BOS Better Online Solutions Ltd. Stock

Ladies and gentlemen, welcome to B.O.S. Q2 Investor Summit. Thank you for joining us today. Before we begin, a brief reminder that this call contains forward-looking statements relating to B.O.S.' business, financial condition and results of operations. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Such statements include, but are not limited to, matters relating to product demand, pricing, market acceptance, economic conditions and technology development as further detailed in the company's filings with the various securities authorities.

Before I turn things over to management, I would like to give a brief recap of the results we just released. The growth momentum continued. Second quarter 2026 revenue grew 29% year-over-year, helping offset a softer first quarter of 2026 and bringing trailing 12-month revenue to the same level as our record 2025 revenue. We anticipate that full year 2026 revenue will exceed full year 2025 revenue. Our backlog remained at a record $31 million as of the end of the second quarter of 2026. Approximately $20 million of the backlog is scheduled for delivery by year-end. Together with first half revenue, this amount represents approximately 91% of our full year 2025 revenue.

Despite the increase in our operating expenses due to the dollar's devaluation, we believe we will offset this through revenue growth and improved gross profit margins. As a result, we expect net income for full year 2026 to exceed $3.6 million we achieved in year 2025. Our balance sheet is solid. Shareholders' equity stands at $30.9 million and cash stands at $10 million. That gives us the flexibility to capitalize on organic and M&A opportunities.

B.O.S. is a company with a growing backlog, accelerating revenues, a clean balance sheet and exposure to some of the strongest structural trends in the global economy, defense spending, automation and supply chain modernization. And yet, B.O.S. currently has a market capitalization of approximately $31 million and its enterprise value, market cap less cash is approximately $21 million. For comparison, the Russell Microcap Index trades at approximately 2x book value versus B.O.S. trades 1x book value. Russell Microcap Index price-to-earnings ratio of roughly 16x compared to our roughly 9x. Thank you for watching.

Now I will turn the call over to Eyal Cohen, CEO.

Good morning. Great to see you again in our quarterly conference. Joining me today is Moshe, our Chief Financial Officer. I'm pleased to see strong participation today, including many new names following the recent virtual conferences we participated during May, June and July.

Let me start by sharing a few thoughts on how the business is progressing. I'm very pleased with our financial performance, financial position, management team, Board members and the growth opportunities in front of us. This has given us the confidence to grow year after year, and we remain focused on continuing that trend. I am pleased that the commercial market in Israel has recovered as reflected in a 17% growth in the RFID revenue in the first half of the year as compared to the comparable period.

Demand in the Defense segment continues to be strong as reflected in our record backlog, most of which relates to our Supply Chain division. The penetration of our Robotics division into more factories in the Defense segment is going very well. We are successfully implementing AI good in B.O.S. for internal use to improve our operational efficiency and in software development for commercial use, commercial sale. I believe these steps will yield improved operational margins and support our revenue growth.

On the financial front, despite 30% growth in the total revenue between Q1 '26 and Q2 '26, cash remained roughly unchanged at $10 million. We grew without needing to burn cash, which is a strong indication of highly efficient cash management with our vendors helping to finance our clients. We will deploy this cash to support our external growth through M&A. On the M&A front, we have several AI opportunities on the table that we have been evaluating carefully.

On the IR side, in May, we presented at the MicroCapClub Virtual Summit. In June, we participated in the iAccess Alpha Virtual Summit. In July, we hosted our first investor webinar. We are going to participate in the Sidoti conference scheduled for the end of September. In September, we will also join a Non-Deal Roadshow to ThinkEquity clients. During July and August, we released 3 announcements on a major contract.

In recent [ process ] we have became active online on Facebook, LinkedIn, X and via e-mail, and we plan to increase our investment in those channels. I will send you the link to our pages, and you are welcome to follow and share. We are hopeful those activities will help close the gap in our valuation. With that, I want to thank you again for your continued confidence and support in B.O.S. as we carry this momentum into the second half of the year. Thank you for listening.

I will now -- we will now be happy to open the call for questions.

Congratulations on a fantastic quarter. Regarding one of your recent orders, it was in the semiconductor industry. Is that kind of a onetime order? Or do you see more orders occurring from that industry?

We have to understand that once we announce on a contract that relates to the Supply Chain division, on the back of it, there is a design work of embedding our components into the client's product that is in development process. Actually, we work on that order a year ago. So on this the products start the mass production, then we start to get the orders. So we expect as long as the product is alive, the orders will follow.

Okay. And can you kind of give an update on your progress in India? I know that's becoming a large part of your revenues. And where do you see that progressing over the next year?

Yes. We are very pleased with the progress of our team in India. They are doing a very good job. They are reaching to a client that we have never been in contact with. I am sure that it will yield to additional -- it will support the growth of B.O.S. in India in year '27.

Okay. And my final question is referring to M&A, you still plan to make any M&A activity non-dilutive to shareholders and finance that with existing cash and bank loans. Is that correct?

That's correct. Actually, we are planning to do an M&A. But as you know, in the recent 2 or 3 years, we didn't -- we have not succeeded to close the deal because it doesn't match to our criteria, especially for the first criteria, that it should be a very -- a company with a solid history of profit and a positive outlook. We have several opportunities on the table. We are checking it. We are in negotiations with several companies.

Hopefully, one of them will be closed. Of course, we have the financial policy, how to finance -- we have the policy how to finance those deals, as I mentioned before. We have like $10 million in the cash in hand. If we are buying a profitable company, there is no reason why the bank won't participate at 50% of the financing. We actually can reach to maximum acquisition value of $20 million. So we are set.

It's Scott Weis. Nice quarter. My question is on the RFID division. It was up a nice 17.5% year-over-year. It bounced back. Was that a function of the easy comp year-over-year? Or are you seeing some kind of a positive change there?

Yes. We see a positive change. Actually, we expected -- we were expecting for that, and it's happened a little bit silent here in Israel and it camps. There is a rebound in the market. The demand starts very strong. We see a recovery. Hopefully, it will continue for a long time after 3 years of like to be in a hold position. So for year '26, it looks very -- I'm bullish on year '26 for the RFID division.

And the same question for the Supply Chain segment. Revenues were down 6% or so. Can you -- is there any insight you can give us as to why it was down?

No. As you saw, the fluctuation in this division are significantly high. As you remember, in the first quarter, we were below the comparable quarter last year and about -- if I remember correctly, it was like 17% less and then here in the second quarter, we succeed to close the gap. We know that our clients in the defense segment will buy our component, but we are not controlling on the rate of consumption.

There could be fluctuation because of that, I'm not giving importance to the 5% decrease. More than this, we have a very strong backlog that $31 million, which is a record backlog. By the way, despite of 30% growth in revenues from Q1 to Q2, the backlog still remain on the same level of $31 million as it was at the end of the first quarter.

Consolidated.

Yes, consolidated. Out of the $31 million, we have $20 million for delivery by the year-end. We did the calculation. Based on that, we provided positive outlook that we will exceed the $51 million in year '26.

This is Kevin from Alliance Global Partners. As a follow-up on M&A, could you speak to what are kind of the gating factors in it? Would it be finding targets, price expectations or the financing capacities?

I'm not sure I got your question. Can you repeat because the line is not so clear. Can you repeat, please?

Yes, sure. As a follow-up to the earlier M&A question, could you kind of speak to what are some of the gating factors on kind of closing a deal? Would that be finding targets, price expectations or the financing capacity?

Yes. The criteria are, as I mentioned, that the cap of acquisition of investment will be $20 million. The criteria that there should be a synergy to our core business. You know the synergy could be a range of synergy, how much is 50% synergy, 100% full synergy. We have flexibility on that issue, on that criteria.

Regarding the financial position, the financial performance or the performance of the company, we are checking that in the recent 3 to 5 years, the company presented consecutive profits. There is positive outlook going forward. Regarding the multiple, the valuation, we are -- the thing that we have on the table, the multiple on the EBITDA is between 5 to 6. This is the range of valuation we are talking about.

Got it. And then as a follow-up, you've announced about $4.7 million in new orders since late July on top of the $7.1 million from India and the U.S. through May. And your guidance has stayed pinned around that $3.6 million range, which is flat to last year. Could you walk me through that bridge? Is it incremental revenue being absorbed by shekel and the mix? And then specifically, what has to change? Would that be FX pricing or mix for this momentum to break through to the bottom line in 2027?

Yes. In this year, this press release, we just announced that we will exceed the $3.6 million. Usually, we don't provide exact percentage of growth. Usually, we use that we will exceed like we did -- like we are doing in the revenue that we will exceed the $51 million, and we will exceed the $3.6 million. But still, there is a challenge we are facing with the devaluation of the U.S. dollar. As you saw in the first half of the year, it increased our operational expenses by about $600,000. Yes, it increased the operational expenses by $600,000. On an annual basis, it's like $1.2 million.

We have to find a way to compensate it in order not to be -- in order to generate profit that will be higher than year 2025, higher than the $3.6 million. We can work on internal efficiency, and we are doing it mainly with the assistance of the AI tools to improve our operational efficiency. But to improve our operational efficiency by $1.2 million a year, it will be very tough.

We are doing it by operational efficiency, by increasing the gross profit margin of our products in order to compensate. We are increasing our revenues. If you increase the revenues and you increase -- you work with all those points together, this is the assumption for our outlook for exceeding the $3.6 million.

James [ Chan ] here. In a previous conference call, you suggested that you were open to the possibility of a new name for your company because Better Online Solutions is awkward at best and a little inaccurate and a little bit silly. So I have been working on this and giving it some thought and consulting the people. And I believe the best solution is an organic one, something that you're already known by. So I suggest BOSC, your symbol as the name for the company.

I totally agree with you. I think you know why? BOSC? because it's also BOScoin. So it's -- okay. It's great. Yes, but I agree, all the investors know the name BOSC, they know the ticket. I totally agree with you. If I won't get any other recommendation from our shareholders that can send me e-mails and other suggestion, I think we will go for it on it. Any further questions?

This is [ Igor Nagorski ] and nice talking to you again, especially after a strong quarter. I want to touch upon gross margins. So the gross margins, I don't have it really in front of me right now, but they seem to be kind of being a little bit flat while your revenue is growing. Is gross margins affected by RFID versus supply chain mix? Maybe you can give us -- I know you don't disclose them exactly, but maybe you can walk us a little bit through that? Or are they affected by FX? Or do you think your gross margins can improve while your revenue is growing?

I think the gross margin, we are working that the gross margin will improve because what I just mentioned before, because we have to compensate on the effect of the devaluation of the U.S. dollar. We are working extensively with our clients to increase the sales price. I have to tell you that since the beginning of the year, all the salesperson, all the sales team increasing prices in order to compensate it. I'm following, we are following month by month. Our expectations are that our gross profit margin go ahead will increase.

But in certain cases, when we have, there could be a huge transaction, especially in the supply chain for a certain kind of product that the gross profit margin could be lower. It's a price of -- it's a matter of negotiation with the client. I hope it won't decrease -- it won't lower the average of the gross profit margin that we're expecting. In general, we are expecting higher gross profit margins.

Does it apply to just supply chain or it also equally applies to RFID?

Yes. I mentioned the supply chain -- because in the supply chain, there are huge transactions. There could be a transaction like of $2 million, $1.5 million that can affect significantly on a specific quarter. In the RFID, the transactions are much lower. It could be like $0.25 million, $100,000, $0.5 million maximum. Because of that, I mentioned just the effect of certain transactions of the supply chain.

For RFID division, apart from obviously the issues that Israel has been in various stages of for the last few years, you had specific company issue. I remember that last year, you were restructuring your RFID division. Is this restructuring over or we expect some significant further improvements? Or how much did it change from the last year?

Yes, it was improved. It's not a company under the RFID, it's a unit under the RFID. We have been doing the great work there and great progress. It absolutely -- the performance now are much better than we had in the parallel in the comparable period last year. But still, we have work to do, but this unit will be profitable in year '26 as opposed to year '25. The certain unit in the RFID, the RFID in general is a profitable division. The certain specific unit that caused us such -- that caused us some losses decreased our net income in the RFID division, I think now the situation is much, much more better.

Is RFID more or less a function of, if Israel in a state of war or that is relative quiet because obviously, RFID has done much better in Q2 than in Q1 or there are other significant factors?

I think the RFID is 100% affected by the Israeli commercial market. As I mentioned before, we are in the process to penetrate with the RFID to the defense segment, and we hired a consulting company special for that mission. We're also working to penetrate to hospitals and which is a growing segment in Israel and very stable like in all other places in the world. We are searching acquisition in that field. It's very tough. We are not finding. We don't even have opportunity on the table. The other option is to set a team to build it from 0 from scratch. By that, you reduce the exposure of the RFID division to geopolitical events that put on hold the commercial segment in Israel.

Any other further questions? Okay. Thank you for your time and attention. Feel free to reach out if you would like to schedule with us a one-on-one session. Thank you very much. It was a pleasure to see you again today.

Thank you. Have a good day.

Welcome, everyone, and thank you for joining BOS' virtual investor event on strategy, execution and financial discipline. Today's conversation is designed to give you a concise and candid look at how BOS is executing in 2026, converting their backlog into revenue, strengthening its supply chain platform and driving profitability across aerospace, defense and industrial and retail markets. We'll touch on the composition and quality of BOS' backlog, recent order activity in key geographies and how operational discipline in the Supply Chain division supports both growth and the margins.

So before all of that, we're going to also look ahead to what investors should think about in the coming quarters. With that, I'm going to turn it over to our speakers to introduce themselves, starting with Eyal, and then we'll go to the rest of you. So Eyal, will you kick us off, please.

Thank you, Toni. Eyal Cohen, I joined the company 20 years ago and acting as the company's CEO in the recent 5 years.

Hello. My name is Avidan Zelicovsky. I'm currently the President of the group. I'm also the CEO of the Supply Chain, which is about 20 years. Before that, the Supply Chain unit bought company BOS Odem, which now I am in the industry for the last 30 years.

I am Moshe Zeltzer. I'm the CFO of the group, and I joined the company 5 years ago.

Perfect. Eyal, will you give us a brief introduction here before we get started and kick off the presentation.

Yes, sure. So thank you for -- first, thank you for joining BOS' First Investor Summit. And before we start the presentation, I would like to give a brief on BOS. BOS integrates supply chain technologies for defense, manufacturers and retailers. And BOS has delivered 21 consecutive profitable quarters with the $51 million in annual revenue, a $3.6 million in net income and $4.6 million in EBITDA. A solid balance sheet with $30 million in equity, $10 million in cash and only $1 million in loans.

So in a moment, we will play a 10-minute video presentation that we have carefully prepared for this summit. It covers what we are, what we do, our financial performance and where we see BOS heading. Once the video concludes, we will be right here to answer any questions and have open discussions. So let's begin.

[Presentation]

At BOS, we're built around one idea that supply chains can be smarter, faster and more efficient and that the right technology makes that possible. We pursue that idea through 3 specialized divisions, each one tackling a different layer of the supply chain challenge. Our Robotics Division replaces manual labor with automated solutions, transforming how inventory is handled. Our RFID Division brings precision to tracking and end-of-line automation from sorting to packing across the entire supply chain. And our Supply Chain Division works even closer to our clients, integrating our franchised electromechanical components directly into their products. Together, these 3 divisions give BOS a broad and complementary platform, one that allows us to serve clients across multiple touch points in their operations.

BOS is led by an experienced executive team of 8 and a Board of 4, including a former Head of Procurement for the Israeli Ministry of Defense. Given our technology focus, we have 2 dedicated CTOs, one for Robotics, one for RFID. In total, we're a team of 80 professionals with 30% being engineers and technicians.

Now let's look at each division in more detail. Our Supply Chain division integrates franchised electromechanical components directly into the products of leading defense and high-tech companies. Our engineers work hand-in-hand with our clients' R&D teams, ensuring seamless integration that generates long-term OEM revenue as those products move into production. The growth driver here is simple. The more components we embed, the more we grow. That's why over the past 2 years, we've doubled our engineering team and tripled the number of manufacturers we represent.

We're proud to serve global defense leaders, Israel Aerospace Industries, Elbit Systems and Rafael, along with their hundreds of subcontractors across the U.S.A., India and Europe. This network is our launch pad for global expansion without the need for costly overseas offices. Our RFID Division delivers end-to-end supply chain automation for logistics centers, covering inventory tracking, automated sorting and automatic packing. We create real-time inventory visibility by connecting warehouse operations directly to our clients, ERP, WMS and MES systems. Our integrated platform combines ruggedized industrial hardware from Tier 1 manufacturers like Zebra and Honeywell with our own proprietary middleware software.

Beyond tracking, we deploy complete turnkey automation, automatic sorters, carton packing machines, robotic palletizing and pallet wrapping, enabling fully integrated order fulfillment. Our business model is built for predictability and scale. Recurring revenue from annual service contracts, ongoing consumable sales and expansion revenue as clients grow to new facilities. We serve top-tier enterprises across Israel, including Shufersal, IKEA and Teva.

Our Robotics Division designs and deploys custom automation solutions, replacing labor-intensive processes with precision robotics and automated machinery. Our engineers evaluate client production lines, identify automation opportunities and deliver a complete proposal from concept design and cost breakdown to ROI projections. Each robotic cell we build is fully integrated, robotic arms, custom grippers, proprietary peripheral machines and end-to-end electrical and software systems.

Over the past 2 years, we've strategically focused on the defense industry, a sector that still relies heavily on manual labor yet faces growing pressure for speed and quality. That's a powerful tailwind for automation.

Our flagship client is Elbit Systems, one of Israel's largest defense manufacturers. We've successfully developed and installed robotic production lines at Elbit Systems sites worldwide. Though due to confidentiality, we're unable to share footage of those systems.

With this offering in mind, let's turn to the financials and where we see growth. When we talk about growth at BOS, we think about it in 2 ways: organic growth building on what we have and strategic acquisitions that expand our reach. Over the past 4 years, the story has been primarily organic, and the numbers speak for themselves. Revenue grew from $33.6 million in 2021 to $51 million in 2025, that is meaningful sustained growth, built on real demand from real clients, and we believe that demand is only accelerating.

Three tailwinds, in particular, give us confidence. The first is the global increase in defense budgets. This is not a short-term cycle. It is a structural long-term shift in how governments around the world are prioritizing security. BOS is well positioned to benefit from this trend for years to come.

The second is closer to home. The replenishment and expansion of the Israeli Defense Forces inventory, driven by the conflict that began in October 2023, has created significant and ongoing demand that directly supports our business.

The third is newer and very promising. India is rapidly emerging as a major subcontracting hub for global defense programs and the numbers are already telling that story. In the first quarter of 2026 alone, we received $3.3 million in orders from Indian customers compared to just $172,000 in the same quarter last year. To capture this momentum and build on it, we appointed an Indian representative company in March 2026 to establish a dedicated presence in that market. We are only at the beginning of what we believe is a significant long-term opportunity. Alongside organic growth, we are actively building our acquisition pipeline and we have the financial strength to act on it.

Our balance sheet is solid. Shareholders' equity stands at $29 million, and we hold $9.5 million in cash, net of loans. That gives us real flexibility. We are targeting companies valued at up to $20 million with 2 nonnegotiable criteria: first, financial strength, a proven track record of profitability and consistent growth; second, strategic fit, companies that deepen and expand what we can offer to our existing clients.

On the financing side, approximately half of each acquisition will be funded through long-term bank loans with the remainder coming from our own resources.

I want to be clear on 1 point. No shareholder dilution is expected. Let me now turn to where we stand heading into the rest of 2026, and the picture is an encouraging one. When we combine our backlog of $31 million as of March 31, 2026 with Q1 revenues, we are already at $42.4 million, 83% of our full year 2025 revenues.

As a result, we expect to exceed year 2025 revenues that amounted to $51 million. The depreciation of the U.S. dollar against the New Israeli Shekel is creating pressure on our profitability and as a result, we are maintaining our net income target of $3.6 million for the full year.

BOS is a company with a growing backlog, accelerating revenues, a clean balance sheet and exposure to some of the strongest structural trends in the global economy, defense spending, automation and supply chain modernization. And yet BOS currently trades at book value. The Russell 2000, the index of small-cap companies we are measured against trades at approximately 2.4x book value, our price to earnings ratio stands at roughly 9x compared to 20x for the index.

We believe this gap exists primarily because not enough investors know our story yet. That is what we are working to change and calls like this one are part of that effort.

All right. We're back. Let's go ahead and jump into some questions that I have, and then some questions that have come in through the chat.

So let's start here. In one or two sentences, how would you describe what BOS does today for aerospace, defense, industrial and then retail customers?

So in one sentence, BOS leverages cutting-edge technologies to optimize supply chain operation through its 3 business divisions, the Supply Chain Division, the Robotics Division and the RFID Division.

And then can you give us a sense of how these 3 divisions complement each other?

Yes, sure. So BOS integrates technology that improves the efficiency of inventory production and logistics. The initial point is when our Supply Chain Division embeds our franchise component in the development process of our clients product. It continues when our Robotics Division offer robotic cells for manufacturing the clients products.

Thereafter, our RFID Division marks and tracks the product through the production and logistic phases using RFID. And at the end of the line, it provides automatic packing and sorting machines.

Wonderful. And then Avidan, this one might be for you, but how would you describe the Supply Chain Division in one sentence and then the main problem that you solve for customers?

Well, generally, our customers come from the technology sector, mainly defense and aerospace, which we are in the last 25 years focused on. But not only we also supply to the high level, medical, industrial and other tech. What we do supply is components of various technologies, which include sensors, displays, electromechanical, GPS indication components and others.

Our base is with engineers, which goes to the R&D engineering team in the tech industry and help them design the components in which we work closely with partners and distribution centers which include huge companies such as Amphenol Aerospace, all traded in the NASDAQ, Collins, Sensata, [Future], and we distribute their products and help design sell their components.

It varies from U.S. companies to European companies, to Asian companies. So we have a big variation, which we go to customers and help them design their product.

Wonderful. And then taking a step back here, where is BOS physically located?

We are located in 1 site in Israel, and we use 3,000 square meters to operate our business. In addition, we have 2 sales offices, 1 in India and 1 in the U.S.A. to serve the global operation of our Supply Chain Division.

Great. So what portion of this business is defense-related?

Yes. That's a great question. Approximately 65% of our business serves the defense segment in general. So there is a varied exposure among our 3 divisions. Most of our Supply Chain and Robotics Divisions' revenues are associated with the defense segment while RFID Division engages mainly with retailers.

So we are in the process of transitioning a significant portion of the RFID Division to the Defense segment. For that purpose, we recently engaged a specialized consulting firm led by IDF veterans, Israeli Defense Forces veterans to expand the RFID Division into the Israeli defense sector.

Got it. Got it. And I know some of these questions, some investors -- current investors might already know the answers. But I want to make sure that we answer all these questions for any potential investors who might be watching or anyone new to BOS' story. So let's go this direction here. What is kind of the revenue profile? And what portion of it is highly predictable.

I will take it. So more than 80% of our revenues are predictable. A major portion of our product is defined as a consumable for our clients versus CapEx, capital expenditure. For example, the electronic components that our Supply Chain division sells to our defense clients are embedded into munitions, which are consumables. Hence, the orders are highly repeated and highly predictable.

In the RFID Division, the annual service contracts for equipment and software and the printed materials like ribbons for industrial printers and RFID and bar code tags are highly repeated and highly predictable.

On the other hand, the robotic sales of our Robotics Division are capital expenditure for our clients, thus we have a very low visibility into the time frame of new orders from this division, from the Robotics Division.

And then Avidan, this one maybe for you here. So I know that you've doubled your engineering team and then tripled the number of manufacturers that you represent over the past 2 years. What would you say drove that decision? And then what does that mean for future revenue?

Well, the supply chain has a unique, I would say, solution to the customers, which makes our company unique even in the -- within the industry.

First, I would like to highlight both [BOS] and the Supply Chain, we have a very, very strong business development and sense for where the technology will go.

For example, in the corona, the medical innovation in Israel to solve medical issues that were rising in the corona and we immediately drove our engineering sales team to medical companies which develop medical system for that, and we have been growing in that field.

In the last years, if you look at what happens worldwide, the air defense became the most important technology in the world, and this was top #1 because there are 3 variations of technology of air defense.

The [Arrow missile], which intercepts ballistics, you have the mid one, which is the David's Sling, and you have the short one, which is the Iron Dome, all of which make above 90% interception.

Well, there's a huge demand due to the Russia-Ukraine War and also other tension of worldwide and in the Middle East. So we are already inside all these technologies with our components. This means a lot of need for sales engineering from my team, and we have doubled it because there's a big need for a lot of innovation.

So you have a formula here, which on one hand, we are conservative because we don't use a huge amount of people in R&D because we don't develop. But on the other hand, if any success of any technology in the market and we designed the components of our partners worldwide, and then we get the full business of their export and local sales. And then we sell profit, but we have less exposure to costs affiliated with R&D development.

So this is a unique version, and we want to be unique on one hand in business development and second, with higher-level sales engineering.

Great. And then a follow-up question to that. I know that you serve global defense leaders like Elbit, IAI, Rafael and then their subcontractors in the U.S., India and then Europe. How does that network actually work as a launch pad for this global expansion?

Okay. So let's take India as an example. India became a very big hub for contract manufacturers, and it's a huge country, which is growing very fast, top worldwide. And Israel has a very deep connection to India. So we have been, in the last 15 years, took manufacturing sites to India in some areas. The customers in India came to us because we supply the Israeli-oriented projects and they come and buy from us. We also, by the way, build up offices in India today. So we have office in India under a company that we serve the Indian market. So the companies in India and also in the U.S. and Europe, Greece, Italy and even in the U.S. are contract manufacturers of Israeli projects. Iron Dome has been manufactured in the U.S., for example. So they buy the components from us because we design.

Some of them are customized with our IP with the manufacturer. So we have the extra value that they don't supply the catalog item, they supply the customers. So we have an advantage there. So in that field, we have penetrated the global market aiding by the Israeli project, but not only Israeli projects they buy, they also buy some of their other projects locally or outside of the local market. So they started to buy more and more components from us due to our service. We also agreed with some of our partnership worldwide to sell overseas, and not only in Israel because of our capabilities.

You see the results in the last 6 months, we have been selling worldwide over $7 million in which the parallel, we've done $1.6 million. So that is an effect of this global marketization. We have a good future ahead of us to penetrate more into the Indian market and other markets.

Very helpful. Eyal, I think I'll actually kick it to you here for some questions about the Robotics sector. So I know that defense automation is a key focus for Robotics. Back to kind of this kind of line of questioning here, why defense specifically, a sector that traditionally has been very conservative about adopting new technology?

Yes. So the defense segment is defined by us as a heavy consumer of automation. So we can expect that we can increase the visibility of revenues from this segment because it's heavy consumer of automation.

The defense segment -- the defense manufacturers have no choice. They are facing resilient demand, pressure for short lead times, shortage and shortage of employees in the production line. And so this segment is where we are focusing our resources.

Okay. And then Elbit Systems is your flagship Robotics client. How dependent is the entire division on Elbit? And what is your strategy for broadening that customer base?

Yes, that's right. Elbit is a major client of our Robotics Division. But recently, we received an initial order from Rafael, another leading defense manufacturer in Israel, and we are in initial sales processes with the Israel aircraft industry. Another leading defense manufacturer. So I think by the end of this year, we will have a footprint with the key players in Israeli defense segment in addition to Elbit.

Great. Now let's pivot to everyone's favorite, let's talk about revenue. So revenue grew from $33.6 million in 2021 to $51 million in 2025. Can you walk us through a few things that drove that growth?

I think in one word, the defense segment. But let's go into detail. There have been 3 main pillars behind our growth. First, we have increased the number of manufacturers we represent. Second, we have tripled the number of sales engineers -- of our sales engineers and third, we have benefited from the strong demand in the defense segment.

Great. And then do you think that these demands are sustainable?

Well, as I've said previously, we are working with the defense sector quite a bit as we worked with the corona medical system. So we see now on the aerospace and defense a very strong, sustainable for the coming 2, 3 years, at least and why is that? If you look at the global tension, as I said before, now if you look at what's going on, there's wars coming, Russia-Ukraine and Middle East. So they use all the warehouse munition and air defense.

Just to give you a brief recall on this. If you look now at what happens even now today, you see a lot of launched missiles from Iran. But in the end, there's some interception issues in some areas in the Middle East, including the Gulf countries because they don't have enough interceptors already which means the U.S. keep their interceptors what they left, Israel has, but there's a big need and there's also in Ukraine, not enough interceptors.

So in order for them to have -- and money is not an issue for the Gulf countries. So -- by the way, also in the U.A.E., there was an Israeli air defense system, the Iron Dome. So what happens now is they will use all their money to buy as much interceptors as they can, but there's limited production ability yearly. So we build up more and more facilities to sustain the demand.

Therefore, whatever you see now actually should be the beginning of what we call, a big record sale of air defense, which Israel is again #1. So that is something we see, of course, sustainable and also penetrate the Indian market in other areas more and more, we believe in this as well.

Don't forget, we are very creative. So when there was corona, we went into more of the medical. We also sell to large names in the industry of the customers. For example, [Biosense]. We are selling some components, we sell also to HP Israel. They were buying local companies and became HP and came [Biosense] and they buy components, designed sets from us. So we have a bit of what I'd say, segments that we can play if we see a lower demand in some areas, we would try to see the next future.

This is one of our key advantages. So yes, I see sustainable business from defense, but I also a company DNA being 20 years in BOS with Eyal together, we always try to see where we can make more money and make more opportunities. So yes, we have the sustainability for the coming 2, 3 years.

Got it. Great. And then Eyal, I'll kick it back over to you. I know that in the past, you've mentioned that you believe that you'll exceed last year's $51 million. Let's talk a little bit about that and really what gives you that confidence?

Yes, very simple because during the first quarter, we sold $11 million. And our backlog at the end of the quarter amounted to $31 million. So by the end of the first quarter, we had secured approximately $42 million in revenue. So it makes sense that we will exceed the $51 million in revenue in year '26.

Got it. And then, Moshe, to bring you back into the conversation here. Let's talk a little bit about the dollar depreciation against the shekel and pressures against profitability. How are you managing that? And what's your hedging strategy there?

Most of the sales are quoted in U.S. dollar. And we buy most of the products in U.S. dollar. But most of our operational expenses are in Israeli Shekel. The devaluation of the U.S. dollar against Israeli Shekel increased our operational expenses and pressed our profit margin.

Since we believe that the U.S. dollar will stay weak over the long term, we are working through 2 channels to offset it. First, increasing revenue on the existing operational platform; and second, increasing our sales margin.

In the first quarter, our gross profit margin increased by 1% to 24.9% from 23.9% in the comparable quarter last year.

Great. Avidan, again, back to you here. So I know that you cited global defense budgets rising as a structural tailwind here. And I think we talked a little bit about this, but just to clarify, which geographies or programs would you say that you're most focused on?

Well, as I've said previously, India is a very key market. I just have to maybe expand the information about India. India is becoming a worldwide global hub for defense and aerospace for few factors in the China market, which was a big CM, contract manufacturing sites as from various reasons decreased their position, especially on high-level industrial tech and military aerospace. So the Indian market became a safe haven for global companies to come and manufacture high-level technology in aerospace and defense.

We have built up in the last 20 years, the Indian relationship between us. So it's very, very difficult to enter India from various reasons. But if you do that, if you know how to what we call play the game in India, then there's a world of opportunities. So we have succeeded doing that, and we see that as a firm future. And also, we have opened these offices under a company which we started just this year.

Also, the U.S. is a prime market, we sell in the U.S., also part of Israeli relationship and partnership between Israel and U.S. in aerospace and defense. And we sell also to Europe. We are going to work also on increasing that opportunities as we've done $7 million, as I said, in 6 months versus $1.6 million.

So we see that as a growing market. And as Eyal mentioned, you've seen our backlog, the work all of us do to ensure future, backlog is future. If you look at investors, they look at every quarter. But if you look at most -- I would say, one of the most -- key point is the backlog. And we have a very strong backlog, and we see still that it should be a strong backlog. So this -- and many of these also include U.S.-based -- sorry, India-based business and U.S.-based business. So this is our prime market, India and U.S.

Great. Thank you. I want to also make sure that I'm pulling in some questions here that are coming in through the chat. So Eyal, this one I'm going to read it seems like it might be a question for you to answer here. But it says, you're targeting acquisitions of up to $20 million with no shareholder dilution. Can you say more about what kind of companies you're looking at? And how advanced your pipeline is?

Yes. So the first and most important condition is profitable companies with a solid history of profits and the positive outlook. The second condition is synergy with our core business. So we currently have several opportunities on the table, and absolutely, we will share with you once we sign them.

Great. And then a few more here from the chat, it says why use only half bank financing for acquisitions, is that a policy? Or is it driven by current market conditions?

Our financial model is based on the 3 principles. One, no dilution for the shareholders. The second...

Let's start this question again, sorry.

No worries. My fault. I forgot, I was just focused on making sure that you guys all had coke. I wasn't focused on telling you to silence your phones...

That's okay, this is for wake up call, so...

It's time to go to sleep now. All right. Let's go ahead and jump here to another question that I see coming into the chat a few more. So it says here, why use only half bank financing for acquisitions? Is that a policy? Or is it driven by current market conditions?

I will take that. Okay. Our financing model is based on 3 principles: one, no dilution for the shareholders. Second, leveraging the $10 million in cash we have on hand into $20 million in investment through bank loans. And third, we can use bank loans because the target company should be profitable and it will allow us to finance 50% of the acquisition by bank loans.

Got it. Got it. And then another one here in the chat. It says you trade at book value while the Russell 2000 trades at 2.6x. What do you think is the single biggest reason for that discount and what is going to close it.

So I think the major point here is -- the major word here is exposure because there are thousands of companies listed on the NASDAQ and we need to grab investors' attention for BOS story, for our story. So for that, we hired the IR firm for the first time in year '25 and recently, we changed our IR strategy to toward digital marketing as opposed to the legacy methods. And for that purpose, we hired Allele Communications, which specializes in digital marketing for investors. And hopefully, it will yield a higher exposure.

Yes. So looking forward to a lot more events like this. Okay. So I want to get a few more questions here before we wrap it up today. Moshe, let's go to you here on the first one. It says, what is the floated number of shares?

We have about 7 million outstanding shares, all of which are floating.

Great. And then do you have derivatives?

Yes. We have 430,000 options and warrants with an average exercise price of $3 and the average life of 2 years.

Great. And then, Eyal, what is research coverage looking like? Do you have research coverage?

Yes, yes. Recently, we have been covered by A.G.P., I think the first report initiated 3 months ago.

Great. And then the target price for BOS, what is that today?

Yes. So the target price according to A.G.P. is $8, which is approximately double what we are trading today.

Great. And then again, as we wrap up, just a few more questions here. Eyal, maybe you can give us a few of the key priorities for BOS in 2026.

Yes. So with the 2026 approaching, I'm pleased to note that we have already secured 80% of our annual target revenues as of the end of the first quarter. That said, we continue to closely monitor the impact of currency fluctuations on operational expenses, as Moshe outlined earlier. And looking ahead, our primary focus is driving BOS growth through M&A and we -- and I'm hopeful we will close at least one transaction before the year-end.

Great. And then one question.

Can I pop in a second? I want also to add on this. Me and Eyal worked together for the last 20 years to make BOS great again, as Trump said. So we work very hard. We see ourselves as blue collars because we work specifically every day, and we like it. We love the job and we are passionate for the company as if -- even if it was ours, we work as if it was ours, this is something unique.

We come every day to make this happen and we truly believe in the future because we have the experience, the management experience. When you look at the past, it was a losing company. We took it, made it profitable for a sustainable period and we look for the future with all our knowledge and expertise, and we are sure that we will in future make it again better and better. This is what we aim and this is something that we feel together.

That is a great answer to that one. And then the last question, I was going to say all of you can comment on this if you'd like. But what would your message to investors be who are hearing BOS' story for the first time today, and that's how I'll end it.

Yes, especially in the current environment in the market. So the investment risk in BOS is relatively low, and the upside is relatively high. The risk is relatively low because we have been profitable for 21 quarters in a row. We have a strong balance sheet, as I mentioned before, with $10 million in cash, less than $1 million in long-term loans, $30 million in equity and most of our business is tied to the growing defense segment.

The upside is valuation. We trade at book value and if we take off the cash on hand, our enterprise value is less than $20 million. This is for a company with net income of $3.6 million, EBITDA of $4.6 million. So this is the exact definition of upside.

Great. And then any other final closing comments here before we wrap today? Or do you feel like maybe you've said it all.

I think if you look at the 3 of us, we have something special in our DNA. We wake up every morning even just for the passion of it, not for the money, not for us, at least. We do it passionately because we love the business. We come every day, we do our work and we always look for the future, and we have the passion for it. So this is something that you might see if you don't. But this is something I think can conclude what we feel.

Great. Thank you. Always very important. So with that, I think that we can end it here today. Thank you all for sharing your time and your perspectives with us. And then thank you to everyone who joined today's virtual investor event.

If you have any additional questions or you'd like to learn more, visit the Investors section of the bosc.com website. Any other questions, feel free to e-mail the e-mail that will pop up in a second on the screen. So thank you again, and we really appreciate your time today.

Thank you.

Good day, and welcome to the iAccess Alpha Virtual Best Ideas Spring Investment Conference 2026. Our next presenting company is BOS. [Operator Instructions]

I'd now like to turn the floor over to today's host, first, Eyal Cohen, CEO of BOS, who has led the company's strategic direction for 7 years. And joining him is Moshe Zeltzer, BOS' Chief Financial Officer, who oversees the company's financial strategy. Please go ahead.

We are excited to participate in iAccess Alpha Investment Conference for the second time. Before we start the presentation, I would like to give a brief on BOS. BOS integrates supply chain technologies for defense manufacturers and retailers. BOS has delivered 21 consecutive profitable quarters with $51 million in revenue, $3.6 million in net income and $4.6 million in EBITDA in year 2025. With a solid balance sheet with $30 million in equity, $10 million in cash and less than $1 million in loans.

In a moment, we will play a 10-minute video presentation that we have carefully prepared for this event. It covers who we are, what we do, our financial performance and where we see BOS heading. Once the video concludes, we will be right here to answer any questions you may have, whether on strategy, financials, operations or anything else on your mind. So let's begin.

[Presentation]

Good afternoon, everyone. My name is Toni McLaughlin. I am the Director of Communications at Allele Communications. And I am going to run through these questions that came in through the chat to the BOS team here. So let's go ahead and get started with some questions that I see here.

Eyal, let's start with you. Could you please tell us a little bit about yourself, when you joined the company, in what role and what is your professional background?

Yes. Thank you. In my background, I am an Israeli and a U.S. CPA. I worked for several years at PwC. And since '97, I have played varied roles and financial roles in NASDAQ companies. I joined BOS in 2003. And since 2019, I have been serving BOS as both the CEO and member of the Board of Directors.

Amazing. All right, let's go to the next one. So can you give us a sense of how the 3 divisions: Robotics, RFID and Supply Chain complement each other.

All right. So BOS integrates technologies that improve the efficiency of inventory, production and logistics. So the initial point usually is when our Supply Chain division embeds our franchise components into the client's product during the development. It continues when our Robotic division offers robotic sales for manufacturing the client's product. And thereafter, our RFID division marks and tracks the product through the production and logistics phases using RFID. And at the end of the line, it provides automatic packing and sorting machines. So this is the exact cycle that you saw in the presentation.

Another one here. Where is the company physically located?

So first, we are located in Israel in one site. And we use like a 3,000 square meter to operate our business. In addition, we have 2 sales offices, one in India and one in the U.S.A. to serve the global operation of our Supply Chain division.

Wonderful. Which portion of your business is defense-related?

Yes. So approximately 65% of our business serves the defense segment. Most of our Supply Chain and Robotics divisions revenues are associated with the defense segment, while our RFID division engage mainly with retailers. So because of that, recently, we have engaged a specialized consulting firm led by IDF veterans to expand the RFID division into Israeli defense sector.

Great. So another one here. What is the profile of your revenues? And what portion of it is highly predictable?

Great question. More than 80%, more or less, of our revenues are predictable. A major portion of our products is defined as consumables for our clients versus CapEx, capital expenditure. For example, let's take an example, the electronic components that our Supply Chain division sells to our defense clients are embedded in munition, which are consumables. Hence, the orders are highly repeated and highly predictable.

On the other hand, the robotic sales of our Robotics division are defined as capital expenditure, CapEx. Thus, we have very low visibility into the time frame of new orders.

Here's a good one. So you've doubled your engineering team and tripled the number of manufacturers you represent over the past 2 years. What drove that decision? And what does that mean for future revenue?

Yes. So while our clients develop new products, our sales engineers offer the client our relevant franchise component. Once our component is approved by the client and the client's product goes live, we get orders according to our clients' production rate. So because of that, we tripled our engineering team over the past 2 years, and it played an instrumental role in our growth.

Okay. This one definitely knows what's going on here. So it says, you serve global defense leaders like Elbit, IAI and Rafael and their subcontractors in the U.S., India and Europe. How does that network actually work as a launch pad for global expansion?

Yes. So typically, our client in Israel, the defense manufacturer uses subcontractors for the assembly of the product. And those subcontractors have to buy our franchise components from us as they are part of the product bill of materials. And as a result, we received like $7 million in orders from subcontractors in India and the U.S. in the first 5 months of 2026. So this is the business model.

All right. This one, a good question here. It says, it seems like defense automation is a key focus for the Robotics division. Why defense specifically, a sector that is traditionally conservative about adopting new technology?

Sorry, can you repeat on the question, Toni?

Yes, absolutely. It says, it seems here like defense automation is a key focus for the Robotics division. Why defense specifically, a sector that is traditionally conservative about adopting new technology?

Yes. So the defense segment is defined by us as, in the strategic plan that we prepared, as a heavy consumer of automation. And actually, they don't -- they have no choice. They are facing resilient demand, short lead time and the shortage of employees. And this is exactly the segment where we will focus or should focus our resources.

So another question here. Elbit Systems is your flagship Robotics client. How dependent is the division on Elbit? And what is your strategy for broadening the customer base?

Yes. So Elbit is a major client of our Robotics division, and it's great. And recently, we received an initial order from Rafael, another leading defense manufacturer. And we are in initial sales processes with IAI within the Robotics division. And by the way, the IAI and Rafael also are the main clients of the Supply Chain division. So we think by the end of this year, we will have a footprint, the Robotics division will have a footprint with the key players in the Israeli defense segment.

All right. Another one here. It says, revenue grew from $33.6 million in 2021 to $51 million in 2025. Can you walk us through what drove that growth?

Yes, sure. There are 3 pillars behind our growth. First, increasing the number of manufacturers we represent. So it increased our product offering, solution offering. Second, tripling the number of our sales engineers in order to support all the manufacturers we represent. And third, the resilient demand in the defense segment. So those are the 3 pillars.

It seems like a follow-up to that question. It says, are those demands sustainable?

Great question. I believe that the strong demand will continue for several years for 3 reasons. First, after 3 years of intensive conflict, the Israeli defense forces have to replenish their empty warehouses. And second, the new perception in Europe driven by the conflict with Russia and the lack of confidence in NATO is pushing countries in Europe, especially Germany, to significantly increase their defense budget. And I believe the Israeli defense industry will gain a significant portion of those budgets.

All right. It seems another follow-up question here. It says, Eyal, you mentioned that you'll exceed last year's $51 million. What gives you that confidence?

Actually, it's simple because during the first quarter, we sold $11 million, about $11 million. And our backlog at the end of the first quarter amounted to $31 million. So by the end of the quarter, we have secured approximately $42 million in revenue. So it makes sense that we will exceed the $51 million in year 2026.

All right. Switching gears here. This question says, the dollar depreciation against the shekel is pressuring profitability. How are you managing that? And what's your hedging strategy?

Okay. I'll take that. Most of our sales are quoted in U.S. dollar. And we buy most of the products in U.S. dollar, but most of our operational expenses are in Israeli shekel. The devaluation of the U.S. dollar against the Israeli shekel increased our operational expenses and press our profit margin.

Since we believe that the dollar will stay weak over the long term, we are working through 2 channels to offset it.

First, increasing revenue on the existing operational platform. And the second, increasing our sales margin. In the first quarter, our gross profit margin increased by 1 point to 24.9% from 23.9% in the comparable quarter last year.

Wonderful. Thank you, Moshe. Another question here, coming back to something you mentioned earlier. It says, you cited rising global defense budgets as a structural tailwind. Which geographies or programs are you most focused on?

So our key territories are India, global territories are India and the U.S. In the first 5 months of '26, we got $7.1 million in orders from those territories as compared to only $1.5 million in the comparable period last year, which was a record year last year, year '25. So most of our programs are currently related to Israeli projects. But with the support of the office we launched in India a few months ago, I believe we will also secure programs in India that are not related to our Israeli clients.

Thank you, Eyal. Another one here, it says you're targeting acquisitions of up to $20 million with no shareholder dilution. Can you say more about what kinds of companies you're looking at and how advanced your pipeline is?

So the first and most important condition is profitable companies with a solid history of profits and a positive outlook. This is the first and most important condition.

The second condition is a synergy with our core business. So we currently have several opportunities on the table, and we will share with you once we sign.

And then a question here. Moshe, this one might be for you. It says, why use only half bank financing for acquisitions? Is that a policy? Or is it driven by current market conditions?

Our financial model is based on 3 principles. One, no dilution for the shareholders. And the second, leveraging the $10 million in cash we have on hand into $20 million in investments from bank loans. And the third, we can use the bank loans because the target company should be profitable, and it will allow us to finance 50% of the acquisition by bank loans.

Okay. Great. And then another question here. We'll get a few more and then we can wrap it up. It says, you trade at book value, while the Russell 2000 trades at 2.6x. What do you think is the single biggest reason for that discount and what will close it?

This is a big question. Great question. And the major point, I believe, is the exposure. There are thousands of companies listed on the NASDAQ, and we need to grab investor attention for our story. It's very challenging.

We hired -- for that, we hired an IR firm for the first time in year '25. And recently, we changed our IR strategy toward digital marketing as opposed to the legacy method. And for that purpose, we hired Allele Communications, which specializes in digital marketing for investors. So hopefully, it will yield a higher exposure.

Thank you very much. So let's go through these last few questions here. I'm seeing one that says, what is the floating number of shares?

We have about 7 million outstanding shares, all of which are floating.

Okay. Another one here. It says, do you have derivatives?

Yes. We have 430,000 option and warrants with an average exercise price of $3 and an average remaining life of 2 years.

Okay. And then do you have any research coverage?

Yes. Just recently, we have been covered by AGP, and I'm very pleased with that, yes.

All right. Great. And the last 2 questions here. First one being, what is the target price for BOS?

The target price according to AGP is $8, which is double than what we are currently trading.

Noted. And then let's wrap it up here with this final question that I see. I know that we're not getting to all the questions today, but let's end here with this one. It says, what is your message to investors who are hearing the BOS story for the first time today?

First, welcome. And the investment risk in BOS is relatively low, and the upside is relatively high. The risk is relatively low because we have been profitable for 21 quarters in a row, we have a strong balance sheet with $10 million in cash, less than $1 million in long-term loans, $30 million in equity, and most of our business is tied to the growing defense segment.

The upside is the valuation. We trade at book value. And if we take off cash on hand, our enterprise value is less than $20 million. So I believe that this is the exact definition of upside.

Wonderful. Eyal and Moshe, thank you so much for your time here today. I see that there are a few other questions that we can't get to, but we'll be sure to follow up. And if anyone joining is looking for more information, you can visit the company's website at boscom.com.

Thank you, everyone, so much for joining. I really appreciate your time and looking forward to keeping that conversation going.

All right. Thank you very much.

Thank you.

That concludes Better Online Solutions presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.

[AI Agent – Claude]

Ladies and gentlemen, thank you for joining us today. My name is Claude and I will be leading today's presentation. Following the prepared remarks, Eyal Cohen, Chief Executive Officer; and Moshe Zeltzer, Chief Financial Officer, will be available to take your questions.

Before we begin, a brief reminder that this call contains forward-looking statements relating to BOS business, financial condition and results of operations. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Such statements include, but are not limited to, matters relating to product demand, pricing, market acceptance, economic conditions and technology development as further detailed in the company's filings with the various securities authorities.

With that said, let's get started. BOS is a company built around one idea: that supply chains can be smarter, faster and more efficient, and that the right technology makes that possible. We pursue that idea through 3 specialized divisions. Our Robotics division replaces manual labor with automated solutions, transforming how inventory is handled. Our RFID division brings precision to tracking and end-of-line automation, from sorting to packing across the supply chain. And our Supply Chain division works even closer to our clients, integrating our franchised electromechanical components directly into their products. Together, these 3 divisions give BOS a broad and complementary platform, one that allows us to serve clients across multiple touch points in their operations.

How we grow. Now when we talk about growth at BOS, we think about it in 2 ways: organic growth, building on what we have and strategic acquisitions that expand our reach. Over the past 4 years, the story has been primarily organic and the numbers speak for themselves. Revenue grew from $33.6 million in 2021 to $51 million in 2025. That is meaningful, sustained growth built on real demand from real clients. And we believe that demand is only accelerating. Three tailwinds, in particular, give us confidence. The first is the global increase in defense budgets. This is not a short-term cycle. It is a structural long-term shift in how governments around the world are prioritizing security. BOS is well positioned to benefit from this trend for years to come.

The second is closer to home. The replenishment and expansion of the Israeli Defense Forces inventory, driven by the conflict that began in October 2023, has created significant and ongoing demand that directly supports our business. The third is newer and very promising. India is rapidly emerging as a major subcontracting hub for global defense programs, and the numbers are already telling that story. In the first quarter of 2026 alone, we received $3.3 million in orders from Indian customers compared to just $172,000 in the same quarter last year. To capture this momentum and build on it, we appointed an Indian representative company in March 2026 to establish a dedicated presence in that market.

We are only at the beginning of what we believe is a significant long-term opportunity. Alongside organic growth, we are actively building our acquisition pipeline, and we have the financial strength to act on it. Our balance sheet is solid. Shareholders' equity stands at $29 million, and we hold $9.5 million in cash net of loans. That gives us real flexibility. We are targeting companies valued at up to $20 million with 2 nonnegotiable criteria. First, financial strength, a proven track record of profitability and consistent growth; second, strategic fit, companies that deepen and expand what we can offer to our existing clients. On the financing side, approximately half of each acquisition will be funded through long-term bank loans with the remainder coming from our own resources. I want to be clear on one point. No shareholder dilution is expected.

Let me now turn to where we stand heading into the rest of 2026, and the picture is an encouraging one. When you combine our backlog of $31 million as of March 31, 2026, with Q1 revenues, we are already at $42.4 million, 83% of our full year target after just 1 quarter. As a result, we now expect to exceed our previously announced annual revenue target of $51 million. The depreciation of the U.S. dollar against the new Israeli shekel is creating pressure on our profitability. And as a result, we are maintaining our net income target of $3.6 million for the full year at this stage.

We are responding on 2 fronts: accelerating revenue growth and actively working to improve our gross profit margins. Both of these efforts are already showing up in our Q1 results. Our gross profit margin reached 24.9%, up from 23.9% in the same quarter last year, and our backlog grew 29% during the first quarter from $24 million to $31 million. As we monitor the progress of these initiatives, we will reassess our net income outlook for the full year and update accordingly.

I want to close with something that we believe deserves your attention. BOS is a company with a growing backlog, accelerating revenues, a clean balance sheet and exposure to some of the strongest structural trends in the global economy, defense spending, automation and supply chain modernization. And yet, BOS currently trades at book value. The Russell 2000, the index of small-cap companies we are measured against, trades at approximately 2.6x book value. Our price-to-earnings ratio stands at roughly 11x compared to 22x for the index. We believe this gap exists primarily because not enough investors know our story yet. That is what we are working to change and calls like this one are part of that effort. Ladies and gentlemen, that concludes the prepared remarks.

We will now open the floor for questions. Eyal Cohen and Moshe Zeltzer are ready to take your questions. [Operator Instructions]

Okay. I hope you enjoyed our new presentation format. My only concern is that his English and his voice much better than my voice and English. And yours as well. So let's open the floor for discussion. Ready to take your questions.

This is Todd Felte. Just wanted to ask on the devaluation of the dollar with the NIS. Are you doing anything to hedge or compensate on that aspect?

Yes. We are -- I think the most efficient way to handle this long-term trend, I believe, of strong shekel is to increase the efficiency of the business. Because any hedging, any kind of hedging, has a limited period. Although we are doing hedging on the balance sheet, not on the P&L because we are doing hedging on the balance sheet, we see the fluctuation in the currency differences in the financial expenses or income.

But for the long term, we have to increase the efficiency of the business. And we are doing it based on 2 pillars. The first one is to increase the sales price, even though it's quoted in dollar, but to increase the gross profit margin to compensate our operational expenses, which are quoted in NIS. So this is in the first one. Second one is to grow our business. And as you saw, our backlog is in this trend, we saw a 30% growth in the first quarter in the backlog and also saw a growth in the gross profit margin by 1 point from 33.9% (sic) [ 23.9% ] to 24.9%. So we are in the right direction.

On top of that, we plan to -- we are working on acquisitions on good acquisition or as Trump says, beautiful acquisitions. So beautiful acquisition based on the criteria we just illustrated in the video, history of -- solid history of profit and high synergy. And this is the long-term solution for the devaluation of the dollar.

Okay. That's helpful. I know your components are used a lot in the aero and Iron Dome systems as well as missiles and fighter jets. Are any of your components used in drones, which seem to be kind of the weapon or defense tool of choice these days?

Not yet. We are on it. Hopefully, we will find the right manufacturers to represent his product to embed in our clients' product. Hopefully, it will come.

And my final question. In the past, you had spoke about the expansion of RFID to different sectors and that you were excited about the expansion of RFID to the health care sector. How is that progressing?

So first, we put a team in place with the defense to extend the RFID business to the defense. As we announced, we hired a company, external company to escort us through this very complicated process and to short the time line of the success. So we have team in place to penetrate to the defense -- to expand the business of the RFID to the defense.

In the hospitals, we are part of the team in place, not -- we have not signed yet. I have to gather together all the ingredients of the team. And once it will be ready, I will sign the contract and start the penetration. I know exactly what kind of person -- what -- how the team should look like, what is his experience. And once I will have it, we'll start the expansion. I believe it will be this year.

This is Kevin from AGP. So backlog increased 29% sequentially to $31 million. Can you break down which of these divisions -- which of your divisions contributed most to that growth?

The -- most of the backlog related to the Supply Chain division because it has a long-term orders. So this is a primarily a portion.

Okay. And then what do you attribute some of the early success in the Indian market to?

The success that we saw in the first quarter in regarding with the amount of orders?

Yes.

I think it's -- this is an initial yield of the work on the field of the work we did in the field, we have done in the field in India made by our Israeli team. And I believe once we have a local team in place in India, it will urge the process of participating in more bids with more clients to expand our client base there. So the result you saw in the first quarter was made by our local team in Israel.

This is [ Igor Nagorski ]. I would like to ask you questions now. So first, a comment. I think it's actually a very good quarter given all the circumstances. I think there was a lot of investor caution and you could see it in your stock price, given your prior comments. So I think everybody feels that this was a positive result.

My question is this, I'm looking at your RFID results, and I see that the profitability is still relatively low. Was it, first of all, impacted by the war and the situation business [indiscernible] Persian Gulf and so on in this quarter? Or was it something else? And how do you expect the RFID division to perform, hopefully, assuming that the situation remained relatively quiet for the remainder of the year? Or how do you model it?

Thank you for the question. Regarding the RFID, in the first quarter, during the month of March, the division was -- it worked partially. So it's damaged the gross profit margin. We had a fixed cost with low revenues during March. Another effect on the gross profit margin was the devaluation of the dollar because our cost of goods includes a lot of workforce, all the lab team, all the warehouse team. So it increased the labor cost in dollar.

But we are working -- as I mentioned before, we are working to increase the gross profit margin of the product we are selling. And I believe we will start to see this result in the second quarter of the year. So it will compensate on the devaluation of the dollar. And in the second quarter of the year, hopefully, until now, there is no resumption of the conflict of the war. So we are in -- it looks like we will be in a good shape in the second quarter related to the RFID division, and it will represent improved results.

My other question is, first of all, obviously, you have tremendous expansion in India and now it's a very meaningful revenue from there. Do you think you can repeat it in any other countries because obviously, Israeli defense sector now is highly valued and has customers in many other countries. And do you think you can have meaningful revenues abroad from other countries than India?

Yes. We have a connection with the 2 subcontractors in the U.S. and we got revenues from them during this year. I assume we announced during this year on 2 major contracts, and I believe that the revenue will continue to grow over there. And we are checking now additional area in the East where the local defense client here in Israel does business over there, not just in India. There are many places in the Far East that, for example, IAI and Elbit has business over there. So we are tracking -- we are following their tracks there. And hopefully, we can duplicate the business model that we have in India to other territories. So there is a potential, yes.

And my last sort of question or comment. Any thoughts of renaming your company? Because I think your name is rather now silly given what you do has nothing to do -- Better Online Solutions just really confuses a lot of people.

Yes, it's a good question. Do you think -- do you have a better name?

I can come up with a few. I'm sure ChatGPT can, but it's just -- it sounds like a late '90s Internet company.

Okay. I know we talked about it many times, but it's a lot of headache to change a name for a company. But I believe after several acquisitions that we'll do, we'll have to rebrand our business. So it will come.

Right. I think it would help to during the -- especially if you go to conference and doing presentations because I think a lot of people are dismiss of your business, they have no idea that you have anything to do with defense industry and looking at your name. So it might be a great idea.

Okay. Okay. But if you have a good recommendation, send me.

I'll set this up.

I think Scott is missing today. Any further questions? Okay. So on behalf of the Board of Directors and management team, thank you for participation in our Q1 2026 conference call in the new format. I hope you liked it. And if you need more details or would like to follow up, please feel free to reach out. Thank you. Have a great day.

So good morning, and thank you for making the time to join our Full Year 2025 results call. Joining me is Mr. Moshe Zeltzer, our Chief Financial Officer. And I'm pleased to report that '25 was an outstanding year for B.O.S. on multiple metrics, and I'm grateful to our team for the hard work and commitment in achieving these results.

We delivered strong revenue growth throughout the year, setting multiple record quarters and increasing our outlook 3x. Ultimately, we completed the year '25 growing 27% year-over-year to a record $51 million in revenues and our net income grew year-over-year by 57% to a record $3.6 million, demonstrating our ability to drive profitable growth leverage in our model.

Even with this growth, we exited the year with a substantial contracted backlog of $24 million, giving us good visibility into the year ahead. Looking forward, I want to share the key trends that I shape -- that will shape our trajectory in 2026. Demand in the defense sector remains robust and is expected to continue driving growth in our Supply Chain and Robotics division throughout the year. We maintain strong backlog visibility and healthy customer relationships across this segment.

Alongside that, we are taking steps to extend our geographic reach. In March 2026, we appointed an Indian company to represent B.O.S. in the Indian market as India is emerging as a growing subcontracting hub for global defense programs. This is a meaningful step in our global expansion strategy.

On the product side, our organic growth model is built around continuously broadening the portfolio of manufacturers we represent and embracing the new technologies they develop. Because our manufacturing partners invest heavily in next-generation solutions, we benefit from self-replenishing flow of innovative products to bring our clients.

Turning to our RFID division. The ongoing geopolitical tension in Israel since October '23 have continued to weigh on the Israeli commercial market, which represent the primary revenue base for this division. Therefore, we recorded goodwill impairment charges of $700,000 in 2024 and an additional $1.2 million in year '25. To reduce our exposure to geopolitically sensitive Israeli civil market, our 2026 strategic plan focuses on growing our business -- RFID business by entering the hospital segment, more stable and higher growth vertical within Israel.

Successful penetration of this segment will require broadening our product offering, hiring personnel with relevant domain expertise and establishing new customer relationships. We expect to make this investment throughout 2026 with revenue contribution expected to begin in '27.

On the currency front, the USD to Israeli shekel exchange rate opened 2026 at ILS 3.18 per dollar, reflecting an approximately 13% devaluation of the dollar against the Israeli shekel compared to start of 2025. As a result, we expect our Israeli shekel denominated operating expenses to increase by approximately $600,000 in 2026 compared to 2025.

Another effect of the dollar's weakness in 2025 was $800,000 in nonrecurring currency exchange income we recognized this year, which arose from the revaluation of the Israeli shekel denominated balance sheet items following the sharp dollar decline. The gain is not expected to repeat in 2026, assuming the rate remains at approximately ILS 3.18 per dollar. Combined, these 2 currency-related items represent approximately $1.4 million in headwinds going into 2026.

Separately, the $1.2 million goodwill impairment charge taken in 2025 is not expected to recur in 2026, which partially offset the B.O.S. leaving a net year-over-year drag of approximately $200,000. Our financial foundation has never been stronger. Cash and equivalents have grown to $11.8 million, up from $3.6 million at year-end 2024. Shareholders' equity amount to almost $29 million, up from $21 million at year-end 2024. We have positive working capital of more than $22 million and bank debt amounted to only $1.7 million.

This strong balance sheet gives us the flexibility to capitalize on opportunities as they arise, supporting both organic growth and strategic acquisitions. We are actively evaluating a range of acquisition opportunities, each of which must meet our strict criteria, including a proven track record of profitability and high revenue visibility.

Turning to our outlook. Consistent with our established policy of issuing conservative initial guidance with updates provided as the year progresses, we are projecting revenues of approximately $51 million and net income of approximately $3.6 million for 2026. We look forward to updating you as the year progresses and our momentum becomes clearer.

On the Investor Relations front, in 2025, I conducted Non-Deal Roadshow comprising 44 one-on-one meetings with potential investors and presented at 2 investor summits. Our stock appreciated 42% during that year, year '25, yet a significant valuation gap remains related to our benchmark index Russell 2000.

Over the past 4 years, both delivered compounded annual earnings per share growth of 60% compared to 12% of the Russell 2000, 5x the rate of the index. Despite this performance, we trade near book value, while Russell 2000 trade at roughly 2.4x book value. And our price-to-earning ratio stands at approximately 9x compared to 20x for the index.

We attribute much of this discount to limited market awareness. To address this, we will shift our IR strategy toward digital marketing starting this April, engaging early communication and Investor Relations firm specializing in digital investor outreach. We believe this approach will meaningfully expand our investor reach and visibility in a significantly shorter time frame rather than the traditional IR method. With that, we are happy to take your questions, and if you have any questions, please unmute yourself.

Congratulations on a really good year. This is Todd Felte. I was wondering if you could talk about the current conditions over there and how you expect your business impacted if the war, let's say, last another 30 days compared to what happens if it drags on for another 6 months with your various divisions.

Yes. So thank you, Todd. First, most of our business linked to the Defense segment. As you know, the supply chain, which was -- which is a primary growth driver of B.O.S. Most of its business is related to the defense segment and the robotics division as well. So in that aspect, if the war will continue, it will positively affect the growth of those 2 divisions.

In regard with the RFID division, currently, it's very sensitive to the geopolitical tension. And if the war will continue, it will negatively impact its business. But as I mentioned before, we are working to shift our sales resources and business development resources towards the new segments, which are less sensitive or even the opposite are growing in such period like the hospitals in Israel, defense as well, but we will focus on the hospital segment in Israel. In addition, as you know, if the war will continue, we learn how to work with that. The economy will gradually return to its normal course of business despite several attacks a day. It's not new for us. We are in this situation for 3 years, and still, we are doing good. But hopefully, it will be ended.

Okay. And there was a gentleman who asked a question in the chat, which is I thought a good question. He spoke about the growth rate you've achieved and why there is no growth anticipated in the guidance. I think your guidance is for $51 million, and that's basically what you did last year. So can you kind of give us some insight on that?

Yes. First, we reached to a record level of revenues, $51 million revenues compared to $40 million revenues in the previous year. It's phenomenal. Our revenue growth depends on the consumption of our components by the different segments, mainly Rafael and the Israeli aircraft industry, and there are hundreds of subcontractors around the world.

I believe that there is high potential for continuing growth because the warehouses are empty. But we currently have and at the end of year '25, we have like $24 million backlog, which covers 50% of our outlook for year '26. So we have to be, as we did all the time to be conservative. And we will update -- I believe we will upgrade the outlook quarter-by-quarter according to the progresses.

And we have to remember that we are in a very sensitive period in geopolitical tension. Every day, there are news, and we have to be a little bit conservative. And I think that still with $51 million revenues and $3.6 million net income and all the ratios that I illustrated before -- that was illustrated before compared to the index -- to the Russell 2000 Index, there is no need for any growth to justify this current valuation. I think we are undervalued with the $51 million revenues and $3.6 million net income, and there is a great upside there.

Okay. My last question is just on the M&A front. I see your cash position is up to $11.8 million. Can you just kind of go over your M&A strategy? I believe in the past, you planned there would be no dilution on any M&A that you did and that any acquisitions you did would be immediately accretive to revenue and earnings. Is that still the case? And do you plan on investing some of that cash maybe in short-term notes or securities if there's no M&A on the immediate horizon?

Yes. So first, as we have the $12 million cash on hand, I think there are opportunities of M&A are increasing because we can acquire a larger company that can move the needle. So it's a great tool to have on hand, and we have several acquisitions that we are evaluating. Hopefully, we will close an acquisition during year '26. Until then, we invest the cash on hand on security funds, and that burn like 4% -- 4%, 5% interest per year, something like that. So the money is working and waiting for utilization.

Regarding the dilution, it's not included in the plan. There is no plan for dilution with $11 million to do an acquisition, it's nice acquisition. And if we want to increase it, we can leverage it with the -- if it's a profitable company, we can leverage it with the bank loans -- long-term bank loans and together to reach to a significant amount of acquisition. It could be one, it could be two. So I don't expect for any dilution in that aspect in M&A. And by the way, in any other aspect as well.

I have 2 questions. This is Scott Weiss. How are you?

Fine. Thank you, Scott. How are you?

Good. Thank you. Regarding India, can you comment on if you've seen revenue in India to date? And what kind of numbers are you expecting for 2026?

We see flow of revenues from India. We saw flow of revenues in year '23, in year '24, in year '25. And we opened the -- we established the office there, the agency there in order to urge it and to have more foot on the ground in India in order to increase this number. We didn't provide any outlook for how many revenues, but hopefully, it will increase significantly during the year. It's not investment for 1 year, it's for long-term investment, and we will expand our investment in India as its progress according to the progress. So this is our addressable market overseas.

Can you share 1 or 2 of the larger customers from the Indian markets?

Yes. We are working -- our clients are, I believe, are the biggest -- one of the biggest of the top 5 subcontractors of -- assembly subcontractors of electronic systems. They are working with the Rafael. They are working with the IAI, they are working with the Boeing, they are working with global organization. Among the names are SASMOS, [indiscernible] DCX.

And I believe there are -- there is a long list of subcontractor that we have not reached yet. And this is a primary reason for having foot on the ground in India in order to go to visit more manufacturers, more assembly company and to start to do business with them because if we have a good offering for one -- for their competitors, so I believe we can increase our sales -- we can increase our client base in India with the same offering.

Okay. My second question is regarding the RFID investment. What kind of investment spend are you expecting to enter the hospital market?

In amount or what kind of investment?

B.O.S.

Okay. To my -- according to the initial plan, I believe it won't be a significant amount in the size of B.O.S. but it will be a significant amount for the RFID. It could be around $800 to -- it could be in shekel, it could be like $300,000 in year '26. And then in year '27, this new segment will be in breakeven and in year '28, it start to be profitable. But it is for the long term because in the RFID division, every time there is a geopolitical tension, it got impacted directly and immediately. So we have to -- and because we don't believe that in year -- going forward, there will be a long-term peace period. So we have to be ready for that, and we have to do this move.

Do you have existing relationships in the hospital segment?

Currently, no. But we have several people -- several candidates that we can hire with the related connections. By the way, it could be also through M&A of companies that are already in that field and to use our system to support the sales and the sourcing of the product to this segment.

Okay. My last question is regarding the guidance. I realize how conservative you've historically been, but the guidance suggests that you've seen a slowdown. And I just wanted to flesh that out a little bit. Have you seen any changes from Q4 to Q1 to where we are today?

No. The opposite, I see that the backlog increased. The backlog of the group increased in the first quarter.

Thank you very much.

You are welcome and hope to see you soon in Israel, Scott.

This is [indiscernible] good afternoon and good morning for me. I have a question, and I think somebody else had the same question about your guidance. So you're projecting the same revenue and the same net income as you had this year. So I understand the revenue part.

The net income was affected by 2 things this year. One was the impairment charge, which I assume will not be going forward or maybe it will be. The second part, you paid no taxes. Are you going to pay the taxes next year. So maybe you can just walk me through and say, on the $51 million, how do you get to exactly the same net income when you had two significant items affecting it this year?

Yes. Thank you for your question. I think that Moshe described that we had two points that was impacted year '26 report. And maybe Moshe, can you return on what you just said regarding the currency exchange, the weakness of the dollar and what was the impact in year '26 -- '25 and what do we expect in year '26?

Yes. In the financial income in 2025, we cut off the -- we expected that our Israeli shekel dominated operating expenses to increase by approximately $600,000 in 2026 compared to 2025. Another effect of the dollar weakness in 2025 was $800,000 in nonrecurring currency exchange income we recognized last year, which arose from the revaluation of the Israeli shekel denominated balance sheet items following the sharp dollar decline. This gain is not expected to repeat in 2026. So about the impairment of the goodwill, it will offset by the impact of the Israeli shekel against the dollar, which is not supposed to impact in 2026 like it was in 2025. So...

So I agree. In summary, there was a charge of $1.2 million of goodwill in '25 that we don't expect -- you're right, we don't expect it to recur in '26, okay? But on the other hand, there were some benefits in year '25 that in the -- because of the weakness of the dollar, the operational expenses in year '25 -- in '26 will be higher by $600,000 than it was in year '25 because we opened the year '26 with a very low currency rate of ILS 3.18 per dollar as compared to something like ILS 3.5 per dollar at the beginning of year '25.

So we expect higher operational costs by $600,000 and another thing that we recorded in year '25 financial income because of the weakness of the dollar of $800,000. And as long -- as the currency exchange rate of '26 will remain at $3.18, we don't expect to record the same income. So the benefit in the currency exchanges in year '25 and offset by the goodwill impairment in year '25. So now you compare -- you can easily compare the years of '25 and '26, okay?

Okay. My other question is, it's a little bit difficult to break down if you are paying any taxes. And I know you referred to that you have a tax carryover a bit and unrealized losses. So could you tell me what you expect your taxes are going to be like this year and next year?

Yes. We have a plan to -- the taxes are a little bit tricky because the taxes are -- we are going to utilize all the carryforward taxes in B.O.S., the parent company by the end of year '26 and all of it recorded as an asset in the balance sheet. But we still have a lot of tax assets in -- tax carryforward losses in the subsidiary, the RFID division that we want to utilize, and we are considering different kind of solution -- tax solution for that in order to utilize it because -- so that all the profit of -- all the group will be offset by the carry taxes losses of the RFID division. So we don't expect to have any significant tax expenses in year '26.

Okay. And for your '27, is it a little bit too early? Or are you also saying that the taxes keep on carrying over into the next years?

Can you repeat, please, again?

For year '27 and going forward, do you see that you're going to still have tax carryovers in your divisions or it's probably going to expire?

No, no. There is no expiry date for those losses...

I mean, used up, sorry. Used up, I knew it will expire...

If you will -- Okay. If we will utilize -- if we will execute the tax planning as we wish, I believe we won't have tax expenses in the several coming years.

Okay. And my last sort of comment, you cannot have to take as a question. You referred to your stock being cheap, and I think everybody on this call agrees with this. I think there is no better way to demonstrate that your stock is cheap is to announce a small buyback or to have the executive buy some of your own stock because I think it would benefit everybody. So this is just a comment. And I don't know if you agree with this, but that would be, I think, in many people's minds.

Yes. I think because we have just $11 million, and we are a very small company, we have to invest this money by acquiring company in order to support the growth of the company and not to do an artificial financial act to support the stock. Personally, I don't believe in buy stock -- in buyback stock. It didn't improve itself according to what I read -- I have read during all the years. And we are very small to activate such plan.

Companies in big size that have hundreds of millions on cash in hand, they can do it. They can allocate part of it just for public relation. We don't have the space for it. We have to -- we work very hard to gain this money, and we have a lot of opportunities for acquisitions. And I believe this is the best thing to do for the company for the long term.

Regarding buying stocks by the officers of the company, I think -- I can tell you -- I know what are the compensation package of those officers, I think they cannot afford to do buyback. They are not -- they don't have a compensation -- huge compensation that they can allocate it. The part of their compensation, it's options instead of cash bonus. And I think it's a sign of support from the officer that they believe in the company.

I have a question. It's [indiscernible] in New York. You were talking about India, and I was a little unclear. You said that if I understood it, there were revenues in '23, '24 and '25 and you're expecting India to grow. But can you quantify how much of your revenue came from India in '23, '24 and '25?

It's several million dollars. It's around $3 million in average during that -- in those years. And we expect to -- following the trends in the market and following our investment in India to grow it significantly during -- gradually during the years.

Any further questions? Okay. So thank you all for your thoughtful questions today. They reflect exactly the kind of engaged dialogue we value with our investors. Let me close with a final thought. Year '25 was a milestone for both record revenues, record net income and record cash on the balance sheet. We entered 2026 with a strong foundation, a clear strategic road map and a team that has demonstrated its ability to execute. We are committed to delivering long-term value for our shareholders. And I look forward to continuing that dialogue with you throughout the year. Thank you again for your participation, and please feel free to reach out at any time. Have a great day.

Hello, everyone, and thank you for joining Better Online Solutions or B.O.S. for our presentation today. With me is Eyal Cohen, our Chief Executive Officer. And today, we will provide an overview of the presentation and then address questions from the audience.

You can submit those through the online platform. B.O.S. is a leading integrator of supply chain technologies, especially in the defense and aerospace industries. The company is traded on the NASDAQ under the symbol BOSC. Eyal, with that, I'll turn it over to you for the presentation.

Thank you, Matt. Good afternoon, and thank you for making the time to meet with me today. B.O.S. integrates cutting-edge technologies to streamline and enhance supply chain operation across 3 specialized divisions. Our robotic division automates inventory processes by replacing manual labor with robotic solutions. The RFID division covering inventory tracking and end-of-line automation, particularly off-the-shelf automated sorting and packing systems throughout the supply chain.

And the Supply Chain division integrates our franchise electromechanical components directly into our clients' product. Let's explore each division in more detail. Our supply chain division is dedicated to integrating franchise electromechanical components into the products of leading defense and high-tech companies.

Our engineering team works hand-in-hand with our customers' R&D department to ensure seamless integration of our franchise component into their innovative designs, generating for us long-term OEM revenues as client product with our embedded components move into production. The primary growth driver here is the number of components we embed into clients' products.

That's why expanding our integration capabilities is central to our strategy. Over the last 2 years, we have doubled our engineering team and tripled the number of manufacturers represent strengthening our market position and growth trajectory. We are proud to serve global defense leaders such as Israeli Aerospace Industries, Elbit Systems, Rafael and the hundreds of subcontractors around the world. Our network extends both directly to the clients in Israel and indirectly via their subcontractor across the U.S.A., India and Europe.

This network serves our launch for global expansion without the need for costly overseas sales offices. RFID division. It delivers end-to-end supply chain automation technologies for logistics centers. covering inventory tracking, automated sorting and automatic packing solutions.

We create real-time inventory visibility by connecting warehouse flow operation directly to the client ERP, WMS or MES systems. Our integrated platform combines ruggedized industrial hardware with our proprietary software. The ruggedized hardware includes handheld computer, forklift-mounted tablet, scanners, RFID readers and thermal printers from top-tier manufacturers like Zebra and Honeywell.

Beyond tracking, we deploy turnkey automation systems, including automatic sorters, carton packing machines, robotic palletizing and pallet tracking, enabling fully integrated order fulfillment workflows. For new warehouse project, we designed and installed complete wireless infrastructure position us as a major provider for connectivity and automation from the ground up.

The business model of the RFID division combined from recurrent revenues from annual service contract for hardware and software maintenance, ongoing sales of consumables like barcode labels, RFID tags and supplies and expansion revenue in case of existing clients expand to additional facilities.

This combination of recurrent revenue, consumables and expansion opportunities create a highly predictable and scalable business model. We're proud to serve top-tier enterprises across Israel like Supersal in the food retail, IKEA non-food retail and Teva in the industrial sector. Robotic division.

Our Robotic division designs and deploys custom-made automation solutions that streamline labor-intensive industrial and logistics processes through robotics and automated machinery -- custom automated machinery. Our engineering team works directly with the client that face labor shortage or high-cost manual processes.

We evaluate their production lines, determine which tasks can be fully or partly automated and deliver a comprehensive proposal, including concept design, cost breakdown and ROI projection. Our robotic sales consists of several integrated components, robotic arms purchased or developed in-house, custom design reapers, proprietary peripheral automation machine tailored to each client unique requirement and comprehensive electrical design and software development for the complete system.

Our team includes mechanical engineers, control engineers, software programmers and production crew specializing in mechanical assembly, enabling us to handle projects from concept through installation. Over the past 2 years, we have strategically transitioned our business focus to the defense industry.

Currently, 90% of our backlog is concentrated in this sector. The defense manufacturer sector remains heavily reliant on manual labor while facing increasing pressure for faster production cycles and higher quality standards. This creates significant tailwinds for automation adoption.

Our major defense client is Elbit Systems, one of the Israeli larger defense contractors. We have successfully developed and installed a robotic production line at their Israeli facilities. In Q1 '26, we will install a robotic production line at one of Elbit's European factories, marking our first international defense deployment.

This European expansion validates both our technology and our ability to scale beyond the domestic market. B.O.S. is led by a skilled executive team of 8 and a Board of 4 members. One Board member previously served as the Head of Procurement of Israeli Ministry of Defense. Given the importance of technology, we employ 2 dedicated CTOs, one for the robotics and one for the RFID. Our total team includes 80 professionals with 30% being engineers and technicians.

Competitive advantages. B.O.S. provide a comprehensive offering for industrial and logistic processes and each expansion step of our offering strengthen our competitive advantage. Breakdown our competitive advantage by division.

The Supply Chain division advantage is built on 4 fundamental pillars: specialization in electromechanical components, which connectors and cable, authorized representation of global industry leaders, strategic partnership with Indian assembly manufacturer and direct access to strategic client.

Robotic and RFID division, there is high synergy between our Robotics and RFID division, which creates a powerful competitive advantage. Together, they provide a comprehensive automation solution to improve productivity in industrial and logistic processes across 3 integrated phases.

Phase A, production automation through robotic sales, Phase B, inventory tagging and tracking via barcode RFID, connecting the production flow or warehouse to client ERP systems and Phase C, packing automation through robotic sales. Operational results and outlook. We delivered strong growth in the first 9 months of this year.

Revenue grew year-over-year by 28% to $38 million, continuing our record performance this year. We are strategically expanding overseas by partnering with international subcontractors of our Israeli defense clients. These markets are relatively untapped by B.O.S. and represent potential growth.

We see India as a major target market because it is a global hub for wire and connector assembly, where we have competitive advantages. Through this approach, our international revenue grew by 24% year-over-year, demonstrating the growth potential in international markets.

Our net income grew year-over-year by 54% to $2.8 million, while our revenue grew by 28%, showing our ability to convert revenue into bottom line results, plus profit leverage as we scale the operating base of the business. We demonstrated consistent profitability with steady net income growth, achieving a compound annual growth rate of 57% from year '21 through year '25.

Our financial foundation has never been stronger. Cash and equivalents grew to $7.3 million, up from $3.6 million at the year-end. Our shareholders' equity amounts to $25 million, which accounted for 66% of our balance sheet. We have positive working capital of $18 million and $1.1 million in long-term loans used to finance real estate we are using for our own operation.

This strong balance sheet gives us the flexibility to capitalize on opportunities as they arise, supporting organic growth and strategic acquisitions. The consistent growth in revenues and net income Strong financial position and $24 million backlog covering approximately 50% of our annual revenues underscores the strength of our defense focused strategy.

This reflects years of deliberate investment in product diversification and operational excellence that position us to capitalize on the defense sector's robust growth trajectory. Our financial outlook for year '25 has been upgraded for the third time this year. We now expect to meet the high end of our previous guidance range of $45 million to $48 million in revenue and $2.6 million to $3.1 million in net income.

We will provide our outlook for year '26 during the first quarter next year. There are several tailwinds that have accelerated our growth momentum, and we believe will support our long-term organic growth.

First, the global increase in defense budget, which seems like a long-term trend that will positively impact our growth in the coming years. Second, the replenishment and expansion of Israeli defense forces inventory.

Third, expanding our presence in India assembly subcontractor market. On top of it, the potential stabilization and improving geopolitical condition in the Middle East is a pivotal tailwind for the growth of the Israeli civil market and will positively impact the growth of our RFID division.

These drivers support our continued organic growth in conjunction with our outbound sales efforts. We continue to seek M&A opportunities to support our long-term growth. In this regard, we are targeting companies that meet 4 key criteria.

Strategic fit companies that extend our offering to core defense segment clients, geographic focus, Israeli-based companies, financial strength, solid history of profitability and consistent growth, management, strong and experienced management teams.

Size parameters, we are targeting acquisition valued up to $10 million and the financial financing strategies given the profitability of the target companies, 50% of the investment will be financed through long-term bank loans. Given our strong balance sheet, we will finance the rest of the investment by our internal resources.

Our valuation offers attractive upside compared to Russell 2000 Index multiples. Price to earnings of Russell is 20 versus B.O.S. at 9. Price to book value for Russell is 2.2 and B.O.S. 1.2 only.

Thank you for your time and attention, and we are ready to take your questions.

Excellent. Thank you, Eyal. So we had some questions sent to us in advance by some of our stockholders. They e-mailed me and you in advance. And we've also had a few questions coming in during the presentation. So we'll get those included as well.

And of course, the audience can submit through the screen with additional questions. But perhaps let's just start with one that we get quite often, which is how do we explain the gap between B.O.S. valuation and the Russell 2000 Index that you highlighted in that slide in the presentation.

Yes. Yes. As you saw in the presentation, both valuation ratio are approximately half of those of Russell 2000. I'm convinced that the primary driver of this gap is limited market exposure, which is precisely why I am here today.

Over the past year, we have made substantial progress on our Investor Relations strategy compared to virtually no activity in prior years. At the beginning of the year, we engaged Darrow, an IR firm that has been instrument in our efforts.

Thank you very much for that. And their work includes a weekly one-on-one investor meetings and participation in conference. This is our fourth event that we are participating in this year alone. And I have to tell you that we already see meaningful results.

Our average daily trading volume has increased to 130,000 shares, which is equivalent to approximately $600,000. I believe improved liquidity is critical foundation for minding the valuation gap over time.

Yes. Absolutely. And we had a couple of questions on financing the growth in the business, one on organic and one on acquisitions actually. So let's start organic. You discussed the financing model for M&A, but how do you plan to finance the company's organic growth, which has been very strong over the last couple of years as well?

Yes. As I mentioned, the M&A will be financed through a combination of long-term bank loans and cash on hand that we have $7 million. And in the fourth quarter, we will see increase in that level of cash. Organic growth, however, will be funded if needed through bank revolving credit facilities.

We currently have like $1.5 million unused bank revolving credit capacity for many years. If needed to support our organic growth initiatives, we can draw on this bank facility, and we are confident that we can expand it further with our banking partners if necessary.

Excellent. And then the other side of that, you mentioned for the M&A project opportunities, you have a balance sheet that allows you to do cash and debt for that. We get an additional question that was asking if you have an internal rate of return target or IRR target that you're looking for in the acquisitions that you're considering?

I think the minimum IRR should be around 15% to 16% minimum. I have to tell you one of the challenges that we have, of course, we are targeting profitable companies with a solid history of profits in the different segment, which is very tough because our valuation as a public company is very low, and it's very tough for me, hard for me to buy a private company in higher multiples.

So it's a kind of challenge, but we are trying to bring the best company for the long term to the company and which will give a high yield to the group, promote us to our long-term target of being $100 million revenues company. Profitable, focusing on the segment market. And we are working on that. And I hope that next year, we will be able to complete an acquisition, of course, with no dilution.

All the better. So speaking of the different divisions, we've got supply chain, RFID, robotics divisions that we report. Which segment do you think is going to contribute the most incremental growth going forward?

Yes. I think we see growth in all the divisions for year '26 but rather than pointing to a single segment, I see significant tailwinds across all the 3 divisions that will drive our long-term organic growth. Of course, the defense is the most robust -- has the most robust growth because of the global increase in the defense budget and the replenishment and expansion of the Israeli defense inventory that represent a long-term trend that will positively impact both our Supply Chain division and the Robotics division as well.

Because 90% of the business of the Robotic division currently is in the defense segment. But the potential stabilization and improving geopolitical condition in the Middle East provide a significant tailwind for the Israeli civil market, which will particularly benefit our RFID division.

So in short, we will -- we are well positioned for growth across our portfolio in year '26 with each segment capitalizing on distinct but complementary market dynamics.

Excellent. And one of the questions we also got following up on that was we previously talked about the RFID segment having some challenges that are being worked through and the performance improving. How should investors think about the turnaround in RFID?

And do you think that profits in that division could return to their 2024 levels from a couple of years ago?

As I mentioned, we are seeing potential stabilization and improving geopolitical condition in the Middle East, which is a significant tailwind for the civil market and for the RFID accordingly. We are now in the third month of Q4, and we are already experiencing this rebound firsthand.

And second, we are continuing to -- we have been aggressively expanding our RFID product offering with end of the light information solutions by our robotics division as well that includes off-the-shelf equipment such as sorter and various packing machines. This diversification strength our position and broadens our addressable market.

So we are optimistic that it will return to track on the fourth quarter of this year.

Excellent. And then another question we had come in, noting that foreign exchange headwinds have pressured our margins a bit this year. What pricing adjustments or operational changes are you implementing? And do you think those are enough to offset that pressure going into 2026?

Yes. And the U.S. dollar has depreciated approximately 11% against the Israeli Sheqel in the 6 months ended September, meaning the second quarter and the third quarter of this year. And since the majority of our operational expenses are in sheqel denominated, this creates roughly $0.5 million in additional cost pressure on operating income during that period.

We are proactively addressing this challenge that we see as a long-term trend. We don't see that the trend will be turned around. So we are addressing this challenge through 2 key measures, strategic sales price upgrade, which is not easy, but there is no other way to handle this kind of 11% depreciation.

And we initiated this process in Q4. And gradually, I believe we will see the result in Q4 and in year '26 as well. And of course, on the ongoing operational efficiency improvements, digitizing many operational activities using the AI also for internal users, using BI.

We believe this combined action will sustainably mitigate the foreign exchange impact going forward and position us well for year '26.

Okay. I think we have time for just maybe a couple more questions. We're getting some good ones on the inbound here. One of the questions kind of following up on the foreign exchange. Your gross margins have moved up nicely over the last several quarters, reaching nearly 25% last quarter. How are you raising the margins? And this ties into your answer is higher pricing, cost cutting.

Most importantly, where do you think the margins can get to in the next 12 months for your business?

I think we are -- we're supposed to be in the range of 25% to 30% since we are integrators, and this is, I think, the gross margin range of integrators. And there is fluctuating in between this point because of a different mix of products that we are selling between the quarters with different level of profitability.

So we are trying to improve our efficiency, but it won't move the needle significantly between the 25% and 30%. The mix of product has much more influence on the gross profit margin.

Excellent. And listen, we have just couple of minutes left here. Let's see this one. So you talked about in the presentation, the strong growth opportunities in Israel and now in India. But what about growth opportunities in the U.S. and European markets? Do you see opportunities in those large markets also?

Yes, absolutely. We see growth potential in B.O.S. in the U.S. and Europe by leveraging our relationship with the major clients like Elbit Rafael and IAI as they expand in those territories. As I mentioned earlier, once our supply chain division embeds its franchise component into this client and product, we supply those same components to their subcontractor worldwide and by that, creating a natural expansion pathway.

However, in India, our approach is a little bit different is proactive approach. We are actively pursuing direct sales to local defense and aerospace subcontractors. And we believe India is well positioned as a global hub for electronic assembly and with continuing strong demand from the defense clients, it represents significant growth potential that we intend to capitalize on during year '26.

Excellent. I think we're bumping right up on time. But of course, for anyone that's listening and wants to request a meeting, you can reach out to myself through my e-mails listed on all of our press releases. We're happy to set up calls, as Eyal mentioned. We do them every single week with investors. We'd be happy to do so and discuss the business or answer additional questions.

Any other closing comments for just 60 seconds, Eyal?

It was a pleasure to participate in that summit. And thank you for your time. And as you mentioned, if you need any more details or would like to follow up, please feel free to reach out.

Outstanding. Thank you so much, and thank you, everyone, for joining us.

Thank you.

Ladies and gentlemen, thank you for standing by. Welcome to the BOS conference call. [Operator Instructions]

As a reminder, this conference call is being recorded and will be available on the BOS website as of tomorrow. .

Before I turn the call over to Mr. Cohen, I would like to remind everyone that forward-looking statements for the respective company's business, financial condition and results of its operations are subject to risks and uncertainties, which could cause actual results to differ materially from those contemplated.

Such forward-looking statements include, but are not limited to, product demand, pricing, market acceptance, changing economic conditions, risks and product and technology development and the effect of the company's accounting policies as well as certain other risk factors, which are detailed from time to time in the company's filings with the various securities authorities.

I would now like to turn the call over to Mr. Eyal Cohen, CEO. Mr. Cohen, please go ahead.

Good morning, and thank you for making the time to meet with us today. Joining me is Mr. Moshe Zeltzer, our Chief Financial Officer. BOS integrate cutting edge technologies to streamline and enhance [indiscernible] operation. We delivered strong growth in the first 9 months of this year. Revenue grew year-over-year by 28% to $38 million, continuing our record performance this year. .

We are strategically expanding overseas by partnering with international subcontractors of our Israeli defense clients. This market -- these markets are relatively untapped by BOS and represent potential growth for BOS. We see India as a major target market because it is a global hub for wire and connector assembly where we have a competitive advantage. Through this approach, our international revenues grew by 24% year-over-year, demonstrating the growth potential in international market.

Our net income grew year-over-year by 54% to $2.8 million, while our revenues grew by 28%, showing our ability to convert revenue into bottom line results plus profit leverage as we scale the operating base of the business. We have demonstrated consistent profitability with steady net income growth, achieving a compound annual growth rate of 51% from year '21 through the year 2025.

This results underscore the strength of our defense focused strategy, reflecting use of delivery investment in product diversification and operational excellence that position us to capitalize on the defense sector to robust growth trajectory. Given our strong execution and stable backlog exceeding $24 million, we are raising our full year 2025 financial guidance.

We now expect to meet the high end of our previous guidance range of $45 million to $48 million in revenue and $2.6 million to $3.1 million in net income. There are several tailwinds that have accelerated our growth momentum, and we believe will support our long-term organic growth. First, as you know, the global increase in defense budgets. A second replenishment and expansion of Israeli Defense Forces inventory and equipment and vehicles. Third, the potential stabilization and improving geopolitical conditions in the Middle East, which is a pivotal tailwind for the growth of the Israeli [indiscernible] market and will positively impact the growth of our RFID division.

These drivers support our continued organic growth in conjunction with our outbound sales efforts. We continue to look for opportunities to enhance our organic growth with strategic actions that fit our business and diligent pricing parameters. Through the combination of this effort, we intend to grow both over the coming years.

With that overview, I will turn the call over to Moshe Zeltzer, our CFO, to discuss our financial position. Please, Moshe.

Thank you, Eyal. Our financial consolidation has never been stronger. Cash and equivalents grew to $7.3 million, up from $3.6 million at year-end. Our shareholders' equity amount to $25 million, which account for 66% of our balance sheet. We have positive working capital of $18 million and $1.1 million in long-term loans secured by real estate we are using for our own operations.

This strong balance sheet gives the flexibility to capitalize on opportunities as they arise, supporting organic growth and strategic acquisitions. Our valuation offers attractive upside compared to Russell 2000 Index multiples. Price-to-earnings ratio Russell 2000 is 20 versus BOS at 11, price to book ratio Russell 2000 at 2.2% versus BOS at 1.7%. Thank you for your time and attention. We are happy to take your questions.

This is Scott White at CIMCO Capital. Great quarter. Terrific. I have a few questions and if it's okay, I'd like to ask them one at a time. In the press release, you highlighted that you're excited about your expanding opportunities with new and existing customers. Can you highlight a couple that you're particularly enthusiastic about and specifically new customers?

Yes. The main customer that we are joining to our portfolio mainly overseas clients, mainly from India. And I can tell you that in the recent week, there was a huge dedication here from -- in Israel from India, including ministers from Indira, and we were happy to meet with many, many companies from India and those are the major clients that we are joining our group.

Okay. When would you expect revenues to hit the bottom line to impact your P&L.

What do you mean?

When do you expect revenues from this new Indian customer to impact your P&L?

Yes, it already impacted the year -- these 9 months, we already see the growth in revenues from international market by 24% as compared to the comparable period last year, and this has mainly come from the Indian market. And it poses and gradually, we are taking -- we are increasing our market share in this territory. .

Okay. Second question, can you expand on the loss in the RFID division and exactly what you mean by logistics center slowdown in Israel?

Yes. The RFID division engagement in the civil market, not in the defense market segment. This segment had a very challenging time in the recent 2 years because of the conflict in the Middle East. And it adversely affect the business. And in the recent 2 quarters, we also saw the effect of the U.S. dollar devalued against the Israeli shekel that also adversely affected the business. But in the fourth quarter, because of some measure we took operationally and in the business model as well, and the change in the environment in Israel, especially in the geopolitical environment, we see a rebound in the demand, and we are optimistic about returning back to profit in the fourth quarter.

Okay. Great. And then that was my next question. Can you expand on the currency impact? And how much can you quantify the effect it had on your P&L? And do you hedge? And if not, you're going to start hedging?

Yes. So the U.S. dollar devaluate -- again, the Israeli shekel by about 11% in the 6 months has ended the September 30 this year, the second and the third quarter. And since most of our operational expenses are denominated in shekels accounts, while our revenues are primarily in dollars, this currency movement created approximately [indiscernible] additional cost pressure on operating income during this period or roughly about [ $40 million ] per quarter. So as I mentioned before, we are proactively addressing this headwind through strategic sales price adjustment initiated in the fourth quarter and operational efficiency improvements. .

And on the hedging, we are hedging the balance sheet exposure and forever hedging, each hedging has a mutation period. And we don't believe that -- it's temporary exchange rate. I think it will all be for the long term. So any kind of hedging on the dollar is temporary. And we are trying to find a solution for the long term. And because of that, we are in the process of a sub price adjustment and operational efficiency improvements.

One more question, and then I'll jump back in the queue. One of the potential concerns on your P&L and continued growth is the impact of the end of the war in Gaza. Can you address this? And how should we think about the end of the war and its impact?

I think there are 2 coins -- 2 sides for the coin. On one side, we are in the different segment, the supply chain provision, the biggest division in BOS 90% of its business is in the difference. And each customers are the major client in Israel. So there is a direct impact of the tension. On the other hand, we have the RFID division, which is in the steady market. The [indiscernible] market doesn't benefit from the war. But because the biggest -- we have the big exposure to the difference, because of that, we are growing in the top line and in the bottom line. .

Historically, have you grown faster on the defense side, in a time of war or time of peace.

All the years, the growth -- the main growth came from the supply chain because even in time of peace, those 3 clients are the biggest exporter in Israel. They're going year-by-year. And also, the defense budget of Israel is going year-by-year even before the war. So I'm not sure about the number, but I think the average growth rate of the defense market in Israel along the years were about 7%. So it's growing. Sometimes in so period in [indiscernible] in the recent 2 years, about 17% each year or more in normal years about 10%.

Congratulations on another great quarter. I see that you have a $7.3 million in cash and I assume that amount is rising in the current quarter. You've talked about M&A possibilities. Will you have to use raise equity? Or will you be able to use cash for any M&A activity?

Todd. Yes, our cash position was strong at the end of the third quarter with over $7 million and 0 bank debt. That's continued to grow in the fourth quarter. So for M&A, we are targeting profitable Israeli defense sector companies. We complementary products, serving our major clients and their subcontractors. So with acquisition targets of up to $10 million and bank financing typically available for approximately 50% because it's a profitable company, 50% of the purchase price we can execute this [ interaction ] using our existing cash on hand without acquiring equity raising, while maintaining sufficient working capital for operational organic growth.

That's great. Also, can you kind of give us some clarity on the amount of the percentage of your defense business, which is in Israel and the mouth that's in internationally and how that how you expect that to change. I've seen a lot of contracts from India and Europe, and I was hoping you could kind of quantify that for us.

Yes. As we saw in the chart like in the 9 months is the -- out of the $38 million, $3.6 million were sales overseas regarding -- related to the Supply Chain, related to the Defense. And we are taking measure to -- and reallocate resources to increase this number by being active with active approach, especially in India and they may be even to change our approach in how to operate the sales in India, and we see a lot of potential in this market.

So I believe that this number of $3.6 million that reflects 24% increase in sales oversea will continue. We will see this trend continue in the fourth quarter and in year '26 as well.

Okay. I know you talked about opening up kind of a branch office in India. I assume that's where a lot of the expansion is going to be? And is there any update to that office you're going to open over there?

Yes. We are checking various options on how to make it in the most efficient way. We are taking a very conservative measures how to allocate our financial resources overseas, now to do it in a very lean way. And I believe that in next year, we will see the actual results of our plan. .

Okay. Congratulations again on a great quarter.

Thank you.

My name is Igor. This is my second call. Congratulations on a strong quarter. So my question is Israel is expensive, everything in Israel is expensive any operations and now it's getting a bit more expensive stronger shekel. And now that you becoming more and more of an international company international sales, any thoughts of spreading the cost and moving some of the operations outside of Israel, given that it's so expensive to do anything in Israel?

It's a good idea, but maybe, maybe it's a good idea. We need to think about it. Actually, we don't -- I don't see any -- which units we can operate overseas. But one of the options, as I mentioned to Todd is to instead of doing the sales to India from Israel to do the sale to India from India. So this is the first example how we can reduce our cost, but the main approach to do sales in India were not to save cost but to increase sales, but we can get both of the things together, but it's a good idea.

I need to [indiscernible]. I need to think about it, and I will keep you updated in the next call.

My other question is -- so I know that the last years were sort of overshadowed by the Gaza war and Gaza people would refer to this. historically, like if you take many, many years, the company is a bit of a cyclical company. So some periods of times, there's more demand there is a little bit less demand. How do you intend to make a company a little bit less cyclical and more like a sustainable growth? Like what is your strategy like? What do you see the company like 5 years down the road?

I think by going overseas to increase our sales overseas, we saw in the number like out of $38 million adjusted, $3.6 million of international sales. So if you increase it, we can reduce the cycling. And the growing by acquisition and adding more increase in the portfolio, our offering. And by that, we can eliminate the exposure that you mentioned. But the structure of BOS is that we have the supply chain in the defense, and we have the RFID and we have the robotic in between. So we are already spread. But I have to be honest with you, the -- we are in the defense for many years, more than 10 years, and it's all the time growing. I don't remember a cycle of a slowdown in this segment. I'm sure that in 3 or 4 years, the demand will come back to normal after the situation in the Middle East and in Europe. But I believe it's the best segment to attach to.

Okay. And my last question about the potential for M&A. So obviously, you put $4.5 million at the market option now, and you have plenty of cash [indiscernible] for any cash. So do you have -- are you looking at any specific opportunities right now? Or you just put it just in case? Like what is your thought about M&A for the next year or 2 years?

I hope that in next year, we will close on M&A. This is the working plan. And my plan is to close one. And I hope that every 2 years, we will be able to close on the M&A. And by that, with the organic growth to reach to the $100 million. This is a target. But those are our plans, and we are working to -- according to those plans.

Just curious, I understand it might be opportunistic, but why don't you look to borrow to do an M&A and potentially looking at the equity component, given that your stock is not particularly high. So that would be maybe a little bit some optimal versus borrowing from a bank, given that you pretty solid company, this good cash flow and earnings.

I didn't understand your.

So it looks like you put a potential for M&A, you have an option of $4.5 million equity -- so obviously, I don't know now what the opportunity, the M&A opportunity is going to look like. But I would hope that you would first intent would be to borrow money from the bank to do an M&A versus issuing equity given that your equity is relatively low, given your valuation, So I think.

As I mentioned to Todd, we -- in case of doing acquisition, even $10 million , which is a frame of investment that we are targeting assuming 50% by bank loans because it will be a profitable target company. So for the rest, the $5 million, absolutely, we can -- we don't need to issue more stock. We have it on hand.

We have $7.5 million as of the end of September, and the cash continues to grow. And so I don't see any need to raise the equity to consume in M&A.

So you just have a just in case a big opportunity comes up that you have a $4.5 million offering at the market.

We see it. We have tools like every public company should have like the shelf perspective that we have, and we haven't used for 4 years. Like the ATM that we have, and we haven't used since the date was filed. And the asset in that unused credit line that we have in the bank are not used. So we are holding facilities which we have. And -- but actually, in order to consume $10 million M&A, we don't need to raise BOS tool except for the unused credit lines [indiscernible] credit lines. .

How much do you have available credit to us now approximately?

Sorry?

How much credit do you have unused as of now?

$1 million for the RFID.

No. unused. Unused, we have unused for ongoing years not for the acquisition we [indiscernible]

Oh, I see, okay. yes. So that's capital .

On $1.5 million to $2 million unused credit line for we've all been credited for organic growth. But when you already check with the banks in case of model of acquisition, a profitable company. And I believe we can get 50% financing from the bank to -- for the acquisition. .0's

From an Investor Relations perspective, have you finalized your dates as to when you're going to come to the U.S. to meet investors?

Yes. I think it will be April next year. In between, I will participate in the virtual summit, we will announce on it and they will continue to do ongoing one-on-one weekly meetings with the potential investors. Scott?

Yes, I got it.

Any follow-up question?

No, no follow-up from good although I'd like to meet you when you come to the U.S. for sure.

Yes. We can meet. So thank you, again, for your participation. And if you need more details or would like to follow up, please feel free to reach out to us. Thank you.

Thank you. Bye-bye.