Item 7A. Quantitative and Qualitative Disclosures About Market Risk
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Currency
Exchange Risk
Our results of operations and cash flows are affected by fluctuations
in foreign currency exchange rates. Since 2015, most of our expenses were denominated in U.S. dollars and the remaining expenses
were denominated in NIS and euros, until 2018 most of our revenues were denominated in U.S. dollars and the remainder of our revenues
was denominated in euros and British pound whereas in the last three years our euro revenues are higher than our U.S dollar revenues.
Accordingly, changes in the value of the NIS and euro relative to the U.S. dollar in each of the years 2021, 2020, and 2019 impacted amounts
recorded on our consolidated statements of operations for those periods. We expect that the denominations of our revenue and expenses
in 2022 will be consistent with what we experienced in 2021.
The following table presents information about the changes in the
exchange rates of the NIS and euro against the U.S. dollar in 2021, 2020 and 2019:
Change in Average Exchange Rate
Period
NIS against the
U.S. Dollar (%)
Euro against the
U.S. Dollar (%)
2021
(6.38
)
3.46
2020
3.76
2.07
2019
0.87
(5.16
)
The figures above represent the change in the average exchange
rate in the given period compared to the average exchange rate in the immediately preceding period. Negative figures represent depreciation
of the U.S. dollar compared to the NIS or the euro. A 10% increase or decrease in the value of the NIS against the U.S. dollar would have
decreased or increased our net loss by approximately $587 thousand in 2021. A 10% increase or decrease in the value of the euro against
the U.S. dollar would have decreased or increased our net loss by approximately $82 thousand in 2021.
From time to time, we enter into limited short term hedging arrangements
with financial institutions. We do not use derivative financial instruments for speculative or trading purposes.
Other Market Risks
We do not believe that we have material exposure to interest rate risks or to inflationary
risks.
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