian corporation, incorporated under the laws of Ontario.
Our effective corporate tax rate for the years ended 2025, 2024
and 2023 may substantially exceed the Canadian tax rate since our U.S.-based subsidiaries will generally be subject to applicable federal,
state, local and foreign taxation, and we may also be subject to taxation in the other foreign jurisdictions in which we own assets, have
employees or conduct activities. Because of the complexity of these local tax provisions, it is not possible to anticipate the actual
combined effective corporate tax rate which will apply to us.
As of December 31, 2025, we had a net deferred tax assets of $0.1
million, of which $0.2 million in domestic deferred tax liability, net offset by $0.3 million in foreign deferred tax asset, net. We had
total estimated available operating tax loss carryforwards of $1 million with respect to our operations in Canada to offset against future
taxable income. We have recorded a full valuation allowance for such carryforward tax losses due to the uncertainty of their future realization.
As of December 31, 2025, our foreign subsidiaries outside of Ontario had estimated total available carryforward operating tax losses of
$1.4 million, out of which $1.1 million was attributable to our U.S. subsidiary and $0.3 million to our U.K. subsidiary. Utilization of
U.S. net operating losses may be subject to a substantial annual limitation due to the “change in ownership” provisions of
the Internal Revenue Code of 1986 and similar state tax law provisions. The annual limitation may result in the expiration of net operating
losses before utilization.
Recently Issued Accounting Standards
Please refer to “Impact of recently issued and adopted accounting
standards” in Note [2] of our consolidated financial statements included elsewhere in this annual report for more information.
| B. |
Liquidity and Capital Resources |
Cash and cash equivalents and short-term deposits amounted to $22.5
million on December 31, 2025 compared to $20.6 million at December 31, 2024. The increase in cash and cash equivalents is primarily due
to net cash provided by operating activities which was offset by net cash used in investing activities net. Our cash and cash equivalents
and short -term bank deposits are held in various banks, mainly in U.S. dollars, Euros, CAD and GBP.
Since inception until our initial public offering in March 1993,
we financed our activities mainly through cash flow from operations. In March 1993, we received proceeds of $9.8 million from our initial
public offering of 1,380,000 ordinary shares. Subsequently, we made follow-on public offerings in February 1997 (of 2,085,000 ordinary
shares) and in April 2005 (of 1,700,000 ordinary shares), in which we raised $9.4 million and $14.9 million, respectively. To allow us
to begin to implement a new strategic plan, on September 8, 2010, a company affiliated with our former principal shareholder, provided
us with a bridge loan of $10.0 million. To repay the loan and to raise permanent capital for general working capital purposes including
facilitating the implementation of our new business strategy, we raised $16.2 million from a rights offering of 5,273,274 ordinary shares
and a private placement of 150,000 of ordinary shares in 2011. In October 2016, we completed a rights offering in which we received gross
proceeds of approximately $23.8 million from the sale of 6,170,386 ordinary shares. Our controlling shareholders, FIMI V Funds purchased
3,392,869 ordinary shares including through its exercise of over-subscription rights.
-
34 -
We expect that our total research and development expenses in 2026
will be approximately $4.2 million. Our research and development plan for 2026 covers development of new and innovative products, as well
as the improvement of existing technologies.
We believe that our cash and cash equivalents, bank facilities,
bank deposits and our expected cash flows from operations will be sufficient to meet our ongoing cash requirements through 2026. Our existing
funds have enabled us to settle the acquisition of Blickfeld in cash. Our liquidity could be negatively affected by a decrease in demand
for our products, including the impact of potential reductions in customer purchases that may result from the current general economic
climate.
Cash Flows
The following table summarizes our cash flows for the periods presented:
|
Year ended December 31, |
||||||||||||
|
2025 |
2024 |
2023 |
||||||||||
|
(in thousands) |
||||||||||||
|
Net cash provided by (used in) operating activities |
1,755 |
6,656 |
260 |
|||||||||
|
Net cash used in investing activities |
(561 |
) |
(223 |
) |
(334 |
) | ||||||
|
Net cash provided by (used in) financing activities |
16 |
39 |
(213 |
) | ||||||||
|
Effect of exchange rate changes on cash and cash equivalents |
665 |
(812 |
) |
156 |
||||||||
|
Increase (decrease) in cash, cash equivalents and restricted cash |
1,875 |
5,660 |
(131 |
) | ||||||||
|
Cash, cash equivalents and restricted cash at the beginning of the year, including
cash attributable to discontinued operations |
20,466 |
14,806 |
14,937 |
|||||||||
|
Cash, cash equivalents and restricted cash at the end of the year |
22,341 |
20,466 |
14,806 |
|||||||||
Net cash provided by operating activities was approximately $1.8
million and $6.7 million in the years ended December 31, 2025 and 2024, respectively, compared to net cash provided by operating activities
in the year ended December 31, 2023 of approximately $0.3 million.
Net cash provided by operating activities in the year ended December
31, 2025 was primarily attributable to our profit of $3.2 million as well as a decrease of $1.1 million in trade receivables, $0.7 million
of depreciation and amortization expenses and $0.6 million in stock based compensation. This was offset in part by a decrease of $2.9
million in other accounts payable and accrued expenses, deferred revenues and customer advances, a decrease of $0.9 million in trade payables,
an increase of $0.4 million in other accounts receivable and prepaid expenses, an increase of $0.2 million in inventories, a decrease
of $0.6 million in deferred income taxes. Net cash provided by operating activities in the year ended December 31, 2024 was primarily
attributable to our profit of $2.6 million as well as a decrease of $1.7 million in inventories, an increase of $1.5 million in other
accounts payable and accrued expenses, deferred revenues and customer advances, an increase of $1.2 million in trade payables, $0.7 million
of depreciation and amortization expenses, a decrease of $0.4 million in deferred income taxes and a decrease of $0.1 million in other
accounts receivable and prepaid expenses. This was offset in part by an increase of $1.2 million in trade receivables and $0.3 million
in accrued severance pay. Net cash provided by operating activities in the year ended December 31, 2023 was primarily attributable to
a decrease of $1.5 million in inventories, $0.9 million of depreciation and amortization expenses, a decrease of $0.6 million in trade
receivables, a decrease of $0.2 million in deferred income taxes and a decrease of $0.1 million in unbilled receivables. This was offset
in part by our loss in 2023, as well as an increase of $1.0 million in other accounts receivable and prepaid expenses, a decrease of $0.8
million in trade payables and a decrease of $0.1 million in customer advances.
-
35 -
Net cash used in investing activities was approximately $0.6 million,
$0.2 million and $0.3 million in the years ended December 31, 2025, 2024 and 2023, respectively. In the year ended December 31, 2025,
our net cash used in investing activities was primarily attributable to purchase property and equipment for $0.6 million. In the
year ended December 31, 2024, our net cash used in investing activities was primarily attributable to purchase property and equipment
for $0.3 million. In the year ended December 31, 2023, our net cash used in investing activities was primarily attributable to purchase
of property and equipment for $0.4 million.
Net cash provided by financing activities of approximately
$16 thousand and $39 thousands in the years ended December 31, 2025 and 2024, respectively, compared to net cash used in financing activities
of approximately $0.2 million in the year ended December 31, 2023.
In the year ended December 31, 2025, our net cash provided by financing
activities was attributable to the proceeds from the issuance of shares upon exercise of options of $16 thousand. In the year ended December
31, 2024, our net cash provided by financing activities was attributable to the proceeds from the issuance of shares upon exercise of
options of $39 thousand. In the year ended December 31, 2023, our net cash used in financing activities was attributable to deferred payment
with respect to asset acquisition for $0.2 million.
We had capital expenditures for property and equipment of approximately
$0.6 million, $0.3 million and $0.4 million, in the years ended December 31, 2025, 2024 and 2023, respectively. We estimate that our capital
expenditures for 2026 will total approximately $0.5 million. We expect to finance these expenditures primarily from our cash and cash
equivalents and our operating cash flows. However, the actual amount of our capital expenditures will depend on a variety of factors,
including general economic conditions and changes in the demand for our products.
We completed the acquisition of Blickfeld on February 13, 2026,
using cash on hand at December 31, 2025.
Credit Lines and Other Debt
As of December 31, 2025, we had credit lines with the Royal Bank
of Canada, through Senstar Corporation, our Canadian subsidiary, of $0.6 million in the aggregate, of which $0.5 million was available
at December 31, 2025. As of December 31, 2025, the outstanding balances under the credit lines of our Canadian subsidiary consisted of
several bank performance, advance payment.
We have no significant off-balance sheet concentration of credit
risks, such as foreign exchange contracts or foreign hedging arrangements.
| C. |
Research and Development, Patents and Licenses. |
Government Grants
We participate in programs sponsored by the Industrial Research
Assistance Program (IRAP) in Canada. During 2025, 2024 and 2023 we recognized IRAP funding in the amount of $538,000, $17,000 and $266,000,
respectively.
Investment Tax Credit
Our operations in Canada are eligible for investment tax credits
for research and development activities and for certain current expenditures. For the years ended December 31, 2025, 2024 and 2023, we
recognized $225,000, $204,000 and $113,000, respectively, of investment tax credits.
| D. |
Trend Information. |
Our operations were negatively affected by the worldwide shortage
of various materials and sub-components required to produce certain of our PIDS products. We are monitoring the supply chain shortage,
vs our ongoing and forecasted manufacturing requirements, while implementing various procurement methodologies to meet current and forecasted
demand for our products. However, our ability to continue meeting the demand for our products is dependent among others on our ability
to maintain an effective procurement plan support from our suppliers, and when needed establish a contractual relationship with alternative
suppliers.
-
36 -
We continue to observe evolving trade dynamics that are influencing
global supply chains, pricing structures, and regulatory environments across our key operating regions: Canada, the United States, EMEA,
and APAC. In particular, the imposition of tariffs and other trade restrictions by the U.S. government, along with corresponding retaliatory
actions by its trading partners, have contributed to increased uncertainty and cost pressures within our operations.
In Canada and the United States, we have seen periodic adjustments
to bilateral trade agreements and import tariffs, particularly related to industrial goods and technology components, which have required
ongoing adjustments in our procurement and distribution strategies. In EMEA, shifting U.S.-EU trade relations and post-Brexit regulatory
changes continue to affect cross-border trade logistics and duties, influencing product pricing and availability. Meanwhile, APAC remains
a region of heightened sensitivity due to U.S.-China trade tensions, with tariff exposure and supply chain adjustments being an ongoing
focus.
These trends have led us to evaluate alternative sourcing strategies,
diversify our supplier base, and consider regional manufacturing options where economically viable. Although the overall impact to date
has been manageable, we expect global trade and tariff policy to remain a material area of operational focus and strategic planning over
the near to medium term.
| E. |
Critical Accounting Estimates |
The preparation of financial statements in conformity with U.S.
GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates and the use of different assumptions would likely result in materially different
results of operations. Critical accounting policies are those that are both most important to the portrayal of our financial position
and results of operations and require management’s most difficult, subjective or complex judgments. Although not all of our significant
accounting policies require management to make difficult, subjective or complex judgments or estimates, the following policies and estimates
are those that we deem most critical.
Revenue Recognition
We recognize revenues in accordance with ASC No. 606, "Revenue
from Contracts with Customers" ("ASC No. 606"). As such, we identify a contract with a customer, identify the performance obligations
in the contract, determine the transaction price, allocate the transaction price to each performance obligation in the contract and recognize
revenues when (or as) we satisfy a performance obligation.
We generate our revenues mainly from: (1) sales of security products;
(2) services and maintenance, which are performed either on a fixed-price basis or as time-and-materials based contracts; and (3) software
license fees and related services. Our products and services are generally distinct and accounted for as separate performance obligations.
Certain arrangements with customers contain multiple distinct performance obligations. For these arrangements, we allocate the transaction
price to each performance obligation based on its relative stand-alone selling price (SSP). We generally establish SSPs based on observable
selling prices.
The transaction price is determined based on the consideration
to which we will be entitled in exchange for transferring goods or services to our customer. We usually do not grant a right of return
to our customers.
In instances of contracts where revenue recognition differs from
the timing of invoicing, we generally determine that those contracts do not include a significant financing component. We use the practical
expedient and do not assess the existence of a significant financing component when the difference between payment and revenue recognition
is a year or less. Revenue is recognized net of any taxes collected from customers which are subsequently remitted to governmental entities
(e.g., sales tax and other indirect taxes). We account for shipping and handling activities as fulfillment activities. Shipping
and handling activities are classified as part of the cost of revenues.
-
37 -
Payment terms are typically up to 90 days, and vary by the type
of payer, country of sale and the products or services offered.
Revenue for security products and software licenses are generally
recognized at a point in time, when the customer obtains control over the product or license. Revenues for services and maintenance are
recognized over time, using the method that best depicts the transfer of services to the customer, as those services are performed or
over the term of the contract. Software related services provide the customer with unspecified software updates, on a when available basis
and are recognized ratably over time as these services have a continuance pattern of transfer to the customer during the contract period.
Warranties are classified as either an assurance type or a service type warranty. A warranty is considered an assurance type warranty
if it provides the customer with assurance that the product will function as intended for a limited period of time. An assurance type
warranty is not accounted for as a separate performance obligation under the revenue model.
Inventories
Inventories are stated at the lower of cost or net realized value.
We periodically evaluate the quantities on hand relative to historical and projected sales volumes, current and historical selling prices
and contractual obligations to maintain certain levels of parts. Based on these evaluations, inventory write-offs are provided to cover
risks arising from slow-moving items, discontinued products, excess inventories, market prices lower than cost and adjusted revenue forecasts.
Cost is determined as follows:
| • |
Raw materials, parts and supplies – using the “first-in, first-out” method. |
| • |
Work-in-progress and finished products – on the basis of direct manufacturing costs with the addition of allocable indirect
manufacturing costs. |
During the years ended December 31, 2025, 2024 and 2023 we recorded
inventory write-offs from continuing operations in the amounts of $0.8 million, $0.1 million and $0.3, respectively. Such write-offs were
included in cost of revenues.
Income taxes
We account for income taxes in accordance with ASC 740 “Income
Taxes.” This statement prescribes the use of the liability method whereby deferred tax asset and liability account balances are
determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted
tax rates and laws that will be in effect when the differences are expected to reverse. We provide a valuation allowance, if necessary,
to reduce deferred tax assets to their estimated realizable value.
As part of the process of preparing our consolidated financial
statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating
our actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and
accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance
sheet. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income and we must establish
a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. Increases in the valuation
allowance result in additional expense to be reflected within the tax provision in the consolidated statement of income.
As of December 31, 2025, we had a net deferred tax assets of $0.1
million, of which $0.2 million in domestic deferred tax liability, net offset by $0.3 million in foreign deferred tax asset, net. We had
total estimated available operating tax loss carryforwards of $1 million with respect to our operations in Canada to offset against future
taxable income. We have recorded a full valuation allowance for such carryforward tax losses due to the uncertainty of their future realization.
As of December 31, 2025, our foreign subsidiaries outside of Ontario had estimated total available carryforward operating tax losses of
$1.4 million, out of which $1.1 million was attributable to our U.S. subsidiary and $0.3 million to our U.K. subsidiary. Utilization of
U.S. net operating losses may be subject to a substantial annual limitation due to the “change in ownership” provisions of
the Internal Revenue Code of 1986 and similar state tax law provisions. The annual limitation may result in the expiration of net operating
losses before utilization.
-
38 -
Goodwill
Goodwill and certain other purchased intangible assets have been
recorded as a result of acquisitions. Goodwill represents the excess of the purchase price in a business combination over the fair value
of net tangible and intangible assets acquired. Goodwill is not amortized but rather is subject to an impairment test.
ASC No. 350, “Intangible-Goodwill and other” (“ASC
No. 350”) requires goodwill to be tested for impairment at least annually and, in certain circumstances, between annual tests.
The accounting guidance gives the option to perform a qualitative assessment to determine whether further impairment testing is necessary.
The qualitative assessment considers events and circumstances that might indicate that a reporting unit's fair value is less than its
carrying amount. If it is determined, as a result of the qualitative assessment, that it is more likely than not that the fair value of
a reporting unit is less than its carrying amount, a quantitative test is performed. Alternatively, ASC No. 350 permits an entity to bypass
the qualitative assessment for any reporting unit and proceed directly to performing the quantitative goodwill impairment test.
For the years ended December 31, 2025, 2024 and 2023, no impairment
losses were recorded.
If the carrying value of a reporting unit exceeds its fair value,
we should recognize an impairment of goodwill for the amount of this excess. We perform an annual impairment test during the fourth quarter
of each fiscal year, or more frequently if impairment indicators are present.
Intangible assets
Our intangible assets are comprised of patents, acquired technology
and customer relations. Intangible assets are amortized over their useful lives using a method of amortization that reflects the pattern
in which the economic benefits of the intangible assets are consumed or otherwise used up, in accordance with the ASC No. 350.
For the years ended December 31, 2024, 2023 and 2022, no impairment
losses were recorded.
Impairment of long-lived assets
Our long-lived assets (assets group) to be held or used, including
right of use assets and intangible assets that are subject to amortization, are reviewed for impairment in accordance with ASC 360, “Property,
Plant, and Equipment” whenever events or changes in circumstances indicate that the carrying amount of a group of assets may not
be recoverable. Recoverability of a group of assets to be held and used is measured by a comparison of the carrying amount of the group
to the future undiscounted cash flows expected to be generated by the group. If such group of assets is considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. For the years
ended December 2025, 2024 and 2023, we did not record any impairment charges attributable to long-lived assets.
| ITEM 6. |
Directors, Senior Management and Employees |
| A. |
Directors and Senior Management. |
Set forth below are the names, ages, principal position and a biographical
description of each of our directors and executive officers:
|
Name |
Age |
Position | ||
|
Gillon Beck |
64 |
Chairman of the Board of Directors | ||
|
Jacob Berman (1) (2) (3) |
77 |
Director | ||
|
Tom Overwijn (1) (2) (3) |
64 |
Director | ||
|
Kelli Roiter (1) (2) (3) |
54 |
Director | ||
|
Fabien Haubert |
51 |
Chief Executive Officer | ||
|
Alicia Kelly |
48 |
Chief Financial Officer | ||
|
Jeremy Weese |
49 |
Chief Technology Officer | ||
|
Matthieu Currat |
43 |
Chief Operating Officer |
|
(1) Member of our Audit
Committee.
(2) Member of our Compensation
Committee.
(3) Member of our Sustainability,
Nominating and Governance Committee. |
||
-
39 -
Gillon Beck has served as
a director and our Executive Chairman since September 2023, and as a director and Executive Chairman of the Senstar Technologies Ltd.
(Senstar’s predecessor) board of directors since September 2014. Since 2003, Mr. Beck has been a Senior Partner at FIMI Opportunity
Funds, the controlling shareholder of Senstar, as well as a Director of the FIMI Opportunity Funds’ General Partners and SPV companies.
In addition, Mr. Beck currently serves as Chairman of the Board of ImageSat NV, Emet Computing Ltd. (TASE), Gal-Shvav Ltd, Bet Shemesh
Engines Holdings (1997) Ltd. (TASE: BSEN), Inrom Industries Ltd., Bird Aerosystems Ltd., and is a director of Rafa Laboratories Ltd.,
Simplivia Ltd., Orbit Technologies Ltd (TASE: ORBI), Carmel Forge Ltd., AITECH Ltd, Stern Engineering Ltd., Utron Ltd. (TASE) and Unitronics
(1989) (RG) Ltd (TASE: UNIT). During the past five years, Mr. Beck had served as a member of the board of directors of the following public
companies: Overseas Commerce Ltd (TASE: OVRS), Ham-Let Ltd., Inrom Construction Ltd. From 1999 to 2003, Mr. Beck served as Chief Executive
Officer and President of Arad Ltd. (TASE). Mr. Beck received a Bachelor of Science degree (Cum Laude) in Industrial Engineering in 1990
from the Technion – Israel Institute of Technology, and a Master of Business Administration in Finance in 1992 from Bar-Ilan University.
Jacob Berman has served
as a member of our board of directors since March 2024, and as a director of Senstar Technologies Ltd. (Senstar’s predecessor) since
November 2013. Since November 2014 until March 2019, Mr. Berman had served as the chairman of the board of directors of Israel Discount
Bank of New York and acted as a member of our audit committee and compensation committee between September 2014 and December 2014. Mr.
Berman is the President and founder of JB Advisors, Inc., a New York based financial advisory firm with extensive experience in international
private banking, real estate investment counseling, and commercial/retail banking since 2002. Mr. Berman was the founder, President and
CEO of the Commercial Bank of New York.
Tom Overwijn has served
as a member of our board of directors since March 2024. Mr. Overwijn has been a partner in Fybe Finance since 2021 and acts as Interim
Finance Manager via Fybe at various companies. From 2011 until 2018, Mr. Overwijn was Director and later CFO of Siqura Group in The Netherlands.
Prior to that, from 2005 to 2011, Mr. Overwijn served as COO of Optelecom-NKF and from 1990 to 2005 he served in various positions at
NKF, a cable manufacturer. Mr. Overwijn started his career in auditing. Mr. Overwijn is an RA (Chartered Accountant) and is registered
in the accountant’s register of the Netherlands Institute of Chartered Accountants (NBA).
Kelli Roiter has served
as a member of our board of directors since March 2024. Ms. Roiter founded and managed Jefferies’ Private Capital Group within its
Investment Banking unit. Ms. Roiter joined Jefferies in 2008 and retired in 2023. Ms. Roiter’s primary responsibilities at Jefferies
were raising private institutional capital for private equity, private debt and venture capital funds, as well as raising capital for
private companies. Prior to Jefferies, Ms. Roiter was an external consultant (Fund Seven Inc.) raising capital for Bay City Capital LLC.
Previously, Ms. Roiter was a Director at Citigroup, managing the Private Bank’s third party alternative investment fundraising efforts.
Prior to that, Ms. Roiter was a Director at Donaldson, Lufkin & Jenrette/Credit Suisse, managing their third party alternative fundraising
efforts, focused on family offices, small/medium corporations and ultra-high net worth individuals, as well as the firm’s traditional
equity asset management platform. Ms. Roiter received her MBA in Finance from Yale University and her Bachelor of Commerce with Honors
in Accounting and Economics from Concordia University in Montreal, Canada.
Fabien Haubert has served
as our Chief Executive Officer since March 2023. Prior to this, he was the Managing Director of the Senstar Group in Ottawa, Canada, a
role he held since January 2020. In this position, he focused on repositioning and reorganizing the company to drive scalable growth,
increased profitability, and a strong commitment to innovation. Mr. Haubert joined Senstar in February 2018 as Vice President of Sales
for the EMEA region, based in Paris, France. During his tenure, he successfully restructured operations, leading to sustainable growth
in the region. Before joining Senstar, Mr. Haubert held several executive sales positions in the EMEA market. He served as Regional Director
for EMEA at IndigoVision, a leading IP-based CCTV solutions provider headquartered in Edinburgh, where he consistently generated growth
in his region. Additionally, he worked within the TKH Group in the Netherlands as Senior Sales Director for EMEA, focusing on innovative
IP-based security solutions. In this role, he played a key part in restructuring, optimizing, and driving sustainable business expansion.
With deep expertise in the security technology sector, Mr. Haubert has extensive experience in IP CCTV, access control, alarm monitoring,
intrusion detection systems, software management, and system integration. He holds a Master of Science in Electronics Engineering from
École Supérieure d’Ingénieurs en Électrotechnique et Électronique and a Master in Strategy and Engineering
of International Business from École Supérieure des Sciences Économiques et Commerciales (ESSEC). Mr. Haubert is multilingual,
speaking French, English, Spanish and Italian, with a working knowledge of Dutch.
-
40 -
Alicia Kelly has served
as our Chief Financial Officer since March 2024 after serving as Vice President of Finance since 2019 when she joined us. As Vice President
of Finance, Ms. Kelly had overseen global accounting, financial reporting, controls, financial planning and analysis, business systems
and legal. Her career spans over 20 years of extensive and varied experience in financial management and business leadership working for
high tech corporations boasting global development and manufacturing capabilities. Prior to joining Senstar in July 2019, Ms. Kelly served
in group controller roles overseeing the worldwide financial operations of Curtiss-Wright within its Defense Solutions segment for nearly
a decade. In addition to her financial roles, she also contributed as a Director within Curtiss-Wright’s Supply Chain and Customer
Services functions. She has also held progressive financial management positions in both software development and conglomerate contract
manufacturing companies. Ms. Kelly is a CPA in Canada and holds a Bachelor of Business Administration degree from the University of Ottawa.
Jeremy Weese has served
as our Chief Technology Officer since March 2020. bringing over 25 years of progressive leadership and technical expertise to the company.
Throughout his career at Senstar, Jeremy has held several key roles, including Chief Operating Officer, Vice President of Engineering,
and Director of Engineering, where he led global operations across R&D, manufacturing, product management, technical support, marketing,
HR, and finance. Jeremy is recognized for his strategic leadership in driving technology roadmaps, managing organizational change, and
overseeing product development. He has been instrumental in leading successful pre- and post-acquisition integrations, streamlining product
lines, and enhancing product value through strategic planning. His technical background spans embedded firmware development, hardware
design, and sensor technology innovation. Jeremy holds a Bachelor of Science degree in Computer Engineering (Magna Cum Laude) from the
University of Ottawa, earned in 1999. His deep technical expertise, combined with a strong strategic vision, has consistently driven innovation
and operational excellence at Senstar.
Matthieu Currat has served
as our Chief Operating Officer since July 2024 and as Vice President APAC since December 2023. Prior to this, he held multiple leadership
roles at Omnisens SA, including CEO and COO positions. At Omnisens, he led strategy and implemented business improvements and managed
its successful integration within Prysmian Group. His earlier career includes various engineering and management positions at Technip
across multiple countries. Matthieu holds extensive experience in project management, operations, and strategic growth in the energy and
technology sectors. He earned a Master's degree in Mechanical, Electrical, and Production Management from ECAM Lyon in France.
The terms of office of Messrs. Beck, Berman, and Overwijn and Ms.
Roiter will expire at our 2026 annual general meeting of shareholders.
| B. |
Compensation |
Compensation of Directors
We pay our directors an annual fee of CAD 38,000 and a fee of CAD
1,700 for each board or committee meeting that they physically attend (or CAD 2,200 if attendance requires air travel), and CAD 1,100
for a virtual meeting. In addition, we pay to our Executive Chairman a monthly payment of CAD 5,700. Our executive Chairman is also entitled
to a director fees paid to all of our directors as described above. In addition, Mr. Beck is entitled to annual cash bonus of CAD 40,000
payable in the event our net profit pursuant to our annual audited and consolidated financial statement exceeds $5,000,000.
Compensation in the Aggregate
The aggregate compensation costs on behalf of our directors and
executive officers as a group during 2025 (including directors and executive officers who no longer serves as directors and executive
officer) consisted of approximately $2.1 million in salary, fees, bonus, equity based compensation, commissions and directors’ fees,
but excluding dues for professional and business associations, business travel and other expenses commonly reimbursed or paid by companies.
As of December 31, 2025, the aggregate amount set aside or accrued for pension, retirement and vacation or similar benefits for our directors
and executive officers was approximately $0.1 million.
-
41 -
As of December 31, 2025, our directors and executive officers as
a group, consisting of 8 persons, held options to purchase an aggregate of 796,500 Common Shares, having exercise prices ranging from
$2.89 to $4.16 and expiration dates ranging from 2026 to 2031. Generally, the options vest over a one to three years period. See Item
6E. “Directors, Senior Management and Employees – Share Ownership – Stock Option Plans.”
Compensation of Executive Officers Individually
The table below sets forth the compensation paid to our executive
officers during the year ended December 31, 2025:
|
Information Regarding the Senior Executives(1) (U.S. dollars in thousands) |
||||||
|
Name and Principal Position(2) |
Base Salary |
Benefits and
Perquisites(3) |
Variable
Compensation(4) |
Equity-Based
Compensation(5) |
Total | |
|
Fabien Haubert – Chief Executive Officer |
275 |
201 |
130 |
265 |
870 | |
|
Jeremy Weese – Chief Technology Officer |
197 |
20 |
71 |
87 |
375 | |
|
Alicia Kelly - Chief Financial Officer |
194 |
12 |
87 |
87 |
381 | |
|
Matthieu Currat – Chief Operating Officer |
179 |
10 |
66 |
43 |
298 | |
|
(1) |
All amounts reported in the table are in terms of cost to our company, as recorded
in our financial statements. | |||||
|
(2) |
All current Senior Executives listed in the table are full-time employees. Cash compensation
amounts denominated in currencies other than the U.S. dollar were converted into U.S. dollars at the average conversion rate for the year
ended December 31, 2025. | |||||
|
(3) |
Amounts reported in this column include benefits and perquisites or on account of
such benefits and perquisites, including those mandated by applicable law. Such benefits and perquisites may include, to the extent applicable
to each executive, payments, contributions and/or allocations for savings funds, pension, severance, vacation, car or car allowance, medical
insurances and benefits, risk insurances (e.g., life, disability, accident), convalescence pay, payments for social security, tax gross-up
payments and other benefits and perquisites consistent with our guidelines. | |||||
|
(4) |
Amounts reported in this column refer to Variable Compensation such as commission,
incentive and bonus payments as recorded in our financial statements for the year ended December 31, 2025. | |||||
|
(5) |
Amounts reported in this column represent the expense recorded in our financial statements
for the year ended December 31, 2025. | |||||
| C. |
Board Practice |
Introduction
According to Ontario law and our By-Laws, our board of directors
manages, or supervises the management of, our business and affairs. The board of directors may exercise all powers conferred on it by
the OBCA. Our executive officers are responsible for our day-to-day management. The executive officers have individual responsibilities
delegated by our board of directors. Executive officers are appointed by and serve at the discretion of the board of directors, subject
to any applicable agreements.
Election of Directors
Our Articles provide for a minimum of three and a maximum of 11
directors. Our directors have been empowered to determine the number of directors within the minimum and maximum number permitted by the
Articles. Our board of directors is currently composed of four directors.
Our directors are elected by our shareholders at our annual meeting
of shareholders and hold office until the next annual meeting of shareholders. All the members of our board of directors may be reelected
upon completion of their term of office. Our annual meetings of shareholders are called no later than fifteen months after holding the
last preceding annual meeting. In the intervals between our annual meetings of shareholders, subject to the OBCA, the board of directors
may from time to time appoint a new director to fill a vacancy or to add to their number, and any director so appointed will remain in
office until our next annual meeting of shareholders and may be re-elected.
-
42 -
Independent Directors
In general, NASDAQ Stock Market Rules require that the board of
directors of a NASDAQ-listed company has a majority of independent directors and that its audit committee has at least three members and
be comprised only of independent directors, each of whom satisfies the “independence” requirements of NASDAQ and the SEC.
However, foreign private issuers, such as our company, may follow certain home country corporate governance practices instead of certain
requirements of the NASDAQ Stock Market Rules.
Our board of directors has determined that each of Mr. Berman,
Mr. Overwijn and Ms. Roiter qualifies as an independent director under the requirements of the SEC and NASDAQ.
Audit Committee
Listing Requirements
Under the corporate governance rules of Nasdaq, we are required
to maintain an audit committee consisting of at least three independent directors, each of whom is financially literate and one of whom
has accounting or related financial management expertise. Our audit committee consists of Mr. Berman, Mr. Overwijn and Ms. Roiter. Mr.
Berman serves as the chairperson of the audit committee. All members of our audit committee meet the requirements for financial literacy
under the applicable rules and regulations of the SEC and the corporate governance rules of Nasdaq. Our board of directors has determined
that Mr. Berman is an audit committee financial expert as defined by the SEC rules and has the requisite financial experience as defined
by the corporate governance rules of Nasdaq. Our board of directors has determined that each member of our audit committee is “independent”
as such term is defined in Rule 10A-3(b)(1) under the Exchange Act, which is different from the general test for independence of board
and committee members.
Audit Committee Role
Our board of directors has adopted an audit committee charter setting
forth the responsibilities of the audit committee, which are consistent with the SEC rules and the corporate governance rules of Nasdaq
and include:
| • |
retaining and terminating our independent auditors, subject to ratification by the board of directors, and in the case of retention,
to ratification by the shareholders |
| • |
re-approving audit and non-audit services to be provided by the independent auditors and related fees and terms; |
| • |
overseeing the accounting and financial reporting processes of our company and audits of our financial statements, the effectiveness
of our internal control over financial reporting and making such reports as may be required of an audit committee under the rules and
regulations promulgated under the Exchange Act; |
| • |
reviewing with management and our independent auditor our annual and quarterly financial statements prior to publication or filing
(or submission, as the case may be) to the SEC; |
| • |
recommending to the board of directors the retention and termination of the internal auditor, and the internal auditor’s engagement
fees and terms, as well as approving the yearly or periodic work plan proposed by the internal auditor; |
| • |
reviewing with our general counsel and/or external counsel, as deemed necessary, legal and regulatory matters that could have a material
impact on the financial statements; |
| • |
identifying irregularities in our business administration by among other things, consulting with the internal auditor or with the
independent auditor, and suggesting corrective measures to the board of directors; |
| • |
reviewing policies and procedures with respect to transactions between the Company and officers and directors (other than transactions
related to the compensation or terms of service of officers and directors), or affiliates of officers or directors, or transactions that
are not in the ordinary course of the Company’s business and deciding whether to approve such acts and transactions if so required;
and |
| • |
establishing procedures for the handling of employees’ complaints as to the management of our business and the protection to
be provided to such employees. |
A copy of the audit committee charter is available to investors
and others on our website at www.senstar.com.
-
43 -
Compensation Committee
Listing Requirements
Under the corporate governance rules of Nasdaq, we are required
to maintain a compensation committee consisting of at least two independent directors. Our compensation committee consists of Mr. Berman,
Mr. Overwijn and Ms. Roiter. Mr. Overwijn serves as chairperson of the committee. Our board of directors has determined that each member
of our compensation committee is independent under the corporate governance rules of Nasdaq, including the additional independence requirements
applicable to the members of a compensation committee.
Compensation Committee Role
Our board of directors has adopted a compensation committee charter
setting forth the responsibilities of the committee, which are consistent with the corporate governance rules of Nasdaq and include, among
others:
| • |
recommending to our board of directors for its approval a compensation policy, as well as other compensation policies, incentive-based
compensation plans and equity-based compensation plans, and overseeing the development and implementation of such policies and recommending
to our board of directors any amendments or modifications the committee deems appropriate; |
| • |
reviewing and approving the granting of options and other incentive awards to our chief executive officer and other executive officers,
including reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer and other
executive officers, including evaluating their performance in light of such goals and objectives; and |
| • |
administering our equity-based compensation plans, including without limitation, approving the adoption of such plans, amending and
interpreting such plans and the awards and agreements issued pursuant thereto, and making awards to eligible persons under the plans and
determining the terms of such awards. |
A copy of the compensation committee charter is available to investors
and others on our website at www.senstar.com.
Sustainability, Nominating and Governance Committee
Our sustainability, nominating and governance committee consists
of Mr. Berman, Mr. Overwijn and Ms. Roiter. Mr. Overwijn serves as chairperson of the committee. Our board of directors has adopted a
sustainability, nominating and governance committee charter setting forth the responsibilities of the committee, which include:
| • |
overseeing and assisting our board in reviewing and recommending nominees for election as directors; |
| • |
assessing the performance of the members of our board; |
| • |
establishing and maintaining effective corporate governance policies and practices, including, but not limited to, developing
and recommending to our board a set of corporate governance guidelines applicable to our business: and |
| • |
to oversee our policies, programs and strategies related to environmental, social and governance. |
A copy of the sustainability, nominating and governance committee
charter is available to investors and others on our website at www.senstar.com.
Directors’ Service Contracts
There are no arrangements or understandings between us and any
of our subsidiaries, on the one hand, and any of our directors, on the other hand, providing for benefits upon termination of their employment
or service as directors of our company or any of our subsidiaries.
-
44 -
Approval of Related Party Transactions under Ontario Law
Fiduciary Duties of Directors and Officers
Under the OBCA, a director or officer of a corporation must in
exercising his or her powers and discharging his or her duties to the corporation (i) act honestly and in good faith with a view to the
best interests of the corporation; and (ii) exercise the care, diligence and skill that a reasonably prudent person would exercise in
comparable circumstances.
Disclosure of Interests of Directors and Officers; Approval of Transactions with Directors
and Officers
Subject to and in accordance with the provisions of the OBCA, a
director or officer of the corporation who is a party to a material contract or transaction or proposed material contract or transaction
with the corporation, or is a director or an officer of, or has a material interest in, any person who is a party to a material contract
or transaction or proposed material contract or transaction with the corporation, is required to disclose in writing to the corporation
or request to have entered in the minutes of meetings of directors the nature and extent of such interest, and any such director must
not attend any part of a meeting of directors during which the contract or transaction is discussed and must refrain from voting in respect
thereof unless otherwise permitted by the OBCA. If no quorum exists for the purpose of voting on such a resolution only because a director
is not permitted to be present at the meeting due to a conflict of interest, the remaining directors will be deemed to constitute a quorum
for the purposes of voting on the resolution.
Exculpation, Indemnification and Insurance of Directors and Officers
Under the By-Laws, we shall indemnify a director or officer, a
former director or officer or another individual who acts or acted at our request as a director or officer, or an individual acting in
a similar capacity, of another entity (each of the foregoing, an “individual”), against
all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual
in respect of any civil, criminal, administrative or investigative action or other proceeding in which the individual is involved because
of that association with us or other entity, on the condition that (i) such individual acted honestly and in good faith with a view to
our best interests or to the best interests of the other entity for which the individual acted as a director or officer or in a similar
capacity at our request, as the case may be; and (ii) if the matter is a criminal or administrative action or proceeding that is enforced
by a monetary penalty, we may not indemnify the individual unless the individual had reasonable grounds for believing that his or her
conduct was lawful.
Further, we shall advance monies to the individual for the costs,
charges and expenses of a proceeding referred to above provided such individual agrees in advance, in writing, to repay the monies if
the individual does not fulfill the conditions in (i) and (ii) above.
We shall also seek the approval of a court to indemnify an individual
referred to in the first paragraph above, or advance monies under the second paragraph above, in respect of an action by or on our behalf
or on behalf of another entity to procure a judgment in its favor, to which such individual is made a party because of the individual’s
association with us or other entity as described in the first paragraph above, against all costs, charges and expenses reasonably incurred
by the individual in connection with such action, if the individual fulfills the conditions set out in (i) and (ii) above.
We maintain directors’ and officers’ liability insurance
which insures directors and officers for losses as a result of claims against the directors and officers in their capacity as directors
and officers and also reimburses us for payments made pursuant to the indemnity provisions under the By-Laws and the OBCA. In addition,
we indemnify our directors and officers pursuant to a standard indemnification agreement that provides for indemnification to the fullest
extent permitted by the OBCA.
-
45 -
| D. |
Employees |
We consider our employees the most valuable asset of our company.
We offer competitive compensation and comprehensive benefits to attract and retain our employees. The remuneration and rewards include
retention through share-based compensation and performance-based bonuses.
We believe that an engaged workforce is key to maintaining our
ability to innovate. We have steadily increased our workforce and have been successful in integrating our new employees and keeping our
employees engaged. Investing in our employees’ career growth and development is an important focus for us. We offer learning opportunities
and training programs including workshops, guest speakers and various conferences to enable our employees to advance in their chosen professional
paths.
We are committed to providing a safe work environment for our employees
in compliance with applicable regulations.
As of December 31, 2025, we employed 132 full-time employees, of
whom 17 were employed in general management and administration, 50 were employed in selling and marketing, 35 were employed in production,
customers' support and maintenance and 30 were employed in engineering and research and development. Of such full-time employees, 77 were
located in Canada, 21 were in the United States and 34 were in various other countries. Subsequent to year end with the completion of
the Blickfeld acquisition, another 28 employees will join the Senstar team.
As of December 31, 2024, we employed 126 full-time employees, of
whom 17 were employed in general management and administration, 42 were employed in selling and marketing, 36 were employed in production,
customers' support and maintenance and 31 were employed in engineering and research and development. Of such full-time employees, 81 were
located in Canada, 18 were in the United States and 27 were in various other countries.
As of December 31, 2023, we employed 136 full-time employees, of
whom 21 were employed in general management and administration, 41 were employed in selling and marketing, 42 were employed in production,
customers' support and maintenance and 32 were employed in engineering and research and development. Of such full-time employees, 96 were
located in Canada, 18 were in the United States and 22 were in various other countries.
We generally provide our employees with benefits and working conditions
beyond the required minimums. Each of our subsidiaries provides a benefits package and working conditions which we believe are competitive
with other companies in their field of operations.
-
46 -
| E. |
Share Ownership. |
The following table sets forth certain information regarding the
ownership of our Common Shares by our directors and executive officers as of April 29, 2026.
|
Name |
Number of Common Shares Owned (1)
|
Percentage of Outstanding Common Shares (2)
|
||||||
|
Gillon Beck (3)
|
- |
- |
||||||
|
Jacob Berman |
- |
- |
||||||
|
Tom Overwijn |
- |
- |
||||||
|
Kelli Roiter |
- |
- |
||||||
|
Fabien Haubert (4)
|
174,000 |
* |
||||||
|
Alicia Kelly (5)
|
68,333 |
* |
||||||
|
Jeremy Weese(6)
|
44,408 |
* |
||||||
|
Matthieu Currat (7)
|
22,167 |
* |
||||||
|
All directors and executive officers as a group (8 persons) (8)
|
308,908 |
* |
||||||
_______________
* Less than 1%
| (1) |
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with
respect to securities. Common Shares relating to options or convertible debenture notes currently exercisable or exercisable within 60
days of the date of this table are deemed outstanding for computing the percentage of the person holding such securities but are not deemed
outstanding for computing the percentage of any other person. Except as indicated by footnote, the persons named in the table above have
sole voting and investment power with respect to all shares shown as beneficially owned by them. |
| (2) |
The percentages shown are based on 23,331,653 Common Shares issued and outstanding as of April 29, 2026. |
| (3) |
Does not include any Common Shares held by the FIMI Funds. |
| (4) |
Includes 174,000 Common Shares issuable upon the exercise of currently exercisable options. |
| (5) |
Includes 68,333 Common Shares issuable upon the exercise of currently exercisable options. |
| (6) |
Includes 44,333 Common Shares issuable upon the exercise of currently exercisable options. |
| (7) |
Includes 22,167 Common Shares issuable upon the exercise of currently exercisable options. |
| (8) |
Includes 308,833 Common Shares issuable upon the exercise of currently exercisable options. |
Share Option Plans
Stock Option Plan
In August 2024, we adopted the Senstar Technologies Corporation
Stock Option Plan, or the 2024 Plan. The purpose of the 2024 Plan is to provide the company with a mechanism to attract, retain and motivate
qualified employees, consultants and directors of our company and its designated subsidiaries, to reward such persons for their contributions
toward the long term goals and success of our company, and to align the interests of such persons with those of our company’s shareholders.
The maximum number of Senstar Common Shares reserved for issuance
under the 2024 Plan is 1,250,000 Common Shares (following an increase of additional 250,000 common shares as was approved by the Board
of Directors at April 2025). The Board of Directors, the compensation committee, or another authorized committee of Senstar’s Board
of Directors, administers the 2024 Plan. Under the 2024 Plan, the administrator has the authority, subject to the terms of the 2024 Plan
and applicable law, to (a) determine the eligible employees, consultants and directors to whom options may be granted; (b) grant options
on such terms and conditions as it determines, including (i) the time at which options may be granted, (ii) the conditions under which
options may be granted or forfeited, (iii) the number of Senstar common Shares to be covered by an option, (iv) the exercise price of
an option, (v) whether any restrictions or limitations apply on Senstar common Shares issuable pursuant to such options, and (vi) the
acceleration of vesting or exercisability, or the waiver of any termination provisions of any option; (c) determine whether an option
is a qualifying option or non-qualifying option for Canadian tax purposes; (d) establish the form or forms of option agreements; (e) cancel,
amend, adjust or otherwise change any option; (f) construe and interpret the 2024 Plan and all option agreements; (g) adopt, amend, prescribe
and rescind administrative guidelines and rules relating to the 2024 Plan, including rules and regulations relating to sub-plans established
for the purpose of satisfying applicable foreign laws or qualifying for favorable tax treatment under applicable foreign laws; and (h)
make all other determinations and take all other actions necessary or advisable for the implementation and administration of the 2024
Plan.
As of December 31, 2025, options to purchase 996,000 of our
Common Shares were outstanding under the 2024 Plan.
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47 -
| F. |
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation |
Not Applicable
Clawback Policy.
We adopted a Clawback Policy in compliance with the SEC rules and Nasdaq listing standards to recover any excess incentive-based compensation
from current and former executive officers after an accounting restatement. A copy of the Clawback Policy is filed as an exhibit
to this Annual Report.
| ITEM 7. |
Major Shareholders and Related Party Transactions |
| A. |
Major Shareholders |
The following table sets forth certain information as of April
29, 2026 regarding the beneficial ownership of Senstar Common Shares, by each person or entity known to us to own beneficially 5% or more
of Senstar Common Shares.
|
Name |
Number of Common
Shares Beneficially
Owned1
|
Percentage of
Outstanding CommonShares2
|
||||||
|
FIMI Opportunity Five (Delaware), Limited Partnership3
|
4,646,924 |
19.9 |
% | |||||
|
FIMI Israel Five, Limited Partnership3
|
5,207,235 |
22.3 |
% | |||||
Major Shareholders Voting Rights
The voting rights of our major shareholders do not differ from
the voting rights of other holders of our Common Shares.
Record Holders
Based on a review of the information provided to us by our transfer
agent, as of April 29, 2026, there were 27 holders of record of our Common Shares, of which 23 record holders holding approximately 91.29%
of our Common Shares had registered addresses in the United States. These numbers are not representative of the number of beneficial holders
of our shares nor is it representative of where such beneficial holders reside since many of these Common Shares were held of record by
brokers or other nominees, including CEDE & Co., the nominee for the Depositary Trust Company (the central depositary for the U.S.
brokerage community), which held approximately 91.27% of our outstanding Common Shares as of such date.
| B. |
Related Party Transactions. |
None.
| C. |
Interests of Experts and Counsel. |
Not applicable.
1
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect
to securities. Common Shares relating to options or convertible notes currently exercisable or exercisable within 60 days of the date
of this table are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding
for computing the percentage of any other person. Except as indicated by footnote, the persons named in the table above have sole voting
and investment power with respect to all shares shown as beneficially owned by them.
2
The percentages shown are based on 23,331,653 Common Shares issued and outstanding as of April 29, 2026.
3
Based on Schedule 13D/A filed with the SEC on October 11, 2016 and other information available to us. The address of FIMI Opportunity
Five (Delaware), Limited Partnership and FIMI Israel Opportunity Five, Limited Partnership is c/o FIMI FIVE 2012 Ltd., Electra Tower,
98 Yigal Alon St., Tel-Aviv 6789141, Israel.
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48 -
| ITEM 8. |
Financial Information |
| A. |
Consolidated Statements and Other Financial Information. |
Consolidated Financial Statements
See the consolidated financial statements included under Item 18,
“Financial Statements.”
Legal Proceedings
We are subject to legal proceedings arising in the normal course
of business. Based on the advice of our legal counsel, management believes that these proceedings will not have a material adverse effect
on our financial position or results of operations.
Dividend Distribution Policy
While we have historically retained our earnings to finance operations
and expand our business, on December 7, 2020, we announced a cash distribution in the amount of US$1.079 per share (approximately US$
25 million in the aggregate) which was paid on December 28, 2020, and, following the completion of the sale of Integration Solutions Division
and court approval, we announced on August 16, 2021 a cash distribution in the amount of $1.725 per share (approximately $40 million in
the aggregate), which was paid on September 22, 2021. Future dividend distributions are subject to the discretion of our board of directors
and approval of our shareholders and will depend on a number of factors, including our operating results, future capital resources available
for distribution, capital requirements, financial condition, the tax implications of dividend distributions on our income, future prospects
and any other factors our board of directors may deem relevant.
| B. |
Significant Changes. |
Since the date of the annual consolidated financial statements
included in this annual report, no significant changes have occurred.
| ITEM 9. |
The Offer and Listing |
| A. |
Offer and Listing Details. |
Our Common Shares are traded on the NASDAQ Global Market. Our ticker
symbol is “SNT.”
| B. |
Plan of Distribution. |
Not applicable.
| C. |
Markets. |
The ordinary shares of Senstar Technologies Ltd. have traded on
the NASDAQ Global Market from our initial public offering in 1993 until the completion of the Redomiciliation under the symbol “SNT”
(previously under the symbol “MAGS”). Since the completion of the Redomiciliation, on March 19, 2024, our Common Shares continue
to trade on the NASDAQ Global Market under the symbol “SNT”.
| D. |
Selling Shareholders. |
Not applicable.
| E. |
Dilution. |
Not applicable.
| F. |
Expenses of the Issue. |
Not applicable.
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49 -
| ITEM 10. |
Additional Information |
| A. |
Share Capital. |
Not applicable.
| B. |
Articles and By-Laws. |
Our authorized share capital is unlimited, of which 23,331,653
Common Shares, no par value per share, are issued and outstanding as of April 29, 2026.
Copies of our Articles and By-Laws are attached as Exhibit 1.1
to this annual report on Form 20-F. The information called for by this item is set forth in Exhibit 2.1 to this annual report on Form
20-F and is incorporated herein by reference.
The transfer agent and registrar for our Common Shares is Equiniti
Trust Company LLC, New York, New York.
| C. |
Material Contracts. |
| • |
On December 9, 2025, we entered into a definitive agreement to acquire Blickfeld GmbH ("Blickfeld"), a Munich-based specialist
in 3D LiDAR sensors and integrated software. A copy of the agreement has been filed as an exhibit to this Annual Report. |
| • |
Structure and Consideration: The transaction was structured as a cash-funded acquisition, whereby a wholly owned subsidiary
of the Company acquired all outstanding shares of Blickfeld. The consideration consisted of an upfront cash payment of €10.4 million,
supplemented by €1 million in performance-based earnouts, subject to customary closing adjustments. |
| • |
Funding: The acquisition was funded using the Company’s existing cash reserves. |
| • |
Closing Conditions: The completion of the transaction was subject to customary closing conditions, including required regulatory
approvals. |
| • |
Completion: The acquisition closed on February 13, 2026. |
| • |
Post-Closing Operations: Following the closing, Blickfeld GmbH and its subsidiary, Blickfeld North America Inc., continue to
operate as subsidiaries of the Company, maintaining their existing names. Blickfeld operates with a degree of autonomy while leveraging
Senstar’s global infrastructure, support, and sales channels. |
| • |
Strategic Rationale: The acquisition is intended to integrate Blickfeld’s high-precision 3D LiDAR security technology
with the Company’s existing perimeter intrusion detection systems (PIDS) and video management software (VMS). This acquisition aims
to broaden the Company’s addressable market into new verticals, including volumetric and traffic monitoring, improve situational
awareness capabilities, and strengthen its technological portfolio in the security market. |
The Company may face risks regarding the successful integration of Blickfeld's technology
and personnel, and the realization of anticipated synergies within the expected timeframe.
| D. |
Exchange Controls. |
Ontario law and regulations do not impose any material foreign
exchange restrictions on non‑Ontario holders of our Common Shares.
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50 -
| E. |
Taxation. |
The following is a discussion of Canadian and United States tax
consequences material to us and to our shareholders. To the extent that the discussion is based on new tax legislation which has not been
subject to judicial or administrative interpretation, the views expressed in the discussion might not be accepted by the tax authorities
in question. The discussion is not intended, and should not be construed, as legal or professional tax advice and does not exhaust all
possible tax considerations.
Holders of our Common Shares should consult their own tax advisors
as to the United States, Canadian or other tax consequences of the purchase, ownership and disposition of Common Shares, including, in
particular, the effect of any foreign, state or local taxes.
MATERIAL CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the principal Canadian federal income
tax considerations generally applicable to a person (a “Holder”) who acquires as a beneficial owner our Common Shares, and
who, at all relevant times, for purposes of the application of the Income Tax Act (Canada) and the regulations adopted thereunder (collectively,
the “Canada Tax Act”): (i) deals at arm’s length with Senstar Technologies Corporation; (ii) is not affiliated with
Senstar Technologies Corporation; (iii) holds our Common Shares as capital property; and (iv) has not entered into, with respect to any
of our Common Shares a “derivative forward agreement” or a “dividend rental arrangement,” each as defined in the
Canada Tax Act. Generally, our Common Shares will be capital property to a Holder provided the Holder does not acquire or hold such Common
Shares in the course of carrying on a business or as part of an adventure or concern in the nature of trade.
This summary is based upon the current provisions of the Canada
Tax Act, and an understanding of the current administrative practices published in writing by the Canada Revenue Agency prior to the date
hereof. This summary takes into account all specific proposals to amend the Canada Tax Act publicly announced by, or on behalf of,
the Minister of Finance (Canada) prior to the date hereof (the “Proposed Amendments”) and assumes that all Proposed Amendments
will be enacted in the form proposed. This summary does not otherwise take into account or anticipate any changes in law or administrative
policy, whether by legislative, governmental or judicial decision or action, and does not take into account or consider any provincial,
territorial or foreign income tax considerations.
This summary is of a general nature. It is not intended to be,
and should not be construed to be legal or tax advice to any particular Holder. Accordingly, Holders are urged to consult their own tax
advisors having regard to their own particular circumstances.
Currency Conversion
Generally, for purposes of the Canada Tax Act, all amounts relating
to the acquisition, holding or disposition of our Common Shares must be converted into Canadian dollars based on exchange rates as determined
in accordance with the Canada Tax Act.
Holders Not Resident in Canada
The following portion of the summary is generally applicable to
a Holder who, at all relevant times, for purposes of the Canada Tax Act: (i) is not, and is not deemed to be, a resident of Canada, and
(ii) does not use or hold, and is not deemed to use or hold, our Common Shares in a business carried on in Canada (a “Non-Resident
Holder”). Special rules, which are not discussed in this summary, may apply to a Non-Resident Holder that is an insurer that carries
on an insurance business in Canada and elsewhere.
Dividends
Dividends paid or credited, or deemed under the Canada Tax Act
to be paid or credited, by Senstar Technologies Corporation to a Non-Resident Holder on our Common Shares will generally be subject to
Canadian withholding tax under the Canada Tax Act at the rate of 25% of the gross amount of the dividend, subject to any reduction in
the rate of withholding to which the Non-Resident Holder is entitled under any applicable income tax convention. Non-Resident Holders
are advised to consult their tax advisors in this regard.
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51 -
Dispositions
A Non-Resident Holder for whom our Common Shares are not or are
not deemed to be “taxable Canadian property” for purposes of the Canada Tax Act will generally not be subject to income tax
under the Canada Tax Act on the disposition or deemed disposition of such shares. Generally, provided that our Common Shares are listed
on a “designated stock exchange” (which includes the Nasdaq Global Market), our Common Shares will not be taxable Canadian
property to a Non-Resident Holder at a particular time unless at any time during the 60-month period that ends at that particular time,
both of the following conditions were satisfied: (a) one or any combination of (i) the Non-Resident Holder, (ii) persons with whom the
Non-Resident Holder did not deal at arm’s length (for purposes of the Canada Tax Act), and (iii) partnerships in which the Non-Resident
Holder or a person with whom the Non-Resident Holder did not deal at arm’s length held a membership interest directly or indirectly
through one or more partnerships, owned 25% or more of the issued shares of any class or series of a class of the capital stock of Senstar
Technologies Corporation, and at that time (b) more than 50% of the fair market value of our Common Shares was derived directly or indirectly
from one or any combination of real or immovable property situated in Canada, “Canadian resource properties” (as defined in
the Canada Tax Act), “timber resource properties” (as defined in the Canada Tax Act) or options in respect of, interests in,
or for civil law rights in, any such property, whether or not such property exists. Notwithstanding the foregoing, our Common Shares may
otherwise be deemed to be taxable Canadian property of a Non-Resident Holder in certain circumstances. The Non-Resident Holders
for whom Common Shares may constitute taxable Canadian property should consult their own tax advisors.
Holders Resident in Canada
The following portion of the summary is generally applicable to
a Holder who, at all relevant times, for purposes of the Canada Tax Act, is or is deemed to be resident in Canada (a “Canadian Resident
Holder”). Certain Canadian Resident Holders may be entitled to make, or may have already made, the irrevocable election
permitted by subsection 39(4) of the Canada Tax Act the effect of which may be to deem to be capital property any of our Common
Shares (and all other “Canadian securities”, as defined in the Canada Tax Act) owned by such Resident Holder in the taxation
year in which the election is made and in all subsequent taxation years. Resident Holders whose Common Shares might not otherwise
be considered to be capital property should consult their own tax advisors concerning this election. This portion of the summary
is not applicable to a Canadian Resident Holder (i) that is a “specified financial institution”, (ii) an interest in which
is, or for whom the Securities would be, a “tax shelter investment”, (iii) that is for purposes of certain rules (referred
to as the “mark-to-market” rules) applicable to securities held by financial institutions, a “financial institution”,
(iv) that reports its “Canadian tax results” in a currency other than Canadian currency, or (v) that is a corporation resident
in Canada that is, becomes, or does not deal at arm’s length for purposes of the Canada Tax Act with a corporation resident in Canada
that is or becomes, as part of a transaction or event or series of transactions or events that includes the acquisition of our Common
Shares, controlled by a non-resident person (or a group of such persons not dealing with each other at arm’s length) for purposes
of the “foreign affiliate dumping” rules in section 212.3 of the Canada Tax Act.
Dividends
A Canadian Resident Holder will be required to include in computing
its income for a taxation year any dividends received (or deemed to have been received) on our Common Shares. In the case of a Canadian
Resident Holder that is an individual (other than certain trusts), such dividends will be subject to the gross-up and dividend tax credit
rules applicable to taxable dividends received from “taxable Canadian corporations”, including the enhanced gross-up and dividend
tax credit applicable to any dividends designated by Senstar Technologies Corporation as an “eligible dividend” in accordance
with the provisions of the Canada Tax Act. A dividend received (or deemed to have been received) by a Canadian Resident Holder
that is a corporation will generally be deductible in computing the corporation’s taxable income. In certain circumstances, however,
a taxable dividend received (or deemed to have been received) by a Canadian Resident Holder that is a corporation will be deemed to be
either proceeds of disposition or a gain from the disposition of a capital property. Canadian Resident Holders that are corporations should
consult their own tax advisors having regard to their own particular circumstances.
A Canadian Resident Holder that is a “private corporation”,
as defined in the Canada Tax Act, or any other corporation controlled, whether because of a beneficial interest in one or more trusts
or otherwise, by or for the benefit of an individual (other than a trust) or a related group of individuals (other than trusts), will
generally be liable to pay a refundable tax under Part IV of the Canada Tax Act on dividends received (or deemed to have been received)
on our Common Shares to the extent such dividends are deductible in computing the Canada Resident Holder’s taxable income for the
taxation year.
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Dispositions
Generally, a Canadian Resident Holder who disposes of, or is deemed
for purposes of the Canada Tax Act to have disposed of our Common Shares will realize a capital gain (or a capital loss) in the taxation
year of the disposition equal to the amount by which the proceeds of disposition of the Common Shares exceed (or are less than) the total
of (1) the adjusted cost base to the Canadian Resident Holder of the Common Shares determined immediately before the disposition, and
(2) any reasonable costs of disposition.
Generally, one-half of any capital gain (a “taxable capital
gain”) realized by a Canadian Resident Holder from a disposition of our Common Shares must be included in the Canadian Resident
Holder’s income for the taxation year of disposition. Subject to and in accordance with the provisions of the Canada Tax Act, a
Canadian Resident Holder will generally be required to deduct one-half of any capital loss (an “allowable capital loss”) realized
in the taxation year of disposition against taxable capital gains realized in the same taxation year. Any unused allowable capital losses
for the taxation year of disposition may generally reduce net taxable capital gains realized in any of the three prior taxation years
or in any subsequent year in the circumstances and to the extent provided in the Canada Tax Act.
If a Canadian Resident Holder is a corporation, any capital loss
realized on a disposition or deemed disposition of our Common Shares may, in certain circumstances, be reduced by the amount of any dividends
which have been received or which are deemed to have been received on such Common Shares.
Similar rules may apply where a Canadian Resident Holder that is
a corporation is a member of a partnership or a beneficiary of a trust that owns our Common Shares directly or indirectly through a partnership
or a trust. Canadian Resident Holders to whom these rules may be relevant should consult their own tax advisors.
Additional Refundable Tax
A Canadian Resident Holder that is a “Canadian-controlled
private corporation” (as defined in the Canada Tax Act) throughout the relevant taxation year or a “substantive CCPC”
(as defined in the Canada Tax Act), at any time in the year may be liable to pay an additional tax (refundable in certain circumstances)
on its “aggregate investment income” (as defined in the Canada Tax Act) for the year, including taxable capital gains realized
on the disposition of our Common Shares. Canadian Resident Holders that are “Canadian-controlled private corporations” or
would be “substantive CCPCs” should consult their own tax advisors regarding their particular circumstances.
Alternative Minimum Tax
A Canadian Resident Holder that is an individual or a trust may
be liable to pay minimum tax (as defined in the Canada Tax Act) on dividends received on our Common Shares or on the disposition of our
Common Shares. Canadian Resident Holders that are individuals or trusts should consult their own tax advisors regarding their particular
circumstances.
Eligibility for Investment
Provided that our Common Shares are listed on a “designated
stock exchange” for the purposes of the Canada Tax Act (which currently includes the Nasdaq Global Market), our Common Shares will
be, at such time, “qualified investments” under the Canada Tax Act for trusts governed by a “registered retirement savings
plan” (“RRSP”), a “registered retirement income fund” (“RRIF”), a “registered education
savings plan” (“RESP”), a “deferred profit sharing plan,” a “registered disability savings plan”
(“RDSP”), a “tax-free savings account” (“TFSA”), or a first home savings account (“FHSA”),
each as defined in the Canada Tax Act.
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Notwithstanding the foregoing, if our Common Shares held by a TFSA,
RRSP, RRIF, RDSP, FHSA, or RESP (a “Registered Plan”) are “prohibited investments” for purposes of the Canada
Tax Act, the holder of the TFSA, FHSA or RDSP, the annuitant of the RRSP or RRIF, or the subscriber of a RESP (as the case may be) will
be subject to a penalty tax as set out in the Canada Tax Act. Our Common Shares will generally be a “prohibited investment”
if the holder of a TFSA, FHSA or RDSP, the annuitant of a RRSP or RRIF, or the subscriber of a RESP (as the case may be): (i) does not
deal at arm’s length with Senstar Technologies Corporation for purposes of the Canada Tax Act; or (ii) has a “significant
interest” (within the meaning of the Canada Tax Act) in Senstar Technologies Corporation. In addition, our Common Shares will not
be a prohibited investment if such Common Shares are “excluded property,” as defined in the Canada Tax Act, for a TFSA,
FHSA, RRSP, RRIF, RDSP or RESP. Holders who intend to hold our Common Shares in a TFSA, FHSA, RRSP, RRIF, RESP or RDSP should consult
their own tax advisors in this regard.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a description of the material U.S. federal income
tax consequences of the acquisition, ownership and disposition of our Common Shares. This description addresses only the U.S. federal
income tax considerations that are relevant to U.S. Holders (as defined below) who hold our Common Shares as capital assets. This summary
is based on the U.S. Internal Revenue Code of 1986, as amended, or the Code, Treasury regulations promulgated thereunder, judicial and
administrative interpretations thereof, all as in effect on the date hereof and all of which are subject to change either prospectively
or retroactively.
There can be no assurance that the U.S. Internal Revenue Service,
or the IRS, will not take a different position concerning the tax consequences of the acquisition, ownership and disposition of our Common
Shares or that such a position would not be sustained. This description does not address all tax considerations that may be relevant with
respect to an investment in our Common Shares. In addition, this description does not account for the specific circumstances of any particular
investor, such as:
| • |
broker-dealers; |
| • |
financial institutions; |
| • |
certain insurance companies; |
| • |
investors liable for alternative minimum tax; |
| • |
regulated investment companies, real estate investment trusts, or grantor trusts; |
| • |
dealers or traders in securities, commodities or currencies; |
| • |
tax-exempt organizations; |
| • |
non-resident aliens of the United States or taxpayers whose functional currency is not the U.S. dollar; |
| • |
persons who hold the Common Shares through partnerships or other pass-through entities; |
| • |
persons who acquire their Common Shares through the exercise or cancellation of employee stock options or otherwise as compensation
for services; |
| • |
persons (or their direct, indirect or constructive owners) that actually or constructively own 10% or more of our shares by vote
or value; or |
| • |
investors holding Common Shares as part of a straddle, appreciated financial position, a hedging transaction or conversion transaction.
|
If a partnership or an entity treated as a partnership for U.S.
federal income tax purposes owns our Common Shares, the U.S. federal income tax treatment of a partner in such a partnership will generally
depend upon the status of the partner and the activities of the partnership. A partnership that owns our Common Shares and the partners
in such partnership should consult their tax advisors about the U.S. federal income tax consequences of holding and disposing of Common
Shares.
This summary does not address the effect of any U.S. federal taxation
(such as estate and gift tax) other than U.S. federal income taxation. In addition, this summary does not include any discussion of state,
local or non-U.S. taxation. You are urged to consult your tax advisors regarding the non-U.S. and U.S. federal, state and local tax consequences
of an investment in Common Shares.
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For purposes of this summary, as used herein, the term “U.S.
Holder” means a person that is eligible for the benefits of the Treaty and is a beneficial owner of a common share who is, for U.S.
federal income tax purposes:
| • |
an individual who is a citizen or, for U.S. federal income tax purposes, a resident of the United States; |
| • |
a corporation or other entity taxable as a corporation created or organized in or under the laws of the United States or any political
subdivision thereof; |
| • |
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or |
| • |
a trust if such trust has validly elected to be treated as a U.S. person for U.S. federal income tax purposes or if (1) a court within
the United States is able to exercise primary supervision over its administration and (2) one or more U.S. persons have the authority
to control all of the substantial decisions of such trust. |
Unless otherwise indicated, this discussion assumes that the Company
is not, and will not become, a “passive foreign investment company,” or a PFIC, for U.S. federal income tax purposes. See
“Passive Foreign Investment Companies” below.
Taxation of Distributions
Subject to the discussion below under the heading “Passive
Foreign Investment Companies” the gross amount of any distributions received with respect to our Common Shares, including the amount
of any foreign taxes withheld therefrom, will constitute dividends for U.S. federal income tax purposes to the extent of our current and
accumulated earnings and profits, as determined for U.S. federal income tax purposes. Because we do not expect to maintain calculations
of our earnings and profits under U.S. federal income tax principles, it is expected that the entire amount of any distribution will generally
be reported as dividend income to you. Dividends are included in gross income as ordinary income. Distributions in excess of our current
and accumulated earnings and profits would be treated as a non-taxable return of capital to the extent of your tax basis in our Common
Shares and any amount in excess of your tax basis will be treated as gain from the sale of Common Shares. See “Disposition of Common
Shares” below for a discussion of the taxation of capital gains. Our dividends would not qualify for the dividends-received deduction
generally available to corporations under section 243 of the Code.
Dividends that we pay in foreign currency, including the amount
of any foreign taxes withheld therefrom, will be included in your income in a U.S. dollar amount calculated by reference to the exchange
rate in effect on the day such dividends are received, regardless of whether the payment is in fact converted into U.S. dollars. A U.S.
Holder who receives payment in foreign currency and converts foreign currency into U.S. dollars at an exchange rate other than the rate
in effect on such day may have a foreign currency exchange gain or loss that would be treated as U.S.-source ordinary income or loss.
U.S. Holders should consult their own tax advisors concerning the U.S. tax consequences of acquiring, holding and disposing of foreign
currency.
Subject to complex limitations, some of which vary depending upon
the U.S. Holder’s circumstances, any foreign withholding tax imposed on dividends paid with respect to our Common Shares, at a rate
not exceeding the applicable rate provided by the Treaty, will be a foreign income tax eligible for credit against a U.S. Holder’s
U.S. federal income tax liability (or, alternatively, for deduction against income in determining such tax liability). Foreign taxes withheld
in excess of the applicable rate allowed by the Treaty (if any) will not be eligible for credit against a U.S. Holder’s federal
income tax liability. The limitation on foreign income taxes eligible for credit is calculated separately with respect to specific classes
of income. Dividends generally will be treated as foreign-source passive category income or, in the case of certain U.S. Holders, general
category income for U.S. foreign tax credit purposes. Further, there are special rules for computing the foreign tax credit limitation
of a taxpayer who receives dividends subject to a reduced tax rate (see discussion below). A U.S. Holder may be denied a foreign tax credit
with respect to foreign income tax withheld from dividends received on our Common Shares if such U.S. Holder fails to satisfy certain
minimum holding period requirements or to the extent such U.S. Holder’s position in Common Shares is hedged. An election to deduct
foreign taxes instead of claiming foreign tax credit applies to all foreign taxes paid or accrued in the taxable year. The rules relating
to the determination of the foreign tax credit are complex, and you should consult with your own tax advisors to determine whether and
to what extent you would be entitled to this credit.
Subject to certain limitations (including the PFIC rules discussed
below), “qualified dividend income” received by a non-corporate U.S. Holder will be subject to tax at the lower long-term
capital gain rates (currently a maximum of 20%). Distributions taxable as dividends paid on our Common Shares should qualify for a reduced
rate provided that either: (i) we are entitled to benefits under the Treaty, or (ii) our Common Shares are readily tradable on an established
securities market in the United States and certain other requirements are met. We believe that we are entitled to benefits under the Treaty
and that our Common Shares currently are readily tradable on an established securities market in the United States (see discussion below).
However, no assurance can be given that our Common Shares will remain readily tradable. The rate reduction does not apply unless certain
holding period requirements are satisfied, nor does it apply to dividends received from a PFIC (see discussion below), in respect of certain
risk-reduction transactions, or in certain other situations. The legislation enacting the reduced tax rate on qualified dividend income
contains special rules for computing the foreign tax credit limitation of a taxpayer who receives dividends subject to the reduced tax
rate. U.S. Holders of our Common Shares should consult their own tax advisors regarding the effect of these rules in their particular
circumstances.
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Sale or Disposition of Common Shares
Subject to the discussion of PFIC rules below, if you sell or otherwise
dispose of our Common Shares, you will generally recognize gain or loss for U.S. federal income tax purposes in an amount equal to the
difference between the amount realized on the sale or other disposition and your adjusted tax basis in our Common Shares, in each case
determined in U.S. dollars. Such gain or loss will generally be capital gain or loss and will be long-term capital gain or loss if you
have held the Common Shares for more than one year at the time of the sale or other disposition. Long-term capital gain realized by a
non-corporate U.S. Holder is generally eligible for a preferential tax rate (currently a maximum of 20%). In general, any gain that you
recognize on the sale or other disposition of Common Shares will be U.S.-source for purposes of the foreign tax credit limitation; losses
will generally be allocated against U.S. source income. Deduction of capital losses is subject to certain limitations under the Code.
In the case of a cash basis U.S. Holder who receives foreign currency
in connection with the sale or disposition of our Common Shares, the amount realized will be based on the U.S. dollar value of the foreign
currency received with respect to the Common Shares as determined on the settlement date of such exchange. A cash basis U.S. Holder who
receives payment in foreign currency and converts foreign currency into U.S. dollars at a conversion rate other than the rate in effect
on the settlement date may have a foreign currency exchange gain or loss, which would be treated as ordinary income or loss.
An accrual basis U.S. Holder may elect the same treatment required
of cash basis taxpayers with respect to a sale or disposition of our Common Shares that are traded on an established securities market,
provided that the election is applied consistently from year to year. Such election may not be changed without the consent of the IRS.
In the event that an accrual basis U.S. Holder does not elect to be treated as a cash basis taxpayer (pursuant to the Treasury regulations
applicable to foreign currency transactions), such U.S. Holder may have a foreign currency gain or loss for U.S. federal income tax purposes
because of differences between the U.S. dollar values of the currency received prevailing on the trade date and the settlement date. Any
such currency gain or loss would be treated as U.S.- source ordinary income or loss and would be in addition to the gain or loss, if any,
recognized by such U.S. Holder on the sale or disposition of such Common Shares.
Passive Foreign Investment Companies
Based on the composition of our income, assets (including the value
of our goodwill, going-concern value or any other unbooked intangibles, which may be determined based on the price of the Common Shares),
and operations, [we believe we will not be classified as a “passive foreign investment company”, or PFIC, for the 2025 taxable
year. However, because PFIC status is based on our income, assets and activities for the entire taxable year, it is not possible to determine
whether we will be characterized as a PFIC for our current taxable year or future taxable years until after the close of the applicable
taxable year. Moreover, we must determine our PFIC status annually based on tests that are factual in nature, and our status in the current
year and future years will depend on our income, assets and activities in each of those years and, as a result, cannot be predicted with
certainty as of the date hereof. If we were a PFIC for any taxable year during which a U.S. Holder owned Common Shares, certain adverse
consequences could apply to the U.S. Holder. Specifically, unless a U.S. Holder makes one of the elections mentioned below, gain recognized
by the U.S. Holder on a sale or other disposition of Common Shares would be allocated ratably over the U.S. Holder’s holding period
for the Common Shares. The amounts allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC
would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect
for individuals or corporations, as appropriate, for that taxable year, and an interest charge would be imposed on the resulting tax liability.
Further, any distribution in excess of 125% of the average of the annual distributions received by the U.S. Holder on our Common Shares
during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, would be subject to taxation as described
immediately above. In addition, if we were a PFIC for a taxable year in which we pay a dividend or the immediately preceding taxable year,
the preferential dividend rates discussed above with respect to dividends paid to certain non-corporate U.S. Holders would not apply.
If we were a PFIC for any taxable year in which a U.S. Holder owned our shares, the U.S. Holder would generally be required to file annual
returns with the IRS on IRS Form 8621.
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56 -
If we are treated as a PFIC with respect to you for any taxable
year, you will be deemed to own shares in any entities in which we own equity that are also PFICs (“lower tier PFICs”), and
you may be subject to the tax consequences described above with respect to the shares of such lower tier PFIC you would be deemed to own.
i. Mark-to-market
elections
If we are a PFIC for any taxable year during which you hold Common
Shares, then instead of being subject to the tax and interest charge rules discussed above, you may make an election to include gain on
the Common Shares as ordinary income under a mark-to-market method, provided that such Common Shares are “marketable.” The
Common Shares will be marketable if they are “regularly traded” on a qualified exchange or other market, as defined in applicable
U.S. Treasury regulations, such as the New York Stock Exchange (or on a foreign stock exchange that meets certain conditions). For these
purposes, the Common Shares will be considered regularly traded during any calendar year during which they are traded, other than in de
minimis quantities, on at least 15 days during each calendar quarter. Any trades that have as their principal purpose meeting this requirement
will be disregarded. However, because a mark-to-market election cannot be made for any lower tier PFICs that we may own, you will generally
continue to be subject to the PFIC rules discussed above with respect to your indirect interest in any investments we own that are treated
as an equity interest in a PFIC for U.S. federal income tax purposes. As a result, it is possible that any mark-to-market election with
respect to the Common Shares will be of limited benefit.
If you make an effective mark-to-market election, in each year
that we are a PFIC, you will include in ordinary income the excess of the fair market value of your Common Shares at the end of the year
over your adjusted tax basis in the Common Shares. You will be entitled to deduct as an ordinary loss in each such year the excess of
your adjusted tax basis in the Common Shares over their fair market value at the end of the year, but only to the extent of the net amount
previously included in income as a result of the mark-to-market election. If you make an effective mark-to-market election, in each year
that we are a PFIC, any gain that you recognize upon the sale or other disposition of your Common Shares will be treated as ordinary income
and any loss will be treated as ordinary loss, but only to the extent of the net amount of previously included income as a result of the
mark-to-market election.
Your adjusted tax basis in the Common Shares will be increased
by the amount of any income inclusion and decreased by the amount of any deductions under the mark-to-market rules discussed above. If
you make an effective mark-to-market election, it will be effective for the taxable year for which the election is made and all subsequent
taxable years unless the Common Shares are no longer regularly traded on a qualified exchange or the IRS consents to the revocation of
the election. You should consult your tax advisor about the availability of the mark-to-market election, and whether making the election
would be advisable in your particular circumstances.
ii. Qualified
electing fund elections
In certain circumstances, a U.S. equity holder in a PFIC may avoid
the adverse tax and interest charge regime described above by making a “qualified electing fund” election to include in income
its share of the corporation’s income on a current basis. However, you may make a qualified electing fund election with respect
to the Common Shares only if we agree to furnish you annually with a PFIC annual information statement as specified in the applicable
U.S. Treasury regulations. We do not intend to provide the information necessary for you to make a qualified electing fund election if
we are classified as a PFIC. Therefore, you should assume that you will not receive such information from us and would therefore be unable
to make a qualified electing fund election with respect to any of our Common Shares were we to be or become a PFIC.
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Additional Tax on Investment Income
In addition to the income taxes described above, U.S. Holders that
are individuals, estates or trusts and whose income exceeds certain thresholds will be subject to a 3.8% Medicare contribution tax on
net investment income, which includes dividends and capital gains from the sale or exchange of our Common Shares.
Backup Withholding and Information Reporting
Payments in respect of our Common Shares may be subject to information
reporting to the IRS and to U.S. backup withholding tax at the rate (currently) of 24%. Backup withholding will not apply, however, if
you (i) are a corporation, or fall within certain exempt categories, and demonstrate the fact when so required, or (ii) furnish a correct
taxpayer identification number and make any other required certification.
Backup withholding is not an additional tax. Amounts withheld under
the backup withholding rules may be credited against a U.S. Holder’s U.S. tax liability. A U.S. Holder may obtain a refund of any
excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the IRS.
U.S. citizens and individuals taxable as resident aliens of the
United States that own “specified foreign financial assets” with an aggregate value in a taxable year in excess of certain
thresholds (as determined under rules in Treasury regulations) and that are required to file a U.S. federal income tax return generally
will be required to file an information report with respect to those assets with their tax returns. IRS Form 8938 has been issued for
that purpose. “Specified foreign financial assets” include any financial accounts maintained by foreign financial institutions,
foreign stocks held directly, and interests in foreign estates, foreign pension plans or foreign deferred compensation plans. Under those
rules, our Common Shares, whether owned directly or through a financial institution, estate or pension or deferred compensation plan,
would be “specified foreign financial assets.” Under Treasury regulations, the reporting obligation applies to certain U.S.
entities that hold, directly or indirectly, specified foreign financial assets. Penalties can apply if there is a failure to satisfy this
reporting obligation. A U.S. Holder is urged to consult the U.S. Holder’s tax advisor regarding the reporting obligation.
Any U.S. Holder who acquires more than $100,000 of our Common Shares
or holds 10% or more in vote or value of our Common Shares may be subject to certain additional U.S. information reporting requirements.
Public stock buyback tax
Public companies face a new 1% excise tax on the fair market value
(FMV) of stock repurchases beginning in 2023. The tax applies to corporations with stock traded on an established securities market, which
includes corporations with stock that is traded on a national securities exchange. A repurchase is defined for this purpose as a redemption
under Section 317(b), plus “economically similar” transactions. The tax could increase costs on many kinds of common redemption
activity, including redemptions related to M&A and stock compensation plans. The new excise tax is not deductible for income tax purposes.
The above description is not intended to constitute a complete
analysis of all tax consequences relating to acquisition, ownership and disposition of our Common Shares. You should consult your tax
advisor concerning the tax consequences of your particular situation.
| F. |
Dividends and Paying Agents. |
Not applicable.
| G. |
Statements by Experts. |
Not applicable.
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| H. |
Documents on Display. |
We are subject to certain of the reporting requirements of the
Securities and Exchange Act of 1934, as amended, or the Exchange Act, as applicable to “foreign private issuers” as defined
in Rule 3b-4 under the Exchange Act. As a foreign private issuer, we are exempt from certain provisions of the Exchange Act. Accordingly,
our proxy solicitations are not subject to the disclosure and procedural requirements of Regulation 14A under the Exchange Act, and transactions
in our equity securities by our officers and directors are exempt from the “short-swing” profit recovery provisions contained
in Section 16 of the Exchange Act. In addition, we are not required to file quarterly reports including financial statements. We file
with the SEC an annual report on Form 20-F containing financial statements audited by an independent accounting firm. We also submit to
the SEC reports on Form 6-K containing, among other things, press releases and unaudited financial information. We post our annual report
on Form 20-F on our website (www.senstar.com) promptly following the filing of our annual
report with the SEC. The information on, or that can be accessed through, our website is not incorporated by reference into this annual
report.
The SEC maintains an Internet website that contains reports and
other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov.
We make our reports available on our internet website, free of charge, as soon as reasonably practicable after such material is electronically
filed with the SEC. The documents concerning our company that are referred to in this annual report may also be inspected at our executive
offices in Ottawa, Ontario.
| I. |
Subsidiary Information. |
Not applicable.
| J. |
Annual Report to Security Holders. |
Not applicable.
| ITEM 11. |
Quantitative and Qualitative Disclosures about Market Risk |
We are exposed to a variety of risks, including changes in interest
rates and foreign currency fluctuations.
Foreign Currency Exchange Risk
We sell most of our products in North America, Europe and APAC.
Our revenues are primarily denominated in U.S. dollars and Euros, while a portion of our expenses, primarily labor expenses, is incurred
in Canadian Dollars and Euros. Additionally, certain assets, especially trade receivables, as well as part of our liabilities are denominated
in Canadian dollars, Euros and U.S. dollars. As a result, fluctuations in rates of exchange between the U.S. dollar and non-U.S. dollar
currencies may affect our operating results and financial condition. The U.S. dollar cost of our operations in Canada may be adversely
affected by the appreciation of the Canadian dollars against the U.S. dollar. In addition, the value of our non-U.S. dollar revenues could
be adversely affected by the depreciation of the U.S. dollar against such currencies.
The U.S. dollar cost of our operations in Canada is influenced
by the exchange rate between the U.S. dollar and the CAD. In 2025 and 2023, the Canadian dollar depreciated by 4.8% and 2.3% against the
U.S. dollar, respectively, and appreciated by 8.7% against the U.S. dollar in 2024. We may incur exchange losses in the future which may
materially affect our operating results.
In 2025 and 2023, foreign currency fluctuations had a negative
impact on our results of operations as we recorded foreign exchange loss, net of $0.2 million and $0.1 million, respectively. In 2024,
foreign currency fluctuations had a positive impact on our results of operations as we recorded foreign exchange gain, net of $0.5 million.
We cannot assure you that in the future our results of operations
may not be materially affected by currency fluctuations.
| ITEM 12. |
Description of Securities Other Than Equity Securities |
Not applicable.
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PART II
| ITEM 13. |
Defaults, Dividend Arrearages and Delinquencies |
Not applicable.
| ITEM 14. |
Material Modifications to the Rights of Security Holders and Use of Proceeds |
Not applicable.
| ITEM 15. |
Controls and Procedures |
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed
to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within
the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our chief
executive officer and chief financial officer to allow timely decisions regarding required disclosure. Our management, including our chief
executive officer and chief financial officer, conducted an evaluation of our disclosure controls and procedures, as defined under Exchange
Act Rule 13a-15(e), as of the end of the period covered by this Annual Report on Form 20-F. Based upon that evaluation, our chief executive
officer and chief financial officer concluded that our disclosure controls and procedures were effective.
Management’s Report on Internal Control
over Financial Reporting
Our management, including our chief executive officer and chief
financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under
Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with accounting principles generally accepted in the United States. Internal control over financial reporting includes those policies
and procedures that: pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of our assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made
only in accordance with appropriate authorizations; and (iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Our management assessed the effectiveness of our internal control
over financial reporting as of December 31, 2025. In conducting its assessment of internal control over financial reporting, management
based its evaluation on the framework in “Internal Control – Integrated Framework” (2013) issued by the Committee of
Sponsoring Organizations, or the COSO, of the Treadway Commission. Based on that assessment, our management has concluded that our internal
control over financial reporting was effective as of December 31, 2025.
Changes in Internal Control over Financial Reporting
Except for the remediation efforts described above, there have
been no changes in our internal control over financial reporting during the year ended December 31, 2025 that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.
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| ITEM 16. | [Reserved] |
|
ITEM 16A. |
Audit Committee Financial Expert |
Our board of directors has determined that Mr. Jacob Berman, an
independent director, meets the definition of an audit committee financial expert, as defined by rules of the SEC. For a description of
Mr. Berman’s relevant experience, see Item 6.A. “Directors, Senior Management and Employees – Directors and Senior Management.”
|
ITEM 16B. |
Code of Ethics |
We adopted an amended and restated code of ethics in March 2024.
The code is reviewed periodically by our board of directors, applies to our chief executive officer and all senior financial officers
of our company, including our chief financial officer, chief accounting officer or controller, and persons performing similar functions.
The amended and restated code of ethics reflects our growing emphasis on international operations and better addresses issues related
with such activities by providing clear instructions in connection with commercial international activities. The code of ethics is publicly
available on our website at www.senstar.com. Written copies are available upon request.
If we make any substantive amendment to the code of ethics or grant any waivers, including any implicit waiver, from a provision of the
code of ethics, we will disclose the nature of such amendment or waiver on our website.
|
ITEM 16C. |
Principal Accountant Fees and Services |
Independent Public Accountant Fees and Services
The consolidated financial statements of Senstar as of December 31,
2025 and for the year then ended, appearing in this Annual Report have been audited by EY Canada (“EY Canada”), an independent
registered public accounting firm, as set forth in their report thereon appearing elsewhere herein.
The consolidated financial statements of Senstar as of December
31, 2024 and for the years ended December 31, 2024 and 2023, appearing in this Annual Report have been audited by Kost Forer Gabbay
& Kasierer, a member of Ernst & Young Global (“Kost”), and are included in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
The following table sets forth, for each of the years indicated,
the fees billed by EY Canada and Kost. All of such fees were pre-approved by our Audit Committee.
|
Year Ended December 31, |
||||||||
|
Services Rendered |
2025 |
2024 |
||||||
|
Audit (1)
|
288,069 |
209,000 |
||||||
|
Tax (2)
|
311,258 |
29,000 |
||||||
|
Other (3)
|
24,000 |
13,000 |
||||||
|
Total |
623,327 |
251,000 |
||||||
| (1) |
Audit fees are for audit services for each of the years shown in the table, including fees associated with the annual audit (including
audit of our internal control over financial reporting), consultations on various accounting issues and audit services provided in connection
with other statutory or regulatory filings. |
| (2) |
Tax fees are for professional services rendered by our auditors for tax compliance, tax planning and tax advice on actual or contemplated
transactions, tax consulting associated to international taxation, tax assessment deliberation, transfer pricing and withholding tax assessments.
|
| (3) |
Other fees primarily relate to out of pocket reimbursement of expenses and primarily traveling expenses of our auditors. These fees
also relate to fees associated with the conflict Minerals work plan, due diligence, and the Risk Assessment Service. |
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61 -
Pre-Approval Policies and Procedures
Our audit committee has adopted a policy and procedures for the
pre-approval of audit and non-audit services rendered by our independent public accounting firm, EY Canada and its affiliates. Pre-approval
of an audit or non-audit service may be given as a general pre-approval, as part of the audit committee’s approval of the scope
of the engagement of our independent auditor, or on an individual basis. Any proposed services exceeding general pre-approved levels also
require specific pre-approval by our audit committee. The policy prohibits retention of the independent public accountants to perform
the prohibited non-audit functions defined in Section 201 of the Sarbanes-Oxley Act or the rules of the SEC, and also requires the audit
committee to consider whether proposed services are compatible with the independence of the public accountants.
|
ITEM 16D. |
Exemptions from the Listing Standards for Audit Committees |
Not applicable.
|
ITEM 16E. |
Purchase of Equity Securities by the Issuer and Affiliated Purchasers |
We did not purchase any Common Shares of our company nor did an
affiliated purchaser purchase any Common Shares of our company on our behalf during 2025.
|
ITEM 16F. |
Changes in Registrant’s Certifying Accountant |
On June 5, 2025, following review and consultation, the Audit Committee
of the Board of Directors of the Company recommended that the Board of Directors engage Ernst & Young LLP as the Company’s independent
registered public accounting firm for the fiscal year ending 2025. The Board of Directors subsequently accepted the recommendation of
the Audit Committee and approved the engagement of Ernst & Young LLP, contingent and effective upon the approval of such
engagement by the Company’s shareholders. The Board of Directors of the Company also approved the resignation of Kost, Forer, Gabbay
& Kasierer, a member of Ernst & Young Global, as independent registered public accounting firm of the Company. On June 27, 2025,
the Company’s shareholders approved the engagement of of Ernst & Young LLP as the Company’s independent registered public
accounting firm for the fiscal year ending 2025.
The reports of Kost, Forer, Gabbay & Kasierer, on the Company's
financial statements for the past two fiscal years did not contain an adverse opinion or a disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope, or accounting principles.
In connection with the audits of the Company's financial statements
for each of the two fiscal years ended 2024, and in the subsequent interim period through April 2025, there were no disagreements with
Kost, Forer, Gabbay & Kasierer, on any matters of accounting principles or practices, financial statement disclosure, or auditing
scope and procedures which, if not resolved to the satisfaction of Kost, Forer, Gabbay & Kasierer, would have caused Kost, Forer,
Gabbay & Kasierer, to make reference to the matter in their report, and there were no reportable events as the term is described in
Item 16F(a)(1)(v) of Form 20-F.
Prior to the filing of the Form 6-K on June 6, 2025, we delivered
a copy of the disclosure in the Form 6-K to EY and The Company has requested Kost, Forer, Gabbay & Kasierer, to furnish it a letter
addressed to the Commission stating whether it agrees with the above statements. Kost, Forer, Gabbay & Kasierer responded with a letter
dated June 6, 2025, a copy of which was furnished as Exhibit 99.1 to such Form 6-K, stating that EY agrees with the statements set forth
therein.
There were no "reportable events" as that term is described in
Item 304(a)(1)(v) of Regulation S-K.
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62 -
|
ITEM 16G. |
Corporate Governance |
Under NASDAQ Stock Market Rule 5615(a)(3), foreign private issuers,
such as our company, are permitted to follow certain home country corporate governance practices instead of certain provisions of NASDAQ
Stock Market Rules. A foreign private issuer that elects to follow a home country practice instead of any of such NASDAQ requirements
must submit to NASDAQ in advance a written statement from an independent counsel in such issuer’s home country certifying that the
issuer’s practices are not prohibited by the home country’s laws.
We currently rely on this “foreign private issuer exemption”
as follows:
Adoption or Amendment of Equity-Based
Compensation Plans: We have elected to follow Ontario law instead of the Nasdaq Listing Rule 5635(c), which requires that we obtain
shareholder approval for the establishment or amendment of certain equity based compensation plans and arrangements. Under Ontario law
and practice, in general, the approval of the board of directors is required for the establishment or amendment of equity based compensation
plans and arrangements.
|
ITEM 16H. |
Mine Safety Disclosure |
Not applicable.
|
ITEM 16I. |
Disclosure Regarding Foreign Jurisdictions That Prevent Inspections |
Not applicable.
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63 -
ITEM 16J. Insider Trading Policies
We have adopted a written insider trading policy governing the purchase, sale, and other dispositions of our securities by directors, senior management, and employees that are reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and any listing standards applicable to us. A copy of the Insider Trading Policy is filed as an exhibit to this Annual Report.
ITEM 16K. Cybersecurity
Cybersecurity Risk Management and Strategy
Our board of directors recognizes the critical importance of maintaining the availability and completion of our data and systems, the trust and confidence of our business partners and employees. Our Audit Committee is responsible for reviewing our policies with respect to cybersecurity risks and relevant contingent liabilities and risks that may be material to the company, including risks from third parties and business partners .
We generally seek to address cybersecurity risks by implementing security measures on our internal computer systems. These security measures include firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated by our IT manager. Our Chief Operations Officer is responsible for implementing protection measures for our information systems from cybersecurity threats and promptly responding to any cybersecurity incidents.
Our management has primary responsibility for our overall cybersecurity risk management and supervises our internal information technology personnel. Our management is responsible for assessing and managing our material risks from cybersecurity threats. The risk assessment occurs on an ongoing basis, or as business needs change, and covers identification of risks that could act against our Company's objectives as well as specific risks related to a compromise to the security of data.
- 64 -
PART III
| ITEM 17. | Financial Statements |
We have elected to furnish financial statements and related information specified in Item 18.
| ITEM 18. | Financial Statements |
The financial statements required by this item are found at the end of this annual report, beginning on page F-1.
| ITEM 19. | Exhibits |
Exhibit No. | Description |
1.1 | Articles and By-Laws of the Registrant (1) |
2.1 | Description of the rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934 (2) |
4.1 | Agreement and Plan of Merger, dated as of September 26, 2023, among Senstar Technologies Ltd., Senstar Technologies Corporation and Can Co Sub Ltd. (3) |
4.2 | Form of Indemnity Agreement for directors and officers (4) |
4.3 | Insider Trading Policy (5) |
4.4 | Senstar Technologies Corporation Stock Option Plan (6) |
4.5 | Blickfeld Share Purchase Agreement |
8.1 | List of Subsidiaries of the Registrant |
12.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act, as amended |
12.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act, as amended |
13.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
13.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
15.1 | Consent of EY Canada |
15.2 | Consent of Kost Forer Gabbay & Kasierer, a member of EY Global |
16 | Letter, dated May 1, 2026, from Kost Forer Gabbay & Kasierer, a member of EY Global, addressed to the U.S. Securities and Exchange Commission |
97.1 | Clawback Policy (7) |
101.INS | Inline XBRL Instance Document.* |
101.SCH | Inline XBRL Taxonomy Extension Schema Document.* |
101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document.* |
101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document.* |
101.LAB | Inline XBRL Taxonomy Label Linkbase Document.* |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document.* |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)* |
| * | Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are not filed for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
| (1) | Filed as Exhibit 3.1 to our Registration Statement on Form F-4 (File No. 333-274706), filed with the Securities and Exchange Commission on September 27, 2023 and incorporated herein by reference. |
| (2) | Filed as Exhibit 2.1 to our Annual Report on Form 20-F for the year ended December 31, 2023, and incorporated herein by reference. |
| (3) | Filed as Exhibit 99.1 to Form 6-K of Senstar Technologies Ltd., furnished to the Securities and Exchange Commission on September 27, 2023, and incorporated herein by reference. |
| (4) | Filed as Exhibit 10.1 to our Registration Statement on Form F-4 (File No. 333-274706), filed with the Securities and Exchange Commission on September 27, 2023 and incorporated herein by reference. |
| (5) | Filed as Exhibit 4.6 to our Annual Report on Form 20-F for the year ended December 31, 2023, and incorporated herein by reference. |
| (6) | Filed as Exhibit 4.4 to our Annual Report on Form 20-F for the year ended December 31, 2024, and incorporated herein by reference. |
| (7) | Filed as Exhibit 97.1 to our Annual Report on Form 20-F for the year ended December 31, 2023, and incorporated herein by reference. |
- 65 -
SIGNATURE
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this amendment to annual report on its behalf.
SENSTAR TECHNOLOGIES CORPORATION | |||
By: | /s/ Fabien Haubert | ||
| Name | Fabien Haubert | ||
| Title: | Chief Executive Officer | ||
Date: May 1, 2026
- 66 -
SENSTAR TECHNOLOGIES CORPORATION
AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2025
IN U.S. DOLLARS
INDEX
|
Page
|
|
|
Report of Independent Registered Public Accounting Firm (PCAOB ID:
|
F-2 – F-4
|
|
Consolidated Balance Sheets
|
F-5 – F-6
|
|
Consolidated Statements of Operations
|
F-7
|
|
Consolidated Statements of Comprehensive Income
|
F-8
|
|
Consolidated Statements of Shareholders' Equity
|
F-9 – F-10
|
|
Consolidated Statements of Cash Flows
|
F-11 – F-13
|
|
Notes to Consolidated Financial Statements
|
F-14 – F-44
|
 |
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A,
Tel-Aviv 6492102, Israel
|
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of
SENSTAR TECHNOLOGIES CORPORATION
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Senstar Technologies Corporation and its subsidiaries (the Company) as of December 31, 2024, the related consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
|
/s/ KOST FORER GABBAY & KASIERER
|
|
|
A Member of EY Global
|
|
We have served as the Company’s auditor from 1984 to 2024.
Tel-Aviv, Israel
May 1, 2026
|
A member firm of Ernst & Young Global Limited
|
F - 2
Report of independent registered public accounting firm
To the Shareholders and the Board of Directors of
Senstar Technologies Corporation
Opinion on the consolidated financial statements
We have audited the accompanying consolidated balance sheet of Senstar Technologies Corporation and its Subsidiaries [the “Company”] as of December 31, 2025, the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for the year ended December 31, 2025, and the related notes [collectively referred to as the “consolidated financial statements”]. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
Basis for opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) [“PCAOB”] and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe our audit provides a reasonable basis for our opinion.
F - 3
Critical audit matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: [1] relates to accounts or disclosures that are material to the consolidated financial statements and [2] involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.
|
Revenue Recognition – Determination of the standalone selling price of distinct performance obligations not sold separately
|
||
|
Description of the Matter
|
As explained in note 2 to the consolidated financial statements, the Company generates revenues from: [1] sales of security products; [2] services and maintenance, and [3] software license fees and related services. The Company may enter into contracts with customers that include multiple products and services, which are generally distinct and recorded as separate performance obligations. The transaction price is then allocated to the distinct performance obligations not sold separately based on a relative standalone selling price [“SSP”] basis and revenue is recognized when control of the distinct performance obligation is transferred to the customer.
The principal considerations for our assessment that the determination of the SSP of distinct performance obligations not sold separately represents a critical audit matter is the significant audit effort due to the volume of data to evaluate the SSP as well as significant auditor judgment in assessing the reasonableness of the SSP in the absence of directly observable selling prices.
|
|
|
How We
Addressed the Matter in Our Audit
|
Our audit procedures included, among others, evaluating the appropriateness of the overall methodology used by management to develop the SSP of distinct performance obligations not sold separately. These procedures also included, among others, on a sample basis [i] testing the accuracy and completeness of the data in the population of transactions used to calculate the SSP; [ii] testing the mathematical accuracy of management’s calculations of the SSP and [iii] testing management’s analysis evaluating the impact of changes in the SSP on the amount of revenue recognized in the current period.
|
/s/ Ernst & Young LLP
Chartered Professional Accountants
Licensed Public Accountants
We have served as the Company’s auditor since 2025.
May 1, 2026
F - 4
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
ASSETS
|
||||||||
|
CURRENT ASSETS:
|
||||||||
|
Cash and cash equivalents
|
$
|
|
$
|
|
||||
|
Short-term bank deposits
|
|
|
||||||
|
Restricted cash and deposits
|
|
|
||||||
|
Trade receivables, net
|
|
|
||||||
|
Unbilled accounts receivable
|
|
|
||||||
|
Other accounts receivable and prepaid expenses
|
|
|
||||||
|
Inventories
|
|
|
||||||
|
Total current assets
|
|
|
||||||
|
LONG-TERM ASSETS:
|
||||||||
|
Deferred tax assets
|
|
|
||||||
|
Operating lease right-of-use assets
|
|
|
||||||
|
Property and equipment, net
|
|
|
||||||
|
Intangible assets, net
|
|
|
||||||
|
Goodwill
|
|
|
||||||
|
Total long-term assets
|
|
|
||||||
|
Total assets
|
$
|
|
$
|
|
||||
The accompanying notes are an integral part of the consolidated financial statements.
F - 5
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share and per share data)
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
|
CURRENT LIABILITIES:
|
||||||||
|
Trade payables
|
$
|
|
$
|
|
||||
|
Deferred revenues and customer advances
|
|
|
||||||
|
Other accounts payable and accrued expenses
|
|
|
||||||
|
Short-term operating lease liabilities
|
|
|
||||||
|
Total current liabilities
|
|
|
||||||
|
LONG-TERM LIABILITIES:
|
||||||||
|
Deferred revenues
|
|
|
||||||
|
Deferred tax liabilities
|
|
|
||||||
|
Long-term operating lease liabilities
|
|
|
||||||
|
Other long-term liabilities
|
|
|
||||||
|
Total long-term liabilities
|
|
|
||||||
|
COMMITMENTS AND CONTINGENT LIABILITIES
|
||||||||
|
SHAREHOLDERS' EQUITY:
|
||||||||
|
Share capital -
|
||||||||
|
Common shares no par value -
|
||||||||
|
Authorized:
|
|
|
||||||
|
Additional paid-in capital
|
|
|
||||||
|
Accumulated other comprehensive income (loss)
|
(
|
)
|
(
|
)
|
||||
|
Foreign currency translation adjustments (Company's standalone financial statements)
|
|
|
||||||
|
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
|
Total shareholders' equity
|
|
|
||||||
|
Total liabilities and shareholders' equity
|
$
|
|
$
|
|
||||
The accompanying notes are an integral part of the consolidated financial statements.
F - 6
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except per share data)
|
Year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Revenues
|
$
|
|
$
|
|
$
|
|
||||||
|
Cost of revenues
|
|
|
|
|||||||||
|
Gross profit
|
|
|
|
|||||||||
|
Operating expenses:
|
||||||||||||
|
Research and development, net
|
|
|
|
|||||||||
|
Selling and marketing
|
|
|
|
|||||||||
|
General and administrative
|
|
|
|
|||||||||
|
Total operating expenses
|
|
|
|
|||||||||
|
Operating income (loss)
|
|
|
(
|
)
|
||||||||
|
Financial income (expenses), net
|
|
|
(
|
)
|
||||||||
|
Income (loss) before income taxes
|
|
|
(
|
)
|
||||||||
|
Taxes on income (tax benefit)
|
(
|
)
|
|
(
|
)
|
|||||||
|
Net income (loss)
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
|
Basic net income (loss) per share
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
|
Diluted net income (loss) per share
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
The accompanying notes are an integral part of the consolidated financial statements.
F - 7
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
U.S. dollars in thousands
|
Year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Net income (loss)
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
|
Foreign currency translation adjustments
|
|
(
|
)
|
|
||||||||
|
Total other comprehensive income (loss)
|
|
(
|
)
|
|
||||||||
|
Total comprehensive income (loss)
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
The accompanying notes are an integral part of the consolidated financial statements.
F - 8
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
U.S. dollars in thousands (except share data)
|
Number of shares
|
Common shares
|
Additional paid-in
capital
|
Accumulated other comprehensive
income (loss)
|
Foreign currency translation
adjustments - the Company
|
Accumulated
deficit
|
Total shareholders' equity
|
||||||||||||||||||||||
|
Balance as of January 1, 2023
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||
|
Stock-based compensation
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Foreign currency translation adjustments - the Company
|
-
|
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||||||
|
Comprehensive income (loss):
|
||||||||||||||||||||||||||||
|
Net loss
|
-
|
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
|
Foreign currency translation adjustments
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Balance as of December 31, 2023
|
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||||
|
Change in par value of common shares
|
-
|
(
|
)
|
|
|
|
|
|
||||||||||||||||||||
|
Issuance of shares upon exercise of employee stock options
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Stock-based compensation
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Foreign currency translation adjustments - the Company
|
-
|
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||||||
|
Comprehensive income (loss):
|
||||||||||||||||||||||||||||
|
Net income
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Foreign currency translation adjustments
|
-
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||
|
Balance as of December 31, 2024
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F - 9
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
U.S. dollars in thousands (except share data)
|
Number of shares
|
Additional paid-in
capital
|
Accumulated other comprehensive
income (loss)
|
Foreign currency translation
adjustments - the Company
|
Accumulated deficit
|
Total shareholders' equity
|
|||||||||||||||||||
|
Balance as of December 31, 2024
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||
|
Issuance of shares upon exercise of employee stock options
|
|
|
|
|
|
|
||||||||||||||||||
|
Stock-based compensation
|
-
|
|
|
|
|
|
||||||||||||||||||
|
Foreign currency translation adjustments - the Company
|
-
|
|
|
|
|
|
||||||||||||||||||
|
Comprehensive income (loss):
|
||||||||||||||||||||||||
|
Net income
|
-
|
|
|
|
|
|
||||||||||||||||||
|
Foreign currency translation adjustments
|
-
|
|
|
|
|
|
||||||||||||||||||
|
Balance as of December 31, 2025
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F - 10
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
|
Year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Cash flows from operating activities:
|
||||||||||||
|
Net income (loss)
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
|
Adjustments required to reconcile net income to net cash provided by (used in) operating activities:
|
||||||||||||
|
Depreciation and amortization
|
|
|
|
|||||||||
|
Loss (gain) on sale of property and equipment
|
|
(
|
)
|
|
||||||||
|
Stock based compensation
|
|
|
|
|||||||||
|
Decrease (increase) in trade receivables, net
|
|
(
|
)
|
|
||||||||
|
Decrease (increase) in unbilled accounts receivable
|
|
(
|
)
|
|
||||||||
|
Decrease (increase) in other accounts receivable and prepaid expenses
|
(
|
) |
|
(
|
)
|
|||||||
|
Decrease (increase) in inventories
|
(
|
)
|
|
|
||||||||
|
Decrease (increase) in deferred income taxes, net
|
|
|
|
|||||||||
|
Decrease (increase) in operating lease right-of-use assets
|
|
|
|
|||||||||
|
Decrease in operating lease liabilities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Increase (decrease) in trade payables
|
(
|
)
|
|
(
|
)
|
|||||||
|
Increase (decrease) in other accounts payable and accrued expenses and deferred revenues and customer advances
|
(
|
)
|
|
(
|
)
|
|||||||
|
Accrued severance pay, net
|
|
(
|
)
|
(
|
)
|
|||||||
|
Net cash provided by operating activities
|
$
|
|
$
|
|
$
|
|
||||||
The accompanying notes are an integral part of the consolidated financial statements.
F - 11
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
|
Year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Cash flows from investing activities:
|
||||||||||||
|
Investment of short-term bank deposits
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
|
Proceeds from sale of property and equipment
|
|
|
|
|||||||||
|
Purchase of property and equipment
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Cash flows from financing activities:
|
||||||||||||
|
Proceeds from issuance of shares upon exercise of options to employees
|
|
|
|
|||||||||
|
Deferred payment with respect to asset acquisition
|
|
|
(
|
)
|
||||||||
|
Net cash provided by (used in) financing activities
|
|
|
(
|
)
|
||||||||
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(
|
)
|
|
||||||||
|
Increase (decrease) in cash and cash equivalents
|
|
|
(
|
)
|
||||||||
|
Cash and cash equivalents at the beginning of the year
|
|
|
|
|||||||||
|
Cash and cash equivalents at the end of the year
|
$
|
|
$
|
|
$
|
|
||||||
The accompanying notes are an integral part of the consolidated financial statements.
F - 12
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
|
Year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Supplemental disclosures of cash flows activities:
|
||||||||||||
|
Cash paid (received) during the year for:
|
||||||||||||
|
Interest
|
$
|
|
$
|
|
$
|
|
||||||
|
Federal tax
|
$
|
|
$
|
(
|
) |
$
|
|
|||||
|
Provincial tax
|
|
(
|
) |
|
||||||||
|
United States tax
|
|
|
|
|||||||||
|
Canada
|
|
|
|
|||||||||
|
Israel
|
|
|
|
|||||||||
|
$ |
|
$ |
(
|
) |
$ |
|
||||||
|
Significant non-cash transactions:
|
||||||||||||
|
Right-of-use asset recognized with corresponding lease liability
|
$
|
|
$
|
|
$
|
|
||||||
*The company was domiciled in Canada in 2024 and 2025, in 2023 the company was domiciled in Israel.
The accompanying notes are an integral part of the consolidated financial statements.
F - 13
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 1:- |
GENERAL
|
| a. |
General:
|
Senstar Technologies Corporation ("the Parent Company" or "Senstar") and its subsidiaries (together - "the Company") is a leading international provider of comprehensive physical, video, and access control security products and solutions. The Company offers comprehensive solutions for critical sites, which leverage its broad portfolio of homegrown PIDS (Perimeter Intrusion Detection Systems), advanced VMS and SMS (Video Management Software and Security Management Software) with native IVA (Intelligent Video Analytics) security solutions, as well as access control products and technologies.
| b. |
Redomiciliation Transaction:
|
On September 26, 2023, Senstar Technologies Ltd., Senstar Technologies Corporation, a newly established Ontario corporation, and Can Co Sub Ltd., a Company organized under the laws of the State of Israel and a wholly-owned subsidiary of Senstar Technologies Corporation (“Merger Sub”) entered into a merger agreement (the “Merger Agreement”), pursuant to which Senstar Technologies Corporation would become the Parent Company of Senstar Technologies Ltd. as a result of the merger of Merger Sub with and into Senstar Technologies Ltd., with Senstar Technologies Ltd. surviving the merger as a wholly-owned subsidiary of Senstar Technologies Corporation (the “Merger”).
Effective March 18, 2024 (the “Effective Time”), Merger Sub was merged with and into Senstar Technologies Ltd. As a result of the Merger, (a) the separate corporate existence of Merger Sub ceased and Senstar Technologies Ltd. continued as the surviving company; (b) all the properties, rights, privileges, powers and franchises of Senstar Technologies Ltd. and Merger Sub vested in Senstar Technologies Ltd. (as the surviving company); (c) all debts, liabilities and duties of Senstar Technologies Ltd. and Merger Sub became the debts, liabilities and duties of Senstar Technologies Ltd. (as the surviving company); and (d) all the rights, privileges, immunities, powers and franchises of Senstar Technologies Ltd. continued unaffected by the Merger in accordance with the Israeli Companies Law, 5759-1999.
Each Senstar Technologies Ltd. ordinary share issued and outstanding immediately prior to the consummation of the Merger represented the right to receive one (1) validly issued, fully paid and nonassessable common share of Senstar Technologies Corporation, representing the same proportional equity interest in Senstar Technologies Corporation as that shareholder held in Senstar Technologies Ltd.
As a result of this transaction, domicile of the corporate parent changed from Senstar Technologies Ltd., a company organized under the laws of the State of Israel to Senstar Technologies Corporation, an Ontario organized Company (the “Redomiciliation”).
F - 14
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 1:- |
GENERAL (Cont.)
|
The number of common shares of Senstar Technologies Corporation outstanding immediately after the Redomiciliation continued to be the same as the number of ordinary shares of Senstar Technologies Ltd. outstanding immediately prior to the Redomiciliation. The rights of shareholders of Senstar Technologies Corporation are governed under Ontario law and the Articles and By-Laws of Senstar Technologies Corporation.
The Redomiciliation was accounted for as a change in the reporting entity between entities under common control and the historical basis of accounting was retained as if the entities had always been combined for financial reporting purposes. The consolidated financial statements for periods prior to the Redomiciliation are the consolidated statements of Senstar Technologies Ltd. as the predecessor to the Company for accounting and reporting purposes and, upon completion of the Redomiciliation, such historical consolidated financial statements became Senstar Technologies Corporation's historical consolidated financial statements.
| c. |
On December 9, 2025 Senstar Technologies Corporation’s wholly owned subsidiary entered into a definitive agreement (the "Agreement") to acquire Blickfeld GmbH ("Blickfeld"), a top producer of 3D LiDAR sensors with integrated software for security, volume monitoring, industrial and traffic applications, for €
|
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"), followed on a consistent basis.
| a. |
Use of estimates:
|
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. Such management estimates and assumptions are related, but not limited to estimates used in determining values of goodwill and identifiable intangible assets in a business combination, the determination of the standalone selling price in revenue arrangements with multiple performance obligations, allowances for credit losses, the valuation of inventory and the need for a provision, warranty provision, the valuation of income tax assets and uncertain tax positions, legal contingencies and the valuation of stock-based compensation costs. 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.
F - 15
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
| b. |
Foreign currency:
|
The Company's management believes that the Canadian Dollar (“CAD”) is the primary currency of the economic environment in which Senstar Technologies Corporation operates. Therefore, the functional currency of Senstar Technologies Corporation is the CAD.
The Company's reporting currency is the U.S. dollar.
ASC 830, "Foreign Currency Matters" sets the standards for translating foreign currency financial statements of consolidated subsidiaries. The first step in the translation process is to identify the functional currency for each subsidiary included in the financial statements. The accounts of each subsidiary are then measured in its functional currency. All transaction gains and losses from the measurement of monetary balance sheet items are reflected in the statement of operations as financial income or expenses, as appropriate.
After the measurement process is complete at the subsidiary level, the financial statements of subsidiaries with a functional currency different than the Canadian dollar are translated into Canadian dollars, using the current rate method. Equity accounts are translated using historical exchange rates. All other balance sheet accounts are translated using the exchange rates in effect at the balance sheet date. Statement of operations amounts have been translated using the average exchange rate for the year. The resulting translation adjustment is reported as a component of shareholders' equity in accumulated other comprehensive income (loss).
The Company then translates the consolidated financial statements into the U.S. dollar reporting currency, using the same method described above, except that the resulting translation adjustment is reported as a separate component of shareholders’ equity in “Foreign currency translation adjustments (Company's standalone financial statements)”.
| c. |
Principles of consolidation:
|
The consolidated financial statements include the accounts of Senstar and its subsidiaries. Intercompany transactions and balances including profits from intercompany sales not yet realized outside the Company, have been eliminated upon consolidation.
| d. |
Cash equivalents:
|
Cash equivalents are short-term highly liquid investments that are readily convertible into cash with original maturities of three months or less at the date acquired.
| e. |
Short-term restricted cash and deposits:
|
Short-term restricted cash and deposits are primarily invested in certificates of deposit that are restricted to withdrawals or use up to one year. Such certificates of deposit are used primarily as collateral for performance.
F - 16
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
| f. |
Short-term bank deposits:
|
Short-term bank deposits are deposits with maturities of more than three months and less than one year and are presented at their cost.
| g. |
Inventories:
|
Inventories are stated at the lower of cost or net realizable value. The Company periodically evaluates the inventory quantities on hand relative to historical and projected sales volumes, current and historical selling prices and contractual obligations to maintain certain levels of parts. Based on these evaluations, inventory write-offs are provided to cover risks arising from slow-moving items, discontinued products, excess inventories, market prices lower than cost and adjusted revenue forecasts.
Cost is determined as follows:
Raw materials, parts and supplies: using the "first-in, first-out" method.
Work in progress and finished products: on the basis of direct manufacturing costs with the addition of allocable indirect cost, representing allocable operating overhead expenses and manufacturing costs.
During the years ended December 31, 2025, 2024 and 2023, the Company recorded inventory write-offs in the amounts of $766 , $129 and $321 , respectively. Such write-offs were included in cost of revenues.
| h. |
Property and equipment:
|
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of the assets at the following annual rates:
|
%
|
||
|
Buildings
|
|
|
|
Machinery and equipment
|
|
|
|
Motor vehicles
|
|
|
|
Promotional displays
|
|
|
|
Office furniture and equipment
|
|
|
|
Leasehold improvements
|
|
F - 17
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
| i. |
Intangible assets:
|
Intangible assets are comprised of know-how and patents, capitalized and acquired technology and customer relationships.
Intangible assets are amortized over their useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up, in accordance with ASC 350, "Intangibles - Goodwill and Other." Patents are amortized based on the straight-line while technology and customer relationships are amortized using acceleration method, at the following weighted average annual rates:
|
%
|
||
|
Patents
|
|
|
|
Technology
|
|
|
|
Customer relationships
|
|
| j. |
Impairment of long-lived assets:
|
The Company's long-lived assets (assets group) to be held or used, including right of use assets and intangible assets that are subject to amortization, are reviewed for impairment in accordance with ASC 360, "Property, Plant, and Equipment" whenever events or changes in circumstances indicate that the carrying amount of a group of assets may not be recoverable. Recoverability of a group of assets to be held and used is measured by a comparison of the carrying amount of the group to the future undiscounted cash flows expected to be generated by the group. If such group of assets is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. During the years ended December 2025, 2024 and 2023, the Company did not record any impairment charges attributable to long-lived assets.
| k. |
Goodwill:
|
Goodwill and certain other purchased intangible assets have been recorded as a result of acquisitions. Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Goodwill is not amortized, but rather is subject to an impairment test.
F - 18
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
ASC No. 350, "Intangible-Goodwill and other" requires goodwill to be tested for impairment at least annually and, in certain circumstances, between annual tests. The accounting guidance gives the option to perform a qualitative assessment to determine whether further impairment testing is necessary. The qualitative assessment considers events and circumstances that might indicate that a reporting unit's fair value is less than its carrying amount. If it is determined, as a result of the qualitative assessment, that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative test is performed. Alternatively, ASC No. 350 permits an entity to bypass the qualitative assessment for any reporting unit and proceed directly to performing the quantitative goodwill impairment test. The Company performed a quantitative impairment test for both 2025 and 2024.
If the carrying value of a reporting unit exceeds its fair value, the Company recognizes an impairment of goodwill for the amount of this excess. The Company performs an annual impairment test during the fourth quarter of each fiscal year, or more frequently if impairment indicators are present.
The Company operates as one operating segment with a single reporting unit. Therefore, goodwill is tested for impairment at that level.
For the years ended December 31, 2025, 2024 and 2023, no impairment losses were recorded.
| l. |
Business combinations:
|
The Company accounts for business combinations in accordance with ASC No. 805, “Business Combinations” using the acquisition method of accounting, which requires, among other things, allocation of the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed at their estimated fair values on the acquisition date. The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, the Company makes estimates and assumptions, especially with respect to intangible assets. The estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable, and, as a result, actual results may differ from estimates. During the measurement period, not to exceed one year from the date of acquisition, the Company may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date. Acquisition-related expenses, such as legal and consulting fees, are expensed as incurred.
F - 19
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
| m. |
Revenue recognition:
|
The Company recognizes revenues in accordance with ASC No. 606, "Revenue from Contracts with Customers" ("ASC No. 606"). As such, the Company identifies a contract with a customer, identifies the performance obligations in the contract, determines the transaction price, allocates the transaction price to each performance obligation in the contract and recognizes revenues when (or as) the Company satisfies a performance obligation.
The Company generates its revenues mainly from: (1) sales of security products; (2) services and maintenance, which are performed either on a fixed-price basis or as time-and-materials based contracts; and (3) software license fees and related services. The Company's products and services are generally distinct and accounted for as separate performance obligations. Certain arrangements with customers contain multiple distinct performance obligations. For these arrangements, the Company allocates the transaction price to each performance obligation based on its relative stand-alone selling price ("SSP"). The Company generally establishes SSPs based on observable selling prices for their products and services. If the product or service is not sold separately, the Company makes an estimate of the SSP using historical pricing information and analysis.
The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods or services to the customer. The Company usually does not grant a right of return to its customers.
In instances of contracts where revenue recognition differs from the timing of invoicing, the Company generally determined that those contracts do not include a significant financing component. The Company uses the practical expedient and does not assess the existence of a significant financing component when the difference between payment and revenue recognition is a year or less. Revenue is recognized net of any taxes collected from customers which are subsequently remitted to governmental entities (e.g., sales tax and other indirect taxes). The Company accounts for shipping and handling activities as fulfillment activities. Shipping and handling activities are classified as part of the cost of revenues.
Payment terms are typically up to 90 days, and vary by the type of payer, country of sale and the products or services offered.
Revenue for security products and software licenses are generally recognized at a point in time, when the customer obtains control over the product or license. Revenues for services and maintenance are recognized over time, using the method that best depicts the transfer of services to the customer, as those services are performed or over the term of the contract.
F - 20
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
Software related services provide the customer with unspecified software updates, on a when available basis and are recognized ratably over time as these services have a continuance pattern of transfer to the customer during the contract period. Warranties are classified as either an assurance type or a service type warranty. A warranty is considered an assurance type warranty if it provides the customer with assurance that the product will function as intended for a limited period of time. An assurance type warranty is not accounted for as a separate performance obligation under the revenue model.
Remaining performance obligations:
Remaining performance obligations represent the future revenues expected to be recognized on firm orders received by the Company and are equivalent to the Company’s remaining performance obligations at the end of each period for a remaining period of more than a year. The Company's remaining performance obligations as of December 31, 2025 was $4.1 million, out of which the Company expects to recognize approximately 63 % as revenue in 2026, with the remainder to be recognized thereafter. The Company does not disclose information about remaining performance obligations that have original expected durations of one year or less.
Deferred revenues and customer advances:
Customers advances are recorded when the Company receives payments from customers before performance obligations have been performed. Deferred revenues are recognized as revenues as (or when) the Company performs the performance obligation under the contract. Deferred revenues and customer advances as of December 31, 2025 and 2024 were $4.4 million and $4.2 million, respectively, and primarily relate to revenues that are recognized over time for service contracts. Approximately $3.8 million out of the balance as of December 31, 2024 was recognized as revenues during the year ended December 31, 2025.
F - 21
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
| n. |
Accounting for stock-based compensation:
|
The Company accounts for stock-based compensation in accordance with ASC 718, "Compensation-Stock Compensation". ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the award is recognized as an expense over the requisite service periods in the consolidated statement of operations, generally options vest over a period of 3 years.
The Company recognizes compensation expenses for the value of its awards, which have graded vesting, based on the accelerated attribution method over the vesting period. The Company accounts for forfeitures as they occur.
During the years ended December 31, 2025, 2024 and 2023, the Company recognized stock-based compensation expenses related to employee stock options in the amounts of $612 , $18 and $18 , respectively.
The Company estimates the fair value of stock options granted under ASC 718 using the Binomial model. The Binomial model for option pricing requires a number of assumptions, of which the most significant are the suboptimal exercise factor and expected stock price volatility. The suboptimal exercise factor is estimated using historical option exercise information. The suboptimal exercise factor is the ratio by which the stock price must increase over the exercise price before employees are expected to exercise their stock options. Expected volatility is based upon actual historical stock price movements and was calculated as of the grant dates for different periods, since the Binomial model can be used for different expected volatilities for different periods. The risk-free interest rate is based on the yield from U.S. Treasury zero-coupon bonds with an equivalent term to the contractual term of the options.
The expected term of options granted is derived from the output of the option valuation model and represents the period that options granted are expected to be outstanding. During the year ended December 31, 2023 no options were granted.
The following assumptions were used in the Binomial option pricing model for the years ended December 31, 2025 and 2024, respectively (no options were granted in 2023):
|
2025
|
2024
|
||||
|
Dividend yield
|
|
|
|||
|
Expected volatility
|
|
|
|||
|
Risk-free interest
|
|
|
|||
|
Contractual term
|
|
|
|||
|
Suboptimal exercise multiple
|
|
|
F - 22
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
| o. |
Research and development costs:
|
Research and development costs incurred in the process of developing product improvements or new products, are charged to expenses as incurred.
The Company participates in programs sponsored by the Industrial Research Assistance Program ("IRAP") in Canada. Under this program, the company incurs costs and then submits claims, the funding received is reported by offsetting research and development costs. In the years ended December 31, 2025, 2024 and 2023 the Company recognized IRAP funding in the amount of $538 , $17 , and $266 , respectively.
| p. |
Warranty costs:
|
The Company generally provides assurance type warranty to its customers for a period of up to 36 months to cover potential manufacturing defects. The Company estimates the costs that may be incurred under its warranty and records a liability in the amount of such costs at the time product revenue is recognized in accordance with ASC 450, "Contingencies." Factors that affect the Company's warranty liability include the number of units, historical and anticipated rates of warranty claims and cost per claim. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.
The following table provides the detail of the change in the Company's warranty accrual, which is a component of other accrued expenses in the consolidated balance sheets as of December 31, 2025 and 2024:
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
Warranty provision, beginning of year
|
$
|
|
$
|
|
||||
|
Charged to costs of revenue relating to new sales
|
|
|
||||||
|
Utilization of warranty
|
(
|
)
|
(
|
)
|
||||
|
Foreign currency translation adjustments
|
(
|
)
|
(
|
)
|
||||
|
Warranty provision, year end
|
$
|
|
$
|
|
||||
| q. |
Net earnings per share:
|
Basic net earnings per share are computed based on the weighted average number of common shares outstanding during each year. Diluted net earnings per share is computed based on the weighted average number of common shares outstanding during each year, plus dilutive potential common shares considered outstanding during the year, in accordance with ASC 260, "Earnings Per Share."
F - 23
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
The total weighted average number of the Company's common shares related to the outstanding options excluded from the calculations of diluted earnings per share was 241,063 shares, 314,937 shares and 363,499 shares for the years ended December 31, 2025, 2024 and 2023, respectively.
| r. |
Concentrations of credit risk:
|
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, short-term bank deposits, trade receivables, other accounts receivable, and unbilled accounts receivable.
As of December 31, 2025, the Company's cash and cash equivalents and restricted cash and short-term deposits were invested in major Canadian, U.S. and European banks. The Company is exposed to credit risk in the event of default by the financial institutions to the extent of the amounts recorded on the accompanying consolidated balance sheets exceed insured limits. Generally, these deposits may be redeemed upon demand and therefore, bear low risk.
Trade receivables are recorded when the right to consideration becomes unconditional, and an invoice is issued to the customer. Unbilled receivables include amounts related to the Company’s contractual right to consideration not yet invoiced. Trade receivables of the Company, as well as the unbilled accounts receivable, are primarily derived from sales to large and solid organizations and governmental authorities located mainly in the U.S., Canada, Europe and Asia-Pacific (APAC).
The Company establishes current expected credit losses (“CECL”) for pools of assets with similar risk characteristics by evaluating historical levels of credit losses, current economic conditions that may affect a customer’s ability to pay, and creditworthiness of significant customers. The Company, in the normal course of business, monitors the financial condition of its customers and reviews the credit history of each new customer. When the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company (such as in the case of bankruptcy filings or material deterioration in the customer’s operating results or financial position, and payment experiences), the Company records a specific credit loss provision to reduce the customer’s related accounts receivable to its estimated net realizable value. In certain circumstances, the Company may require letters of credit, other collateral or additional guarantees. Receivables are written-off and charged against the recorded allowance when the Company has exhausted collection efforts without success.
F - 24
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
Changes in the Company's allowance for credit losses related to accounts receivables during the years ended December 31, 2025 and 2024 are as follows:
|
Year ended
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
Balance at the beginning of the year
|
$
|
|
$
|
|
||||
|
Credit losses expenses during the year
|
|
|
||||||
|
Customer write-offs during the year
|
(
|
)
|
(
|
)
|
||||
|
Exchange rate
|
|
(
|
)
|
|||||
|
$
|
|
$
|
|
|||||
As of December 31, 2025, the Company has no significant off-balance sheet concentrations of credit risk, such as foreign exchange contracts.
| s. |
Income taxes:
|
The Company accounts for income taxes in accordance with ASC 740, "Income Taxes." This ASC prescribes the use of the liability method whereby deferred tax assets and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value.
The Company establishes reserves for uncertain tax positions based on an evaluation of whether the tax position is “more likely than not” to be sustained upon examination. The Company records interest and penalties pertaining to its uncertain tax positions in the financial statements as income tax expense.
| t. |
Severance pay:
|
The Company’s Israeli subsidiary has entered into an agreement with its employees implementing Section 14 of the Severance Pay Law and the General Approval of the Labor Minister dated June 30, 1998, issued in accordance with the said Section 14, mandating that upon termination of such employees' employment, all the amounts accrued in their insurance policies will be released to them. The severance pay liabilities and deposits covered by these plans are not reflected in the balance sheet as the severance pay risks have been irrevocably transferred to the severance funds.
F - 25
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
On December 31, 2007, the then Chairman of the Company's Board of Directors ("Former Chairman"), retired from his position. His retirement agreement included certain perquisites from the Company for the rest of his life. During 2024 the Company and the Former Chairman agreed on terminating his retirement agreement. As such, as of December 31, 2024, the Company no longer has a liability related to the Former Chairman’s retirement agreement.
On December 31, 2007, the then Chairman of the Company's Board of Directors ("Former Chairman"), retired from his position. His retirement agreement included certain perquisites from the Company for the rest of his life. During 2024 the Company and the Former Chairman agreed on terminating his retirement agreement. As such, as of December 31, 2025 and 2024, the Company no longer has a liability related to the Former Chairman’s retirement agreement.
| u. |
Fair value measurements:
|
ASC 820, "Fair Value Measurement and Disclosure" clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.
As a basis for considering such assumptions, ASC 820 establishes a three tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
| Level 1 | - | Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| Level 2 | - | Significant other observable inputs based on market data obtained from sources independent of the reporting entity. |
| Level 3 | - | Unobservable inputs which are supported by little or no market activity. |
The carrying amounts of cash and cash equivalents, trade receivables, unbilled accounts receivable and trade payables approximate their fair value due to the short-term maturity of such instruments.
| v. |
Advertising expenses:
|
Advertising costs are expensed as incurred. Advertising expenses for the years ended December 31, 2025, 2024 and 2023 were $139 , $155 and $161 , respectively.
F - 26
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
| w. |
Comprehensive income (loss):
|
The Company accounts for comprehensive income (loss) in accordance with ASC 220, "Comprehensive Income". ASC 220 establishes standards for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements. Comprehensive income generally represents all changes in shareholders' equity during the period except those resulting from investments by, or distributions to, shareholders.
The Company has determined that its items of comprehensive income (loss) relate to unrealized gain (loss) from foreign currency translation adjustments.
Changes in the Company's accumulated other comprehensive income (loss), net for the years ended December 31, 2025, 2024 and 2023 are as follows:
|
Year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Balance at the beginning of the year
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||
|
Foreign currency translation adjustments
|
|
(
|
)
|
|
||||||||
|
Total accumulated other comprehensive income (loss)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||
| x. |
Leases:
|
In accordance with ASC 842, the Company determines if an arrangement is a lease and the classification of that lease at inception based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefits from the use of the asset throughout the period, and (3) whether the Company has a right to direct the use of the asset. The Company elected to not recognize a lease liability and a right-of-use (“ROU”) asset for leases with a term of twelve months or less.
ROU assets and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. ROU assets are initially measured at amounts, which represents the discounted present value of the lease payments over the lease, plus any initial direct costs incurred. The lease liability is initially measured based on the discounted present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. The implicit rate within the operating leases is generally not determinable, therefore the Company uses the Incremental Borrowing Rate (“IBR”) based on the information available at commencement date in determining the present value of lease payments. The Company’s IBR is estimated to approximate the interest rate for collateralized borrowing with similar terms and payments and in economic environments where the leased asset is located.
F - 27
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
Certain leases include options to extend or terminate the lease. An option to extend the lease is considered in connection with determining the ROU asset and lease liability when it is reasonably certain that the Company will exercise that option. An option to terminate is considered unless it is reasonably certain that the Company will not exercise the option.
| y. |
Reclassifications:
|
Certain prior period amounts have been reclassified in order to conform the current period presentation. The reclassification had no effect on previously reported consolidated balance sheets, consolidated statements of operations and comprehensive income (loss) and consolidated statements of cash flows.
| z. |
Impact of recently issued and adopted accounting standards:
|
Recently issued accounting standards adopted by the Company:
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 during the year ended December 31, 2025. See Note 13 Taxes on Income in the accompanying notes to the consolidated financial statements for further detail.
Recently issued accounting standards not yet adopted by the Company:
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03.
In December 2025, the FASB issued ASU 2025-10, Accounting for Government Grants Received by Business Entities (Topic 832): Government Grants, the amendments in this update require that a government grant received by a business entity should not be recognized until: 1. It is probable that (a) a business entity will comply with the conditions attached to the grant and (b) the grant will be received. 2. A business entity meets the recognition guidance for a grant related to an asset or a grant related to income. ASU 2025-10 is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods, with early adoption permitted. The company is currently evaluating the impact of adopting ASU 2025-10.
F - 28
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 3:- |
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES
|
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
Prepaid expenses
|
$
|
|
$
|
|
||||
|
Government authorities
|
|
|
||||||
|
Prepaid tax asset
|
|
|
||||||
|
Others
|
|
|
||||||
|
$
|
|
$
|
|
|||||
| NOTE 4:- |
INVENTORIES
|
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
Raw materials
|
$
|
|
$
|
|
||||
|
Work in progress
|
|
|
||||||
|
Finished products
|
|
|
||||||
|
$
|
|
$
|
|
|||||
| NOTE 5:- |
LEASES
|
The Company entered into operating leases primarily for offices and cars. The leases have remaining lease terms of up to 4.1 years.
The Company also elected the practical expedient (by class of underlying asset) to not separate lease and non-lease components and instead to account for each separate lease component and the non-lease components associated with that lease component as a single lease component for its leased assets.
| a. |
Supplemental balance sheet information related to operating leases is as follows:
|
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
Operating lease ROU assets
|
$
|
|
$
|
|
||||
|
Operating lease liabilities, current
|
$
|
|
$
|
|
||||
|
Operating lease liabilities, long-term
|
$
|
|
$
|
|
||||
|
Weighted average remaining lease term (in years)
|
|
|
||||||
|
Weighted average discount rate
|
|
%
|
|
%
|
||||
F - 29
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 5:- |
LEASES (Cont.)
|
| b. |
Future lease payments under operating leases as of December 31, 2025, are as follows:
|
|
December 31,
|
||||
|
2026
|
$
|
|
||
|
2027
|
|
|||
|
2028
|
|
|||
|
2029
|
|
|||
|
Total future lease payments
|
|
|||
|
Less - imputed interest
|
(
|
)
|
||
|
Total lease liability balance
|
$
|
|
||
| c. |
Operating lease expenses amounted to $
|
| NOTE 6:- |
PROPERTY AND EQUIPMENT, NET
|
a. Composition:
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
Cost:
|
||||||||
|
Land and buildings
|
$
|
|
$
|
|
||||
|
Machinery and equipment
|
|
|
||||||
|
Motor vehicles
|
|
|
||||||
|
Promotional displays
|
|
|
||||||
|
Office furniture and equipment
|
|
|
||||||
|
|
|
|||||||
|
Accumulated depreciation:
|
||||||||
|
Buildings
|
|
|
||||||
|
Machinery and equipment
|
|
|
||||||
|
Motor vehicles
|
|
|
||||||
|
Promotional displays
|
|
|
||||||
|
Office furniture and equipment
|
|
|
||||||
|
|
|
|||||||
|
Property and equipment, net
|
$
|
|
$
|
|
||||
| b. |
Depreciation expenses amounted to $
|
F - 30
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 7:- |
INTANGIBLE ASSETS, NET
|
| a. |
Composition:
|
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
Cost:
|
||||||||
|
Know-how and patents
|
$
|
|
$
|
|
||||
|
Technology
|
|
|
||||||
|
Customer relationships
|
|
|
||||||
|
|
|
|||||||
|
Accumulated amortization:
|
||||||||
|
Know-how and patents
|
|
|
||||||
|
Technology
|
|
|
||||||
|
Customer relationships
|
|
|
||||||
|
|
|
|||||||
|
Intangible assets, net
|
$
|
|
$
|
|
||||
| b. |
Amortization expenses related to intangible assets amounted to $
|
| c. |
Estimated amortization of intangible assets for the years ended:
|
|
December 31,
|
||||
|
2026
|
$
|
|
||
|
2027
|
|
|||
|
2028
|
|
|||
|
$
|
|
|||
F - 31
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 8:- |
GOODWILL
|
The Company operates in one operating segment, and this segment consists of only one reporting unit.
The changes in the carrying amount of goodwill associated with continuing operations and appearing in the accompanying consolidated balance sheets as of December 31, 2025 and 2024 are as follows:
|
Total
|
||||
|
As of January 1, 2024
|
$
|
|
||
|
Foreign currency translation adjustments
|
(
|
)
|
||
|
As of December 31, 2024
|
|
|||
|
Foreign currency translation adjustments
|
|
|||
|
As of December 31, 2025
|
$
|
|
||
| NOTE 9:- |
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
|
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
Employees and payroll accruals
|
$
|
|
$
|
|
||||
|
Accrued expenses
|
|
|
||||||
|
Government authorities
|
|
|
||||||
|
Uncertain tax positions
|
|
|
||||||
|
Others
|
|
|
||||||
|
$
|
|
$
|
|
|||||
| NOTE 10:- |
COMMITMENTS AND CONTINGENT LIABILITIES
|
| a. |
Guarantees:
|
As of December 31, 2025 and 2024, the Company had credit lines of approximately $547 and $521 , out of which $66 and $204 were utilized for bank performance guarantees, advance payment guarantees and bid bond guarantees from several banks, respectively, mainly in Israel and Canada.
| b. |
Legal proceedings:
|
The Company is subject to legal proceedings arising in the normal course of business. Based on the advice of legal counsel, management believes that these proceedings will not have a material adverse effect on the Company's financial position or results of operations.
F - 32
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 11:- |
SHAREHOLDERS’ EQUITY
|
| a. |
Pertinent rights and privileges conferred by common shares:
|
The common shares confer upon their holders the right to receive notice to participate and vote in the general meetings of the Company and the right to receive dividends, if declared.
| b. |
Stock Option Plan:
|
On June 23, 2010, Senstar Technologies Ltd.’s Annual General Meeting approved the Company’s 2010 Israeli Share Option Plan, or the 2010 Plan, which authorizes the grant of options to employees, officers, directors and consultants of the Company and its subsidiaries. In June 2013, Senstar Technologies Ltd.’s shareholders approved an increase to the number of common shares available for issuance under the 2010 Plan by an additional 500,000 shares. The 2010 Plan had an original term of ten years , which was extended in August 2020 for an additional 5 years, on which date Senstar Technologies Ltd.’s Board of Directors had also increased and set the number of common shares available for issuance under the 2010 Plan to 1,200,000 shares. As part of the Redomiciliation, the Company decided to cancel the 2010 Plan.
In August 2024, the Company adopted the Senstar Technologies Corporation Stock Option Plan, or the 2024 Plan.
The maximum number of Senstar Technologies Corporation’s common shares reserved for issuance under the 2024 Plan is 1,250,000 common shares (following an increase of additional 250,000 common Shares as was approved by the Board of Directors at April 2025). The board of directors, Senstar’s compensation committee, or another authorized committee of the Senstar’s board of directors, administers the 2024 Plan. Under the 2024 Plan, the administrator has the authority, subject to the terms of the 2024 Plan and applicable law, to (a) determine the eligible employees, consultants and directors to whom options may be granted; (b) grant options on such terms and conditions as it determines, including (i) the time at which options may be granted, (ii) the conditions under which options may be granted or forfeited, (iii) the number of Senstar’s common shares to be covered by an option, (iv) the exercise price of an option, (v) whether any restrictions or limitations apply on Senstar’s common shares issuable pursuant to such options, and (vi) the acceleration of vesting or exercisability, or the waiver of any termination provisions of any option; (c) determine whether an option is a qualifying option or non-qualifying option for Canadian tax purposes; (d) establish the form or forms of option agreements; (e) cancel, amend, adjust or otherwise change any option; (f) construe and interpret the 2024 Plan and all option agreements; (g) adopt, amend, prescribe and rescind administrative guidelines and rules relating to the 2024 Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws or qualifying for favorable tax treatment under applicable foreign laws; and (h) make all other determinations and take all other actions necessary or advisable for the implementation and administration of the 2024 Plan.
As of December 31, 2025, 232,334 Senstar common shares were available for future option grants under the 2024 Plan.
F - 33
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 11:- |
SHAREHOLDERS’ EQUITY (Cont.)
|
A summary of employee option activity under the Company’s stock option plans as of December 31, 2025 and changes during the year ended December 31, 2025, and December 31, 2024 and changes during the year ended December 31, 2024 are as follows:
|
Number of options
|
Weighted-average exercise price
|
Weighted- average remaining contractual life
(in months)
|
Aggregate intrinsic
value
(in thousands)
|
|||||||||||||
|
Outstanding at January 1, 2024
|
|
|
|
|
||||||||||||
|
Granted
|
|
|
-
|
-
|
||||||||||||
|
Exercised
|
(
|
)
|
|
-
|
-
|
|||||||||||
|
Expired
|
(
|
)
|
|
-
|
-
|
|||||||||||
|
Outstanding as of December 31, 2024
|
|
|
|
|
||||||||||||
|
Exercisable as of December 31, 2024
|
|
|
|
|
||||||||||||
|
Number of options
|
Weighted-average
exercise price
|
Weighted- average
remaining
contractual life
(in months)
|
Aggregate intrinsic
value
(in thousands)
|
|||||||||||||
|
Outstanding at January 1, 2025
|
|
|
|
|
||||||||||||
|
Granted
|
|
|
|
- |
|
- | ||||||||||
|
Exercised
|
(
|
)
|
|
-
|
-
|
|||||||||||
|
Expired
|
(
|
)
|
|
-
|
-
|
|||||||||||
|
Outstanding as of December 31, 2025
|
|
|
|
|
||||||||||||
|
Exercisable as of December 31, 2025
|
|
|
|
|
||||||||||||
The weighted-average grant-date fair value of options granted during the years ended December 31, 2025 and 2024 were $1.74 and $1.15 , respectively. No options were granted in 2023. The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company’s closing stock price on the last trading day of the fourth quarter of fiscal 2025 and the exercise price, multiplied by the number of in-the-money options). This amount changes, based on the fair market value of the Company’s shares. The total intrinsic value of options exercised for the years ended December 31, 2025 and 2024 were approximately $4 and $12 , respectively. As of December 31, 2023, there was no intrinsic value. As of December 31, 2025, there was approximately $448 of unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Company’s stock option plan. This cost is expected to be recognized over a period of up to 3 years.
F - 34
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 11:- |
SHAREHOLDERS’ EQUITY (Cont.)
|
The options outstanding as of December 31, 2025 are follows:
|
Number of options
outstanding as of
December 31,
2025
|
Exercise
price
|
Weighted
average
remaining
contractual life
(in months)
|
Number of options
exercisable as of
December 31,
2025
|
|||||||||||
|
|
|
|
|
|||||||||||
|
|
|
|
|
|||||||||||
|
|
|
|
|
|||||||||||
|
|
|
|
||||||||||||
| c. |
Dividends:
|
Dividends, if any, will be declared and paid in U.S. dollars.
| NOTE 12:- |
BASIC AND DILUTED NET EARNINGS PER SHARE
|
|
Year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Numerator:
|
||||||||||||
|
Income (loss) attributable to Senstar shareholders
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
|
Denominator:
|
||||||||||||
|
Denominator for basic net earnings per share weighted-average number of shares outstanding
|
|
|
|
|||||||||
|
Effect of diluting securities:
|
||||||||||||
|
Employee stock options
|
|
|
|
|||||||||
|
Denominator for diluted net earnings per share - adjusted weighted average shares and assumed exercises
|
|
|
|
|||||||||
F - 35
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 13:- |
TAXES ON INCOME
|
| a. |
Tax laws and tax rates applicable to the Group companies:
|
The Company:
The Company is taxed at the regular corporate tax rate for Canadian companies domiciled in Ontario at 26.5 %.
Non-Canadian subsidiaries taxation:
Non-Canadian subsidiaries are taxed according to the tax laws in their respective country of domicile. The tax rates of the Company's non-Canadian subsidiaries range between 19 %-30 %.
| b. |
Tax assessments:
|
Senstar Technologies Corporation has not received final tax assessments since its incorporation. Senstar Technologies Ltd. received final tax assessments in Israel through the 2024 tax year. The remaining subsidiaries have not received final tax assessments since their incorporation. However, the assessments of these subsidiaries are deemed final through the range between the 2019-2023 tax years.
F - 36
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 13:- |
TAXES ON INCOME (Cont.)
|
| c. |
Reconciliation between the theoretical tax expense, assuming all income is taxed at the Canadian statutory rate for 2025 and 2024 and the Israeli statutory rate for 2023, and the actual tax expense, is as follows:
|
|
Year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Income (loss) before taxes as reported in the statements of operations
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
|||||||||||||||||||
|
Canadian Federal Statutory Tax Rate
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
(
|
)
|
|||||||||||||
|
Provincial and Local Income Tax, Net of Federal Income Tax Effect
|
(
|
)
|
(
|
)
|
(
|
)
|
|
|
|
|||||||||||||||
|
Foreign Tax Effect
|
||||||||||||||||||||||||
|
United States of America
|
||||||||||||||||||||||||
|
Changes in valuation allowance
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|
|
||||||||||||||
|
Tax rate differences in subsidiaries and benefit from reduced tax rates
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|
|
||||||||||||||
| Foreign tax credits | ||||||||||||||||||||||||
|
Other
|
(
|
) |
(
|
) |
|
|
|
|
||||||||||||||||
|
Germany
|
||||||||||||||||||||||||
|
Changes in enacted tax rates
|
|
|
|
|
|
|
||||||||||||||||||
|
Tax rate differences in subsidiaries and benefit from reduced tax rates
|
|
|
|
|
|
|
||||||||||||||||||
|
Non-deductible professional fees
|
|
|
|
|
|
|
||||||||||||||||||
|
Israel
|
||||||||||||||||||||||||
|
Withholding tax undistributed earnings
|
|
|
(
|
)
|
(
|
)
|
|
|
||||||||||||||||
|
Non-deductible professional fees
|
|
|
(
|
)
|
(
|
)
|
|
|
||||||||||||||||
|
Canada
|
||||||||||||||||||||||||
|
Tax rate differences in subsidiaries and benefit from reduced tax rates
|
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
|
Investment tax credits
|
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
|
Other
|
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
|
Other Foreign Jurisdiction
|
||||||||||||||||||||||||
|
Other
|
|
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||||
|
Provision for uncertain tax position
|
(
|
)
|
(
|
)
|
|
|
|
|
||||||||||||||||
|
Non-deductible stock compensation
|
|
|
|
|
|
|
||||||||||||||||||
|
Non-deductible professional fees
|
|
|
|
|
|
|
||||||||||||||||||
|
Taxable capital gains
|
|
|
|
|
|
|
||||||||||||||||||
|
Non-deductible other
|
|
|
|
|
|
|
||||||||||||||||||
|
Changes in valuation allowance
|
|
|
|
|
|
|
||||||||||||||||||
|
Investment tax credits
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|
|
||||||||||||||
|
Withholding tax undistributed earnings
|
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
|
Other
|
|
|
(
|
)
|
(
|
)
|
|
|
||||||||||||||||
|
Taxes on income (tax benefit) in the statements of operations
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||||||||||||||
(*) Based on the Canadian statutory income tax rate of
F - 37
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 13:- |
TAXES ON INCOME (Cont.)
|
| d. |
Taxes on income (tax benefit) included in the statements of operations:
|
|
Year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Current
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||
|
Deferred
|
|
|
|
|||||||||
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||
|
Year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Domestic (*)
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
|
Foreign
|
(
|
)
|
|
(
|
)
|
|||||||
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||
(*) Domestic refers to Canada for 2025 and 2024 and to Israel for 2023.
F - 38
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 13:- |
TAXES ON INCOME (Cont.)
|
| e. |
Deferred income taxes:
|
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets are as follows:
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
Deferred tax assets:
|
||||||||
|
Operating losses carry forwards
|
$
|
|
$
|
|
||||
|
Capital losses carry forwards
|
|
|
||||||
|
Tax Credits
|
|
|
||||||
|
Right of use liability
|
|
|
||||||
|
Property, plant and equipment
|
|
|
||||||
|
Deferred revenue
|
|
|
||||||
|
Reserves
|
|
|
||||||
|
Total deferred taxes before valuation allowance
|
|
|
||||||
|
Valuation allowance
|
(
|
)
|
(
|
)
|
||||
|
Deferred tax assets, net:
|
|
|
||||||
|
Deferred tax liabilities:
|
||||||||
|
Intangible assets
|
(
|
)
|
(
|
)
|
||||
|
Right of use asset
|
(
|
)
|
(
|
)
|
||||
|
Tax credits
|
(
|
)
|
(
|
)
|
||||
|
Undistributed earnings of subsidiaries
|
(
|
)
|
(
|
)
|
||||
|
Deferred tax liabilities:
|
(
|
)
|
(
|
)
|
||||
|
Net deferred tax assets
|
$
|
|
$
|
|
||||
|
Domestic (*)
|
$
|
(
|
)
|
$
|
(
|
)
|
||
|
Foreign
|
$
|
|
$
|
|
||||
(*) Domestic refers to Canada.
F - 39
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 13:- |
TAXES ON INCOME (Cont.)
|
As of December 31, 2025, the Company currently plans to repatriate a portion of its foreign earnings from its foreign subsidiaries in the foreseeable future. As a result, the Company has recognized a deferred tax liability consisting of potential withholding and distribution taxes of $0.32 million as of December 31, 2025.
The Company’s repatriation plans are subject to change, and any material adjustments to the deferred tax liability resulting from changes in repatriation plans or tax laws will be reflected in future periods. The Company’s intention to repatriate foreign earnings reflects its strategic business decisions regarding the utilization of funds. Management continues to monitor changes in tax law and other factors that could impact the timing or amount of repatriation
The Company provided valuation allowance for a portion of the deferred tax regarding the carryforwards losses and other temporary differences that management believes are not expected to be realized in the foreseeable future (see Note 13g).
| f. |
The domestic and foreign components of income (loss) before taxes are as follows:
|
|
Year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Domestic (*)
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
|
Foreign
|
|
|
(
|
)
|
||||||||
|
$
|
|
$
|
|
$
|
(
|
)
|
||||||
(*) Domestic refers to Canada for 2025 and 2024 and to Israel for 2023.
| g. |
Net operating carryforward tax losses:
|
As of December 31, 2025 Senstar Technologies Corporation has estimated total available carryforward operating tax losses of $1,024 (2024 - $866 ) which may be used to offset against future taxable income, for a period of 20 years. These losses begin to expire starting 2043. A full valuation allowance on these carry forward tax losses due to the uncertainty of their future realization . As of December 31, 2025 the Company's foreign subsidiaries have estimated total available carryforward operating tax losses of $1,399 (2024 - $7,571 ) which may be used to offset against future taxable income, for periods ranging between 1 year to unlimited time for the realization of such tax losses.
F - 40
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 13:- |
TAXES ON INCOME (Cont.)
|
As of December 31, 2025 the Company recorded a net deferred tax asset after valuation allowance in the amount of $263 (2024 - $855 ) for its subsidiaries' carryforward tax losses.
Utilization of U.S. net operating losses (federal and state net operating losses) may be subject to annual limitation due to the "change in ownership" provisions of the Internal Revenue Code of 1986 and similar state provisions.
| h. |
Uncertain tax positions:
|
As of December 31, 2025 and 2024, balances in respect to ASC 740, "Income Taxes" amounted to $178 and $1,874 , respectively. A reconciliation of the beginning and ending amount of unrecognized tax positions is as follows:
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
Balance at the beginning of the year
|
$
|
|
$
|
|
||||
|
Additions based on tax positions taken related to the current year
|
|
|
||||||
|
Reduction related to expirations of statute of limitations
|
(
|
) |
(
|
)
|
||||
|
Reductions related to settlements of tax matters
|
(
|
)
|
||||||
|
Foreign currency translation adjustments
|
|
|
||||||
|
Balance at the end of the year
|
$
|
|
$
|
|
||||
Although the Company believes that it has adequately provided for any reasonably foreseeable outcomes related to tax audits and settlement, there is no assurance that the final tax outcome of its tax audits will not be different from that which is reflected in the Company's income tax provisions. Such differences could have a material effect on the Company's income tax provision, cash flow from operating activities and earnings in the period in which such determination is made.
F - 41
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 13:- |
TAXES ON INCOME (Cont.)
|
| i. |
Supplemental disclosure for taxes in cash flow
|
|
Year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Supplemental disclosures of cash flows activities:
|
||||||||||||
|
Cash paid (refund) during the year for:
|
||||||||||||
|
Federal tax
|
$
|
|
$
|
(
|
) |
$
|
|
|||||
|
Provincial tax
|
|
(
|
) |
|
||||||||
|
United States tax
|
|
|
|
|||||||||
|
Canada
|
|
|
|
|||||||||
|
Israel
|
|
|
|
|||||||||
|
$
|
|
$
|
(
|
) |
$
|
|
||||||
* The company was domiciled in Canada in 2025 and 2024, in 2023 the company was domiciled in Israel.
| NOTE 14:- |
BALANCES AND TRANSACTIONS WITH RELATED PARTIES
|
Commencing on October 1, 2014, the Company compensates its Executive Chairman of the Board for services provided to the Company. In addition to the directors' fees paid by the Company to all of its directors, the Company pays the Executive Chairman for his services: (i) a monthly payment of approximately $4 for time devoted to such position; and (ii) an annual cash bonus of $30 that is payable only if the Company's net profit pursuant to its annual audited and consolidated financial statement exceeds $5,000 .
| NOTE 15:- |
SEGMENT INFORMATION
|
The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the chief operating decision maker (“CODM”), which is the Chief Executive Officer. The CODM manages the Company’s business activities as a single operating and reportable segment at the consolidated level. Accordingly, the Company's CODM uses consolidated net income to measure segment profit or to assess performance. There is no expense or asset information, that are supplemental to those disclosed in these consolidated financial statements, that are regularly provided to the CODM. The allocation of resources and assessment of performance of the operating segment is based on consolidated net income as shown in the Company’s consolidated statements of operations. The CODM considers net income in the annual forecasting process and reviews actual results when making decisions about allocating resources. Since the Company operates as one operating segment, financial segment information, including profit or loss and asset information, can be found in the consolidated financial statements.
F - 42
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 15:- |
SEGMENT INFORMATION (Cont.)
|
Geographical information:
The following is a summary of revenues within geographic areas based on end customers’ location and long-lived assets:
1. Revenues:
|
Year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
North America
|
$
|
|
$
|
|
$
|
|
||||||
|
Europe
|
|
|
|
|||||||||
|
APAC
|
|
|
|
|||||||||
|
South and Latin America
|
|
|
|
|||||||||
|
Others
|
|
|
|
|||||||||
|
$
|
|
$
|
|
$
|
|
|||||||
2. Long-lived assets:
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
Canada
|
$
|
|
$
|
|
||||
|
Europe
|
|
|
||||||
|
USA
|
|
|
||||||
|
$
|
|
$
|
|
|||||
Long-lived assets include operating lease right-of-use assets, intangible assets, net, goodwill, and property and equipment, net.
F - 43
SENSTAR TECHNOLOGIES CORPORATION AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 16:- |
SELECTED STATEMENTS OF INCOME DATA
|
Financial expenses:
|
Year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Financial expenses:
|
||||||||||||
|
Bank charges
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
|
Foreign exchange loss, net
|
(
|
)
|
|
(
|
)
|
|||||||
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||
|
Financial income:
|
||||||||||||
|
Interest on short-term bank deposits
|
|
|
|
|||||||||
|
Foreign exchange income, net
|
|
|
|
|||||||||
|
|
|
|
||||||||||
|
Financial income (expenses), net
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||
| NOTE 17:- |
SUBSEQUENT EVENTS
|
On December 9, 2025, we entered into a definitive agreement to acquire Munich-based Blickfeld GmbH, a pioneer in 3D LiDAR sensors and software. The transaction, which closed on February 13, 2026, was valued at €10.4 million in cash, with an additional €1 million in performance-based earnouts, fully funded from Senstar's cash reserves. By acquiring Blickfeld, Senstar strengthened its position in critical infrastructure security and expanded its capabilities into high-growth verticals such as 3D traffic management and volume monitoring. Post-acquisition, Blickfeld GmbH and its North American subsidiary will continue to operate under their current names as subsidiaries of Senstar, maintaining their Munich headquarters while utilizing Senstar's global sales and support network to accelerate market penetration
F - 44
FAQ
What does Senstar Technologies (SNT) do in the security market?
Senstar Technologies provides perimeter intrusion detection systems, video management software, security management software, access control and intelligent video analytics. Its solutions protect critical infrastructure such as borders, power plants, prisons, logistics sites, data centers and telecom assets in more than 100 countries worldwide.
How much revenue did Senstar Technologies generate in 2025?
Senstar reported 2025 consolidated revenue of $36,374 thousand. North America contributed $17,959 thousand, Europe $12,830 thousand, APAC $4,942 thousand, South and Latin America $467 thousand, and other regions $176 thousand, reflecting a highly international customer base across multiple geographies.
What is notable about Senstar Technologies’ acquisition of Blickfeld GmbH?
Senstar agreed in December 2025 to acquire Munich-based Blickfeld GmbH for €10.4 million in cash plus €1 million of performance-based earnouts, funded from cash reserves. The 3D LiDAR specialist strengthens Senstar’s capabilities in critical infrastructure security, traffic management and industrial volume monitoring applications.
Where does Senstar Technologies (SNT) generate most of its revenue geographically?
Senstar derives the vast majority of its revenue outside Canada, with about 94.5% of 2025 sales from international markets. North America and Europe are the largest regions, while APAC, South and Latin America, and other areas provide additional diversification across global security and infrastructure projects.
How much does Senstar Technologies invest in research and development?
Senstar spent $3.3 million on research and development in 2025. The company focuses R&D on enhancing perimeter sensors, AI-driven analytics, its Symphony common operating platform, and new technologies like sensor fusion and LiDAR integration to keep pace with evolving customer and regulatory security requirements.
What are the main financial and operational risks highlighted by Senstar Technologies?
Senstar cites risks from reliance on government security budgets, intense competition, currency fluctuations, supply-chain challenges, and cybersecurity threats. Additional concerns include potential PFIC tax treatment for U.S. investors, evolving ESG expectations, and exposure to geopolitical and trade-policy shifts across its global operating footprint.