The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial statements for the periods specified and their related notes included in this Annual Report on Form 20-F, as well as “Item 3. Key Information-A. Selected Financial Data.” This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expect,” “anticipate,” “intend,” “believe,” or similar language. All forward-looking statements included in this Annual Report are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. In evaluating our business, you should carefully consider the information provided under “Item 3. Key Information-D. Risk Factors.” Actual results could differ materially from those projected in the forward-looking statements. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties. A.Operating Results OVERVIEW We are a global telecom infrastructure provider dedicated to developing technology that will serve the rapidly growing demand for bandwidth from cloud-based services, mobile, streaming and other applications. We work with carriers globally, to meet this demand through a range of innovative broadband packet optical transport and wireless/fixed-line access products and solutions. We focus on delivering innovative carrier-class broadband transport and access products and solutions, optimized for mobile backhaul, metro aggregation, broadband access and Wi-Fi data offloading. Collectively, our range of solutions is designed to expand and modernize telecommunications networks through smooth network system integration, lower operating costs and increased broadband access. We also provide the carriers with increased revenue opportunities by enhancing their subscribers’ user experience. The majority of our business is based in Japan, India and China. We differentiate ourselves with products designed to reduce network complexity, integrate high performance capabilities and allow a simple transition to next generation networks. We design our products to facilitate cost-effective and efficient deployment, maintenance and upgrades. Our customers can easily integrate our products, which are IP-based, with other industry standard hardware and software. Additionally, we believe we can introduce new features and enhancements that can be cost-effectively added to our customers’ existing networks. IP-based devices can be changed or upgraded in modules, saving our customers the expense of replacing their entire system installation. Our strategic priorities are summarized as follows: •Focus primarily on providing a suite of IP-based solutions and broadband products and related services; •Maintain our position in Japan and India while solidifying our presence in selective geographical markets in Asia; •Leverage our strong reputation with telecom carriers and cable operators and our ability to solve complex network problems; and •Improve our financial position by executing announced restructuring initiatives and reducing operating expense levels. 38 Investments In October 2004, we invested $3.0 million in Series D preferred convertible stock of GCT Semiconductor, Inc., or GCT, which designs, develops and markets integrated circuit products for the wireless communications industry. This investment represents approximately a 0.2965% interest in GCT. This investment is accounted for using the cost method. We assess the fair value at every year-end. In 2012 and 2016, we recorded $2.1 million and $0.8 million investment impairment, respectively. As of December 31, 2016, the book value of the investment was zero. On March 26, 2024, GCT announced that it became a publicly traded company after completing business combination with Concord Acquisition Corp III and commenced trading on NYSE under ticker symbol "GCTS" starting March 27, 2024. With the adoption of ASC 321, the Company recorded the investment of GCT, an investment in privately held company with no readily determinable fair values, using the measurement alternative at cost less impairment before GCT becoming publicly traded. The Company discontinued using the measurement alternative upon GCT becoming publicly traded, when the investment has readily determinable fair values as quoted by market exchanges, and remeasured the investment at fair value with changes in fair value recorded in earning. As of December 31, 2025 and 2024, fair value of the equity securities in GCT was $0.1 million and $0.2 million, respectively, included in short-term investments depending upon management’s intentions for trading. Changes in fair value losses of $0.1 million and gains of $0.2 million was recorded for the years ended December 31, 2025 and 2024, respectively, included in other income (expense), net. On October 16, 2010, we invested $30.0 million in ITV Media Inc., or (“ITV”), $10.0 million of which was paid by our common shares that we had the repurchase rights and $20.0 million of which was paid by cash. We recorded this transaction as an acquisition because we then owned 75% interests in ITV and had effective control. The transactions closed on November 8, 2010. On April 15, 2012, we then exercised our repurchase right, which trigged deconsolidation of ITV from our consolidated financial statements starting from June 21, 2012 because we lost effective control due to our ownership decreasing from 75% to 49% and we lost one seat on the Board of Directors. Thereafter we recorded this investment using the equity method. From December 3, 2012 to December 31, 2015, we purchased $35.1 million convertible bonds that bear interest at 6.5% per annum with various maturity dates and subsequently all maturity dates were extended to March 31, 2027. In 2013 and 2014, we recorded a total of $9.6 million and $5.3 million, respectively, in losses for the preferred stock investment to reflect our 49% interest in ITV losses. After the preferred shares were reduced to zero, we start to record 100% ITV losses against our convertible bond investment balance until the carrying value of the convertible bond investment balance was reduced to zero. Therefore, in 2014 and 2015, we recorded $3.6 million and $14.0 million, respectively, in losses to reflect 100% of ITV losses. Additionally, at every year-end, we assess the fair value of the ITV, and recorded impairment charges of $9.1 million, $2.4 million and $6.0 million in 2013, 2014 and 2015, respectively. The convertible bond investments balance was reduced to zero as of December 31, 2015. RESULTS OF OPERATIONS Our reporting segments are as follows: •Equipment-Sales of equipment, including network infrastructure and application products. Network infrastructure products mainly include broadband products. Network application products mainly include wireless infrastructure technologies. •Services-Providing services and support for our equipment products and also the new operational support segment. 39 The comparison of 2024 and 2023 financial positions and results of operations and related discussions was in “Item 5—Results of Operations” included in the annual report for the year ended December 31, 2024 on Form 20-F, which was not incorporated in this annual report. Net Sales Years Ended December 31, % of % of Net Sales by Segment 2025 Net Sales 2024 Net Sales (in thousands, except percentages) Equipment $751 8 % $1,406 13 % Services 8,227 92 % 9,472 87 % Total $8,978 100 % $10,878 100 % Net Sales by Region China $2,053 23 % $2,084 19 % India 2,993 33 % 4,893 45 % Japan 3,932 44 % 3,901 36 % Total $8,978 100 % $10,878 100 % Fiscal 2025 vs. 2024 Net sales decreased by 17.5% to $9.0 million for 2025 as compared to $10.9 million for 2024. Sales from equipment were $0.8 million for 2025, a decrease of $0.6 million compared to $1.4 million for 2024. The decrease was primarily due to decreased revenue from customers in India due to decrease in volume. Sales from services were $8.2 million for 2025, a decrease of $1.3 million compared to $9.5 million during 2024. The decrease was mainly due to the completion of current projects and no new major projects in India. Cost of Net Sales Years Ended December 31, % of % of Cost of Net Sales by Segment 2025 Net Sales 2024 Net Sales (in thousands, except percentages) Equipment $ 1,401 187 % $ 1,223 87 % Services 6,526 79 % 6,749 71 % Total $ 7,927 88 % $ 7,972 73 % Cost of net sales consists primarily of material and labor costs associated with manufacturing, assembly and testing of products, costs associated with installation and customer training, warranty costs, fees to agents, inventory and contract loss provisions and related overhead. Cost of net sales also includes import taxes and tariffs on components and assemblies. Fiscal 2025 vs. 2024 Cost of net sales was $7.9 million, or 88% of net sales for 2025 compared to $8.0 million, or 73% of net sales, for 2024. Cost of net sales from equipment was $1.4 million, or 187% of net equipment sales, for 2025, compared to $1.2 million, or 87% of net equipment sales for 2024. The increase was primarily due to increase in inventory reserve and a change in expected recovery of cost from suppliers. Cost of net sales from services were $6.5 million, or 79% of net sales from services, for 2025, compared to $6.8 million, or 71% of net sales from services for 2024. The decrease was primarily due to the decrease of sales from services resulted from decrease in projects. 40 Gross Profit Years Ended December 31, Gross Profit Gross Profit Gross Profit (Loss) by Segment 2025 % 2024 % (in thousands, except percentages) Equipment $ (650 ) (87 ) % $ 183 13 % Services 1,701 21 % 2,723 29 % Total $ 1,051 12 % $ 2,906 27 % Our gross profit has been affected by changes in average selling prices, material costs, product mix, the impact of warranty charges and contract loss provisions, as well as inventory reserves. Inventory reserves was $0.4 million and $0.1 million for 2025 and 2024, respectively. Our gross profit, as a percentage of net sales, varies among our product families. We expect that our overall gross profit, as a percentage of net sales, will fluctuate in the future as a result of shifts in product mix and stages of the product life cycle. Fiscal 2025 vs. 2024 Gross profit was $1.1 million, or 12% of net sales, for 2025, compared to gross profit of $2.9 million, or 27% of net sales, for 2024. Sales of equipment had a gross loss of $0.6 million, with a negative gross profit margin of 87%, for 2025, as compared to a gross profit of $0.2 million, with a gross profit margin of 13% for 2024. The decrease in gross profit margin was due to increase of $0.3 million in inventory reserves and a change of $0.5 million in expected recovery of cost from suppliers in addition to high fixed cost with lower revenue. Sales of service earned a gross profit of $1.7 million, or 21% of net sales of services for 2025, compared to a gross profit of $2.7 million, or 29% of net sales of services, for 2024, due to high fixed labor cost with lower service revenue. Operating Expenses The following table summarizes our operating expenses: Years Ended December 31, % of % of 2025 Net Sales 2024 Net Sales (in thousands, except percentages) Selling, general and administrative $ 4,964 55 % $ 5,152 47 % Research and development 4,644 52 % 5,085 47 % Total operating expenses $ 9,608 107 % $ 10,237 94 % Selling, general and administrative expenses, or SG&A, include employee compensation and benefits, professional fees, sales commissions, allowance of credit losses and travel and entertainment costs. Research and development, or R&D, expenses consist primarily of compensation and benefits of employees engaged in research, design and development activities, cost of parts for prototypes, related equipment depreciation and third-party development expenses. We believe that continued and prudent investment in R&D is critical to our long-term success, and we continue to evaluate appropriate investment levels. Selling, General and Administrative Fiscal 2025 vs. 2024 SG&A expenses were $4.9 million for 2025, a decrease of 3.6%, or $0.2 million, as compared to $5.1 million for 2024. The decrease was mainly due to continued tight cost controls leading to personnel costs reduction and a decline in general spending. Allowance for credit losses were approximately $0.58 million for 2025, an increase of 1,589.6%, or $0.62 million, as compared to reversal of credit losses of $0.04 million for 2024. 41 Research and Development Fiscal 2025 vs. 2024 R&D expenses were $4.7 million in 2025, a decrease of 8.7%, or $0.4 million, compared to $5.1 million in 2024. The decrease was mainly due to decreased personnel cost resulting from cost reduction. Stock-based Compensation Expense The following table summarizes the stock-based compensation expense in the Company's Consolidated Statements of Comprehensive Loss: Years Ended December 31, 2025 2024 2023 (in thousands) Cost of net sales $ — — $ 28 Selling, general and administrative 114 117 151 Research and development — — 114 Total $ 114 $ 117 $ 293 As of December 31, 2025, there was approximately $0.03 million of total unrecognized compensation cost, as measured, related to unvested stock options and restricted stock and restricted stock units. This cost is expected to be recognized over a weighted-average period of 0.09 years. Fiscal 2025 vs. 2024 Stock-based compensation expense was $0.1 million and $0.1 million for 2025 and 2024, respectively. Interest Income Fiscal 2025 vs. 2024 Interest income was $2.2 million and $2.8 million for 2025 and 2024, respectively. The decrease was mainly due to decrease of high-interest deposits amount held during the period. Other Income (Expense), Net Fiscal 2025 vs. 2024 Other expense, net was $0.01 million for 2025, compared to other income, net of $0.9 million for 2024. The decrease was mainly due to decrease of foreign currency exchanges gains resulting from depreciation of U.S. dollar against Renminbi, and decrease of changes in fair value gains resulting from the decrease of fair value of GCT investment. Income Tax Expense FASB ASC 740-10 establishes criteria for recognizing or continuing to recognize only more-likely-than-not tax positions, which may result in income tax expense volatility in future periods. While we believe that we have adequately provided for all tax positions, amounts asserted by taxing authorities could be greater than our accrued position. Accordingly, additional provisions on income tax related matters could be recorded in the future as revised estimates are made or the underlying matters are settled or otherwise resolved. For a full reconciliation of our effective tax rate to the U.S. federal statutory rate of 21% and further explanation of our provision for taxes, see Note 10 to our Consolidated Financial Statements included under Part III, Item 18, which is incorporated herein by reference. Fiscal 2025 vs. 2024 Income tax expense was $1.6 million in 2025, compared to $0.7 million of income tax expense in 2024. Our overall effective tax rate was -26% in 2025, compared to -19% in 2024. The fluctuation was primarily due to the India withholding income tax resulting from the dividend distributions from India in 2025. 42 Net Loss As a result of the foregoing, net loss was $8.0 million, $4.4 million and $3.9 million in 2025, 2024 and 2023, respectively. Foreign Currency Risk See “Item 11. Quantitative and Qualitative Disclosures About Market Risk-Foreign Exchange Rate Risk” for information regarding the impact of foreign currency fluctuations on us. Government Policies For information regarding governmental economic, fiscal, monetary or political policies or factors that have materially affected, or could materially affect, our operations or our shareholders’ investments, see “Item 3. Key Information-D. Risk Factors-Risks Relating to Conducting Business in China” and “Item 10. Additional Information-E. Taxation.” B.Liquidity and Capital Resources Contractual Obligations and Other Commercial Commitments The following table summarizes our significant contractual obligations as of December 31, 2025: Payments Due by Period Less than More than Total 1 year 1-3 years 3-5 years 5 years (in thousands) Outstanding letters of credit $ 8,561 $ 6,574 $ 1,498 $ 388 $ 101 Purchase commitments 27 27 — — — Capital commitments 1 1 — — — Lease liabilities 1,150 817 333 — — Total $ 9,739 $ 7,419 $ 1,831 $ 388 $ 101 Letters of credit We issue standby letters of credit primarily to support international sales activities outside of China and in support of purchase commitments. When we submit a bid for a sale, often the potential customer will require that we issue a bid bond or a standby letter of credit to demonstrate our commitment through the bid process. In addition, we may be required to issue standby letters of credit as guarantees for advance customer payments upon contract signing or performance guarantees. As of December 31, 2025, our outstanding letters of credit approximated $8.6 million. These balances are included in Short-term restricted cash and Long-term restricted cash. Purchase commitments We are obligated to purchase raw materials and work-in-process inventory under various orders from various suppliers. If we fail to fulfill the contracts, it will have adverse consequences materials to our operations or financial condition. On December 31, 2025, the Company had outstanding purchase commitments, including agreement that are non-cancelable approximately $0.03 million. Capital commitments The Company’s capital commitments are related to commitments in connection with its ERP replacement implementation project, total capital commitments contracted but not yet reflected in the financial statements amounted to approximately $1 thousand as of December 31, 2025. All of the commitments are to be fulfilled within one year. Intellectual property Certain sales contracts include provisions under which customers would be indemnified by us in the event of, among other things, a third-party claim against the customer for intellectual property rights infringement related to our products. There are no limitations on the maximum potential future payments under these guarantees. We have not accrued any amounts in relation to these provisions as no such claims have been made and we believe we have valid enforceable rights to the intellectual property embedded in our products. 43 Uncertain tax positions As of December 31, 2025, we had $3.2 million of gross unrecognized tax benefits, of which $0.5 million related to tax benefits that, if recognized, would affect the annual effective tax rate. The remaining $2.7 million gross unrecognized tax benefits, if recognized, would affect certain deferred tax assets and federal tax benefit of state income tax. The following table sets forth a summary of our cash and cash equivalents and restricted cash as of the dates indicated. December 31, December 31, 2025 2024 Change (in thousands) Cash and cash equivalents $ 33,814 $ 43,913 $ (10,099 ) Restricted cash 8,561 9,230 (669 ) Total $ 42,375 $ 53,143 $ (10,768 ) The following table sets forth a summary of our cash flows for the periods indicated: Years Ended December 31, 2025 2024 (in thousands) Cash used in operating activities $ (8,821 ) $ (4,457 ) Cash used in investing activities (1,039 ) (158 ) Cash provided by financing activities — — Effect of exchange rate changes on cash, cash equivalents and restricted cash (908 ) (1,889 ) Net decrease in cash, cash equivalents and restricted cash $ (10,768 ) $ (6,504 ) Cash and cash equivalents, consisting primarily of bank deposits and money market funds, are recorded at cost which approximates fair value because of the short-term nature of these instruments. As of December 31, 2025, cash and cash equivalents of approximately $4.9 million, $10.0 million, $3.8 million and $15.1 million were held by our subsidiaries in India, China, Japan and the U.S., respectively. The PRC government imposes currency exchange controls on “non-current accounts” in China. The Foreign Exchange Control Regulations of the People’s Republic of China released on January 29, 1996, amended on January 14, 1997 and August 5, 2008 respectively (the “PRC Foreign Exchange Control Regulations”) permits foreign-owned entities to convert the RMB into foreign currency for transactions that fall under the “current account,” the items of which shall mean goods, services, gains and transactions items that are frequently transferred, etc. involved in international balance of payments. Our PRC subsidiaries may use RMB to purchase foreign exchange for settlement of such “current account” transactions according to applicable provisions of the State Administration of Foreign Exchange (“SAFE”) without pre-approval. However, pursuant to applicable regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In calculating accumulated profits, foreign investment enterprises in China are required to allocate at least 10% of their accumulated profits each year, if any, to fund certain reserve funds unless these reserves have reached 50% of the registered capital of the enterprises. Pursuant to the PRC Foreign Exchange Control Regulations, other transactions that involve conversion of RMB into foreign currency are classified as “capital account” transactions, which shall mean transactions items in international balance of payments which cause changes in external assets and liabilities, including capital transfers, direct investments, investments in securities, derivatives and loans, etc.; examples of “capital account” transactions include repatriations of investments by or loans to foreign owners, or direct equity investments in a foreign entity by a China domiciled entity. “Capital account” transactions will be examined and registered by banks or SAFE in China to convert a remittance into a foreign currency, such as U.S. dollars, and transmit the foreign currency outside of China. As a result of these and other restrictions under PRC laws and regulations, our China subsidiaries are restricted in their ability to transfer a portion of their net assets to the parent. 2025 Cash Flows Net cash used in operating activities during 2025 was $8.8 million. During the year ended December 31, 2025, our operating activities were significantly affected by the following: •Net loss of $8.0 million adjusted by non-cash charges items, mainly including $0.2 million of depreciation, $1.1 million of lease amortization, $0.1 million of share-based compensation, $0.2 million of deferred income taxes, $0.6 million of 44 allowance for credit losses, $0.4 million of inventory write-downs and $0.1 million of changes in fair value for trading securities investment. •Changes in operating assets and liabilities used net cash of $3.5 million. The cash outflow included $0.2 million from accounts receivable, $2.8 million from accounts payable, $0.7 million from customer advances, $0.1 million from deferred revenue, and $0.5 million from other liabilities, partially offset by cash inflow included $0.1 million from prepaid and other assets, $0.6 million from income tax payable and $0.1 million from inventory and deferred cost. Net cash used in investing activities during 2025 was $1.0 million, mainly for cash outflow of $0.4 million for the purchases of property, plant and equipment and $0.6 million from the purchase of short-term investment. Net cash provided by financing activities during 2025 was nil. See Note 5 to our Consolidated Financial Statements included under Part III, Item 18 of this Annual on Form 20-F for additional discussion. 2024 Cash Flows Net cash used in operating activities during 2024 was $4.5 million. During the year ended December 31, 2024, our operating activities were significantly affected by the following: •Net loss of $4.4 million adjusted by non-cash charges items, mainly including $0.3 million of depreciation, $1.1 million of lease amortization, $0.1 million of share-based compensation, $0.2 million of deferred income taxes and $0.1 million of inventory write-downs, partially offset by $0.2 million of changes in fair value for trading securities investment. •Changes in operating assets and liabilities used net cash of $1.6 million. The cash outflow included $0.7 million from prepaid and other assets, $1.0 million from accounts payable, $1.4 million from inventory and deferred cost, $0.3 million from income tax payable and $2.3 million from other liabilities, partially offset by cash inflow included $3.6 million from accounts receivable and $0.5 million from customer advances. Net cash used in investing activities during 2024 was $0.2 million, mainly for cash outflow of $0.2 million for the purchases of property, plant and equipment. Net cash provided by financing activities during 2024 was nil. See Note 5 to our Consolidated Financial Statements included under Part III, Item 18 of this Annual on Form 20-F for additional discussion. Accounts receivable decreased by $0.3 million to $4.5 million as of December 31, 2025 from $4.8 million as of December 31, 2024. As of December 31, 2025, our allowance for credit losses was $1.5 million on gross receivable of $6.0 million. The significant decrease in accounts receivable and related allowance for credit losses was due to collections from India in 2025. See “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business.” 45 Inventories and Deferred Costs The following table summarizes our inventories and deferred costs: December 31, December 31, Increase/ 2025 2024 (Decrease) (in thousands) Inventories: Raw materials $ 564 $ 840 $ (276 ) Work in process 374 589 (215 ) Finished goods 383 506 (123 ) Total Inventories $ 1,321 $ 1,935 $ (614 ) Deferred costs $ 397 $ 272 $ 125 Inventories consist of product held at our manufacturing facility and warehouses, as well as finished goods at customer sites for which the customer has taken possession, but based on specific contractual terms, title has not yet passed to the customer. Finished goods at customer sites were approximately $0.1 million and nil as of December 31, 2025 and 2024 respectively. There were no significant inventory write-offs in 2025, 2024 and 2023. The deferred cost balance is the unamortized cost of post-contract customer support over a period of time of certain legacy contracts and we amortize the deferred revenue and related costs of goods sold over the post-contract support period. LIQUIDITY We recorded net loss of $8.0 million and an operating loss of $8.6 million for the year ended December 31, 2025. We recorded net loss of $4.4 million and operating loss of $7.3 million for the year ended December 31, 2024. Our accumulated deficit increased from $1,259.4 million as of December 31, 2024 to $1,267.4 million as of December 31, 2025. Net cash used in operating activities were $8.8 million in 2025 and $4.5 million in 2024 respectively. As of December 31, 2025, we had cash and cash equivalents of $33.8 million, of which $10.0 million was held by our subsidiaries in China. The amount of cash available for transfer from the PRC subsidiaries for use by our non-PRC subsidiaries is limited both by the liquidity needs of the subsidiaries in China and by PRC-government mandated limitations including currency exchange controls on transfers of funds outside of China. We have controlled our operating expenses over years. Our management believes that the continuing efforts to stream-line our operations will enable our fixed cost base to be better aligned with operations, market demand and projected sales level. If projected sales do not materialize, we will need to take further actions to reduce costs and expenses or explore other cost reduction options. Our management believes that both our PRC and non-PRC operations will have enough liquidity to finance working capital and capital expenditure needs for more than 12 months subsequent to the date our financial statements are issued. However, we have concentrated our business in Asia, particularly Japan, India and China. Any unforeseen prolonged economic downturn, political risk in these markets could affect our customers in making their respective investment decisions and could have a material impact on the foregoing assessment. There can be no assurance that additional financing, if required, will be available on terms satisfactory to us or at all, and if funds are raised in the future through issuance of preference shares or debt, these securities could have rights, privileges or preference senior to those of our ordinary shares and newly issued debt could contain debt covenants that impose restrictions on our operations. Further, any sale of newly issued debt or equity securities could result in additional dilution to our current shareholders. C.Research and Development, Patents and Licenses We believe that an integral part of our future success will depend on our ability to develop and enhance our services. Our product development efforts and strategies consist of incorporating new technologies from third parties as well as continuing to develop our own proprietary technology. We have utilized and will continue to utilize the products and services of third parties to enhance our platform of technologies and services to provide competitive and diverse IP-based network solutions to our users. In addition, we plan to continue to expand our technologies, products and services through products and services developed internally. We will seek to continually improve and enhance our existing services to respond to rapidly evolving competitive and technological conditions. For the years ended December 31, 2025, 2024 and 2023 we spent $4.6 million, $5.1 million, and $5.9 million, respectively, on R&D activities. R&D expenses are expensed as incurred. 46 D.Trend Information Although we experience some seasonality typical of the telecommunications industry, such as seasonally weak first quarters, our revenues and earnings have not demonstrated consistent seasonal characteristics. For a discussion of significant recent trends in our financial condition and results of operations, please see “Item 5. Operating and Financial Review and Prospects-A. Operating Results” and “Item 5. Operating and Financial Review and Prospects-B. Liquidity and Capital Resources.” E.Critical Accounting Estimates The preparation of the Company’s Annual Financial Statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are other items within our financial statements that require estimation but are not deemed critical, as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements. For a detailed discussion of our significant accounting policies and related judgments, see “Notes to Consolidated Financial Statements – Note 2 Summary of Significant Accounting Policies”. Allowances Allowance for credit losses: We make estimates of the lifetime expected credit losses for accounts receivable with similar risk characteristics on a pool basis. For each pool, we first estimate its recovery period based on relevant historical accounts receivable collection information, and then we estimate the credit allowances based on the recovery period, the historical distribution of each aging bucket, and the impact of macroeconomic factors. Expected credit losses are recorded as selling, general and administrative expenses in the consolidated statements of comprehensive loss. Changes in these estimates and assumptions could materially affect the credit losses. See Item 5 for information regarding Allowance for credit losses. Valuation of inventory: Inventories are stated at the lower of cost and net realizable value. We continually monitor inventory valuation for potential losses and obsolete inventory at our manufacturing facilities as well as at customer sites. Adjustments are recorded to write down the cost of inventory to estimated net realizable value, which is dependent upon the factors such as inventory aging, historical and forecasted consumer demand, and market conditions that impact pricing. Write-downs are recorded in cost of revenues in our consolidated statements of comprehensive loss. See Item 5 for information regarding Inventory reserve. Allowance of deferred tax assets: We recognize deferred income taxes as the difference between the tax bases of assets and liabilities and their financial statement amounts based on enacted tax rates. Management judgment is required in the assessment of the recoverability of our deferred tax assets based on its assessment of projected taxable income. Numerous factors could affect our results of operations in the future. If there is a significant decline in our future operating results, management’s assessment of the recoverability of our deferred tax assets would need to be revised, and any such adjustment to our deferred tax assets would be charged to income in that period. If necessary, we record a valuation allowance to reduce deferred tax assets to an amount which management believes is more likely than not to be realized. Changes in estimates of taxable income in the future could result in reversal of the valuation allowances which would be credited to income in the year of reversal. See Note 10 of the Notes to the Consolidated Financial Statements for information regarding Allowance of deferred tax assets. Off-Balance Sheet Commitments and Arrangements As of and during the year ended December 31, 2025, we had no off-balance sheet arrangements. 47 F.Safe Harbor This Annual Report on Form 20-F contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. Forward-looking statements are based on current expectations, estimates, forecasts and projections about us, our future performance and the industries in which we operate as well as on our management’s assumptions and beliefs. Such statements relate to, among other things: •our business expectations regarding contract awards and telecom carriers; •our plan to expand our market position in IP-based and broadband products; •our expectations regarding the growth rates and telecom capital expenditure budgets of certain geographic regions; •our anticipation regarding the growth of China’s gross domestic product; •our plan to grow in certain geographic regions; our expectations regarding growth in certain segments, uncertainties in obtaining future contracts in India; our intention to make significant investment in research and development, or R&D; •our anticipation regarding our new products on the cable market; •our expected financial results; •our expectations about our efforts to streamline our operations, new accounting pronouncements, liquidity and access to credit facilities and cash in our China subsidiary; sufficiency of liquidity and our ability to obtain funding or sell additional securities; •our relationships with suppliers, vendors and clients; our expectation regarding the current economic environment; •our expectation regarding the impact of our strategy and the PRC government’s policies on our financial results; •changes in our Board of Directors and management; •our expectations regarding litigation and the impact of legal proceedings and claims; •our expectations that quarterly operating results will fluctuate from quarter to quarter; our expectations regarding competition and our ability to compete successfully in the markets for our products; our expectations regarding industry trends; •our expectations that average selling prices of our products will continue to be subject to significant pricing pressures; our expectations regarding future growth based on market acceptance of our products; our expectations regarding revenue and gross margin; our expectations regarding the growth in business and operations; •our expectations regarding our multinational operations; our ability to attract and retain highly skilled employees; •our plans regarding the effect of foreign exchange rates; our expectations regarding acquisitions and investments; •our continued efforts relating to the protections of our intellectual property, including claims of patent infringement; •our expectations regarding future impairment review of our goodwill, intangible assets, and other long-lived assets; •our expectations regarding costs of complying with environmental, health and safety laws; our expectations regarding defects in our products; •our expectations regarding the effectiveness of our internal control over financial reporting; •our estimations regarding stock-based compensation; and •our plans regarding cash dividends; and our expectations regarding our facilities and the sufficiency of our facilities. Statements that contain words like “expects,” “anticipates,” “may,” “will,” “targets,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” or variations of such words and similar expressions are also forward-looking statements. 48 Readers are cautioned that these forward-looking statements are only predictions and are subject to risks and uncertainties related to, among other things, our ability to execute on our business plan and implement certain restructuring actions, China’s control of currency exchanges, ongoing litigation, our ability to introduce and deploy IP-based technologies and products, our ability to satisfy certain security and supply chain standards in India, impact of economic and/or political risks in Asia on our customers’ investment decisions, the number of competitors and the composition of competitors, additional warranty expense and inventory reserves, availability of future financing, our ability to manage our resources and other items discussed in Part I, “Item 3. Key Information-D. Risk Factors” of this Annual Report on Form 20-F. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We do not guarantee future results, and actual results, developments and business decisions may differ from those contemplated by the forward-looking statements. We undertake no obligation to update these forward-looking statements to reflect events or circumstances occurring after the date of this Form 20-F. 49