Board of Directors' Report on the State of the Company's Affairs

The Board of Directors' Report on the State of the Company's Affairs

For the periods of three and six months ended June 30, 2022

The Company's board of directors hereby respectfully submits the Board of Directors' report on the state of the Company's affairs for the three and six months' periods ended on June 30, 2022 (the "Report ", and "Q2 of 2022 " and the "Reported Period ", respectively), according to the Israeli Securities Regulations (Periodic and Immediate Reports), 5730-1970 (the "Reports Regulations ").

The scope of this Report is limited, and it is drafted under the assumption that the readers also have available the Company's Annual Report for the year 2021 published on March 9, 2022 (reference number: 2022-01-028219) and amended on March 28, 2022 (reference number: 2022- 01-030507) (the "Annual Report ")1 and the Company's quarterly report for the three-month period ended 31 March, 2022 (published May 19, 2022, reference no: 2022-01-049626).

1. Explanations of the Board of Directors regarding the state of the Company's affairs

The Company was incorporated in Israel on January 16, 2005, as a private company. On May 10, 2022, the Company published a prospectus regarding the initial public offering of the Company's shares (the "IPO "), and since May 13, 2021, the Company's shares are traded on the Tel Aviv Stock Exchange Ltd. (the "TASE "), and the Company is a public company.

As of its incorporation and as of the publication date of this Report, the Company, including through corporations that it directly and indirectly owns (hereinafter together: the "Group "), is engaged in providing solutions and services for processing and operation of businesses through a global platform. In the framework of its activity, the Company offers its customers, through its platform - which combines proprietary hardware and software developed by the Company - comprehensive solutions and services to unattended points of sale and service ("Unattended " or the "Unattended Activity "), and to attended points of sale and service ("Attended " or the "Attended Activity "). As of the date of this Report, the Company's Attended Activity focuses on the Israeli and UK markets, and the Company plans to expand it in the next year to the American and Australian markets.

The Company's estimate with respect to the expansion of its Attended Activity to the

American and Australian markets in the next year, as described above, constitutes forward looking information, as defined in the Israeli Securities Law, 5728-1968 (the "Securities Law"), the materialization of which is uncertain and is not solely in the

Company's control. Such estimations are based on the information known to the

Company as of the date of this Report. It is clarified that there is no certainty that such estimates shall materialize, and they may materialize materially differently than as stated above, inter alia due to their dependence on external factors that are not in the

1 For a convenience translation of the Annual Report into English, see such Company's publication, published on March

Company's control, including the risk factors set out in Section 1.35 of the Annual Report.

The Company has been growing consistently since its incorporation, and in recent years the Company's growth has even accelerated. The Company measures its growth through four key metrics: the number of connected and managed points of sale that the Company provides services to, the number of customers and the number of transactions executed at the points of sale, and their financial value.

Presented below is data regarding these four key metrics with respect to the three and six-months periods ended June 2022:

The financial value of the

1.5. Dealing with macro economic conditions and effects:

Coronavirus outbreak, including the global shortage in components

During Q1 of 2020 the Coronavirus ("COVID-19 ") began to spread globally, and on March 11, 2020, the World Health Organization declared Covid-19 a global pandemic. Covid-19 led to sharp declines on stock markets all over the world, and to a global economic slowdown. The global economic slowdown led, and may in the future lead, to a decrease in consumption, and thus it had, and may also in the future have, a negative effect on the Group's activity and its results.

Nevertheless, an additional trend that can be pointed to is that due to the Covid-19 pandemic, consumers prefer cashless payment methods in order to limit interactions with other people and surfaces, in the framework of social distancing rules. Such behavior has a positive effect on the Company.

As of the end of 2021 and as of the date of this Report, the number of active Attended and Unattended points of sale of the Group's customers, as well as the number of consumer transactions executed in the Attended and Unattended points of sale, is significantly higher than it was before the outbreak of Covid-19.

In addition, the global outbreak of Covid-19 caused uncertainty in the global economy and staggering economic damage due to the closure of many businesses, slowdown in manufacture, delay in deliveries and partial shutdown of national and international transportation, while on the other hand global demand for various electronic products significantly increased. The global shortage of components which are required for manufacturing the Company's POS devices led to an increase in prices (including some significant increases), and as a result adversely affected the Company's gross profit rate from the sale of POS devices since Q3 2021. The Company's strategy is to continue the supply of POS devices to its customers without increasing the selling prices even under such circumstances, since the Company is of the opinion that the sale of POS devices to customers constitutes the Company's strategic foundation for engaging with new customers and for expanding the activity of existing customers, thereby driving the Company's continued growth. In 2021 and in Q2 of 2022, POS devices sales accounted for approximately 40% and 38% respectively, of the Company's sales.

In light of the fact that the Covid-19 crisis is ongoing, and it is difficult to estimate how it will develop in the future, the Company cannot at this stage estimate the scope of the future implications of Covid-19 on the Company's operations and results. Notwithstanding the foregoing, the Company estimates that during the short term, the supply chain activity will continue to adversely affect the POS manufacturing process and gross margins. The Company is continuously working to improve its supply chain with increased efforts in light of the global components' shortage, including adding a manufacturer of the Company's integrated POS devices, expanding the circle of suppliers from whom the Company purchases components directly and through its subcontractors, and extending the range of components equipping further than pre pandemic norms. The Company believes that in the mid-term, once the availability of components will be back to normal, the Company's gross margin will return to the pre pandemic levels. In addition, the Company believes that the Covid-19 pandemic will not significantly impair its activity, and even the opposite, as since the outbreak of the pandemic, the dependence on digital solutions for remote management increased, and the importance of the Group's products for managing Unattended commerce became stronger.

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