The following discussion and analysis should be read in conjunction with our consolidated financial statements, the notes to those financial statements, and other financial data that appear elsewhere in this annual report. In addition to historical information, the following discussion contains forward-looking statements based on current expectations that involve risks and uncertainties. Actual results and the timing of certain events may differ significantly from those projected in such forward-looking statements due to a number of factors, including those set forth in “Risk Factors” and elsewhere in this annual report. Our consolidated financial statements are prepared in conformity with U.S. GAAP. 52 For a discussion of our results of operations for the year ended December 31, 2024, including a year-to-year comparison between 2023 and 2024, and a discussion of our liquidity and capital resources for the year ended December 31, 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 25, 2025. A. Operating Results Overview We are the number one wireless transport specialist in terms of unit shipments and global distribution of our business. We provide wireless transport solutions that enable cellular operators and other wireless service providers to serve a broad range of use-cases, including mobile broadband, fixed broadband, Industrial and other IoT services. Our solutions use microwave and millimeter wave technology to transfer large amounts of telecommunication traffic between base stations and small/distributed cells and the core of the service provider’s network. We also provide our solutions to other non-carrier private networks such as oil and gas companies, public safety network operators, businesses and public institutions, broadcasters, energy utilities and others that operate their own private communications networks. Our solutions are deployed by more than 600 service providers, as well as more than 1,600 private network owners, in over approximately 130 countries. Industry Trends Market trends have placed, and will continue to place, pressure on our solutions, products and services. Our objective is to continue meeting the demand for our solutions while at the same time increasing our profitability. We seek to achieve this objective by constantly reviewing and improving our execution in, among others, development, manufacturing and sales and marketing. Set forth below is a more detailed discussion of the trends affecting our business: • The widespread surge in network traffic in 2020 to date emerging from the COVID-19 pandemic has significantly affected the way business and individuals access information for work and leisure. National lock-ins for large parts of the population and labor market trends brought many businesses to exercise company-wide work-from-home activities with massive use of video conferencing and cloud network communication. Entire families stay longer at home and extensively consume video streaming and online gaming, along with video chats with friends and relatives. The result is an increase in broadband demand. Some countries, even developed ones, lack broadband communication networks in rural areas. As a result, service providers are required to increase network investment to match the network capabilities to the surge in broadband demand. We anticipate that the increase in network traffic which service providers experienced amidst the pandemic will remain and may even increase, as companies and employees adapt to broader use of telecommuting, and families adopt higher use of video calls/chats as larger portions of the world population, young and elderly alike, use highly visual remote communication tools and high-volume communication transactions. • 5G enables operators to enhance their services portfolio with more use cases such as enhanced mobile broadband (eMBB) delivering gigabit broadband, as well as address new market segments such as IoT & IIoT and mission critical applications with URLLC (Ultra Reliable Low Latency Communications) and mMTC (Massive Machine Type Communications) services. Those services, combined with new network architectures require higher capacity, lower latency networks and in particular higher transport capacity, far denser macro cells and small/distributed cells grids and the implementation of network virtualization technologies and architectures, namely network slicing using SDN. Our wireless transport solutions resolve both higher capacity, lower latency and network densification requirements with advanced capabilities, based on our multicore technology for microwave narrowband spectrum (up to 224Mhz) and the use of wider bands in millimeter-wave spectrum, up to 2,000MHz. Network virtualization requirements are addressed with layer 3 capabilities and SDN support. • OPEN RAN transforms Radio Access Network (RAN) technology from design to operation of the network. OPEN RAN creates the possibility of an open RAN environment, with interoperability between different vendors over defined interfaces. In a legacy mobile network ecosystem, RAN is proprietary where a single vendor provides proprietary radio hardware, software, and interface to enable the mobile network to function. 53 • RAN ecosystem is evolving towards proving the competitive landscape of RAN supplier ecosystem and network operators embracing the transformation. Opening up RAN horizontally brings in a new range of low-cost radio players, and it gives mobile operators a choice to optimize deployment options for specific performance requirements at a much better cost. This trend is expected to increase the size of Best-of-Breed segment (on the account of the end-to-end market segment) that Ceragon is focusing on. • Software Defined Networking (SDN) is a concept aimed at simplifying network operations and allowing network engineers and administrators to quickly respond to a fast-changing business environment. SDN delivers network architectures that transition networks from a world of task-specific dedicated network devices, to a world of optimization of network performance through network intelligence incorporated within network controllers performing control functions and network devices, which perform traffic (data-plane) transport. Our wireless transport solutions are SDN-ready, built around a powerful software-defined engine and can be incorporated within the SDN network architecture. Our SDN architecture is envisioned to provide a set of applications that can achieve end-to-end wireless transport network optimization by intelligently making use of the scarce network resources, such as spectrum and power consumption. • The emergence of distributed cells presents transport challenges that differ from those of traditional macro-cells. Distributed cells are used to provide connectivity and capacity in hot spots and underserved spots, as well as increase coordination between adjacent cells, leading to improved service level. They also significantly reduce the cost of cell-site equipment. This new architecture is forecasted to be present in a high percentage of advanced 5G network deployments. Our distributed-cells wireless transport portfolio includes a variety of compact all-outdoor solutions that provide operators with optimal flexibility in meeting their unique physical, capacity, networking, and regulatory requirements. • The introduction of a disaggregated model for hardware and software. This model allows better scalability, simplicity and flexibility for network operators as it offers independent elements for hardware and software, allowing the use of commercial off-the-shelf hardware, to accelerate delivery of new solutions and innovations. Different domains in the network are being opened these days, such as the Radio Access Network - OpenRAN, the Routing in the cell-sites – DCSG (Disaggregated Cell Site Router), and the Disaggregated Wireless Transport. • The network sharing business model is growing in popularity among mobile network operators (MNOs) who are faced with increasing competition from over-the-top players and an ever-growing capacity crunch. Network sharing can be particularly effective in the transport portion of mobile networks, especially as conventional macro cells evolve into super-sized macro sites that require exponentially more bandwidth for wireless transport. It has become abundantly clear that in these new scenarios, a new breed of wireless transport solutions with a significant investment is required. Our wireless transport solutions support network sharing concepts by addressing both the ultra-high capacities required for carrying multiple operator traffic, as well as the policing for ensuring that each operator’s service level agreement is maintained. • While green-field deployments tend to be all IP-based, the overwhelming portion of network infrastructure investments goes into upgrading, or “modernizing” existing cell-sites to fit new services with a lower total cost of ownership. Modernizing is more than a simple replacement of network equipment. It helps operators build up a network with enhanced performance, capacity and service support. For example, Ceragon offers a variety of innovative mediation devices that eliminate the need to replace costly antennas, which are already deployed. In doing so, we help our customers to reduce the time and the costs associated with network upgrades. The result: a smoother upgrade cycle, short network down-time during upgrades and faster time to revenue. • A growing market for non-mobile transport applications which includes: offshore communications for the oil and gas industry, as well as the shipping industry, which require a unique set of solutions for use on moving rigs and vessels; broadcast networks that require robust, highly reliable communication for the distribution of live video content either as a cost efficient alternative to fiber, or as a backup for fiber installations; and Smart Grid networks for utilities, as well as local and national governments that seek greater energy efficiency, reliability and scale. • A growing demand for high capacity, IP-based long-haul solutions in emerging markets where telecom and broadband infrastructure, such as fiber, is lacking. This demand is driven by the need of service providers to connect more communities in order to bridge the digital divide, using 4G and even 5G services. • Subscriber growth continues mainly in emerging markets such as India, Africa and Latin America, but is getting close to saturation. 54 • The adoption of AI across the telecommunications industry is accelerating and is expected to be a key driver of future network evolution, particularly in the context of 5G and emerging 6G architectures. Industry participants are increasingly incorporating AI capabilities into network infrastructure to enable enhanced automation, real-time optimization, predictive maintenance, and improved energy efficiency. These developments are contributing to the transition toward more autonomous, software-driven, and programmable networks, including the emergence of AI-native and AI-assisted radio access network (“RAN”) architectures. As operators seek to manage growing data traffic, complexity, and performance requirements, demand is increasing for solutions that integrate AI across network planning, deployment, and operations. In parallel, the rapid growth of AI-driven applications, particularly those requiring real-time inference, such as generative AI, autonomous systems, and immersive digital experiences, is expected to materially increase network requirements, including higher capacity, lower latency, and more distributed compute capabilities. This is driving increased adoption of edge computing architectures and placing greater emphasis on network reliability, uplink performance, and deterministic latency. As a result, telecommunications operators and enterprises operating private networks are investing in next-generation infrastructure capable of supporting these workloads, while also expanding the use of AI beyond core network functions into customer-facing applications, enterprise services, and internal operations. The adoption of AI also introduces new considerations, including regulatory compliance, data privacy, cybersecurity, and governance requirements, which may influence the pace and structure of AI-related investments across the sector. We are also experiencing pressure on our sale prices as a result of several factors: • Increased competition. Our target market is characterized by vigorous, worldwide competition of large and aggressive competitors for market share and rapid technological development. These factors have resulted in aggressive pricing practices and downward pricing pressures and growing competition. • Regional pricing pressures. A significant portion of our sales derives from India, in response to the rapid build-out of cellular networks in that country. For the years ended December 31, 2025 and 2024, 34.4% and 42.5%, respectively, of our revenues were earned in India. Sales of our products in these markets are usually at lower gross margins in comparison to other regions. As we continue to focus on operational improvements, these price pressures may have a negative impact on our gross margins. As part of our business, we are engaged in supplying installation and other services for our customers, often in emerging markets. In this context, we may act as the prime contractor and equipment supplier for network build-out projects, providing installation, supervision and commissioning services required for these projects, or we may provide such services and equipment for projects handled by system integrators. In such cases, we typically bear the risks of loss and damage to our products until the customer has issued an acceptance certificate upon successful completion of acceptance tests. If our products are damaged or stolen, or if the network we install does not pass the acceptance tests, the end user or the system integrator, as the case may be, could delay payment to us and we would incur substantial costs, including fees owed to our installation subcontractors, increased insurance premiums, transportation costs and expenses related to repairing or manufacturing the products. Moreover, in such a case, we may not be able to repossess the equipment, thus suffering additional losses. Also, these projects are rollout projects, which involve fixed-price contracts. We assume greater financial risks on fixed-price projects, which routinely involve the provision of installation and other services, versus short-term projects, which do not similarly require us to provide services or require customer acceptance certificates in order for us to recognize revenue. In addition, as most of our deliveries occur before we are able to collect the consideration for such projects, it poses further financial and customer credit risk, as well as collection and liquidity risks of such customers. Results of Operations Revenues. We generate revenues primarily from the sale of our products, and, to a lesser extent, services. The final price to the customer may largely vary based on various factors, including but not limited to the size of a given transaction, the geographic location of the customer, the specific application for which products are sold, the channel through which products are sold, the competitive environment and the results of negotiation. Cost of Revenues. Our cost of revenues consists primarily of the prices we pay contract manufacturers for the products they manufacture for us, the costs of off the shelf parts, accessories and antennas, the costs of our manufacturing and operations facilities, estimated and actual warranty costs, costs related to management of our manufacturers’ activity and procurement of our proprietary and other product parts, supply chain and shipping, as well as inventory write-off costs and amortization of intangible assets. In addition, we pay salaries and related costs to our employees and fees to subcontractors relating to installation, maintenance, and other professional services. Significant Expenses Research and Development Expenses, net. Our research and development expenses, net of government grants, consist primarily of salaries and related costs for research and development personnel, subcontractors’ costs, costs of materials, costs of R&D facilities and depreciation of equipment. All of our research and development costs are expensed as incurred, except for development expenses, which are capitalized in accordance with ASC 985-20 and ASC 350-40. We believe that continued investment in research and development is essential to attaining our strategic objectives. 55 Sales and Marketing Expenses. Our sales and marketing expenses consist primarily of compensation and related costs for sales and marketing personnel, trade show and exhibit expenses, travel expenses, commissions and promotional materials. General and Administrative Expenses. Our general and administrative expenses consist primarily of compensation and related costs for executive, finance, information system and human resources personnel, professional fees (including legal and accounting fees), insurance, provisions for credit loss (doubtful debts) and other general corporate expenses. Restructuring and related charges. Restructuring expenses consist primarily of costs associated with reduction in workforce, consolidation of excess facilities, termination of contracts and the restructuring of certain business functions. Restructuring and related expenses are reported separately in the consolidated statements of operations. Acquisition and integration-related charges. Acquisition-related expenses include those expenses related to acquisitions that would otherwise not have been incurred by the Company, including professional and services fees, such as legal, audit, consulting, paying agent and other fees. Acquisition-related costs are not included as components of consideration transferred but are accounted for as expenses in the period in which the costs are incurred. Integration-related expenses represent incremental costs related to combining the Company and its business acquisitions, primarily third-party consulting and other third-party services related to merging the previously separate companies' systems and processes. Financial and other expenses, net. Our financial and other expenses, net, consist primarily of gains and losses arising from the re-measurement of transactions and balances denominated in non-dollar currencies into dollars, gains and losses from our currency hedging activity, interest paid on bank loans and factoring activities, holdback amount fair value adjustments other fees and commissions paid to banks, actuarial losses and other expenses. Taxes. Our taxes on income consist of current corporate tax expenses in various locations and changes in tax deferred assets and liabilities, as well as reserves for uncertain tax positions. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the U.S (“U.S. GAAP”). These accounting principles require management to make certain estimates, judgments and assumptions based upon information available at the time they are made, historical experience and various other factors that are believed to be reasonable under the circumstances. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the periods presented. Our management believes the accounting policies that affect its more significant judgments and estimates used in the preparation of its consolidated financial statements and which are the most critical to aid in fully understanding and evaluating our reported financial results include the following: • Revenue recognition; • Inventory valuation; and • Business combination. Revenue recognition We generate revenues from selling products and services to end users, distributors, system integrators and original equipment manufacturers (“OEM”). The Company recognizes revenue when (or as) it satisfies performance obligations by transferring promised products or services to its customers in an amount that reflects the consideration the Company expects to receive. The Company applies the following five steps: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied. The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. For each contract, the Company considers the promise to transfer tangible products, software products and licenses, network roll-out, professional services and customer support, each of which are distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to any variable consideration, to determine the net consideration which the Company expects to receive. As the Company’s standard payment terms are less than one year, the contracts have no significant financing component. The Company allocates the transaction price to each distinct performance obligation, based on their relative standalone selling price. Revenue from tangible products is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied). 56 The revenues from customer support and extended warranty are recognized ratably over the contract period and the costs associated with these contracts are recognized as incurred. Revenues from network roll-out and professional services are recognized when the Company's performance obligation is satisfied, usually upon customer acceptance. The Company accounts for rebates and stock rotations provided to customers as variable consideration, based on historical analysis of credit memo data, rebate plans and stock rotation arrangements, as a deduction from revenue in the period in which the revenue is recognized. Inventory valuation. Our inventories are stated at the lower of cost or realizable net value. Cost is determined by using the moving average cost method. At each balance sheet date, we evaluate our inventory balance for excess quantities and obsolescence. This evaluation includes an analysis of slow-moving items and sales levels by product and projections of future demand. If needed, we write off inventories that are considered obsolete or excessive. If future demand or market conditions are less favorable than our projections, additional inventory write-offs may be required and would be reflected in cost of revenues in the period the revision is made. Business Combination. We apply the provisions of ASC 805, “Business Combination,” and we allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from customer relationships, acquired technology and acquired trademarks from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred. Impact of recently adopted accounting standards The Company has reviewed recent accounting pronouncements and concluded that they are either not applicable to its business or that no material effect is expected on the consolidated financial statements as a result of their future adoption (see Note 2 of our audited consolidated financial statements). Comparison of Period to Period Results of Operations The following table presents a consolidated statement of operations data for the periods indicated as a percentage of total revenues. Year Ended December 31 2025 2024 Revenues 100 % 100 % Cost of revenues 66.2 65.3 Gross profit 33.8 34.7 Operating expenses: Research and development, net 9.0 8.9 Sales and marketing 14.4 11.3 General and administrative 7.2 3.6 Restructuring and related charges 1.1 0.4 Acquisition and integration-related charges - 0.4 Other operating expenses - 0.3 Total operating expenses 31.7 24.9 Operating income 2.1 9.8 Financial expenses and others, net 1.9 2.9 Taxes on income 0.8 0.8 Net Income (Loss) (0.6 )% 6.1 % 57 Year ended December 31, 2025 compared to year ended December 31, 2024 Revenues. Revenues totaled $338.7 million in 2025 as compared to $394.2 million in 2024, a decrease of $55.5 million, or 14.1%. Revenues in North America increased to $112.8 million in 2025, from $89.9 million in 2024. Revenues in India decreased to $116.7 million in 2025, from $167.6 million in 2024. Revenues in EMEA decreased to $49.3 million in 2025, from $65.0 million in 2024. Revenues in Latin America decreased to $30.4 million in 2025, from $37.2 million in 2024. Revenues in APAC decreased to $29.7 million in 2025, from $34.5 million in 2024. The acquisition of E2E by way of merger at the beginning of 2025 contributed to our revenue. Cost of Revenues. Cost of revenue totaled $224.2 million in 2025 as compared to $257.3 million in 2024, a decrease of $33.2 million, or 12.9%. The decrease was primarily due to a decrease of $35.5 million related to material costs, mainly resulted from the lower volume of revenues, a decrease of $1.1 million related to salaries and employee-related expenses, a decrease of $0.8 million in shipping and storage costs (net of increase in cost), offset by an increase of $3.2 million in service costs, an increase of $1.0 of million in Amortization of intangibles and increase of $0.1 in other Expenses. Our cost of revenue includes the impact of the acquisition of E2E by way of merger at the beginning of 2025. Gross Profit. Gross profit decreased to $114.6 million or 33.8% as a percentage of revenues in 2025 from $136.9 million or 34.7% in 2024. This decrease in gross profit is mainly attributable to the decline in revenues compared to the prior year, partially offset by better regional mixture with increase in revenues from North America and reduction in revenues from India, tight control over general operational costs, and improved supply chain costs. Research and Development Expenses, Net. Our net research and development expenses totaled $30.4 million in 2025 as compared to $35.0 million in 2024, resulting in a decrease of $4.5 million, or 12.9%. The decrease was primarily due to a decrease of $4.7 million in salaries and related expenses, and was offset by an increase of $0.2 others research and development expenses. Our research and development expenses include the impact of the acquisition of E2E by way of merger at the beginning of 2025. Our research and development efforts are a key element of our strategy and are essential to our success. We intend to maintain or slightly increase our commitment to research and development, and an increase or a decrease in our total revenue would not necessarily result in a proportional increase or decrease in the levels of our research and development expenditures. As a percentage of revenues, research and development expenses represent 9.0% and 8.9% in 2025 and 2024. Sales and Marketing Expenses. Sales and marketing expenses totaled $48.7 million in 2025, as compared to $44.7 million in 2024, an increase of $4.0 million, or 8.9%. The increase was primarily attributed to an increase of $2.5 million in salaries and related expenses, an increase of $0.6 million in travel costs, an increase of $0.3 million in software and hardware maintenance, an increase of $0.3 million in depreciation expenses, and an increase of $0.3 million in other sales and marketing expenses. Our sales and marketing expenses include the impact of the acquisition of E2E by way of merger at the beginning of 2025. General and Administrative Expenses. General and administrative expenses totaled $24.4 million in 2025 as compared to $14.2 million in 2024, an increase of $10.2 million, or 71.5%. The increase was primarily attributed to a change of $9.3 million in credit loss expenses. The change in credit loss expenses was mainly attributed to the fact that 2024 included a recovery of $9.1 million from a single customer in Latin America, which significantly reduced credit loss expenses in that period. In addition, there was an increase of $1.1 million in information technology (IT) related costs, an increase of $0.4 million in depreciation expenses, and an increase of 0.6 million in other general and administrative expenses, offset by a decrease of $0.8 million in salary and employee-related expenses, and a decrease of $0.4 million in audit and consulting fees. As a percentage of revenues, general and administrative expenses were 7.2% in 2025 compared to 3.6% in 2024. Our general and administrative expenses include the impact of the acquisition of E2E by way of merger at the beginning of 2025. 58 Restructuring and related charges. Restructuring and related charges totaled $3.7 million in 2025, as compared to $1.4 million in 2024. The increase was primarily attributed to contractual and termination severance pay and other related costs for the impacted employees. These expenses are not incurred on a consistent basis and may vary from period to period depending on the scope and nature of restructuring programs implemented. Acquisition and integration-related charges. Acquisition and integration-related charges totaled $0.1 million in 2025, as compared to $1.7 million in 2024. The expenses in 2024 were primarily related to the acquisition and integration of Siklu, while in 2025 they were primarily related to the acquisition of E2E. The decrease included a $1.2 million reduction in integration-related expenses, partially offset by a $0.2 million increase in acquisition-related professional and services fees. In addition, the Company recorded a $0.6 million favorable adjustment to the earn-out liability related to the E2E acquisition in 2025, compared to no such adjustment in 2024. Other operating expenses. Other operating expenses totaled $0.0 million in 2025, as compared to $1.2 million in 2024, related to the provision for the settlement of a class action claim (see Note 1C of our audited consolidated financial statements). Financial and other expenses, Net. Financial expenses and others, net totaled $6.5 million in 2025 as compared to $11.5 million in 2024, a decrease of $4.9 million, or 43.0%. The decrease was mainly attributed to a favorable change of $3.5 million related to mark-to-market revaluation of acquisition-related holdback liability, which resulted in income in 2025 compared to expenses in 2024, a decrease of $1.2 million in interest on loans and factoring fees, a decrease of $0.1 million in exchange rate differences, and a decrease of $0.1 million in other financial expenses. As a percentage of revenues, financial and other expenses, net, were 1.9% in 2025 compared to 2.9% in 2024. Taxes on income. Tax expenses were $2.8 million in 2025, compared to $3.2 million in 2024, resulting in a decrease of $0.4 million. Taxes on income are dependent upon where our profits are generated, such as the location and taxation of our subsidiaries. The decrease primarily reflects reduced profitability. Net Income. In 2025, the Company had a net loss of $2.1 million compared to a net income of $24.1 million in 2024. As a percentage of revenues, net loss was (0.6%) in 2025 compared to a net income of 6.1% in 2024. Impact of Currency Fluctuations The majority of our revenues are denominated in U.S. dollars, and to a lesser extent, in INR (Indian Rupee), Euro, and in other currencies. Our cost of revenues is primarily denominated in U.S. dollars as well, while a major part of our operating expenses is in New Israeli Shekel (NIS), and to a lesser extent, in Indian INR (Indian Rupee), Euro, NOK (Norwegian Kroner), BRL (Brazilian Real) and other currencies. We anticipate that a material portion of our operating expenses will continue to be in NIS. Fluctuation in the exchange rates between any of these currencies (other than U.S. dollars) and the U.S. dollar could significantly impact our results of operations as well as the comparability of these results in different periods. Even in cases where our revenues or our expenses in a certain currency are relatively modest, high volatility of the exchange rates with the U.S. dollar can still have a significant impact on our results of operations. For example, in recent years we have suffered a significant adverse impact on our financial results due to fluctuation in the exchange rates of the U.S. dollar compared to the INR (Indian Rupee), New Israeli Shekel (NIS), NOK (Norwegian Kroner), NGN (Nigerian Naira) and the ARS (Argentine Peso). We partially reduce currency exposure to NIS by entering into hedging transactions and may do so for other currencies in the future. The effects of foreign currency re-measurements are reported in our consolidated statements of operations. For a discussion of our hedging transactions, please see Item 11.”QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK”. 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 appreciated in relation to the NIS at a rate of -12.5%, from NIS 3.647 per $1 on December 31, 2024, to NIS 3.19 per $1 on December 31, 2025. In 2024, the U.S. dollar appreciated in relation to the NIS at a rate of 0.6%, from NIS 3.627 per $1 on December 31, 2023, to NIS 3.647 per $1 on December 31, 2024. The annual rate of inflation in Israel was 2.6% in 2025 and 3.2% in 2024. Transactions and balances in currencies other than U.S. dollars are re-measured into U.S. dollars according to the principles in ASC Topic 830, “Foreign Currency Matters.” Gains and losses arising from re-measurement are recorded as financial income or expense, as applicable. 59 Effects of Government Regulations and Location on the Company’s Business For a discussion of the effects of governmental regulation and our location in Israel on our business, see Item 3. “KEY INFORMATION” – Risk Factors – “Risks Relating to Operations in Israel”. Additionally, due to the nature of our global presence and operations, we are subject to the law and jurisdiction in the countries where our branches or subsidiaries are located or in which we conduct our operations. For a discussion of the effects of governmental regulation and our global spread and operation of our business, see Item 3. “KEY INFORMATION” – Risk Factors – “We are subject to complex and evolving regulatory requirements that may be difficult and expensive to comply with and that could adversely impact our business, results of operations and financial condition”, “As part of our business are located throughout Europe, we are exposed to the negative impact of invasion of Ukraine by Russia on the European markets in which we operate and on our operations”, “Our international operations expose us to the risk of fluctuations in currency exchange rates and restrictions related to foreign currency exchange controls” and “Due to the volume of our sales in emerging markets, we are susceptible to a number of political, economic and regulatory risks that could have a material adverse effect on our business, reputation, financial condition and results of operations. This includes the business practices in such emerging markets, that may expose us to legal and business conduct-related regulatory risks”. B. Liquidity and Capital Resources Since our initial public offering in August 2000, we have financed our operations primarily through the proceeds of that initial public offering, proceeds from exercise of stock options, follow-on offerings, cash provided by operating activities, and various loans and facilities from banks, including factoring and grants from the IIA. The Company entered into the revolving Credit Facility, dated as of March 14, 2013 by and among the Company and Bank Hapoalim B.M., HSBC Bank Plc, Bank Leumi Le’Israel Ltd. and First International Bank of Israel Ltd. (the “Credit Facility”). The Credit Facility has been renewed and amended several times during the past years according to the Company’s needs and financial position. In June 2023, the Company signed an amendment to the Credit Facility pursuant to which the term of the Credit Facility was extended by additional year to June 30, 2024. This amendment also included an increase of $9.8 million to $72 million to the Credit Facility for Loans and a decrease of $11.9 million to the bank guarantees credit lines to $45.9 million. In December 2023, in connection with the acquisition of Siklu, the Company signed an amendment to the Credit Facility in which it obtained the approval of the syndication of banks to carry out Siklu's acquisition and added additional bank, Bank Mizrahi Tefahot Ltd., to the syndication agreement. This amendment also included an increase of $5 million to $77 million to the Credit Facility for Loans. In June 2024, the Company signed an amendment to the Credit Facility pursuant to which the term of the Credit Facility was extended by an additional 2 years to June 30, 2026. This amendment also included a decrease of $5 million to the bank guarantees credit lines to $40.9 million. As of December 31, 2025, the Company has utilized $19.0 million of the $77 million available under the Credit Facility for short-term loans. During 2025, the credit lines carried interest rates in the range of 4.94% and 6.44%. As of December 31, 2025, the total credit facilities for bank guarantees and for loans is $117.9 million. The Credit Facility is secured by a floating charge over all Company assets as well as several customary fixed charges on specific assets. Repayment could be accelerated by the financial institutions in certain events of default including in insolvency events, failure to comply with financial covenants or an event in which a current or future shareholder acquires control (as defined under the Israel Securities Law) of the Company. The Credit Facility contains financial and other covenants requiring that the Company maintains, among other things, minimum shareholders' equity value and financial assets, a certain ratio between its shareholders' equity (excluding total intangible assets and goodwill) and the total value of its assets (excluding total intangible assets and goodwill) on its balance sheet, a certain ratio between its net financial debt to each of its working capital and accounts receivable. As of December 31, 2025 and 2024, the Company met all of its covenants. As of December 31, 2025, we had approximately $38.4 million in cash and cash equivalents. 60 In 2025, our $31.6 million in cash provided by operating activities was affected by the following principal factors: Net loss of $2.1 million; • $43.7 million decrease in trade and other accounts receivable and prepaid expenses, net; • $14.3 million of depreciation and amortization expenses; • $4.6 million decrease in operating lease right-of-use assets; and • $4.1 million share-based compensation expenses. These factors were offset mainly by: • $27.1 million decrease in trade and other accounts payable and accrued expenses, net; • $3.1 million decrease in operating lease liability; • $2.1 million increase in inventories; • $0.6 million decrease in accrued severance pay and pensions, net; and • $0.2 million decrease in deferred revenues. In 2024, our $26.2 million in cash provided by operating activities was affected by the following principal factors: • Net income of $24.1 million; • $26.9 million increase in trade and other accounts payable and accrued expenses, net; • $12.1 million of depreciation and amortization expenses; • $7.6 million decrease in inventories; • $4.6 million decrease in operating lease right-of-use assets; • $4.3 million share-based compensation expenses; and • $0.3 million of loss from sale of property and equipment, net. These factors were offset mainly by: • $44.9 increase in trade and other accounts receivable and prepaid expenses, net; • $4.2 million decrease in operating lease liability; • $3.6 million decrease in deferred revenues; and $1.0 million decrease in accrued severance pay and pensions, net Net cash used in investing activities was approximately $24 million for the year ending December 31, 2025, as compared to net cash used in investing activities of approximately $16.5 million for the year ended December 31, 2024. In the year ended December 31, 2025, our investing activities were comprised of $13.6 million paid for purchases of property and equipment, $6.6 million paid as cash consideration for the acquisition of E2E, and $3.8 million of software development costs capitalized. In the year ended December 31, 2024, our investing activities were comprised of $14.6 million paid for purchases of property and equipment and $1.9 million of software development costs capitalized. Net cash used in financing activities was approximately $5.5 million for the year ended December 31, 2025, as compared to approximately $1.5 million net cash used in financing activities for the year ending December 31, 2024. In the year ended December 31, 2025, our net cash used in financing activities was primarily due to repayments of bank credits and loans of $6.2 million offset by proceeds from exercise of stock options of $0.7 million. In the year ended December 31, 2024, our net cash used in financing activities was primarily due to repayments of bank credits and loans of $7.4 million offset by proceeds from exercise of stock options of $5.9 million. Our material cash requirements as of December 31, 2025, and any subsequent interim period, primarily include our capital expenditures, lease obligations and purchase obligations. Our capital expenditure primarily consists of purchases of manufacturing and test equipment, computers and peripheral equipment, office furniture and equipment. Our capital expenditures were $13.6 million in 2025, $14.6 million in 2024 and $10.0 million in 2023. We will continue to make capital expenditures to meet the expected growth of our business. 61 During the normal course of business, we enter into certain lease contracts with lease terms through 2034. As of December 31, 2025, the total remaining contractual obligations are approximately $17.7 million, of which $4.9 million is for the next 12 months. Our lease obligations consist of the commitments under the lease agreements for offices and warehouses for our facilities worldwide, as well as car leases. Our facilities are leased under several lease agreements with various expiration dates. Our leasing expenses were $4.5 million in 2025, $4.6 million in 2024, and $4.0 million in 2023. Our purchase obligations consist primarily of commitments for our operating activities and working capital needs. Our operating expenses were $107.3 million in 2025, $98.1 million in 2024 and $98.7 million in 2023. As of December 31, 2025, the Company had outstanding inventory purchase orders with its suppliers in the amount of $18.2 million. Our capital requirements are dependent on many factors, including working capital requirements to finance the business activity of the Company, and the allocation of resources to research and development, marketing and sales activities. We plan on continuing to raise capital as we may require, subject to changes in our business activities. We believe that the current working capital, cash and cash equivalent balances together with the Credit Facility available with the five financial institutions, will be sufficient for our expected requirements through at least the next 12 months. C. Research and Development, Patents and Licenses, Etc. We place considerable emphasis on research and development to improve and expand the capabilities of our existing products, to develop new products (with particular emphasis on equipment for emerging IP-based networks) and to lower the cost of producing both existing and future products. We intend to continue to devote a significant portion of our personnel and financial resources to research and development. As part of our product development process, we maintain close relationships with our customers to identify market needs and to define appropriate product specifications. In addition, we intend to continue to comply with industry standards and, in order to participate in the formulation of European standards, we are full members of the European Telecommunications Standards Institute. Our research and development activities are conducted mainly at our facilities in Rosh Ha’Ayin, Israel, and also at our sites in Greece, Romania and India (Bangalore). As of December 31, 2025, our research, development and engineering staff consisted of 257 employees globally. Our research and development team includes highly specialized engineers and technicians with expertise in the fields of millimeter-wave design, modem and signal processing, data communications, system management and networking solutions. The IIA sometimes participate in our R&D funding for our Israel-based company. For more information regarding the restrictions imposed by the R&D Law and regarding grants received by us from the IIA, please see Item 4. “INFORMATION ON THE COMPANY- B. Business Overview - The Israel Innovation Authority.” Our research and development department provides us with the ability to design and develop most of the aspects of our proprietary solutions, from chip-level, including both ASICs and RFICs, to full system integration. Our research and development projects currently in process include extensions to our leading IP-based networking product lines and development of new technologies to support future product concepts. In addition, our engineers continually work to redesign our products with the goal of improving their manufacturability and testability while reducing costs. Intellectual Property For a description of our intellectual property see Item 4. “INFORMATION ON THE COMPANY – B. Business Overview - Intellectual Property”. D. Trend Information For a description of the trend information relevant to us see discussions in Parts A and B of Item 5. “OPERATING AND FINANCIAL REVIEW AND PROSPECTS”. E. Critical Accounting Estimates See Item 5 “Critical Accounting Policies and Estimates” above. 62 Effect of Recent Accounting Pronouncements See Note 2, Significant Accounting Policies, in Notes to the Consolidated Financial Statements in Item 8 of Part II of this Report, for a full description of recent accounting pronouncements, including the expected dates of adoption and estimated effects on financial condition and results of operations, which is incorporated herein by reference.