AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk is the risk of loss related to changes in market prices, including interest rates and foreign exchange rates, of financial instruments that may adversely impact our financial position, results of operations or cash flows. Our overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on our financial performance. Risk of Interest Rate Fluctuation and Credit Exposure Risk At present, our credit and interest risk arise from cash and cash equivalents, deposits with banks as well as accounts receivable. A substantial portion of our liquid instruments is invested in short-term deposits with Bank Leumi le-Israel Ltd. and Bank Mizrachi-Tefachot, major Israeli banking institutions, as well as with Valley Bank, NY, USA. We estimate that because our liquid instruments are invested mainly in short-term bank deposits, the credit and interest risk associated with these balances is immaterial. The primary objective of our investment activities is to preserve principal while maximizing the income we receive from our investments, without significantly increasing risk and loss. Our investments are exposed to market risk due to fluctuations in interest rates, which may affect our interest income and the fair market value of our investments. We manage this exposure by performing ongoing evaluations of our investments. Foreign Currency Exchange Risk Our foreign currency exposures give rise to market risk associated with exchange rate movements of the U.S. dollar, our functional and reporting currency, mainly against the NIS and other currencies. Although the U.S. dollar is our functional currency and reporting currency, a portion of our expenses are denominated in NIS. Our NIS expenses consist principally of payments to employees or service providers, rent and short-term investments in NIS. We anticipate that a sizable portion of our expenses will continue to be denominated in currencies other than the U.S. dollar. If the U.S. dollar fluctuates significantly against the NIS, it may have a negative impact on our results of operations. We mitigate our foreign exchange risk by aligning the currencies of our short-term investments with the currencies of anticipated expenses, based on our expected cash flows. Furthermore, we manage this risk by hedging our monthly salary expenses that are denominated in NIS. Portfolio diversification is performed based on risk level limits that we set. We have in the past, and may in the future, enter into currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rates of our principal operating currencies. These measures, however, may not adequately protect us from the material adverse effects of such fluctuations. Set forth below is a sensitivity test to possible changes in U.S. dollars/NIS exchange rate as of December 31, 2025: Sensitive instrument Income (loss) from change in exchange rate (U.S. dollars in thousands) Value (U.S. dollars in thousands) Income (loss) from change in exchange rate (U.S. dollars in thousands) Down 2% Down 5% Up 2% Up 5% Cash and cash equivalents and deposits 14 34 689 (14 ) (34 ) Other current assets 4 10 206 (4 ) (10 ) Accounts payable (3 ) (8 ) (150 ) 3 8 Other payables (22 ) (54 ) (1,078 ) 22 54 Post employment benefit liabilities (3 ) (8 ) (160 ) 3 8 Total income (loss) (10 ) (26 ) 10 26 Set forth below is a sensitivity test to possible changes in U.S. dollars/Euro exchange rate as of December 31, 2025: Sensitive instrument Income (loss) from change in exchange rate (U.S. dollars in thousands) Value (U.S. dollars in thousands) Income (loss) from change in exchange rate (U.S. dollars in thousands) Down 2% Down 5% Up 2% Up 5% Cash and cash equivalents and deposits 2 6 125 (2 ) (6 ) Accounts payable 0 0 0 0 0 Other payables 0 0 0 0 0 Total income (loss) 2 6 (2 ) (6 ) 129