Veloryx follow-up: what is really being bought in Euro Sol, and at what numbers

What This Follow-up Is Isolating

The main article was right to frame Veloryx's move into HLS as the central strategic turn. This continuation stays only with the first deal that is supposed to turn that turn into an operating business: Euro Sol. That is not a side issue. As of the report date, Veloryx still says it has no revenue from the new activity. So Euro Sol is not just another possible acquisition inside a broader M&A narrative. It is the first operating base that is meant to carry both the story and the numbers.

Three things need to be separated here because the documents keep blending them together.

• ILS 35 million is not a single purchase price paid to the sellers. In the annual report, ILS 26 million is allocated to buying shares from existing shareholders, while another ILS 9 million is meant to go into Euro Sol itself as a capital investment in exchange for preferred shares.
• The road from 70% to 100% is not immediate. The presentation draws a simple move from a first-stage 70% holding to a later 100% holding, but the annual report describes PUT and CALL options on the remaining shares that become exercisable only after three years, for a 12-month period, under mechanisms that still have to be defined in binding agreements.
• The same deal is presented with two different operating baselines. Section 6.33 of the annual report gives revenue of ILS 16 million in 2024 and ILS 20 million in 2025, with EBITDA margins of 22% and 17%, respectively. Later in the same report, and again in the investor presentation, Euro Sol is framed instead as having about ILS 25 million of cumulative 2024-2025 revenue with about 20% EBITDA.
• The named customers are real, but they are not a substitute for underwriting. The documents name defense bodies and overseas customers, yet do not disclose customer concentration, backlog, repeat revenue, or collection quality.

That chart is the right starting point. It says the real question is not only how much Veloryx is paying, but who gets the money and what that money is supposed to buy.

What Is Actually Being Bought

The operating picture is not thin. In the annual report, Euro Sol is described as an Israeli, profitable defense company that has been active for more than 13 years in the development, production, and operation of operational drone systems, with four different drone models. The presentation keeps the same line and adds a few more layers: operational field experience, commercial activity with defense customers in Israel and abroad, in-house manufacturing, use of composite materials, and a market reputation presented as a competitive edge.

The list of names is not trivial either. In the annual report, the named counterparties include Israel Police, the Ministry of Defense, the IDF, MAFAT, Elbit Systems, and Next Vision, alongside activity in Morocco, Brazil, the Netherlands, and Japan. The presentation sharpens that into a slightly different but overlapping logo set: Israel Police, the Ministry of Defense, the IDF, Elbit Systems, Next Vision, the Japan Coast Guard, the Netherlands Police, and Morocco's RMA. That matters for two reasons. First, this is not being pitched as a start-up with a deck and two pilots. It is being pitched as a platform that has already sold to known bodies. Second, precisely because of that, the missing disclosure becomes more visible: there is still no revenue split by customer, no backlog, no Israel-versus-export mix, and no indication of repeatability.

That is also where the strategic promise has to be read more carefully. The presentation talks about preserving operational independence, expanding production capacity, integrating Euro Sol's products into a broader solution, opening new markets, and using White Label channels. In other words, Veloryx is not telling a story of swallowing a small activity into a listed shell. It is telling a story of buying a living platform that is supposed to keep operating largely as it already does, with founder-led management continuing in place.

That is exactly where the gap between the narrative and the underwriting begins. Narratively, this looks like a shortcut into a market with products, customers, geographies, and a live reputation. Economically, it still requires a simpler answer: how much of that revenue is repeatable, how concentrated it is, and what Veloryx is actually getting for each layer of cash it is putting on the table.

ILS 26 Million To The Sellers, ILS 9 Million Into The Company

The most important point in this transaction is the separation between the price paid to shareholders and the capital that remains inside Euro Sol. In the annual report, ILS 26 million is allocated to buying 1.4 million ordinary shares from existing shareholders in two tranches of ILS 13 million each. By contrast, the ILS 9 million is not an additional seller payment. It is a capital investment into Euro Sol itself, to be made in nine equal installments, starting 120 days after closing and continuing over the following eight months, in exchange for preferred shares with certain priority rights.

That is not a semantic distinction. Anyone reading this as a flat ILS 35 million acquisition price is missing the mechanics. The ILS 26 million is the price of the secondary leg, meaning the cash that goes out to current owners. The ILS 9 million is money that is supposed to stay in the acquired company and fund its next phase. That means ILS 35 million describes a broader capital commitment around the deal, not a clean share-price number that can be dropped into a single acquisition multiple.

That is also where the numerical read can begin to get cleaner. If we stick only to the secondary leg, ILS 26 million for 70% implies an equity value of about ILS 37.1 million for 100% of the shares, before the preferred-share investment and before any adjustment for cash or debt inside the target. If we then anchor to the detailed 2025 disclosure, meaning ILS 20 million of revenue and a 17% EBITDA margin, that points to an EBITDA base of about ILS 3.4 million. On that reading, the secondary leg sits around 1.9 times revenue and about 10.9 times EBITDA on an equity-value basis. But even that read is provisional, because the report itself says the 2025 figures are unaudited and may differ materially.

The presentation sharpens the distinction between price and funding even more. On the sources side it shows about ILS 22 million of equity, linked to a private placement, and about ILS 15 million of bank debt. On the uses side it shows ILS 26 million to shareholders and ILS 9 million of reinvestment. So even the company's own internal framing already admits that this is not only a control acquisition. It is also the construction of a financing package around the next phase of Euro Sol.

And this is where timing matters. In the annual report, the road to 100% is not a simple second step but a PUT and CALL mechanism that only becomes relevant three years after closing and remains open for one year. The presentation, by contrast, compresses that into a short diagram of 70% in stage one and 100% in the next stage. That is not false. It is also not the same thing. The gap between those two presentations is exactly where a careful reader should stop: full ownership exists as a narrative destination, but in the legal description it is delayed, conditional, and dependent on agreements that have not yet been signed.

The Numbers Do Not Speak The Same Language

This is where the main yellow flag of this continuation sits. The same evidence set does not give one clean size baseline for Euro Sol.

In section 6.33 of the annual report, the company states explicitly that revenue amounted to ILS 16 million in 2024 and ILS 20 million in 2025, with EBITDA margins of 22% and 17%, respectively. That is a detailed, year-by-year presentation. The footnote also says the 2024 figures are based on audited financial statements, while the 2025 figures are based on unaudited data and may differ materially.

But later in the same annual report, in the post-balance-sheet events section, the language changes. There the company says that in 2024 and 2025 Euro Sol's sales revenue amounted to about ILS 25 million, with about 20% EBITDA. The February 2026 presentation adopts exactly that same version: sales over time of ILS 25 million across 2024-2025 and 20% EBITDA.

This is not a cosmetic gap. The detailed annual disclosure leads to a two-year total of ILS 36 million. The summary disclosure in the report and the presentation talks about about ILS 25 million. The EBITDA layer shifts as well: in the detailed presentation it is a sequence of 22% and then 17%. In the summary version it becomes a single 20% number.

The problem is not only that there is a gap. The problem is that the company does not explain what sits behind it. There is no perimeter explanation, no statement that one of the figures reflects only part of the activity, no bridge from audited to unaudited, and not even a sentence saying the presentation is using a simplified summary. So the documents themselves do not let the reader know what exactly sits behind the ILS 25 million figure. What is clear is that there is no explicit bridge to it.

And that is exactly why these figures matter. If the real base is ILS 20 million of 2025 revenue, a reader can at least start to think in terms of what scale Veloryx is trying to buy. If the operative number is instead ILS 25 million across two years combined, the picture already looks very different. Without an explicit reconciliation between the two versions, the reader is left with a deal that cannot be assigned one clean multiple.

The Name Is Public, But The Deal Is Still Not Closed

In the immediate report dated March 9, 2026, Veloryx finally named the target: Euro Sol Aerial Solutions Ltd. That matters because it removes the remaining fog around the phrase "the drone company". The same filing also says the parties are in the final stages of reaching a binding agreement.

But this section matters only if it is read to the end. That same immediate report explicitly says completion still depends on satisfactory due diligence, commercial agreements, a signed binding contract, the required financing, regulatory approvals, and corporate approvals. In other words, the target is now identified and the negotiations are advanced, but the closing still has not happened. That matters especially because the presentation already sounds partly like an operating plan for the post-acquisition period, while the more binding disclosure still speaks in the language of conditions precedent.

The economic implication is simple. At this stage there is still no integrated platform. There is an advanced strategic option. So what the market is really underwriting now is not only Euro Sol's quality, but Veloryx's ability to secure financing, sign definitive documents, and turn a layered deal structure into a business with measurable value creation.

Bottom Line

Euro Sol looks, on the face of the documents, like a much more serious operating target than the listed shell itself: it has tenure, products, customer names, international reach, and positive profitability. That is the side supporting the thesis. The problem is that exactly where the story has to become numbers, the documents stop speaking in one voice.

So the right read of the deal at this point is this: Veloryx is not presenting one clean price for one company on one clean operating base. It is presenting a staged deal in which ILS 26 million buys shares from existing shareholders, ILS 9 million is supposed to stay inside Euro Sol, the move from 70% to 100% is still delayed and conditional, and the historical revenue and EBITDA base is presented in two unreconciled versions.

That does not automatically make this a bad deal. It does mean the question "what is really being bought, and at what numbers" is still open. Until a binding agreement appears with full mechanics and a clear reconciliation of the revenue and profitability base, it is hard to give this deal a clean multiple, a clean quality-of-growth read, or a clean judgment on how much proof it gives to Veloryx's HLS transition.