A. Operating Results The following discussion of our results of operations should be read together with our audited consolidated financial statements and the related notes, which appear elsewhere in this Annual Report. The following discussion contains forward-looking statements that reflect our current plans, estimates and beliefs and involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this Annual Report. Our Company We are a leading global provider of satellite-based broadband communications. We design and manufacture ground-based satellite communications equipment and provide comprehensive secure end-to-end solutions, end-to-end services for mission-critical operations, powered by our innovative technology. Our portfolio includes a satellite network platform, VSATs, amplifiers, high-speed modems, high-performance on-the-move antennas, and high efficiency, high power SSPAs, BUCs, and Transceivers, furthermore, following the acquisitions of SBS in January 2025 and DataPath in 2023 our portfolio also includes next-generation IFC, Satellite Communication, terminal solutions and transportable and portable terminals for defense forces and field services. Our comprehensive solutions support multiple applications with a full portfolio of products to address key applications, including broadband internet access, cellular backhaul over satellite, enterprise, digital inclusion solutions, IFC, maritime, land mobility, defense, and public safety, all while meeting the most stringent service level requirements. We have a large installed base and currently operate hundreds of active networks. We develop and market ground-based satellite communications equipment. We have proven experience in delivering complex projects and services worldwide, in addition to providing managed networks and services through satellite and terrestrial networks. Moreover, we offer complete turnkey integrated solutions. 27 We have a large installed base and have shipped more than 1.6 million satellite terminals spanning over 100 countries since 1989 and currently have hundreds of active networks. We have sales and support offices worldwide, 3 NOCs which provide Global NOC services, and R&D centers, in Israel, the U.S. and Europe. Our products are sold to communication service providers, satellite operators, MNOs and system integrators that use satellite communications to serve enterprise, digital inclusion solutions, government and residential users, MNOs and system integrators that use our technology. Our solutions and services are also sold to defense and homeland security organizations. In addition, we provide services directly to end-users in various market segments, including in certain countries in Latin America. From 2022 through 2024, we operated in three operating segments: • Satellite Networks. • Integrated Solutions. • Network Infrastructure and Services. Commencing January 1, 2025, as we increased our focus on the defense market segment and the IFC sector as primary growth engines, to better target the diverse and attractive end markets we serve, and to provide investors with greater insight into our business lines and strategic growth opportunities, we operate in three operating segments as follows: • Gilat Commercial Division. • Gilat Defense Division. • Gilat Peru Division. Recent Events Since October 2023, Israel has been engaged in sustained armed conflict following the Hamas attack on Israel, which resulted in extensive casualties, kidnappings, and widespread rocket fire. Hostilities subsequently expanded to additional fronts, including Hezbollah in Lebanon, militias operating from Syria, and the Houthis in Yemen. In 2025, Israel and Iran were engaged in an intense 12‑day exchange of attacks, including missile strikes, cyberattacks, and aviation disruptions. On February 28, 2026, the United States and Israel launched preemptive strikes against Iran, publicly described as targeting Iran’s nuclear and ballistic missile program and related military capabilities, and Iran responded with missile and drone attacks against Israel, U.S. forces and interests in the region, and locations in certain Gulf countries. Since that time, the armed conflict has resumed and remains ongoing, with repeated missile and drone attacks and heightened risk of escalation, including through cyber and other asymmetric activities. In addition, Hezbollah, the Iran-aligned armed group in Lebanon, has resumed attacks against Israel, further increasing regional instability and the risk of additional escalation on Israel’s northern border. Although ceasefires were previously announced between Israel and Hamas, the overall regional situation remains volatile and unpredictable. In particular, the ceasefire arrangements and negotiations relating to Gaza have faced recurring strain, and there is continuing uncertainty regarding the potential for renewed and expanded hostilities between Israel and Hamas. These events have created, and may continue to create, uncertainty and operational risks for Israeli companies. The Israel Defense Forces have mobilized large numbers of reservists at various points, including employees of our Company and their close family members. Significant or prolonged absences of key personnel could disrupt our operations. Financial Statements in U.S. Dollars The currency of the primary economic environment in which most of our operations are conducted is the U.S. dollar and therefore, we use the U.S. dollar as our functional and reporting currency. Transactions and balances originally denominated in U.S. dollars are presented at their original amounts. Gains and losses arising from non-U.S. dollar transactions and balances are included in the consolidated statements of income. The financial statements of one of our foreign subsidiaries, whose functional currency has been determined to be its local currency, have been translated into U.S. dollars. The assets and liabilities of this subsidiary have been translated using the exchange rates in effect at the balance sheet date. Statements of income amounts have been translated using specific rates. The resulting translation adjustments are reported as a component of shareholders’ equity in accumulated other comprehensive loss. 28 Explanation of Key Income Statement Items Revenues We generate revenues mainly from the sale of products (including construction of networks), satellite-based communications networks services, and from providing connectivity, internet access, and telephony services. We sell our products and services to enterprises, government, and residential customers under large-scale contracts that utilize both our own networks, and other networks that we install, mainly based on BOT and BOO contracts. These large-scale contracts sometimes involve the installation of thousands of VSATs or construction of massive fiber-optic and wireless networks. Revenues from sale of products includes mainly the sale of VSATs, hubs, low-profile antennas on-the-move/on-the-pause terminals, SSPAs and construction and installation of large-scale networks based on BOT and BOO contracts. Sale of services includes access to and communication via satellites (“space segment”), installation of equipment, telephone services, internet services, consulting, on-line network monitoring, network maintenance, field services, and repair services. We sell our products primarily through our direct sales force and indirectly through resellers or system integrators. In 2025, 2024, and 2023, PRONATEL, a customer of our Gilat Peru operating segment, accounted for 14%, 15% and 15% of our revenue, respectively. Following the merger of a major European customer and a major U.S. customer in 2025, both primarily associated with our Gilat Commercial operating segment, the European customer accounted for 24%, 12% and 14% of our revenue in 2025, 2024 and 2023, respectively, and the U.S. customer accounted for 20%, 11% and 15% of our revenue in 2025, 2024 and 2023, respectively. Collectively, these two customers accounted for approximately 44% of our revenue in 2025, compared to 23% and 29% in 2024 and 2023, respectively. Costs and Operating Expenses Cost of revenues, primarily includes the cost of system design, equipment, inventory write-off costs, satellite capacity, salaries, and related costs, allocated overhead costs, depreciation and amortization, customer service, interconnection charges and third-party maintenance and installation. Our research and development expenses, net of grants received, primarily consist of salaries and related costs, raw materials, subcontractor expenses, related depreciation costs and overhead allocated to research and development activities. Our selling and marketing expenses consist primarily of salaries and related costs, commissions earned by sales and marketing personnel, commissions to agents, trade show expenses, promotional expenses and overhead costs allocated to selling and marketing activities, as well as depreciation expenses and travel costs. Our general and administrative expenses consist primarily of salaries and related costs, allocated overhead costs, office supplies and administrative costs, credit losses, fees and expenses of our directors, depreciation, and professional service fees, including legal, insurance and audit fees, net of rental income. Our other operating income, net, consist primarily of non-recurring incomes and expenses. For further details, see note 14 in our consolidated financial statements, which appear elsewhere in this Annual Report. Our operating results are significantly affected by, among other things, the timing of contract awards and the performance of agreements. As a result, our revenues and income may fluctuate substantially from quarter to quarter, and we believe that comparisons over longer periods of time may be more meaningful. The nature of certain of our expenses is mainly fixed or partially fixed, and any fluctuation in revenues will generate a significant variation in gross profit and net income. Year Ended December 31, 2025 compared to Year Ended December 31, 2024 Revenues. Revenues for the years ended December 31, 2025 and 2024 for our three operating segments were as follows: Year Ended Year Ended December 31, December 31, 2025 2024 2025 2024 U.S. dollars in thousands Percentage change Percentage of revenues Gilat Commercial 281,352 155,344 81 % 62 % 51 % Gilat Defense 100,430 97,755 3 % 22 % 32 % Gilat Peru 69,875 52,349 33 % 16 % 17 % Total 451,657 305,448 48 % 100 % 100 % Our total revenues for the years ended December 31, 2025, and 2024 were $451.7 million and $305.4 million, respectively. The increase is attributable to $126.0 million, $2.7 million, and $17.5 million increases in Gilat Commercial, Gilat Defense, and Gilat Peru revenues, respectively. The increase in Gilat Commercial revenues in 2025 is primarily attributable to the contribution of SBS, acquired in January 2025, partially offset by the termination of our activity in the Russian market during 2024. The increase in Gilat Peru’s revenues in 2025 is primarily attributable to higher revenues driven by expansion projects awarded under the Regional PRONATEL Projects, as well as the recognition of revenues from services provided, following the resolution of variable considerations constraint. 29 Gross profit. The gross profits and the gross margins of our three operating segments for the years ended December 31, 2025 and 2024 were as follows: Year Ended Year Ended December 31, December 31, 2025 2024 2025 2024 U.S. dollars in thousands Percentage of revenues Gilat Commercial 74,581 75,281 27 % 48 % Gilat Defense 29,722 25,580 30 % 26 % Gilat Peru 29,041 12,470 42 % 24 % Total 133,344 113,331 30 % 37 % Our gross profit and gross margin are affected year-to-year by revenue volume, the mix of products sold, the mix of revenues between products and services, the regions in which we operate, the size of our transactions, and the timing of their consummation. Moreover, from time to time, we may have large-scale projects which can cause material fluctuations in our gross profit. We recognize revenue from the construction performance obligations related to the PRONATEL Regional Projects and other projects using the percentage-of-completion method, and as such, any changes to our estimated profits in these projects may cause material fluctuations in our gross profit and gross margin. As such, we are subject to significant year-to-year fluctuations in our gross profit. Our gross margin decreased to 30% in 2025 from 37% in 2024. The decrease in our gross margin in the year ended December 31, 2025 is mainly as a result of the following: • The decrease in the Gilat Commercial operating segment is mainly attributable to our newly acquired subsidiary, SBS, which has lower gross margins during its initial production periods as well as the amortization of purchased intangibles related to this acquisition, partially offset by a favourable deal mix. • The increase in Gilat Defense operating segment is mainly attributable to a favourable deal mix. • The increase in Gilat Peru operating segment is primarily attributable to higher revenues driven by expansion projects awarded under the Regional PRONATEL Projects, as well as the recognition of revenue from services provided, due to the resolution of a variable consideration constraint. Operating expenses: Year Ended December 31, 2025 2024 U.S. dollars in thousands Percentage change Research and development expenses, net 46,651 38,136 22 % Selling and marketing expenses 35,114 27,381 28 % General and administrative expenses 31,345 26,868 17 % Other operating income, net (3,206 ) (6,751 ) (53 )% Total operating expenses 109,904 85,634 28 % Research and development expenses, net were incurred by our Commercial and Defense operating segments. R&D expenses, net increased by approximately $8.5 million in 2025 compared to 2024. The increase is mainly attributable to our newly acquired subsidiary, SBS, and was partially offset by an increased number of engineers performing work at customers’ request in connection with ongoing projects. 30 Selling and marketing expenses increased by approximately $7.7 million in the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase is mainly attributable to our newly acquired subsidiary, SBS, as well as the amortization of purchased intangibles related to this acquisition. General and administrative expenses increased by approximately $4.5 million in the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase is mainly attributable to our newly acquired subsidiary, SBS. Other operating income, net amounted to approximately $3.2 million in the year ended December 31, 2025, compared to approximately $6.8 million in the year ended December 31, 2024. The change was driven primarily by lower income from arbitration funds, which was partially offset by higher net income from the revaluation of the DPI and SBS earn-out considerations in the year ended December 31, 2025. Financial income (expenses), net In the year ended December 31, 2025, we incurred financial expenses, net of $4.5 million, compared to financial income, net of $1.5 million for the year ended December 31, 2024. The change is primarily attributable to interest expenses and associated costs related to the loan we took for the SBS acquisition. Taxes on income Taxes on income are dependent upon where our profits are generated, such as the location and taxation of our subsidiaries, as well as changes in deferred tax assets and liabilities, and changes in valuation allowance attributable to changes in our profit estimates in different regions. In the year ended December 31, 2025, we had a tax benefit of approximately $1.8 million compared to tax expenses of approximately $4.4 million in the year ended December 31, 2024. The tax benefit for the year ended December 31, 2025, was primarily related to the Company’s recognition of deferred tax assets in the U.S. Year Ended December 31, 2024 compared to Year Ended December 31, 2023 For a discussion of our results of operations for the year ended December 31, 2024, including a year-to-year comparison between 2024 and 2023, refer to Item 5. “Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2024, filed with the SEC on March 27, 2025, as retrospectively revised to reflect recast segment information, and filed with the SEC on August 28, 2025. Variability of Quarterly Operating Results Our revenues and profitability may vary from quarter to quarter and in any given year, depending primarily on the sales mix of our family of products and the mix of the various components of the products, sale prices, and production costs, as well as on entering into new service contracts, the termination of existing service contracts, or different profitability levels between different service contracts. Sales of our products to a customer typically consist of numerous VSATs and related hub equipment, low-profile antennas, and SSPAs, BUCs, which carry varying sales prices and margins. Annual and quarterly fluctuations in our results of operations may be caused by the timing and composition of orders by our customers and the timing of our ability to recognize revenues. Our future results may also be affected by a number of factors, including our ability to continue to develop, introduce and deliver new and enhanced products on a timely basis and expand into new product offerings at competitive prices, to integrate our recent acquisitions, to anticipate customer demands effectively, and to manage future inventory levels in line with anticipated demand. Our results may also be affected by currency exchange rate fluctuations and economic conditions in the geographical areas in which we operate. In addition, our revenues may vary significantly 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 cannot be certain that revenues, gross profit and net income (or loss) in any particular quarter will not vary from the preceding or comparable quarters. Our expense levels are based, in part, on expectations as to future revenues. If revenues are below expectations, operating results are likely to be adversely affected. In addition, a substantial portion of our expenses are fixed (e.g. lease payments) and adjusting expenses in the event revenues drop unexpectedly often takes considerable time. As a result, we believe that period-to-period comparisons of our results of operations are not necessarily meaningful and should not be relied upon as indications of future performance. Due to all of the foregoing factors, it is possible that in some future quarters our revenues or operating results will be below the expectations of public market analysts or investors. In such an event, the market price of our shares would likely be materially adversely affected. 31 Conditions in Israel We are organized under the laws of the State of Israel, where we also maintain our headquarters and a material portion of our laboratory capacity and principal research and development facilities. See Item 3.D. “Key Information – Risk Factors – Risks Related to Our Location in Israel” for a description of governmental, economic, fiscal, monetary, or political factors that have materially affected or could materially affect our operations. Impact of Inflation and Currency Fluctuations While most of our sales and service contracts are denominated in U.S. dollars or are linked to the U.S. dollar, and most of our expenses are in U.S. dollars and NIS, portions of our projects in Latin America as well as our operations in Asia, Europe and to a lesser extent Australia, are linked to their respective local currencies. The foreign exchange risks are often significant due to fluctuations in local currencies relative to the U.S. dollar. The influence on the U.S. dollar cost of our operations in Israel relates primarily to the cost of salaries in Israel, which are paid in NIS and constitute a substantial portion of our expenses in NIS. In 2025, the U.S. dollar depreciated in relation to the NIS at a rate of 14%, from NIS 3.65 per $1 on December 31, 2024 to NIS 3.19 per $1 on December 31, 2025. In 2025 and 2024, we entered into hedging agreements to cover certain of our NIS to U.S. dollar exchange rate exposures. For more information, see Item 11 – “Quantitative and Qualitative Disclosures about Market Risk” to this Annual Report. The annual rate of inflation in Israel was 2.6% in 2025 and 3.2% in 2024. Our monetary balances that are not linked to the U.S. dollar impacted our financial expenses during the 2025 and 2024 periods, resulting in an approximately $173 thousand gain and $839 thousand loss, respectively. This is due to fluctuations in currency rates in certain regions in which we do business, mainly in Europe and Latin America. There can be no assurance that our results of operations will not be materially adversely affected by other currency fluctuations in the future. Recently Issued Accounting Pronouncements Please refer to summary of “Significant Accounting Policies” in Note 2 of our consolidated financial statements included elsewhere in this Annual Report for more information. B. Liquidity and Capital Resources Since our inception, our financing requirements have been met through cash from funds generated by private equity investments, public offerings, issuances of convertible subordinated notes, bank loans and credit facilities, operations, as well as funding from research and development grants. We have used available funds primarily for working capital, capital expenditures and strategic investments. As of December 31, 2025, and 2024, we had cash and cash equivalents, short-term deposits and restricted cash of $185.4 million and $120.2 million, respectively. We believe that our working capital is sufficient for our present requirements. In 2025, we completed two private placements of ordinary shares to Israeli institutional and accredited investors (as defined under the Securities Law), generating aggregate net proceeds of approximately $164 million. On September 16, 2025, we issued 7,058,820 ordinary shares at a purchase price of $9.35 per share, resulting in net proceeds of approximately $65.3 million. On December 30, 2025, we issued 8,888,889 ordinary shares at a purchase price of $11.25 per share, resulting in net proceeds of approximately $98.7 million. Both offerings were conducted exclusively in Israel in reliance on Regulation S under the U.S. Securities Act of 1933. The acquisition of SBS was partly funded by a new $100 million secured credit line from HSBC Bank USA and Bank Hapoalim. We drew $60 million under this facility to fund the initial cash consideration payable at closing. The remaining $40 million was available to fund potential future earn-out payments. The loan bore interest at a rate of SOFR plus 2.75% to 3.5% and was subject to customary covenants that, under certain circumstances, limited our ability to incur indebtedness, create liens, make investments, merge with other companies, dispose of assets, prepay other indebtedness, or make dividends and other distributions. The outstanding balance under this facility was fully repaid on December 31, 2025. As of December 31, 2025, DataPath's debt was $2 million in current maturities of a long-term loan. The long-term loan was obtained from DataPath’s former shareholders and bears an interest of 14%. 32 At times, we guarantee the performance of our work for some of our customers, primarily government entities. Guarantees are often required for our performance during the installation and operational periods of long-term rural telephony projects, such as in Latin America, and for the performance of other projects worldwide. The guarantees typically expire upon meeting certain operational milestones. In addition, from time to time, we provide corporate guarantees to guarantee the performance of our subsidiaries. The aggregate amount of the financial guarantees outstanding to secure our various obligations, issued on our behalf mainly by HSBC, and the First International Bank of Israel, or FIBI, as of December 31, 2025, was approximately $87.6 million, including an aggregate of approximately $83.7 million related to our business in Peru. To secure these guarantees, we provided a floating charge over our assets, as well as pledges, including a fixed pledge, over certain assets and property. Under the arrangements with HSBC and FIBI, we are required to observe certain conditions. Our credit and guarantee agreements also contain various restrictions and limitations that may impact us. These restrictions and limitations relate to incurrence of indebtedness, contingent obligations, negative pledges, liens, mergers and acquisitions, change of control, asset sales, dividends and distributions, redemption or repurchase of equity interests and certain debt payments. As of December 31, 2025, we were in compliance with such conditions. The agreements also stipulate a floating charge on our assets to secure the fulfilment of our obligations to FIBI and HSBC as well as other pledges, including a fixed pledge, on certain assets and property. Cash Flows The following table summarizes our cash flows for the periods presented: Years Ended December 31, 2025 2024 U.S. dollars in thousands Net cash provided by operating activities 20,675 31,669 Net cash used in investing activities (136,366 ) (6,610 ) Net cash provided by (used in) financing activities 163,196 (8,107 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 1,241 (1,454 ) Net increase in cash, cash equivalents and restricted cash 48,746 15,498 Cash, cash equivalents and restricted cash at beginning of the period 120,249 104,751 Cash, cash equivalents and restricted cash at end of the period 168,995 120,249 Our cash, cash equivalents, and restricted cash increased by approximately 48.7$ million during the year ended December 31, 2025 primarily as a result of the following: Operating activities. Cash provided by our operating activities was approximately $20.7 million in 2025 compared to approximately $31.7 million in 2024. The change was primarily attributable to higher arbitration funds collected in 2024, interest payments made in 2025 in connection with the SBS acquisition, and increased investment in working capital, mainly related to SBS as it ramps up production. Investing activities. Cash used in investing activities was approximately $136.4 million in 2025 compared to approximately $6.6 million in 2024. The change is mainly attributable to the cash used to acquire SBS, as well as investment in short term deposits in 2025 compared to 2024. Financing activities. Cash provided by financing activities was approximately $163.2 million in 2025 compared to cash used in financing activities of approximately $8.1 million in 2024. The change reflects mainly the net proceeds from private placements totalling approximately $164 million completed in 2025. 33 For a discussion of our cash flow for the year ended December 31, 2024, including a year-to-year comparison between 2024 and 2023, refer to Item 5. “Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2024, filed with the SEC on March 27, 2025, as retrospectively revised to reflect recast segment information, and filed with the SEC on August 28, 2025. C. Research and Development We devote significant resources to research and development projects designed to enhance our hubs, VSATs, Satellite Communication on-the-move antennas, ESA antennas, our DKET solutions, BUCs, SSPAs, and Transceivers products, In particular, we continue to invest in expanding our portfolio to address HTS, VHTS and NGSO satellites constellations solutions, mobility applications, both IFC and maritime, as well as defense solutions. We intend to continue to devote substantial resources to complete the development of certain features, including improving functionality, supporting higher throughput, improving space segment utilization and network resilience, thereby contributing to reducing the cost of proposed solutions for our customers. We conduct our research and development activities in Israel, the U.S. (in California and Georgia), Bulgaria, Moldova, Poland and Spain. Our facilities in Israel, Spain, and Moldova focus on research and development of VSATs, baseband equipment, and network management. Our Bulgarian center focuses on developments related to our Satellite Communication on-the-move antennas, , and the development of VSATs and baseband equipment. Our facilities in California focus on the design and development of BUCs, SSPAs, and Transceivers and our ESA terminal. Our facility in Georgia, U.S. focuses on development of satellite communication portable and transportable solutions. Our Poland center focuses on developments related to our ESA solutions. We have devoted significant research and development resources over the last few years to the development of our SkyEdge family of products, including the development of our own hardware platforms for both baseband equipment and software. In 2025, we invested heavily in improving space spectral efficiency, including release of the new VSAT platform supporting advanced coding schemas, in developing new enhanced functionality for IFC application and global bandwidth management. We continued to invest in optimizing solutions for cellular backhaul and other applications, improving throughput, supported security, and resilience. We develop our own network software and software for our VSATs. We have made a significant investment in a new modular product architecture involving hot-swappable RF amplifier modules, power supply modules and block up conversion modules for military and commercial teleport providers. This architecture will allow us to mix and match components for faster system product development and better supply chain resilience. In 2025, we also invested in the development of our ESA for IFC applications. In addition, we invested in developing SatCom terminals for UAVs. Our software and our internally developed hardware are proprietary, and we have implemented protective measures both of a legal and practical nature. We have obtained and registered patents in the U.S. and in various other countries in which we offer our products and services. We rely on copyright laws to protect against unauthorized copying of the object code of our software and on copyright and trade secret laws to protect the source code of our software. We derive additional protection for our software by generally licensing only the object code to customers and keeping the source code confidential. In addition, we enter into confidentiality agreements with our customers and other business partners to protect our software technology and trade secrets. We have also obtained trademark registrations in the U.S. and in various other countries to provide additional protection to our intellectual property. Despite all of these measures, it is possible that competitors could copy certain aspects of our technology or obtain information that we regard as a trade secret in violation of our legal rights. We participate in various programs under which we have received and are eligible to receive research and development grants to finance research and development projects in Israel, pursuant to the provisions of The Encouragement of Industrial Research and Development Law, 1984. We are also participating in grant research programs of the European Union, Horizon 2020, and from time to time, we participate in programs through bilateral R&D foundations such as the BIRD foundation. With respect to some of our funding programs, we are obligated to pay royalties from the revenues derived from products developed within the framework of such programs. However, most of our programs are non-royalty-bearing programs. We also participate in joint programs with academic institutions, which are partially funded by the Israeli Innovation Authority. In the event of a commercial use of specific academic knowledge, we are obligated to pay the academic institution royalties from the revenues derived from products developed within the framework of such programs. 34 The following table sets forth, for the years indicated, our gross research and development expenses, the portion of such expenses which was funded mainly by non-royalty bearing grants and the net expenses of our research and development activities: Years Ended December 31, 2025 2024 (U.S. dollars in thousands) Gross research and development expenses 48,659 40,597 Grants (2,008 ) (2,461 ) Net research and development expenses 46,651 38,136 For a discussion of our research and development expenses for the year ended December 31, 2024, including a year-to-year comparison between 2024 and 2023, refer to Item 5. “Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2024, filed with the SEC on March 27, 2025, as retrospectively revised to reflect recast segment information, and filed with the SEC on August 28, 2025. D. Trend Information The satellite communications market continues to evolve toward VHTS, software‑defined satellites, and NGSO constellations, driving demand for multi‑orbit, high‑capacity ground‑segment solutions. These industry trends support growing interest in advanced platforms such as our SkyEdge IV system and in mobility and IFC solutions strengthened by our acquisition of SBS. In addition, long‑term global developments, including increased requirements for broadband connectivity, digital inclusion programs, and defense‑related communications, continue to influence customer priorities in the markets we serve. Operationally, we are also monitoring the effects of regional geopolitical conditions in Israel, which have led to periodic adjustments in transportation routes, supply‑chain logistics, and workforce availability. While these factors have not materially affected our operations to date, the environment remains dynamic, and we continue to manage and evaluate potential implications for production, logistics, and customer deliveries. For additional discussion of risks and uncertainties that could impact these trends, see Item 3.D, Risk Factors. E. Critical Accounting Estimates The preparation of the consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (U.S. GAAP) requires us to make estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Main areas that require significant estimates and assumptions by us include contract costs, revenues (including variable consideration, determination of contracts duration, establishing stand-alone selling price for performance obligations), application of percentage-of-completion accounting, impairment of inventories, impairment and useful life of long-lived assets, goodwill impairment, valuation allowance in respect of deferred tax assets, uncertain tax positions, accruals for estimated liabilities, including litigation and insurance reserves, contingent considerations and intangibles from business combination transaction and stock-based compensation. We base our estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the financial information included in this annual report. 35 Revenues. For further details, see note 2(m) in our consolidated financial statements, which appear elsewhere in this Annual Report. Income Taxes. For further details, see note 2(s) in our consolidated financial statements, which appear elsewhere in this Annual Report. Inventory Valuation. For further details, see note 2(g) in our consolidated financial statements, which appear elsewhere in this Annual Report. Goodwill. For further details, see note 2(k) in our consolidated financial statements, which appear elsewhere in this Annual Report. Intangible assets. For further details, see note 2(i) in our consolidated financial statements, which appear elsewhere in this Annual Report. In the years ended December 31, 2025, 2024 and 2023 we performed assessments to continue to support our conclusion that no impairment of goodwill was required for any of our reporting units. Contingencies. Liabilities related to legal proceedings, demands and claims are recorded in accordance with ASC 450, “Contingencies”, or ASC 450, which defines a contingency as “an existing condition, situation, or set of circumstances involving uncertainty as to possible gain or loss to an enterprise that will ultimately be resolved when one or more future events occur or fail to occur.” In accordance with ASC 450, accruals for exposures or contingencies are being provided when the expected outcome is probable and when the amount of loss can be reasonably estimated. It is possible, however, that future results of operations for any particular quarter or annual period could be materially affected by changes in our assumptions, the actual outcome of such proceedings or as a result of the effectiveness of our strategies related to these proceedings. For further details, see note 2(l) in our consolidated financial statements, which appear elsewhere in this Annual Report. Business Combination. Accounting for business combination requires us to make significant estimates and assumptions in determining the fair value of contingent consideration that is part of the consideration transferred and the fair values of assets acquired and liabilities assumed, especially with respect to intangible assets. Critical estimates in valuing the acquired intangible assets and the contingent consideration include, but are not limited to, projected revenues and results in the forecasted years. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, they are based, in part, on historical experience and information obtained from management of the acquired companies and are inherently uncertain. For further details, see notes 2, 17 and 18 in our consolidated financial statements, which appear elsewhere in this Annual Report.