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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 20-F

(Mark One)

[ ]      REGISTRATION STATEMENT PURSUANT TO SECTION 12 (b) OR (g) OF THE
         SECURITIES EXCHANGE ACT OF 1934

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ____ TO ____

                         COMMISSION FILE NUMBER 0-26498

                             NUR MACROPRINTERS LTD.
                         ------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                                     ISRAEL
                         ------------------------------
                 (Jurisdiction of incorporation or organization)

                              5 David Navon Street
                         Moshav Magshimim 49001, Israel
                         ------------------------------
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE
ACT:

                                ordinary shares,
                                NIS 1.0 par value
                                -----------------
                                 Title of Class

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act:

                                ordinary shares,
                                NIS 1.0 par value
                                -----------------
                                 Title of Class

         Indicate the number of outstanding shares of each of the issuer's
classes of capital or common stock as of December 31, 1999:

                                ordinary shares,
                      NIS 1.0 par value, 11,774,573 shares
                      ------------------------------------
                         Title of Class Number of Shares


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         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X  No
                                             --    --
         Indicate by check mark which financial statement item the registrant
has elected to follow. Item 17      Item 18 X
                              --           --


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IN ADDITION TO HISTORICAL INFORMATION, THIS ANNUAL REPORT ON FORM 20-F CONTAINS
FORWARD-LOOKING STATEMENTS. THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE
SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THOSE REFLECTED IN THE FORWARD-LOOKING STATEMENTS.
FACTORS THAT MIGHT CAUSE SUCH DIFFERENCE INCLUDE BUT ARE NOT LIMITED TO, THOSE
DISCUSSED IN "ITEM 1: DESCRIPTION OF BUSINESS--RISK FACTORS" AND "ITEM 9:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE
FORWARD-LOOKING STATEMENTS, WHICH REFLECT MANAGEMENT'S ANALYSIS AS OF THE DATE
HEREOF. THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY REVISE THESE
FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES THAT ARISE AFTER
THE DATE HEREOF. IN ADDITION TO THE DISCLOSURE CONTAINED HEREIN, READERS SHOULD
CAREFULLY REVIEW ANY disclosure OF RISKS AND UNCERTAINTIES CONTAINED IN OTHER
DOCUMENTS THAT THE COMPANY FILES FROM TIME TO TIME WITH THE SECURITIES AND
EXCHANGE COMMISSION.

                                     PART I

ITEM 1:           DESCRIPTION OF BUSINESS

GENERAL

         NUR Macroprinters Ltd. (the "Company") is a world leader in the
development, manufacturing, marketing and servicing of wide format and super
wide format inkjet printing systems. The Company's printers are used for
on-demand, short-run, wide format (up to 1.8 meters (6 feet), "WF") and
superwide format (over 1.8 meters, "SWF") printing. The Company also supplies
inks and print substrates essential to the operation of the Company's printers.

         The Company's main product line is the NUR Blueboard-TM- family of SWF
printers. The NUR Blueboard-TM- printer, a second generation of super wide
format printers, was introduced by the Company in early 1997. The Blueboard
printer can print on substrates of variable widths from 0.9 to 5.0 meters
(approximately 3 to 16.4 feet). The Blueboard printer is based on continuous
inkjet digital printing technology and is designed for high throughput, high
print quality, reliability and ease of use.

         In April 1998, the Company introduced a faster version of the Blueboard
printer, the Blueboard 2-TM-, in response to demand from its customers for
increased productivity. In February 1999, the Company introduced the Blueboard
HiQ-TM-, which produces higher quality prints with higher resolution than the
Blueboard and the Blueboard 2 printers.

         Before the introduction of the NUR Blueboard-TM- printer, the Company's
principal products were its first generation WF, Outboard and SWF Wideboard
printers. The Outboard printer, which is capable of printing in widths of up to
1.6 meters (approximately 5 feet), was manufactured until the fourth quarter of
1995. In the fourth quarter of 1995, the Company introduced the Wideboard
printer, which is capable of printing on substrates of variable widths of up to
5 meters (16.4 feet). The NUR Outboard and Wideboard printers both use
continuous inkjet technology.

         In February 2000, the Company commercially released the NUR Fresco, a
new printing system, targeted at the WF screen printing environment. The NUR
Fresco is the first of the Company's printers to use drop-on-demand technology
("D-O-D") involving the intermittent firing of ink drops when needed on the
substrate while the printing head travels across the substrate. The Outboard
printer, Wideboard printer, the NUR Blueboard printers, and the NUR Fresco are
referred to collectively herein as the "Company's Printers". The Company also
sells specialized inks and substrates for use with the Company's Printers. The
inks sold by the Company to its customers for use with the NUR Blueboard and the
NUR Fresco printers are resistant to water and ultraviolet rays and well suited
for indoor and outdoor use. The substrates the Company sells are also suitable
for indoor and outdoor use and are made of vinyl, PVC, paper and mesh.


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         The Company sells its printers and related products primarily to
commercial printers, design and service firms, screen printers, outdoor media
companies and trade shops. The products are used to print large images such as
billboards, posters and banners; point of purchase, exhibition and trade show
displays; as well as decorations and backdrops for construction scaffolding
covers, showrooms, television and film studios, museums and exhibits. The
Company's Printers are installed in over 200 sites throughout Europe, North and
South America, Africa and Asia.

         The Company was incorporated as an Israeli corporation on July 29,
1987. The Company's Ordinary Shares have been traded on the Nasdaq National
Market since October 1995 and are currently traded under the symbol NURM.

INDUSTRY BACKGROUND

         The market for printed applications requiring WF and SWF printing has
expanded over the last few years. WF and SWF printing applications include
billboards, posters, and banners; special event and trade show displays; point
of purchase displays; fleet graphics; decorations and backdrops. For example,
the retail, automotive, restaurant, travel, and gasoline industries use outdoor
advertising to promote their products in locations including roadside billboards
and posters displayed on streets and buildings, as well as the outside of buses,
vans, trucks, and trains, so-called vehicular graphics. WF and SWF prints can
also be found in theaters as stage decorations, in museums and exhibitions as
backdrops or displays, and on construction sites as building site coverings.
Prior to the introduction of digital printing systems, WF and SWF short-run
prints were produced either by hand painting, which is relatively slow and
expensive, and produces lesser quality images, or by screen or offset printing,
both of which are relatively expensive and time consuming processes.

         With the cost of digital printing expected to decrease and the ability
of digital technology expected to produce shorter runs more economically, the
Company believes that the use of WF and SWF prints, such as those produced by
the Company's Printers, should grow, and that the portion of the market serviced
by digital printing should increase. The ability to produce WF and SWF images
digitally has also opened new media opportunities for advertisers, such as mural
printing, carpet printing, new forms of fleet graphics printing. The growth in
demand for WF and SWF digital printers, is fueled by both the replacement of
conventional print methods and the development of new printing applications.

         TRADITIONAL WF AND SWF PRINTING METHODS

         Conventional methods of WF and SWF printing have included hand
painting, screen printing, and offset printing. Generally, producing WF and SWF
color prints by traditional methods in relatively short runs from a few copies
to a few hundred copies, depending on the application, has either been
relatively slow and expensive or of limited quality. Because of the inherent
limitations of the traditional WF and SWF printing methods, quality WF and SWF
prints produced by these methods are generally limited to long runs of identical
prints, designed and prepared well in advance or, in the case of hand painting,
to single print applications. As a result, traditional methods of producing WF
and SWF prints have not provided timely and economic solutions for the needs of
the short run printing market.

         HAND PAINTING. Hand painting involves either the projection of an image
onto a substrate, which is then drawn onto the substrate and subsequently
painted by hand, or the spraying of paint onto material covered by a template
that has been cut to the desired shape. The process of hand painting is an
alternative mainly in developing countries where labor costs are significantly
lower and where the significantly lower image quality is tolerated by the local
market

         SCREEN PRINTING. The screen printing process is distinguished by its
ability to print finely detailed images on practically any surface, including
paper, plastics, metals, and three-dimensional surfaces. However, the process
requires significant set-up time and materials cost before the image can be sent
to press. This cost constrains the minimum number of copies the screen printer
can produce economically. As screen-printing is a highly labor-intensive
process, it is best suited for run lengths between 50 to 400


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copies. Hence, this market is a clear target in which the Company believes its
digital printers can be highly competitive.

         OFFSET PRINTING. Offset color printing generally produces very high
quality images compared to hand painting or screen-printing. However, because of
the complex steps involved in offset color printing, each printing job, whether
small or large, involves substantial setup time and costs. In addition, much
like hand painting and screen-printing, alterations and customizations are not
economically feasible unless the entire offset color printing process is
repeated. Another drawback is that the variety of substrate materials and widths
suitable for use with offset printing machinery is limited. In general, offset
color printing is best suited for long print runs.

         WF AND SWF DIGITAL PRINTING

         The introduction of digital printing is aiding in the transformation of
the WF and SWF printing industry by lowering setup costs, shortening turnaround
time, and reducing labor requirements. The Company believes that the
availability of WF and SWF digital printing should lead to an increase in demand
for limited runs for customized and localized advertising campaigns. In
addition, the Company believes that single use applications, such as the use of
banners, displays, and backdrops for trade shows, theme parks, entertainment,
and special events, should become more popular. The Company believes that the
market for WF and SWF printing should increase as current applications gain
market acceptance and as new applications are developed.

         Digital printing involves the production of hard-copy images and text
from digital data that is either generated on a computer at the printing site or
originated by a customer on the customer's computer system. The digital data is
then transferred directly from an electronic pre-press or desktop publishing
system to the digital printer. There are currently several digital printing
technologies available, including electrostatic, airbrush, D-O-D, thermal
transfer, and continuous inkjet printing.

         ELECTROSTATIC PRINTING. Electrostatic printing is a non-impact printing
technique that employs an array of metal styli, selectively pulsed to a high
potential to generate a charged latent image on dielectric-coated paper, which
is then toned to develop the latent image into a visible image. The achievable
printing resolution is up to 400 dots per square inch ("DPI"). The main drawback
of the technology is the need for special and expensive substrates and toners.
This requirement inflates the cost of consumables considerably.

         THERMAL TRANSFER PRINTING. Thermal transfer printing is a contact
printing technology that employs arrays of heated needles and pressure to melt
and transfer wax based inks from a carrier roll onto a restricted variety of
substrates. Like electrostatic printing, thermal transfer printing requires
relatively expensive consumables.

         AIRBRUSH PRINTING. Airbrush printing is accomplished by forcing a low
viscosity colored fluid through small aperture nozzles, thus creating a spray
jet. Computer driven modulation of the spray jets deposits an image-wise colored
layer deposited onto the substrate. The strongest feature of airbrush technology
is the printer's ability to cover large areas with uniform color. One
manufacturer of airbrush printers produces a printer that can also print on both
sides of a poster at the same time, which is important for signs that are
rear-illuminated.

         PIEZO CONTINUOUS INKJET PRINTING ("CIJ"). CIJ technology involves the
continuous flow of electrically conductive ink within a closed loop that is
deflected to a specific location on a sheet of paper or other medium. The ink is
separated into uniform micro-drops and the micro-drops are electronically
directed to be printed onto a selected area of the medium. CIJ technology allows
for high speed printing and produces images with good resolutions sufficient for
viewing from distances of beyond five feet. CIJ printers also produce multiple
copies with consistent color quality, unlike airbrush printers. The cost of
equipment using CIJ technology is relatively high in comparison to printers
using electrostatic


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technology. However, the cost of the output produced with CIJ printers is lower
than that of electrostatic printers. Although the printer and printing costs of
CIJ and airbrush technology are comparable CIJ printers produce higher quality
prints at higher speeds and with more consistent color. The Company's Blueboard,
Outboard and Wideboard printers all use piezo CIJ technology.

         PIEZO D-O-D INKJET PRINTING. D-O-D technology involves the intermittent
firing of ink drops when needed on the substrate. It provides high resolution
and enables use of a variety of inks, for home, office and industrial use. In
September 1998, the Company acquired from Meital Technologies Ltd. ("Meital")
all rights (including all related assets) to Meital's piezo drop-on-demand
inkjet technologies for application in WF digital printers for approximately
$3.0 million. To address the needs of the WF market for higher resolution images
for use with shorter viewing distances, the Company utilizes D-O-D technology in
its NUR Fresco printer.

         While D-O-D is still a new and evolving technology CIJ is a
well-established and therefore reliable technology. D-O-D technology was
primarily developed for office use and is characterized by a relatively higher
resolution and a selected range of substrates while CIJ technology was developed
mainly for use in industrial applications and therefore, shows a more uniform
and stable color output, including the ability to print on a wide selection of
substrates.

         The Company believes that its NUR Blueboard printers are currently the
only commercially available SWF digital printers using piezo continuous inkjet
technology. Although not the only D-O-D printer available for the WF market, the
Company believes that the NUR Fresco's productivity makes it particularly
attractive to screen printers. The Company believes that the Company's Printers
have been designed and engineered to fit the overall needs of their respective
WF and SWF printing markets.

         The Company's strategy is to:

         -   strengthen its position as a world leader in the SWF printing
             market by supplying the most productive and cost-effective SWF
             digital printers;

         -   replace a significant portion of existing WF screen printers with
             its digital inkjet printers;

         -   be its customers' vendor of choice for all of their ink and
             substrate needs;

         -   enable its customers to develop new ways to profit from the
             Company's printing systems; and

         -   provide its customers with highly responsive and capable support,
             service and supplies.

PRODUCTS

         The Company's revenues are derived primarily from the sale and service
of the Company's Printers and the sale of consumables used with the Company's
Printers. The consumables consist primarily of ink and substrates. See "Item 9.
Management's Discussion and Analysis of Financial Condition and Results of
Operations--Geographic Breakdown of Revenues" for more information on the
breakdown of revenues by category of activity and into geographic markets.

         PRINTERS

         The Outboard printer, which was introduced in 1992, was the Company's
first product, and, until the end of 1995, its principal product. The Outboard
printer is capable of producing WF prints in widths of up to 1.6 meters. In the
fourth quarter of 1995, the Company introduced the Wideboard printer, which was
the Company's first generation SWF printer and its principal product in 1996.
The Wideboard printer is capable of producing prints of widths of 5 meters. The
Company has discontinued the manufacture of the Outboard printer and of the
Wideboard printer.


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         Since the beginning of 1997, the Company has been marketing and selling
the NUR Blueboard printer, a second-generation SWF printer that is also capable
of producing prints of up to 5 meters in width with practically no limit on the
length of the print. The NUR Blueboard is designed for high throughput, high
print quality, reliability, and ease of use. When wider widths of prints are
required, the NUR Blueboard printer, as is the case with the other Company's
Printers, creates a print layout in sections that, when seamed and placed
together, create a continuous image due to the NUR Blueboard printer's high
level of color consistency and accuracy.

         In April 1998, the Company introduced a faster version of the NUR
Blueboard printer, the NUR Blueboard 2 printer, in response to demand in the SWF
printing industry for increased productivity. In February 1999, the Company
introduced the NUR Blueboard HiQ, part of the NUR Blueboard family of products,
with higher print quality and higher resolution than the market leading NUR
Blueboard printers. The NUR Blueboard HiQ is available both as an upgrade to
existing NUR Blueboard printers and as a new product delivered from the
manufacturer. The NUR Blueboard printers are all based on piezo continuous
inkjet technology, which is particular suitable for the superwide format market
due to its outdoor durable inks, color consistency, high reliability and
adaptability for use with a variety of substrate materials including vinyl,
carpet, canvas, tarpaulin and mesh. The NUR Blueboard printers are currently the
Company's main hardware products.

         The NUR Blueboard printers accept a wide variety of rolled substrates,
differing in types and sizes, with a new design feeding mechanism that allows
for ease of loading and unloading of substrate rolls weighing 330 lbs. or more.
The NUR Blueboard printers are unique in that they are able to print at their
respective top speeds (up to 320 sq. ft./hr. for the NUR Blueboard and up to 650
sq. ft./hr for the NUR Blueboard 2 and NUR Blueboard HiQ) while printing at
their respective highest visual resolutions (70 DPI for the NUR Blueboard and
NUR Blueboard 2 and 150 DPI for the NUR Blueboard HiQ). The NUR Blueboard
printers' software accepts many popular types of image formats (such as TIFF,
CT, JPEG, BMP, and PostScript) and images with various resolutions, and converts
them automatically for printing. In addition, the NUR Blueboard printers'
software can be connected to any communication configuration supported by the
operating system, which enables smooth integration of the printers in the
pre-press environment for higher productivity. The NUR Blueboard printers'
operating software is based on Microsoft Corporation's Windows NT multitasking
operating system which enables printing while preparing the next job for print.
The software has sophisticated color correction tables that enable the printers
to match color output according to substrate characteristics.

         The NUR Blueboard printers are marketed primarily to commercial
printers, design and service firms, screen printers, outdoor media companies and
trade shops for shorter run, WF and SWF printing. The Company's NUR Blueboard
printers reproduce images with visual resolutions of 70-150 DPI, which allows
for superior viewing from distances of 5-10 feet or more, depending on the image
file resolution. The NUR Blueboard printers are capable of producing millions of
distinctive colors. Thanks to the constant ink monitoring and control built into
its continuous inkjet printing technology, the NUR Blueboard printers achieve a
high level of color consistency for copies printed at different times and under
different environmental conditions in the shop. Generally, depending upon the
required print resolution, the Outboard printer operates at speeds of between
200 to 600 sq. ft./hr; the Wideboard printer operates at speeds of between 100
to 300 sq. ft./hr; the NUR Blueboard printer operates at speeds of up to 320 sq.
ft./hr; and the NUR Blueboard 2 and NUR Blueboard HiQ operate at up to 650 sq.
ft./hr.

         The Company's NUR Blueboard printers are digital roll-fed presses that
accept a variety of substrates. They print directly from digital data, using no
printing plates. The Company's Printers can be operated in a standalone mode or
in conjunction with pre-press and desktop publishing systems. When configured
with a pre-press system, the pre-press workstation prepares the digital file
containing the specifications for the output to be produced. The Company's NUR
Fresco printer, commercially released in February 2000, was first introduced in
February 1999. In August 1999, the NUR Fresco printer started an extensive Beta
testing program, which included installation in beta sites throughout the world
and testing the machine in real time environment.


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         The NUR Fresco is a digital production press specifically aimed at the
WF market. Offering throughput of up to 900 sq.ft/hr, the Company believes that
the NUR Fresco offers a digital alternative to screen printing for short to
medium length prints, eliminating the high set up cost associated with films and
screen preparation costs which are the basis of screen printing. With emphasis
on ease of use and operational flexibility, the NUR Fresco is designed to fit
any workflow, whether of a digital printing or of screen printing. NUR Fresco
produces full color images up to six feet wide with virtually no length
limitations on a wide variety of substrates at a resolution of up to 360 DPI.

         The NUR Fresco is suitable for a wide range of applications such as
point of purchase displays, indoor and outdoor banners, bus shelters, fleet
graphics displays, shopping mall displays and more.

         Operating both in roll to roll and roll to sheet modes, the NUR Fresco
offers operational flexibility to choose the handling method suitable for each
job. The NUR Fresco's small foot print is made possible due to a built-in drying
system that produces a fully dry and ready to use print, in any print speed. The
built-in drying system is based on state-of-the-art control mechanism.

         NUR Fresco accepts most popular graphics file format, offering full
integration to the already existing processes of the printing business. The NUR
Fresco is designed for ease of use and can be run by one operator.

         The Fresco media program is developed by NUR in tandem with leading
substrate manufacturers in the market to offer NUR Fresco users variety of media
choice suitable for all types of applications range and price range. By
developing this open media system NUR Fresco offers low operating costs without
binding the user to a specific provider of expensive consumables.

         The NUR Fresco complements the NUR Blueboard printers, by expanding the
Company's Printers coverage into a more complete and full range of indoor and
outdoor WF and SWF application graphics.

         The Company's Printers require little operator supervision, enabling
one operator to run several machines at once. While an operator must be
specifically trained in the operation of a printer, no special color mixing
skills are required unlike conventional methods such as offset printing.

         The Company's Printers can significantly reduce the setup costs
associated with each print job, the skill level of the personnel required, and
the number of skilled personnel required as compared to traditional methods of
WF and SWF printing. These advantages make WF and SWF short-run color printing
significantly more economical than conventional printing methods. Additionally,
the relatively quick turnaround for the printed product enables the Company's
Printers to produce more output in a given period, thereby lowering the costs of
labor per print.

         Unlike hand painting, screen or offset printing, the layout can be
viewed through the pre-press workstation prior to printing, permitting last
minute fine-tuning. By running a single copy of the print, corrections of text,
enhancements of images, and additions of color can all be accomplished with
minimal time, effort, and cost. Additionally, since the format can readily be
changed, the Company's Printers allow the end-user to make each print in the run
different, with little time, effort, or additional cost. For example, if so
desired, different languages, graphics, and text can be added to each print in a
run.

         During the years ended December 31, 1997, 1998 and 1999, sales of the
Company's Printers accounted for approximately 55%, 52% and 55%, respectively,
of the Company's total consolidated sales. Sales of spare parts used in the
Company's Printers accounted for approximately 6%, 4.6% and 2.4% of total sales
in the years ended December 31, 1997, 1998 and 1999, respectively. Excluding M.
NUR Marketing & Communication GmbH's ("NUR Germany") in the years ended December
31, 1997, 1998 and 1999, sales of the Company's Printers accounted


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for approximately 64%, 59.7% and 57.5%, respectively, of the Company's total
sales. Sales of spare parts used in the Company's Printers accounted for
approximately 7%, 5.4% and 2.5% of total sales in the years ended December 31,
1997, 1998 and 1999, respectively. Currently, the retail prices of the Company's
Printers generally range from $375,000 to $550,000 per machine.

         CONSUMABLES

         The Company sells consumables (inks and printing substrates) primarily
to the users of the Company's Printers and substrates to users of other WF and
SWF printers.

         INKS

         The NUR Blueboard printers use specialized solvent-based pigmented ink
designed for the needs of the SWF market. The ink is resistant to water and
ultraviolet rays, making it fairly durable and thus well suited for outdoor
conditions. The Company's Printers, through the utilization of the ink, can
print on almost an unlimited variety of substrates, including numerous types of
paper, vinyl, cloth, textiles, mesh, and metals. The ink enables the output of
the Company's Printers to be used both for indoor and outdoor advertising.
During the years ended December 31, 1997, 1998 and 1999, sales of the ink
accounted for approximately 21%, 23.6% and 23.1%, respectively, of the Company's
total sales. Excluding NUR Germany's results from the years ended December 31,
1997, 1998 and 1999, sales of the ink accounted for approximately 24.4%, 27% and
24.1%, respectively, of the Company's total sales

         This ink used by the Blueboard, Outboard and Wideboard printers, was
developed with the Company's participation by Imaje S.A. ("Imaje"), a French ink
manufacturer, specifically for use in the Company's Printers. The Company has an
exclusive distribution and manufacturing agreement with Imaje for the use of the
ink in the WF and SWF printers. The Company has an exclusive distribution
agreement for the ink with Imaje. The agreement between the Company and Imaje
calls for mutual exclusivity to be kept for as long as both parties abide by the
agreement.

         The NUR Fresco uses specialized solvent-based pigmented ink designed
for the needs of the WF market and suited for D-O-D technology printers. It also
is highly resistant to water and UV and imparts more vibrant colors in the
images printed using the NUR Fresco.

         As of February 2000, inks for the NUR Fresco printer are manufactured
by Stillachem S.A., a 50% owned subsidiary of the Company ("Stillachem") and are
sold to the customers by the Company's sale, marketing and service subsidiaries.

         Stillachem focuses on the development and manufacture of specialized
inks for D-O-D digital printing systems and inks for other digital printers,
including clear-coat varnishes for WF and SWF printers. In August 1999, shortly
after its incorporation, Stillachem acquired from Techno-Ink Manufacturing Pty.
Ltd., a South African based company involved in the manufacture of digital
production inks, certain know-how and equipment required for the manufacture of
digital inks and ink related products.

         SUBSTRATES

         As of June 1998, the Company also began supplying, through its wholly
owned subsidiary in Belgium, NUR Media Solutions S.A. ("NUR Media Solutions"),
specialized substrates designed to work with the Company's Printers and its ink.
The Company sells substrates under the NUR brand name that are manufactured by
several different suppliers for the Company. The substrates are made of vinyl,
PVC, paper, and mesh and are suited for indoor and outdoor use. The substrates
are distributed worldwide by the Company's sales and service organizations. All
NUR-branded materials are manufactured exclusively for NUR Media Solutions.


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         NUR Media Solutions, with other leading manufacturers, introduced the
Fresco media program, which offers users of the NUR Fresco specially endorsed
substrates. These are tested to work with the NUR Fresco and the NUR Fresco ink
for a total printing solution that provides a high quality performance,
reliability and durability.

SALES AND MARKETING

         The Company distributes and sells its products through its wholly-owned
subsidiaries, NUR Europe S.A. ("NUR Europe"), NUR America, Inc. ("NUR America"),
NUR Asia Pacific (Hong Kong) Ltd. ("NUR Asia Pacific"), NUR Macroprinters
(Shanghai) Ltd. ("NUR Shanghai") and through its NUR Middle East and Africa
division ("NUR Middle East & Africa").

         Until the end of 1996, most worldwide sales of the Company's Printers
had been made through Scitex Corporation Ltd. ("Scitex"). Since the beginning of
1997, the Company moved to direct distribution of its printers starting from the
Americas and Europe. As of February 1999, the Company established two additional
sales organizations, NUR Asia Pacific and NUR Middle East & Africa, replacing
Scitex's role as distributor of the Company's products in the Far East, the
Middle East and Africa. The Company's marketing activities include participating
in relevant tradeshows worldwide, advertising in trade publications, marketing
directly to a target base, as well as publishing its own newsletters,
participating in services and industry forums and maintaining an internet site.

         NUR Media Solutions' objective is to develop and market a wide range of
advanced consumables for the Company's WF and SWF printers. Included in such
consumables are the Company's specialized substrates, which are designed to work
with the Company's existing range of printers and inks and will be distributed
worldwide by the Company's sales and service organizations.

         The Israeli Government, through the Fund for the Encouragement of
Marketing Activities of the Ministry of Industry and Commerce (the "Marketing
Fund"), awards participation grants for marketing expenses incurred overseas. In
1997, 1998, and 1999, the Company received $0.2 million, $0.11 million and $0.13
million, respectively, for the promotion of the Company's exportation of its
printers. The Company is obligated to pay a royalty of 3% of the export added
value to the Marketing Fund until 100% of the grants have been repaid. The value
of the grants received (including grants received in previous years) are linked
to the U.S. dollar. As of December 31, 1999, the Company had made royalty
payments in respect of such grants to the Marketing Fund totaling approximately
$0.08 million.

         In September 1999, the Company sold its 84% interest in M.NUR Marketing
& Communications GmbH, the Company's German subsidiary, which engaged in the
printing of SWF digital graphics. The capital gain from this sale amounted to
$132,000.

PRODUCTION AND SOURCES OF SUPPLY

          Until September 1999, the Company manufactured and assembled the NUR
Blueboard printers, through a subcontractor. As of October 1999, the Company
manufactures and assembles all of the NUR printers, through NUR Pro Engineering
Ltd., a 50% owned subsidiary ("NPE"). Full system integration and acceptance and
quality control testing of the printers, are conducted by the Company at a NPE
facility located near the Company's operations in Israel. Product quality
control tests and inspections are performed at various steps throughout the
manufacturing process, and each product is subjected to a final test prior to
delivery.

         The Company believes that, to meet anticipated increases in sales, it
can expand NPE's production capabilities or engage sub-contractors to carry
certain of the manufacturing or the assembly of its printers The Company
supplies NPE with the inkjet heads used in the NUR Blueboard printers which the
Company acquires from Imaje, the sole manufacturer and supplier of these
components. The Company believes that it will be able to obtain and/or
manufacture inks for the NUR Blueboard Outboard and Wideboard printers.


                                       10
<PAGE>


         NPE employs unaffiliated subcontractors to manufacture certain
components for the Company's Printers. Such subcontractors have, in the past,
been late in delivering components. The Company has, however, been able to
obtain adequate supplies of the components and raw materials necessary to
produce its printers and has not had any serious problems with its
subcontractors. As the Company's business grows, its will need to purchase
greater quantities of components on a timely basis; any delay in supply could
ultimately hurt its sales.

         The NUR Fresco will also be assembled by NPE. Most of the components
are available from several sources, however, the D-O-D inkjet print heads used
in the NUR Fresco, are currently purchased from Modular Ink Technology ("MIT"),
a Swedish company. The Company has contracted with MIT to ensure the supply of
print heads.

 SERVICE AND SUPPORT

         Installation, post sale support and warranty services of the Company's
products, are provided by NUR America, NUR Europe, NUR Asia Pacific and NUR
Middle East Africa. The Company's warranty to its direct customers and the
Company's distributors in most cases covers defects in the Company's Printers
for a period of six months after installation. In most cases the Company has a
parallel warranty from NPE or from its suppliers with respect to most of the
components covered by the Company's warranty. The Company is also committed to
maintaining sufficient spare parts and materials necessary for the operation of
the Company's Printers for a period of five years after the manufacturing date
of the last NUR printer.

RESEARCH AND DEVELOPMENT

         The Company's research and development efforts, currently engaging
approximately 55 employees, are focused on developing new products and
technologies; enhancing the quality and performance relative to price of its
existing products; reducing manufacturing costs; upgrading and expanding its
product line through the development of additional features; and improving
functionality in response to market demand.

         There are two research and development facilities, the main facility at
the Company's headquarters in Israel and another smaller facility in Belgium.

         Total research and development expenses, before royalty bearing grants,
were approximately $1.73 million, $5.03 million and $5.53 million in the years
ended December 31, 1997, 1998 and 1999, respectively. In the year ended December
31, 1998, $1.95 million of these expenses were related to the acquisition of
technology from Meital resulting in a one-time write-off assigned to research
and development. Research and development expenditures are comprised principally
of salaries for employees, the hiring of sub-contractors, capital investment in
infrastructure for software and electronic designs, and prototype material
costs. Initially, the Company relied on outside research and development. The
Company began its own research and development operations in early 1994. NUR
Europe received a grant from local authorities in Belgium for reimbursement of
up to 70% of its total research and development investment, which it carries out
in Belgium, up to approximately $1 million. If no revenues are derived from the
technologies and NUR Europe develops no products as a result thereof, then no
repayment of the grant is required. Should revenues be recognized from the
research and development efforts, a progressive five-year repayment program
would be implemented. NUR Media Solutions has established a research and
development center in Belgium dedicated to the research and development of print
substrates and inks for use with the Company's Printers.

         In September 1998, the Company purchased certain piezo D-O-D technology
from Meital. The Company purchased Meital's technology for an aggregate amount
of $3.0 million, of which payment of $0.85 million was conditional upon the
success of the technology, and $0.9 million was to be paid in future
installments. The Meital acquisition resulted in the recognition by the Company
of a one-time


                                       11
<PAGE>


charge involving a write-off assigned to research and development of $1.95
million in the third quarter of 1998. As part of the purchase price, the Company
has future royalty obligations to Meital, during the next two years, of up to
$1.3 million. During 1999, the Company paid royalties to Meital in the amount of
$0.45 million. If the Company does not meet its obligation to pay minimum
royalty payments, Meital will have the option to buy the technology back for
approximately the royalties paid by the Company to date.

         In the past, the Company has received grants from the Government of
Israel, through the Office of the Chief Scientist (the "OCS"), for the
development of its systems and products, including the Outboard printer. The
Company received approximately, $0.37 million, $0.04 million, $0.82 million, and
$0.74 million in research and development grants from the OCS in the years ended
December 31, 1996, 1997, 1998, and 1999, respectively. The OCS awards grants of
up to 50% (and in certain circumstances up to 66%) of a project's approved
expenditures in return for royalties. Under the terms of the Company's funding
from the OCS, royalties are payable generally at a rate of 2% to 3% on sales of
products developed from the funded project and ending when 100% to 150% of the
dollar value of the grant is repaid. No payments of royalties for such grant
were made to OCS in the years ended December 31, 1996, through 1999. As of
December 31, 1999, the Company had a contingent liability to pay OCS $1.1
million in future royalty payments. The Company expects to make royalty payments
to the OCS on sales of the NUR Fresco printers. The terms of the OCS grants
prohibit the manufacture of products developed with government grants to be
performed outside of Israel or the transfer out of Israel of the technology
developed pursuant to these grants without the prior consent of the OCS. These
restrictions do not bar exports from Israel of products developed with such
technologies. In addition, the know-how from the research and development that
is used to produce the product may not be transferred to third parties or out of
Israel without the approval of the OCS.

COMPETITION

         The principal competitive factors affecting the Company's sales of its
products are their performance relative to price, productivity and throughput,
product features and technology, quality, reliability, cost of operation and
consumables, the quality and costs of training, support and service as well as
the flexibility of adapting to customers' applications of the products. Other
competitive factors include the ability to provide access to product financing,
the Company's reputation and customer confidence in the Company to continually
develop new products and product accessories that will help them maintain and
grow their business.

         The Company's main competitors in the SWF arena are Vutek, Signtech and
Scitex. All three companies have introduced products that directly compete with
the NUR Blueboard printers. In the WF market, the competitors are Scitex,
through its subsidiary, Scitex Wide Format Printing Ltd., formerly Idanit
Technologies Ltd., 3M Image Graphics, Vutek and Raster Graphics Inc. These
companies have introduced products that compete with the NUR Fresco printer. The
printing industry is large, and many of the Company's competitors possess
greater management, financial, technical, manufacturing, marketing, sales,
distribution, and other resources than those of the Company. As a result, there
can be no assurance that competitors will not develop and market products
utilizing new technology that are competitive in price and performance with the
Company's Printers, and there can be no assurance that the Company can compete
effectively with such products.

TRADE SECRETS, PATENTS AND PROPRIETARY RIGHTS

         The Company currently relies on a combination of trade secrets,
licenses, and patents, together with non-disclosure and confidentiality
agreements, to establish and protect its proprietary rights in its products. No
assurance can be given that the Company's existing patents or any future patents
by the Company will not be challenged, invalidated, or circumvented, or that the
Company's competitors will not independently develop or patent technologies that
are substantially equivalent or superior to the Company's technology. There can
be no assurance that further patent protection will be obtained in Israel, the
United States, or elsewhere, for existing or new products or applications, or
that such further protection, if obtained, will be effective. In some countries,
meaningful patent protection is not available.


                                       12
<PAGE>


The Company is not aware of any material claim that its products infringe upon
the proprietary rights of third parties. However, there can be no assurance that
third parties will not assert infringement claims against the Company in the
future, and the cost of responding to such assertions, regardless of their
validity, could be significant. In addition, such claims may be found to be
valid and could result in awards against the Company, which could have a
material effect on the Company's business. As a result, the cost to the Company
of protecting its patent rights could be substantial. The Company believes that
its success is less dependent upon the legal protection afforded by patent and
other proprietary rights than on the knowledge, ability, experience, and
technological expertise of its employees and its key suppliers. It is the
Company's policy to have employees sign confidentiality agreements, to have
selected parties, including key suppliers, sub-contractors, and distributors,
sign non-competition agreements, and to have third parties sign non-disclosure
agreements. Although the Company takes precautionary measures to maintain its
trade secrets, no assurance can be given that others will not acquire equivalent
trade secrets or otherwise gain access to or disclose the Company's proprietary
technology, or that the Company can meaningfully protect its rights to such
proprietary technology not subject to patent protection.

EMPLOYEES AND LABOR RELATIONS

         As of March 31, 2000, the Company employed approximately 200 persons
worldwide, about 23% of which in research and development. 95 of these employees
are employed by the Company in Israel and the remainder are employed by the
Company's subsidiaries worldwide. All of the Company's employees who have access
to confidential information are required to sign a non-disclosure agreement
covering all Company confidential information that they might possess or to
which they might have access.

         The Company believes its labor relations are satisfactory and has never
experienced a strike or work stoppage. The Company believes its future success
will depend, in part, on its ability to continue to attract, retain, motivate,
and develop highly qualified technical, marketing and sales, and management
personnel.

         Israeli law generally requires severance pay equal to one month's
salary for each year of employment upon the termination of employment. The
Company's liability for future severance pay obligations is fully provided for
by payments equal to 8.33% of an employee's salary each month made to various
managers' insurance policies and by accrual. The employees of the Company are
usually provided with an additional contribution towards their retirement that
amounts to 10% of wages, of which the employee and the employer each contributes
half. Furthermore, Israeli employees and employers are required to pay
predetermined sums to the National Insurance Institute, which is similar to the
United States Social Security Administration, and additional sums towards
compulsory health insurance.

INSURANCE

         The Company believes that the insurance coverage for its business is in
accordance with industry standards and is adequate and appropriate in light of
the Company's businesses and the risks to which they are subject.

RISK FACTORS

         INVESTING IN OUR SHARES IS VERY RISKY. YOU SHOULD BE ABLE TO BEAR A
COMPLETE LOSS OF YOUR INVESTMENT. TO UNDERSTAND THE LEVEL OF RISK, YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS, AS WELL AS THE OTHER INFORMATION
FOUND IN THIS FORM.

WE NEED ADDITIONAL FINANCING. We believe that our revenues from operations
                              together with our capital resources and credit
                              facilities will be sufficient to fund our current
                              activities at their present rate without our
                              planned expansion through July 2001. If we want to
                              proceed with the planned


                                       13
<PAGE>


         WE NEED TO RAISE MORE             expansion of our operations, we will
         MONEY TO SUCCESSFULLY RUN         require additional funds, to be
         OUR BUSINESS.                     raised through public or private
                                           financing of debt or equity, to
                                           ensure our ability to maintain our
                                           operations after December 2000. If we
                                           are unable to raise such funds, we
                                           will have to reduce or eliminate
                                           certain planned expenditures for
                                           research and development, production,
                                           or marketing of our products, any one
                                           of which could have a negative impact
                                           on our financial results. In this
                                           regard, how much money we will need
                                           depends on numerous factors,
                                           including the success of our
                                           marketing and customer service
                                           efforts, our research and development
                                           activities and the demand for our
                                           products and services. We cannot
                                           guarantee that additional financing
                                           will be available or that, if
                                           available, it will be obtained on
                                           terms we find favorable. We currently
                                           have no commitments for additional
                                           financing.

WE DEPEND ON A FEW KEY                     We are highly dependent upon the sale
PRODUCTS IN A BUSINESS                     of our principal products, the NUR
SUBJECT TO RAPID                           Blueboard printers and the NUR Fresco
TECHNOLOGICAL CHANGE.                      printer. Rapid changes in technology,
                                           customer preferences and evolving
                                           industry standards increasingly
                                           characterize the market for our
                                           printers. As a result of these
                                           factors, our growth and future
                                           financial performance will depend
                                           upon our ability to develop and
                                           market new products and keep pace
                                           with the latest technological
                                           advances in the industry. We must
                                           also improve our existing products to
                                           accommodate technological advances
                                           and customer preferences. During 1998
                                           and 1999, we invested approximately
         OUR SUCCESS DEPENDS ON THE        $5.03 million and $5.53 million
         RESEARCH AND DEVELOPMENT OF       respectively, in research and
         NEW PRODUCTS.                     development projects of which, in
                                           1998, $1.95 million was related to
                                           the acquisition of technology that
                                           caused a one-time write-off assigned
                                           to research and development. Our
                                           business could seriously suffer if we
                                           fail to anticipate or respond
                                           adequately to changes in technology
                                           and customer preferences, or if our
                                           products are delayed in their
                                           development or introduction. Other
                                           events beyond our control could also
                                           hurt our business. For example, one
                                           of our competitors could develop and
                                           market a printer that customers
                                           prefer over our printers. We cannot
                                           make assurances that we will
                                           successfully develop any new
                                           products. Finally, we cannot predict
                                           how the introduction of new products
                                           by our competitors will affect sales
                                           of our existing products.

         OUR NEW PRODUCT, THE NUR          We started selling the NUR Fresco in
         FRESCO, HAS NOT BEEN              February 2000. Much of our success
         WIDELY ACCEPTED IN ITS            with the NUR Fresco depends upon our
         INTENDED MARKET.                  ability to sell this digital printing
                                           system as a replacement for
                                           traditional screen printers in the
                                           wide format market for short and
                                           medium-run jobs. This market is
                                           currently dominated by screen
                                           printers. We may not be successful in
                                           our efforts.

OVER THE NEXT TWO YEARS WE                 In September 1998 we acquired all
WILL MAKE SIGNIFICANT                      rights to a certain drop-on-demand
ROYALTY PAYMENTS.                          inkjet technology suitable for large
                                           format digital printers. Until
                                           September 2001 we must pay royalty
                                           payments to the seller of up to $1.3
                                           million. If we do not make certain
                                           minimum royalty payments, the seller
                                           of the technology will have the
                                           option to buy-back the technology.

OUR SUCCESS DEPENDS ON OUR                 We currently purchase all of the ink
                                           and inkjets used in our NUR


                                       14
<PAGE>


SUPPLIERS AND SUBCONTRACTORS.              Blueboard printers from one supplier,
                                           Imaje, a French manufacturer of
                                           ink-related products, and purchase
                                           all of our inkjet printheads used in
                                           the NUR Fresco from another supplier.
                                           We have been able to obtain adequate
                                           supplies of ink and inkjets in the
                                           past, although Imaje has occasionally
                                           delivered the supplies late. If these
                                           sole suppliers experience any problem
                                           that results in production delays,
                                           our sales to new customers and
         IMAJE IS OUR ONLY SUPPLIER OF     existing customers that rely on our
         INK AND INKJETS FOR THE NUR       ink and/or inkjet components to
         BLUEBOARD PRINTERS.               operate their printers could be hurt.
                                           Because the success of our business
                                           depends on the sale of our printers,
                                           such a supply problem could have a
                                           severe effect on our financial
                                           results. Also, if Imaje reduces or
                                           changes the credit or payment terms
                                           it extends to us, our business could
                                           be hurt.

         WE RELY ON A LIMITED NUMBER OF    We employ a limited number of
         SUBCONTRACTORS.                   unaffiliated subcontractors to
                                           manufacture components for our
                                           printers. The assembly of our NUR
                                           Blueboard printers is currently
                                           conducted by NPE, a 50% owned
                                           subsidiary. Our subcontractors have,
                                           in the past, been late in delivering
                                           components. We have, however, been
                                           able to obtain adequate supplies of
                                           the components and raw materials
                                           necessary to produce our printers and
                                           we have not had any serious problems
                                           with our subcontractors. Because we
                                           rely on subcontractors, we cannot be
                                           sure that we will be able to maintain
                                           an adequate supply of components.
                                           Moreover, we cannot be sure that any
                                           of the components we purchase will
                                           satisfy our quality standards and be
                                           delivered on time. Our business could
                                           suffer if we fail to maintain our
                                           relationships with our subcontractors
                                           or fail to develop alternative
                                           sources for our printer components.
                                           Also, as our business grows, we will
                                           need to purchase greater quantities
                                           of components on a timely basis, and
                                           any delay in supply could hurt our
                                           sales. We cannot guarantee that we
                                           will develop alternative sources of
                                           production for our products.

OUR BUSINESS IS EXTREMELY                  The printing equipment industry is
COMPETITIVE.                               extremely competitive and many of our
                                           competitors have greater management,
                                           financial, technical, manufacturing,
                                           marketing, sales, distribution and
                                           other resources than we do. Our
                                           ability to compete depends on factors
                                           both within and outside of our
                                           control, including the performance
                                           and acceptance of our current
                                           printers and any products we develop
                                           in the future. We compete against
                                           several companies that market digital
         WE HAVE NUMEROUS                  printing systems based on
         COMPETITORS IN THE MARKET         electrostatic, drop-on-demand inkjet,
         FOR OUR PRINTERS.                 airbrush and other technologies. We
                                           also face competition from existing
                                           conventional wide-format and
                                           super-wide format printing methods,
                                           including hand painting, screen
                                           printing and offset printing. Our
                                           competitors could develop new
                                           products, with existing or new
                                           technology, that could be competitive
                                           in price and performance with our
                                           printers. We can not assure you that
                                           we can compete effectively with any
                                           such products.

         WE ALSO FACE COMPETITION          We also compete with independent
         IN THE MARKET FOR PRINTING        manufacturers in the market for
         SUPPLIES.                         printer supplies, in particular, the
                                           inks we supply. In 1998 and 1999, ink
                                           sales accounted for 23.6% and 23.1%
                                           of our total sales, respectively. We
                                           cannot guarantee that we will be able
                                           to remain the exclusive or even
                                           principal ink manufacturer for our
                                           printers. We recently entered the
                                           substrate business, which is also
                                           highly


                                       15
<PAGE>


                                           competitive and characterized by a
                                           large number of suppliers worldwide.
                                           We are developing substrates through
                                           subcontractors that have a high added
                                           value when used with our printers. We
                                           believe we are well positioned, both
                                           in our technical knowledge and in the
                                           minds of our customers, to succeed in
                                           selling high value-added substrates
                                           to our customers. We can not assure
                                           you that we will be able to compete
                                           effectively or achieve significant
                                           revenues in the substrate business.

WE DEPEND ON OUR KEY EMPLOYEES.            Our success depends to a significant
                                           extent upon the contributions of key
                                           personnel and our senior executives.
                                           Our business could seriously suffer
                                           if one or more of our key personnel
                                           or senior executives were to leave
                                           our Company. In addition, we do not
                                           have, and do not contemplate getting,
                                           "key-man" life insurance for any of
                                           our key employees. Our future success
                                           will also depend in part on our
                                           continuing ability to retain our key
                                           personnel and senior executives and
                                           to attract other highly qualified
                                           employees. We cannot assure our
                                           continued success in attracting or
                                           retaining highly qualified personnel.

WE RELY ON TRADE SECRETS, PATENTS AND      We rely on a combination of trade
PROPRIETARY RIGHTS.                        secrets, licenses, patents and
                                           non-disclosure and confidentiality
                                           agreements to establish and protect
                                           our proprietary rights in our
                                           products. We cannot guarantee that
                                           our existing patents or any future
                                           patents will not be challenged,
                                           invalidated, or circumvented, or that
                                           our competitors will not
                                           independently develop or patent
                                           technologies that are substantially
                                           equivalent or superior to our
                                           technology. We cannot be sure that we
                                           will receive further patent
                                           protection in Israel, the United
                                           States, or elsewhere, for existing or
                                           new products or applications. Even if
                                           we do secure further patent
                                           protection, we cannot guarantee it
                                           will be effective. In some countries,
                                           meaningful patent protection is not
                                           available. We are not aware of any
                                           infringement claims against us
                                           involving our proprietary rights.
                                           Third parties may assert infringement
                                           claims against us in the future, and
                                           the cost of responding to such
                                           assertions, regardless of their
                                           validity, could be significant. In
                                           addition, such claims could be found
                                           to be valid and result in large
                                           judgments against us. Even if such
                                           claims are not valid, the cost could
                                           be substantial to protect our patent
                                           rights.

         IT IS DIFFICULT TO PROTECT OUR    We believe that our success is less
         PROPRIETARY RIGHTS.               dependent upon the legal protection
                                           afforded by patent and other
                                           proprietary rights than on the
                                           knowledge, ability, experience and
                                           technological expertise of our
                                           employees and our key suppliers. Our
                                           policy is to have employees sign
                                           confidentiality agreements, to have
                                           selected parties, including key
                                           suppliers, sub-contractors and
                                           distributors, sign non-competition
                                           agreements and to have third parties
                                           that we deal with sign non-disclosure
                                           agreements. Although we take
                                           precautionary measures to protect our
                                           trade secrets, we cannot guarantee
                                           that others will acquire equivalent
                                           trade secrets or steal our exclusive
                                           technology. Moreover, we may not be
                                           able to meaningfully protect our
                                           rights that are not protected by
                                           patents.


                                       16
<PAGE>


WE RELY ON INTERNATIONAL SALES.            Our printers and supplies are sold
                                           worldwide, with revenues generated in
                                           various currencies. There are a
                                           number of risks inherent in
                                           international business activities,
                                           including unexpected changes in
                                           regulatory requirements, political
                                           instability, tariffs and other trade
                                           barriers, as well as the burdens of
                                           complying with different foreign
                                           laws. To date, fortunately, these
                                           risks have not materially affected
                                           our business or financial situation.
                                           We cannot predict, however, when
                                           exchange or price controls or other
                                           restrictions on the conversion of
                                           foreign currencies could impact our
                                           business.

         CURRENCY FLUCTUATIONS ARE         Because we have revenues and expenses
         A RISK WE FACE ON A DAILY         in various currencies, including the
         BASIS.                            U.S. dollar, the NIS and certain
                                           European currencies, our financial
                                           results are subject to the effects of
                                           fluctuations of foreign currency
                                           exchange rates. In the future,
                                           currency fluctuations could hurt our
                                           profitability. We do not hedge
                                           against fluctuations in currency
                                           exchange rates, but we may do so in
                                           the future.

ENVIRONMENTAL CONCERNS.                    We mix the ink used in our NUR
                                           Blueboard printers with a methyl
                                           ethyl-ketone solvent. Methyl
                                           ethyl-ketone solvent is a hazardous
                                           substance and is subject to various
                                           government regulations relating to
                                           its transfer, handling, packaging,
                                           use, and disposal. We store the ink
                                           at warehouses in Europe, the United
                                           States and Israel, and a shipping
                                           company ships it at our direction. We
                                           face potential responsibility for
                                           problems that may arise when we ship
                                           the ink to customers. We believe that
                                           we are in material compliance with
                                           all applicable environmental laws and
                                           regulations. If we fail to comply
                                           with these laws or an accident
                                           involving our ink waste or methyl
                                           ethyl-ketone solvent occurs then our
                                           business and financial results could
                                           be adversely affected.

WE RELY ON GOVERNMENT GRANTS,              We have been favorably affected by
TAX BENEFITS AND OTHER FUNDING             certain Israeli and Belgian
FROM THIRD PARTIES.                        Government programs incentives. Our
                                           operations could be and tax
                                           legislation principally related to
                                           research and development and
                                           adversely affected if these programs
                                           sales and marketing grants and
                                           capital investment or tax benefits
                                           are reduced or eliminated and not
                                           replaced with equivalent programs or
                                           benefits, or if our ability to
                                           participate in these programs were
                                           significantly reduced. We cannot
                                           assure you that such programs and tax
                                           legislation will continue in the
                                           future or that the available benefits
                                           will not be reduced or that we will
                                           continue to meet the conditions to
                                           benefit from such programs and
                                           legislation.

         WE RECEIVE TAX BENEFITS           Pursuant to the Law of Encouragement
         FROM THE ISRAELI                  of Capital Investments, the Israeli
         GOVERNMENT.                       government has granted "Approved
                                           Enterprise" status to some of our
                                           production facilities. Consequently,
                                           these facilities are eligible for
                                           certain tax benefits for the first
                                           several years in which they generate
                                           taxable income. If we fail to obtain
                                           additional grants, or if our tax
                                           benefits are significantly reduced,
                                           our financial condition could suffer.

         WE MUST COMPLY WITH               To receive grants and tax benefits,
         CONDITIONS TO RECEIVE             we must comply with a number of
                                           conditions. If we fail to comply with
                                           these conditions, the grants


                                       17
<PAGE>


         GRANTS AND TAX  BENEFITS.         and tax benefits that we receive
                                           could be partially or fully canceled
                                           and we would be forced to refund the
                                           amount of the canceled benefits
                                           received, adjusted for inflation and
                                           interest. We believe that we have
                                           operated and will continue to operate
                                           in compliance with the required
                                           conditions, although we cannot be
                                           sure. We further believe that the
                                           likelihood is remote that we will be
                                           required to refund grants or tax
                                           benefits that we receive from the
                                           Israeli government, the Marketing
                                           Fund, and under our "Approved
                                           Enterprise" status.

WE HAVE CHANGED OUR LEADERSHIP             In April 1997, when Moshe Nur
AND HAVE LIMITED MANAGEMENT                transferred control of NUR
RESOURCES TO MANAGE FUTURE                 Macroprinters, we replaced most of
GROWTH.                                    the members of our board of
                                           directors. We also made several
                                           management changes at such time and
                                           changed our Chief Financial Officer.
                                           Our recent growth has placed, and
                                           will continue to place, a significant
                                           strain on our management team,
                                           facilities and other resources. In
                                           order to support our growth, our new
                                           leadership adopted financial controls
                                           and reporting systems and expanded
                                           our management, facilities, financial
                                           and other resources. To avoid any
                                           negative effects on our business, we
                                           must successfully implement financial
                                           controls, expand our manufacturing,
                                           sales, marketing and service
                                           organizations, and update our
                                           accounting, operational and
                                           management information systems.
                                           Failure to do so effectively could
                                           have a material adverse effect on our
                                           business and financial results.

OUR OPERATING RESULTS TEND TO              Our revenues may vary significantly
FLUCTUATE.                                 from quarter to quarter as a result
                                           of, among other factors, the timing
                                           of new product announcements and
                                           releases by our competitors and us.
                                           We do not typically have a material
                                           backlog of orders at the beginning of
                                           each quarter. We generally ship and
                                           record a significant portion of our
                                           revenues for orders placed within the
                                           same quarter, primarily in the last
                                           month of the quarter. We may not
                                           learn of shortfalls in sales until
                                           late in, or shortly after the end of,
                                           such fiscal period. As a result, our
                                           quarterly earnings may be subject to
                                           significant variations.

IMPORTANT FACILITIES AND OPERATIONS ARE    Our most important facilities and
LOCATED IN ISRAEL.                         operations and many of our
                                           subcontractors are located entirely
                                           in the State of Israel. Political and
                                           military conditions in Israel
                                           directly affect operations. Since
                                           Israel was established in 1948, a
                                           state of hostility has existed,
                                           varying in degree and intensity,
                                           between Israel and certain Arab
                                           countries. Although Israel has
                                           entered into agreements with some of
                                           these countries, the Palestine
                                           Liberation Organization and the
                                           Palestinian Authority, and the
                                           feuding parties have signed various
                                           declarations in hopes of resolving
                                           some of the hostilities, we cannot
                                           predict the future of the volatile
                                           Middle East and of Israel in
                                           particular. To date, Israel has not
                                           entered into a peace treaty with
                                           Lebanon or Syria, with whom Israel
                                           shares its northern borders, or with
                                           certain other Arab countries with
                                           which a state of hostility exists.
                                           Any major hostilities involving
                                           Israel, the Palestinian Authority, or
                                           Arab countries in the Middle East
                                           could have a


                                       18
<PAGE>


                                           serious negative impact on our
                                           business operations.

         SOME OF OUR OFFICERS AND          Furthermore, all nonexempt male adult
         EMPLOYEES ARE ON MILITARY         citizens of Israel, including some of
         RESERVE.                          our officers and employees, are
                                           obligated to perform military reserve
                                           duty and are subject to being called
                                           for active duty under emergency
                                           circumstances. While we have operated
                                           effectively under these conditions in
                                           the past, we cannot predict the full
                                           impact of such conditions on us in
                                           the future, particularly if emergency
                                           circumstances occur.

WE ARE SENSITIVE TO ECONOMIC CONDITIONS    Inflation in Israel and devaluation
IN ISRAEL.                                 of the NIS have an impact on our
                                           financial results. Although Israel
                                           has substantially reduced the rates
                                           of inflation and devaluation in
                                           recent years, they are still
                                           relatively high and we could
                                           experience losses due to inflation or
                                           devaluation. If inflation rates in
                                           Israel increase again and hurt
                                           Israel's economy as a whole, our
                                           operations and financial condition
                                           could be negatively impacted.

         WE DO NOT KNOW THE IMPACT         Israeli law limits foreign currency
         OF RECENT POLICY CHANGES          transactions and transactions between
         ON FOREIGN CURRENCY               Israeli and non-Israeli residents.
         TRANSACTIONS.                     The Controller of Foreign Exchange at
                                           the Bank of Israel, through "general"
                                           and "special" permits, may regulate
                                           or waive these limitations. Until
                                           recently, transactions in foreign
                                           currency were strictly regulated. In
                                           May 1998, the Bank of Israel
                                           liberalized its foreign currency
                                           regulations by issuing a new "general
                                           permit" pursuant to which foreign
                                           currency transactions are generally
                                           permitted, although certain
                                           restrictions still apply. Restricted
                                           transactions include foreign currency
                                           transactions by institutional
                                           investors, including futures
                                           contracts by foreign residents for
                                           periods of more than one month, and
                                           investments outside of Israel by
                                           pension funds and insurers. Under the
                                           new general permit, all foreign
                                           currency transactions must be
                                           reported to the Bank of Israel. We
                                           cannot currently assess what impact,
                                           if any, this liberalization will have
                                           on us. We also cannot predict its
                                           impact on the value of the NIS
                                           compared to the dollar and the
                                           corresponding effect on our financial
                                           statements.

SERVICE OF PROCESS AND                     We are organized under the laws of
ENFORCEMENT OF JUDGMENTS.                  Israel and our headquarters are in
                                           Israel. Certain of our officers and
                                           directors reside outside of the
                                           United States. Therefore, you may not
                                           be able to enforce any judgment
                                           obtained in the U.S. against us or
                                           any of such persons. You may not be
                                           able to enforce civil actions under
                                           U.S. securities laws if you file a
                                           lawsuit in Israel. However, we have
                                           been advised by our Israeli counsel
                                           that subject to certain limitations,
                                           Israeli courts may enforce a final
                                           judgment of a U.S. court for
                                           liquidated amounts in civil matters
                                           after a hearing in Israel. If a
                                           foreign judgment is enforced by an
                                           Israeli court, it will be payable in
                                           Israeli currency.


                                       19
<PAGE>


ITEM 2:  DESCRIPTION OF PROPERTY

ISRAEL

         The Company's main facilities in Moshav Magshimim, Israel consists of
approximately 13,000 square feet. The Company uses this facility as its
headquarters and for research and development. Lease for the Magshimim property
has been extended until December 1, 2000, when the Company plans to relocate its
headquarters to a leased facility in a high-tech industrial zone in Lod, Israel.
The Lod facility is approximately 14,765 square feet. The initial five-year
lease of the Lod facility provides for monthly rent of $63,750. The lease
agreement grants the Company an option to continue the lease term for two
consecutive periods of 2.5 years.

         NPE leases approximately 6,292 square feet in Rosh Ha'ain, Israel, for
the manufacture and assembly of the NUR Blueboard and the NUR Fresco. The Rosh
Ha`ain lease expires in May 2001.

UNITED STATES

         NUR America leases office space in Newton, Massachusetts consisting of
4,500 square feet for use as the subsidiary's headquarters, sales and marketing
offices, and demonstration and service center. The Newton lease expires in
October 2008.

BELGIUM

         NUR Europe leases approximately 1,970 square feet of office space in
Brussels, Belgium for use as the subsidiary's headquarters and sales office
demonstration and service center. The Brussels lease expires in September 2011.
NUR Europe plans to expand its headquarters space at the above address by
additional 2,460 square feet. The lease for the additional space will expire in
March 2012.

         NUR Media Solutions leases approximately 600 square feet office space
in Louvain-la-Neuve, Belgium for use as office space. The Louvain-la-Neuve lease
will expire in December 2002.

         Stillachem leases temporary office space in Belgium of approximately
853 square feet. The lease expires in November 2002. Stillachem intends to build
new facilities specially suited for its operations.

ASIA

         NUR Shanghai leases approximately 2,067 square feet of space for use as
a warehouse and as a demonstration center in a free trade zone in Shanghai,
China, and occupies office space in a separate location in Shanghai China. The
leases will expire on April 2000 and December 2001 respectively. NUR Shanghai
has the option to extend the warehouse lease for an extended period of 12
months.

          NUR Asia Pacific leases office space of approximately 32 square feet
and warehouse space of approximately 32 square feet in Hong Kong. The leases are
terminated upon written notice from NUR Asia Pacific.

         NUR Asia Pacific leases office space of approximately 170 square feet
in Singapore. The lease will expire on November 2000.

ITEM 3:  LEGAL PROCEEDINGS

         In July 1999, the Company entered into a settlement agreement with
Scitex Wide Format Printing Ltd. (formerly Idanit) and a former sales
professional of Idanit currently employed with NUR America. Pursuant to the
settlement agreement, all claims relating to the recruitment of the sales
professional by NUR America, including claims brought in Israel and in
Massachusetts, were settled and withdrawn with prejudice.


                                       20

<PAGE>


ITEM 4:  CONTROL OF REGISTRANT

         The following table sets forth information regarding the beneficial
ownership of the Company's Ordinary Shares as of April 5, 2000, by (i) each
person known by the Company to be the beneficial owner of more than 10% of the
outstanding Ordinary Shares and (ii) all of the Company's executive officers and
directors as a group (10 persons). All of the information with respect to
beneficial ownership of the Ordinary Shares is given to the best of the
Company's knowledge and has been furnished in part by the respective directors,
executive officers, or beneficial owners, as the case may be.

<TABLE>
<CAPTION>

                                                   ORDINARY SHARES          PERCENTAGE OF ORDINARY SHARES
                                                  BENEFICIALLY OWNED            BENEFICIALLY OWNED(1)
<S>                                            <C>                                  <C>
Dan Purjes (2)                                        4,536,263                       35.8%

All current executive officers and
directors as a group (10 persons)(3)                  5,692,225                       43.8%

</TABLE>


----------
(1)  Based on a total of 12,003,073 Ordinary Shares outstanding
(2)  Dan Purjes is Chairman of the Company
(3)  Includes the holdings of Dan Purjes

ITEM 5:  NATURE OF THE TRADING MARKET

         The Company's Ordinary Shares are quoted on the Nasdaq National Market
under the symbol NURM. There is no non-United States trading market for the
shares.

         As of April 5, 2000, there were 103 record holders of Ordinary Shares,
of which 81 represented United States record holders holding approximately 85.4%
the outstanding Ordinary Shares of the Company.

         The prices set forth below are high and low closing bid prices for the
Ordinary Shares of the Company as reported by Nasdaq National Market. Such
quotations reflect inter-dealer prices, without retail markup, markdown, or
commission and may not necessarily represent actual transactions.


                                       21

<PAGE>


<TABLE>
<CAPTION>


                    QUARTER                     HIGH              LOW
                    -------                     ----              ---
                <S>                            <C>              <C>
                     1998
                First quarter                  3 1/8            1 11/16
                Second quarter                 4 1/2            2 1/4
                Third quarter                  3 1/8            1 15/16
                Fourth quarter                 3 3/8            1 3/4

                     1999
                First quarter                  3 5/16           2 1/2
                Second quarter                 3 23/32          2 7/8
                Third quarter                  5 1/2            9
                Fourth quarter                 7 5/16           12 15/16

                     2000
                First quarter                  18 15/16         10 5/8
                Second quarter (through        15 7/8           12 1/8
                May 2, 2000)

</TABLE>


         The Company does not anticipate that it will pay any cash dividend on
its Ordinary Shares in the foreseeable future. Dividends, if any, will be paid
in NIS. Dividends paid to shareholders outside Israel will be converted to U.S.
dollars, on the basis of the exchange rate prevailing at the date of payment.
The Company has determined that it will not distribute dividends out of
tax-exempt profits.

ITEM 6:  EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

         Non-residents of Israel will be able to receive dividends, if declared,
and any amounts payable upon the dissolution, liquidation or winding-up of the
affairs of the Company. Any such payments will be paid in freely repatriable
non-Israeli currencies (including U.S. dollars). Such payments, if made, shall
be made pursuant to a general permit issued by the Controller under the Currency
Control Law, 1978 (the "Currency Control Law").

         In May 1998, a new "general permit" was issued, which removed most of
the restrictions prohibited under the law, and thus enabled Israeli citizens to
freely invest outside of Israel and freely convert Israeli currency into
non-Israeli currencies.

         There are no limitations on the right of non-resident or foreign owners
to hold or vote their Ordinary Shares of the Company that are imposed by the
Company's Articles of Association or by Israeli law, other than certain
limitations imposed by Israeli Law upon countries who are in a state-of-war with
the State of Israel and upon individual or entities residing, incorporated or
carrying out business in such countries.

ITEM 7:  TAXATION

CAPITAL GAINS AND INCOME TAXES APPLICABLE TO NON-ISRAELI SHAREHOLDERS

         The following is a summary of the current tax laws of the State of
Israel as they relate to the Company and its shareholders. This summary does not
discuss all aspects of Israeli tax law that may be relevant to a particular
investor in light of his personal investment circumstances or to certain types
of investors subject to special treatment under Israeli law (for example,
traders in securities, businesses in Israel or persons that own, directly or
indirectly, 10% or more of the Company's outstanding voting stock). The
following also includes a discussion of certain Israeli government programs
benefiting


                                       22

<PAGE>


various Israeli businesses such as the Company. To the extent that the
discussion is based on new legislation yet to be subject to judicial or
administrative interpretation, there can be no assurance that the views
expressed herein will accord with any such interpretation in the future. This
discussion is not intended and should not be construed as legal or professional
tax advice, and does not cover all possible tax considerations.

GENERAL CORPORATE TAX STRUCTURE

         The Company is subject to corporate tax in Israel. Commencing in the
tax year 1993 through and including 1996, the regular rate of corporate tax to
which Israeli companies are subject decreased by 1% each year, i.e., from 39% in
1993 down to 36% in 1996 and thereafter. However, the effective rate payable by
a company which derives income from an "Approved Enterprise" (as further
discussed below) may be considerably less. See "--Law for the Encouragement of
Capital Investments, 1959."

TAXATION UNDER INFLATIONARY CONDITIONS

         The Income Tax Law (Adjustment for Inflation), 1985 (the "Adjustment
for Inflation Law") attempts to overcome some of the problems experienced in a
traditional tax system by an economy experiencing rapid inflation, which was the
case in Israel at the time the Adjustment for Inflation Law was enacted.
Generally, the Adjustment for Inflation Law was designed to neutralize for
Israeli tax purposes the erosion of capital investments in businesses and to
prevent unintended tax benefits resulting from the deduction of inflationary
financing expenses. The Adjustment for Inflation Law applies a supplementary set
of inflationary adjustments to taxable profit computed according to regular
historical cost principles.

         The Adjustment for Inflation Law introduced a special tax adjustment
for the preservation of equity based on changes in the Israeli CPI whereby
certain corporate assets are classified broadly into fixed (inflation resistant)
assets and non-fixed assets. Where shareholders' equity, as defined in the
Adjustment for Inflation Law, exceeds the depreciated cost of fixed assets, a
corporate tax deduction which takes into account the effect of inflationary
change on such excess in allowed (up to a ceiling of 70% of taxable income for
companies in any single tax year, with the unused portion permitted to be
carried forward on a linked basis with no ceiling). If the depreciated cost of
fixed assets exceeds shareholders' equity, then such excess multiplied by the
annual rate of inflation is added to taxable income.

         In addition, subject to certain limitations, depreciation on fixed
assets and losses carried forward are adjusted for inflation based on changes in
the Israeli CPI. The net effect of the Adjustment for Inflation Law on the
Company might be that the Company's taxable income, as determined for Israeli
corporate tax purposes, will be different than the Company's U.S. dollar income,
as reflected in its financial statements, due to the difference between the
annual changes in the CPI and in the NIS exchange rate with respect to the U.S.
Dollar, causing changes in the effective tax rate.

LAW FOR THE ENCOURAGEMENT OF INDUSTRY (TAXES), 1969

         The Company currently qualifies as an "Industrial Company" within the
definition of the Law for the Encouragement of Industry (Taxes), 1969 (the
"Industry Encouragement Law"). According to the Industry Encouragement Law, an
"Industrial Company" is a company resident in Israel, at least 90% of the income
of which in any tax year (exclusive of income from defense loans, capital gains,
interest and dividends), is derived from an "Industrial Enterprise" owned by it.
An "Industrial Enterprise" is defined by that law as an enterprise whose major
activity in a given tax year is industrial production activity.

         Included among the tax benefits for an Industrial Company are
deductions of 12.5% per annum of the purchase price of a good-faith acquisition
of a patent or of know-how, an election under certain conditions to file a
consolidated return and accelerated depreciation rates on equipment and
buildings.


                                       23

<PAGE>


         Eligibility for the benefits under the Industry Encouragement Law is
not subject to receipt of prior approval from any governmental authority. No
assurance can be given that the Company will continue to qualify as an
"Industrial Company" or that the benefits described above will be available in
the future.

LAW FOR THE ENCOURAGEMENT OF CAPITAL INVESTMENTS, 1959

         The Law for the Encouragement of Capital Investments, 1959, as amended
(the "Investment Law"), provides that a capital investment in production
facilities (or other eligible facilities) may, upon application to the Israel
Investment Center, be designated as an Approved Enterprise. Each certificate of
approval for an Approved Enterprise relates to a specific program delineated
both by its financial scope, including its capital sources, and its physical
characteristics, I.E., the equipment to be purchased and utilized pursuant to
the program. The tax benefits derived from any such certificate of approval
relate only to taxable profits attributable to the specific Approved Enterprise.

         Taxable income of a company derived from an Approved Enterprise
designated as such is subject to corporate tax at the rate of 25% or less based
on the percentage of foreign ownership of the company (rather than the regular
corporate tax rate of 36%) throughout the "Benefit Period"--a period of seven
years commencing with the year in which the Approved Enterprise first generated
taxable income (limited to the earlier of twelve years from the commencement of
production or fourteen years from the date of approval) and, under certain
circumstances, extending to a maximum of ten years therefrom. In the event a
company operates under more than one approval or only part of its capital
investments are approved (a "Mixed Enterprise"), its effective corporate tax
rate is the result of a weighted combination of the various applicable rates.

         In addition, a company owning an Approved Enterprise approval may elect
to forego certain government grants extended to its Approved Enterprise in
exchange for an "alternative package" of tax benefits (the "Alternative
Package"). Under the Alternative Package, a company's undistributed income
derived from an Approved Enterprise will be exempt from corporate tax for a
period of between two and ten years, depending on the geographic location of the
Approved Enterprise within Israel, and such company will be eligible for the tax
benefits under the Investment Law described above for the remainder of the
Benefits Period.

         Part of the Company's production facilities have been granted the
status of "Approved Enterprise" under the Investment Law, under two separate
investment plans. The implementation of the investments under the first plan was
finalized in 1993. The implementation of the second plan was finalized in 1999.

         According to the provisions of the Investment Law, the Company chose to
enjoy "alternative benefits"--waiver of grants in return for tax exemption.
Accordingly, the Company's income from the Approved Enterprise will be
tax-exempt for a period of two and four years for the first and second plans,
respectively, commencing with the year it first earns taxable income, and
subject to corporate tax at the rate of 25% (or less based on the percentage of
foreign ownership of the company), for additional periods of five and three
years, for the first and second plans, respectively.

         The period of tax benefits, detailed above, is subject to limits of 12
years from the commencement of production, or 14 years from receiving the
approval, whichever is earlier. Given the above mentioned conditions, the period
of benefits for the first plan commenced in the year 1994 and will terminate in
the year 2000, and the period of benefits for the second plan commenced in the
year 1999 and will terminate in the year 2005.

         If dividends are distributed out of such tax-exempt profits, the
Company will be liable for corporate tax at the rate, which would have been
applied if it had not chosen the alternative tax benefits (currently 15% or 25%
based on the percentage of foreign ownership of the company for an "Approved


                                       24

<PAGE>


Enterprise"). Therefore, income derived from the Company's "Approved Enterprise"
status is not available for distribution to shareholders as a dividend. See Note
20(a) to the Company's Financial Statements.

         The dividend recipient is taxed at the reduced rate applicable to
dividends from Approved Enterprises (15%), if the dividend is distributed during
the tax exemption period or within a specified period thereafter, or for an
unlimited period in the case of a "Foreign Investors' Company" - a company over
25% foreign-owned with an approved enterprise. This tax must be withheld by the
company at source, regardless of whether the dividend is converted into foreign
currency. See "--Capital Gains and Income Taxes Applicable to Non-Israeli
Shareholders."

         Subject to certain provisions concerning income subject to the
Alternative Package, all dividends are considered to be attributable to the
entire enterprise, and the effective tax rate is the result of a weighted
combination of the various applicable tax rates.

         The Investment Law also provides that an Approved Enterprise is
entitled to accelerated depreciation on its property and equipment that are
included in an approved investment program.

         Grants and certain other incentives received by a company in accordance
with the Investment Law remain subject to final ratification by the Israel
Investment Center, such ratification being conditional upon fulfillment of all
terms of the approved program. Failure to comply with all such terms may require
the return of such grants and incentives (inclusive of interest as of the date
of the grant).

         Receipt of grants and tax benefits from the OCS and the Marketing Fund
and under the Company's existing "Approved Enterprise" status and any new
programs, if and when approved, are or will be, as the case may be, subject to
various conditions. The tax benefits derived from the Company's "Approved
Enterprise" status are conditioned upon fulfillment of the conditions stipulated
by the Investment Law, the regulations promulgated thereunder and the criteria
set forth in the certificate of approval issued pursuant to the Investment Law.
In the event of a failure by the Company to comply with these conditions and
criteria, the grants and tax benefits could be canceled, in whole or in part,
and the Company would be required to refund the amount of the canceled benefits,
adjusted for inflation and interest. Management believes that the Company has
operated and will continue to operate in compliance with all the "Approved
Enterprise" conditions and criteria applicable to it from the OCS, the Marketing
Fund and its "Approved Enterprise" status, although there can be no assurance of
this, and that the likelihood is remote that it will be required to refund
grants or tax benefits that it derives from the OCS, the Marketing Fund and
under its "Approved Enterprise" status. There can be no assurance that the
funding and tax benefits will continue. See "Item 1: Description of
Business--Research and Development and --Risk Factors--We Rely Upon Government
Grants, Tax Benefits, and Other Funding From Third Parties."

CAPITAL GAINS AND INCOME TAXES APPLICABLE TO NON-ISRAELI SHAREHOLDERS

         Under existing regulations, any capital gain realized by a shareholder
with respect to the Ordinary Shares acquired on or after the registration of
such shares will be exempt from Israeli Capital Gains Tax if the Ordinary Shares
are listed on an approved foreign securities market (which term includes the
Nasdaq in the United States) and provided that the Company continues to qualify
as an Industrial Company under Israeli law, and provided the shareholder does
not hold such shares for business purposes.

         Upon a distribution of dividends other than bonus shares (stock
dividends), income tax is generally withheld at source at the rate of 25% (or
the lower rate payable with respect to Approved Enterprises, see "--Law for the
Encouragement of Capital Investments, 1959"), unless a double taxation treaty is
in effect between Israel and the shareholder's country of residence that
provides for a lower tax rate in Israel on dividends.


                                       25

<PAGE>


         A tax treaty between the United States and Israel (the "Treaty"),
effective since January 1, 1995, provides for a maximum tax of 25% on dividends
paid to a resident of the United States (as defined in the Treaty). Dividends
distributed by an Israeli company and derived from the income of an approved
enterprise are subject to a 15% dividend withholding tax. The Treaty further
provides that a 12.5% Israeli dividend withholding tax would apply to dividends
paid to a United States corporation owning 10% or more of an Israeli company's
voting stock. The 12.5% rate applies only on dividends from a company that does
not have an "Approved Enterprise" in the applicable period.

         A non-resident of Israel who has had dividend income derived or accrued
in Israel from which tax was withheld at source is currently exempt from the
duty to file an annual Israeli tax return with respect to such income, provided
such income was not derived from a business carried on in Israel by such
non-resident and that such non-resident does not derive other non-passive income
from sources in Israel. Proposals are being formulated to expand the requirement
to file annual Israeli tax returns.

TAX BENEFITS FOR RESEARCH AND DEVELOPMENT

         Israeli tax law allows under certain conditions a tax deduction in the
year incurred for expenditures (including non-depreciable capital expenditures)
in scientific research and development projects, if the expenditures are
approved by the relevant Israeli Government Ministry (determined by the field of
research) and the research and development is for the promotion of the
enterprise and is carried out by or on behalf of the company seeking such
deduction. Expenditures not so approved are deductible over a three-year period.
However, according to Israeli Supreme Court decisions, expenditures made out of
the proceeds of government grants are not deductible, i.e., the Company will be
able to deduct the unfunded portion of the research and development expenditures
and not the gross amount.

                U.S. TAX CONSIDERATIONS REGARDING ORDINARY SHARES

         The following summary describes certain of the principal United States
federal income tax consequences relating to an investment in Ordinary Shares as
of the date hereof. The summary is based on the Internal Revenue Code of 1986
(the "Code"), and existing final, temporary and proposed Treasury Regulations,
Revenue Rulings and judicial decisions, all of which are subject to prospective
and retroactive changes. The Company will not seek a ruling from the Internal
Revenue Service (the "IRS") with regard to the United States federal income tax
treatment relating to an investment in Ordinary Shares and, therefore, there can
be no assurance that the IRS will agree with the conclusions set forth below.
The summary does not purport to address all federal income tax consequences that
may be relevant to particular investors. For example, the summary applies only
to holders who hold Ordinary Shares as a capital asset within the meaning of
Section 1221 of the Code, and does not address the tax consequences that may be
relevant to investors in special tax situations (including, for example,
insurance companies, tax-exempt organizations, dealers in securities or
currency, banks or other financial institutions, or investors that hold Ordinary
Shares as part of a hedge, straddle or conversion transaction). Further, it does
not address the alternative minimum tax consequences of an investment in
Ordinary Shares or the indirect consequences to Holders of equity interests in
investors in Ordinary Shares. ACCORDINGLY, PERSONS CONSIDERING THE PURCHASE OF
ORDINARY SHARES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION
OF UNITED STATES FEDERAL INCOME TAX LAWS, AS WELL AS THE LAWS OF ANY STATE,
LOCAL OR FOREIGN TAXING JURISDICTION, TO THEIR PARTICULAR SITUATIONS.

         For purposes of this discussion, "Company" refers to NUR Macroprinters
Ltd., and "U.S. Holder" means a holder of Ordinary Shares that is a citizen or
resident of the United States, a partnership or corporation created or organized
in the United States or any State thereof (including the District of Columbia),
or an estate or trust the income of which is subject to United States federal
income tax on a net income basis with respect to Ordinary Shares. The term
"non-U.S. Holder" refers to any holder of Ordinary Shares other than a U.S.
Holder.


                                       26

<PAGE>


TAXATION OF U.S. HOLDERS

         DISTRIBUTIONS ON ORDINARY SHARES. Distributions made by the Company
with respect to Ordinary Shares generally will constitute dividends for federal
income tax purposes and will be taxable to a U.S. Holder as ordinary income to
the extent of the Company's undistributed current or accumulated earnings and
profits (as determined for United States federal income tax purposes).
Distributions in excess of the Company's current or accumulated earnings and
profits will be treated first as a nontaxable return of capital reducing the
U.S. Holder's tax basis in the Ordinary Shares, thus increasing the amount of
any gain (or reducing the amount of any loss) which might be realized by such
Holder upon the sale or exchange of such Ordinary Shares. Any such distributions
in excess of the U.S. Holder's tax basis in the Ordinary Shares will be treated
as capital gain to the U.S. Holder and will be either long term or short term
capital gain depending upon the U.S. Holder's federal income tax holding period
for the Ordinary Shares. Dividends paid by the Company generally will not be
eligible for the dividends received deduction available to certain United States
corporate shareholders under Code Sections 243 and 245. The amount of any cash
distribution paid in a foreign currency will equal the U.S. dollar value of the
distribution, calculated by reference to the exchange rate in effect at the time
the dividends are received. A U.S. Holder should not recognize any foreign
currency gain or loss if such foreign currency is converted into U.S. dollars on
the day received. If a U.S. Holder does not convert the foreign currency into
U.S. dollars on the date of receipt, however, such Holder may recognize gain or
loss upon a subsequent sale or other disposition of the foreign currency
(including an exchange of the foreign currency for U.S. dollars). Such gain or
loss, if any, will be ordinary income or loss for United States federal income
tax purposes.

         Subject to certain conditions and limitations, any Israeli withholding
tax imposed upon distributions which constitute dividends under United States
income tax law will be eligible for credit against a U.S. Holder's federal
income tax liability. Alternatively, a U.S. Holder may claim a deduction for
such amount, but only for a year in which a U.S. Holder elects to do so with
respect to all foreign income taxes. The overall limitation on foreign taxes
eligible for credit is calculated separately with respect to specific classes of
income. For this purpose, dividends distributed by the Company with respect to
Ordinary Shares will generally constitute "passive income."

         SALE OR EXCHANGE OF ORDINARY SHARES. A. U.S. Holder of Ordinary Shares
generally will recognize capital gain or loss upon the sale or exchange of the
Ordinary Shares measured by the difference between the amount realized and the
U.S. Holder's tax basis in the Ordinary Shares. Gain or loss will be computed
separately for each block of shares sold (shares acquired separately at
different times and prices). The gain or loss on such disposition will be
long-term capital gain or loss if the Ordinary Shares had been held for more
than one year. The deductibility of capital losses is restricted and generally
may only be used to reduce capital gains to the extent thereof. However,
individual taxpayers generally may deduct annually $3,000 of capital losses in
excess of their capital gains.

         PASSIVE FOREIGN INVESTMENT COMPANY. A foreign corporation generally
will be treated as a "passive foreign investment company" ("PFIC") if, after
applying certain "look-through" rules, either (i) 75% or more of its gross
income is passive income or (ii) 50% or more of the average value of its assets
is attributable to assets that produce or are held to produce passive income.
Passive income for this purpose generally includes dividends, interest, rents,
royalties and gains from securities and commodities transactions. The
look-through rules require a foreign corporation that owns at least 25%, by
value, of an operating subsidiary to treat that proportion of the subsidiaries
assets and income as held or received directly by the foreign parent.

         The Company does not believe that it is currently a PFIC nor does it
anticipate that it will be a PFIC in the future because it expects that less
than 75% of its annual gross income will be passive income and less than 50% of
its assets will be passive assets, based on the look-through rules, the current
income and assets of the Company and its subsidiaries, and the manner in which
the Company and its subsidiaries are anticipated to conduct their businesses in
the future. However, there can be no assurance that the


                                       27

<PAGE>


Company is not or will not be treated as a PFIC in the future. If the Company
were to be treated as a PFIC, all U.S. Holders may be required, in certain
circumstances, to pay an interest charge together with tax calculated at maximum
rates on certain "excess distributions," including any gain on the sale of
Ordinary Shares. In order to avoid this tax consequence, a U.S. Holder (i) may
be permitted to make a "qualified electing fund" election, in which case, in
lieu of such treatment would be required to include in their taxable income
certain undistributed amounts of the Company's income or (ii) may elect to
mark-to-market the Ordinary Shares and recognize ordinary income (or possible
ordinary loss) each year with respect to such investment and on the sale or
other disposition of the Ordinary Shares. Neither the Company nor its advisors
have the duty to or will undertake to inform U.S. Holders of changes in
circumstances that would cause the Company to become a PFIC. U.S. Holders should
consult their own tax advisors concerning the status of the Company as a PFIC at
any point in time after the date of this Form. The Company does not currently
intend to take the action necessary for a U.S. Holder to make a "qualified
electing fund" election in the event the Company is determined to be a PFIC.

         FOREIGN PERSONAL HOLDING COMPANY. A foreign corporation may be
classified as a foreign personal holding company (a "FPHC") for federal income
tax purposes if both of the following tests are satisfied: (i) at any time
during the taxable year five or fewer individuals who are United States citizens
or residents own or are deemed to own (under certain attribution rules) more
than 50% of its stock (vote or value) and (ii) at least 60% (50% for years
subsequent to the year in which it becomes a FPHC) of its gross income
(regardless of its source), as specifically adjusted, "is foreign personal
holding company income," which includes dividends, interest, rents, royalties
and gain from the sale of stock or securities.

         The Company does not believe that it is currently a FPHC nor does it
anticipate that it will be a FPHC in the future; however, no assurance can be
given that the Company is not or will not become a FPHC as a result of future
changes of ownership or changes in the nature of the income of the Company. If
the Company were to be classified as a FPHC, each U.S. Holder would be required
to include in income as a taxable constructive dividend its pro rata share of
the Company's undistributed foreign personal holding company income.

         CONTROLLED FOREIGN CORPORATION. If more than 50% of the Ordinary Shares
(vote or value) of the Company is owned, directly or indirectly, by U.S.
Holders, each of whom owns or is deemed to own under certain attribution rules
10% or more of the total combined voting power of all classes of stock of the
Company ("10% Shareholder"), the Company could be treated as a "controlled
foreign corporation" (a "CFC") under Subpart F of the Code. It is unclear how
controlling blocks of stock will be valued for these purposes. Accordingly, the
Company may be treated as a CFC for United States federal income tax purposes
even though 10% Shareholders do not own more than 50% of the outstanding
Ordinary Shares.

         The Company does not believe that it is currently a CFC; however, no
assurance can be given that the Company will not become a CFC as a result of
future changes in its ownership. If the Company were to be treated as a CFC,
each 10% Shareholder would be required to include in its taxable income as a
constructive dividend its pro rata share of certain undistributed income of the
Company, and all or a portion of the gain from the sale or exchange of the
Ordinary Shares may be treated under Section 1248 of the Code as dividend
income. Neither the Company nor its advisors have the duty to or will undertake
to inform U.S. Holders of changes in circumstances that would cause the Company
to become a CFC. U.S. Holders should consult their own tax advisors concerning
the status of the Company as a CFC.

         INFORMATION REPORTING. Any U.S. Holder who owns 10% or more (in voting
power or value) of the Ordinary Shares of the Company may be required to file
IRS Form 5471 with the IRS to report certain acquisitions or dispositions of
Ordinary Shares. In addition, annual filings of IRS Form 5471 would be required
(i) by any U.S. Holder of 10% or more (of the voting power in the case of a CFC,
or value in the case of a FPHC) of the Ordinary Shares of the Company, and (ii)
by any U.S. Holder owning more than 50%, in voting power or value, of the
Ordinary Shares of the Company. In addition, for taxable years beginning after
February 5, 1999, U.S. Holders are required to report certain acquisitions of
Ordinary Shares from the Company to the IRS on IRS Form 926, and that
nonreporting may subject the U.S.


                                       28

<PAGE>


Holder to substantial penalties. Potential investors of the Shares should
consult with their own tax advisors regarding the necessity of filing
information returns.

TAXATION OF NON-U.S. HOLDERS

         DISTRIBUTIONS ON ORDINARY SHARES. Distributions made by the Company
with respect to the Ordinary Shares to non-U.S. Holders who are not engaged in
the conduct of a trade or business within the United States will be subject to
United States federal income tax only if 25% or more of the gross income of the
Company (from all sources for the three-year period ending with the close of the
taxable year preceding the declaration of the distribution) was effectively
connected with the conduct of a trade or business in the United States by the
Company. The Company does not anticipate engaging in the conduct of a trade or
business within the United States, except through its subsidiaries. However, if
the 25% threshold for such period is exceeded, a portion of any distribution
paid by the Company to a non-U.S. Holder could be subject to federal income tax
withholding at the rate of 30%; the portion of the distribution that could be
subject to withholding would correspond to the portion of the Company's gross
income for the period that is effectively connected to its conduct of a trade or
business within the United States.

         SALE OR EXCHANGE OF ORDINARY SHARES. A non-U.S. Holder will not be
subject to United States federal income tax on any gain realized upon the sale
or exchange of Ordinary Shares if such Holder has no connection with the United
States other than holding the Ordinary Shares and in particular (i) such gain is
not effectively connected with a trade or business in the United States of the
non-U.S. Holder, (ii) in the case of a non-U.S. Holder who is an individual
which has a "tax home" (as defined in Section 911(d)(3) of the Code) in the
United States, such non-U.S. Holder is not present in the United States for 183
days or more in the taxable year of such disposition, and (iii) the Company is
not and has not been at any time within 5 years preceding such disposition a
"U.S. real property holding corporation" (a "USRPHC") for federal income tax
purposes.

         The Company believes that it is not and does not currently intend to
become a USRPHC, but no assurance can be given that the Company is not or will
not become a USRPHC in the future. In general, if the Company is determined to
be a USRPHC then non-U.S. Holders may be subject to United States federal income
tax on the sale or exchange of the Ordinary Shares, and to withholding at a rate
of 10% on any such disposition. However, a non-U.S. Holder will not be subject
to these special rules even if the Company is determined to be a USRPHC provided
that (i) such non-U.S. Holder did not at any time during the five years ending
on the date of sale or disposition actually or constructively own more than 5%
of the Ordinary Shares of the Company and (ii) the Ordinary Shares are then
"regularly traded" on an established securities market in the United States.
Since the Ordinary Shares are traded on the Nasdaq stock market and since it is
regularly quoted by broker dealers, the Ordinary Shares should be considered to
be "regularly traded" on an established securities market. However, it is
possible to interpret the current Temporary Regulations as concluding that the
Ordinary Shares will not be considered "regularly traded" at any time during
which 50% or more thereof is owned by 100 or fewer persons, which will be the
case as of the date of this Form.

         UNITED STATES BUSINESS. A non-U.S. Holder engaged in a trade or
business in the United States whose income from the Ordinary Shares (including
gain from the sale or exchange thereof) is effectively connected with the
conduct of such trade or business will generally be subject to regular United
States federal income tax on such income in the same manner as if it were a U.S.
Holder. In addition, if such a Holder is a foreign corporation, it may be
subject to a branch profits tax equal to 30% of its effectively connected
earnings and profits for the taxable year, subject to adjustments.

BACKUP WITHHOLDING

         Distributions made by the Company with respect to the Ordinary Shares
and the gross proceeds received from the disposition of the Ordinary Shares may
be subject to certain information reporting to the IRS and to a 31% backup
withholding tax. However, backup withholding generally will not apply to


                                       29

<PAGE>


payments made to certain exempt recipients (such as a corporation or financial
institution) or to a Holder who furnishes a correct taxpayer identification
number or provides a certificate of foreign status and provides certain other
required information. If backup withholding applies, the amount withheld is not
an additional tax, but is credited against such Holder's United States federal
income tax liability.

ITEM 8:  SELECTED CONSOLIDATED FINANCIAL DATA

                            STATEMENTS OF OPERATIONS
                                (IN U.S. DOLLARS)
                 (IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)

<TABLE>
<CAPTION>

                                                        1995           1996(1)          1997(1)          1998(1)        1999(2)
                                                      -------          -------          -------          -------        -------
<S>                                                   <C>              <C>              <C>              <C>            <C>
Revenues:
Sales of printers and related products                $13,824          $13,639          $18,874          $31,905        58,259
Sales of printed materials(3)                              --            2,998            3,085            4,540         2,460
                                                      -------          -------          -------          -------        -------
                                                       13,824           16,637           21,959           36,445        60,719
                                                      -------          -------          -------          -------        -------

Cost of revenues:
Cost  of  sales  of  printers   and  related            9,374           11,528            9,627           16,368        30,440
products
Cost of sales of printed materials                         --            2,008            1,684            2,579         1,344
                                                      -------          -------          -------          -------        -------
                                                        9,374           13,536           11,311           18,947        31,784
                                                      -------          -------          -------          -------        -------

Gross profit                                            4,450            3,101           10,648           17,498        28,935
                                                      -------          -------          -------          -------        -------

Research and development expenses                       1,040            1,530            1,726            5,027         5,530
Less royalty-bearing grants                               306              372               43              818           721
                                                      -------          -------          -------          -------        -------
Research and development expenses, net                    734            1,158            1,683            4,209         4,809
                                                      -------          -------          -------          -------        -------

Selling and marketing expenses, net                     1,039            4,823            4,620            5,829         9,485
General and administrative expenses                     1,187            2,560            3,439            5,084         6,275
Write-off of debts from related parties                    --            3,757                --               -            --
                                                      -------          -------          -------          -------        -------
                                                        2,226           11,140            8,059           10,913        15,760
                                                      -------          -------          -------          -------        -------

Operating income (loss)                                 1,490           (9,197)             906            2,376         8,366
Financial expenses, net                                   205              589              320              501           683
Gain (loss) on marketable securities                       12               22               --              (92)           67
Other income (expenses), net                              110               76               (8)             (19)          176
                                                      -------          -------          -------          -------        -------

</TABLE>


                                       30

<PAGE>


<TABLE>
<CAPTION>

                                                      1995           1996(1)          1997(1)           1998(1)          1999(2)
                                                   ---------        ---------        ---------         ----------       ----------
<S>                                                   <C>              <C>                 <C>              <C>          <C>
Income (loss) before taxes on income                  1,407            (9,688)             578              1,764            7,926
Taxes on income                                         221               400               67                264              798
                                                   ---------        ---------        ---------         ----------       ----------
Income (loss) after taxes on income                   1,186           (10,088)             511              1,500            7,128
Minority interest in earnings of subsidiary              --                --              (26)                43              (28)
Equity in losses of 50% owned joint venture(4)       (1,125)               --               --                 --               75
                                                   ---------        ---------        ---------         ----------       ----------
Net income (loss) for the period                        $61          $(10,088)            $485             $1,457            7,175
                                                   ---------        ---------        ---------         ----------       ----------
Basic earnings (loss) per share                        $0.01           $(1.47)           $0.07              $0.13            $0.64
                                                   ---------        ---------        ---------         ----------       ----------
Diluted earnings (loss) per share                      $0.01           $(1.47)           $0.07              $0.13            $0.56
                                                   ---------        ---------        ---------         ----------       ----------
                                                   ---------        ---------        ---------         ----------       ----------
Weighted  average  number of shares  used in
computing basic earnings (loss) per  share         4,904,118        6,880,000        7,293,640         10,880,000       11,181,137
                                                   ---------        ---------        ---------         ----------       ----------
                                                   ---------        ---------        ---------         ----------       ----------
Weighted  average  number of shares  used in
computing diluted earnings (loss) per  share       4,904,118        6,880,000        7,293,640         11,451,389       12,722,600
                                                   ---------        ---------        ---------         ----------       ----------
                                                   ---------        ---------        ---------         ----------       ----------

</TABLE>


----------
(1)  Represents financial information for the Company together with its
     subsidiaries NUR Media Solutions, NUR America, NUR Europe, and NUR Germany.

(2)  Represents financial information for the Company together with its
     subsidiaries NUR Media Solutions, NUR America, NUR Europe, NUR Shanghai,
     NUR Asia Pacific and NUR Germany (NUR Germany first 6 months).

(3)  Represents 84% of NUR Germany's income for the first 6 months of 1999, an
     operation that was sold during the third quarter of 1999.

(4)  Represents equity in Stillachem and NPE.


                               BALANCE SHEET DATA
                                (IN U.S. DOLLARS)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                   1995          1996(1)             1997(1)            1998(1)           1999(2)
                                 -------        --------            --------           --------          --------
<S>                              <C>               <C>              <C>                 <C>               <C>
Working capital............      $10,597           $690             $ 4,674             $5,441            16,017
Total assets...............       16,759         12,161              13,783             21,995            39,648
Total liabilities..........        4,945         10,325               7,998             14,565            21,785
Total shareholders' equity.      $11,814         $1,836             $ 5,785             $7,430            17,863

</TABLE>



                                       31

<PAGE>


----------
(1)  Represents financial information for the Company together with its
     subsidiaries NUR Media Solutions, NUR America, NUR Europe, and NUR Germany.

(2)  Represents financial information for the Company together with its
    subsidiaries NUR Media Solutions, NUR America, NUR Europe, NUR Shanghai, NUR
    Asia Pacific and NUR Germany (NUR Germany first 6 months).

ITEM 9:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

GENERAL

         The Company is a world leader in the market for the sale of WF and SWF
digital printing systems. The Company develops, manufactures, sells, and
services digital, inkjet color printing systems for on demand, production, WF
and SWF printing. The Company also supplies inks and substrates which are
consumable products for the operation of the Company's Printers. The Company's
total revenues grew from approximately $22 million in the year ended December
31, 1997, to approximately $36.4 million in the year ended December 31, 1998 and
$60.7 million in the year ended December 31, 1999. Excluding NUR Germany's
results, revenues in 1999 were $58.3 million compared to $31.9 million in 1998
and $18.9 million in 1997.

         The Company carries out its main research and development center for
the printers at its facilities in Moshav Magshimim. The Company's main sales and
service activities are carried out through its wholly owned subsidiaries, NUR
Europe, located in Brussels, Belgium, NUR America, located in Newton,
Massachusetts, in the United States, NUR Asia Pacific located in Shanghai,
China, and through its NUR Middle East and Africa unit located in Belgium. The
Company also wholly owns NUR Media Solutions, located in Brussels, Belgium,
which develops advanced consumables for the Company's Printers. The Company owns
50% of Stillachem, located in Charleroi Belgium, which is a digital ink factory
producing inks for the NUR Fresco printers, and 50% of NPE located at Rosh
Ha'ain Israel which is its main subcontractor for the assembly of the Company's
Printers.

         The Company, incorporated as an Israeli corporation on July 29, 1987,
started operation in June 1991, and since October 1995, the Company's Ordinary
Shares are traded on Nasdaq National Market. The Company is currently quoted on
Nasdaq National Market under the symbol NURM.

         Revenues from the Company's Printers and related materials are derived
from the sale of the Company's Printers, inks, substrates, spare parts, and
related services. Revenues from printed materials were derived from NUR
Germany's printing and advertising display services, a company that was sold
during the third quarter of 1999.

         Cost of sales of printers and related materials include costs related
to product shipments including materials, labor, overhead, and other direct or
allocated costs involved in the manufacture, warehousing, delivery, support, and
maintenance of products. Research and development expenses include mainly labor,
materials consumed, expenses by sub-contractors, consultants, and others.
Research and development expenses are carried to the statement of operations as
incurred. Grants are netted from research and development costs on an accrual
basis as the related expenses are incurred.

         The sales and marketing expenses include the costs associated with the
staff of the sales and marketing force of the Company and its subsidiaries,
advertising and promotion of existing and new products, trade shows,
commissions, and other marketing activities. During 1999, the Company expended
significant financial and management resources to expand its business and
product offerings. The Company invested in strengthening the service and sales
organizations in NUR Europe and NUR America, by hiring additional sales and
service staff in both territories. The Company also invested in the creation and
set-up of NUR Asia Pacific, NUR Shanghai and NUR Middle East and Africa, the
Company's new sales and service organizations, replacing Scitex, its distributor
in these territories until the end of 1998. The Company also invested in the
continuation of the development of NUR Media


                                       32

<PAGE>


Solutions, a subsidiary dedicated to the development and marketing of
consumables, mainly substrates, inks and clear coat varnishes for the use with
the Company's products. The Company also established two new joint ventures,
NPE, an assembly subcontractor for the Company's Printers located in Israel, and
Stillachem, an ink factory for the NUR Fresco inks located in Belgium.

CERTAIN ACCOUNTING POLICIES

         The main sources of revenues for the Company are sales of the Company's
Printers and related consumable products. Sales are recognized upon shipment of
the product to customers, when no significant vendor obligation remains and
collection is deemed probable.

         The accompanying consolidated financial statements have been prepared
in U.S. dollars. The U.S. dollar is the currency of the primary economic
environment in which the operations of the Company and NUR America are
conducted. The U.S. dollar is the functional and reporting currency of the
Company. The majority of sales are made in U.S. dollars and the majority of
purchases of materials and components are invoiced and paid in U.S. dollars. In
addition, a substantial number of other expenses are incurred outside Israel in
U.S. dollars or paid in U.S. dollars or in New Israeli Shekels ("NIS") linked to
the exchange rate of the U.S. dollar.

         See note 2 to the Company's Financial Statements included as a part of
this annual report for a discussion of the Company's accounting policy for
determining rate of exchange and linkage based amounts.

         The Company's transactions and balances denominated in U.S. dollars are
presented in their original amounts. Non-dollar transactions and balances have
been remeasured into U.S. dollars in accordance with Statement 52 of the
Financial Accounting Standards Board ("FASB"). All transaction gains and losses
from remeasurement of monetary balance sheet items denominated in non-dollar
currencies are reflected in the statement of operations as financial income or
expenses, as appropriate.

         The functional currencies of NUR Media Solutions and NUR Europe are
their local currencies. The balance sheets of these subsidiaries are translated
into U.S. dollars at the exchange rate prevailing on the date of the balance
sheet. The statements of operations and cash flows are translated at weighted
average exchange rates during each year presented. Translation adjustments are
recorded in a separate component of shareholders' equity.

         The Company's consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in Israel. As
applicable to the Company's financial statements, generally accepted accounting
principles in the U.S. and Israel are identical in all material respects.

         The Company accounts for stock-based compensation in accordance with
the requirements of Accounting Principles Board Opinion No. 25 ("APB 25")
"Accounting for Stock Issued to Employees." Under APB 25, when the exercise
price of the Company's employee options is less than the fair value of the
underlying shares on the date of grant, compensation expense is recognized.

         In accounting for options granted to persons other than employees, the
provisions of Financial Accounting Standards Board Statement No. 123,
"Accounting for Stock Based Compensation" were applied. According to FASB 123,
the fair value of these options was estimated at the grant date using
Black-Scholes options pricing model.

CURRENT AND FUTURE TRENDS

         PRINTERS SALES

         SWF: The Company has estimated based on its own market research that
the SWF industry has grown at a rate of 15-20% annually for the last three
years. Originally the SWF market was created for


                                       33

<PAGE>


print billboard. Currently the main drive for growth is coming from the
introduction of new application such as mural coverings, truck side printing and
exhibition graphics. The Company's growth during 1998 and 1999 has exceeded this
growth rate, mainly as a result of the Company's increased market share in the
SWF market and the introduction of new products. The Company believes it will
maintain a similar level of revenues in the SWF market of its business during
2000.

         WF: In February 2000, the Company started to sell the first NUR Fresco
printers to the WF professional market. The Company believes it will see most of
its growth in 2000 coming from the introduction of this product to the WF
professional print market.

         CONSUMABLES SALES

         During 1998 and 1999, the Company focused on its consumable recurring
revenues strategy. During 1999 this part of the business has grown by 116%
compared to 1998. The consumable business is made of two families of products,
specialized inks and specialized substrates. The Company believes that during
2000 the growth rate in the sale of the consumables will be less than in 1999
and will only reflect the growth rate of the installed base of the Company's
Printers.

         GROSS MARGINS

         The gross margins of the Company are expected to be at similar levels
in 2000 as in 1999. Although there is a downward price pressure on the Company's
existing products, there have been certain reductions in the manufacturing cost
of these products. The Company anticipates a launch of its new products at gross
margins similar to its existing products.

         INDUSTRY

         The out-of-home digital printing industry has undergone significant
changes in the past few years, and additional change is anticipated in the
future. The most noticeable change in the industry has been the adoption of
inkjet technologies by all major competitors in the industry. The Company's
major competitors have each introduced an inkjet-based printer to replace their
existing airbrush printers. The new printers, introduced since the end of 1997,
are based on the D-O-D technology. The Company believes it is the only
manufacturer with printers that use CIJ and DOD printing technology. To date,
the Company has been successful in maintaining and increasing its growth in
revenues from the Company's Printers.

         With the cost of digital printing expected to decrease and the ability
of digital technology expected to produce shorter runs more economically, the
Company believes that the use of WF and SWF printing, such as that produced by
the Company's Printers, should grow, and that the portion of the market serviced
by digital printing should increase. The ability to produce WF and SWF images
digitally has also opened new media opportunities for advertisers, such as mural
printing, carpet printing, new forms of fleet graphics printing. The growth in
demand for SWF digital printers is fueled both by the replacement of
conventional print methods and the development of new printing applications.

GEOGRAPHIC BREAKDOWN OF REVENUES

         The Company sells its products and services around the world. Revenues
are generally recognized at the location of the sale of the product or service.
The table below shows the breakdown of revenues (dollars in thousands) by
categories of activities and into geographic markets in the years ended December
31, 1999, 1998 and 1997. The "Other" category, below, includes, among other
things, revenues generated by the service of the Company's printers. With the
sale of NUR Germany in the third quarter of 1999, the Company no longer derives
significant revenues from the sale of printed materials.



                                       34

<PAGE>

<TABLE>
<CAPTION>

     YEAR ENDED            PRINTERS             INK            SUBSTRATES     PRINTED MATERIALS        OTHERS             TOTAL
  DECEMBER 31, 1999         (55.1%)           (23.1%)            (12.1%)             (4%)              (5.7%)             (100%)
       REGION              $        %        $         %        $        %         $        %        $         %        $        %
------------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>       <C>      <C>      <C>      <C>      <C>        <C>       <C>     <C>       <C>     <C>       <C>
Middle-East &            2,408     7.2%     1,428    10.2%      785    10.8%        --       --      330      9.5%    4,951     8.2%
Africa.............      6,357      19%     2,792    19.9%      468     6.4%        --       --      378     10.9%    9,995    16.5%
Asia...............     11,017    32.9%     3,533    25.1%    2,898    39.8%     2,460      100%   1,540     44.4%   21,448    35.3%
Europe
 North & Latin
  America..........     13,692    40.9%     6,291    44.8%    3,123      43%        --       --    1,219     35.2%   24,325      40%

Total Revenues.....     33,474     100%    14,044     100%    7,274     100%     2,460     100%    3,467      100%   60,719     100%
                        ------    ----    -------    ----     -----    ----     ------    ----    ------     ----    ------    ----
                        ------    ----    -------    ----     -----    ----     ------    ----    ------     ----    ------    ----
</TABLE>

<TABLE>
<CAPTION>

    YEAR ENDED             PRINTERS             INK            SUBSTRATES     PRINTED MATERIALS        OTHERS             TOTAL
 DECEMBER 31, 1998         (52.3%)           (23.6%)            (2.4%)            (12.5%)             (9.2%)             (100%)
      REGION              $        %         $        %         $       %         $        %        $         %        $        %
-----------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>       <C>      <C>       <C>        <C>    <C>       <C>       <C>     <C>        <C>    <C>       <C>
Middle-East &
Africa............        916     4.8%       858     9.9%      156    17.5%        --       --      308      9.2%    2,238     6.1%

Asia..............      1,762     9.2%     1,286    15.1%       --       --        --       --      278      8.3%    3,326     9.1%

Europe                  7,369      39%     2,388      28%      460    51.5%     4,540     100%    1,484     44.4%   16,241    44.6%

North & Latin
 America...........     9,005      47%     4,087      47%      278      31%        --       --    1,270     38.1%   14,640    40.2%

Total Revenues.....    19,052     100%     8,619     100%      894     100%     4,540     100%    3,340      100%   36,445     100%
                       ------    ----    -------    ----     -----    ----     ------    ----    ------     ----    ------    ----
                       ------    ----    -------    ----     -----    ----     ------    ----    ------     ----    ------    ----
</TABLE>

<TABLE>
<CAPTION>

     YEAR ENDED           PRINTERS             INK             SUBSTRATES      PRINTED MATERIALS       OTHERS            TOTAL
  DECEMBER 31, 1997         (55%)             (21%)               (0%)              (14%)              (10%)            (100%)
       REGION             $       %         $        %         $        %         $        %        $         %       $         %
-----------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>       <C>      <C>      <C>        <C>      <C>     <C>       <C>      <C>        <C>   <C>        <C>
Middle-East &
Africa............     1,344      11%                          --       --

Asia..............        --      --      1,122      25%       --       --         0       0%      583       26%    3,049      14%

Europe............     6,353      53%     1,549      34%       --       --     3,085     100%      862       38%   11,849      54%

</TABLE>


                                       35

<PAGE>


<TABLE>
<S>                    <C>       <C>      <C>      <C>        <C>      <C>     <C>       <C>      <C>        <C>   <C>        <C>
 North & Latin
  America.........     4,326      36%     1,900      42%       --       --         0       0%      835       37%    7,061      32%

Total Revenues....    12,023     100%     4,571     100%       --       --     3,085     100%    2,280      100%   21,959     100%
                      ------    ----    -------    ----     -----    ----     ------    ----    ------     ----    ------    ----
                      ------    ----    -------    ----     -----    ----     ------    ----    ------     ----    ------    ----

</TABLE>


                                       36

<PAGE>


RESULTS OF OPERATIONS

         The following table sets forth for the periods indicated certain line
items from the Company's statement of operations as a percentage of the
Company's sales:


<TABLE>
<CAPTION>

                                                                 YEARS ENDED DECEMBER 31,
                                                   -----------------------------------------------
                                                   1995    1996(1)     1997(1)   1998(1)   1999(2)
                                                   -----------------------------------------------
                                                                     (IN PERCENTS)
                                                   -----------------------------------------------
<S>                                                <C>      <C>         <C>       <C>       <C>
REVENUES ......................................    100%     100%        100%      100%      100%
  Cost of sales of printers and related .......     68       69        43.9      44.9      50.1
  products
   Cost of sales of printed materials .........     --       12         7.6       7.1       2.2
   Gross profit ...............................     32       19        48.5        48      47.7
   Research and development expenses ..........      8        9         7.8      13.8       9.1
   Research and development expenses net ......      5        7         7.7      11.5       7.9
   Selling expenses, net ......................      7       29          21        16      15.6
   General and administrative expenses ........      9       15        15.7        14      10.3
   Write-off debts of related parties .........     --       23          --        --
   Operating income (loss) ....................     11      (55)        4.1       6.5      13.8
   Financial expenses, net ....................      2        4         1.5       1.4         1
   Gain (loss) on marketable securities .......     --       --          --       0.2        --
   Other income (expense) .....................      1       --          --      0.05       0.3
   Taxes on income (tax benefit) ..............      2        2         0.3       0.7       1.3
   Minority interest in earnings of subsidiary      --       --         0.1       0.1      0.05
   Equity in loss of a 50% owned subsidiary ...     (8)      --          --        --       0.1
   Net income (loss) ..........................     --      (61)        2.2         4      11.8

</TABLE>

----------
(1)  Represents the Company on a consolidated basis with its subsidiaries NUR
     Media Solutions, NUR America, NUR Europe and NUR Germany.

(2)  Represents the Company on a consolidated basis with its subsidiaries NUR
     Media Solutions, NUR America, NUR Europe, NUR Germany, NUR Shanghai and NUR
     Asia Pacific (NUR Germany first six months of 1999).

     YEAR ENDED DECEMBER 31, 1999 COMPARED WITH YEAR ENDED DECEMBER 31, 1998

         REVENUES. Total revenues increased by 66.6%, to approximately $60.7
million in the year ended December 31, 1999 from approximately $36.44 million in
the year ended December 31, 1998, mainly as a result of the introduction of the
NUR Blueboard HiQ and market acceptance of the NUR Blueboard printers and as a
result of the continued move to direct distribution by the Company of the
Company's products in the Middle East, Africa and Asia. Growth was also fueled
by the growth of sales of the ink as a result of the growth of the installed
base of the Company's Printers and substrates a new business started in the
third quarter of 1999. Excluding NUR Germany's results from the year ended
December 31, 1998 (a company that was sold during the third quarter of 1999),
revenues in 1999 were $58.26 million, an increase of 82.6% compared to $31.9
million in 1998.


                                       37

<PAGE>


         EXPENSES. Research and development costs, net of the OCS grants, were
approximately $4.8 million in the year ended December 31, 1999, compared to $4.2
million in the year ended December 31, 1998. The increase is mainly as a result
of increased efforts in developing new products. The Company expects to continue
to invest significant resources in its research and development programs for new
products and enhancements of existing products. The Company expects that
research and development expenses will continue to increase in absolute dollar
terms as compared to previous years.

         Selling and marketing expenses were approximately $9.5 million in the
year ended December 31, 1999 compared to approximately $6.1 million in the year
ended December 31, 1998. The Company received $0.13 million in the year ended
December 31, 1999 from the Marketing Fund for selling and marketing expenses as
compared to $0.11 million in the year ended December 31, 1998. The Company will
not be eligible for support from the Marketing Fund commencing in 2000 due to
the Company reaching the maximum allowed export revenues. The majority of sales
and marketing expenses are incurred by the distribution subsidiaries, NUR
Europe, NUR America, NUR Shanghai and NUR Asia Pacific.

         General and administrative expenses were approximately $6.27 million in
the year ended December 31, 1999, compared to approximately $4.8 million in the
year ended December 31, 1998, representing an approximately 30.7% increase. This
increase was due primarily to building of the financial and administrative
infrastructures of the Company and the opening of the new subsidiaries in the
Far East.

         Financial expenses, net increased to $0.61 million in the year ended
December 31, 1999 from $0.50 million in the year ended December 31, 1998.

         GROSS PROFIT. Gross profit was approximately $28.9 million in the year
ended December 31, 1999, an increase of 65.4% from $17.5 million in the year
ended December 31, 1998. Gross profit as percentage of sales was 47.6% in the
year ended December 31, 1999 compared to 48% in the year ended December 31,
1998. Excluding NUR Germany's results from the year ended December 31, 1998
gross profit increased to $27.82 million (47.75% as percentage of sales) from
$15.54 million (48.7% as percentage of sales) in 1998, an increase of 79%.

         TAXES. Taxes on income were $0.798 million in the year ended December
31, 1999 as compared to $0.264 million in the year ended December 31, 1998.

    YEAR ENDED DECEMBER 31, 1998 COMPARED WITH YEAR ENDED DECEMBER 31, 1997

         REVENUES. Total revenues increased by 66%, to approximately $36.44
million in the year ended December 31, 1998 from approximately $21.96 million in
the year ended December 31, 1997, mainly as a result of the introduction of the
NUR Blueboard 2 and market acceptance of the NUR Blueboard printers and as a
result of the continued move to direct distribution by the Company of the
Company's products in Europe and the United States, the Company's two major
markets. Growth was also fueled by the growth of sales of the ink as a result of
the growth of the installed base of the Company's Printers.

         SALES. Sales of the Company's Printers and related products increased
by 69% to approximately $31.9 million in the year ended December 31, 1998 from
approximately $18.9 million in the year ended December 31, 1997. This increase
was attributed primarily to the introduction and market acceptance of the NUR
Blueboard and to increased revenues due to the move from sales through
distributors to direct sales to end users through the Company's subsidiaries in
Europe and the United States.

         EXPENSES. Research and development costs, net of the OCS grants, were
approximately $4.2 million in the year ended December 31, 1998, compared to
$1.68 million in the year ended December 31, 1997. The increase is mainly due to
acquired in process research and development in the amount of $1.95 million and
as a result of increased efforts in developing new products. The Company expects
to continue


                                       38

<PAGE>


to invest significant resources in its research and development programs for new
products and enhancements of existing products. The Company expects that
research and development expenses will continue to increase in absolute dollar
terms as compared to previous years.

         Selling and marketing expenses were approximately $6.1 million in the
year ended December 31, 1998 compared to approximately $4.6 million in the year
ended December 31, 1997. The Company received $0.11 million in the year ended
December 31, 1998 from the Marketing Fund for selling and marketing expenses as
compared to $0.2 million in the year ended December 31, 1997. The Company will
not be eligible for support from the Marketing Fund commencing in 1999 due to
the Company reaching the maximum allowed export revenues. The majority of sales
and marketing expenses are incurred by the distribution subsidiaries, NUR Europe
and NUR America.

         General and administrative expenses were approximately $4.8 million in
the year ended December 31, 1998, compared to approximately $3.4 million in the
year ended December 31, 1997, representing an approximately 50% increase. This
increase was due primarily to legal and extra-ordinary audit costs resulting
from the change in control and management of the Company, and to the re-building
of the financial and administrative infrastructures of the Company.

         Financial expenses, net increased to $0.5 million in the year ended
December 31, 1998 from $0.32 million in the year ended December 31, 1997.

         GROSS PROFIT. Gross profit was approximately $17.5 million in the year
ended December 31, 1998, an increase of 65.1% from $10.6 million in the year
ended December 31, 1997. Gross profit as percentage of sales was 48% in the year
ended December 31, 1998 compared to 48.5% in the year ended December 31, 1997.

         TAXES. Taxes on income were $0.264 million in the year ended December
31, 1998 as compared to $0.067 million in the year ended December 31, 1997.

LIQUIDITY AND CAPITAL RESOURCES

         Since the commencement of the Company's activities in the second half
of 1991 through mid-1993, the Company financed its operations primarily through
loans and injection of equity by shareholders. In October 1993, the Company
raised, through a private placement, approximately $6 million (approximately $3
million in equity and $3 million in convertible debentures). Following the 1993
private placement, the Company financed its operations primarily through cash
generated from operations. In the year ended December 31, 1995, the Company's
major source of cash was the $6.86 million of net proceeds from the Company's
initial public offering in October 1995.

         The Company incurred a loss of approximately $10.1 million in the year
ended December 31, 1996. This loss was comprised of approximately $4.8 million
in losses due to increased expenses associated with the setup of direct sales
and marketing efforts by the Company in Europe and in the United States, and to
the assumption of international support and service; approximately $1.2 million
in research and development expenses; approximately $0.6 million in financing
expenses; approximately $0.4 million in elimination of deferred taxes; and
approximately $3.8 million in losses due to the write-off of debts to the
Company associated with Moshe Nur and companies controlled by him. These debts
resulted, in part, from ineffective controls that failed to prevent unauthorized
transactions and failed to detect the misappropriation of funds. As a result,
the Company's shareholders' equity was reduced to approximately $1.8 million as
of December 31, 1996.

         In the year ended December 31, 1997, the Company's net income was
$0.485 million. In 1997, additional capital was needed to fund accrued debts to
suppliers during the year ended December 31, 1996 and the beginning of 1997, and
to increase the Company's working capital and equity base. In the third and
fourth quarters of 1997, the Company completed a private placement of $4.0
million of


                                       39

<PAGE>


Ordinary Shares, from which the Company received net proceeds of approximately
$3.51 million (the "Private Placement").

         In the year ended December 31, 1997, the Company's major source of cash
was the $3.51 million of net proceeds from the Private Placement.

         In the year ended December 31, 1998, net cash provided by operating
activities was approximately $2.9 million. Cash provided from financing activity
was $1.7 million primarily from additional use of short-term credit line
totaling $2.3 million.

         In the year ended December 31, 1999, net cash provided by operating
activities was approximately $3.8 million.

         In September 1999, the Company raised $3.3 million through a private
placement of 600,000 of its Ordinary Shares and warrants to purchase 150,000 of
its Ordinary Shares, in the aggregate, to ISAL Amlat Investments (1993) Ltd.
("Isal") and Dovrat & Co Ltd. In February 2000, Isal and Dovrat exercised the
warrants issued under the investment agreement at an exercise price of $8.00 per
share resulting in the payment of an additional $1.2 million to the Company.

         The Company has future royalty obligations to Meital, which will not
exceed $1.3 million, payable during the two years ending September 2001. Such
commitment is part of the purchase price for technology acquired by the Company
from Meital.

         As part of the Matan Settlement Agreement, the Company was obligated to
pay a total of $880,000, plus interest and tax, assuming timely payments, to the
Matan Parties. During 1999, the Company had already paid $293,000 to Matan. The
remaining sum of $586,000 has been fully reserved and is payable by the Company
to the Matan Parties in equal quarterly installments ending December 2001.

         OPERATING ACTIVITIES

         In the year ended December 31, 1997, the Company had net income of
$0.485 million. Net cash used by operating activities was approximately $2.05
million. The main changes in the Company's working capital were (i) an increase
of approximately $1.8 million in trade accounts receivable, (ii) a decrease of
approximately $1.24 million in trade payables, and (iii) a decrease of
approximately $1.3 million in customer advances.

         In the year ended December 31, 1998, the Company had net income of
$1.457 million. Net cash provided by operating activities was approximately $2.9
million. The main changes in the Company's working capital were (i) an increase
of approximately $3.03 million in trade accounts receivable, (ii) an increase of
approximately $1.3 million in trade inventories, and (iii) an increase of
approximately $4.1 million in trade payables.

         In the year ended December 31, 1999, the Company had net income of $7.2
million. Net cash provided by operating activities was approximately $3.8
million. The main changes in the Company's working capital were (i) an increase
of approximately $3.6 million in trade accounts receivable, (ii) an increase of
approximately $6.66 million in trade inventories, (iii) an increase of
approximately $2.65 million in trade payables, and (iv) an increase of
approximately $3.1 million in accrued expenses and other liabilities.

         INVESTING ACTIVITIES

         Net cash used in investing activities was approximately $1.61 million
in the year ended December 31, 1997. The Company invested approximately $3.58
million in the year ended December 31, 1998, consisting of $2.54 million for
equipment and $1.3 million for the acquisition of technology and


                                       40

<PAGE>


approximately $1.20 million in the year ended December 31, 1999, including $0.7
million provided by realization of investment in a subsidiary.

         FINANCING ACTIVITIES

         Net cash provided by financing activities in the year ended December
31, 1999 was approximately $4.45 million.

         The Company maintains long and short-term credit facilities in an
aggregate amount of approximately $8.15 million at December 31, 1999. At
December 31, 1999, the Company had approximately $2.775 million in long-term
loans from banks and others, $0.832 million of which is payable within 12 months
and $2.743 in short term loans. The Company's long term loans are linked to the
U.S. dollar and the Belgian Franc bearing interest at a rate ranging between
4.32% and 7.5%.

         As of December 31, 1999, total current assets of the Company amounted
to approximately $35.1 million, out of which $9.19 million was in cash, cash
equivalents and marketable securities, compared with total current liabilities
of approximately $19.1 million. The increase in current assets is attributable
primarily to growth in inventories resulting from the growth in the Company's
revenues and the build up for the NUR Fresco production. The increase of the
current liabilities is attributable primarily to the increase of trade payables
and short term loans.

         Net cash provided by financing activities in the years ended December
31, 1997, 1998, and 1999 was approximately $3.08, $ 1.7 and $4.45 million,
respectively.

         The Company has granted several security interests in its assets to
various banks and leasing companies to secure bank credit lines and lease
facilities.

         IMPACT OF INFLATION, DEVALUATION AND FLUCTUATION OF CURRENCIES

         Most of the Company's sales are in U.S. dollars. In addition, a
substantial number of other expenses are incurred outside Israel in U.S. dollars
or paid in U.S. dollars or in NIS linked to the exchange rate of the U.S.
dollar. Approximately 50% of these costs are denominated in U.S. dollars. Costs
not effectively denominated in U.S. dollars are translated to U.S. dollars, when
recorded, at prevailing exchange rates for the purposes of the Company's
financial statements, and will increase if the rate of inflation in Israel
exceeds the devaluation of the Israeli currency against the U.S. dollar or if
the timing of such devaluations were to lag considerably behind inflation.
Consequently, the Company is and will be affected by changes in the prevailing
NIS/U.S. dollar exchange rate.

         The Company might also be affected by the U.S. dollar exchange rate to
the major European currencies mainly the German Mark and the Belgian Franc.

         During 1992 and 1993, the value of the U.S. dollar increased relative
to major currencies and the rate of inflation in Israel exceeded the rate in the
United States. In 1995 and 1996, the value of the U.S. dollar decreased relative
to major currencies, and the rate of inflation in Israel exceeded the rate in
the United States. The annual rate of inflation in Israel in 1995 was 8.1%,
which increased to 10.6% in 1996 and decreased to 7.0% in 1997 to 8.6% in 1998
and to 1.3% in the year ended December 31, 1999. The NIS was devalued against
the U.S. dollar by approximately 3.9%, 3.7%, 8.8%, 17.6% in 1995, 1996, 1997,
1998 respectively and reevaluated against the U.S. dollar by approximately 0.16%
in 1999. The Company cannot predict whether the rate of devaluation of the NIS
against the U.S. dollar will continue to exceed the rate of inflation in the
future and whether these conditions will have a material adverse effect on the
Company.

         The representative dollar exchange rate for converting the NIS to
dollars, as reported by the Bank of Israel, was NIS 4.153 for one dollar US on
December 31, 1999 (NIS 4.16 on December 31, 1998, NIS 3.536 on December 31,
1997, NIS 3.251 on December 31, 1996 and NIS 3.135 on December 31, 1995).


                                       41

<PAGE>


         The Company's transactions and balances denominated in U.S. dollars are
presented at their original amounts. Non-dollar transactions and balances have
been measured into U.S. dollars in accordance with Statement 52 of the FASB. All
transaction gains and losses from remeasurement of monetary balance sheet items
denominated in non-dollar currencies are reflected in the statement of
operations as financial income or expenses, as appropriate. The average exchange
rates during the years ended December 31, 1995, 1996, 1997, 1998 and 1999 were
NIS 3.011, 3.187, 3.449, 3.8 and 4.138 for one dollar US, respectively. The
exchange rate as of March 31, 2000 was NIS 4.026 for one dollar.

         CURRENT AND FUTURE CAPITAL NEEDS

         The Company believes that its revenues from operations together with
its existing capital resources and credit facilities will be sufficient to fund
the Company's current activities at their present rate without the Company's
planned expansion through July 2001. The Company will require additional funds,
to be raised through public or private financing of debt or equity, in order to
ensure its ability to proceed with the planned expansion of its operations after
December 2000. If such funds are not raised, the Company may have to reduce or
eliminate planned expenditures for research and development, production, or
marketing of its products, any one of which could have an adverse effect on the
Company's business. There can be no assurance that such additional financing
will be available or that, if available, it will be obtained on terms favorable
to the Company. The Company currently has no commitments for additional
financing and is exploring the possibility of raising additional capital.

         In this regard, the Company's capital requirements and level of
expenses depend upon numerous factors, including the scope and success of the
Company's marketing and customer service efforts, and of its research and
development activities, as well as the demand for the Company's products and
services. Moreover, in the course of the bankruptcy proceedings of Moshe Nur and
the companies controlled by him, the Company in the future may be exposed to
claims arising from the actions of Moshe Nur despite the recent settlement of
all material claims related to such persons and entities. Liabilities arising
from any such claims may be material.

ITEM 9A  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company does not believe the disclosure otherwise required by Item
9A of Form 20-F to be material to the Company.

ITEM 10:  DIRECTORS AND OFFICERS OF REGISTRANT

         The executive officers and directors of the Company are as follows:

<TABLE>
<CAPTION>

NAME                                    AGE          POSITION WITH THE COMPANY
----                                    ---          -------------------------
<S>                                     <C>          <C>
Dan Purjes(1)                            50          Chairman of the Board of Directors
Erez Shachar(2)                          36          President, Chief Executive Officer and Director
Yoram Ben-Porat(2)                       45          Director and President of NUR Media Solutions
Hilel E. Kremer                          38          Chief Financial Officer
Eyal I. Israeli                          45          Vice President of Operations
Efraim M. Weinreb                        42          Vice President of Research and Development
Ron Michael                              32          Vice President of Marketing
Robert L. Berenson(3)                    60          Director
Hugo R. Chaufan (1)(3)                   56          Director
Robert F. Hussey(1)(3)                   51          Director

</TABLE>

---------
(1)  Member of the Company's stock option and compensation committee
(2)  Member of the Company's Non-Employee Director Share Option Plan committee
(3)  Member of the Company's audit committee


                                       42

<PAGE>


         DAN PURJES has served as the Chairman of the Board of the Company since
April 1997. Mr. Purjes is Chairman and Chief Executive Officer of Josephthal, an
investment banking and brokerage firm which is a member of the New York Stock
Exchange. Prior to joining Josephthal in 1985, Mr. Purjes was a Vice President
with a number of securities firms, including Bear Stearns & Co. and L.F.
Rothschild Unterberg Towbin, in their corporate finance and brokerage sales
divisions. He began his Wall Street career at Morgan Stanley & Co. in 1978 as a
director of their computer systems department. Prior to that, Mr. Purjes was a
manager at Citibank and at Philip Morris International in their computer systems
areas. Mr. Purjes earned B.S. and M.S. degrees in Computer Science from the City
College of New York School of Engineering.

         EREZ SHACHAR has served as the Company's President and Chief Executive
Officer since July 1997 and as a Director of the Company since October 1997. Mr.
Shachar has also served as a Director of NUR Europe and NUR America since
October 1997, of NUR Media Solutions since January 1998, of NUR Asia Pacific
since January 1999, and of NPE since September 1999. Mr. Shachar is also a
Director of Eltek Ltd., a publicly held corporation. Prior to joining the
Company, from 1989 to 1997, Mr. Shachar served in various research and
development, marketing, sales, and senior management positions with Scitex
Corporation. Mr. Shachar's last position with Scitex was Vice President of Sales
and Marketing of Scitex Europe, and prior thereto Mr. Shachar held several
positions in the marketing organization of Scitex Europe. Prior to joining
Scitex Europe, Mr. Shachar was a software developer within the research and
development group of Scitex. Mr. Shachar holds a B.Sc. in Mathematics and
Computer Science from Tel Aviv University, and a M.B.A. degree from INSEAD,
France.

          HILEL E. KREMER has served as the Chief Financial Officer and
Secretary of the Company since December 1998. Mr. Kremer has also served as a
Director of NUR Europe, NUR America and NUR Media Solutions since December 1998
and as a Director of NUR Asia Pacific and NPE since April and September 1999,
respectively. Prior to joining the Company, from 1993 to 1998 Mr. Kremer served
in various management positions with Scitex Corporation. Mr. Kremer's last
position with Scitex was Vice President of Finance and Chief Financial Officer
of Scitex Asia Pacific, and prior thereto Mr. Kremer held several positions in
the finance organization of Scitex Europe. Prior to joining Scitex Europe, Mr.
Kremer held various positions in the budgeting department of the Israeli Finance
ministry. Mr. Kremer holds a B.A. in Economics from Hebrew University,
Jerusalem, and an M.B.A. degree from INSEAD, France.

         YORAM BEN-PORAT has served as a Director of the Company since March
1991. Since October 1993, Mr. Ben-Port has served as Director and President of
NUR Media Solutions. Since October 1993, Mr. Ben-Porat has served as the Chief
Executive Officer and Deputy Chairman of the Board of Directors of NUR
International. He was among the founders of the Company and between January and
September 1993, he served as the Chief Executive Officer of the Company. From
1987 until December 1992, Mr. Ben-Porat served as Research and Development and
Business Development Manager of NUR Outdoor and NUR Focus. Prior thereto, he was
an independent consultant to metal finishing process companies in the high
technology industry. Mr. Ben-Porat holds a degree in Economics and Marketing
from the Tel Aviv College of Management and Administration.

         EYAL I. ISRAELI has served as the Vice President of Operations since
May 1996. From January 1995 until he joined the Company, Mr. Israeli served as
the Director of Customer Support for Indigo Electronic Printing Systems Ltd.
From February 1993 to January 1995, Mr. Israeli served as the Manager of
Corporate Customer Support for Orbotech Ltd. In addition, from January 1987 to
February 1993, Mr. Israeli served as Vice President of Customer Support for
Optrotech Inc., the U.S. subsidiary of Optrotech Ltd. Mr. Israeli holds a B.Sc.
in Electronic Engineering from Ben-Gurion University, a M.Sc. in Electronic
Systems from Tel Aviv University and a joint M.B.A. from Northwestern and Tel
Aviv Universities.

         EFRAIM M. WEINREB has served as Vice President of Research and
Development since July 1998. Prior to joining the Company, from January 1997 to
July 1998, Mr. Weinreb served as Vice President of


                                       43

<PAGE>


Research and Development of AutoMedia, a start-up company that developed digital
video solutions. From 1983 to 1996, Mr. Weinreb served in various research and
development management positions with Scitex Corporation Ltd. Mr. Weinreb's last
position with Scitex was research and development manager of Brisque Front-End.
Mr. Weinreb holds a B.A. in Economics and Computer Science from Bar - Ilan
University.

         RON MICHAEL has served as the company's Vice President of Marketing
since June 1999. Prior to joining the Company, from 1997 to 1999, Mr. Michael
served as Managing Director of Hygiene Products Ltd., a McCarthy Group company.
Prior to that he held several positions within Strategic Business Development
("SBD"), a leading Israeli strategy consulting firm. The last position he held
at SBD was Senior Project Manager, specializing in structural business moves.
Prior to that, he founded and served as Managing Director of Esprit Promotion
Systems Ltd., a company specializing in the development and sales of direct
marketing data bases. Mr. Michael holds a B.A. in Business Administration from
Tel-Aviv College of Administration, an LL.B. degree in Law from Tel-Aviv
University and an MBA degree from INSEAD France.

         ROBERT L. BERENSON has served as a Director of the Company since July
1998. Mr. Berenson is President of Grey Advertising Inc., the second largest
advertising agency in the United States and sixth largest in the world. He
joined Grey in 1964 as an Assistant Account Executive, rose through the ranks to
become the youngest Executive Vice President in the Company's history in 1977
and took his present position as President in 1989. Mr. Berenson is also a
Director of the Better Business Bureau of New York, the Advertising Educational
Foundation and the Federal Law Enforcement Foundation. He holds a B.S./B.A.
degree in Journalism and Marketing from Syracuse University and an M.S. in
Journalism from the Medill School at Northwestern University.

         HUGO R. CHAUFAN has served as a Director of the Company since September
1999. Dr. Chaufan is President of ISAL Amlat Investments (1993) Ltd., managing
director and co-founder of Isal Investments Co. N.V., Isal Holland B.V. and Isal
Nadlan (1994) Ltd. Dr. Chaufan is chairman of the board of directors of Project
Glilot Ltd., Poster Media (Israel) Ltd., Ain Pei Arutzei pirsum Ltd., Shnapp
Industries Ltd., Sivan Plastic Industries 1991 Ltd., Cargal Ltd. and Chemipal
Ltd. Prior to becoming managing Director of Isal Amlat Investments Co. N.V. in
1987, Dr. Chaufan held the position of C.E.O. of Israel Chemical Industries
Ltd., after holding senior management positions, including Deputy Director, at
the Budget Department of the Finance Ministry. Dr. Chaufan holds a degree on
Accountancy, Certified Accountancy and a Ph.D. in Economics.

         ROBERT F. HUSSEY has served as a Director of the Company since
September 1997. Prior to joining the Company, from June 1991 to April 1997, Mr.
Hussey served as the President and Chief Executive Officer of Metrovision of
North America Inc. Prior thereto, from 1984 to 1991, Mr. Hussey served as the
President, Chief Executive Officer and Director of POP Radio Corp., a company
which he helped form. From 1979 to 1984, Mr. Hussey served as the Vice
President/Management Supervisor for Grey Advertising, Inc. From 1977 to 1979,
Mr. Hussey was the Director of Financial Advertising for E.F. Hutton. Prior
thereto, from 1973 to 1977, Mr. Hussey served as a Senior Financial Analyst and
Product Manager for American Home Products, Inc. Mr. Hussey is also a Director
of Digital Data Networks Inc., a publicly held corporation. Mr. Hussey holds a
B.S. in Finance from Georgetown University and a M.B.A. in International Finance
from George Washington University.

TERMS OF DIRECTORS

         The members of the Board are elected annually at the Company's general
meeting and remain in office until the next annual general meeting of the
Company, unless the director has previously resigned, vacated his office, or was
removed in accordance with the Company's Articles of Association. In addition,
the Board may elect additional members to the Board.


                                       44

<PAGE>


ALTERNATE DIRECTORS

         The Articles of Association provide that, subject to the Board's
approval, a director may appoint, by written notice to the Company, any
individual (whether or not such person is then a member of the Board) to serve
as an alternate director. Any alternate director shall have all of the rights
and obligations of the director appointing him or her, except the power to
appoint an alternate (unless the instrument appointing him or her expressly
provides otherwise). The alternate director may not act at any meeting at which
the director appointing him or her is present. Such alternate may act as the
alternate for several directors and have the corresponding number of votes.
Unless the appointing director limits the time period or scope of any such
appointment, such appointment is effective for all purposes and for an
indefinite time, but will expire upon the expiration of the appointing
director's term. There are currently no alternate directors.

COMMITTEES OF THE BOARD OF DIRECTORS

         The Company's Articles of Association provide that the Board may
delegate all of its powers to committees of the Board as it deems appropriate,
subject to the provisions of the Israeli Companies Ordinance (New Version) 1983,
as amended (the "Companies Ordinance"). As of February 2000, the new Israeli
Companies Law, 1999 (the "Companies Law") came into effect, replacing most of
the provisions of the Companies Ordinance (other than provisions relating to
liens and liquidation of companies). The Companies Law will require the Company
to introduce certain amendments to its Articles of Association (including the
Company's requirement to have two Israeli "Outside Directors" meeting specific
independence criteria, as elected members of its Board) and will bring into
effect new procedures for the approval of certain transactions.

         APPROVAL OF CERTAIN TRANSACTIONS UNDER THE COMPANIES LAW; AUDIT
COMMITTEE

         The Companies Law requires disclosure by an "Office Holder" or a
"Controlling Shareholder" (both as defined below) to the Company in the event
that an Office Holder or Controlling Shareholder has a direct or indirect
personal interest in a transaction to which the Company intends to be a party,
and codifies the duty of care and fiduciary duties which an Office Holder has to
the Company. An "Office Holder" is defined in the Companies Law as a director,
managing director, chief business manager, executive vice president, vice
president, other manger directly subordinate to the managing director and any
other person assuming the responsibilities of any of the foregoing positions
without regard to such person's title, and a Controlling Shareholder is defined
as a holder having the ability to control the affairs of the Company or the
holder of at least 25% of the shares of the Company (if there is no other holder
of at least 50% of the shares).

         The Companies Law requires that the Company appoint an audit committee
of the Company's Board (the "Audit Committee") meeting certain criteria defined
in the Companies Law and that certain transactions, actions, and arrangements
must be approved by the Audit Committee. The Company is also required to
maintain the Audit Committee as a result of the inclusion for quotation of the
Ordinary Shares on the Nasdaq National Market. In certain circumstances,
shareholder approval is also required. The Audit Committee must be comprised of
members of the Board who are not employees of the Company, and the majority of
members of the Audit Committee may not be holders, directly or indirectly
through family members, of more than five percent of the Ordinary Shares.

         The Company has appointed an Audit Committee consisting of Robert L.
Berenson, Hugo Chaufan, and Robert F. Hussey. Approval by the Audit Committee
and the Board is required for (i) proposed transactions to which the Company
intends to be a party in which an Office Holder or Controlling Shareholder has a
direct or indirect personal interest, (ii) actions or arrangements which may
otherwise be deemed to constitute a breach of fiduciary duty or of the duty of
care of an Office Holder to the Company, (iii) arrangements with directors as to
the terms of office or compensation, and (iv) indemnification of Office Holders.
Arrangements with directors as to the terms of their service or compensation
also require shareholder approval. All arrangements as to compensation of Office
Holders


                                       45

<PAGE>


who are not directors require approval of the Board. In certain circumstances,
the matters referred to in (i), (ii), and (iv) may also require shareholder
approval.

         Office holders (including directors) who have a personal interest in a
matter which is considered at a meeting of the Board or the Audit Committee may
not be present at such meeting, may not participate in the discussion, and may
not vote on any such matter, except that such Office Holders may consent in
writing to resolutions adopted by the Board and/or the Audit Committee by
unanimous consent.

         STOCK OPTION AND COMPENSATION COMMITTEE

         In March 1998, the Company established a committee to administer the
Company's stock option plans, other than the 1998 Non-Employee Director Share
Option Plan (the "Stock Option and Compensation Committee"). The Stock Option
and Compensation Committee is charged with administering and overseeing the
allocation and distribution of stock options under the approved stock option
plans of the Company and the approval of the Company's executive officer's
annual compensation. The Stock Option and Compensation Committee is presently
comprised of three members: Dan Purjes, Hugo Chaufan and Robert F. Hussey.

         NON-EMPLOYEE DIRECTOR SHARE OPTION PLAN COMMITTEE

         In February 1999, the Company established a committee to administer the
Company's 1998 Non-Employee Director Share Option Plan (the "NEDSOP Committee").
The NEDSOP Committee is charged with administering and overseeing the allocation
and distribution of stock options under the 1998 Non-Employee Director Share
Option Plan. The NEDSOP Committee is presently comprised of two members: Erez
Shachar and Yoram Ben-Porat

ITEM 11: COMPENSATION OF DIRECTORS AND OFFICERS

         In the year ended December 31, 1999 the aggregate compensation paid by
the Company to the directors and executive officers of the Company (a total of
10 persons) amounted to approximately $1,041,000.

         The executive officers of the Company received part of the compensation
set forth above under the Company's Management by Objectives Compensation Plan
("MBO"). The MBO sets annual individual goals to be achieved by the executive
officers throughout the year. The percentage of individual achievement
determines the percent of the MBO bonus paid to each executive officer. The MBO
plan for the benefit of the Company's Chief Executive Officer is administered by
the Stock Option and Compensation Committee. The MBO plan for the benefit of the
other executive officers is administered by the Chief Executive Officer.

         The Company pays its Board members who are not employees of the Company
remuneration for their services as directors. This remuneration includes an
annual payment of $5,000 and an additional payment of approximately $250 per
meeting. Each non-employee Board member also receives an annual grant of options
to purchase 10,000 Ordinary Shares under the conditions set forth in the
Company's 1998 Non-Employee Director Share Option Plan

ITEM 12: OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES
         OUTSTANDING OPTIONS AND WARRANTS

         As of March 31, 2000, the Company had outstanding options, under the
Company's stock option plans, to purchase a total of 1,985,399 of its Ordinary
Shares. Of such options, 212,966 have been issued under the Flexible Stock
Incentive Plan (the "1995 Plan"), 1,694,100 have been issued under the 1997


                                       46

<PAGE>


Stock Option Plan (the "1997 Plan"), and 78,333 have been issued under the 1998
Non-Employee Director Share Option Plan (the "1998 Plan"). The options granted
under the 1995 Plan and the 1997 Plan are subject to various vesting
requirements and have been issued at exercise prices ranging from $0.30 to
$11.375 per share with various expiration dates. The options granted under the
1998 Plan have an exercise price of $2.75 per share, are not subject to vesting
requirements and expire on October 26, 2008. See Note 19 to the Company's
financial statements included as a part of this Form 20-F. The Company has also
granted to Meital, in connection with a consulting arrangement, an option to
acquire 100,000 Ordinary Shares at $1.00 per share in September 1998.

         As of March 31, 2000, the Company had outstanding warrants exercisable
into a total of 595,000 Ordinary Shares. Of such warrants, (i) 155,000 were
originally issued to Josephthal as representative of the underwriters in
connection with the Company's initial public offering in October 1995 (the "IPO
Warrants"), (ii) 400,000 were originally issued to Josephthal as placement agent
in connection with the Company's private placement between September and
December 1997 (the "Private Placement Warrants"), (iii) 25,000 were issued to
Cruttenden Roth Incorporated in connection with its role as "qualified
independent underwriter" in a registration of Ordinary Shares on behalf of
certain selling security holders (the "QIU Warrants"), and (iv) 15,000 were
issued to Zamir & Barak in partial consideration for legal services rendered on
behalf of the Company (the "ZB Warrants"). The IPO Warrants are exercisable at
$7.20 per share no later than October 2000. The Private Placement Warrants are
exercisable at $1.00 per share no later than September and December 2002. The
QIU Warrants are exercisable at $4.50 per share from February 2000 to February
2004. The ZB Warrants are exercisable at $2.25 per share from January 2000 to
January 2004. Dan Purjes, the Chairman of the Company is also the Chairman of
Josephthal. See "Item 13: Interest of Management in Certain Transactions."

         Of the options and warrants described above, directors and executive
officers of the Company hold options and warrants to purchase an aggregate of
906,333 Ordinary Shares called for by such securities.

1995 STOCK OPTION PLAN

         In 1995, the Company adopted the 1995 Plan which provides for grants of
stock options to employees of and consultants to the Company. Options to
purchase an aggregate of 500,000 Ordinary Shares were originally available for
grant under the 1995 Plan, as amended, including options for future services
(such options, "Service Options"), options for performance (such options,
"Performance Options"), and options to consultants for service or performance
(such options, "Consultant Options").

         The Company's 1995 Plan provides that it may be administered by the
Board or by a committee appointed by the Board and is currently administered by
the Stock Option and Compensation Committee. The Stock Option and Compensation
Committee determines the employees and consultants who are granted options under
the 1995 Plan, the timing of such grants, the terms thereof, and the number of
shares to be covered thereby. Such committee also determines the exercise price
for Ordinary Shares subject to the Performance and Consultants Options under the
1995 Plan and the exercise price for the Service Options, provided that in no
case shall the exercise price of any Service Option be less than 80% of the fair
market value of such Ordinary Shares at the date of grant (the "Date of Grant").
Service Options usually vest over a four-year period. One-third of the Service
Options vest after the second annual anniversary of the Date of Grant with an
additional one-third vesting on the third and fourth anniversary of the Date of
Grant, respectively. Performance Options vest under the same terms as applicable
to the Service Options. Consultants Options vest over a specified period of time
based on past or future services rendered or performance targets to be achieved
by the Company as determined by the Board. Notwithstanding the foregoing, the
Consultants Options vest ten years following the Date of Grant. No option may be
assigned or transferred except by will or the laws of descent and distribution.


                                       47

<PAGE>


         Under the 1995 Plan for Israeli employees, options and Ordinary Shares
issuable upon the exercise of options granted to Israeli employees of the
Company can be held in a trust until the payment of all taxes due with respect
to the grant and exercise (if any) of such options.

1997 STOCK OPTION PLAN

         In 1997, the Company adopted the 1997 Plan which provides for grants of
stock options to employees of and consultants to the Company. Options to
purchase an aggregate of 2,200,000 Ordinary Shares were originally available for
grant under the 1997 Plan, as amended.

         The 1997 Plan provides that it is to be administered by the Board or by
a committee appointed by the Board and is currently administered by the Stock
Option and Compensation Committee. The Stock Option and Compensation Committee
has broad discretion to determine the persons entitled to receive options under
the 1997 Plan, the terms and conditions on which options are granted, and the
number of Ordinary Shares subject thereto, up to the maximum aggregate amount
permitted under the 1997 Plan. The Stock Option and Compensation Committee also
has discretion to determine the purchase price to be paid upon the exercise of
an option granted under the 1997 Plan.

         The exercise price of the option shares under the 1997 Plan is
determined by the Stock Option and Compensation Committee; provided, however,
that the exercise price of any option granted shall not be less than eighty
percent (80%) of the Stock Value (as defined below) at the time of the issuance
of such options (the "Date of Grant"). The "Stock Value" at any time is equal to
the then current Fair Market Value (as defined below) of the Company's Ordinary
Shares. For purposes of the 1997 Plan, the "Fair Market Value" means, as of any
date, the last reported sale price, on such date, of the Ordinary Shares on such
principal securities exchange of the most recent prior date on which a sale of
the Ordinary Shares took place.

         The Stock Option and Compensation Committee determines the term of each
option granted under the 1997 Plan; provided, however, that the term of an
option shall not be for more than ten (10) years. Upon termination of
employment, all unvested options lapse. Pursuant to the 1997 Plan options shall
vest over a four-year period, provided that the Stock Option and Compensation
Committee may determine different vesting schedules. Some of the Options granted
are subject to a three-year vesting period, with one third of the options
vesting after each year.

         The options granted are subject to restrictions on transfer, sale, or
hypothecation. All options and Ordinary Shares issuable upon the exercise of
options granted to Israeli employees of the Company are held in trust for a
minimum of two years in accordance with Section 102 of the Israel Income Tax
Ordinance.

1998 NON-EMPLOYEE DIRECTOR SHARE OPTION PLAN

         In 1998 the Company adopted the 1998 Plan to provide for grants of
options to purchase Ordinary Shares to non-employee directors of the Company.
The 1998 Plan is administered by the Non-Employee Share Option Plan Committee.
An aggregate amount of not more than 250,000 Ordinary Shares is reserved for
grants under the 1998 Plan. The 1998 Plan will expire on December 8, 2008 (10
years after adoption), unless earlier terminated by the Board.

         Under the 1998 Plan, each non-employee director that served on the 1998
"Grant Date," as defined below, automatically received an option to purchase
10,000 Ordinary Shares on such Grant Date and will receive an option to purchase
an additional 10,000 Ordinary Shares on each subsequent Grant Date thereafter
provided that he or she is a non-employee director on the Grant Date and has
served as such for the entire period since the last Grant Date. The "Grant Date"
means, with respect to 1998, October 26, 1998, and with respect to each
subsequent year, August 1. Directors first elected or appointed after the 1998
Grant Date, will automatically receive on such director's first day as a
director an option to purchase up to 10,000 Ordinary Shares prorated based on
the number of full months of service


                                       48

<PAGE>


between the prior Grant Date and the next Grant Date. Each such non-employee
director would also automatically receive, as of each subsequent Grant Date, an
option to purchase 10,000 Ordinary Shares provided he or she is a non-employee
director on the Grant Date and has served for the entire period since the last
Grant Date.

         The exercise price of the option shares under the 1998 Plan is 100% of
the Fair Market Value (as defined below) of such Ordinary Shares at the time of
issuance of such options (the "Date of Grant"). The "Fair Market Value" means,
as of any date, the average closing bid and sale prices of the Ordinary Shares
for the date in question as furnished by the National Association of Securities
Dealers, Inc. through Nasdaq or any similar organization if Nasdaq is no longer
reporting such information, or such other market on which the Ordinary Shares
are then traded, or if not then traded, as determined in good faith (using
customary valuation methods) by resolution of the members of the Board of
Directors of the Company, based on the best information available to it. The
exercise price is required to be paid in cash.

         The term of each option granted under the 1998 Plan is ten (10) years
from the applicable Date of Grant. All options granted vest immediately after
issuance.

         The options granted would be subject to restrictions on transfer, sale
or hypothecation. All options and Ordinary Shares issuable upon the exercise of
options granted to the non-employee directors of the Company could be withheld
until the payment of taxes due with respect to the grant and exercise (if any)
of such options.

ITEM 13: INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

         Not applicable


                                       49

<PAGE>


                                     PART II

ITEM 14: DESCRIPTION OF SECURITIES TO BE REGISTERED

         Not applicable

                                    PART III

ITEM 15: DEFAULTS UPON SENIOR SECURITIES

         Not applicable

ITEM 16: CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED SECURITIES

         Not applicable

                                     PART IV

ITEM 17: FINANCIAL STATEMENTS

         Not applicable

ITEM 18: CONSOLIDATED FINANCIAL STATEMENTS

         The Consolidated Financial Statements and related notes thereto
included after the signature page hereto pursuant to Item 19: "Consolidated
Financial Statements and Exhibits" are incorporated herein by reference.


                                       50

<PAGE>


ITEM 19: CONSOLIDATED FINANCIAL STATEMENTS AND EXHIBITS

A.       INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

         The Consolidated Financial Statements and related notes thereto
included after the signature page hereto are incorporated herein by reference.

B.       EXHIBITS

<TABLE>
<CAPTION>

NUMBER     DESCRIPTION
<S>        <C>
    3.1    Memorandum of Association of the Registrant, in Hebrew with a translation to English1

    3.2    Amended Articles of Association of the Registrant 2

    3.3    Certificate of Name Change 3

    4.1    Specimen Certificate for Ordinary Shares 1

    4.2    Representative's Warrant Agreement dated October 12, 1995 1

    4.3    Form of Representative's Warrant Certificate  1

    4.4    Forms of Placement Agent's Warrant Agreement and Certificate 4

    4.5    Forms of Qualified Independent Underwriter's Warrant Agreement and Certificate  4

    4.6    Form of Warrant Agreement between the Registrant and Barak Zamir, Advocates

    10.1   1995 Stock Option / Stock Purchase Plan 1

    10.2   Amendment to the 1995 Stock Option / Stock Purchase Plan 4

    10.3   1997 Stock Option Plan 5

    10.4   1998 Non-Employee Director Share Option Plan 6

    10.5   Lease Agreement between the Registrant and Mr. Moshe Nur dated
           October 4, 1993, as amended on May 29, 1995, in Hebrew with a
           translation to English 1

    10.6   Lease Agreement for office space in Brussels, Belgium between Nivellease, S.A. and the Registrant
           dated November 25, 1996 4

    10.7   Lease Agreement for office space in Newton Centre, Massachusetts
           between WHTR Real Estate Limited Partnership and the Registrant dated
           July 10, 1998 4

    10.9   Distribution Agreement between Imaje S.A. and the Registrant dated June 26, 1995 1

    10.10  Settlement Agreements relating to Moshe Nur and his affiliated companies 4

    10.16  Bank Hapoalin revolving loan agreement 4, 7

</TABLE>


                                       51

<PAGE>


<TABLE>
    <S>    <C>
    10.17  Agreement between I.T.S. Machinery Development Ltd. and the Registrant dated February 10, 1997 4

    10.18  Form of confidentiality agreement 4

    10.19  Agreement dated September 13, 1998 between "Meital" Electronic Technology Ltd. and Markowitz Yaakov
           and the Registrant 4

    21     List of Subsidiaries of the Registrant

    23.1   Consent of Kost Forer & Gabbay (S-8)

    23.2   Consent of Kost Forer & Gabbay (F-3)

    23.3   Consent of Willy Knyrim (F-3)

    23.4   Consent of Willy Knyrim (S-8)

    27.1   Financial Data Schedule as of and for the year ended December 31, 1995 5

    27.2   Financial Data Schedule as of and for the year ended December 31, 1996 6

    27.3   Financial Data Schedule as of and for the year ended December 31, 1997 7

    27.4   Financial Data Schedule as of and for the year ended December 31, 1998 8

    27.5   Financial Data Schedule as of and for the year ended December 31, 1999

</TABLE>

----------
1/   Previously filed with the Company's Registration Statement (File No.
     33-93160) on Form F-1 and incorporated by reference herein.
2/   Previously filed with the Company's Form F-3 (File No. 333-92493) and
     incorporated by reference herein.
3/   Previously filed with the Company's Form 6-K dated January 7, 1998 and
     incorporated by reference herein
4/   Previously filed with the Company's Form F-1 (File No. 333-66103) and
     incorporated by reference herein.
5/   Previously filed with the Company's Form 20-F for the year ended December
     31, 1997 and incorporated by reference herein.
6/   Previously filed with the Company's Form 6-K dated November 13, 1998 and
     incorporated by reference herein.
7/   Filed in summary form. Original filed in paper format pursuant to Form SE.
8/   Previously filed with the Company's Form 20-F for the year ended December
     31, 1998 and incorporated by reference herein.


                                       52

<PAGE>

Financial Statement Schedules

Other than as set forth below, all schedules have been omitted as the required
information is either not applicable or presented in the financial statements or
notes thereto.


                                       53

<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this Amendment to its Annual Report to
be signed on its behalf by the undersigned, thereunto duly authorized.


                                  NUR MACROPRINTERS LTD.

                                  By: /s/ Erez Shachar
                                      -------------------------------------
                                      Erez Shachar
                                      President and Chief Executive Officer

Dated:  May 4, 2000


                                       54

<PAGE>

                        REPORT OF INDEPENDENT AUDITORS

                            TO THE SHAREHOLDERS OF

                     M.NUR MARKETING & COMMUNICATION GmbH


         We have audited the accompanying balance sheets of M.Nur Marketing &
Communication GmbH ("the Company") as of December 31, 1997 and 1998 and the
related statements of operations, changes in shareholders equity and cash
flows for each of the two years in the period ended December 31, 1998 and the
company's statement of operations changes in shareholders equity and cash
flows for the year ended December 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

         We conducted our audits in accordance with generally accepted
auditing standards in the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance as to whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by the Company's management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

         In our opinion, based on our audits, the financial statements
referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 1997 and 1998 and the related
results of their operations and cash flows for each of the two years in the
period ended December 31, 1998, and the Company's results of operations
and cash flows for the year ended December 31, 1996, in conformity with
generally accepted accounting principles in Germany. As applicable to the
Company's financial statements, generally accepted accounting principles in
the United States and in Germany are identical in all material aspects.

Kassel, Germany
April 21, 1999


                                       Yours truly,


         (Willy Knyrim Seal)


                                       WILLY KNYRIM
                              Certified Public Accountants (Germany)


<PAGE>

                             NUR MACROPRINTERS LTD.

                        CONSOLIDATED FINANCIAL STATEMENTS

                             AS OF DECEMBER 31, 1999

                                IN U. S. DOLLARS

<TABLE>
<CAPTION>
                                      INDEX

                                                           PAGE
                                                       --------------

<S>                                                   <C>
REPORT OF INDEPENDENT AUDITORS                              F-2

CONSOLIDATED BALANCE SHEETS                              F-3 - F-4

CONSOLIDATED STATEMENTS OF INCOME                           F-5

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY               F-6

CONSOLIDATED STATEMENTS OF CASH FLOWS                    F-7 - F-9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS              F-10 - F-38
</TABLE>




                             - - - - - - - - - - - -


<PAGE>


[LOGO]ERNST & YOUNG    |X|  KOST FORER & GABBAY        |X|  Phone: 972-3-6232525
                            2 Kremenetski St.               Fax:   972-3-5622555
                            Tel-Aviv 67899, Israel



                         REPORT OF INDEPENDENT AUDITORS

                             To the Shareholders of

                             NUR MACROPRINTERS LTD.

         We have audited the accompanying consolidated balance sheets of Nur
Macroprinters Ltd. ("the Company") and its subsidiaries as of December 31, 1998
and 1999 and the related consolidated statements of income, changes in
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the financial
statements of a subsidiary, which statements reflect total assets constituting
4.2% of total consolidated assets as of December 31, 1998, and total revenues
constituting 14% and 12% of the total consolidated revenues for the two years
ended December 31, 1997 and 1998, respectively. These statements were audited
by other auditors whose reports have been furnished to us, and our opinion,
insofar as it relates to data included for this subsidiary, is based solely on
the reports of the other auditors.

         We conducted our audits in accordance with generally accepted auditing
standards in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the reports of the other
auditors provide a reasonable basis for our opinion.

         In our opinion, based on our audits and the reports of the other
auditors, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company and its subsidiaries as of December 31, 1998 and 1999 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with generally
accepted accounting principles in the United States.

Tel-Aviv, Israel                                   KOST FORER & GABBAY
February 16, 2000                        A Member of Ernst & Young International


                                      F-2
<PAGE>


                                                          NUR MACROPRINTERS LTD.

CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                     DECEMBER 31,
                                                                         -------------------------------------
                                                                              1998                 1999
                                                                            -------               -------
                                                                              U.S. DOLLARS IN THOUSANDS
                                                                         -------------------------------------

      ASSETS
<S>                                                                          <C>                   <C>
CURRENT ASSETS:
  Cash and cash equivalents (Note 3)                                         2,327                 9,190
  Marketable securities                                                         63                    --
  Trade receivables (net of allowance for doubtful accounts: $ 644
   thousand and $ 1,290 thousand as of December 31, 1998 and 1999,
   respectively)                                                             9,091                11,647
  Other accounts receivable and prepaid expenses      (Note 4)               2,756                 3,673
  Inventories (Note 5)                                                       3,699                10,689
                                                                            ------                ------

TOTAL current assets                                                        17,936                35,199
-----
                                                                            ------                ------

LONG-TERM INVESTMENTS:
  Investments in affiliates (Note 6)                                            --                   623
  Restricted long-term bank deposit                                            337                   367
  Deferred income taxes                                                         --                   125
  Long-term prepaid expenses                                                    59                    --
  Severance pay fund                                                           369                   514
                                                                            ------                ------

TOTAL long-term investments                                                    765                 1,629
-----
                                                                            ------                ------

PROPERTY AND EQUIPMENT, NET (Note 7)                                         3,058                 2,723
                                                                            ------                ------

OTHER ASSETS, NET (Note 8)                                                     236                    97
                                                                            ------                ------

TOTAL assets                                                                21,995                39,648
-----                                                                       ======                ======
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


                                      F-3
<PAGE>


                                                          NUR MACROPRINTERS LTD.


CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                        DECEMBER 31,
                                                                            --------------------------------------
                                                                                  1998                 1999
                                                                                -------               -------

                                                                                  U.S. DOLLARS IN THOUSANDS
                                                                            --------------------------------------

      LIABILITIES AND SHAREHOLDERS' EQUITY
<S>                                                                              <C>                  <C>
CURRENT LIABILITIES:
  Short-term bank credit and loans (Note 10)                                     2,972                2,743
  Current maturities of long-term bank loans (Note 12)                             224                  832
  Trade payables                                                                 6,104                8,243
  Accrued expenses and other liabilities (Note 11)                               2,926                5,573
  Customer advances                                                                269                1,791
                                                                               -------              -------

TOTAL current liabilities                                                       12,495               19,182
-----
                                                                               -------              -------

LONG-TERM LIABILITIES:

  Long-term loans, net (Note 12)                                                   950                1,650
  Long-term liability (Note 13)                                                    587                  293
  Accrued severance pay                                                            464                  660
                                                                               -------              -------

TOTAL long-term liabilities                                                      2,001                2,603
-----
                                                                               -------              -------

MINORITY INTEREST                                                                   69                   --
                                                                               -------              -------

CONTINGENT LIABILITIES (NOTE 14)

SHAREHOLDERS' EQUITY:
  Share capital (Note 17):

    Ordinary shares of NIS 1 par value:

      Authorized: 20,000,000 shares as of December 31, 1998 and 1999;
Issued and outstanding:

      10,880,000 and 11,774,573 shares as of December 31, 1998 and
      1999, respectively                                                         2,729                2,940
  Additional paid-in capital                                                    14,376               17,702
  Accumulated comprehensive income (loss)                                          165                 (114)
  Accumulated deficit                                                           (9,840)              (2,665)
                                                                               -------              -------

TOTAL shareholders' equity                                                       7,430               17,863
-----
                                                                               -------              -------

TOTAL liabilities and shareholders' equity                                      21,995               39,648
-----                                                                          =======              =======
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                      F-4
<PAGE>


                                                          NUR MACROPRINTERS LTD.

CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                  YEAR ENDED DECEMBER 31,
                                                                 ----------------------------------------------------------
                                                                       1997                1998                 1999
                                                                     -------             -------               -------
                                                                                 U.S. DOLLARS IN THOUSANDS
                                                                                 EXCEPT PER SHARE AMOUNTS
                                                                 ----------------------------------------------------------
<S>                                                                    <C>                <C>                 <C>
Revenues (Note 19a-c):

  Sales of printers and related products                               18,874             31,905              58,259
  Sales of printed materials                                            3,085              4,540               2,460
                                                                      -------            -------             -------

                                                                       21,959             36,445              60,719
                                                                      -------            -------             -------
Cost of revenues:

  Cost of sales of printers and related products                        9,627             16,368              30,440
  Cost of sales of printed materials                                    1,684              2,579               1,344
                                                                      -------            -------             -------

                                                                       11,311             18,947              31,784
                                                                      -------            -------             -------

Gross profit                                                           10,648             17,498              28,935
                                                                      -------            -------             -------

Research and development expenses                                       1,726              5,027               5,530
Less - grants and royalty-bearing grants                                   43                818                 721
                                                                      -------            -------             -------

Research and development expenses, net                                  1,683              4,209               4,809
                                                                      -------            -------             -------

Selling and marketing expenses, net (Note 20a)                          4,620              6,111               9,485
General and administrative expenses                                     3,439              4,802               6,275
                                                                      -------            -------             -------

                                                                        8,059             10,913              15,760
                                                                      -------            -------             -------

Operating income                                                          906              2,376               8,366
Financial expenses, net (Note 20b)                                        320                501                 683
Gain (loss) on marketable securities                                       --                (91)                 67
Other income (expenses), net                                               (8)               (20)                176
                                                                      -------            -------             -------

                                                                          578              1,764               7,926
Taxes on income (Note 18d)                                                 67                264                 798
                                                                      -------            -------             -------

Income after taxes on income                                              511              1,500               7,128
Equity in earnings of affiliates, net                                      --                 --                  75
Minority interest in earnings of subsidiary                               (26)               (43)                (28)
                                                                      -------            -------             -------

Net income                                                                485              1,457               7,175
                                                                      =======            =======             =======

Basic earnings per share (Note 17b)                                      0.07               0.13                0.64
                                                                      =======            =======             =======

Diluted earnings per share (Note 17b)                                    0.07               0.13                0.56
                                                                      =======            =======             =======
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                      F-5
<PAGE>


                                                          NUR MACROPRINTERS LTD.

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                                ACCUMULATED
                                                    NUMBER OF                                      OTHER
                                                    ORDINARY                    ADDITIONAL     COMPREHENSIVE
                                                     SHARES         SHARE         PAID-IN          INCOME        ACCUMULATED
                                                   OUTSTANDING     CAPITAL        CAPITAL          (LOSS)          DEFICIT
                                                   -----------    ----------    ----------     -------------     -----------
                                                                                                 U.S. DOLLARS IN THOUSANDS
                                                                  ----------------------------------------------------------
<S>                                                <C>              <C>             <C>              <C>           <C>
Balance as of January 1, 1997                      6,880,000        1,593           11,916           109           (11,782)
Comprehensive income:
Net income                                                --           --               --            --               485
Other comprehensive loss:

Foreign currency translation adjustments                  --           --               --          (139)               --


Comprehensive income                                      --           --               --            --                --

Issuance of shares, net                            4,000,000        1,136            2,376            --                --
Amortization of deferred stock compensation               --           --               91            --                --
                                                  ----------   ----------        ----------    ----------        ----------

Balance as of December 31, 1997                   10,880,000        2,729           14,383           (30)          (11,297)
Comprehensive income:
Net income                                                --           --               --            --             1,457
Other comprehensive income:

Foreign currency translation adjustments                  --           --               --           195                --


Comprehensive income                                      --           --               --            --                --

Share capital issuance expenses                           --           --             (128)           --                --
Amortization of deferred stock compensation               --           --              121            --                --
                                                  ----------   ----------        ----------    ----------        ----------

Balance as of December 31, 1998                   10,880,000        2,729           14,376           165            (9,840)
Comprehensive income:
Net income                                                --           --               --            --             7,175
Other comprehensive loss:

Foreign currency translation adjustments                  --           --               --          (279)               --


Comprehensive income                                      --           --               --            --                --

Issuance of shares, net                              600,000          141            2,764            --                --
Exercise of options                                  294,573           70              395            --                --
Amortization of deferred stock compensation               --           --              167            --                --
                                                  ----------   ----------       ----------    ----------        ----------

Balance as of December 31, 1999                   11,774,573        2,940           17,702          (114)           (2,665)
                                                  ==========   ==========       ==========    ==========        ==========
</TABLE>


<TABLE>
<CAPTION>

                                                                           TOTAL
                                                      COMPREHENSIVE    SHAREHOLDERS'
                                                      INCOME (LOSS)        EQUITY
                                                      -------------    -------------

                                                      ------------------------------

<S>                                                    <C>                  <C>
Balance as of January 1, 1997                                               1,836
Comprehensive income:
Net income                                                      485           485
Other comprehensive loss:

Foreign currency translation adjustments                       (139)         (139)
                                                          ----------

Comprehensive income                                            346            --
                                                          ==========
Issuance of shares, net                                                     3,512
Amortization of deferred stock compensation                                    91
                                                                       ----------

Balance as of December 31, 1997                                             5,785
Comprehensive income:
Net income                                                    1,457         1,457
Other comprehensive income:

Foreign currency translation adjustments                        195           195
                                                          ----------

Comprehensive income                                          1,652            --
                                                          ==========
Share capital issuance expenses                                              (128)
Amortization of deferred stock compensation                                   121
                                                                       ----------

Balance as of December 31, 1998                                             7,430
Comprehensive income:
Net income                                                    7,175         7,175
Other comprehensive loss:

Foreign currency translation adjustments                       (279)         (279)
                                                                       ----------

Comprehensive income                                          6,896            --
                                                          ==========
Issuance of shares, net                                                     2,905
Exercise of options                                                           465
Amortization of deferred stock compensation                                   167
                                                                       ----------

Balance as of December 31, 1999                                            17,863
                                                                       ==========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                      F-6
<PAGE>


                                                          NUR MACROPRINTERS LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                  YEAR ENDED DECEMBER 31,
                                                                 ----------------------------------------------------------
                                                                       1997                1998                 1999
                                                                      ------              ------               ------
                                                                                 U.S. DOLLARS IN THOUSANDS
                                                                 ----------------------------------------------------------
<S>                                                                    <C>                <C>                   <C>
Cash flows from operating activities:

Net income                                                             485                1,457                 7,175
Adjustments to reconcile net income to net
  cash provided by (used in) operating activities:

  Minority interest in earnings of subsidiary                           26                   43                    28
  Depreciation and amortization                                        644                  792                   932
  Loss (gain) from sale of property and equipment                        8                   20                   (44)
  Gain from sale of a subsidiary                                        --                   --                  (132)
  Loss (gain) on marketable securities                                  --                   91                   (67)
  Deferred income taxes, net                                            27                  (34)                 (867)
  Amortization of deferred stock compensation                           91                  121                   167
  Accrued severance pay, net                                           (18)                  (1)                   51
  Equity in earnings of affiliates, net                                 --                   --                   (75)
  Write-off of technology assigned to research and

development                                                             --                1,950                    --
  Marketable securities, net                                            --                 (154)                  130
  Increase in trade receivables                                     (1,783)              (3,026)               (3,645)
  Decrease (increase) in other accounts receivable
    and prepaid expenses                                                41                 (953)                 (563)
  Decrease (increase) in inventories                                   317               (1,447)               (6,664)
  Decrease in long-term prepaid expenses                               231                   78                    59
  Increase (decrease) in trade payables                             (1,248)               2,933                 2,650
  Increase in accrued expenses and other    liabilities                502                  463                 3,093
  Increase (decrease) in customer advances                          (1,328)                  59                 1,522
  Increase in long term liability                                       --                  504                    --
                                                                    ------               ------                ------

Net cash provided by (used in) operating activities                 (2,005)               2,896                 3,750
                                                                    ------               ------                ------
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


                                      F-7
<PAGE>


                                                          NUR MACROPRINTERS LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                                  YEAR ENDED DECEMBER 31,
                                                                 --------------------------------------------------------
                                                                      1997                 1998                 1999
                                                                     ------               ------               ------
                                                                                 U.S. DOLLARS IN THOUSANDS
                                                                 --------------------------------------------------------
<S>                                                                    <C>                  <C>                   <C>
Cash flows from investing activities:

Restricted long term bank deposit
Purchase of property and equipment                                     (150)                (187)                 (30)
Proceeds from sale of property and equipment                         (1,479)              (2,541)              (1,498)
Purchase of other assets                                                 15                  191                  188
Investments in affiliates                                                --                   --                  (11)
Investment grants received                                               --                   --                 (548)
Acquisition of technology                                                --                  266                   --
Proceeds from sale of investment in a subsidiary net                     --               (1,307)                  --
  of cash in the subsidiary at the time it ceased being
  consolidated (a)
                                                                         --                   --                  702
                                                                     ------               ------               ------
Net cash used in investing activities
                                                                     (1,614)              (3,578)              (1,197)
                                                                     ------               ------               ------
Cash flows from financing activities:

Share capital issuance expenses
Proceeds from issuance of shares, net                                    --                 (128)                  --
Proceeds from exercise of options                                     3,512                   --                2,905
Short-term bank credit and loans, net                                    --                   --                  465
Proceeds from principal of long-term loans                             (810)               2,320                 (229)
Repayment of principal of long-term loans                             1,263                  106                2,000
                                                                       (886)                (535)                (692)
                                                                     ------               ------               ------
Net cash provided by financing activities
                                                                      3,079                1,763                4,449
                                                                     ------               ------               ------
Effect of exchange rate changes on cash
  and cash equivalents
                                                                         36                   12                 (139)
                                                                     ------               ------               ------
Increase (decrease) in cash and cash equivalents
                                                                       (504)               1,093                6,863
Cash and cash equivalents at the beginning of the year
                                                                      1,738                1,234                2,327
                                                                     ------               ------               ------
Cash and cash equivalents at the end of the year
                                                                      1,234                2,327                9,190
                                                                     ======               ======               ======
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                      F-8
<PAGE>


                                                          NUR MACROPRINTERS LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                                                                                   YEAR ENDED DECEMBER 31,
                                                                    -------------------------------------------------------
                                                                         1997                1998                1999
                                                                    ---------------     ---------------     ---------------
                                                                                  U.S. DOLLARS IN THOUSANDS
                                                                    -------------------------------------------------------

(a)    Proceeds from sale of investment in a subsidiary net of cash in the
       subsidiary at the time it ceased being consolidated:

<S>                                                                   <C>              <C>                <C>
      Working capital (excluding cash)                                      --                --                499
      Fixed assets, net                                                     --                --                168
      Minority interest                                                     --                --                (97)
      Gain from realization of a subsidiary                                 --                --                132
                                                                     ----------------  ----------------   ----------------

                                                                            --                --                702
                                                                     ================  ================   ================
      Supplemental disclosure of cash flows activities:

      Cash paid during the year for:

       Interest                                                              367               174              333
                                                                     ================  ================   ================

       Income taxes                                                           74               110              --
                                                                     ================  ================   ================

      Non-cash investing activities:

      Accrued expenses and other liabilities incurred

upon the acquisition of technology                                          --                 643              --
                                                                     ================  ================   ================

      Assignment from fixed assets to inventory                             --                --                666
                                                                     ================  ================   ================
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                      F-9
<PAGE>


                                                          NUR MACROPRINTERS LTD.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1:-      GENERAL

              a.     Organization:

                     1.     NUR Macroprinters Ltd. ("the Company") is an Israeli
                            Corporation. The Company develops, manufactures
                            sells and services digital printing systems for
                            on-demand, short-run, wide format and super wide
                            format printing as well as related consumable
                            products. The Company maintains wholly-owned
                            subsidiaries in Europe, United States and in Asia
                            for sales support and marketing. The Company's
                            products are sold by a network of dealers and
                            distributors. The principal markets of the Company
                            and its subsidiaries are located in Europe, America
                            and Asia.

                     2.     NUR Media Solutions S.A. ("Nur Media Solutions"):

                            In April 1998, the Company renamed its previously
                            wholly-owned subsidiary Nur International S.A. to
                            Nur Media Solutions S.A., which is engaged in
                            developing and marketing of consumables for the
                            Company's printers as well as for printers of other
                            manufacturers (see Note 16c).

                     3.     NUR America Inc. ("Nur America"):

                            In 1996, the Company established a wholly-owned
                            subsidiary in the United States - Nur America, which
                            is engaged in the marketing of the Company's
                            products and related consumable products in South
                            America and North America.

                     4.     NUR Europe S.A. ("Nur Europe"):

                            In 1996, the Company established a wholly-owned
                            subsidiary in Belgium - Nur Europe which is engaged
                            in the marketing of the Company's products and
                            related consumable products in Europe.

                     5.     M. NUR Marketing & Communication GmbH
                            ("Nur Germany"):

                            In December 1997, the Company purchased the shares
                            of Nur Germany, a 84% owned subsidiary, that were
                            held by Nur Media Solutions. Nur Germany is engaged
                            in selling and marketing of consumable printed
                            materials. During the third quarter of 1999 the
                            Company sold its shares in Nur Germany and recorded
                            $ 132 thousand as a capital gain.

                     6.     NUR Asia Pacific Ltd. ("Nur Asia Pacific"):

                            In January 1999, the Company established a
                            wholly-owned subsidiary in Hong-Kong, Nur Asia
                            Pacific, which is engaged in the marketing of the
                            Company's products and related consumable products
                            as well as support services for the Company's
                            products in Asia.


                                      F-10
<PAGE>


                                                          NUR MACROPRINTERS LTD.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                     7.     NUR Macroprinters (Shanghai) Co., Ltd.
                            ("Nur Shanghai"):

                            In May 1999, the Company established a wholly-owned
                            subsidiary in the People's Republic of China
                            ("China"), which is engaged in the marketing of the
                            Company's products and related consumable products
                            as well as support services for the Company's
                            products in China.

                     8.     Stillachem S.A. ("Stillachem"):

                            In December 1999, the Company established
                            Stillachem, a joint venture in which the Company
                            owns 50.1%. Stillachems is engaged in development
                            and manufacture of special inks for digital printing
                            systems.

                     9.     NUR Pro Engineering Ltd.

                            In October 1999, the Company established a 50% owned
                            affiliate, named Nur Pro Engineering, for the
                            assembly of the Company's printers.

              b. Acquisition of technology:

                     In December 1997, the Company signed an agreement with
                     Meital Electronic Technologies Ltd. ("Meital"), which is
                     engaged in research and development in fields related to
                     the Company's activity. In accordance with the agreement,
                     the Company provided loans to Meital in 1997 and 1998
                     totaling $ 50 thousand and $ 350 thousand, respectively.
                     During 1997 and 1998, the Company recorded a provision in
                     respect of the aforementioned amounts since Meital is in
                     the development stage, and there was an uncertainty
                     regarding its ability to repay the loans.

                     In September 1998, the Company acquired from Meital all
                     rights (including all related assets) to Meital's piezo DoD
                     inkjet technologies for application in wide format digital
                     printers for approximately $3.0 million, consisting of an
                     up-front payment of $750 thousand, the assumption of
                     certain liabilities including those that relate to the
                     legal dispute between Idanit Technologies Ltd. ("Idanit")
                     and Meital (see Note 13) and future royalties which are
                     based on sales. The Meital acquisition resulted in a
                     one-time charge to research and development in the amount
                     of $1.95 million. The Company has future contingent royalty
                     obligations, based on future sales until September 2001, of
                     Meital's technology-based printers, which will not exceed
                     $1.3 million. If certain minimum royalties are not paid,
                     Meital has the option to buy back the technology in the
                     amount of royalties paid by the Company.

              c. Concentration of risks that may have a significant impact on
                 the Company:

                     Suppliers:

                     The Company purchases all of the ink and ink-jets used in
                     its super wide format printers from one supplier. The
                     Company's customers rely on the ink to operate their
                     printers.


                                      F-11
<PAGE>


                                                          NUR MACROPRINTERS LTD.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                     Because the Company's business depends on the ink for sale
                     of its printers, a failure in supplying or a change in
                     credit-terms could have a severe adverse effect on the
                     Company's financial results.

                     Subcontractors:

                     The Company employs a limited number of unaffiliated
                     subcontractors to manufacture components for its printers.
                     The Company currently employs one 50% owned sub-contractor
                     to assemble its printers.

                     Because the Company relies on subcontractors, its business
                     could suffer if the Company fails to maintain its
                     relationships with its subcontractors or fails to develop
                     alternative sources for its printer components.

NOTE 2:-      SIGNIFICANT ACCOUNTING POLICIES

              The Company's consolidated financial statements have been prepared
              in accordance with generally accepted accounting principles in the
              United States.

              a.     Use of estimates:

                     The preparation of financial statements in conformity with
                     generally accepted accounting principles requires
                     management to make estimates and assumptions that affect
                     the amounts reported in the financial statements and
                     accompanying notes. Actual results could differ from those
                     estimates.

              b. Financial statements in U.S. dollars:

                     The accompanying consolidated financial statements have
                     been prepared in U.S. dollars. The U.S. dollar is the
                     currency of the primary economic environment in which the
                     operations of the Company, Nur America and affiliate are
                     conducted. The majority of sales is made in U.S. dollars
                     and the majority of purchases of materials and components
                     is invoiced and paid in U.S. dollars. In addition, a
                     substantial number of other expenses are incurred outside
                     Israel in U.S. dollars or paid in U.S. dollars or in New
                     Israeli Shekels ("NIS") linked to the exchange rate of the
                     U.S. dollar. Accordingly, the Company has determined the
                     U.S. dollar as the currency of its primary economic
                     environment and thus its functional and reporting currency.

                     The Company's transactions and balances denominated in U.S.
                     dollars are presented at their original amounts. Non-dollar
                     transactions and balances have been remeasured into U.S.
                     dollars in accordance with Statement 52 of the Financial
                     Accounting Standards Board ("FASB"). All transaction gains
                     and losses from remeasurement of monetary balance sheet
                     items denominated in non-dollar currencies are reflected in
                     the statement of operations as financial income or
                     expenses, as appropriate.


                                      F-12
<PAGE>


                                                          NUR MACROPRINTERS LTD.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                     The financial statements of certain subsidiaries and
                     affilates, whose functional currency is not the U.S.
                     dollar, have been translated into U.S. dollars, in
                     accordance with FASB Statement No. 52, "Foreign Currency
                     Translation". All balance sheet accounts have been
                     translated using the exchange rates in effect at the
                     balance sheet date. Statement of operations amounts have
                     been translated using the average exchange rate for the
                     year. The resulting aggregate translation adjustments are
                     reported as a component of accumulated other comprehensive
                     income (loss) in shareholders' equity.

              c. Principles of consolidation:

                     The consolidated financial statements include the accounts
                     of the Company and its subsidiaries listed below.
                     Intercompany transactions and balances, including profits
                     from intercompany sales not yet realized outside the group,
                     have been eliminated in consolidation.

                     Subsidiaries included in consolidation:

<TABLE>
<CAPTION>

                                                                DECEMBER 31, 1998 AND 1999
                                                         -------------------------------------------
                                                                     SHARES CONFERRING
                                                         -------------------------------------------
                                                                                      RIGHTS TO
                                                           VOTING RIGHTS               PROFITS
                                                         ------------------     --------------------
                                                                %                        %
                                                         ------------------     --------------------
<S>                                                             <C>                     <C>
                     NUR Media-Solutions                        100                     100

                     NUR Europe                                 100                     100

                     NUR America                                100                     100

                     NUR Asia Pacific                           100                     100

                     NUR Shanghai                               100                     100

                     NUR Germany *)                              84                      84
</TABLE>

                     *)     Due to the sale of the subsidiary, its statements of
                            income are consolidated for the period ending June
                            30, 1999.

              d.     Cash equivalents:

                     The Company considers all highly liquid investments
                     originally purchased with maturities of three months or
                     less to be cash equivalents.


                                      F-13
<PAGE>


                                                          NUR MACROPRINTERS LTD.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

              e.     Marketable securities:

                     The Company accounts for investments in debt and equity
                     securities (other than those accounted for under the equity
                     method of accounting) in accordance with FASB Statement No.
                     115, "Accounting for Certain Investments in Debt and Equity
                     Securities".

                     Management determines the appropriate classification of its
                     investments in debt and equity securities at the time of
                     purchase and reevaluates such determinations at each
                     balance sheet date.

                     Management has classified all of its marketable securities
                     as trading securities. These securities are carried at
                     their fair value based upon the quoted market price of
                     those investments. Net realized and unrealized gains and
                     losses on these securities are included in the statement of
                     income.

              f.     Inventories:

                     Inventories are stated at the lower of cost or market
                     value. Cost is determined as follows:

                     Raw materials - by the "first-in, first-out" method;
                     work-in-progress and finished products - on the basis of
                     computed manufacturing costs.

                     The Company annually reviews the inventory for
                     obsolescence, based on the sales activity of its products,
                     and provides a reserve where appropriate.

              g.     Investments in affiliates:

                     The investment in companies, partnerships and joint
                     ventures, over which the Company can exercise significant
                     influence (generally, entities in which the Company holds
                     20% to 50% of ownership or voting rights) are presented
                     using the equity method of accounting. The Company
                     generally discontinues applying the equity method when its
                     investment (including advances and loans) is reduced to
                     zero and it has not guaranteed obligations of the affiliate
                     or otherwise committed to provide further financial support
                     to the affiliate. Where the Company's share of an
                     affiliate's losses is greater than the investment in such
                     an affiliate and in which the Company has guaranteed
                     obligations of the affiliate, the excess amount is
                     presented as a liability.

                     Jointly controlled entities (generally entities in which
                     the Company holds 50% ownership or voting rights) are
                     accounted for using the equity method.

              h.     Restricted long term bank deposit:

                     Restricted long term bank deposit is maintained with banks
                     mainly to secure obligations of customers. The Company is
                     restricted from withdrawing any portion of the long term
                     bank deposit at any time, until the repayment of the
                     leasing obligation by the customer. The restricted long
                     term bank deposit will mature approximately in 2001, is
                     linked to the U.S. dollar and bears interest at a rate of
                     5%.


                                      F-14
<PAGE>


                                                          NUR MACROPRINTERS LTD.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

              i.     Property and equipment:

                     These assets are stated at cost, net of grant received and
                     accumulated depreciation.

                     Depreciation is calculated using the straight-line method
                     over the estimated useful lives of the assets.

                     The annual depreciation rates are as follows:
<TABLE>
<CAPTION>
                                                                                  %
                                                              ------------------------------------------
                     <S>                                          <C>
                     Machinery and equipment                                   10 - 33
                     Motor vehicles                                              15
                     Office furniture and equipment                            6 - 10
                     Building                                                     3
                     Leasehold improvements                       Over the term of the lease period
</TABLE>

              j.     Other assets:

                     Other assets are stated at amortized cost. Amortization is
                     calculated using the straight-line method over the
                     estimated useful lives, at the following annual rates:

<TABLE>
<CAPTION>
                                                                  %
                                                           ----------------
<S>                                                              <C>
                     Distribution rights                         20
                     Patent rights                               10
</TABLE>

              k.     Accrued severance pay, net:

                     The Company's liability for severance pay is calculated
                     pursuant to Israeli severance pay law based on the most
                     recent salary of the employees multiplied by the number of
                     years of employment as of the balance sheet date. The
                     Company records as expense the net increase in its funded
                     or unfunded severance liability. Employees are entitled to
                     one month salary for each year of employment, or a portion
                     thereof. The Company's liability is fully provided by
                     monthly deposits with severance pay funds, insurance
                     policies and by an accrual. Deposits with severance pay
                     funds and insurance policies are not under the control of
                     the Company. The value of these policies is recorded as an
                     asset in the Company's balance sheet. The deposited funds
                     include profits accumulated up to the balance sheet date.

                     The deposited funds may be withdrawn only upon the
                     fulfillment of the obligation pursuant to Israeli severance
                     pay law or labor agreements. The value of the deposited
                     funds are based on the cash surrendered value of these
                     policies, and include immaterial profits.

                     Severance expenses for the years ended December 31, 1997,
                     1998 and 1999 were $ 312 thousand $ 314 thousand and $ 440
                     thousand, respectively.


                                      F-15
<PAGE>


                                                          NUR MACROPRINTERS LTD.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

              l.     Income taxes:

                     The Company accounts for income taxes in accordance with
                     Statement of Financial Accounting Standards (SFAS) No. 109,
                     "Accounting for Income Taxes". This statement prescribes
                     the use of the liability method, whereby deferred tax asset
                     and liability account balances are determined based on
                     differences between financial reporting and tax bases of
                     assets and liabilities and are measured using the enacted
                     tax rates and laws that will be in effect when the
                     differences are expected to reverse. The Company provides a
                     valuation allowance, if necessary, to reduce deferred tax
                     assets to their estimated realizable value.

              m.     Basic and diluted earnings per share:

                     Basic earnings per share is computed based on the weighted
                     average number of Ordinary shares outstanding during each
                     year. Diluted earnings per share is computed based on the
                     weighted average number of Ordinary shares outstanding
                     during each year, plus dilutive potential ordinary shares
                     considered outstanding during the year, in accordance with
                     FASB Statement No. 128, "Earnings Per Share".

              n.     Accounting for stock-based compensation:

                     The Company has elected to account for stock-based
                     compensation in accordance with the provisions of
                     Accounting Principles Board Opinion No. 25 ("APB-25"),
                     "Accounting for Stock Issued to Employees". Under APB-25,
                     when the exercise price of the Company's share options
                     equals or is higher than the market price of the underlying
                     shares on the date of grant, no compensation expense is
                     recognized. The pro-forma information with respect to the
                     fair value of the options is provided in accordance with
                     the provisions of Statement No. 123 (see Note 17). In
                     accounting for options granted to other than employees, the
                     provisions of Statement of Financial Accounting Standard
                     Board No. 123 "Accounting for Stock-Based Compensation",
                     were applied. The fair value of these options was estimated
                     at the grant date using the Black-Scholes option pricing
                     model.

              o.     Revenue recognition

                     1.     Revenues from sales of products are recognized upon
                            shipment provided that no significant vendor
                            obligations remain and collection is deemed
                            probable.

                     2.     Revenues from services are recognized ratably over
                            the term of the agreements.

              p.     Warranty costs:

                     The Company provides a warranty for up to six months, at no
                     extra charge. A provision which to date has been
                     insignificant is recorded for probable costs, in connection
                     with warranties, based on the Company's experience (in
                     respect of most of these costs the Company has warranties
                     from its suppliers).


                                      F-16
<PAGE>


                                                          NUR MACROPRINTERS LTD.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

              q.     Research and development costs:

                     Research and development costs are charged to expense as
                     incurred.

                     Grants are netted from research and development costs on an
                     accrual basis as the related expenses are incurred.

              r.     Royalty-bearing grants:

                     Royalty-bearing grants from the Government of Israel for
                     funding of approved research projects and for funding
                     marketing activity are recognized at the time in which the
                     Company is entitled to such grants, on the basis of the
                     related costs incurred.

              s.     Advertising costs:

                     The Company expenses advertising costs as incurred.
                     Advertising expenses for the years ended December 31, 1997,
                     1998 and 1999 are $ 252 thousand, $ 492 thousand and $ 602
                     thousand, respectively.

              t.     Concentrations of credit risk:

                     SFAS No. 105, "Disclosure of Information About Financial
                     Instruments with Off-Balance-Sheet Risk and Financial
                     Instruments with Concentrations of Credit Risk", requires
                     disclosure of any significant off-balance-sheet and credit
                     risk concentrations. The Company has no significant
                     off-balance-sheet concentration of credit risk such as
                     foreign exchange contracts, option contracts or other
                     foreign hedging arrangements.

                     Financial instruments that potentially subject the Company
                     to concentrations of credit risk consist principally of
                     cash and cash equivalents, marketable securities, trade
                     receivables and restricted cash. Cash, cash equivalents and
                     restricted cash are deposited with major banks in Israel,
                     the United States, Asia and Belgium. Such deposits in the
                     United States may be in excess of insured limits and are
                     not insured in other jurisdictions. Management believes
                     that the financial institutions that hold the Company's
                     cash and cash equivalents and restricted cash are
                     financially sound, and, accordingly, minimal credit risk
                     exists with respect to these financial instruments. The
                     Company's trade receivables are mainly derived from sales
                     to customers in the United States, Asia and Europe. The
                     Company has adopted credit policies and standards intended
                     to accommodate industry growth and inherent risk.
                     Management believes that credit risks are moderated by the
                     diversity of its end customers and geographic sales areas.
                     The Company performs ongoing credit evaluations of its
                     customers' financial condition and requires collateral as
                     deemed necessary. The Company's marketable securities
                     include investment in U.S. company. Management believes
                     that this company is financially sound and accordingly
                     minimal credit risks exists with respect to these
                     marketable securities.


                                      F-17
<PAGE>


                                                          NUR MACROPRINTERS LTD.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

              u.     Fair value of financial instruments:

                     The estimated fair value of financial instruments has been
                     determined by the Company using available market
                     information and valuation methodologies. Considerable
                     judgment is required in estimating fair values.
                     Accordingly, the estimates may not be indicative of the
                     amounts the Company could realize in a current market
                     exchange. The carrying amounts of cash and cash
                     equivalents, restricted cash, trade receivables, short-term
                     bank credit and loans and marketable securities approximate
                     fair values, due to the short term maturities of these
                     instruments and the terms of the deposits.

                     The carrying amounts of the Company's long-term borrowing
                     arrangements approximate their fair value. The fair value
                     of the Company's long-term loan is estimated using
                     discounted cash flow analyses, based on the Company's
                     current increment borrowing rates for similar types of
                     borrowing arrangements.

              v.     Impact of recently issued accounting standards:

                     In June 1998, the Financial Accounting Standards Board
                     issued No. 133 ("SFAS 133"), "Accounting for Derivative
                     instruments and Hedging Activities" ("SFAS No. 133"). This
                     statement establishes accounting and reporting standards
                     requiring that every derivative instrument (including
                     certain derivative instruments embedded in other contracts)
                     be recorded in the balance sheet as either an asset or
                     liability measured at its fair value. The statement also
                     requires that changes in the derivative's fair value be
                     recognized currently in earnings unless specific hedge
                     accounting criteria are met. Special accounting for
                     qualifying hedges allows a derivative's gains and losses to
                     offset related results on the hedged item in the income
                     statement, and requires that a company must formally
                     document, designate, and assess the effectiveness of
                     transactions that receive hedge accounting. The FASB has
                     issued SFAS No. 137, "Accounting for Derivative Instruments
                     and Hedging Activities - Deferral of the Effective Date of
                     FASB Statement No. 133". The Statement defers for one year
                     the effective date of SFAS No. 133. The rule will apply to
                     all fiscal quarters of all fiscal years beginning after
                     June 15, 2000. The Company does not expect the impact of
                     this new statement on the Company's consolidated balance
                     sheets or results of operations to be material.

              w.     Reclassification:

                     Certain amounts from prior years have been reclassified to
                     conform with current period presentation.

NOTE 3:-      CASH AND CASH EQUIVALENTS

<TABLE>
<CAPTION>
                                                               INTEREST RATE                       DECEMBER 31,
                                                        ----------------------------    ------------------------------------
              LINKAGE TERMS                                1998            1999              1998            1999
              --------------------------------------       -----          -----              -----          -----
                                                                     %                       U.S. DOLLARS IN THOUSANDS
                                                        ----------------------------    ------------------------------------

<S>                                                         <C>            <C>               <C>            <C>
               U.S. dollars                                 5.1            1.75              1,297          6,995
               DM                                           3.3             --                 698            --
               Euro                                          --             --                 --             533
               Belgian Franks                                --            0.56                163            955
               Other                                         --            0.57                169            707
                                                                                             -----          -----
</TABLE>


                                      F-18
<PAGE>


                                                       NUR MACROPRINTERS LTD.

NOTES TO FINANCIAL STATEMENTS
-----------------------------------------------------------------------------

<TABLE>
<S>                                                    <C>            <C>
                                                       2,327          9,190
                                                       =====          =====
</TABLE>


                                      F-19
<PAGE>


                                                          NUR MACROPRINTERS LTD.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 4:-      OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES

<TABLE>
<CAPTION>

                                                                   DECEMBER 31,

                                                       --------------------------------------
                                                             1998                 1999
                                                       -----------------    -----------------
                                                             U.S. DOLLARS IN THOUSANDS

                                                       --------------------------------------
<S>                                                            <C>             <C>
               Government authorities                          665                --
               Participations and grants receivable            683             1,351
               Related parties (1)                              93                65
               Deferred income taxes (2)                        42               784
               Employees                                        95               291
               Advances to suppliers                           437               265
               Prepaid expenses                                561               628
               Other                                           180               289
                                                             -----             -----

                                                             2,756             3,673
                                                             =====             =====
</TABLE>

              (1)    Balances for two executives that are linked to the U.S.
                     dollar and bears annual interest at the rate of 2%.

              (2)    See Note 18.

NOTE 5:-      INVENTORIES

<TABLE>
<CAPTION>

                                                   DECEMBER 31,
                                       --------------------------------------
                                             1998                 1999
                                       -----------------    -----------------
                                             U.S. DOLLARS IN THOUSANDS
                                       --------------------------------------
<S>                                          <C>                 <C>
               Raw materials                 1,539               1,763
               Work-in-progress                226               2,158
               Finished products             1,934               6,768
                                            ------              ------

                                             3,699              10,689
                                            ======              ======
</TABLE>

NOTE 6:-      INVESTMENTS IN AFFILIATES

<TABLE>
<CAPTION>

                                                                       DECEMBER 31,
                                                                           1999
                                                                     ------------------
<S>                                                                            <C>
              Equity, net (a) (b)                                              339
              Long-term loans                                                  284
                                                                     ------------------

              Total investments in affiliates                                  623
                                                                     ==================

              (a) As follows:
                    Net equity as at purchase date:
                      Cost of additionally acquired shares                     264
                      Accumulated net earnings                                  75
                                                                     ------------------

                                                                               339
                                                                     ==================
</TABLE>


                                      F-20
<PAGE>


                                                          NUR MACROPRINTERS LTD.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                     (b)    (1)    In October 1999, the Company entered into
                                   a joint venture, with Nur Pro Engineering
                                   Ltd. for the assembly of the Company's
                                   printers.

                                   Under the establishment agreements, the
                                   Company has the option to purchase the other
                                   50% of Nur Pro Engineering or to sell its
                                   50%, if certain conditions as described in
                                   the agreements are met (including a Buy me,
                                   Buy you mechanism).

                                   The Company granted the following loans to
                                   Nur Pro Engineering:

                                   A loan is the amount of $ 175 thousand linked
                                   to the U.S. dollar and bearing annual
                                   interest at the rate of 3%. A maturity date
                                   has not been determined.

                                   A loan in the amount of $ 100 thousand linked
                                   to the NIS with no interest to be repaid
                                   after 20 years.

                            (2)    In December 1999, the Company established
                                   Stillachem , a joint venture in which the
                                   Company owns 50.1%. Stillachem is engaged in
                                   development and manufacture of special ink
                                   for digital printing systems.

NOTE 7:-      PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                             MACHINERY                          OFFICE       BUILDING AND
                                AND            MOTOR        FURNITURE AND     LEASEHOLD
                             EQUIPMENT       VEHICLES         EQUIPMENT      IMPROVEMENTS        GRANTS          TOTAL
                            -------------   ------------   --------------  -----------------   ------------   -------------
                                                              U.S. DOLLARS IN THOUSANDS
                            ----------------------------------------------------------------------------------------------
<S>                              <C>               <C>          <C>             <C>                <C>           <C>
Cost as of January 1,
1999                             1,319             345          1,664           1,209              (266)         4,271
   Additions                       801               2            625              70                 -          1,498
   Disposals                      (799)           (235)          (529)            (17)                -         (1,580)
                            -------------   ------------   --------------  -----------------   ------------   -------------
Balance as of
   December 31, 1999             1,321             112          1,760           1,262              (266)         4,189
                            -------------   ------------   --------------  -----------------   ------------   -------------

Accumulated
depreciation as of
   January 1, 1999                 133             105            793             232               (50)         1,213
   Additions                       248              46            408             136               (56)           782
   Disposals                      (119)            (88)          (319)             (3)                -           (529)
                            -------------   ------------   --------------  -----------------   ------------   -------------
Balance as of
   December 31, 1999               262              63            882             365              (106)         1,466
                            -------------   ------------   --------------  -----------------   ------------   -------------

Depreciated cost as of
   December 31, 1999             1,059              49            878             897              (160)         2,723
                            =============   ============   ==============  =================   ============   =============
Depreciated cost as of
   December 31, 1998             1,186             240            871             977              (216)         3,058
                            =============   ============   ==============  =================   ============   =============
</TABLE>

              Depreciation expense amounted to $ 496 thousand, $ 647 thousand
              and $ 782 thousand for the years ended December 31, 1997, 1998 and
              1999, respectively.

              As for charges, see Note 15.


                                      F-21
<PAGE>


                                                          NUR MACROPRINTERS LTD.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 8:-      OTHER ASSETS, NET

<TABLE>
<CAPTION>

                                                         DECEMBER 31,
                                             -----------------------------------
                                                   1998                 1999
                                             -----------------    --------------
                                                   U.S. DOLLARS IN THOUSANDS
                                             -----------------------------------
<S>                                                <C>                  <C>
              Cost:
                 Distribution rights               700                  700
                 Patent rights                      61                   72
                                             -----------------    --------------

                                                   761                  772
                                             -----------------    --------------
              Accumulated amortization:
                 Distribution rights               490                  630
                 Patent rights                      35                   45
                                             -----------------    --------------

                                                   525                  675
                                             -----------------    --------------

              Amortized cost                       236                   97
                                             =================    ==============
</TABLE>

              Amortization of distribution and patent rights were $ 148
              thousand, $ 145 thousand and $ 150 thousand for the years ended
              December 31, 1997, 1998 and 1999, respectively.

NOTE 9:-      LEASES

              a.     Nur America Inc. leases office space and demo-center
                     facility under a ten-year operating lease agreement ending
                     October 2008.

              b.     Nur Europe S.A. leases office space and warehouse
                     facilities under a 15 year capital lease agreement ending
                     in December 2011.

              c.     Nur Media Solutions lease office space under a lease
                     agreement expiring in December 2002.

              d.     Nur Shangai leases space for use as a warehouse as well as
                     a demo-center and offices in a separate location under
                     lease agreements expiring in 2000 and 2001, respectively.

              e.     Nur Asia pacific leases offices and warehouse space under a
                     one year agreement.

              f.     The Company entered into a lease agreement with a former
                     shareholder (Moshe Nur) according to which the Company
                     leases two adjacent buildings.

                     During 1996 and 1997, the Company paid $ 545 thousand in
                     respect of the construction of the building, on behalf of
                     Moshe Nur. In 1997, Moshe Nur experienced financial
                     difficulties, resulting in the filing of a petition for
                     bankruptcy. According to a settlement agreement signed in
                     September 1998 (see Note 14e), it was agreed that the
                     Company's payments are considered as a pre-payment of the
                     lease until July 2000.

                     The Company recorded $ 162 thousand and $ 120 thousand as
                     rent expenses, in connection with such prepaid expenses for
                     the years ended December 31, 1998 and 1999, respectively.


                                      F-22

<PAGE>


                                                          NUR MACROPRINTERS LTD.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

         g.       Future minimum lease payments as of December 31, 1999, under
                  the aforementioned non- cancelable leases, are as follows
                  (U.S. dollars in thousands):
<TABLE>

                 <S>                                   <C>
                     2000                                        77
                     2001                                        84
                     2002                                        89
                     2003                                        92
                     Thereafter                                 683
                                                         ----------------
                                                              1,025
                                                         ================
</TABLE>

         h.       Rental expenses were $ 350 thousand, $ 220 thousand and $ 297
                  thousand for the each of the years ended December 31, 1997,
                  1998 and 1999, respectively.

NOTE 10:-     SHORT-TERM BANK CREDIT AND LOANS

<TABLE>
<CAPTION>
                                                                    WEIGHTED
                                                                    AVERAGE
                                                                    INTEREST
                                              LINKAGE                 RATE                     DECEMBER 31.
                                                           --------------------------- -----------------------------
                                               TERMS          1998          1999           1998           1999
                                           --------------  ------------ -------------- -------------  --------------
                                                                       %                U.S. DOLLARS IN THOUSANDS
                                                           --------------------------- -----------------------------
<S>                                         <C>            <C>          <C>                <C>             <C>
               Revolving bank credit          Belgian
                                              Franks            5             -                173              -
               Revolving bank credit            NIS            17           16.5               112             18
               Short-term loans             U.S. dollar      7.2+1.5        9.23             1,214          1,480
               Short-term loans                 NIS           17.7            -                683              -
               Short-term loans               Belgian
                                              Franks        Libor+2.5        4.4               790          1,245
                                                                                       -------------- --------------
                                                                                             2,972          2,743
                                                                                       ============== ==============
</TABLE>

         The weighted average interest rate was 9% and 7% for the years ended
December 31, 1998 and 1999, respectively

         The unused line of credit, denominated in NIS, Belgian Franks and US
dollars, at December 31, 1999 is $ 3,405 thousand.

NOTE 11:-     ACCRUED EXPENSES AND OTHER LIABILITIES

<TABLE>
<CAPTION>
                                                                                                 DECEMBER 31,
                                                                                     --------------------------------------
                                                                                           1998                 1999
                                                                                     -----------------    -----------------
                                                                                           U.S. DOLLARS IN THOUSANDS
                                                                                     --------------------------------------
<S>                                                                               <C>                <C>
              Employees and payroll accruals                                                 670                1,567
              Government authorities                                                         301                  835
              Royalties payable                                                              664                  396
              Current maturities of long-term liabilities                                    293                  293
              Warranty and installation                                                       90                  462
              Accrued expenses                                                               908                2,020
                                                                                     -----------------    -----------------
                                                                                           2,926                5,573
                                                                                     =================    =================
</TABLE>




                                      F-24
<PAGE>

                                                          NUR MACROPRINTERS LTD.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 12:-     LONG-TERM LOANS

              a.     Composed as follows:
<TABLE>
<CAPTION>
                                                 LINKAGE              WEIGHTED AVERAGE
                                                  TERMS                INTEREST RATE                      DECEMBER 31,
                                               -------------     ---------------------------     -------------------------------
                                                                    1998            1999             1998             1999
                                                                 -----------     -----------     -------------    --------------
                                                                             %                     U.S. DOLLARS IN THOUSANDS
                                                                 ---------------------------     -------------------------------
<S>                                        <C>                  <C>             <C>                   <C>         <C>
                     From banks                    U.S.            Libor +
                                                  dollar            3.12            7.5                   20          1,611
                     From leasing                Belgian
                        companies                 Franks            6.6             6.6                1,154            871
                                                                                                 -------------    --------------
                                                                                                       1,174          2,482
                     Less - current
                     maturities                                                                          224            832
                                                                                                 -------------    --------------
                                                                                                         950          1,650
                                                                                                 =============    ==============
</TABLE>

              b. Aggregate maturities of long-term loans:
<TABLE>
<CAPTION>
                                                                                                 DECEMBER 31,
                                                                                     --------------------------------------
                                                                                           1998                 1999
                                                                                     -----------------    -----------------
                                                                                           U.S. DOLLARS IN THOUSANDS
                                                                                     --------------------------------------
<S>                                                                                     <C>                <C>
                     First year (current maturities)                                         224                832
                                                                                     -----------------    -----------------
                     Second year                                                             188                813
                     Third year                                                              170                408
                     Fourth year                                                             118                 46
                     Fifth year and thereafter                                               474                383
                                                                                     -----------------    -----------------
                                                                                             950              1,650
                                                                                     -----------------    -----------------
                                                                                           1,174              2,482
                                                                                     =================    =================
</TABLE>

NOTE 13:-     LONG-TERM LIABILITY

              In connection with various claims filed by Dochovna group (the
              developer of Outboard Printer and several companies he controls),
              Idanit and the Company, a settlement was reached in December 1998,
              according to which the Company will pay a total of $ 880 thousand
              during a three year period. The Company fully provided for the
              said amount in 1998. The Company paid Dochovna group total amount
              of $ 293 thousand for each of the years ended December 31, 1998
              and 1999. As of balance sheet date the total liability amounts to
              $ 586 thousand.


                                      F-24
<PAGE>

                                                          NUR MACROPRINTERS LTD.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

              Future payments shall bear annual interest of 6% unless the
Company pays the full amount by March 31, 2000.

               The parties to the settlements were Dochovna Idanit, Scitex
corporation Ltd. (which acquired Idanit), Meital and Jacob Markovits (Meital
CEO).

NOTE 14:-     CONTINGENT LIABILITIES

              a.     The Company entered into several project plans with the
                     Chief Scientist of the Government of Israel regarding the
                     development of the printers and the Mega Light, a
                     discontinued product. The Company has an obligation to pay
                     royalties at the rate of 2% - 3% of the sales derived from
                     the applicable products developed within the framework of
                     such research and development projects, up to an amount
                     equal to 100% - 150% of the grant received, in NIS linked
                     to the exchange rate of the U.S. dollar.

                     The Company has no obligation to repay this amount if sales
                     are not sufficient to satisfy the royalty obligations. As
                     of December 31, 1999, the Company has a contingent
                     obligation to pay royalties in the amount of $ 1,152
                     thousand.

              b.     The Company is required to pay royalties to the Fund for
                     the Encouragement of Marketing Activity at the rate of 3%
                     of the increases in export sales of products for which the
                     Company received participations for its marketing
                     activities, up to an amount equal to 100% of the grant
                     received. Royalties regarding grants received in 1999 bears
                     LIBOR interest.

                     The grant is repayable only in respect of sales of the
                     related products, as a percentage of the growth in export
                     sales.

                     If there is no increase in export sales, or if the Company
                     ceases producing the relevant products, the grant would not
                     be repaid. As of December 31, 1999, the Company has a
                     contingent obligation to pay royalties in the amount of $
                     597 thousand.

               c.    In May 1996, the Company signed an agreement as follows:

                     1.     Exercise the option to purchase all of Shamrock's
                            (former shareholder in Nur Media Solutions) shares
                            in Nur Media Solutions, for a consideration of one
                            dollar.

                     2.     Notwithstanding the above, for every year during
                            which Nur Media Solutions' net income (after taxes)
                            will exceed $ 1 million, the Company will pay
                            Shamrock a sum equal to 10% of Nur Media Solutions'
                            net income, up to a total of $ 0.5 million
                            (accumulating from the first payment). Nur Media
                            Solutions' net income shall be determined by its
                            annual audited financial statements. Shamrock's
                            right to payments under this section will expire
                            upon the earlier of the payment of the $ 0.5 million
                            thereunder, or at the end of the fiscal year 2002.
                            In 1997, 1998 and 1999, Nur Media Solutions' net
                            income (after taxes) was less than $ 1 million.

              d.     The Company has guaranteed capital lease payments in the
                     amount of $ 105 thousand for a printer that was leased by
                     a subsidiary.

              e.     During September 1998, the district court of Tel Aviv
                     approved several settlement agreements among the Company,
                     the special manager for Moshe Nur's assets in his



                                      F-25
<PAGE>

                                                          NUR MACROPRINTERS LTD.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                     bankruptcy proceedings, Moshe Nur and certain of his family
                     members, two Israeli banks, and the temporary receiver of
                     Nur Outdoor Advertising Ltd. (a company formerly affiliated
                     with Mr. Nur).

                     According to the settlement, all material claims against
                     the Company relating to the lease of its offices (including
                     confirmation of the Company's pre-payment of lease fees
                     until July 2000), alleged breach of contracts and debts
                     allegedly owed to any of the abovementioned parties were
                     dismissed. The Company agreed not to file any claim against
                     the abovementioned settling parties, provided that no
                     claims will be filed against the Company in connection with
                     the bankruptcy proceedings.

                     As part of the various settlement agreements, the Company
                     paid in 1998 an aggregate of $100 thousand. However, in the
                     course of the bankruptcy proceedings of Moshe Nur and the
                     companies controlled by him, the Company may, in the
                     future, be exposed to claims arising from the actions of
                     Moshe Nur, the liability of whom could be material.

              f.     In 1997, claims and threats of claims were brought against
                     the Company in respect of various matters. The Company made
                     a provision in the amount of $ 25 thousand in respect of
                     these claims and threats of claims based on the opinion of
                     the Company's Israeli legal advisors. The Company's
                     management believes that these provisions are adequate.

              g.     In December 1999, a claim was filed against the Company in
                     the amount of $ 330 thousand regarding a breach of an
                     agreement to pay finders fee in connection with a private
                     placement in 1999 (See Note 17).

                     According to the Company's management and its legal
                     advisors, the Company will not be obliged to pay any amount
                     regarding this claim.

              h.     In October 1999, the Company signed an agreement with a
                     consultant according to which the consultant will render
                     services in connection with the manufacture of the
                     Company's new printers. Under this agreement, the Company
                     is obligated to pay $ 2 thousand for each new printer. The
                     Company has the option to end this agreement after the
                     manufacturing of 112 printers.

                     As of December 31, 1999, the Company has a contingent
                     obligation to pay service fees in the amount of $ 224
                     thousand.

              i.     As for contingent liability regarding acquisition of
                     technology, see Note 1b.

NOTE 15:-     CHARGES, GUARANTEES AND RESTRICTED CASH

              a.     As collateral for its liabilities to the banks, the Company
                     granted an unlimited senior in priority lien on its
                     machinery and equipment, motor vehicles, as well as a
                     floating lien (a lien on the assets of the Company as they
                     exist from time to time) on all of its assets.


                                      F-26
<PAGE>

                                                          NUR MACROPRINTERS LTD.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

              b. The collateralized liabilities are as follows:

<TABLE>
<CAPTION>
                                                                                                 DECEMBER 31,
                                                                                     --------------------------------------
                                                                                           1998                 1999
                                                                                     -----------------    -----------------
                                                                                           U.S. DOLLARS IN THOUSANDS
                                                                                     --------------------------------------
<S>                                                                                   <C>                  <C>
                     Short-term bank credit                                                 2,972                2,743
                     Long-term liabilities, including current maturities                    1,174                2,482
                                                                                      ----------------     ----------------
                                                                                            4,146                5,225
                                                                                      ================     ================
</TABLE>

NOTE 16:-     TRANSACTIONS AND BALANCES WITH RELATED PARTIES

              a.     For a lease agreement with a former shareholder, see Note
                     9c.

              b.     Between September and December 1997, the Company effected a
                     private offering of its Ordinary Shares in the United
                     States (see also Note 17a), for which the investment
                     banking firm of Josephthal and Co. Inc. ("Josephthal")
                     acted as an exclusive placement agent. The chairman of
                     Josephthal beneficially owns approximately 35.8% of the
                     Company's Ordinary Shares. The chairman of Josephthal is
                     the Company's chairman. As compensation for his services as
                     the Company's exclusive placement agent, Josephthal
                     received fees of $ 439 thousand and warrants to purchase
                     400,000 Ordinary Shares at an exercise price of $ 1.00 per
                     share or less than 400,000 Ordinary Shares of the Company
                     if the cashless alternative pursuant to the agreement has
                     been elected. Finally, an individual employed by Josephthal
                     was the Company's acting Chief Financial Officer from April
                     through October 1997 received compensation of approximately
                     $ 45 thousand.

              c.     Transactions with related parties:
<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31,
                                                                 ----------------------------------------------------------
                                                                      1997                 1998                 1999
                                                                 ----------------     ----------------     ----------------
                                                                                 U.S. DOLLARS IN THOUSANDS
                                                                 ----------------------------------------------------------
<S>                                                               <C>                 <C>                 <C>
                        Sales:
                         Nur Outdoor                                    159                    -                    -
                         Nur Focus                                       31                    -                    -
                                                                 ----------------    -----------------    -----------------
                                                                        190                    -                    -
                                                                 ================    =================    =================
                        Cost of sales:
                         Paid to:
                           Nur Outdoor                                   99                    -                    -
                           Nur Focus                                     18                    -                    -
                                                                 ----------------    -----------------    -----------------
                                                                        117                    -                    -
                                                                 ================    =================    =================
                        Selling expenses:
                         Nur Focus                                        -                    -                    -
                                                                 ================    =================    =================
</TABLE>

              d. Loans to related parties, see Note 6b and 4.



                                      F-27
<PAGE>

                                                          NUR MACROPRINTERS LTD.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



NOTE 17:-     SHARE CAPITAL

              a.     Between September and December 1997, the Company effected a
                     private offering of its securities in the United States. In
                     the private offering, the Company issued 4,000,000 Ordinary
                     shares of NIS 1 par value each in consideration of $ 1 per
                     Ordinary share.

                     Following the initial public offering of the Company's
                     shares in October 1995, the Company issued 155,000 warrants
                     to Josephthal. These warrants are exercisable no later than
                     October 2000 into 155,000 Ordinary shares of the Company at
                     an exercise price of $ 7.20 per share, or less than 155,000
                     Ordinary shares of the Company if the cashless alternative
                     pursuant to the agreement has been elected.

                     As part of the private offering, the Company issued
                     warrants to the placement agent, Josephthal, expiring in
                     September 2002 to purchase 400,000 Ordinary shares of the
                     Company at an exercise price of $ 1.00 per share or less
                     than 400,000 Ordinary shares of the Company if the cashless
                     alternative pursuant to the agreement has been elected.

                     In September 1999, the Company effected a private offering
                     of its securities. In the private offering, the Company
                     issued 600,000 Ordinary shares of NIS 1 par value each in
                     consideration of $ 5.5 per Ordinary share.

                     In addition, the Company issued warrants expiring in four
                     years to purchase 150,000 Ordinary shares of the Company at
                     an exercise price of $ 8 per share. If certain conditions
                     exist, the Company may induce the exercise of these
                     warrants.

              b. Earnings per share:

                     The following table sets forth the computation of
                     historical basic and diluted earnings per share:

<TABLE>
<CAPTION>
                                                                                        YEAR ENDED DECEMBER 31,
                                                                            ------------------------------------------------
                                                                                1997            1998              1999
                                                                            -------------    ------------     --------------
                                                                                       U.S. DOLLARS IN THOUSANDS
                                                                            ------------------------------------------------
<S>                                                                        <C>             <C>               <C>
              Numerator:
                 Net income as reported                                             485             1,457             7,175
                                                                             ============    ==============    =============
                 Numerator for basic earnings per share - income
              available to ordinary shareholders                                    485             1,457             7,175
                                                                             ============    ==============    =============
                 Numerator for diluted earnings per share -
              income available to ordinary shareholders                             485             1,457             7,175
                                                                             ============    ==============    =============
              Denominator:
              Weighted average Ordinary shares
                 outstanding                                                  7,293,640        10,880,000        11,181,137
                                                                             ------------    --------------    -------------
              Denominator:
                 Denominator for basic earnings per share
                   -weighted - average shares                                 7,293,640        10,880,000        11,181,137
                                                                             ------------    --------------    -------------
                 Effect of dilutive securities Employee stock
                   options                                                         72,527         571,389         1,541,463
                                                                             ------------    --------------    -------------
                 Denominator for diluted earnings per
                   share-adjusted weighted-average shares                     7,366,167        11,451,389        12,722,600
                                                                             ============    ==============    =============
</TABLE>

                                      F-28
<PAGE>

                                                          NUR MACROPRINTERS LTD.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



              c.     Stock Option Plan:

                     In October 1995, the Company's Board of Directors adopted a
                     Flexible Stock Incentive Plan (the "Stock Incentive Plan").
                     The Stock Incentive Plan provides for grants of stock
                     options to the Company's employees and outside consultants.
                     An aggregate amount of not more than 500,000 stock options
                     are available for grant under the Stock Incentive Plan. Of
                     such amount, (i) not more than 414,768 options are
                     available for grant as stock options on the basis of future
                     services ("Service Options"), (ii) not more than 18,232
                     options may be granted as stock options on the basis of
                     performance ("Performance Options" - as of December 31,
                     1999 there are no outstanding performance options) and
                     (iii) not more than 67,000 options may be granted as stock
                     options to consultants on the basis of service or
                     performance in respect of the public offering ("Consultant
                     Options").

                     The service options usually vest over a four-years period
                     with an exercise price of not less than 80% of the fair
                     market value of the Ordinary shares at the date of grant
                     (as defined in the stock incentive plan).

                     Consultant options usually vest immediately based on past
                     serviced rendered as the board determines. The options
                     expires usually after ten years from the date of grant.

                     In October 1997, the Company adopted an additional stock
                     option plan. According to that option plan, 1,200,000
                     options will be granted to Company's employees, directors
                     and consultants. In October 1998 and August 1999, the
                     Company's shareholders approved the increase in the number
                     of options available for grant by 500,000, and 500,000
                     options, respectively.

                     The options usually vest over a three-years period with an
                     exercise price of not less than 80% of the fair market
                     value of the common stock at the date of grant (as defined
                     in the stock option plan). Each option usually expire after
                     ten years from the date of grant.

                                      F-29
<PAGE>

                                                          NUR MACROPRINTERS LTD.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                     In December 1998, the Company's shareholders approved the
                     directors share option plan ("1998 plan") according to
                     which 250,000 options are available for grant with an
                     exercise price of the average of the closing bid and sale
                     price at the issuance date. Each option is vested
                     immediately and will expire after 10 years. During 1999,
                     the Company granted 58,333 options to directors (including
                     the Chairman of the Board of Directors). The balance of the
                     options at December 31, 1999 is as follows:
<TABLE>
<CAPTION>

                                                                                           OPTIONS OUTSTANDING
                                                                              ----------------------------------------------
                                                                                                                WEIGHTED
                                                               AVAILABLE         NUMBER         EXERCISE         AVERAGE
                                                               FOR GRANT       OF OPTIONS         PRICE         EXERCISE
                                                                                                                  PRICE
                                                             --------------   --------------  --------------  --------------
                                                                                                U.S. DOLLARS IN THOUSANDS
                                                                                              ------------------------------
<S>                                                           <C>              <C>           <C>            <C>
                     Balance as of January 1, 1997               380,229          119,771       0.3-1.75          1.34
                         Additional stock options plan         1,200,000                -           -               -
                         Options granted (25 employees
                          and a vendor)                         (325,600)         325,600       0.3-1.75          1.33
                         Options granted (2 employees and
                          3 directors)                          (825,000)         825,000          1-3            1.46
                                                             --------------   --------------  --------------  --------------

                     Balance as of December 31, 1997             429,629        1,270,371         0.3-3            1.3
                         Additional stock options plan           750,000                -           -               -
                         Options granted (46 employees,

                          4 directors and 1 consultant)         (655,000)         655,000         1 - 3             2
                         Options forfeited                       150,332         (150,332)       1.4 - 2           1.4
                                                             --------------   --------------  --------------  --------------

                     Balance as of December 31, 1998             674,961        1,775,039        0.3 - 3          1.62
                         Additional stock options plan           500,000                -           -               -
                         Options granted  (93 employees,

                          4 directors and 1 consultant          (693,933)         693,933      5.5 - 7.88         5.12
                         Options exercised                             -         (294,573)          -             1.57
                                                             --------------   --------------  --------------  --------------

                     Balance as of December 31, 1999             481,028        2,174,399      0.3 - 7.88         1.98
                                                             ==============   ==============  ==============  ==============
</TABLE>

                     The number of options exercisable as of December 31, 1997,
                     1998 and 1999 was 849,921, 1,308,622 and 1,209,967,
                     respectively.

                     The weighted average exercise price of options exercisable
                     as of December 31, 1997, 1998 and 1999 is $ 1.3, $ 1.28 and
                     $ 1.65, respectively.


                                      F-30
<PAGE>

                                                          NUR MACROPRINTERS LTD.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



                    The options outstanding as of December 31, 1999 have been
                    separated into ranges of exercise price, as follows:
<TABLE>
<CAPTION>
                                                                                                                    WEIGHTED
                                                 OPTIONS           WEIGHTED                         OPTIONS         AVERAGE
                                               OUTSTANDING          AVERAGE        WEIGHTED       EXERCISABLE       EXERCISE
                                                  AS OF            REMAINING        AVERAGE          AS OF           PRICE
                                               DECEMBER 31,       CONTRACTUAL      EXERCISE      DECEMBER 31,      OF OPTIONS
                      EXERCISE PRICE               1999              LIFE            PRICE           1999         EXERCISABLE
                      --------------        -----------------  ---------------- -------------- ---------------- ---------------
                <S>                        <C>                  <C>             <C>             <C>               <C>
                      $ 1.25 - 1.75                  275,466           2             1.46           207,468           1.43
                      $ 1 - 1.5                      741,500           4             1.22           710,500           1.22
                      $ 2 - 3                        460,000           7             2.34           223,666           2.13
                      $ 2.75                          30,000           9             2.75           30,000            2.75
                      $ 2.875 - 4.6                  115,000          10             3.45              -               -
                      $ 5.5 - 7.875                  552,433          10             5.71           38,333            7.19
                                             -----------------                   -------------- ---------------- ---------------
                                                   2,174,399                         1.98          1,209,967          1.65
                                             =================                   ============== ================ ===============
</TABLE>

              d.     In January 1997, the Company granted to an Israeli vendor
                     an option to purchase 30,000 shares at an exercise price of
                     $ 1.75 per share. In September 1998, the Company granted to
                     its counsel an option to purchase 15,000 shares at an
                     exercise price of $ 2.25 per share with an immediate
                     vesting.

                     The fair market value of the options was estimated
                     according to FASB-123 at the grant date using Black-Scholes
                     option valuation pricing model. The aggregate amount of
                     compensation related to the above options was $ 12 thousand
                     and $ 11 thousand, and was accounted for as compensation
                     expense in the years ended December 31, 1997 and 1998,
                     respectively.

                     In February 1999, following a registration statement of
                     Form F-1, the Company issued to its qualified independent
                     underwriter options to purchase 25,000 Ordinary shares of
                     the Company at an exercise price of $ 4.5 per share. These
                     warrants are exercisable for a period of four years
                     commencing February 24, 2000, and are not to be sold,
                     transferred, assigned or hypothecated until February 2000,
                     (except for permitted transferees).

              e.     Pro-forma information regarding net income and earnings per
                     share is required by FASB 123, and has been determined as
                     if the Company has accounted for its employee stock options
                     under the fair value method of that Statement. The fair
                     value for these options was estimated at the grant date
                     using the Black-Scholes option valuation pricing model with
                     the following weighted-average assumptions for 1997, 1998
                     and 1999: risk-free interest rates of 6.3%, 5% and 7%,
                     respectively, dividend yields of 0% for each year,
                     volatility factors of the expected market price of the
                     Company's Ordinary shares of 1.25, 0.46 and 0.59,
                     respectively, and a weighted average expected life of the
                     option of 10 years for each year.


                                      F-31
<PAGE>

                                                          NUR MACROPRINTERS LTD.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



                     The Black-Scholes model was developed for use in estimating
                     the fair value of traded options which have no vesting
                     restrictions and are fully transferable. In addition,
                     option valuation models require the input of highly
                     subjective assumptions including the expected share price
                     volatility. Because the Company's employee stock options
                     have characteristics significantly different from those of
                     traded options, and because changes in the subjective input
                     assumptions can materially affect the fair value estimate,
                     in management's opinion, the existing models do not
                     necessarily provide a reliable single measure of the value
                     of its employee stock options.

                     For purposes of pro forma disclosure, the estimated fair
                     value of the options is amortized to expense over the
                     options vesting period. The Company's Pro-forma information
                     is as follows:
<TABLE>
<CAPTION>
                                                                                   YEAR ENDED DECEMBER 31,
                                                                    ------------------------------------------------------
                                                                         1997               1998                1999
                                                                    ---------------    ----------------    ---------------
                                                                                 U.S. DOLLARS IN THOUSANDS,
                                                                                   EXCEPT PER SHARE AMOUNT
                                                                    ------------------------------------------------------
               <S>                                                    <C>               <C>                <C>
                     Net income, as reported                                 485               1,457              7,175
                                                                    ===============     ===============    ================
                     Pro forma net income                                    129               1,251              6,443
                                                                    ===============     ===============    ================
                     Pro forma basic earnings per share                     0.02               0.11               0.55
                                                                    ===============     ===============    ================
                     Pro forma diluted earnings per share                   0.02               0.11               0.51
                                                                    ===============     ===============    ================
</TABLE>

                     The total compensation expense included in the statements
                     of income for 1997, 1998 and 1999 is $ 91 thousand, $ 121
                     thousand and $ 167 thousand, respectively.

                     Weighted average exercise price and weighted average fair
                     value of options granted during the year was as follows:

                     -   $ 5.52 and $ 4.1, respectively, for options granted at
                         an exercise price equal to the market price of the
                         stock on the grant date.

                     -   $ 4.09 and $ 2.9, respectively, for options granted at
                         an exercise price that exceeds the market price of the
                         stock on the grant date.

                     -   $ 5.3 and $ 4.15, respectively, for options granted at
                         an exercise price that is less than the market price of
                         the stock on the grant date.

              f.     Dividends:

                     Dividends if any, will be paid in NIS. Dividends paid to
                     shareholders outside Israel will be converted into U.S.
                     dollars on the basis of the exchange rate prevailing at the
                     date of payment.


                                      F-32
<PAGE>

                                                          NUR MACROPRINTERS LTD.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



NOTE 18:-     TAXES ON INCOME

                     a. Tax benefits under the Law for the Encouragement of
                     Capital Investments, 1959 (the "law"):

                     Certain of the Company's production facilities have been
                     granted the status of "approved enterprise" under the law,
                     under two separate investment plans.

                     The implementation of the investments under the first and
                     second plan was finalized in 1993 and 1998, respectively.

                     According to the provisions of this law, the Company
                     elected to enjoy "alternative benefits" which provide tax
                     exemption in exchange for waiver of grants. Accordingly,
                     the Company's income from the approved enterprise will be
                     tax-exempt for a period of two and four years for the first
                     and second plan, respectively, commencing with the year it
                     first earns taxable income. Based on the percentage of
                     foreign ownership of the Company, income derived during the
                     remaining periods of five and three years of benefits in
                     taxable at the rate of 15% or 20%, for the first and second
                     plan, respectively.

                     The period of tax benefits detailed above is subject to
                     limits of 12 years from the commencement of production, or
                     14 years from receiving the approval, whichever is earlier.
                     Given the abovementioned conditions, the period of benefits
                     for the first and second plan commenced in 1994 and 1999
                     and will terminate in 2000 and 2005, respectively.

                     The tax-exempt profits earned by the Company's "approved
                     enterprise" can be distributed to shareholders without
                     subjecting the Company to taxes only upon the complete
                     liquidation of the Company. The retained tax-exempt profits
                     as of December 31, 1999 are $ 5,802 thousand. If these
                     retained tax-exempt profits are distributed in a manner
                     other than upon the complete liquidation of the Company,
                     they would be taxed at the corporate tax rate applicable to
                     such profits as if the Company had not elected the
                     alternative tax benefits (currently - 15% or 20% for an
                     "approved enterprise" based on the percentage of foreign
                     ownership of the company) and an income tax liability of
                     approximately $ 1,160 thousand would be incurred.

                     The Company has decided to permanently invest the tax
                     exempt income resulting from the "approved enterprise"
                     status and not to distribute such income as dividends.
                     Accordingly, no deferred income taxes have been provided in
                     respect of said tax exempt income.

                     Income from sources other than the "approved enterprise"
                     during the periods of benefits, will be taxable at regular
                     tax rate of 36%.

                     The law also entitles the Company to claim accelerated
                     rates of depreciation on equipment used by the "approved
                     enterprise" during five tax years.

                     The Company applied for a third plan under "approved
                     enterprise" status, and is a now negotiating with the
                     Investment Center.


                                      F-33
<PAGE>

                                                          NUR MACROPRINTERS LTD.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



              b.     Measurement of results for tax purposes:

                     Results for tax purposes are measured in terms of earnings
                     in NIS after certain adjustments for increases in the
                     Israeli Consumer Price Index ("CPI"). As explained in Note
                     2b., the financial statements are measured in U.S. dollars.
                     The difference between the annual change in the Israeli CPI
                     and in the NIS/dollar exchange rate causes a difference
                     between taxable income and the income before taxes shown in
                     the financial statements. In accordance with paragraph g(f)
                     of SFAS No. 109, the Company has not provided deferred
                     income taxes on the difference between the reporting
                     currency and the tax bases of assets and liabilities.

              c.     Tax benefits under the Law for the Encouragement of
                     Industry (Taxation), 1969:

                     The Company is an "industrial company" under the above law
                     and as such is entitled to claim accelerated rates of
                     depreciation, in accordance with regulations published
                     under the inflationary adjustments law.

                     The Company is also entitled to deduct the offering
                     expenses and patent amortization from its taxable income in
                     three and eight equal annual installments, respectively.

              d.     A reconciliation of the theoretical tax expense, assuming
                     all income is taxed at the regular statutory rate applied
                     to corporations in Israel up to December 31, 1999, and the
                     actual tax expense, is as follows:
<TABLE>
<CAPTION>
                                                                                           YEAR ENDED DECEMBER 31,
                                                                                  ------------------------------------------
                                                                                      1997            1998           1999
                                                                                  --------------    ----------    -----------
                                                                                          U.S. DOLLARS IN THOUSANDS
                                                                                  ------------------------------------------

<S>                                                                                <C>             <C>         <C>
                    Theoretical tax expense computed at the rate of 36%                  208             635         2,853
                    Increase (decrease) in taxes:
                    Approved enterprise (1)                                                 -               -        (1,274)
                    Effect of certain adjustments on the results for tax

                    purposes and the Israeli CPI                                           61              91           118
                    Carryforward loss, generated during the year for which
                       a valuation allowance was provided                                   -               -           522
                    Utilization of operating carryforward tax losses
                       from prior years                                                  (202)           (462)       (1,421)
                                                                                  --------------    ----------    -----------
                    Actual tax expense                                                     67             264           798
                                                                                  ==============    ==========    ===========
                      (1) Basic earnings per share amounts of the tax
                            benefits resulting from the exemption                           -               -          0.11
                                                                                  ==============    ==========   ============
                      (1) Diluted earnings per share amounts of the tax
                            benefits resulting from the exemption                           -               -          0.1
                                                                                  ==============    ==========   ============
</TABLE>



                                      F-34
<PAGE>

                                                          NUR MACROPRINTERS LTD.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                           YEAR ENDED DECEMBER 31,
                                                                                  ------------------------------------------
                                                                                      1997            1998           1999
                                                                                  --------------    ----------    -----------
                                                                                          U.S. DOLLARS IN THOUSANDS
                                                                                  ------------------------------------------
       <S>                                                                          <C>            <C>        <C>
             e.       Taxes on income (benefit) included in the statements of
                      income:

                          Current:
                            Domestic                                                        -               -        1,132
                            Foreign                                                        94             298          533
                                                                                  --------------    ----------   ------------
                                                                                           94             298        1,665
                                                                                  ==============    ==========   ============
                          Deferred:
                            Domestic                                                        -               -         (531)
                            Foreign                                                       (27)            (34)        (336)
                                                                                  --------------    ----------   ------------
                                                                                          (27)            (34)        (867)
                                                                                  ==============    ==========   ============
</TABLE>

              f. Deferred taxes:
                     Deferred tax assets are comprised of the following:
<TABLE>
<CAPTION>
                                                                                              YEAR ENDED DECEMBER 31,
                                                                                        -------------------------------------
                                                                                              1998                 1999
                                                                                        -----------------    -----------------
                                                                                             U.S. DOLLARS IN THOUSANDS
                                                                                        -------------------------------------
          <S>                                                                             <C>                  <C>
                     Provisions for severance pay                                                  34                   12
                     Others                                                                        92                  147
                     Net operating loss and deductions carryforward                             3,195                2,296
                                                                                        -----------------    ----------------
                     Gross deferred tax assets                                                  3,321                2,455
                                                                                        -----------------    ----------------
                     Fixed assets                                                                 (82)                  (3)
                     Inventories                                                                  (20)                   -
                                                                                        -----------------    ----------------
                     Gross deferred tax liabilities                                              (102)                  (3)
                                                                                        -----------------    ----------------
                     Valuation allowance (1)                                                   (3,177)              (1,543)
                                                                                        -----------------    ----------------
                     Net deferred tax assets                                                       42                  909
                                                                                        =================    ================
                     Presented as follows:
                     Current assets                                                                42                  784
                     Long-term assets                                                               -                  125
                                                                                        -----------------    ----------------
                                                                                                   42                  909
                                                                                        =================    ================
</TABLE>

                                      F-35
<PAGE>

                                                          NUR MACROPRINTERS LTD.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                    (1)  The Company's subsidiaries have provided valuation
                         allowances against the deferred tax assets in respect
                         of tax loss carryforward and other temporary
                         differences due to history of losses and current
                         uncertainty concerning its ability to realize these
                         deferred tax assets in the future.

                    g.    Income tax assessments, losses and deductions carried
                          forward to future years:

                          At December 31, 1999, the Company had available
                          deductions (excluding capital losses totaling
                          $ 2,413 thousand) aggregating to $ 1,421 thousand,
                          which will expire in the years 2000 to 2005.

                          Nur America, Nur Media Solutions, Nur Europe and Nur
                          Shanghai had available carryforward losses as of
                          December 31, 1999 aggregating to $ 4,957 thousand
                          which has no expiration date.

                    h.    Income (loss) before income taxes consisted of the
                          following:
<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31,
                                                                ----------------------------------------------------------
                                                                     1997                 1998                 1999
                                                                ----------------     ----------------     ----------------
                                                                                U.S. DOLLARS IN THOUSANDS
                                                                ----------------------------------------------------------
<S>                                                            <C>                  <C>                 <C>
                     Domestic                                          1,156                2,535               10,318
                     Foreign                                            (578)                (771)              (2,392)
                                                               ----------------     ----------------     ----------------
                                                                         578                1,764                7,926
                                                               ================     ================     ================
</TABLE>

NOTE 19:-     REPORTABLE SEGMENTS DATA

              a.     Summary information about geographic areas:

                     The Company manages its business on a basis of one
                     reportable segment. See note 1 for a brief description of
                     the Company's business.

                     This data is presented in accordance with SFAS 131
                     "Disclosures about Segments of an Enterprise and Related
                     Information", which the Company has retroactively adopted
                     for all periods presented.

                     The following presents total revenues for the years ended
                     December 31, 1997, 1998 and 1999 and long-lived assets as
                     of December 31, 1998 and 1999:

<TABLE>
<CAPTION>
                                                1997                       1998                          1999
                                        ------------------------- ---------------------------- ------------------------------
                                                       LONG-                       LONG-                          LONG-
                                          TOTAL        LIVED        TOTAL          LIVED          TOTAL           LIVED
                                         REVENUES     ASSETS       REVENUES       ASSETS         REVENUES         ASSETS
                                        ------------------------- ------------- -------------- ---------------  -------------
                                                                    U.S. DOLLARS IN THOUSANDS
                                        -------------------------------------------------------------------------------------
                <S>                      <C>        <C>          <C>           <C>            <C>                <C>
                     Asia *)                   819        975          3,326         1,109          9,995              781
                     America                 7,061        166         14,640           977         24,325              629
                     Europe                 11,849      1,392         16,241         1,747         21,448            1,172
                     Others *)               2,230          -          2,238             -          4,951                -
                                        ------------ ------------ ------------- -------------- ---------------  -------------

                                            21,959      2,533         36,445         3,833         60,719            2,582
                                        ============ ============ ============= ============== ===============  =============
                     *) Reclassified.
</TABLE>


                                      F-36
<PAGE>
                                                          NUR MACROPRINTERS LTD.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


                     Total revenues are divided by the following products:

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31,
                                                                ----------------------------------------------------------
                                                                     1997                 1998                 1999
                                                                ----------------     ----------------     ----------------
                                                                                U.S. DOLLARS IN THOUSANDS
                                                                ----------------------------------------------------------
<S>                                                                  <C>                  <C>                  <C>
                     Printers                                        12,023               19,052               33,474
                     Ink                                              4,571                8,619               14,044
                     Printed materials                                3,085                4,540                2,460
                     Substrates                                           -           *)     894                7,274
                     Others                                           2,280            *)  3,340                3,467
                                                                 ----------------    -----------------    -----------------
                                                                     21,959               36,445               60,719
                                                                 ================    =================    =================
                     *)     Reclassified.

              b.     Major customer data:
                     Percentage of total sales                      11.18%                10.6%                     -
                                                                 ================    =================    =================
</TABLE>


NOTE 20:-     SELECTED STATEMENTS OF OPERATIONS DATA

              a.     Selling and marketing expenses, net:

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31,
                                                                ----------------------------------------------------------
                                                                     1997                 1998                 1999
                                                                ----------------     ----------------     ----------------
                                                                                U.S. DOLLARS IN THOUSANDS
                                                                ----------------------------------------------------------
<S>                                                           <C>                  <C>                    <C>
                     Selling and marketing expenses                   4,820                6,361                  9,885
                     Less - participation of the
                         Fund for the Encouragement
                         of Marketing Activity                          200                  250                    400
                                                                 ----------------    -----------------    -----------------
                                                                      4,620                6,111                  9,485
                                                                 ================    =================    =================

</TABLE>


                                      F-37
<PAGE>



              b. Financial expenses, net:

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31,
                                                                 ----------------------------------------------------------
                                                                      1997                 1998                 1999
                                                                 ----------------     ----------------     ----------------
                                                                                 U.S. DOLLARS IN THOUSANDS
                                                                 ----------------------------------------------------------
<S>                                                               <C>                 <C>                  <C>
                     Expenses:
                         Interest:
                           On short-term credit                         390                 342                  461
                           On long-term loans                           193                  67                   92
                         Loss arising from foreign
                           currency translations                          -                 151                  659
                                                                 ----------------    -----------------    -----------------
                                                                        583                 560                1,212
                                                                 ----------------    -----------------    -----------------
                     Income:
                         Interest                                       234                  59                   86
                         Gain arising from foreign
                           currency translations                         29                   -                  443
                                                                 ----------------    -----------------    -----------------
                                                                        263                  59                  529
                                                                 ----------------    -----------------    -----------------
                                                                        320                 501                  683
                                                                 ================    =================    =================

</TABLE>

                                      F-38
<PAGE>

                                                          NUR MACROPRINTERS LTD.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 21:-     INVESTEES

<TABLE>
<CAPTION>
                                                                                              PERCENTAGE OF (1)
                                                                                     ------------------------------------
              NAME OF THE COMPANY                                                       OWNERSHIP            CONTROL
              -------------------------------------------------------------------    ----------------    ----------------
                                                                                                      %
                                                                                     ------------------------------------
              a.      Subsidiaries outside Israel:
                      ACTIVE:
<S>                                                                                <C>                   <C>
                      NUR Media Solutions S.A.                                            100                   100
                      NUR Europe S.A.                                                     100                   100

                      NUR America Inc.                                                    100                   100

                      NUR Asia Pacific Ltd.                                               100                   100

                      NUR Macroprinters (Shanghai) Co., Ltd.                              100                   100

                      Stillachem S.A.                                                      50.1                  50.1

                      NUR Pro Engineering Ltd.                                             50                    50

                      INACTIVE:

                      NUR Hungaria KFT  (1)                                               100                   100

                      Good-Lux S.A (1)                                                    100                   100

              b.      Subsidiaries in Israel:

                      INACTIVE:

                      NUR Middle East and Africa Ltd.                                     100                   100

                      M.B.T. (Nur) Industries Ltd                                         100                   100

                      Nur Print Technologies (1993) Ltd.                                  100                   100

</TABLE>

                     (1)    Represents the percentages of ownership of Nur Media
                            Solutions (formerly: "Nur International") in these
                            subsidiaries. The shares of some of these
                            subsidiaries are held in custody by the Company.

                                      - - - - - - - - - - - - -

                                      F-39
<PAGE>


                             EXHIBIT INDEX

<TABLE>
<CAPTION>
NUMBER     DESCRIPTION
<S>        <C>
    3.1    Memorandum of Association of the Registrant, in Hebrew with a translation to English1

    3.2    Amended Articles of Association of the Registrant 2

    3.3    Certificate of Name Change 3

    4.1    Specimen Certificate for Ordinary Shares 1

    4.2    Representative's Warrant Agreement dated October 12, 1995 1

    4.3    Form of Representative's Warrant Certificate  1

    4.4    Forms of Placement Agent's Warrant Agreement and Certificate 4

    4.5    Forms of Qualified Independent Underwriter's Warrant Agreement and Certificate  4

    4.6    Form of Warrant Agreement between the Registrant and Barak Zamir, Advocates

    10.1   1995 Stock Option / Stock Purchase Plan 1

    10.2   Amendment to the 1995 Stock Option / Stock Purchase Plan 4

    10.3   1997 Stock Option Plan 5

    10.4   1998 Non-Employee Director Share Option Plan 6

    10.5   Lease Agreement between the Registrant and Mr. Moshe Nur dated
           October 4, 1993, as amended on May 29, 1995, in Hebrew with a
           translation to English 1

    10.6   Lease Agreement for office space in Brussels, Belgium between Nivellease, S.A. and the Registrant
           dated November 25, 1996 4

    10.7   Lease Agreement for office space in Newton Centre, Massachusetts
           between WHTR Real Estate Limited Partnership and the Registrant dated
           July 10, 1998 4

    10.9   Distribution Agreement between Imaje S.A. and the Registrant dated June 26, 1995 1

    10.10  Settlement Agreements relating to Moshe Nur and his affiliated companies 4

    10.16  Bank Hapoalin revolving loan agreement 4, 7

</TABLE>


                                       51

<PAGE>


<TABLE>
    <S>    <C>
    10.17  Agreement between I.T.S. Machinery Development Ltd. and the Registrant dated February 10, 1997 4

    10.18  Form of confidentiality agreement 4

    10.19  Agreement dated September 13, 1998 between "Meital" Electronic Technology Ltd. and Markowitz Yaakov
           and the Registrant 4

    21     List of Subsidiaries of the Registrant

    23.1   Consent of Kost Forer & Gabbay (S-8)

    23.2   Consent of Kost Forer & Gabbay (F-3)

    23.3   Consent of Willy Knyrim (F-3)

    23.4   Consent of Willy Knyrim (S-8)

    27.1   Financial Data Schedule as of and for the year ended December 31, 1995 5

    27.2   Financial Data Schedule as of and for the year ended December 31, 1996 6

    27.3   Financial Data Schedule as of and for the year ended December 31, 1997 7

    27.4   Financial Data Schedule as of and for the year ended December 31, 1998 8

    27.5   Financial Data Schedule as of and for the year ended December 31, 1999

</TABLE>

----------
1/   Previously filed with the Company's Registration Statement (File No.
     33-93160) on Form F-1 and incorporated by reference herein.
2/   Previously filed with the Company's Form F-3 (File No. 333-92493) and
     incorporated by reference herein.
3/   Previously filed with the Company's Form 6-K dated January 7, 1998 and
     incorporated by reference herein
4/   Previously filed with the Company's Form F-1 (File No. 333-66103) and
     incorporated by reference herein.
5/   Previously filed with the Company's Form 20-F for the year ended December
     31, 1997 and incorporated by reference herein.
6/   Previously filed with the Company's Form 6-K dated November 13, 1998 and
     incorporated by reference herein.
7/   Filed in summary form. Original filed in paper format pursuant to Form SE.
8/   Previously filed with the Company's Form 20-F for the year ended December
     31, 1998 and incorporated by reference herein.