You should read the following discussion of our financial condition and results of operations in conjunction with the financial statements and the notes thereto included elsewhere in this Annual Report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, particularly those in “Item 3. Key Information - D. Risk Factors.” Company Overview BrainsWay is a global leader in advanced noninvasive neurostimulation treatments for mental health disorders. We are boldly advancing neuroscience with our proprietary Deep Transcranial Magnetic Stimulation (Deep TMS™) platform technology to improve health and transform lives. We are dedicated to leading through superior science and building on what we believe to be an unparalleled body of clinical evidence. We are the first and only TMS company to be cleared by the FDA for three separate mental health condition indications based on clinically proven efficacy as demonstrated in pivotal randomized placebo-controlled studies. Current indications include major depressive disorder (MDD), including reduction of comorbid anxiety symptoms, commonly referred to as anxious depression, obsessive-compulsive disorder (OCD), and smoking addiction. We have also received CE Mark for a variety of psychiatric and neurological indications. We are focused on increasing global awareness of, and broad access to, Deep TMS. Deep TMS uses magnetic pulses to stimulate neurons and consequently modulates the physiological activity of the brain. Our technology can either increase brain activity in neuronal networks which are hypoactive, or alternatively decrease brain activity in neuronal networks which are hyperactive. Our proprietary electromagnetic coils, which we refer to as H-Coils, are designed to safely stimulate deep and broad brain regions, which we believe provides an advantage over other available TMS products, which we refer to collectively as Traditional TMS, that generally use a “figure 8” design. In the United States, we sell our Deep TMS system for the treatment of MDD (including reduction of comorbid anxiety symptoms, commonly referred to as anxious depression), OCD and smoking addictions. We believe that our Deep TMS technology has the potential to be safe and effective for the treatment of a wide range of additional psychiatric, neurological, and addiction disorders. Additional clinical trials of Deep TMS in various psychiatric, neurological, and addiction disorders are underway or planned. 104 Our first commercial H1 Coil Deep TMS product received clearance from the FDA in 2013 for the treatment of MDD in adult patients who have failed to achieve satisfactory improvement from anti-depressant medication in the current episode. Our Deep TMS system for MDD is currently marketed to and installed at psychiatrists’ offices and other facilities principally in the United States and in certain other countries throughout the world. In addition, our second Deep TMS commercial product received FDA marketing authorization in August 2018 as an adjunct therapy for adult patients suffering from OCD, and we currently market this product to the same general clientele as our MDD systems. Furthermore, our third Deep TMS commercial product received FDA marketing authorization in August 2020 as a short-term therapy for smoking addiction. Moreover, in August 2021, we received 510(k) clearance from the FDA for our Deep TMS for its use for the reduction of comorbid anxiety symptoms in adult patients with depression. In August 2022, we received 510(k) clearance from the FDA for the use of our H7 Coil to treat MDD (including anxious depression). In 2024, we received FDA clearance for an expansion of our existing MDD clearance allowing for the treatment of patients within the 69-86 age range suffering from late life depression. In September 2025, we received FDA clearance for an expansion of our existing MDD clearance allowing for an “accelerated” treatment protocol for patients with MDD, including those with comorbid anxiety symptoms. In November 2025, the FDA granted us an expanded indication for our Deep TMS system allowing for the treatment of adolescent patients (ages 15-21) with depression as an adjunct therapy. Our sales and marketing efforts are currently focused in the United States, where we generated approximately 85% and 81% of our revenues in the year ended December 31, 2025 and 2024, respectively. We believe that Deep TMS represents a platform technology that provides an opportunity to develop additional Deep TMS products for a variety of psychiatric, neurological, and addiction disorders. We are planning clinical trials for other indications, including neurological and/or addiction disorders. Our current customers are principally doctors, mental health clinics, hospitals, and medical centers in the field of psychiatry. Treatment with Deep TMS is typically performed as an office-based procedure using our Deep TMS system, which consists of our proprietary H-Coil helmet, as well as several other components, including a stimulator, cooling system, positioning arm and an operator interface. A course of treatment for MDD typically requires 20 treatment sessions (five times a week over a period of four weeks) and thereafter up to 24 additional maintenance-continuation sessions (twice weekly over a period of up to 12 weeks). The standard Deep TMS treatment protocol for OCD requires 29 treatment sessions over six weeks. A course of treatment for smoking addiction typically requires 18 treatment sessions, comprised of treatment five times a week over a period of three weeks, followed by treatment once per week for an additional three weeks. Each standard MDD, OCD or smoking addiction session lasts 20 minutes, 19 minutes, and 18 minutes, respectively. For Deep TMS for MDD, the FDA has also cleared a 3 minute “Theta Burst” treatment protocol. The recently approved SWIFT, or accelerated protocol, is comprised of an acute phase of 5 sessions per day for 6 days (over a 14 day period), followed by 2 sessions per day once a week for 4 weeks, with each session lasting less than 10 minutes. Patients may experience some discomfort during treatment and must use earplugs to reduce exposure to the loud sounds produced by the device. The treatment requires no anesthesia, hospitalization or sedation and no systemic side effects are associated with this therapy. In the United States, we sell or lease Deep TMS systems by one of the following two methods: (i) a fixed-fee lease model in which the Deep TMS system is leased to a customer for a fixed annual fee, generally with a term of between 48 and 60 months, for unlimited use; and (ii) a sales or purchase model in which the Deep TMS system is sold to the customer for a fixed purchase price. Additional potential revenues may be derived from extended warranty fees paid for the system for service coverage beyond the standard included warranty period, and from variable or usage fees based on the number of treatments performed with the system. We are also able to leverage our platform technology, which includes the ability to treat multiple indications using different H-Coil helmets, to facilitate transactions utilizing combined pricing models often involving a single system with one or more add-on helmets. These flexible offerings are designed to facilitate market penetration by addressing the differing clinical needs and risk tolerance among our customer base. We commercialize Deep TMS for OCD based generally on either the sale model, or as part of a fixed-fee lease model together with our MDD system. Following our receipt of FDA clearance for smoking addiction, we completed controlled and limited market releases of our system for this indication, and are currently in the process of a clinical data collection effort to facilitate a long term commercial plan for this product. As of December 31, 2025, we had an installed base of approximately 1,781 Deep TMS systems, whereby 699 systems were leased from us, and an additional 1,082 systems were sold by us prior to December 31, 2025. Our installed base increased by 428 systems during 2025. In addition, as of December 31, 2025, we had shipped 936 H7 Coils as additional coils attached to certain of our new and existing systems following our receipt in August 2018 of marketing approval from the FDA for our OCD system. For the year ended December 31, 2025, our revenues were $52.2 million compared to $41.0 million for the year ended December 31, 2024, representing an increase of 27.3% over the revenues generated in 2024. Our net income for the year ended December 31, 2025 was $7.6 million, compared to net income of $2.9 million for the year ended December 31, 2024. 105 As of December 31, 2025, we had an accumulated deficit of $90.8 million. Our primary sources of capital to date have been from public offerings in Israel and in the United States, private placements of our securities, grants from the Israel Innovation Authority (IIA), borrowings under our credit facilities, and the lease and sale and commercialization of our products and services. We expect our research, development, and clinical trials expenses to increase in connection with our ongoing activities, particularly as we continue to develop next generation technology (including in the areas of multichannel and rotational field TMS), rollout additional features on our current platform (including beta testing of additional remote capabilities), pursue future confirmatory trials and data collection efforts for existing indications, and seek FDA clearance for new indications such as fatigue in MS, addictions (including alcohol, cocaine and/or opioid addiction), pain and other potential psychiatric and neurological indications. We believe that our existing cash resources will be sufficient to enable us to fund our operating expenses and capital expenditure requirements in the foreseeable future. Components of Our Results of Operations Revenues We derive our revenues from the lease and sale of our Deep TMS systems. We offer the following main pricing models: ● Sale Model: The Deep TMS system is sold to the customer for a fixed purchase price. ● Fixed-fee Lease Model: The customer leases the Deep TMS system and pays a fixed annual or monthly fee for the term of the lease (generally between 48 and 60 months). Additional revenues may be generated from certain customers in certain territories who are or may potentially be under a Pay Per Use model, whereby the customer pays a fixed fee per every patient session during which the system is used. Further potential revenues may be derived from extended warranty fees paid for the system for service coverage beyond the standard included warranty period, which is generally for one year, and from variable or usage fees based on the number of treatments performed with the system. We are also able to leverage our platform technology, which includes the ability to treat multiple indications using different H-Coil helmets, to facilitate transactions utilizing combined pricing models often involving a single system with one or more add-on helmets. Our revenues from the operating leases of our Deep TMS systems are recognized on a straight-line method over the term of the lease. Usage based fees, if applicable, are recognized as revenue when we are entitled to receive such revenue. Our revenues from sales are recognized when control of the system is transferred to the customer, generally upon delivery of the system. Cost of revenues and gross margin Our cost of revenues includes a significant component for the Deep TMS systems that we sell under our sales model. The cost of revenues for systems that we sell primarily consists of the costs of raw materials, including components purchased from our third-party contract manufacturers, and manufacturing and assembly of the components that we perform ourselves. The entire cost of the Deep TMS system is recognized upon such sales. In the case of our other models, including our fixed-fee lease model, we maintain ownership of the Deep TMS systems and place our systems at sites for use by our customers, rather than selling them outright. Cost of revenue for these models includes a significant component of depreciation of the Deep TMS systems. We expect to continue to own our Deep TMS systems that have been placed under these models for the foreseeable future, which allows us to maintain our relatively low cost of revenues for those systems. The cost of revenues for systems that we lease or sell also includes costs related to personnel, royalties to PHS and Yeda, shipping, and costs related to our operations department. We expect our cost of revenues to increase in absolute dollars to the extent our revenues increase. 106 Research and development expenses, net Research and development expenses, net, consist primarily of personnel expenses, including salaries and related benefits and share-based compensation for employees, laboratory materials, regulatory costs, patents, facility costs, and travel expenses, as well as expenses associated with outsourced professional scientific development services, and the costs of multi-center and other clinical trials. We expect to continue to incur research and development expenses for the foreseeable future as we advance the development of our Deep TMS technology for various neurological and/or addiction disorders, as well as for various hardware and software development projects related to the Deep TMS system. Selling and marketing expenses Selling and marketing expenses consist of marketing and commercial activities related to the sale and lease of our Deep TMS systems, as well as certain personnel expenses, including salaries and related benefits, sales commissions and share-based compensation for employees, collection fees and facility costs. Other significant sales and marketing costs include conferences, trade shows, and promotional and marketing activities, including direct and online marketing, SEO, earned media, practice support programs, media campaigns and travel expenses. While we anticipate relative stability in current headcount levels for our existing commercial organization, we plan on investing additional resources including certain added roles to align with our strategic and growth initiatives. General and administrative expenses General and administrative expenses consist primarily of personnel expenses, including salaries and related benefits, share-based compensation, and travel expenses for employees in executive, finance, information technology, legal, and human resource functions. General and administrative expenses also include the cost of insurance, allowance for doubtful accounts, professional services, including legal and accounting fees, as well as administrative costs, including corporate facility costs. General and administrative costs also include, but are not limited to, consulting, investor relations, listing fees on The Nasdaq Global Market and the Tel Aviv Stock Exchange, costs associated with reporting and compliance in the United States and Israel, as well as director and officer insurance premiums. We anticipate that our general and administrative expenses will decrease as we realign our corporate activities. Finance income Our finance income consists primarily of interest earned on our bank deposits, hedging and remeasurement of warrants and investments. Finance expenses Our finance expenses consist primarily of financing costs related to our outstanding liability to the IIA on account of grants received for financing our research and development activity, as well as expenses related to bank charges and foreign currency exchange transactions. Income Taxes Expense Our income taxes expense is derived primarily from income generated from the sales and lease of our Deep TMS systems by our U.S. subsidiary. During the years ended December 31, 2024 and 2025, we recorded deferred tax assets in respect of temporary differences in the U.S. subsidiary. 107 Critical Accounting Policies and Estimates The preparation of financial statements, in conformity with IFRS, requires companies to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities at and as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and judgments are subject to an inherent degree of uncertainty, and actual results may differ. Our significant accounting policies are more fully described in Note 2 to our financial statements included elsewhere in this Annual Report. Critical accounting estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, and are particularly important to the portrayal of our financial position and results of operations. Our judgements and estimates are primarily guided by observing the following critical accounting policies: Classification of leases – the Company as a lessor In order to determine whether to classify a lease as a finance lease or an operating lease, we evaluate whether the lease transfers substantially all the risks and rewards incidental to ownership of the asset. Allowance for Doubtful Accounts based on Expected Credit Losses on Trade Receivables We apply a simplified approach and measure the loss allowance in respect of our short-term financial assets, trade receivables, in an amount equal to the lifetime expected credit losses. We record an allowance for doubtful accounts based on expected credit losses for trade receivables. The allowance rates are based on days past due for our various customers. The allowance is initially based on our historical observed default rates as well as forward-looking information. At each reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed. The amount of the allowance is sensitive to changes in circumstances and forecasted economic conditions. Impairment of inventory The net realizable value is determined based on management's evaluation including forecasts and estimates as to the amounts expected to be realized from the sale or use of inventory. The possible effects on the financial statements are the recognition of impairment loss or the reversal of impairment loss. Determining the Fair Value of an Unquoted Financial Asset or Liability - for the Warrants Liability and Investments The fair value of unquoted financial assets or liability in Level 3 of the fair value hierarchy is determined using valuation techniques, generally using future cash flows discounted at current rates applicable for items with similar terms and risk characteristics. Changes in estimated future cash flows and estimated discount rates, after consideration of risks such as liquidity risk, credit risk and volatility, are liable to affect the fair value of these assets of liability. 108 Recent Accounting Pronouncements The recent accounting pronouncements are set forth in Note 2 to our audited consolidated financial statements beginning on page F-1 of this Annual Report. A. Operating Results Quarterly Results of Operations The following tables show our unaudited quarterly statements of operations for the periods indicated. We have prepared this quarterly information on a basis consistent with our audited financial statements. Three months ended March 31 June 30 Sep. 30 Dec. 31 March 31 June 30 Sep. 30 Dec. 31 March 31 June 30 Sep. 30 Dec. 31 2025 2024 2023 Statement of Operations (in U.S dollars thousands) Revenues 11,536 12,632 13,512 14,545 9,095 10,005 10,502 11,414 6,625 7,829 8,302 9,029 Cost of revenues 2,926 3,133 3,353 3,427 2,283 2,468 2,781 2,903 1,792 2,095 2,131 2,290 Gross profit 8,610 9,499 10,159 11,118 6,812 7,537 7,721 8,511 4,833 5,734 6,171 6,739 Research and development expenses, net 2,332 2,344 2,396 2,531 1,626 1,711 1,809 2,044 1,785 1,902 1,544 1,434 Selling and marketing expenses 4,162 4,940 4,729 5,102 3,827 3,796 4,108 4,472 4,912 3,983 3,602 3,959 General and administrative expenses 1,540 1,637 1,781 1,569 1,266 1,444 1,523 1,564 1,803 1,192 1,158 1,162 Total Operating expenses 8,034 8,921 8,906 9,202 6,719 6,951 7,440 8,080 8,500 7,077 6,304 6,555 Total operating income (loss) 576 578 1,253 1,916 93 586 281 431 (3,667 ) (1,343 ) (133 ) 184 Finance income (expenses), net 688 1,519 555 625 190 117 456 1,305 1,407 (135 ) (38 ) (221 ) Income (loss) before income taxes 1,264 2,097 1,808 2,541 283 703 737 1,736 (2,260 ) (1,478 ) (171 ) (37 ) Income taxes (tax benefit) 157 70 242 (333 ) 172 103 75 188 171 185 59 (164 ) Net income (loss) and Comprehensive income (loss) 1,107 2,027 1,566 2,874 111 600 662 1,548 (2,431 ) (1,663 ) (230 ) 127 Our quarterly revenues and operating results have varied in the past and are expected to vary in the future due to numerous factors. We believe that period-to-period comparisons of our operating results are not necessarily meaningful and should not be relied upon as indications of future performance. Year ended December 31, 2025 compared to year ended December 31, 2024 Revenues Our total revenues increased by $11.2 million, or 27.3%, from $41 million for the year ended December 31, 2024 to $52.2 million for the year ended December 31, 2025. The increase in revenues is primarily attributed to an increase in leases and sales of our Deep TMS systems to customers. Revenues from sales and leases were 67% and 23%, respectively, of the revenues for the year ended December 31, 2025, compared to 55% and 35%, respectively, of the revenues for the year ended December 31, 2024. 109 Cost of revenues and gross margin Our cost of revenues was $12.8 million for the year ended December 31, 2025 compared to $10.4 million for the year ended December 31, 2024. The increase of $2.4 million, or 23% is primarily attributed to an increase in sales volumes. There has been no material change in our gross margin as a percentage of revenue for the last three years. Research and development expenses, net Our research and development expenses, net, were $9.6 million for the year ended December 31, 2025 compared to $7.2 million for the year ended December 31, 2024. The increase of $2.4 million, or 33%, is primarily attributed to an increase in headcount and in investments in clinical trial and post-marketing studies. Selling and marketing expenses Our selling and marketing expenses were $18.9 million for the year ended December 31, 2025 compared to $16.2 million for the year ended December 31, 2024. The increase of $2.7 million, or 16.7%, is primarily attributed to an increase in headcount. General and administrative expenses Our general and administrative expenses were $6.5 million for the year ended December 31, 2025 compared to $5.8 million for the year ended December 31, 2024. The increase of $0.7 million, or 12%, is primarily attributed to higher compensation expenses and the appreciation of the NIS against the U.S. dollar, partially offset by a decrease in headcount. Finance income, net Our finance income, net, was $3.4 million for the year ended December 31, 2025 compared to finance income, net of $2.0 million for the year ended December 31, 2024. The increase of $1.2 million is primarily attributed to hedging transactions, partially offset by a decrease in the remeasurement of warrants. For information on the impact of currency fluctuations on the company, please see “Item 11. Quantitative and Qualitative Disclosures About Market Risk” below. Year ended December 31, 2024 compared to year ended December 31, 2023 For comparison of fiscal year 2024 to fiscal year 2023 please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Year ended December 31, 2024 compared to year ended December 31, 2023” section in our annual report on form 20-F for the year ended December 31, 2024 filed with the SEC on April 22, 2025. For more information regarding governmental economic, fiscal, monetary or political policies or factors that have materially affected, or could materially affect, directly or indirectly, the Company’s operations in Israel, please see also “Item 3D. Risk Factors - Risks Related to Our Functions in Israel.” 110 B. Liquidity and Capital Resources As of December 31, 2025, we had cash, cash equivalents and restricted cash of $67.9 million and an accumulated deficit of $90.8 million, compared to cash, cash equivalents, restricted cash and short-term deposits of $69.6 million, and an accumulated deficit of $98.4 million as of December 31, 2024. We incurred positive cash flows from operating activities of $18.6 million and positive cash flows from operating activities of $10.3 million for the years ended December 31, 2025 and 2024, respectively. We incurred operating losses from our inception through the year ended December 31, 2023, and reached a net profit in the years ended December 31, 2024 and 2025 mainly due to an increase in sales. Our primary sources of capital to date have been from public offerings in the U.S. and Israel and private placements of our securities, grants from the IIA, and leases and sales of our Deep TMS systems. From inception through December 31, 2025, we raised approximately $149 million from placements of our securities and exercise of options. Our primary contractual obligations consist of liabilities in respect of research and development grants received from the IIA, royalties in respect of license agreements for the use of some of our intellectual property with Yeda and PHS, as well as lease liabilities in respect of corporate facilities and vehicles. For information about our contractual obligations, see Notes 11 and 12 to our financial statements included in this Annual Report. We expect our revenues to increase in connection with our ongoing activities, particularly as we expand the marketing of our Deep TMS system for MDD, OCD, and smoking addiction. In November 2024, we raised approximately $20 million in proceeds from a private placement of 2,103,745 ADSs and warrants to purchase 1,500,000 ADSs to Valor (which were subsequently exercised in October 2025 on a cashless basis). Accordingly, based on our current business plan, we believe that our cash and cash equivalents as of December 31, 2025 and the anticipated revenues from sales of our products will be sufficient to fund our operating expenses and capital expenditure requirements in the foreseeable future. Cash flows The table below summarizes our cash flow activities for the indicated periods: Year Ended December 31, (in U.S dollars thousands) 2025 2024 Net cash provided by operating activities 17,488 10,298 Net cash provided by (used in) investing activities (17,466 ) 30,311 Net cash provided by (used in) financing activities (1,709 ) 18,263 Exchange rate differences on cash and cash equivalents 42 (47 ) Increase (decrease) in cash and cash equivalents (1,645 ) 58,825 Cash and cash equivalents at the end of the year 67,700 69,345 Operating Activities Net cash provided by operating activities was $17.5 million during the year ended December 31, 2025, compared to $10.3 million provided by operating activities during the year ended December 31, 2024. The increase of $7.2 million is primarily attributed to the net profit in 2025 compared to the net profit in 2024. Investing Activities Net cash used in investing activities was $17.5 million during the year ended December 31, 2025, compared to $30.3 million provided by investing activities during the year ended December 31, 2024. The change is primarily attributed to the purchase of financial assets measured at fair value during 2025, whereas the cash provided in 2024 included the transfer of $35 million from short-term deposits to cash and cash equivalents. Financing Activities Net cash used in financing activities was $1.7 million during the year ended December 31, 2025, compared to $18.3 million provided by financing activities during the year ended December 31, 2024. The change is primarily attributed to the proceeds from the private placement to Valor in 2024. 111 Government Grants As of December 31, 2025, our wholly owned subsidiary, Brain Research and Development Services Ltd., received grants from the IIA in an aggregate amount of approximately $13.4 million. Brain Research and Development Services Ltd. is currently required to pay 3% royalties of sales of our Deep TMS products, which payment obligations do not currently exceed the amount of the grant received (in U.S. dollars), plus interest at an annual rate equal to the 12-month SOFR rate plus 0.71513%. As of December 31, 2025, Brain Research and Development Services Ltd. paid royalties to the IIA in an aggregate amount of approximately $7.6 million (including amounts in respect of accrued interest), with remaining outstanding royalties of up to $8.8 million. In the event of failure of a project that was partly financed by the IIA, we would not be obligated to pay any royalties or repay the amounts received. Research and development grants received from the IIA are recognized upon receipt as a liability if future economic benefits are expected from the project that will result in royalty-bearing sales. The amount of the liability for the loan is first measured at fair value using a discount rate that reflects a market rate of interest that reflects, in turn, the appropriate degree of risks inherent in our business. If no economic benefits are expected from the research activity, the grants received are recognized as a reduction of the related research and development expenses. In that event, the royalty obligation is treated as a contingent liability in accordance with IAS 37, “Provisions, Contingent Liabilities, and Contingent Asset.” At the end of each reporting period, we evaluate whether there is a reasonable assurance that the received grants will not be repaid based on our best estimate of future sales and, if so, no liability is recognized, and the grants are recorded against a corresponding reduction in research and development expenses. Additionally, in 2013, the MAGNET committee of the IIA (MAGNET) approved the activities of the consortium for the development plan of a brain stimulator and monitor tool, which we refer to as the Consortium, of which we are one of the participants. As part of the Consortium, Brain Research and Development Services Ltd. received from MAGNET approvals for grants in an aggregate amount of NIS 8.2 million (approximately $2.6 million based on the NIS to USD exchange rate as of December 31, 2025). There is no requirement to repay the grants or pay royalties thereon. Such non-royalty-bearing grants from the MAGNET program for funding approved research and development projects are recognized when there is reasonable assurance that the grants will be received and we will comply with all related conditions, on the basis of the costs incurred, and are presented as a deduction from research and development expenses. Outstanding Warrants In connection with the private placement to Valor, consummated on November 5, 2024, we issued Valor a warrant to purchase 1,500,000 ADSs, or the Valor Warrant, at an exercise price of $9.50686 per ADS, or the Valor Warrant Exercise Price. The Valor Warrant became exercisable upon issuance thereof at the closing of the Valor investment, and under the terms of the transaction, was exercisable for 18 months after the initial issuance date, or the Exercise Period. Under the Valor Warrant, if at any time during the Exercise Period, the ADS closing price of any thirty (30) consecutive trading day period exceeds the Valor Warrant Exercise Price by 40% or more, Valor shall be required to fully exercise the Valor Warrant within five (5) trading days. The Valor Warrant initially included an option to exercise the warrant by means of a “cashless exercise” according to the formula set forth in the Valor Warrant, however, we entered into an amendment to the Valor Warrant, effective as of April 1, 2025, which, among other amendments, removed the cashless exercise features from the Valor Warrant, resulting in a reclassification of the Valor Warrant from liability to equity. In October 2025, we received an exercise notice from Valor with respect to all of the issuable ADSs under the Valor Warrant. At our request, the parties agreed for the Valor Warrant to be exercised on a cashless basis, resulting in the issuance of 553,730 ADSs to Valor with no cash proceeds received by us. C. Research and Development, Patents, and Licenses For descriptions of our research and development policies for the years 2024 and 2023, please see the “Item 5.C Research and Development, Patents, and Licenses” sections in our annual reports on Form 20-F filed with the SEC on April 22, 2025 and March 28, 2024, respectively. 112 Intellectual Property The core technology of our Deep TMS based on H-Coils is covered by our patents. Our intellectual property portfolio consists principally of patents and pending patent applications related to our Deep TMS technology that are either exclusively licensed to us for commercialization on a worldwide basis from (1) agencies of the U.S. Public Health Service (PHS) within the U.S. Department of Health and Human Services (DHHS), and (2) Yeda Research and Development Company Limited (Yeda), the commercialization arm of the Weizmann Institute for Science (Weizmann Institute) or are owned by us. These include a total of 29 issued U.S. patents, 2 pending U.S. patent applications, and 61 issued patents and 15 pending patent applications in other jurisdictions (treating Europe as one jurisdiction). Our strategy is to seek to protect our proprietary position by, among other methods, filing U.S. and foreign patent applications related to our proprietary technology, inventions, and improvements that are important to the development of our business. Our intellectual property rights outside of the United States are principally in Europe (France, Italy, Sweden, UK, and Germany), Canada, Australia, Japan, Hong Kong, and Israel. Patents related to our Deep TMS technology may provide future competitive advantages with claims related to aspects of the structure of our coils and methods of administration of treatment for applications of such technology. We also rely on our trade secrets, know-how and continuing technological innovation to develop and maintain our proprietary position. We look to defend our Deep TMS technology by asserting our intellectual property rights, where it is determined to be necessary, to preserve our rights and gain the benefit of our technological investments. We seek to obtain patents in connection with the technology that we developed as part of our strategy for protection of our intellectual property, including technology covered under our license agreements with the PHS and Yeda. The claiming strategy in each of our patent applications is based on the advice of our patent counsel and our business model and business needs are taken into consideration. We file patent applications containing claims seeking protection of our proprietary technologies and products, as well as all new applications and/or uses we discover or develop for existing technologies and products, assuming these are strategically valuable. We continuously assess the number and types of patent applications, as well as the pending and issued patent claims, to ensure that appropriate coverage and value are obtained for our systems and methods, given the governing law and the corresponding patent office rules and regulations. In addition, claims may be modified during patent prosecution or additional claims added to meet our intellectual property and business needs. Patents and Patent Applications Our first group of patents (Patent Family A) relates to the H-Coil technology in general: This includes coverage for the H-Coil for MDD, the H-Coil for OCD, the H-Coil for smoking addiction, and for future products we are developing. This group of patents has been exclusively licensed to us from the PHS, and includes two issued U.S. patents and eight issued patents in other jurisdictions. The issued patents are set to expire in 2026 in the U.S. and expired in 2021 outside the U.S. These coils are also covered by additional patents which extend until later dates as detailed further in this section. Our second group of patents (Patent Family B) relates to additional design features of BrainsWay’s H-Coil for MDD, H-Coil for smoking addiction, and also covers some future products we are developing. This group of patents has been licensed to us from the PHS and from Yeda, and includes six issued U.S. patents and eleven issued patents in other jurisdictions. The issued patents in this group are set to expire in 2025-2028 in the U.S. and in 2026 in other countries, not taking into account any potential patent term adjustment or extension that may be available in the future. These coils are also covered by additional patents which extend until later dates as detailed further in this section. Our third group of patents (Patent Family C) relates to a family of central base coils including BrainsWay’s H-Coil for OCD (which is also cleared for MDD), and also some future products that we are developing. Patent Family C is owned by us, and includes three issued U.S. patents, and eleven issued patents in other jurisdictions. The issued patents are set to expire in 2033 in the U.S., and in 2034 in other countries, not taking into account any potential patent term adjustment or extension that may be available in the future. Our fourth group of patents (Patent Family D) relates to a family of unilateral coils including some future products we are developing. Patent Family D is owned by us, and includes one issued U.S. patent, and five issued patents in other jurisdictions. The issued patents are set to expire in 2033 in the U.S., and in 2034 in other countries, not taking into account any potential patent term adjustment or extension that may be available in the future. 113 Our fifth group of patents (Patent Family E) consists of utility model patent applications and other patent applications which provide coverage of several H-Coils, including those used in BrainsWay’s MDD and OCD systems. Patent Family E is owned by us, and includes two issued Chinese Utility Model patents, one issued patent in the U.S., five issued patents in other jurisdictions, and two pending patent applications in other jurisdictions. The issued patents are set to expire in 2039. Our sixth group of patents (Patent Family F) relates to a family of circular coils including BrainsWay’s H-Coils for MDD and smoking, as well as some other future products we are developing. Patent Family F is owned by us, and includes two issued U.S. patents, and seven issued patents in other jurisdictions. The issued patents are set to expire in 2033 in the U.S. and in 2034 in other countries, not taking into account any potential patent term adjustment or extension that may be available in the future. Our seventh group of patents (Patent Family G) relates to real-time closed-loop brain stimulation and includes one issued U.S. patent and three pending patent applications in other jurisdictions. The issued patent is set to expire in 2038. Our eighth group of patents (consisting of additional families of issued patents and pending patent applications) relates to a multichannel stimulator we are developing as an enhancement to our Deep TMS system, which we see as the next generation of our products, several H-Coil designs which may be future products, capabilities to address additional medical conditions such as the need to open the blood brain barrier, and biomarker research using Deep TMS with an EEG that we are currently conducting. These include seven issued U.S. patents, and fifteen issued or allowed patents in other jurisdictions. The issued patents in these families are set to expire in 2029, 2031, 2033, and between 2037 and 2039, not taking into account any potential patent term adjustment or extension that may be available in the future. In addition to the list of patents noted above, we own an additional group of U.S. patents that relates to multichannel stimulation and was acquired from TMS Innovations, LLC in 2019. We believe these patents will enable us to broaden the scope of capabilities in the multichannel stimulator we are developing. The issued patents are set to expire between 2028 and 2035, not taking into account any potential patent term adjustment or extension that may be available in the future. In addition to the list of patents noted above, in January 2020 we exercised our option to exclusively license the rights to certain patents relating to rotational field TMS from Yeda. In January 2026, the parties added an additional related patent to these exclusive patent rights. This group of patents includes two issued U.S. patents and four issued patents in other jurisdictions. The issued patents are set to expire in 2032 in the U.S. and in 2030 in other jurisdictions, not taking into account any potential patent term adjustment or extension that may be available in the future. In addition to the list of patents noted above, we own another family of patent applications which provide coverage of several H-Coils, including those used in our MDD and OCD systems, and of aspects of rotational field TMS. This patent family is owned by us, and includes one pending patent application in the U.S., and five pending patent applications in other jurisdictions. The patent positions of companies like ours are generally uncertain and involve complex legal and factual questions that may vary from one jurisdiction to another. Our ability to maintain and solidify our proprietary position for our technology will depend on our success in obtaining effective claims and enforcing those claims once granted. We can provide no assurance that our patent applications or those patent applications that we in-license will result in the issuance of any corresponding patents (other than any allowed patent applications, which normally result in the issuance of a patent after the applicant has paid the required issue fee). The inability of any such patent applications to be allowed may harm our ability to protect our intellectual property, our ability to compete in the neuromodulation market, and our results of operations. Our issued patents and those that may be issued in the future, or those licensed to us, may be challenged, narrowed, circumvented or found to be invalid or unenforceable, which could limit our ability to stop competitors from marketing related products. Neither we nor our licensors can be certain that we were the first to invent or first to file for the inventions claimed in our owned or licensed patents or patent applications which may also affect our ability to assert the patents against others. In addition, our competitors may design around our patents or any technology developed by us, and the rights granted under any issued patents may not provide us with any meaningful competitive advantages against these competitors. Furthermore, because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that, before our future product can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any advantage of the patent. See “Item 3.D. Risk Factors - Risk Relating to Intellectual Property.” 114 License Agreements The core technology for Deep TMS is exclusively licensed to us for commercialization on a worldwide basis from PHS and Yeda. PHS License Agreement The initial discoveries of the Deep TMS technology and the feasibility studies for implementation of the technology were carried out in the framework of research performed at NIH by the scientific founders of our Company prior to its formation. The rights for such discoveries are owned by the DHHS and are now licensed to us by the PHS, an agency within the DHHS. Subsequent to these discoveries, applications were filed for registration of Patent Family A and Patent Family B (described under “ - Patents” above) covering the H-Coils developed in the course of this research. In 2003, we entered into a license agreement with the PHS, pursuant to which we were granted (i) an exclusive license to develop, manufacture, use, import and sell any product or treatment which is created or based on the patents and which deals with TMS and (ii) the right to enter into sublicense agreements, subject to approval of the PHS. The U.S. government was granted an irrevocable, nonexclusive, nontransferable royalty-free license for use of any invention in connection with the patents, throughout the world, for the benefit of the U.S. government, a foreign government and other international organization under the provisions of a treaty or agreement applicable to the U.S. government at such time. In addition, the PHS is entitled to grant academic or commercial bodies a nonexclusive license for use of the patents for advancement of basic research only, subject to our consent. We are required to pay royalties consisting of 2% from payments received from sales or leases of our Deep TMS systems and/or portions thereof using the licensed technology (beyond the first $10 million in cumulative sales, a milestone which has passed). In addition, we are required to pay a royalty of 8% from the net cash proceeds we receive from any sublicenses, so long as the underlying intellectual property is valid and enforceable in the relevant territory. Moreover, there is a one-time $10,000 fee relating to certain new FDA approvals associated with these patents. The PHS is responsible for registration and defense of Patent Family A, subject to indemnification by us for registration expenses. We are responsible for registration and defense of the Patent Family B and are required to bear all related expenses. The PHS license agreement is valid up until the expiration of the last to expire of the licensed patent rights under the agreement. The PHS may cancel the agreement in the event of, among others, (i) a fundamental breach by us, (ii) we enter into involuntary liquidation proceedings or shall become insolvent, (iii) we have not achieved our milestones under the agreement (all of which have been achieved as of the date hereof), (iv) we have maliciously made a false statement or has omitted a material fact in an application for a license or in any other report required under the agreement, (v) we do not make the product based upon the patents accessible to the public after commencement of the commercial marketing of the product, (vi) we are unable to bring the product to a level of safety which it must reach in order to license the product or (vii) we do not manufacture the licensed products substantially in the United States without reasonable justification, in each case, subject to a 90-day cure period (other than in respect of clause (ii) above). We may cancel the agreement at any time with 60 days’ notice, subject to payment of any outstanding royalties. 115 If the PHS license agreement is terminated as a result of the expiration of the first registered patent under the agreement (as described above), we may continue to market and sell the products and processes in any country in which the patent is expired, without an obligation to pay royalties or any other payment whatsoever to the PHS. Yeda License Agreement In 2005, we entered into a research and licensing agreement with Yeda, which, as amended from time to time, we refer to as the Yeda license agreement, pursuant to which we licensed certain technologies developed at the Weizmann Institute in studies conducted by Prof. Abraham Zangen, our scientific founder and neurobiological advisor, in the field of treatment of depression using TMS technology. Under the Yeda license agreement, all of the rights, including the rights to registration of patents, rights and inventions, information and/or other results which shall arise from the research, referred to as the “licensed technology”, remain exclusively owned by Yeda. The Yeda license agreement grants us an exclusive license to use the licensed technology, throughout the world, for performance of research and development, manufacture, commercialization, and sale of systems for medical treatment in the field of TMS treatment. The license is valid with regard to every product up to the expiration or revocation date of the latest patent registered under the agreement in a particular country, provided that the date of expiry of the license shall be extended to a period of 15 years commencing on the date of first commercial sale of the product in such country. Yeda reserves the right to make use of the information which shall be developed for academic and research purposes only, including its publication, subject to various restrictions set forth in the agreement. We have agreed to lend to Yeda, without consideration, one Deep TMS system, which it shall use for academic research purposes only. We have the right to grant sublicenses subject to the fulfillment of conditions specified in the agreement. Under the terms of the Yeda license agreement, we are required to pay 1% of net sales on systems which are based on certain patents (which include technology licensed from PHS). Additionally, we are required to pay 2% of net sales (beyond the first $10 million in cumulative sales, a milestone which has passed), for products which are based solely on certain patents licensed exclusively from Yeda. In addition, in the event we receive income from products which are sublicensed, we would be required to pay a royalty of up to 8% on the net cash proceeds received from such sublicenses, so long as the underlying intellectual property is valid and enforceable in the relevant territory. Moreover, the Yeda license agreement provides for certain one-time fees relating to certain new FDA approvals associated with these patents. In January 2020, we exercised our right to add the additional rotational field TMS innovation to the Yeda license agreement, and in January 2026 we expanded the rotational field patents to include certain additional related patents in our portfolio. To the extent products based on this technology are commercialized we will have to pay Yeda royalties, either at increased rates ranging from 1.6%-2% in addition to the previously determined rates for “combined products” (which also include innovations covered by previous agreements), or at a fixed rate of 5% for products based exclusively on the rotational field TMS. In addition to customary termination rights of a party due to material breach by the other party, Yeda has the right to terminate the Yeda license agreement in the event that Yeda receives notice or a claim from the PHS that performance of the research constitutes breach of a patent of the PHS. We have agreed to indemnify Yeda in respect of any such claim or demand from the PHS. To the best of our knowledge, the Yeda license agreement and performance of the research thereunder do not breach the terms of our license agreement with the PHS. In any event of termination of the Yeda agreement, all of the rights in the licensed technology will be returned to Yeda, and we are required to grant Yeda a nonexclusive license, without consideration, in perpetuity, throughout the world for all information developed by it or which shall arise from the development of the products under the agreement, including any license or application for license submitted by us in connection with the products. Following the expiry of the latest patent in such country with regard to such product, we would be entitled to continue to manufacture and sell such product in such country without payment of royalties to Yeda. 116 Trade Secrets and Know-How We may rely, in some circumstances, on trade secrets and know-how to protect our technology. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, in part, through confidentiality agreements and assignment of inventions agreements with our employees, consultants, scientific advisors, and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, such agreements or security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. Magnus Medical Inc. Letter In February 2026, we received a letter from Magnus Medical Inc. alleging IP infringement by the Company, including as a result of the use of our products for, and our activities relating to, our accelerated Deep TMS stimulation protocol. We and our counsel are evaluating the claims raised in the letter, as well as the broader IP landscape relating to accelerated TMS – including through a comprehensive analysis of the patent portfolios of both Magnus and BrainsWay. At this early stage, we currently believe we have strong arguments challenging the claims raised by Magnus, although there can be no assurance that we will prevail in these arguments. Although there is no present lawsuit between Magnus and BrainsWay, we believe that the possibility of near-term litigation between BrainsWay and Magnus Medical Inc. cannot be ruled out. At this stage, the Company is unable to conclude that the likelihood that a claim will be filed and, to the extent filed, the likelihood of an unfavorable outcome is either probable or remote, and accordingly expresses no opinion as to the outcome of this matter. D. Trend Information Trend information is included throughout the other sections of this Item 5. In addition, in the aftermath of the COVID-19 global pandemic, quarantine mandates, geopolitical instability due to several wars, and surges in demand from the AI and quantum computer sectors, we have seen a rise in the price of many of the electronic components needed for our systems. These price increases are largely attributable to supply and demand factors, and in some cases, shortages, relating to these parts across the globe. On a related point, the lead time for receiving electronic components shipped by suppliers has increased significantly in recent years amid the worldwide supply chain crisis, the increases in demand due to AI and quantum computing, and shipping disruptions caused by the war between Ukraine and Russia, and the various wars involving Israel (including the Israel-Gaza, the Israel-Hezbollah conflicts, the US-Israel-Iran war, and various attacks on shipping routes). This was particularly true in 2024, 2025 and 2026 (including in connection with the June 2025 war between Iran and Israel and the February 2026 US-Israel-Iran war), when far fewer carriers operated flights into and outside of Israel. All of this has compelled us to significantly increase inventory levels and/or to utilize more expensive shipping methods to ensure that future demand for our systems can be timely met. E. Critical Accounting Estimates Not applicable.