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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Title of Each Class
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Trading Symbol(s)
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Name of Each Exchange on Which Registered
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Ordinary Shares, Par Value NIS 0.01
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CRNT
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Nasdaq Global Select Market
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Large accelerated filer ☐
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Accelerated filer ☑
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Non-accelerated filer ☐
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Emerging growth company ☐
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PART I |
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PART II |
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PART III |
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105 |
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references to “Ceragon,” the “Company,” “us,” “we,” “our” and the “registrant”
refer to Ceragon Networks Ltd., an Israeli company, and its consolidated subsidiaries; |
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references to “ordinary shares,” “our shares” and similar expressions refer to our Ordinary Shares, NIS 0.01
nominal (par) value per share; |
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references to “dollars,” “U.S. dollars”, “USD” and “$” are to United States Dollars;
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references to “shekels” and “NIS” are to New Israeli Shekels, the Israeli currency; |
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references to the “Companies Law” are to Israel’s Companies Law, 5759-1999; |
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references to the “SEC” are to the United States Securities and Exchange Commission; and |
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references to the "Nasdaq Rules" are to the rules of the Nasdaq Global Select Market. |
ITEM 1. |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2. |
OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3. |
KEY INFORMATION |
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the effects of global economic trends, including recession, rising inflation, rising interest rates, commodity price increases and
fluctuations, commodity shortages and exposure to economic slowdown, on our and our customers’ business, financial condition and
results of operations; |
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the impact of delays in the transition to 5G technologies and in the 5G rollout on our revenues if such transition is developed differently
than we anticipated, either in terms of technology, use-case, timeline or otherwise; |
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if we fail to effectively cope with the high volatility in the supply needs of our customers, we may be unable to timely fulfill
our customer commitments (for example, delivery issues due to long lead time and availability of components and manufacturing power),
and may be obligated to pay expediting fees to our contract manufacturers, penalties to our customers for delays, and may be subject to
order cancelation, all of which would adversely affect our business and results of operations; |
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the effect of the concentration of a major portion of our business on large mobile operators around the world from which we derive
a significant portion of our ordering, that due to their significant weight compared to the overall ordering by other customers during
the same time period, coupled with inconsistent ordering patterns and volume of business directed to us (which may deviate as a result
of parameters such as buying decisions, price lists, roll-out strategy, local market conditions and regulatory environment), creates high
volatility with respect to our financial results and results of operations, including our revenues, gross margin and cash flow;
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the effects of volatility in our revenues, margins and working capital needs and the incurrence of substantial losses and negative
cash flows that we have experienced in recent years, which if continue, would adversely affect our business and financial condition and
in such case we cannot assure that we will be able to maintain improving trends and convert our current backlog into profitability and
positive operating cash flows; |
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we may be exposed to inventory-related losses on inventory purchased by our contract manufacturers and other suppliers, or to increased
expenses should unexpected production ramp up be required due to inaccurate forecasts or business changes. In addition, part of our inventory
may be written off, which would increase our cost of revenues; |
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competition from other wireless transport equipment providers and from other communication solutions that compete with our wireless
solutions; |
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we rely on third-party manufacturers, suppliers and service providers and such reliance may disrupt the proper and timely management
of deliveries of our products, a risk that is intensified in the case of a single source supplier; |
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the global supply of electronic components, including integrated circuits has experienced a sharp increase in demand in the past
several years, coupled with a lack of sufficient production capacity, which has effected and may still effect the lead-time for our components
and their prices; |
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increased breaches of network or information technology security along with an increase in cyber-attack activities, either on our
or our customers’ networks, could have an adverse effect on our business; |
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merger and acquisition activities expose us to risks and liabilities, potential adverse reactions or changes to business relationships,
including those resulting from the completion of the transaction with Siklu and our revenues, net income and operating cash flow attributed
to the Siklu business might deviate significantly from anticipated levels; |
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the expansion of our service offering to new areas, including managed services, software-based services (SaaS) and solutions for
wireless communication networks design, might pose product development, marketing, sales, operation, implementation and support challenges
that might result in significant losses and may adversely affect our financial results and achievement of projected revenues levels;
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risks related to expansion into new market segments, such as the private networks market, the development and commercialization of
new products, and the rapid change in the markets for our products and in related technologies and operational concepts development;
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risks related to our forward-looking forecasts, with respect to which there is no assurance that such forecasts will materialize
as we predicted; |
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risks relating to the failure to attract or retain qualified and skilled “talents” and personnel and the intense competition
for such “talents” and personnel; |
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difficulties in predicting our gross margin as it is exposed to significant fluctuations as a result of potential changes in the
various geographical locations where we generate revenues as well as product mix and software and services portions; |
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our engagement in providing installation or rollout projects for our customers and end users whether directly or via third party
prime contractor, which are long-term projects that are subject to inherent risks, including early delivery of our products with delayed
payment terms, delays or failures in acceptance testing procedures, and potential significant collection risk from our customers
all of which may result in substantial period-to-period fluctuations in our results of operations, cash flow and financial condition;
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changes in privacy and data protection laws and regulations could have an adverse effect on our business prospects, results of operations,
and financial condition; |
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the impact of complex and evolving regulatory requirements in which we operate, on our business, results of operations and financial
condition; |
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risks relating to macro and micro adverse effects on the global and European markets in which we operate due to the invasion of Ukraine
by Russia, such as, among others, cancellation or suspension of orders placed by Russian customers or for Russian end-users, disruption
of delivery of raw materials, oil and gas, goods, and supplies’ price increases, disruption to deliveries, shipping and transportation,
imposition of sanctions, export control restrictions and embargoes, loss of business, cyber-attacks, commodity shortages and other effects
that could have an adverse effect on us, our business, suppliers and customers; |
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risks related to fluctuations in currency exchange rates and restrictions related to foreign currency exchange controls;
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the occurrence of international, political, regulatory or economic events in emerging markets, where the majority of our sales is
made; |
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risks relating to disagreements with tax authorities regarding tax positions that we have taken which may result in increased tax
liabilities; |
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the impact of industry downturn, reduction in our customers’ profitability due to increased regulation or new mobile services
requirements; |
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the impact of the latest Israel-Hamas war, as well as the conditions in the Middle East, could impede our ability to sell, operate
and develop, manufacture and deliver products and components and harm our business and financial results; and |
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risks relating to attempts for a hostile takeover, or shareholder activism, which may, divert our management’s and Board’s
attention and resources from our business and could give rise to perceived uncertainties as to our future direction, could result in the
loss of potential business opportunities, limit our ability to raise funds and make it more difficult for us to attract and retain qualified
personnel for positions in both management and Board levels. |
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new generations of products replacing older ones, including changes in products because of technological advances and cost reduction
measures; and |
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the need of our contract manufacturers to order raw materials that have long lead times, our need to order a Last Time Buy of end
of life components and our inability to estimate exact amounts and types of items thus needed. |
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The component suppliers may experience shortages in components and interrupt or delay their shipments to our contract manufacturers.
Consequently, these shortages could delay the manufacture of our products and shipments to our customers. |
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The component suppliers could discontinue the manufacture or supply of components used in our systems. In such an event, we or our
contract manufacturers may be unable to develop alternative sources for the components necessary to manufacture our products, which could
force us to redesign our products or buy a large stock of the component into inventory before it is discontinued. Any such redesign of
our products would likely interrupt the manufacturing process and could cause delays in our product shipments. Moreover, a significant
modification in our product design may increase our manufacturing costs and bring about lower gross margins. In addition, we may be exposed
to excess inventory of such component, which we will have to write-down in case the demand is not as high as we anticipated at the time
of buying these components. |
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The component suppliers may significantly increase component prices at any time and particularly if demand for certain components
increases dramatically in the global market which would have an adverse effect on the Company’s business. |
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The component suppliers may significantly increase the time to produce and deliver their components at any time resulting in an immediate
effect, as evidenced recently with respect to the semiconductors foundry industry. These lead time increases would delay our products’
delivery timetable and could expose us to shortage in supply or late supplies that may trigger penalties, orders cancellation and losing
some of our customers. |
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The component suppliers may refuse or be unable to further supply such component for various reasons, including, among other things,
their prioritization, focus, regulations, force majeure events or financial situation. |
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we may not be able to discover, or the target company may fail to provide us with, all relevant information and documents in relation
to the transaction, which could lead to a failure to achieve the objectives of acquisition and to a substantial loss; |
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we may fail to reveal that the due diligence materials and documents provided contain untrue statements of material facts or omit
to state a material fact necessary to make the statements therein not misleading, hence fail to achieve the objectives of acquisition
and suffer a substantial loss; |
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we may fail to correctly assess the due diligence investigation findings, establish a correct investment thesis or establish a correct
post-merger integration plan; |
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the process of integrating an acquired business including, for example, the operations, systems, technologies, products, and personnel
of the combined companies, particularly companies with large and widespread operations and/or complex products, may be prolonged due to
unforeseen difficulties; |
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the implementation of the transaction may distract and divert management’s attention from the normal daily operations of our
business; |
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we may sustain and record significant expenditure and costs associated with outstanding transactions that either did not or will
not materialize or would fail to achieve its objectives; |
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there will be increased expenses associated with the transaction, and we may need to use a substantial portion of our cash resources
or incur debt in order to cover such expenses; expenses which the combined merged companies may not be sufficient to offset; |
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we may generate negative cash flow as a result of such transaction, which may require fund raising that may not be available for
us; |
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we may incur unexpected accounting and other expenses associated with the transaction, such as tax expenses, write offs, amortization
expenses related to intangible assets, restructuring costs, litigation costs or such other costs derived from the acquisition; |
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the transaction may harm our business as currently conducted (for example, there may be a temporary loss of revenues, we may experience
loss of current key employees, customers, resellers, vendors and other business partners or companies with whom we engage today or which
relate to any acquired company); |
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we may be required to issue ordinary shares as part of the transaction, which would dilute our current shareholders; |
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we may need to assume material liabilities of the merged entity; |
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in certain cases, mergers and acquisitions require special approvals, or are subject to scrutiny by the local authorities, and failing
to comply with such requirements or to receive such approvals, may prevent or limit our ability to complete the acquisitions as well as
expose us to legal proceedings prior or following the consummation of such acquisitions. In some cases, such proceedings, if initiated,
may conclude in a requirement to divest portions of the acquired business; |
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the failure to successfully complete the integration associated with the transaction (including integrating any acquired technology
into our products), which may cause new markets we were aiming for not to materialize or in which competitors may have a stronger market
position; or |
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we may fail to effectively obtain the technological improvement. |
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Market Acceptance: There is no guarantee that our products, solutions or services will gain acceptance in the new market segment,
which may be significantly different from our existing markets in terms of customer preferences, culture, regulations, and competition.
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Brand Development Risks: Establishing and building our brand in a new market segment, could require significant time and resources,
potentially delaying our planned growth trajectory. A prolonged brand-building process may also reduce the speed at which we can realize
revenues from new segments. |
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Customer Service and Support: As we acquire new customers, our customer service and support operations will need to expand and adapt
to meet their needs. If we are unable to provide high-quality customer service and support, our reputation and brand value could suffer,
which may adversely affect our customer retention rates and our company's overall performance. |
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Regulatory Compliance: Each new market segment is subject to specific regulations and compliance requirements that we must adhere
to. Non-compliance or changes in these regulations could result in fines, sanctions, or other legal consequences that may have a material
adverse effect on our business and operations. |
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Increased Competition: New market segments often come with established competitors who have a better understanding of the local market
dynamics and customer base. We may face significant competition, which can hinder our market penetration efforts and negatively impact
our profitability. |
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Sales and Marketing Challenges: Successfully entering a new market segment typically requires substantial sales and marketing efforts.
There can be no assurance that our marketing strategies will be effective in attracting new customers or that we can do so cost-effectively.
Ineffective sales and marketing efforts may lead to lower than expected sales and adversely affect our revenue and profitability.
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Innovation Uncertainty: The process of developing new products is lengthy, complex and uncertain. It requires significant research,
development, and testing, all of which may fail to result in viable products. Our R&D efforts may not yield new products that can
be commercialized. |
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Market Acceptance: There is a risk that new products may not achieve market acceptance, as our target markets may not be receptive
to our new products, or competitors may offer superior or more cost-effective products. |
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Intellectual Property Risks: There is the risk associated with protecting new intellectual property and potential infringement upon
the intellectual property rights of others. If we cannot adequately protect our intellectual property or if we infringe upon the rights
of others, our competitive position may suffer. |
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Manufacturing and Supply Chain Risks: We may encounter difficulties in scaling up production to meet demand, including problems involving
production yields, quality control and assurance, and shortages of essential components. |
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Pricing and Reimbursement: There could be pricing pressure from competitors and difficulty in obtaining adequate reimbursement for
new products, which could affect their profitability. |
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Product Liability: New products are susceptible to defects, which could lead to liability and harm our reputation. |
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unexpected or inconsistent changes in regulatory requirements, including security regulations, licensing and allocation processes;
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unexpected changes in or imposition of tax, tariffs, customs levies or other barriers and restrictions; |
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fluctuations in foreign currency exchange rates; |
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restrictions on currency and cash repatriation; |
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the burden of complying with a variety of foreign laws, including foreign import restrictions which may be applicable to our products;
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difficulties in protecting intellectual property; |
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laws and business practices favoring local competitors; |
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collection delays and uncertainties; |
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difficulties in transferring or obtaining funds from certain countries within these emerging markets; |
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requirements to do business in local currency; and |
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judicial systems that do not apply the principals of natural justice with regard to disputes with foreign nationals. |
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announcements of technological innovations or new commercial products by us or by our competitors; |
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announcement of significant deals won by us or by our competitors; |
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competitors’ positions and other events related to our market; |
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changes in the Company’s estimations regarding forward looking statements and/or announcement of actual results that vary significantly
from such estimations; |
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the announcement of corporate transactions, merger and acquisition activities or other similar events by companies in our field or
industry; |
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changes and developments effecting our field or industry; |
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period to period fluctuations in our results of operations and cash flow; |
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changes in financial estimates by securities analysts; |
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our earnings releases and the earnings releases of our competitors; |
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our ability to show and accurately predict revenues; |
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our need to raise additional funds and the success or failure thereof; |
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other announcements, whether by the Company or others, referring to the Company’s financial condition, results of operations
and changes in strategy; |
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changes in senior management or the board of directors; |
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the general state of the securities markets (with a particular emphasis on the technology and Israeli sectors thereof); |
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the general state of the credit markets, the volatility of which could have an adverse effect on our investments; |
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developments concerning material proprietary rights, including material patents; |
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whether we or our competitors
receive or are denied regulatory approvals; and |
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global and local macroeconomic developments, components shortage, effects of the Russia-Ukraine war, the conflict between China and
Taiwan, and the state of war declared in Israel in October 2023, and other global occurrences, such as an outbreak of pandemic with similar
effect. |
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hostilities involving Israel; |
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the interruption or curtailment of trade between Israel and its present trading partners; |
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a downturn in the economic or financial condition of Israel; and |
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a full or partial mobilization of the reserve forces of the Israeli army. |
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the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q and current reports on Form
8-K; |
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the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of securities registered
under the Exchange Act, including extensive disclosure of compensation paid or payable to certain of our highly compensated executives
as well as disclosure of the compensation determination process; |
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the provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; and
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the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and establishing
insider liability for profit realized from any “short-swing” trading transaction (a purchase and sale, or sale and purchase,
of the issuer’s equity securities within less than six months). |
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Short-haul solutions, which typically provide a wireless link capacity of up to 2 Gbps per link for backhaul, and/or a link capacity
of up to 20Gbps for fronthaul. These solutions are available for distances of several hundred feet to 10 miles. Short-haul links are deployed
in access applications (macro cells and small cells and distributed cells) wirelessly connecting the individual base-stations or base-station
element (i.e. a “central unit”, a “distributed unit” or a “radio unit”) towers to the core network.
Short-haul solutions are also used in a range of non-carrier “vertical” applications such as state and local government, public
safety, education and off-shore communication for oil and gas platforms. |
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Long-haul solutions, which typically provide a capacity of up to 20 Gbps, are used in the “highways” of the telecommunication
backbone network. These links are typically used to carry services at distances of 10 to 50 miles, and, using the right planning, configuration
and equipment, can also bridge distances of 100 miles and more. Long-haul solutions are also used in a range of non-carrier “vertical”
applications such as broadcast, state and local government, public safety, utilities and offshore communication for oil and gas platforms.
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In 4G, the fronthaul transport network connects Remote Radio Heads (RRHs) to distant centralized/cloud Baseband Units (BBUs), while
backhaul connects BBUs back to 4G Evolved Packet Core (EPC). In 5G, the New Radios (NR) are connected to the BBU, which can be disaggregated
into a Central Unit (CU) and a Distributed Unit (DU). The new midhaul interconnects the CU to the DU via a new, standardized 3GPP interface.
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With help from organizations such as the operator-led O-RAN Alliance, 5G fronthaul and midhaul network interface specifications are
open and defined in a structured format. This allows MNOs to purchase RUs, DUs, CUs, and the associated transport networks between them,
from anyone. We believe that this presents new market opportunities for Ceragon’s leading wireless transport solutions with our
open network architecture. |
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The widespread surge in network traffic in 2020 to 2023 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 home broadband demand, while today’s home broadband networks are not designed for such usage
patterns. 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. |
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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 & IIoTand 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. |
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Software Defined
Networking (SDN) is an emerging 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 may 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.
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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. |
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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. |
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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. |
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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. |
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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 eventually 5G services. |
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Subscriber
growth continues mainly in emerging markets such as India, Africa and Latin
America, but is getting close to saturation. |
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Increase business
operational efficiency by reducing network-related expenses. Our customers
are able to obtain the required capacity with one-quarter of the spectrum needed otherwise, double network capacity without adding more
equipment simply by remotely expanding wireless link capacity, significantly reduce energy related expenses by utilizing our energy efficient
products, use smaller antennas thereby reducing telecommunication tower leasing costs, and improve their staff productivity with the use
of a single wireless transport platform for their long-haul, short-haul and small/distributed cells transport needs. We offer a range
of solutions for quick and simple modernization of wireless networks to 4G and 5G, which significantly contribute to our customers’
ability to modernize and expand their services. |
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Enhance service
portfolio, quality of experience and reach. Our multicore™ technology
allows our customers to introduce new services (e.g. 5G use cases), to improve subscriber (user) quality of experience generated from
the voice, data and multimedia services that they provide to their customers and to extend their network and services reach in order to
address new markets. Our All-outdoor offering enables quicker installation and deployment, hence improving time-to-market of our customers’
services to their subscribers. |
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Ensure peace
of mind. Our solutions utilize the latest in microwave and millimeter-wave
technology, incorporated in-house developed System-on-Chips (baseband and RF integrated circuits), and use the latest advances in SMT
(Surface-mount technologies) based manufacturing – allowing our customers to benefit from the highest service availability across
their Ceragon-based wireless transport network. |
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All-outdoor solutions combine the functionality of both the indoor and outdoor units in a single, compact device. This weather-proof
enclosure is fastened to an antenna, eliminating the need for rack space or sheltering, as well as the need for air conditioning, and
is more environmentally friendly due to its lower footprint and power consumption. |
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Split-mount solutions consist of: |
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Indoor units which are used to process and manage information transmitted to and from the outdoor unit, aggregate multiple transmission
signals and provide a physical interface to wire-line networks. |
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Outdoor units or Radio Frequency Units (RFU), which are used to control power transmission, and provide an interface between antennas
and indoor units. They are contained in compact weather-proof enclosures fastened to antennas. Indoor units are connected to outdoor units
by standard coaxial or Cat-5 baseband cables. |
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All-indoor solutions refer to solutions in which the entire system (indoor unit and RFU) resides in a single rack inside a transmission
equipment room. A waveguide connection transports the radio signals to the antenna mounted on a tower. All indoor equipment is typically
used in long-haul applications. |
|
• |
Disaggregated wireless transport solutions offer a single radio suitable for all-outdoor, a split-mount scenario, and a networking
unit, which provides versatile and scalable hardware options based on merchant routing silicon and also provides routing capabilities
(L3) that are radio technologies aware. |
|
• |
Pointing out accurate solutions for high movement environments. These are advanced microwave radio systems for use on moving rigs/vessels
where the antenna is stabilized in one or two axes, azimuth or azimuth/elevation. |
|
• |
Antennas are used to transmit and receive microwave radio signals from one side of the wireless link to the other. These devices
are mounted on poles typically placed on rooftops, towers or buildings. We rely on third party vendors to supply this component.
|
|
• |
End-to-End Network Management. Our network management system uses standard management protocol to monitor and control managed devices
at both the element and network level and can be easily integrated into our customers’ existing network management systems.
|
|
• |
PtMP - We acquired a new type of solution that provides Point to Multi-Point offering. This solution is ideal for the emerging 5G
Gigabit Wireless Access (GWA) market for residential customers and many enterprise market segments that require dense gigabit connectivity.
|
Product |
Frequency range |
Application |
Networking & transport technologies |
IP-20C |
6-42GHz, dual-carrier |
Shorthaul, small cells, enterprise |
Carrier Ethernet |
IP-20C-HP |
4-11GHz, dual-carrier |
Longhaul |
Carrier Ethernet |
IP-20S |
6-42GHz |
Shorthaul, enterprise |
Carrier Ethernet |
IP-20E |
71-86GHz |
Shorthaul, small cells, enterprise |
Carrier Ethernet |
IP-20V |
57-66GHz |
Shorthaul, small cells, enterprise |
Carrier Ethernet |
Product |
Frequency range |
Application |
Networking & transport technologies |
IP-20N / IP-20A |
4-86GHz |
Shorthaul, Long-haul |
Carrier Ethernet, TDM |
IP-20F |
4-86GHz |
Shorthaul |
Carrier Ethernet, TDM |
IP-20G |
6-42GHz |
Shorthaul |
Carrier Ethernet, TDM |
Product |
Frequency range |
Application |
Networking & transport technologies |
IP-50E |
71-86GHz |
Shorthaul, Fronthaul, Enterprise access |
CE |
IP-50EX |
71-86GHz |
Shorthaul, Enterprise access |
CE |
IP-50C |
6-42GHz, dual-carrier |
Shorthaul |
CE |
IP-50CX |
6-42GHz, dual-carrier |
Shorthaul |
CE |
IP-50FX |
6-86GHz |
Shorthaul, Long-haul, Routing |
IP/MPLS, CE |
Product |
Frequency range |
Application |
Networking & transport technologies |
EH-600TX,
EH-614TX |
57-68GHz |
Smart City, Street level, Broadband Access, Private Network |
PtP, CE & transparent bridge, PoE-in/out |
EH-710TX |
71-76GHz |
Smart City, Street level, Broadband Access, Private Network |
PtP, CE & transparent bridge, PoE-in/out |
EH-8010FX |
71-86GHz |
Broadband Access, Private Network |
PtP, transparent bridge |
MH-B100 & MH-T200 |
59-64GHz |
Smart City, Street level, Broadband Access, Private Network |
PtMP, transparent bridge to full VLAN, PoE-in/out |
MH-N36x, MH-N265
MH-T280, MH-T265, MH-T260/1 |
57-66GHz |
Smart City, Street level, Broadband Access, Private Network |
PtMP, MESH, transparent bridge to full VLAN, PoE-in/out |
• |
SDN Controller
– Ceragon’s SDN Master is a complete controller supporting SDN protocols that can monitor and control Ceragon’s products
in an SDN environment. The SDN Master can work as a ‘standalone’ controller, or as part of an SDN solution managed by a higher
level SDN controller offered by a third-party vendor (sometimes referred to as an SDN Orchestrator), allowing full flexibility to our
customers. |
• |
SDN support
in our wireless transport products - all Ceragon IP-20 and IP-50 products
support the needed SDN protocols allowing the operator to manage these products with Ceragon SDN controllers but also with third party
SDN controllers, again, allowing full flexibility to our customers. |
• |
SDN applications
– Software (SW) tools with significant impact on our customers’ TCO (total cost of ownership), network availability, and fast
network rollout. These applications enable operators to increase their network efficiency and effectiveness with operational optimization
and automatization capabilities. With the SDN technology, Ceragon SW solutions are entering into the cloud domain allowing multiple open
and flexible deployment scenarios for our customers. Currently, Ceragon is developing and enhancing those and other SW tools in order
to expand our offering also to stand-alone SW solutions and services either as on-premises, remote or SaaS services. Ceragon recently
launched “Ceragon Insight”, which is a unified network intelligence and management software suite for wireless transport
network. It aims to provide NOC and Engineering teams with deep insight and analytics tools that save money by enabling highly effective
operations, assuring quality of service, and speeding response to ongoing and upcoming issues. |
Year Ended December 31, |
||||||||||||
Region |
2023 |
2022 |
2021 |
|||||||||
North America |
27 |
% |
23 |
% |
16 |
% | ||||||
Europe |
11 |
% |
14 |
% |
16 |
% | ||||||
Africa |
8 |
% |
7 |
% |
8 |
% | ||||||
India |
34 |
% |
27 |
% |
30 |
% | ||||||
APAC (excluding India) |
7 |
% |
11 |
% |
11 |
% | ||||||
Latin America |
13 |
% |
18 |
% |
19 |
% |
• |
Proactively
planning and executing marketing campaigns and developing content as well as communications material to promote the Ceragon products,
solutions and services to customers and prospects over the entire course of the sales-cycle. Activities include advertising, e-mail, press
releases, newsletters, marketing collateral (white papers, e-books, brochures, case studies, etc.), blogs, promotional videos and more.
This content is produced and written with search engine optimization in mind to ensure Ceragon high ranking in customer organic search
results. |
• |
Organizing and running exhibitions, seminars and events. This goes far beyond the mere planning the
logistics of the event, but customizing messaging for target audience, creating event materials, such as displays, presentations, animated
videos, demos, and most importantly promoting the event to customers and prospects to ensure successful attendance and secure customer
meetings. |
|
- |
for the standard character mark Ceragon Networks in Canada; |
|
- |
for the standard character mark CERAGON, national registrations in Morocco, Malaysia, Indonesia (under the name of Ceragon Networks
AS), Japan, Israel, Mexico, the United States, South Africa, the Philippines, Argentina, Venezuela, Peru, Canada, Nigeria, Brazil and
Colombia, United Kingdom and India, and International Registration (protection granted in Australia, Iceland, Bosnia & Herzegovina,
Korea, Switzerland, Croatia, Norway, Russia, China, Ukraine, CTM (European Union), Turkey, Singapore, Macedonia, Egypt, Kenya and Vietnam);
|
|
- |
for our design mark for FibeAir in United Kingdom and the European Union; |
|
- |
for the standard character mark FibeAir in the United States; and |
|
- |
for the standard character mark CeraView in United Kingdom and the European Union. |
|
• |
the diversification of our technologies and capabilities, which allows flexible vertical integration options, including the development
of the core technology – RFIC and modems, including SoC (System on Chip); |
|
• |
our focus and active involvement in shaping next generation standards and technologies, which deliver best customer value;
|
|
• |
our product performance, reliability and functionality, which assist our customers to achieve the highest value; |
|
• |
the range and maturity of our product portfolio, including the ability to provide solutions in every widely available microwave and
millimeter-wave licensed and license-exempt frequency, as well as our ability to provide both IP and circuit switch solutions and therefore
to facilitate a migration path for circuit-switched to IP-based networks; |
|
• |
our deign to cost structure; |
|
• |
our time-to-market advantage, due to having our own technology and our own chipsets; |
|
• |
our focus on high-capacity, point-to-point microwave and point-to-point as well as point-to-multipoint millimeter-wave technologies,
which allows us to quickly adapt to our customers’ evolving needs; |
|
• |
the range of rollout services offering for faster deployment of an entire network and reduced total cost of ownership; |
|
• |
our support and technical service, experience and commitment to high quality customer service, and |
|
• |
our ability to expand to other vertical markets such as oil and gas and public safety, by drawing upon the capabilities of our technologies
and solutions. |
Company |
Place of Incorporation |
Ownership Interest |
||||
Ceragon Networks, Inc. |
New Jersey |
100 |
% | |||
Ceragon Networks (India) Private Limited |
India |
100 |
% |
ITEM 4A. |
UNRESOLVED STAFF COMMENTS |
ITEM 5. |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
|
• |
The widespread surge in network traffic in 2020 to 2023 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 home broadband demand, while today’s home broadband networks are not designed for such usage
patterns. 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. |
|
• |
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 an emerging 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 endent elements for hardware and software, allowing the use
of commercial off-the-shelf hardware, to accelerate delivery of new solutions and innovations. |
|
• |
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. |
|
• |
Increased competition. Our target market is characterized by vigorous, worldwide competition 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, 2022 and 2023, 27.4% and 30.9%, respectively, of our revenues were earned in
India. Sales of our products in these markets are generally at lower gross margins in comparison to other regions. |
|
• |
Revenue recognition; |
|
• |
Inventory valuation; |
|
• |
Provision for credit loss (doubtful debts); and |
|
• |
Business combination. |
Year Ended December 31 |
||||||||
2023 |
2022 |
|||||||
Revenues |
100 |
% |
100 |
% | ||||
Cost of revenues |
65.5 |
68.5 |
||||||
Gross profit |
34.5 |
31.5 |
||||||
Operating expenses: |
||||||||
Research and development, net |
9.3 |
10.1 |
||||||
Sales and marketing |
11.7 |
12.1 |
||||||
General and administrative |
6.9 |
11.6 |
||||||
Restructuring and related charges |
0.3 |
- |
||||||
Acquisition and integration-related charges |
0.3 |
- |
||||||
Other operating expenses |
- |
1.4 |
||||||
Total operating expenses |
28.5 |
35.2 |
||||||
Operating income (loss) |
6.1 |
(3.7 |
) | |||||
Financial expenses and others, net |
2.4 |
2.1 |
||||||
Taxes on income |
1.9 |
0.8 |
||||||
Net Income (loss) |
1.8 |
(6.7 |
) |
B. |
Liquidity and Capital Resources |
|
• |
Our net income of $6.2 million; |
|
• |
$14.6 million decrease in trade and other accounts receivable and prepaid expenses, net; |
|
• |
$10.0 million of depreciation and amortization expenses; |
|
• |
$6.3 million decrease in inventories; and |
|
• |
$4.0 million share-based compensation expenses; and |
|
• |
$3.8 million decrease in operating lease right-of-use assets. |
|
• |
$9.6 million decrease in deferred revenues; |
|
• |
$4.0 million decrease in operating lease liability; |
|
• |
$0.2 million decrease in trade and other accounts payable and accrued expenses, net; and |
|
• |
$0.2 million decrease in accrued severance pay and pensions, net |
|
• |
Our net loss of $19.7 million |
|
• |
$11.2 million increase in inventories; |
|
• |
$6.2 million increase in trade payables, other accounts payable and accrued expenses; |
|
• |
$5.9 million decrease in operating lease liability; and |
|
• |
$0.4 million accrued severance pay and pensions, net. |
|
• |
$18.1 million decrease in trade and other accounts receivable and prepaid expenses; |
|
• |
$11.0 million of depreciation and amortization expenses; |
|
• |
$3.6 million decrease in operating lease right-of-use assets; |
|
• |
$3.6 million share-based compensation expenses; and |
|
• |
$2.2 million increase in deferred revenues paid in advance; |
C. |
Research and Development |
D. |
Trend Information |
E. |
Critical Accounting
Estimates – see Item 5 “Critical Accounting Policies and Estimates”
above. |
ITEM 6. |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
A. |
Directors and Senior Management |
Name |
Age |
Position |
||||
Ilan Rosen(1)
|
67 |
Chairman of the Board of Directors | ||||
Shlomo Liran (1) |
73 |
Director | ||||
Efrat Makov (1)
|
56 |
Director | ||||
Rami Hadar (1)
|
60 |
Director | ||||
David (Dudi) Ripstein (1)
|
57 |
Director | ||||
Ira Palti |
66 |
Director | ||||
Yael Shaham (1)
|
|
54 |
|
Director | ||
Doron Arazi |
60 |
Chief Executive Officer | ||||
Ronen Stein |
56 |
Chief Financial Officer | ||||
Oz Zimerman |
60 |
Chief Marketing Officer & EVP Corporate Development | ||||
Hadar Vismunski Weinberg |
50 |
Chief Legal Officer & Corporate Secretary | ||||
Michal Goldstein |
52 |
Chief People Officer | ||||
Ulik Broida |
56 |
Chief Product Officer | ||||
Alon Klomek |
54 |
Chief Revenue Officer | ||||
Dima Friedman |
55 |
Chief Operating Officer | ||||
Ronen Ben-Hamou |
52 |
Chief Growth Officer |
|
(1) |
Independent Director. |
B. |
Compensation |
|
a) |
Aggregate Executive
Compensation |
|
• |
Salary Costs. Salary Costs include gross salary, benefits and perquisites, including those mandated by applicable law which may include,
to the extent applicable to each Covered Office Holder, payments, contributions and/or allocations for pension, severance, car or car
allowance, medical insurance and risk insurance (e.g., life, disability, accidents), phone, convalescence pay, relocation, payments for
social security, and other benefits consistent with the Company’s guidelines. |
|
• |
Performance Bonus Costs. Performance Bonus Costs represent bonuses granted to the Covered Office Holder with respect to the year
ended December 31, 2023, paid in accordance with the Covered Office Holder’s performance of targets as set forth in his bonus plan,
and approved by the Company’s Compensation Committee and Board of Directors. |
|
• |
Equity Costs represent the expense recorded in our financial statements for the year ended December 31, 2023, with respect to equity-based
compensation granted in 2023 and in previous years. For assumptions and key variables used in the calculation of such amounts see Note
2U of our audited consolidated financial statements. |
|
• |
Doron Arazi – CEO: Salary Costs - $368,200; Performance Bonus Costs - $296,262; Equity Costs - $380,673.
|
|
• |
Alon Klomek – Chief Revenue Officer: Salary Costs - $317,487; Performance Bonus Costs - $324,307;
Equity Costs - $248,866. |
|
• |
Ronen Stein – CFO: Salary Costs - $301,310; Performance Bonus Costs - $122,189; Equity Costs - $106,017.
|
|
• |
Ulik Broida – Chief Product Officer: Salary Costs - $245,247; Performance Bonus Costs - $107,903;
Equity Costs - $128,226. |
|
• |
Michal Goldstein – Chief People Officer: Salary Costs - $234,314; Performance Bonus Costs - $100,440;
Equity Costs - $87,458. |
C. |
Board Practices |
|
• |
transactions with office holders and third parties, where an office holder has a personal interest in the transaction; |
|
• |
employment terms of office holders; and |
|
• |
extraordinary transactions with controlling parties, and extraordinary transactions with a third party where a controlling party
has a personal interest in the transaction, or any transaction with the controlling shareholder or his relative regarding terms of service
provided directly or indirectly (including through a company controlled by the controlling shareholder) and terms of employment (for a
controlling shareholder who is not an office holder). A “relative” is defined in the Companies Law as spouse, sibling, parent,
grandparent, descendant, spouse’s descendant, sibling or parent and the spouse of any of the foregoing. |
|
• |
the majority of the shares of shareholders who have no personal interest in the transaction and who are present and voting, not taking
into account any abstentions, vote in favor; or |
|
• |
shareholders who have no personal interest in the transaction who vote against the transaction do not represent more than two percent
of the aggregate voting rights in the company. |
|
• |
a breach of his or her duty of care to us or to another person; |
|
• |
a breach of his or her duty of loyalty to us, provided that the office holder acted in good faith and had reasonable cause to assume
that his or her act would not prejudice our interests; |
|
• |
monetary
liabilities or obligations imposed upon him or her in favor of another person;
and/or |
|
• |
any other event, occurrence or circumstance in respect of which we may lawfully insure an office holder. |
|
• |
a financial liability imposed on him or her in favor of another person by any judgment, including a settlement or an arbitration
award approved by a court. |
|
• |
reasonable litigation expenses, including attorney’s fees, incurred by the office holder as a result of an investigation or
proceeding instituted against him by a competent authority which concluded without the filing of an indictment against him and without
the imposition of any financial liability in lieu of criminal proceedings, or which concluded without the filing of an indictment against
him but with the imposition of a financial liability in lieu of criminal proceedings concerning a criminal offense that does not require
proof of criminal intent or in connection with a financial sanction (the phrases “proceeding concluded without the filing of an
indictment” and “financial liability in lieu of criminal proceeding” shall have the meaning ascribed to such phrases
in section 260(a)(1a) of the Companies Law); |
|
• |
reasonable litigation expenses, including attorneys’ fees, expended by an office holder or charged to the office holder by
a court, in a proceeding instituted against the office holder by the Company or on its behalf or by another person, or in a criminal charge
from which the office holder was acquitted, or in a criminal proceeding in which the office holder was convicted of an offense that does
not require proof of criminal intent; |
|
• |
expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative
proceeding instituted against such office holder, or payment required to be made to an injured party, pursuant to certain provisions of
the Securities Law; and/or |
|
• |
any other event, occurrence or circumstance in respect of which we may lawfully indemnify an office holder. |
|
• |
a breach by the office holder of his or her duty of loyalty, except that the company may enter into an insurance contract or indemnify
an office holder if the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;
|
|
• |
a breach by the office holder of his or her duty of care, if such breach was intentional or reckless, but unless such breach was
solely negligent; |
|
• |
any act or omission intended to derive an illegal personal benefit; or |
|
• |
any fine, civil fine, financial sanction or monetary settlement in lieu of criminal proceedings
imposed on such office holder. |
Name |
Number of Ordinary Shares Beneficially Owned (1)
|
Percentage of Outstanding Ordinary Shares Beneficially Owned |
Number of Stock Options Held(2)
|
Exercise price of Options |
Number of RSUs Held(2)
|
|||||||||||||||
All directors and senior management as a group consisting of 16 people (3)
|
1,664,807 |
1.91 |
1,659,807 |
$ |
1.68 – 4.21 |
463,084 |
|
(1) |
Consists of 5,000 ordinary shares and 1,659,807 options to purchase ordinary shares which are vested or shall become vested within
60 days of March 21, 2024. |
|
(2) |
Each stock option is exercisable into one ordinary share and expires 6 years from the date of its grant. Of the number of stock options
listed 1,659,807 options are vested or shall become vested within 60 days of March 21, 2024 for senior management as a group. No RSUs
are expected to vest within 60 days of March 21, 2024. |
|
(3) |
Each of the directors and senior management beneficially owns less than 1% of the outstanding ordinary shares as of March 21, 2024
(including options held by each such person and which are vested or shall become vested within 60 days of March 21, 2024) and have therefore
not been separately listed. |
Remaining Reserved Shares
Available for Option and
RSU Grants * |
Options and
RSUs
Outstanding |
Weighted Average
Exercise Price |
||||||||
324,620 |
(1) |
8,247,677 |
(2) |
$ |
2.71 |
(3) |
|
(1) |
Total under all grants approved by the Board under the Company’s existing Share Option and RSU plan as of 2014. |
|
(2) |
Total of 2,622,195 relates to RSUs outstanding and 5,625,482 relates to options outstanding, under all the Company’s Share
Option and RSU plans. |
|
(3) |
Weighted average price refers only to options. |
Options and RSUs Outstanding |
Unvested Options and RSUs |
|||||||
Directors and senior management |
3,236,496 |
1,756,531 |
||||||
All other grantees |
5,011,181 |
3,308,341 |
ITEM 7. |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
Name |
Number of Ordinary Shares (1)
|
Percentage of Outstanding Ordinary Shares (2)
|
||||||
Zohar Zisapel Estate (3)
|
7,117,174 |
8.32 |
% | |||||
Joseph D. Samberg (4)
|
8,280,000 |
9.68 |
% |
|
(1) |
Consists of ordinary shares and options to purchase ordinary shares, which are vested or shall become vested within 60 days as of
March 21, 2024. |
|
(2) |
Based on 85,556,663 ordinary shares outstanding as of March 4, 2024, excluding options to purchase ordinary shares which are
vested or shall become vested within 60 days of March 21, 2024. |
|
(3) |
(i) 3,694,986
ordinary shares held by Zohar Zisapel Estate; (ii) 200,000 ordinary shares issuable upon the exercise of options granted to Mr. Zisapel
exercisable as of March 21, 2024 or within 60 days thereafter; (iii) 1,101,245 ordinary shares are held of record by Lomsha Ltd., an Israeli
company controlled by Mr. Zisapel; (iv) 18,717 ordinary shares are held by RAD Data Communications Ltd., an Israeli company of which Mr.
Zisapel is a principal shareholder and a director. Mr. Zisapel and his brother, Mr. Yehuda Zisapel, and Ms. Nava Zisapel, have shared
voting and dispositive power with respect to the ordinary shares held by RAD Data Communications Ltd.; and (v) 2,102,226 Ordinary Shares
are held by Michael and Klil Holdings (93) Ltd., an Israeli company controlled by Mr. Zisapel.
The number of ordinary shares beneficially held by Zohar Zisapel is based on a Schedule 13D/A filed by Mr. Zisapel with the SEC on February
16, 2021. |
|
(4) |
Joseph D. Samberg’s address is 1091 Boston Post Road, Rye, NY 10580. |
ITEM 8. |
FINANCIAL INFORMATION |
ITEM 9. |
THE OFFER AND LISTING |
|
• |
the expenditures are approved by the relevant Israeli government ministry, determined by the field of research; |
|
• |
the research and development are for the promotion or development of the company; and |
|
• |
the research and development are carried out by or on behalf of the company seeking the deduction. |
|
• |
deduction of purchases of know-how, patents and the right to use a patent over an eight-year period for tax purposes; |
|
• |
deduction over a three-year period of specified expenses incurred with the issuance and listing of shares on the Tel Aviv Stock Exchange
or on a recognized stock exchange outside of Israel (including Nasdaq); |
|
• |
the right to elect, under specified conditions, to file a consolidated tax return with additional related Israeli industrial companies;
and |
|
• |
accelerated depreciation rates on equipment and buildings. |
|
• |
holds the ordinary shares as a capital asset; |
|
• |
qualifies as a resident of the United States within the meaning of the U.S.-Israel tax treaty; and |
|
• |
is entitled to claim the benefits available to the person by the U.S.-Israel tax treaty. |
|
• |
an individual citizen or resident of the United States; |
|
• |
a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United
States or under the laws of the United States, any political subdivision thereof or the District of Columbia; |
|
• |
an estate, the income of which is subject to U.S. federal income tax regardless of its source; or |
|
• |
a trust (i) if a court within the United States is able to exercise primary supervision over its administration and one or more U.S.
persons have the authority to control all of its substantial decisions or (ii) that has in effect a valid election under applicable U.S.
Treasury Regulations to be treated as a U.S. person. |
|
• |
are broker-dealers or insurance companies; |
|
• |
have elected mark-to-market accounting; |
|
• |
are tax-exempt organizations or retirement plans; |
|
• |
are grantor trusts; |
|
• |
are S corporations; |
|
• |
are certain former citizens or long-term residents of the United States; |
|
• |
are financial institutions; |
|
• |
hold ordinary shares as part of a straddle, hedge or conversion transaction with other investments; |
|
• |
acquired their ordinary shares upon the exercise of employee stock options or otherwise as compensation; |
|
• |
are real estate investment trusts or regulated investment companies; |
|
• |
own directly, indirectly or by attribution at least 10% of our shares (by vote or value); or |
|
• |
have a functional currency that is not the U.S. dollar. |
|
• |
the item is effectively connected with the conduct by the non-U.S. Holder of a trade or business in the United States and, in the
case of a resident of a country which has a treaty with the United States, the item is attributable to a permanent establishment, or in
the case of an individual, the item is attributable to a fixed place of business in the United States; or |
|
• |
the non-U.S. Holder is an individual who holds the ordinary shares as a capital asset and is present in the United States for 183
days or more in the taxable year of the disposition, and certain other conditions are met. |
ITEM 12. |
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES. |
ITEM 13. |
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES. |
ITEM 14. |
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS. |
ITEM 15. |
CONTROLS AND PROCEDURES |
|
(a) |
Disclosure Controls and Procedures |
|
(b) |
Management’s Annual Report on Internal Control Over Financial Reporting |
|
(i) |
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of
the assets of the Company; |
|
(ii) |
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and |
|
(iii) |
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s
assets that could have a material effect on the financial statements. |
|
(d) |
Changes in Internal Controls Over Financial Reporting |
ITEM 16A. |
AUDIT COMMITTEE FINANCIAL EXPERT |
ITEM 16C. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Year Ended December 31, |
||||||||||||||||
2023 |
2022 |
|||||||||||||||
Services Rendered |
Fees |
Percentages |
Fees |
Percentages |
||||||||||||
Audit Fees (1)
|
$ |
742,500 |
88 |
% |
$ |
706,142 |
91 |
% | ||||||||
Audit-Related Fees (2)
|
$ |
26,000 |
3 |
% |
$ |
5,000 |
1 |
% | ||||||||
Tax Fees (3)
|
$ |
79,400 |
9 |
% |
$ |
59,644 |
8 |
% | ||||||||
Total
|
$ |
847,900 |
100 |
% |
$ |
770,786 |
100 |
% |
(1) |
Audit fees consist of services that would normally be provided in connection with statutory and regulatory filings or engagements,
including services that generally only the independent accountant can reasonably provide. |
(2) |
Audit related fees principally relates to assistance with audit services and consultation |
(3) |
Tax fees relate to tax compliance, planning and advice |
ITEM 16D. |
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
ITEM 16E. |
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
ITEM 16F. |
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT |
- |
Compensation
Committee Charter: We have opted out of the requirement to adopt and file a compensation committee charter as set forth in Nasdaq
Rule 5605(d)(1). Instead, our Compensation Committee conducts itself in accordance with provisions governing the establishment (but not
the composition) and the responsibilities of a compensation committee as set forth in the Companies Law and as further stipulated in our
Compensation Policy. |
- |
Shareholder
Approval: We have opted out of the requirement for shareholder approval of stock option plans and other equity-based compensation
arrangements as set forth in Nasdaq Rule 5635. Nevertheless, as required under the Companies Law, shareholder voting procedures are followed
for the approval of equity-based compensation of certain office holders or employees, such as our CEO and members of our Board of Directors.
Equity based compensation arrangements with other office holders are approved by our Compensation Committee and our Board of Directors,
provided they are consistent with our Compensation Policy, and in special circumstances in deviation therefrom, taking into account certain
considerations as set forth in the Companies Law. |
- |
Annual
General Meetings of Shareholders: We have opted out of the requirement for conducting annual meetings as set forth in Nasdaq Rule
5620(a), which requires Ceragon to hold its annual meetings of shareholders within twelve months of the end of its fiscal year end. Instead,
Ceragon is following home country practice and law in this respect. The Companies Law requires that an annual meeting of shareholders
be held every year, and not later than 15 months following the last annual meeting (see in Item 10.B above – ”Additional
Information – Voting, Shareholders’ Meetings and Resolutions”). |
- |
Quorum
at General Meetings of Shareholders: We have opted out of the requirement set under Rule 5620(c) of the Nasdaq Rules, which requires
the presence of two or more shareholders holding at least 33 1/3%, and in lieu follow our home country practice and Israeli law, according
to which the quorum for any shareholders meeting will be the presence (in person or by Proxy) of two or more shareholders holding at least
25% of the voting rights in the aggregate - within half an hour from the time set for opening the meeting. |
- |
Distribution
of Annual Reports: We have chosen to follow our home country practice in lieu of the requirements of Nasdaq Rule 5250(d)(1), relating
to an issuer’s furnishing of its annual report to shareholders. Specifically, we file annual reports on Form 20-F, which contain
financial statements audited by an independent accounting firm, electronically with the SEC, and also post a copy on our website.
|
ITEM 16H. |
MINE SAFETY DISCLOSURE |
ITEM 16I. |
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
ITEM 17. |
FINANCIAL STATEMENTS |
ITEM 18. |
FINANCIAL STATEMENTS |
Index to Consolidated Financial Statements |
Page |
Reports of Independent Registered Public Accounting Firm |
F-2 - F-6 |
Consolidated Balance Sheets |
F-7 - F-8 |
Consolidated Statements of Operations |
F-9 |
Consolidated Statements of Comprehensive Income (loss) |
F-10 |
Consolidated Statements of Changes in Shareholders’ Equity |
F-11 |
Consolidated Statements of Cash Flows |
F-12 - F-13 |
Notes to Consolidated Financial Statements |
F-14 - F-52 |
1.1 |
2.1 |
4.1 |
4.2 |
4.3 |
4.4 |
4.5 |
4.6 |
4.7 |
4.8 |
4.9 |
4.10 |
4.11 |
4.12 |
4.13 |
4.14 |
4.15 |
4.16 |
4.17 |
4.18 |
4.19 |
4.20 |
8.1 |
12.1 |
12.2 |
13.1 |
15.1 |
97.1 |
101 |
Inline XBRL Instance Document |
101 |
SCH Inline XBRL Taxonomy Extension Schema Document |
101 |
CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101 |
DEF Inline XBRL Taxonomy Extension Definition Linkbase Document |
101 |
LAB Inline XBRL Taxonomy Extension Labels Linkbase Document |
101 |
PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
By: |
/s/ Doron Arazi | |
Name: |
Doron Arazi |
|
Title: |
Chief Executive Officer |
Page
|
|
Reports of Independent Registered Public Accounting Firm (PCAOB ID:1281)
|
F-2 – F-6
|
F-7 – F-8
|
|
F-9
|
|
F-10
|
|
F-11
|
|
F-12 - F-13
|
|
F-14 - F- 52
|
Valuation of technology acquired in the acquisition of Siklu Communication Ltd.
|
||
Description of the Matter
|
As describe in Note 3 to the consolidated financial statements, on December 4, 2023, the Company completed its acquisition of Siklu Communication Ltd. for total consideration of approximately $ 10.9 million. The transaction was accounted for as a business combination. The Company recognized technology ( “the Intangible Asset”) at its estimated fair value as of the date of the acquisition. This valuation required management to make significant judgments, estimates, and assumptions.
Auditing the Company’s determination of the fair value of the Intangible Asset was complex due to the significant estimation required by management. The complexity was primarily due to the sensitivity of certain of the significant underlying assumptions. The Company used discounted cash flow model to measure the fair value of the Intangible Asset. The significant assumptions used to estimate the fair value of the Intangible Asset included, among others, discount rates, projected financial information revenue growth rates and profit margins. These significant assumptions are forward-looking and could be affected by future economic and market conditions.
We identified auditing the valuation of the intangible Asset of Siklu Communication Ltd. as a critical audit matter. An extensive audit effort as well as a high degree of subjective auditor judgment was required to evaluate the significant estimation in determining the fair value of the Intangible Asset.
|
|
How we Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for accounting for the acquired intangible asset. For example, we tested controls over management's review of the valuation model and the significant assumptions used, as discussed above, to develop the prospective financial information. We also tested management's controls to validate that the data used in the valuation was complete and accurate.
To test the estimated fair value of the Intangible Asset, we performed audit procedures that included, among others, evaluating the Company’s selection of the appropriate valuation methodology, testing prospective financial information, evaluating the significant assumptions used by management and testing the completeness and accuracy of the underlying data. For example, we compared the significant assumptions to current industry, market and economic trends, historical results of the acquired business and to other relevant factors. We involved our valuation specialists to assist with our evaluation of the methodology used by the Company and certain assumptions included in the fair value estimates. For example, our valuation professionals performed independent comparative calculations to estimate the discount rate used in the model. We have also evaluated the Company’s disclosures regarding the business combination.
|
Inventory valuation
|
||
Description of the Matter
|
The Company’s inventories totaled $ 68.8 million as of December 31, 2023. As explained in Note 2 to the consolidated financial statements, the Company assesses the value of all inventories, including raw materials, finished goods and spare parts, in each reporting period. Reserves for potentially obsolete inventory are made based on management's analysis of inventory aging, future sales forecasts, and market conditions.
Auditing the valuation of obsolete inventory reserves involved subjective auditor judgment because management’s estimate relies on significant assumptions such as the future salability of the inventory, the assessment by inventory age, future usage and market demand for the Company's products.
|
|
How we Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company’s obsolete inventory reserve process. This included management’s assessment of the assumptions and data underlying the obsolete inventory valuation.
Our substantive audit procedures included, among others, evaluating the significant assumptions stated above and the accuracy and completeness of the underlying data that management used to value obsolete inventory. We performed inquiries of appropriate non-financial personnel including operational employees, regarding obsolete inventory items and other factors to corroborate management's assertions regarding qualitative judgments about obsolete inventories. We also compared the cost of on-hand inventories to customer demand forecasts and historical sales and evaluated adjustments to sales forecasts for specific product considerations such as technological changes or alternative uses. We also assessed the historical accuracy of management estimates by comparing the forecasted sales to actual utilization of inventory.
|
2023
|
2022
|
|||||||||||
Note
|
$ thousands
|
$ thousands
|
||||||||||
Assets
|
||||||||||||
Current assets:
|
||||||||||||
Cash and cash equivalents
|
28,237
|
22,948
|
||||||||||
Trade receivables (net of allowance for credit losses of $24,602
|
||||||||||||
and $22,410 at December 31, 2023 and 2022, respectively)
|
11
|
104,321
|
100,034
|
|||||||||
Other accounts receivable and prepaid expenses
|
4
|
16,571
|
15,756
|
|||||||||
Inventories
|
5
|
68,811
|
72,009
|
|||||||||
Total current assets
|
217,940
|
210,747
|
||||||||||
Non-current assets:
|
||||||||||||
Severance pay and pension fund
|
4,985
|
4,633
|
||||||||||
Property and equipment, net
|
6
|
30,659
|
29,456
|
|||||||||
Operating lease right-of-use assets
|
14
|
18,837
|
17,962
|
|||||||||
Intangible assets, net
|
7
|
16,401
|
8,208
|
|||||||||
Goodwill
|
7
|
7,749
|
-
|
|||||||||
Other non-current assets
|
1,954
|
18,312
|
||||||||||
Total long-term assets
|
80,585
|
78,571
|
||||||||||
Total assets
|
298,525
|
289,318
|
F - 7 |
2023
|
2022
|
|||||||||||
Note
|
$ thousands
|
$ thousands
|
||||||||||
Liabilities and shareholders’ equity
|
||||||||||||
Current Liabilities:
|
||||||||||||
Trade payables
|
67,032
|
67,384
|
||||||||||
Deferred revenues
|
17
|
5,507
|
3,343
|
|||||||||
Short-term loans
|
9
|
32,600
|
37,500
|
|||||||||
Operating lease liabilities
|
14
|
3,889
|
3,745
|
|||||||||
Other accounts payable and accrued expenses
|
8
|
23,925
|
20,864
|
|||||||||
Total current liabilities
|
132,953
|
132,836
|
||||||||||
Long-term liabilities:
|
||||||||||||
Accrued severance pay and pensions
|
9,399
|
9,314
|
||||||||||
Deferred revenues
|
17
|
670
|
11,545
|
|||||||||
Operating lease liabilities
|
14
|
13,716
|
13,187
|
|||||||||
Other long-term payables
|
7,768
|
2,653
|
||||||||||
Total long-term liabilities
|
31,553
|
36,699
|
||||||||||
Commitments and contingent liabilities
|
13
|
|||||||||||
Shareholders’ Equity:
|
15
|
|||||||||||
Share capital -
|
||||||||||||
Ordinary shares of NIS 0.01 par value – Authorized: 120,000,000 shares on December 31, 2023 and 2022; Issued: 88,899,844 and 87,834,902 shares on December 31, 2023 and 2022, respectively; Outstanding: 85,418,321 and 84,353,379 shares on December 31, 2023 and 2022, respectively
|
224
|
224
|
||||||||||
Additional paid-in capital
|
437,161
|
432,214
|
||||||||||
Treasury shares at cost – 3,481,523 ordinary shares on December 31, 2023 and 2022
|
(20,091
|
)
|
(20,091
|
)
|
||||||||
Accumulated other comprehensive loss
|
(8,087
|
)
|
(11,156
|
)
|
||||||||
Accumulated deficit
|
(275,188
|
)
|
(281,408
|
)
|
||||||||
Total shareholders' equity
|
134,019
|
119,783
|
||||||||||
Total liabilities and shareholders' equity
|
298,525
|
289,318
|
F - 8 |
Year ended December 31,
|
||||||||||||||||
2023
|
2022
|
2021
|
||||||||||||||
Note
|
$ thousands
|
$ thousands
|
$ thousands
|
|||||||||||||
Revenues
|
18
|
347,179
|
295,173
|
290,766
|
||||||||||||
Cost of revenues
|
227,310
|
202,110
|
202,389
|
|||||||||||||
Gross profit
|
119,869
|
93,063
|
88,377
|
|||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development, net
|
32,274
|
29,690
|
29,473
|
|||||||||||||
Sales and marketing
|
40,577
|
35,795
|
33,509
|
|||||||||||||
General and administrative
|
23,793
|
34,295
|
20,589
|
|||||||||||||
Restructuring and related charges
|
897
|
-
|
-
|
|||||||||||||
Acquisition and integration-related charges
|
3c
|
|
1,118
|
-
|
-
|
|||||||||||
Other operating expenses
|
1b
|
|
-
|
4,220
|
-
|
|||||||||||
Total operating expenses
|
98,659
|
104,000
|
83,571
|
|||||||||||||
Operating income (loss)
|
21,210
|
(10,937
|
)
|
4,806
|
||||||||||||
Financial expenses and others, net
|
19
|
8,468
|
6,306
|
8,625
|
||||||||||||
Income (loss) before taxes on income
|
12,742
|
(17,243
|
)
|
(3,819
|
)
|
|||||||||||
Taxes on income
|
16c
|
|
6,522
|
2,446
|
11,009
|
|||||||||||
Net income (loss)
|
6,220
|
(19,689
|
)
|
(14,828
|
)
|
|||||||||||
Net income (loss) per share:
|
||||||||||||||||
Basic net income (loss) per share
|
0.07
|
(0.23
|
)
|
(0.18
|
)
|
|||||||||||
Weighted average number of ordinary shares used in computing basic net income (loss) per share
|
84,617,774
|
84,132,982
|
83,414,831
|
|||||||||||||
Diluted net income (loss) per share
|
0.07
|
(0.23
|
)
|
(0.18
|
)
|
|||||||||||
Weighted average number of ordinary shares used in computing diluted net income (loss) per share
|
85,482,626
|
84,132,982
|
83,414,831
|
F - 9 |
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
$ thousands
|
$ thousands
|
$ thousands
|
||||||||||
Net income (loss)
|
6,220
|
(19,689
|
)
|
(14,828
|
)
|
|||||||
Other comprehensive income (loss):
|
||||||||||||
Change in foreign currency translation adjustment
|
878
|
353
|
(325
|
)
|
||||||||
Change in unrealized gains (losses) on cash flow hedges:
|
||||||||||||
Unrealized gains (losses) during the period
|
(1,418
|
)
|
(4,057
|
)
|
346
|
|||||||
Losses (gains) reclassified into net income (loss)
|
3,609
|
2,055
|
(1,460
|
)
|
||||||||
Net change
|
2,191
|
(2,002
|
)
|
(1,114
|
)
|
|||||||
Other comprehensive income (loss)
|
3,069
|
(1,649
|
)
|
(1,439
|
)
|
|||||||
Comprehensive income (loss)
|
9,289
|
(21,338
|
)
|
(16,267
|
)
|
F - 10 |
Ordinary shares
|
Share
capital
|
Additional
paid-in
capital
|
Treasury shares at cost
|
Accumulated other comprehensive loss
|
Accumulated deficit
|
Total shareholders' equity
|
||||||||||||||||||||||
$ thousands
|
$ thousands
|
$ thousands
|
$ thousands
|
$ thousands
|
$ thousands
|
|||||||||||||||||||||||
Balance as of January 1, 2021
|
81,703,366
|
218
|
420,958
|
(20,091
|
)
|
(8,068
|
)
|
(246,891
|
)
|
146,126
|
||||||||||||||||||
Exercise of options and vesting of RSUs
|
2,228,230
|
6
|
4,724
|
-
|
-
|
-
|
4,730
|
|||||||||||||||||||||
Share-based compensation
|
-
|
-
|
2,562
|
-
|
-
|
-
|
2,562
|
|||||||||||||||||||||
Other comprehensive loss, net
|
-
|
-
|
-
|
-
|
(1,439
|
)
|
-
|
(1,439
|
)
|
|||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(14,828
|
)
|
(14,828
|
)
|
|||||||||||||||||||
Balance as of December 31, 2021
|
83,931,596
|
224
|
428,244
|
(20,091
|
)
|
(9,507
|
)
|
(261,719
|
)
|
137,151
|
||||||||||||||||||
Exercise of options and vesting of RSUs
|
422,085
|
*
|
)
|
410
|
-
|
-
|
-
|
410
|
||||||||||||||||||||
Share-based compensation
|
-
|
-
|
3,560
|
-
|
-
|
-
|
3,560
|
|||||||||||||||||||||
Other comprehensive loss, net
|
-
|
-
|
-
|
-
|
(1,649
|
)
|
-
|
(1,649
|
)
|
|||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(19,689
|
)
|
(19,689
|
)
|
|||||||||||||||||||
Balance as of December 31, 2022
|
84,353,681
|
224
|
432,214
|
(20,091
|
)
|
(11,156
|
)
|
(281,408
|
)
|
119,783
|
||||||||||||||||||
Exercise of options and vesting of RSUs
|
559,738
|
*
|
)
|
39
|
-
|
-
|
-
|
39
|
||||||||||||||||||||
Share-based compensation
|
-
|
-
|
3,964
|
-
|
-
|
-
|
3,964
|
|||||||||||||||||||||
Shares issued as consideration in connection with the acquisition of Siklu Communication Ltd.
|
504,902
|
*
|
)
|
944
|
-
|
-
|
-
|
944
|
||||||||||||||||||||
Other comprehensive income, net
|
-
|
-
|
-
|
-
|
3,069
|
-
|
3,069
|
|||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
6,220
|
6,220
|
|||||||||||||||||||||
Balance as of December 31, 2023
|
85,418,321
|
224
|
437,161
|
(20,091
|
)
|
(8,087
|
)
|
(275,188
|
)
|
134,019
|
F - 11 |
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
$ thousands
|
$ thousands
|
$ thousands
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income (loss)
|
6,220
|
(19,689
|
)
|
(14,828
|
)
|
|||||||
Adjustments required to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
||||||||||||
Depreciation and amortization
|
9,967
|
11,040
|
12,246
|
|||||||||
Loss from sale of property and equipment, net
|
61
|
20
|
82
|
|||||||||
Share-based compensation
|
3,964
|
3,560
|
2,562
|
|||||||||
Decrease in accrued severance pay and pensions, net
|
(267
|
)
|
(445
|
)
|
(418
|
)
|
||||||
Decrease (increase) in trade receivables, net
|
(2,370
|
)
|
18,428
|
(11,150
|
)
|
|||||||
Decrease (increase) in other accounts receivable and prepaid expenses (including other long-term assets)
|
16,994
|
(345
|
)
|
(6,976
|
)
|
|||||||
Decrease (increase) in inventories
|
6,303
|
(11,155
|
)
|
(11,908
|
)
|
|||||||
Decrease in operating lease right-of-use assets
|
3,781
|
3,571
|
5,713
|
|||||||||
Increase (decrease) in trade payables
|
(1,847
|
)
|
(2,018
|
)
|
5,883
|
|||||||
Increase (decrease) in deferred revenues
|
(9,562
|
)
|
2,229
|
1,672
|
||||||||
Decrease in deferred tax assets, net
|
-
|
-
|
8,279
|
|||||||||
Decrease in operating lease liability
|
(4,034
|
)
|
(5,937
|
)
|
(4,620
|
)
|
||||||
Increase (decrease) in other accounts payable and accrued expenses (including other long-term liabilities)
|
1,677
|
(4,154
|
)
|
(1,556
|
)
|
|||||||
Net cash provided by (used in) operating activities
|
30,887
|
(4,895
|
)
|
(15,019
|
)
|
|||||||
Cash flows from investing activities:
|
||||||||||||
Purchase of property and equipment
|
(9,955
|
)
|
(10,464
|
)
|
(9,383
|
)
|
||||||
Proceeds from sale of property and equipment
|
-
|
-
|
200
|
|||||||||
Purchase of intangible assets
|
(2,944
|
)
|
(1,957
|
)
|
(212
|
)
|
||||||
Payments made in connection with business acquisitions, net of acquired cash
|
(7,971
|
)
|
-
|
-
|
||||||||
Net cash used in investing activities
|
(20,870
|
)
|
(12,421
|
)
|
(9,395
|
)
|
F - 12 |
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
$ thousands
|
$ thousands
|
$ thousands
|
||||||||||
Cash flows from financing activities:
|
||||||||||||
Proceeds from exercise of stock options
|
39
|
410
|
4,730
|
|||||||||
Proceeds from (repayments of) bank credits and loans, net
|
(4,900
|
)
|
22,700
|
9,800
|
||||||||
Net cash provided by (used in) financing activities
|
(4,861
|
)
|
23,110
|
14,530
|
||||||||
Translation adjustments on cash and cash equivalents
|
133
|
75
|
(138
|
)
|
||||||||
Increase (decrease) in cash and cash equivalents
|
5,289
|
5,869
|
(10,022
|
)
|
||||||||
Cash and cash equivalents at the beginning of the year
|
22,948
|
17,079
|
27,101
|
|||||||||
Cash and cash equivalents at the end of the year
|
28,237
|
22,948
|
17,079
|
|||||||||
Supplemental disclosure of non - cash investing activities:
|
||||||||||||
Fair value of ordinary shares issued and contingent holdback obligations to selling shareholders provided as consideration for business combination
|
2,561
|
-
|
-
|
|||||||||
Supplemental disclosure of cash flow information:
|
||||||||||||
Cash paid for income taxes
|
2,839
|
1,871
|
1,995
|
|||||||||
Cash paid for interest on bank loans and factoring fees
|
6,040
|
3,456
|
1,280
|
F - 13 |
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
A. |
Ceragon Networks Ltd. ("the Company") is a global innovator and leading solutions provider of wireless transport. The Company helps operators and other service providers worldwide increase operational efficiency and enhance end customers’ quality of experience with innovative wireless backhaul and fronthaul solutions. The Company’s unique multicore technology and disaggregated approach to wireless transport provides highly reliable, fast to deploy, high-capacity wireless transport for 5G and 4G networks with minimal use of spectrum, power, real estate, and labor resources. It enables increased productivity, as well as simple and quick network modernization. The Company delivers a complete portfolio of turnkey end-to-end AI-based managed and professional services that ensure efficient network rollout and optimization to achieve the highest value for its customers.
|
B. |
On December 4, 2023 the Company completed a series of definitive agreements with Siklu Communication Ltd. (“Siklu”) and Siklu Inc. (the “Seller”), referred to as the “Siklu Acquisition”. In the framework of the Siklu Acquisition, the Company acquired all of the outstanding shares of Siklu and the assets and business activities of the Seller. Siklu is a privately held Israeli-based company which is a provider of multi-Gigabit “wireless fiber” connectivity in urban, suburban and rural areas. See also note 3.
|
C. |
In the summer of 2022, Aviat Networks Inc a competitor of the Company has launched a hostile takeover attempt against the Company, after purchasing more than 5% of the Company outstanding shares. Total expenses associated with the hostile takeover amounted to $4,220 thousand for the year ended December 31, 2022 and presented as part of the other operating expenses in the Company's consolidated financial statements.
|
A. |
Basis of presentation
|
B. |
Use of estimates
|
F - 14
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
C. |
Financial statements in U.S. dollars
|
D. |
Principles of consolidation
|
E. |
Cash equivalents
|
F. |
Inventories
|
F - 15
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
F. |
Inventories (cont’d)
|
G. |
Property and equipment
|
%
|
|
Computers, manufacturing and peripheral equipment
|
6 – 33
|
Office, furniture and equipment
|
Mainly 15
|
Leasehold improvements
|
Over the shorter of the term of the lease or useful life of the asset
|
H. |
Leases
|
I. |
Intangible assets, net
|
F - 16
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
I. |
Intangible assets, net (cont’d)
|
J. |
Business Combinations
|
K. |
Goodwill
|
F - 17
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
L. |
Impairment of long-lived assets
|
The Company's long-lived assets are reviewed for impairment in accordance with ASC topic 360," Property Plant and Equipment", ("ASC 360"), whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. During the years 2023, 2022 and 2021, no impairment losses have been recognized.
M. |
Income taxes
|
N. |
Revenue recognition
|
F - 18
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
N. |
Revenue recognition (cont’d)
|
O. |
Research and development expenses, net
|
P. |
Warranty costs
|
F - 19
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
Q. |
Derivative instruments
|
R. |
Concentrations of credit risk
|
F - 20
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
S. |
Transfers of financial assets |
T. |
Severance pay |
F - 21
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
U. |
Accounting for stock-based compensation |
December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Dividend yield
|
0%
|
0%
|
0%
|
|
||||||||
Volatility
|
41% - 63%
|
47% - 73%
|
66% - 87%
|
|||||||||
Risk-free interest
|
4.1% - 5.5%
|
2.1% - 4.1%
|
0.1% - 1.3%
|
|||||||||
Early exercise multiple
|
2.10
|
2.20
|
1.55
|
V. |
Fair value of financial instruments |
F - 22
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
V. |
Fair value of financial instruments (cont’d) |
The liability with respect to the Holdback Consideration regarding the Siklu Acquisition is classified within Level 3, as this liability is valued using valuation models. Some of the inputs to these models are unobservable in the market.
W. |
Comprehensive income |
F - 23
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
W. |
Comprehensive income (cont'd) |
Unrealized Gains (Losses) on Cash Flow Hedges
|
Foreign Currency Translation Adjustments
|
Total
|
||||||||||
$ thousands
|
$ thousands
|
$ thousands
|
||||||||||
Balance as of January 1, 2023
|
(1,271
|
)
|
(9,885
|
)
|
(11,156
|
)
|
||||||
Other comprehensive income (loss) before
|
||||||||||||
reclassifications
|
(1,418
|
)
|
878
|
(540
|
)
|
|||||||
Amounts reclassified from AOCI
|
3,609
|
-
|
3,609
|
|||||||||
Other comprehensive income
|
2,191
|
878
|
3,069
|
|||||||||
Balance as of December 31, 2023
|
920
|
(9,007
|
)
|
(8,087
|
)
|
X. |
Treasury shares |
Y. |
Basic and diluted net earnings per share |
Z. |
Recently issued but not yet updated Accounting Standards |
F - 24
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
A. |
Siklu
|
Amortization Period
|
Amount
|
|||||||
(years)
|
$ thousands
|
|||||||
Repayment of Siklu's outstanding debt obligations
|
8,341
|
|||||||
Share Consideration
|
944
|
|||||||
Holdback Consideration
|
1,617
|
|||||||
Fair value of total consideration
|
10,902
|
|||||||
Fair value of assets acquired and liabilities assumed:
|
||||||||
Current assets (including cash and cash equivalents of $370 thousand)
|
5,732
|
|||||||
Non-current assets
|
2,047
|
|||||||
Trademark
|
2
|
440
|
||||||
Customer Relationships
|
4-5
|
1,209
|
||||||
Technology
|
2-6
|
3,638
|
||||||
Goodwill
|
7,749
|
|||||||
Other current liabilities
|
(6,694
|
)
|
||||||
Long-term liabilities
|
(3,219
|
)
|
||||||
10,902
|
The valuation of the acquired intangible assets is inherently subjective and relies on significant unobservable inputs. The Company used an income approach to value the acquired developed technology, customer relationships and trade mark intangible assets. The valuation for each of these intangible assets was based on estimated projections of expected cash flows to be generated by the assets, discounted to the present value at discount rates commensurate with perceived risk. The valuation assumptions take into consideration the Company's estimates of customer attrition, technology obsolescence and revenue growth projections. The Company is amortizing the identifiable intangible assets arising from the Siklu Acquisition in relation to the expected cash flows from the individual intangible assets over their respective useful lives, which have a useful life range of 2-10 years (see Note 7). Goodwill results from assets that are not separately identifiable as part of the transaction and is not deductible for tax purposes.
F - 25
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
B. |
Acquisition- and Integration-Related Charges |
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
$ thousands
|
$ thousands
|
$ thousands
|
||||||||||
Acquisition-related professional and services fees
|
720
|
-
|
-
|
|||||||||
Integration-related expenses
|
398
|
-
|
-
|
|||||||||
Total acquisition- and integration-related expense
|
1,118
|
-
|
-
|
December 31,
|
December 31,
|
|||||||
2023
|
2022
|
|||||||
$ thousands
|
$ thousands
|
|||||||
Government authorities
|
6,263
|
7,867
|
||||||
Deferred charges and prepaid expenses
|
5,158
|
6,087
|
||||||
Deposits receivable
|
2,750
|
473
|
||||||
Advances to suppliers
|
963
|
405
|
||||||
Hedging asset
|
920
|
8
|
||||||
Other
|
517
|
916
|
||||||
16,571
|
15,756
|
F - 26
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
December 31,
|
December 31,
|
|||||||
2023
|
2022
|
|||||||
$ thousands
|
$ thousands
|
|||||||
Raw materials
|
33,790
|
35,111
|
||||||
Work in progress
|
486
|
143
|
||||||
Finished products
|
34,535
|
36,755
|
||||||
68,811
|
72,009
|
December 31,
|
December 31,
|
|||||||
2023
|
2022
|
|||||||
$ thousands
|
$ thousands
|
|||||||
Cost
|
||||||||
Computers, manufacturing, peripheral
|
||||||||
equipment
|
157,528
|
143,522
|
||||||
Office furniture and equipment
|
2,754
|
2,372
|
||||||
Leasehold improvements
|
1,949
|
1,694
|
||||||
162,231
|
147,588
|
|||||||
Accumulated depreciation
|
||||||||
Computers, manufacturing, peripheral
|
||||||||
equipment
|
128,206
|
115,260
|
||||||
Office furniture and equipment
|
1,942
|
1,724
|
||||||
Leasehold improvements
|
1,424
|
1,148
|
||||||
131,572
|
118,132
|
|||||||
Depreciated cost
|
30,659
|
29,456
|
F - 27
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
Useful
|
December 31,
|
December 31,
|
||||||||||
Life
|
2023
|
2022
|
||||||||||
$ thousands
|
$ thousands
|
|||||||||||
Original amounts:
|
||||||||||||
Software development costs
|
5 – 10
|
13,096
|
9,558
|
|||||||||
Core technology
|
2 – 6
|
3,638
|
-
|
|||||||||
Customer relationship
|
2 – 5
|
1,209
|
-
|
|||||||||
Trademark
|
2
|
440
|
-
|
|||||||||
18,383
|
9,558
|
|||||||||||
Accumulated amortization:
|
||||||||||||
Software development costs
|
(1,889
|
)
|
(1,350
|
)
|
||||||||
Core technology
|
(57
|
)
|
-
|
|||||||||
Customer relationship
|
(19
|
)
|
-
|
|||||||||
Trademark
|
(17
|
)
|
-
|
|||||||||
(1,982
|
)
|
(1,350
|
)
|
|||||||||
Other Intangible assets, net:
|
||||||||||||
Software development costs
|
11,207
|
8,208
|
||||||||||
Core technology
|
3,581
|
-
|
||||||||||
Customer relationship
|
1,190
|
-
|
||||||||||
Trademark
|
423
|
-
|
||||||||||
Other Intangible assets, net:
|
16,401
|
8,208
|
$ thousands
|
||||
2024
|
1,806
|
|||
2025
|
2,594
|
|||
2026
|
2,252
|
|||
2027
|
1,916
|
|||
2028
|
1,856
|
|||
2029 and thereafter
|
5,977
|
|||
Total expected amortization
|
16,401
|
F - 28
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
December 31,
|
December 31,
|
|||||||
2023
|
2022
|
|||||||
$ thousands
|
$ thousands
|
|||||||
Employees and payroll accruals
|
14,079
|
10,047
|
||||||
Provision for warranty costs
|
1,694
|
1,401
|
||||||
Government authorities
|
2,364
|
1,815
|
||||||
Accrued expenses
|
2,491
|
2,376
|
||||||
Advanced payments from customers
|
3,282
|
3,604
|
||||||
Hedging Liability
|
-
|
1,423
|
||||||
Other
|
15
|
198
|
||||||
23,925
|
20,864
|
F - 29
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
Other accounts receivable and prepaid expenses
|
Other accounts payable and accrued expenses
|
|||||||
December 31, 2023
|
||||||||
$ thousands
|
$ thousands
|
|||||||
Derivatives designated as hedging instruments:
|
||||||||
Currency forward contracts
|
920
|
-
|
||||||
Total derivatives
|
920
|
-
|
Other accounts receivable and prepaid expenses
|
Other accounts payable and accrued expenses
|
|||||||
December 31, 2022
|
||||||||
$ thousands
|
$ thousands
|
|||||||
Derivatives designated as hedging instruments:
|
||||||||
Currency forward contracts
|
-
|
(1,271
|
)
|
|||||
Derivatives not designated as hedging instruments:
|
||||||||
Currency forward and option contracts
|
8
|
(152
|
)
|
|||||
Total derivatives
|
8
|
(1,423
|
)
|
F - 30
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
December 31,
|
December 31,
|
|||||||
2023
|
2022
|
|||||||
$ thousands
|
$ thousands
|
|||||||
Derivatives designated as hedging instruments:
|
||||||||
Currency forward contracts
|
19,482
|
42,848
|
||||||
Derivatives not designated as hedging instruments:
|
||||||||
Currency forward and option contracts
|
-
|
16,082
|
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
$ thousands
|
$ thousands
|
$ thousands
|
||||||||||
Cost of revenues
|
(901
|
)
|
(515
|
)
|
317
|
|||||||
Research and development, net
|
(1,544
|
)
|
(939
|
)
|
699
|
|||||||
Sales and marketing
|
(443
|
)
|
(215
|
)
|
165
|
|||||||
General and administrative
|
(721
|
)
|
(386
|
)
|
279
|
|||||||
Financial expenses and others, net
|
(498
|
)
|
(170
|
)
|
304
|
F - 31
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
December 31,
|
December 31,
|
|||||||
2023
|
2022
|
|||||||
$ thousands
|
$ thousands
|
|||||||
Balance, at beginning of period
|
22,410
|
8,587
|
||||||
Provision for expected credit losses
|
3,898
|
14,489
|
||||||
Balance added in business combination
|
259
|
-
|
||||||
Amounts written off charged against the allowance and others
|
(1,965
|
)
|
(666
|
)
|
||||
Balance, at end of period
|
24,602
|
22,410
|
F - 32
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
December 31,
|
December 31,
|
|||||||
2023
|
2022
|
|||||||
$ thousands
|
$ thousands
|
|||||||
Change in projected benefit obligation
|
||||||||
Projected benefit obligation at beginning of year
|
2,170
|
2,512
|
||||||
Interest cost
|
61
|
37
|
||||||
Expenses paid
|
(135
|
)
|
(153
|
)
|
||||
Exchange rates differences
|
(78
|
)
|
(252
|
)
|
||||
Actuarial loss
|
105
|
26
|
||||||
Projected benefit obligation at end of year
|
2,123
|
2,170
|
December 31,
|
December 31,
|
|||||||
2023
|
2022
|
|||||||
Weighted-average assumptions
|
||||||||
Discount rate
|
3.10
|
%
|
3.00
|
%
|
||||
Rate of compensation increase
|
3.25
|
%
|
3.50
|
%
|
The following table provides the components of net periodic benefits cost for the years ended December 31, 2023, 2022 and 2021:
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
$ thousands
|
$ thousands
|
$ thousands
|
||||||||||
Components of net periodic benefit cost
|
||||||||||||
Interest cost
|
61
|
37
|
38
|
|||||||||
Net periodic benefit cost
|
61
|
37
|
38
|
F - 33
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
$ thousands
|
||||
2024
|
144
|
|||
2025
|
136
|
|||
2026
|
141
|
|||
2027
|
168
|
|||
2028 and thereafter
|
1,534
|
|||
2,123
|
A. |
Leases |
B. |
Liabilities for Royalty Payments to the IIA
|
F - 34
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
C. |
Charges and guarantees |
D. |
Litigations |
F - 35
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
D. |
Litigations (cont’d) |
|
1) |
Class action claim (District Court of Tel Aviv - Economic Department) (cont’d) |
|
F - 36
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
D. |
Litigations (cont’d) |
|
F - 37
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
D. |
Litigations (cont’d) |
|
3) Arbitration proceeding against Ceragon and one of its subsidiaries
A sole arbitrator was appointed during December 2023.
On February 9, 2024 the arbitrator issued the final procedural rules and accepted the parties’ suggestions and, therefore, bifurcated the proceeding.
We are not a party to any other material legal proceedings.
F - 38
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
$ thousands
|
$ thousands
|
$ thousands
|
||||||||||
Components of lease expense
|
||||||||||||
Operating lease cost
|
4,014
|
4,428
|
4,869
|
|||||||||
Short-term lease
|
62
|
52
|
100
|
|||||||||
Total lease expenses
|
4,076
|
4,480
|
4,969
|
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
$ thousands
|
$ thousands
|
$ thousands
|
||||||||||
Supplemental cash flow information
|
||||||||||||
Cash paid for amounts included in the measurement of lease liabilities
|
3,913
|
4,497
|
4,843
|
|||||||||
Supplemental non-cash information related to lease liabilities arising from obtaining ROU assets
|
3,503
|
1,300
|
19,166
|
$ thousands
|
||||
2024
|
3,937
|
|||
2025
|
3,379
|
|||
2026
|
2,665
|
|||
2027
|
2,465
|
|||
2028 and thereafter
|
7,886
|
|||
Total operating lease payments
|
20,332
|
|||
Less: imputed interest
|
2,727
|
|||
Present value of lease liability
|
17,605
|
F - 39
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
A. |
General |
B. |
Stock options plans |
1. |
In 2003, the Company adopted a share option plan, which has been extended or replaced from time to time. To date, the plan that is currently in effect is the Amended and Restated Share Option and RSU Plan as amended on August 10, 2014 (the “Plan”). Under the Plan, options and RSUs may be granted to officers, directors, employees and consultants of the Company or its subsidiaries. The options vest primarily over four years, subject to certain exceptions. The options expire between six to ten years from the date of grant. The Plan expires in December 2024. The Company needs to reserve, and the Board of Directors has reserved, sufficient authorized but unissued Shares for purposes of the Plan subject to adjustments as provided in the Plan. Since the last amendment in 2014, the Company has reserved 15,382,891 units under the Plan. As of December 31, 2023, an aggregate of 324,620 ordinary shares were available for future grants under the plan.
|
2. |
The following table summarizes the activities for the Company’s stock options for the year ended December 31, 2023:
|
Year ended December 31, 2023
|
||||||||||||||||
Number
of options
|
Weighted
average
exercise
price
|
Weighted average remaining contractual term
(in years)
|
Aggregate
intrinsic
value
|
|||||||||||||
$ thousands
|
||||||||||||||||
Outstanding at beginning of year
|
5,305,732
|
2.95
|
3.83
|
19
|
||||||||||||
Granted
|
1,466,357
|
2.00
|
||||||||||||||
Exercised
|
(22,415
|
)
|
1.78
|
|||||||||||||
Forfeited or expired
|
(1,124,192
|
)
|
2.93
|
|||||||||||||
Outstanding at end of the year
|
5,625,482
|
2.71
|
3.66
|
300
|
||||||||||||
Options exercisable at end of the year
|
3,182,912
|
2.88
|
2.87
|
72
|
||||||||||||
Vested and expected to vest
|
5,127,051
|
2.74
|
3.54
|
246
|
F - 40
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
B. |
Stock options plans (cont’d) |
|
Year ended December 31, 2023
|
||||||||
Number of RSUs
|
Aggregate intrinsic
value
|
|||||||
$ thousands
|
||||||||
Unvested at beginning of year
|
2,108,339
|
4,027
|
||||||
Granted
|
1,328,447
|
|||||||
Vested
|
(537,323
|
)
|
||||||
Forfeited
|
(277,268
|
)
|
||||||
Unvested at end of the year
|
2,622,195
|
5,664
|
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
$ thousands
|
$ thousands
|
$ thousands
|
||||||||||
Cost of revenues
|
482
|
587
|
289
|
|||||||||
Research and development, net
|
828
|
405
|
236
|
|||||||||
Sales and marketing
|
1,416
|
1,355
|
700
|
|||||||||
General and administrative
|
1,238
|
1,213
|
1,337
|
|||||||||
Total share-based compensation expenses
|
3,964
|
3,560
|
2,562
|
F - 41
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
C. |
Dividends |
A. |
Israeli taxation
|
1. |
Measurement of taxable income:
|
2. |
Tax benefits under the Law for the Encouragement of Capital Investments, 1959 (the "Law"):
|
F - 42
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
Note 16 - Taxes on Income (cont’d)
A. |
Israeli taxation (cont’d)
|
3. |
Tax benefits under the Law for the Encouragement of Industry (Taxes), 1969:
|
4. |
Tax rates:
|
F - 43
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
Note 16 - Taxes on Income (cont’d)
B. |
Income taxes for non-Israeli subsidiaries:
|
C. |
Tax Assessments: |
|
In 2023, the Company and two of its subsidiaries received tax assessments from local tax authorities in two territories in which they operate. The Company’s management believes it has adequately provided for the reasonably foreseeable outcome related to these assessments and is currently challenging them. However, if these tax assessments are accepted, the Company may be subject to additional tax liabilities, which could have a material adverse effect on its results of operations. |
||
D. |
The income tax expense for the years ended December 31, 2023, 2022 and 2021 consisted of the following:
|
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
$ thousands
|
$ thousands
|
$ thousands
|
||||||||||
Current
|
3,746
|
1,140
|
2,181
|
|||||||||
Deferred
|
2,776
|
1,306
|
8,828
|
|||||||||
6,522
|
2,446
|
11,009
|
||||||||||
Domestic (Israel)
|
1,048
|
664
|
8,844
|
|||||||||
Foreign
|
5,474
|
1,782
|
2,165
|
|||||||||
6,522
|
2,446
|
11,009
|
E. |
Deferred income taxes
|
December 31,
|
December 31,
|
|||||||
2023
|
2022
|
|||||||
$ thousands
|
$ thousands
|
|||||||
Net operating loss carry forward
|
76,348
|
65,148
|
||||||
Temporary differences:
|
||||||||
Allowance for credit loss
|
15,990
|
17,087
|
||||||
Research and development
|
7,796
|
6,092
|
||||||
Lease liabilities
|
3,753
|
3,891
|
||||||
Unrealized foreign exchange gains/losses
|
2,414
|
2,285
|
||||||
Vacation
|
960
|
591
|
||||||
Severance
|
1,001
|
1,090
|
||||||
Other
|
1,134
|
1,652
|
||||||
Deferred tax assets before valuation allowance
|
109,396
|
97,836
|
||||||
Valuation allowance
|
(103,409
|
)
|
(93,529
|
)
|
||||
Deferred tax assets
|
5,987
|
4,307
|
||||||
Deferred tax liabilities:
|
||||||||
Right-of-use lease assets
|
(4,033
|
)
|
(4,140
|
)
|
||||
Intangible assets
|
(1,258
|
)
|
-
|
|||||
Other including property and equipment, net
|
(696
|
)
|
(167
|
)
|
||||
Deferred tax asset, net
|
-
|
-
|
F - 44
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
Note 16 - Taxes on Income (cont’d)
E. |
Deferred income taxes (cont’d)
|
F. |
Net operating loss carry forward and capital loss
|
G. |
Income (Loss) before taxes is comprised as follows:
|
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
$ thousands
|
$ thousands
|
$ thousands
|
||||||||||
Domestic
|
10,880
|
(20,850
|
)
|
(5,430
|
)
|
|||||||
Foreign
|
1,862
|
3,607
|
1,611
|
|||||||||
12,742
|
(17,243
|
)
|
(3,819
|
)
|
F - 45
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
Note 16 - Taxes on Income (cont’d)
H. |
Reconciliation of the theoretical tax expense to the actual tax expense
|
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
$ thousands
|
$ thousands
|
$ thousands
|
||||||||||
Income (loss) before taxes as reported in the consolidated statements of operations
|
12,742
|
(17,243
|
)
|
(3,819
|
)
|
|||||||
Statutory tax rate
|
23
|
%
|
23
|
%
|
23
|
%
|
||||||
Theoretical tax expenses (income) on the
|
||||||||||||
above amount at the Israeli statutory
|
||||||||||||
tax rate
|
2,931
|
(3,966
|
)
|
(878
|
)
|
|||||||
Non-deductible expenses and other
|
||||||||||||
permanent differences
|
2,411
|
|
265
|
(1,602
|
)
|
|||||||
Non-deductible expenses related to employee
|
||||||||||||
stock options
|
946
|
819
|
590
|
|||||||||
Deferred tax assets on losses and other
|
||||||||||||
temporary differences for which valuation
|
||||||||||||
allowance was provided, net
|
(479
|
) |
5,378
|
12,326
|
||||||||
Other
|
713
|
(50
|
)
|
573
|
||||||||
Actual tax expense
|
6,522
|
2,446
|
11,009
|
I. |
A reconciliation of the beginning and ending balances of unrecognized tax benefits related to uncertain tax positions is as follows:
|
December 31,
|
December 31,
|
|||||||
2023
|
2022
|
|||||||
$ thousands
|
$ thousands
|
|||||||
Beginning balance
|
2,291
|
2,367
|
||||||
Increases related to tax positions taken during prior years
|
626
|
283
|
||||||
Increases related to tax positions taken during the current year
|
641
|
330
|
||||||
Decreases related to statute of limitations
|
(371
|
)
|
(689
|
)
|
||||
Ending balance
|
3,187
|
2,291
|
F - 46
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
Year ended
|
Year ended
|
|||||||
December 31,
|
December 31,
|
|||||||
2023
|
2022
|
|||||||
$ thousands
|
$ thousands
|
|||||||
Balance, beginning of the period
|
14,888
|
12,659
|
||||||
New performance obligations
|
9,953
|
6,458
|
||||||
Reclassification to other balance sheet item (*) |
(13,800 |
) | - | |||||
Reclassification to revenue as a result of satisfying performance obligations
|
(4,864
|
)
|
(4,229
|
)
|
||||
Balance, end of the period
|
6,177
|
14,888
|
||||||
Less: long-term portion of deferred revenue
|
670
|
11,545
|
||||||
Current portion, end of period
|
5,507
|
3,343
|
2024
|
2025 and thereafter
|
|||||||
Unsatisfied performance obligations
|
-
|
670
|
F - 47
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
A. |
The Company applies ASC topic 280, "Segment Reporting", ("ASC 820"). The Company operates in one reportable segment (see Note 1 for a brief description of the Company's business). The total revenues are attributed to geographic areas based on the location of the end customer.
|
B. |
The following tables present total revenues for the years ended December 31, 2023, 2022 and 2021 and long-lived assets as of December 31, 2023 and 2022:
|
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
$ thousands
|
$ thousands
|
$ thousands
|
||||||||||
Revenues:
|
||||||||||||
North America (*)
|
95,573
|
67,108
|
47,505
|
|||||||||
Europe
|
42,421
|
42,909
|
47,382
|
|||||||||
Africa
|
19,602
|
19,324
|
23,165
|
|||||||||
Asia-Pacific and Middle East
|
35,033
|
32,970
|
32,008
|
|||||||||
India
|
107,354
|
80,957
|
86,088
|
|||||||||
Latin America
|
47,196
|
51,905
|
54,618
|
|||||||||
347,179
|
295,173
|
290,766
|
(*) |
As of December 31, 2023, 2022 and 2021, 94%, 87% and 72% represent revenues in the United States.
|
December 31,
|
December 31,
|
|||||||
2023
|
2022
|
|||||||
$ thousands
|
$ thousands
|
|||||||
Long-lived assets, net:
|
||||||||
Israel
|
40,672
|
41,076
|
||||||
Others
|
8,824
|
6,342
|
||||||
Total long-lived assets, net (*)
|
49,496
|
47,418
|
(*) |
Long-lived assets are comprised of property and equipment, net and operating lease right-of-use assets
|
|
C. |
Major customer data as a percentage of total revenues: |
F - 48
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
A. |
Restructuring and related charges
|
B. |
Financial expenses and others, net
|
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
$ thousands
|
$ thousands
|
$ thousands
|
||||||||||
Financial income:
|
||||||||||||
Interest on deposits
|
93
|
107
|
160
|
|||||||||
Foreign currency translation differences and
derivatives
|
3,296
|
3,054
|
571
|
|||||||||
3,389
|
3,161
|
731
|
||||||||||
Financial expenses:
|
||||||||||||
Bank charges and interest on loans
|
(7,538
|
)
|
(5,016
|
)
|
(4,650
|
)
|
||||||
Foreign currency translation differences and
derivatives
|
(4,049
|
)
|
(4,451
|
)
|
(4,449
|
)
|
||||||
Others
|
(270
|
)
|
-
|
(257
|
)
|
|||||||
(11,857
|
)
|
(9,467
|
)
|
(9,356
|
)
|
|||||||
(8,468
|
)
|
(6,306
|
)
|
(8,625
|
)
|
F - 49
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
Note 19 - Selected Statements of Operations Data (cont’d)
C. |
Net loss per share
|
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
$ thousands
|
$ thousands
|
$ thousands
|
||||||||||
Numerator:
|
||||||||||||
Numerator for basic and diluted net income (loss) per share – income
(loss) available to shareholders of Ordinary shares
|
6,220
|
(19,689
|
)
|
(14,828
|
)
|
|||||||
Denominator:
|
||||||||||||
Denominator for basic net income (loss) per share – adjusted
weighted average number of Ordinary shares
|
84,617,774
|
84,132,982
|
83,414,831
|
|||||||||
Add - employee stock options and RSU
|
864,852
|
-
|
-
|
|||||||||
Denominator for diluted net income (loss) per share – adjusted weighted average number of Ordinary shares
|
85,482,626
|
84,132,982
|
83,414,831
|
F - 50
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
F - 51
Ceragon Networks Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
Note 20 - Related Party Balances and Transactions (cont’d)
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
$ thousands
|
$ thousands
|
$ thousands
|
||||||||||
Revenues
|
77
|
47
|
394
|
|||||||||
Cost of revenues
|
295
|
345
|
1,125
|
|||||||||
Research and development expenses
|
3
|
115
|
608
|
|||||||||
Sales and marketing expenses
|
252
|
284
|
617
|
|||||||||
General and administrative expenses
|
495
|
1,040
|
1,527
|
|||||||||
Purchase of property and equipment
|
37
|
180
|
175
|
December 31, 2023
|
December 31, 2022
|
|||||||
$ thousands
|
$ thousands
|
|||||||
Trade Receivables
|
-
|
-
|
||||||
Trade payables, other accounts payable and accrued expenses
|
-
|
380
|
F - 52
Between:
|
The bodies listed in Appendix 1 to the Financing Agreement
In their position as Financiers
(the “Financiers”)
|
Of the first part;
|
And:
|
Bank Hapoalim Ltd.
In its position as the credit manager and in its position as the trustee for the securities (“Bank Hapoalim”)
|
Of the second part;
|
And:
|
Ceragon Networks Ltd.
Company Number 51-235244-4 Of 24 Raul Wallenberg St., Tel Aviv, 6971920 (the “Lender”) |
Of the third part;
|
(Each of the Financiers, the credit manager, securities trustee, and the Lender: “Party” and jointly: the “Parties”)
|
||
Whereas
|
On March 14, 2013, the Lender entered into a financing agreement, including its appendices and attachments, with the Financiers, as was amended and as will be amended periodically (the “Financing Agreement”), and pursuant to and by virtue thereof, inter alia, the Lender was provided the “Credit”;
|
|
Whereas
|
The Lender contacted the Financiers and asked that various amendments be made to the Financing Agreement, as set forth in this amendment below;
|
|
Whereas
|
Based on the accuracy of the declarations and representations of the Lender in the Financing Agreement and this amendment, as set forth below, and the upholding of its full undertakings as set forth in the
Financing Agreement, as amended in this amendment, the Financiers agreed to the Lender’s request, all subject and pursuant to the terms and provisions of the Financing Agreement and this amendment;
|
|
1. |
General
|
|
1.1 |
The preamble to this amendment constitutes an integral part thereof. All of the terms mentioned in this amendment above and below will bear the meaning assigned to them in the Financing Agreement, unless noted otherwise.
|
|
1.2 |
For the avoidance of doubt, it is agreed that this amendment constitutes part of the Credit Documents, as defined in Section 2 to the Financing Agreement.
|
|
1.3 |
In addition to any declaration, representation, or undertaking of the Lender in the “Credit Documents” (as this term is defined in the Financing Agreement) or in any other agreement or document that was provided or which will be provided
in connection with the Credit or in connection with the securities, and without impinging upon or derogating from any of the above (except as required by this amendment), the Lender declares, certifies, and undertakes toward the Financiers
and the functionaries as follows:
|
|
1.3.1 |
That the Lender upheld and continues to uphold all of the provisions of the Financing Agreement fully and precisely;
|
|
1.3.2 |
That all of the Lender’s representations set forth in the Financing Agreement (except those listed in Sections 15.1.2, 15.1.3(a), 15.1.5, 15.1.6, 15.1.10, 15.1.11, 15.1.12, and 15.1.16, and except for the representation in Section 15.1.1
solely regarding the fact that the Lender’s shares are registered for trading on the Tel Aviv Stock Exchange Ltd.) remain unchanged and are correct and complete as of the date of execution of this amendment;
|
|
1.3.3 |
That: (a) the Lender received all of the decisions, agreements, authorizations, permits, and certifications needed pursuant to its incorporation documents, under any law and under the directive of any authority, in connection with the
making of this amendment or in connection with the Financing Agreement and its appendices; (b) there is no need to make decisions or provide agreements or any additional certifications whatsoever; (c) all of the measures and actions needed in
order to duly certify its engagement in this amendment have been performed; (d) all of the Lender’s undertakings according, under, or in connection with this amendment or the Financing Agreement or other Credit Documents are legal, binding,
valid, obligatory, and enforceable against it, according to their terms;
|
|
2. |
Amendment of the Financing Agreement
|
|
2.1 |
Extension of the final repayment date. Section 2 to the Financing Agreement will be amended so that the definition “Final Repayment Date” that exists therein will be deleted and replaced by:
“Final Repayment Date” Meaning June 30, 2024”
|
|
2.2 |
Amendment of the definition of the margin. Section 2 to the Financing Agreement will be amended so that the definition “Margin” that exists therein will be deleted and replaced by:
“[E] “Margin” Meaning, a rate of up to 2.5% (two percent and fifty hundredths of a percent).”
|
|
2.3 |
Cancellation of Sections 16.30A and 16.30B.
Sections 16.30A and 16.30B to the Financing Agreement are cancelled.
|
|
2.4 |
Update of Section 3.7.3 to the Financing Agreement. Section 3.7.3 to the Financing Agreement will be amended as follows:
|
|
2.4.1 |
At the end of the second paragraph, after the words “by the Financiers to the Lender” will appear:
|
|
2.5 |
Changing the factoring mix. Section 16.16 to the Financing Agreement will be amended as follows:
|
|
2.5.1 |
In Subsection A, the amount “USD 35 (thirty-five) million” will be replaced by the amount: “USD 12 (twelve) million”;
|
|
2.5.2 |
In Subsection B, after the word “for the amount” will follow the words “additional, cumulative”;
|
|
2.5.3 |
In Subsection B, the amount “USD 35 (thirty-five) million” will be replaced by the amount: “USD 12 (twelve) million”;
|
|
2.5.4 |
In Subsection C, after the word “for the amount” will follow the words “additional, cumulative”;
|
|
2.5.5 |
After Subsection C and before the sixth paragraph, beginning with the words “For the avoidance of doubt, the foregoing does not derogate,” Subsections D and E will be added in the following form:
E. From customers belonging to Bharti (India) Group, for an additional cumulative amount that will not exceed, in total at any time whatsoever, USD 18 (eighteen) million.” |
|
2.5.6 |
In the sixth paragraph, beginning with the words “For the avoidance of doubt, the foregoing does not derogate,” the words “with Reliance Jio Infocomm Group or Pt Smart Telecom” will be replaced by the words: “with Reliance Jio Infocomm
Group, Pt Smart Telecom, T-mobile, or Bharti (India).”
|
|
3. |
Increasing the loan limit and reducing the guarantee limit
|
|
3.1 |
Without derogating from the provisions of Sections 18.1 and 18.9 to the Financing Agreement, as of the date of execution of this amendment:
|
|
A. |
The amount of the limits of the loans set forth in Appendix 1 to the Financing Agreement will be amended, so that the total loan limits that will be allocated by all of the Financiers jointly will be increased and be USD 72,000,000
(seventy-two million), and the share of each of the Financiers in the loan limits will be as set forth in Appendix 1 to the Financing Agreement (as amended in this amendment).
|
|
B. |
The amount of the limits of the bank guarantees set forth in Appendix 1 to the Financing Agreement will be amended, so that the total guarantee limits that will be allocated by all of the Financiers jointly will be decreased and be USD
45,886,000 (forty-five million eight hundred and eighty-six thousand), as follows, and the share of each of the Financiers in the bank guarantee limits will be as set forth in Appendix 1 to the Financing Agreement (as amended in this
amendment).
|
|
C. |
If following the decrease of the bank guarantee limits as set forth in Subsection B above, the amount that is utilized of the bank guarantee limit allocated by any Financier (the “Utilized Amount”)
exceeds the amount of the bank guarantee limit allocated by that Financier (the “Limit Amount”) – then the difference between the Utilized Amount and the Limit Amount will be viewed as the amount
utilized from the loan limit that was allocated by that Financier, and not as an amount utilized from the bank guarantee limit.
For demonstrative purposes only: If, before being amended pursuant to this amendment, the amount of the loan limit allocated by the Financier was NIS 50 million and NIS 40 million was utilized, and the amount of the bank guarantee limit allocated by the same Financier was NIS 30 million and NIS 25 million was utilized, and following the amendment pursuant to this amendment, the amount of the loan limit increased to NIS 60 million and the amount of the bank guarantee limit decreased to NIS 20 million – then the Utilized Amount of the guarantee limit will be NIS 20 million and the Utilized Amount of the loan limit will be NIS 45 million. |
|
3.2 |
As of the date of execution of this amendment, Appendix 1 to the Financing Agreement will be replaced by Appendix 1 attached herein to this amendment pursuant to the amendments made in Section 3.1
above.
|
|
3.3 |
As of the date of execution of this amendment, Section 16.28.5 to the Financing Agreement will be amended so that Appendix 16.28.5 to the Financing Agreement will be replaced by Appendix 16.28.5 attached to this amendment.
|
|
4. |
Cancellation of Section 3.4 and the Appendix to Amendment No. 15
|
|
4.1 |
As of the date of execution of this amendment, Section 3.4 of Amendment No. 15 to the Financing Agreement is cancelled.
|
|
5. |
Payments
|
|
5.1 |
The Lender undertakes to pay: (a) Bank Hapoalim in its position as the credit manager, and (b) every Financier, via the credit manager, a complex transactions fee in connection with amendment of the Financing Agreement, as set forth in
the accompanying letter, which will be executed together with the execution of this amendment by the Lender.
|
|
5.2 |
Payment whatsoever as set forth above will be considered final and definitive, and will not be refunded to the Lender for any reason whatsoever.
|
|
6. |
Miscellaneous
|
|
6.1 |
Unless explicitly established otherwise in this amendment, the terms and undertakings as set forth in this amendment do not derogate, impinge upon, or change any other undertaking of the Lender toward the Financiers or the validity of
any security whatsoever that was provided for the securities trustee for the Financiers according and by virtue of the Financing Agreement or the other Credit Documents or any other document or agreement that was provided or will be
provided to the Financiers or to a functionary in connection with the credit, and these will continue to remain fully valid and binding, including all of the provisions related to the rights of the Financiers to provide the credit for
immediate payment, all subject and according to the provisions and terms of the Credit Documents.
|
|
6.2 |
This amendment, unless explicitly noted otherwise, is meant to add to the provisions of the Financing Agreement and the amendments, and not to derogate from or impinge upon them, and except as explicitly noted in this amendment, all of
the rights of the Financiers and the Lender pursuant to the Financing Agreement, the amendments, and the law, are fully reserved.
|
|
6.3 |
This amendment may be executed by the Parties thereto in one copy or in several separate copies by any of the Parties, and they will jointly constitute one document.
|
[Signatures]
|
|
|
Ceragon Networks Ltd.
|
Bank Hapoalim Ltd.
(As Financier, in its position as credit
manager and in its position as securities
trustee)
|
|
First International Bank of Israel
Ltd. (as a Financier)
|
||
HSBC BANK PLC
(as a Financier)
|
||
Bank Leumi Le’Israel Ltd.
(as a Financier) |
||
Attorney’s Certification
I, the undersigned, Adv. [Stamp], acting as the legal advisor to Ceragon Networks Ltd. (the “Lender”), hereby certify that this amendment was executed by the Lender via Ronen Stein, ID No. 22934947, and Moshik Albahari, ID No. 60842978, pursuant to the decision of the Lender made in accordance with the law and the updated incorporation documents of the Lender. Moreover, I hereby certify that this agreement was executed by an entity authorized to obligate the Lender, and their signature on this agreement binds the Lender for all intents and purposes. |
||
June 26, 2023
|
[Signature + Stamp]
|
|
Date
|
Signature and stamp of attorney
|
|
[Signatures]
|
|
Ceragon Networks Ltd.
|
Bank Hapoalim Ltd.
(As Financier, in its position as credit
manager and in its position as securities
trustee)
|
|
First International Bank of Israel
Ltd. (as a Financier)
|
||
HSBC BANK PLC
(as a Financier)
|
||
Bank Leumi Le’Israel Ltd.
(as a Financier) |
||
Attorney’s Certification
I, the undersigned, Adv. ______, acting as the legal advisor to Ceragon Networks Ltd. (the “Lender”), hereby certify that this amendment was executed by the Lender via _________, ID No. _________, and _________, ID No. _________, pursuant to the decision of the Lender made in accordance with the law and the updated incorporation documents of the Lender. Moreover, I hereby certify that this agreement was executed by an entity authorized to obligate the Lender, and their signature on this agreement binds the Lender for all intents and purposes. |
||
|
[Signature + Stamp]
|
|
Date
|
Signature and stamp of attorney
|
|
|
|
Ceragon Networks Ltd.
[2 signatures + 2 stamps]
|
Bank Hapoalim Ltd.
(As Financier, in its position as credit
manager and in its position as securities
trustee)
|
|
First International Bank of Israel
Ltd. (as a Financier)
|
||
HSBC BANK PLC
(as a Financier)
|
||
Bank Leumi Le’Israel Ltd.
(as a Financier) |
||
Attorney’s Certification
I, the undersigned, Adv. ______, acting as the legal advisor to Ceragon Networks Ltd. (the “Lender”), hereby certify that this amendment was executed by the Lender via _________, ID No. _________, and _________, ID No. _________, pursuant to the decision of the Lender made in accordance with the law and the updated incorporation documents of the Lender. Moreover, I hereby certify that this agreement was executed by an entity authorized to obligate the Lender, and their signature on this agreement binds the Lender for all intents and purposes. |
||
|
|
|
Date
|
Signature and stamp of attorney
|
[Signatures]
|
|
|
Ceragon Networks Ltd.
|
Bank Hapoalim Ltd.
(As Financier, in its position as credit
manager and in its position as securities
trustee)
|
|
|
||
First International Bank of Israel
Ltd. (as a Financier)
[2 signatures + 2 stamps]
|
||
HSBC BANK PLC
(as a Financier)
|
||
Bank Leumi Le’Israel Ltd.
(as a Financier) |
||
Attorney’s Certification
I, the undersigned, Adv. ______, acting as the legal advisor to Ceragon Networks Ltd. (the “Lender”), hereby certify that this amendment was executed by the Lender via _________, ID No. _________, and _________, ID No. _________, pursuant to the decision of the Lender made in accordance with the law and the updated incorporation documents of the Lender. Moreover, I hereby certify that this agreement was executed by an entity authorized to obligate the Lender, and their signature on this agreement binds the Lender for all intents and purposes. |
||
|
|
|
Date
|
Signature and stamp of attorney
|
|
|
|
Ceragon Networks Ltd.
|
Bank Hapoalim Ltd.
(As Financier, in its position as credit
manager and in its position as securities
trustee)
|
|
|
||
First International Bank of Israel
Ltd. (as a Financier)
[2 signatures + 2 stamps]
|
||
HSBC BANK PLC
(as a Financier)
[Signatures + stamps]
|
||
Bank Leumi Le’Israel Ltd.
(as a Financier) |
||
Attorney’s Certification
I, the undersigned, Adv. ______, acting as the legal advisor to Ceragon Networks Ltd. (the “Lender”), hereby certify that this amendment was executed by the Lender via _________, ID No. _________, and _________, ID No. _________, pursuant to the decision of the Lender made in accordance with the law and the updated incorporation documents of the Lender. Moreover, I hereby certify that this agreement was executed by an entity authorized to obligate the Lender, and their signature on this agreement binds the Lender for all intents and purposes. |
||
|
|
|
Date
|
Signature and stamp of attorney
|
Form for execution
|
Appendix 1 to the Financing Agreement (Amendment No. 16)
|
|
1. |
All of the terms in this appendix will bear the meaning attributed to them in the Financing Agreement.
|
|
2. |
The list of financing bodies is as set forth in this appendix.
|
Amount of the loan limit allocated by the Financier
|
Amount of the bank guarantee limit allocated by the Financier
|
Amount of the permitted risk limit
|
|||
1.
|
Bank Hapoalim Ltd.
|
Name: Ms. Yael Nasatsky.
Address: : Business Wing of the Business Division, Headquarters, Bank Hapoalim Ltd, 23 Menachem Begin Blvd., Tel Aviv-Yafo. Tel.: 03-5674300; Fax: 03-6014926 Email: yael.nasatsky-shapiro@poalim.co.il |
USD 37,250,000 (thirty-seven million two hundred and fifty thousand).
|
USD 27,171,000 (twenty-seven million one hundred and seventy-one thousand).
|
USD 5,427,586 (five million, four hundred and twenty-seven thousand, five hundred and eighty-six).
|
2.
|
Bank Leumi Le’Israel Ltd.
|
Name: Mr. Danny Shapira
Address: Hi-Tech Branch, Business Division, Bank Leumi, 34 Yehuda Halevi St., Tel Aviv-Yafo, 65136.
Telephone: 076-885-9184; Fax: 077-8959184.
Email: Danny.Shapira@BankLeumi.co.il
|
USD 14,400,000 (fourteen million four hundred thousand).
|
USD 9,256,000 (nine million two hundred and sixty-five thousand).
|
USD 1,000,000 (one million).
|
3.
|
First International Bank of Israel Ltd.
|
Name: Ms. Naama Magid
Tel.: 03-5196239; Fax: 03-5196944
Email: magid.n@fibi.co.il
Name: Mr. Hezi Cupryk
Tel.: 03-619599; Fax: 03-5196944
Email: Cupryk.H@fibi.co.il
Address: Energy, Chemistry, and Technology Sector in the Business Division, First International Bank of Israel Ltd., 42 Rothschild St., Tel Aviv-Yafo.
|
USD 11,550,000 (eleven million five hundred and fifty thousand).
|
USD 5,450,000 (five million four hundred and fifty thousand).
|
USD 3,982,759 (three million nine hundred and eighty-two thousand, seven hundred and fifty-nine).
|
4.
|
HSBC BANK PLC (Tel-Aviv Branch)
|
Name: Ms. Nirit Frey Markman
Address: 2 Jabotinsky St., Ramat Gan, Amot Atrium Tower, Level 30, 5250501
Tel.: 03-7101120; Fax: 03-7101144
Email: nirit.frey.markman@hsbc.com
|
USD 8,800,000 (eight million eight hundred thousand).
|
USD 4,000,000 (four million).
|
USD 400,000 (four hundred thousand).
|
Total
|
USD 72,000,000 (seventy-two million).
|
USD 45,886,000 (eight million eight hundred and eighty-six thousand).
|
USD 10,810,345 (ten million eight hundred and ten thousand, three hundred and forty-five).
|
Form for execution
|
Appendix 16.28.5 to the Financing Agreement (Amendment No. 16)
|
|
1. |
All of the terms in this appendix will bear the meaning attributed to them in the Financing Agreement.
|
|
2. |
The utilization amounts set forth in this Appendix 16.28.5 below are correct as of ___ of _____ ______ (for calendar quarter no. ___ of the year _____).
|
Amount of the loan limit
|
Amount of the loan limit utilized by the Lender1
|
Amount of the bank guarantee limit
|
Amount of the bank guarantee limit utilized by the Lender
|
|
Total
|
USD 72,000,000 (seventy-two million).
|
USD ______ (____________).
|
USD 45,886,000 (eight million eight hundred and eighty-six thousand).
|
USD ______ (____________).
|
Between:
|
The bodies listed in Appendix 1 to the Financing Agreement
In their position as Financiers (the “Financiers”) |
Of the first part;
|
And:
|
Bank Hapoalim Ltd.
In its position as the credit manager and in its position as the trustee for the securities (“Bank Hapoalim”)
|
Of the second part;
|
And:
|
Ceragon Networks Ltd.
Company Number 51-235244-4 Of 3 Uri Ariav St., Rosh Ha’ayin (the “Lender”)
|
Of the third part;
|
(Each of the Financiers, the credit manager, securities trustee, and the Lender: “Party” and jointly: the “Parties”)
|
Whereas
|
On March 14, 2013, the Lender entered into a financing agreement, including its appendices and attachments, with the Financiers, as was amended and as will be amended periodically (the “Financing Agreement”), and pursuant to and by virtue thereof, inter alia, the Lender was provided the “Credit”;
|
Whereas
|
The Lender is interested in adding Bank Mizrahi Tefahot Ltd. as a Financier in the Financing Agreement simultaneous to completion of the transaction pursuant to the agreement for purchase of
the shares and assets (as defined below), and therefore contacted the Financiers and asked that various amendments be made to the Financing Agreement, as set forth in this amendment below;
|
Whereas
|
Based on the accuracy of the declarations and representations of the Lender in the Financing Agreement and this amendment, as set forth below, and the upholding of its full undertakings as
set forth in the Financing Agreement, as amended in this amendment, the Financiers agreed to the Lender’s request, all subject and pursuant to the terms and provisions of the Financing Agreement and this amendment;
|
|
1. |
General
|
|
1.1 |
The preamble to this amendment constitutes an integral part thereof. All of the terms mentioned in this amendment above and below will bear the meaning assigned to them in the Financing Agreement, unless noted otherwise.
|
|
1.2 |
In this amendment, above and below, in addition to all of the other definitions that appear herein, the following terms will bear the meaning that appears alongside them:
|
“Share and Assets
Purchase Agreement” |
Meaning, the agreement for the purchase of shares and assets between the Lender, Ceragon Networks Inc. (a subsidiary wholly owned by the Lender) (the “Subsidiary”),
Siklu Communications Ltd. (Company Number 51-402563-4) (the “Acquired Company”), and Siklu Inc. (Foreign Company Number 4407186) (the “Parent Company”), executed
on October 23, 2023 and attached as Appendix A to this amendment, by which, inter alia, the Parent Company will sell the Lender all of its shares in the
Acquired Company and will sell and assign the Subsidiary part of its assets, against an allocation of the Lender’s shares to the Parent Company at the value of USD 3,000,000 (three million), so that upon completion of the transaction, the
Lender will hold all of the shares of the Acquired Company and the Parent Company will hold the Lender’s shares at a rate that does not exceed 5%.
|
|
1.3 |
For the avoidance of doubt, it is agreed that this amendment constitutes part of the Credit Documents, as defined in Section 2 to the Financing Agreement.
|
|
1.4 |
In addition to any declaration, representation, or undertaking of the Lender in the “Credit Documents” (as this term is defined in the Financing Agreement) or in any other agreement or document that was provided or which will be provided
in connection with the Credit or in connection with the securities, and without impinging upon or derogating from any of the above (except as required by this amendment), the Lender declares, certifies, and undertakes toward the Financiers
and the functionaries as follows:
|
|
1.4.1 |
That the Lender upheld and continues to uphold all of the provisions of the Financing Agreement fully and precisely;
|
|
1.4.2 |
That all of the Lender’s representations set forth in the Financing Agreement (except those listed in Sections 15.1.2, 15.1.3(a), 15.1.5, 15.1.6, 15.1.10, 15.1.11, 15.1.12, and 15.1.16, and except for the representation in Section 15.1.1
solely regarding the fact that the Lender’s shares are registered for trading on the Tel Aviv Stock Exchange Ltd.) remain unchanged and are correct and complete as of the date of execution of this amendment;
|
|
1.4.3 |
That: (a) the Lender received all of the decisions, agreements, authorizations, permits, and certifications needed pursuant to its incorporation documents, under any law and under the directive of any authority, in connection with the
making of this amendment or in connection with the Financing Agreement and its appendices and/or in connection with the bond amendment pledging the Lender’s accounts (as defined below) and/or with the Share and Assets Purchase Agreement (as
defined above) ; (b) there is no need to make decisions or provide agreements or any additional certifications whatsoever; (c) all of the measures and actions needed in order to duly certify its engagement in this amendment have been
performed; (d) all of the Lender’s undertakings according, under, or in connection with this amendment or the Financing Agreements or other Credit Documents and/or in connection with the bond amendment pledging the Lender’s accounts and/or
with the Share and Assets Purchase Agreement are legal, binding, valid, obligatory, and enforceable against it, according to their terms;
|
|
2. |
Addition of Another Financier
|
|
2.1 |
As of date that this amendment becomes valid (as set forth in Section 6 below), Bank Mizrahi Tefahot will be a financier as part of the Financing Agreement.
|
|
2.2 |
As of date that this amendment becomes valid, Section 2 to the Financing Agreement will be amended as follows:
|
|
2.2.1 |
After the definition “Bank Leumi,” the definition “Bank Mizrahi” will be added as follows:
“Meaning, Bank Mizrahi Tefahot Ltd. and each of its branches, existing and/or that will be opened at any location in the future, in Israel and abroad, and those who replace it or act on behalf of this bank.”
|
|
2.2.2 |
The definition the “Lender’s Account” or the “Lender’s Accounts” will replaced by the following definition:
“Meaning, each of the following accounts: (a) the Lender’s account at FIBI, (b) the Lender’s account at Bank Hapoalim, (c) the Lender’s account at Bank Leumi, (d) the Lender’s account at HSBC (Tel Aviv Branch),
and/or (e) the Lender’s account at Bank Mizrahi, or with another Financier (subject and according to the provisions of this agreement), as relevant.”
|
|
2.2.3 |
After the definition “Lender’s Account at Bank Leumi,” the definition “Lender’s Account at Bank Mizrahi” will be added as follows:
“Meaning, Account No. 291919 managed at the Petach Tikva Business Center Branch (429) of Bank Mizrahi (including if its number is switched or changed).” As of date that this amendment becomes valid, Section 32
to the Financing Agreement will be amended as follows:
“Lender” – 3 Uri Ariav St., Rosh Ha’ayin. Attention: Hadar Vismunski Weinberg; Email: hadarv@ceragon.com.
Position: Syndication Department, Headquarters, Bank Hapoalim Ltd, 23 Menachem Begin Blvd., Tel Aviv-Yafo. Attention: Revital Marinov and Ilan Stein; Email: Revital.marinov@poalim.co.il
and ilan.stein@poalim.co.il.
Bank Hapoalim Ltd.: Business Wing of the Business Division, Headquarters, Bank Hapoalim Ltd, 23 Menachem Begin Blvd., Tel Aviv-Yafo. Attention Sivan Miezler, Email: sivan.miezler@poalim.co.il
Bank Leumi: Technology and Industry Branch, Business Division, Bank Leumi Le’Israel Ltd., 34 Yehuda Halevi St., Tel Aviv-Yafo, 65136. Attention: Noa Doani Joseph; Email:
Noa.DoaniJoseph@BankLeumi.co.il ;
FIBI: Energy, Chemistry, and Technology Sector in the Business Division, First International Bank of Israel Ltd., 42 Rothschild Blvd., Tel Aviv-Yafo. Attention: Noa Magid
and Hezi Cupryk; Email: magid.n@fibi.co.il and Cupryk.H@fibi.co.il .
HSBC: HSBC Bank Plc., Amot Atrium Tower, 7 Jabotinsky St., Ramat Gan. Attention: Nirit Frey Markman; Email: nirit.frey.markman@hsbc.com
Bank Mizrahi: Beit Mizrahi Tefahot, Moshe Aviv Tower, 7 Jabotinsky St., Ramat Gan. Dani Maor; Email: dani_maor@umtb.co.il ;
|
|
2.3 |
Amendment of bonds, Lender’s Accounts (addition of the account at Bank Mizrahi Tefahot Ltd.)
|
|
2.3.1 |
The Lender undertakes that no the date that this agreement is executed, it will sign a bond amendment to pledge the Lender’s Accounts (as defined in Section 14.1.2 to the Financing Agreement) and all of the accompanying documents (“Bond Amendment to Pledge the Lender’s Accounts”), to the full satisfaction of the Financiers. It is clarified that the Bond Amendment to Pledge the Lender’s Accounts will be executed by the securities
trustee subject to the validation of this amendment (pursuant to Section 6 below).
|
|
2.3.2 |
The Lender undertakes that the Registrar of Companies and/or any other relevant register pursuant to the law will be provided, no later than two business days after this amendment becomes valid, with all of the documents related to the
Bond Amendment to Pledge the Lender’s accounts (as defined in Section 14.1.2 to the Financing Agreement), and undertakes that the amendment of said bond will be registered by, and no later than, 14 (fourteen) days from the date that this
amendment becomes valid, all to the full satisfaction of the Financiers. It is clarified that the amendment of said bond will not be registered at the Registrar of Companies and/or any other relevant register until after the securities
trustee has executed the Bond Amendment to Pledge the Lender’s Accounts and this amendment has become valid.
|
|
3. |
Permitted Factoring Transactions
|
|
3.1 |
At the beginning of Section 16.1.16, instead of “USD 20 (twenty) million,” the words “USD 25 (twenty-five) million” will appear;
|
|
3.2 |
In Subsection C, the amount “USD 10 million (ten million)” will be replaced by the amount: “USD 12 million (twelve million)”;
|
|
4. |
Amending the loan limit and the guarantee limit
|
|
4.1 |
As of the date that this amendment becomes valid and without derogating from the provisions of Sections 18.1 and 18.9 to the Financing Agreement:
|
|
4.1.1 |
The amount of the limits of the loans set forth in Appendix 1 to the Financing Agreement will be amended, so that the total loan limits that will be allocated by all of the Financiers jointly will be increased and be USD 77,000,000
(seventy-seven million), and the share of each of the Financiers in the loan limits will be as set forth in Appendix 1 to the Financing Agreement (as amended in this amendment).
|
|
4.1.2 |
The share of each of the Financiers in the bank guarantee limits will be amended and will be as set forth in Appendix 1 to the Financing Agreement (as amended in this amendment).
|
|
4.1.3 |
If following the change in the shares of the Financiers of the bank guarantee limits as set forth in Subsection B above, the amount that is utilized of the bank guarantee limit allocated by any Financier (the “Utilized Amount”) exceeds the amount of the bank guarantee limit allocated by that Financier (the “Limit Amount”) – then the difference between the Utilized Amount and the Limit Amount
will be viewed as the amount utilized from the loan limit that was allocated by that Financier, and not as an amount utilized from the bank guarantee limit.
For demonstrative purposes only: If, before being amended pursuant to this amendment, the amount of the loan limit allocated by the Financier was NIS 50 million and NIS 40 million was utilized, and the amount of the bank guarantee
limit allocated by the same Financier was NIS 30 million and NIS 25 million was utilized, and following the amendment, the amount of the bank guarantee limit decreased to NIS 20 million – then the Utilized Amount of the guarantee limit will
be NIS 20 million and the Utilized Amount of the loan limit will be NIS 45 million.
|
|
4.2 |
As of the date of execution of this amendment, Appendix 1 to the Financing Agreement will be replaced by Appendix 1 attached herein to this amendment pursuant to the amendments made in Sections 2.1
and 4.1 above.
|
|
4.3 |
As of the date of execution of this amendment, Section 16.28.5 to the Financing Agreement will be amended so that Appendix 16.28.5 to the Financing Agreement will be replaced by Appendix 16.28.5 attached to this amendment.
|
|
5. |
Share and Assets Purchase Agreement
|
|
5.1 |
It is hereby clarified that despite the provisions of Sections 16.20 and 16.22 to the Financing Agreement, the Lender will be entitled to enter into the Share and Assets Purchase Agreement and to complete the transaction thereunder,
subject to the following terms:
|
|
5.1.1 |
The Parent Company will not control the Lender as a result of the Share and Assets Purchase Agreement;
|
|
5.1.2 |
No change, addition, or amendment was made to the provisions or terms of the Share and Assets Purchase Agreement, including its appendices and accompanying documents (in their form as on the date of the execution of this amendment) that
impact the monetary liabilities of the Lender of that could detrimentally affect the rights of the Financiers under the Financing Agreement in any way whatsoever, without receipt of the consent of the Financiers (via the manager) in advance
and in writing.
|
|
5.2 |
The provisions of this Section 5 do not derogate from the other debts and undertakings of the Lender pursuant to the Financing Agreement, including with regard to the debts and undertakings that apply to the investee company (as defined in
the Financing Agreement).
|
|
5.3 |
The Lender undertakes that as of the date that this amendment becomes valid, all of the representations and undertakings of the Lender pursuant to the Financing Agreement with respect to the investee company (as defined in the Financing
Agreement) will be upheld in connection with the Acquired Company as well.
|
|
5.4 |
It is agreed and clarified that:
|
|
A. |
On the date that this amendment becomes valid, there may be pledges and encumbrances on the assets of the Acquired Company for Bank Mizrahi Tefahot Ltd. (“Bank Mizrahi”) that secure the existing
credit (as defined below); the Lender undertakes to remove all of these pledges and encumbrances and to provide the Financiers with relevant proof of their removal, within no more than 7 (seven) business days after this amendment becomes
valid. When the pledges and encumbrances pursuant to this Subsection (A) are removed, the existence of said pledges and encumbrances (during the period of up to 7 (seven) business days after this amendment becomes valid) will not be viewed as
a breach of 15.1.18 to the Financing Agreement.
|
|
B. |
On the date that this amendment becomes valid, the Acquired Company may have loans or credit of any type whatsoever that was provided and not fully paid, or bank guarantees that did not yet expire or were not cancelled, or credit
facilities that were not yet utilized (fully or partially), including interest rates of any type, expenses (including disposal and collection expenses), fees, and all of the other payments, of any type or form whatsoever, as set forth below
(the “Existing Credit”), which will be paid, inter alia, by utilizing the full loan limit that Bank Mizrahi undertook to allocate to the Lender in the Lender’s
account at Bank Mizrahi, as set forth in Appendix 1 to the Financing Agreement. The Lender undertakes to pay or to cause the payment of all of the Existing Credit, completely and definitively, to the full satisfaction of the entity financing
the Existing Credit (with the exception of bank guarantees of approx. NIS 570,000 from Bank Mizrahi and the credit card limits at Bank Mizrahi for up to NIS 150,000, which will not be considered an amount utilized from the loan limit), and to
provide the Financiers with relevant proof of its payment no later than 5 (five) business days after this amendment becomes valid. The Lender certifies and undertakes that simultaneously to its execution of this agreement, the Lender will
execute a withdrawal request (as defined in the Financing Agreement) for Bank Mizrahi in the amount (principal) of the full loan limit allocated by Bank Mizrahi (meaning, a total of USD 8,000,000 (eight million). When the Existing Credit is
paid pursuant to this Subsection (B), the existence of Existing Credit as aforementioned (during a period of up to 5 (five) business days after this amendment becomes valid) will not be viewed as a breach of Section 15.1.11 to the Financing
Agreement.
For the avoidance of doubt, it is clarified that the foregoing does not place any responsibility whatsoever on Bank Mizrahi with regard to removal of the existing pledges and encumbrances and/or payment of the
Existing Credit, which are the exclusive responsibility of the Lender. It is clarified that the foregoing does not derogate from the responsibility of Bank Mizrahi to provide the loan limit as set forth above, subject and according to the
Financing Agreement.
|
|
C. |
On the date that this agreement is executed, the Lender will provide the credit agent with an executed letter of intent from Bank Mizrahi, by which Bank Mizrahi will remove all of the pledges and encumbrances registered on the assets of
the Acquired Company for Bank Mizrahi (that secure the Existing Credit), subject to payment of the Existing Credit (which is secured by said pledges and encumbrances), completely and definitively, in the form attached herein as Appendix B to this amendment.
|
|
6. |
Force
This amendment will become valid simultaneously to the completion of the Share and Assets Purchase Agreement and subject to the existence of all of the following: (a) the Parties have
executed this amendment and a bond amendment to pledge the Lender’s Accounts has been executed by the Lender and by the securities trustee; and (b) the Lender provided notice to the credit agent regarding completion of the Share and Assets
Purchase Agreement, attaching the updated shareholder registry of the Acquired Company by which all of the shares of the Acquired Company are held by the Lender, and the credit agent has sent this notice to all of the Financiers; in the
event that these terms are not met by January 31, 2024, this amendment will expire and be null and void, without any requirement to provide written notice to the Lender at any subsequent time.
|
|
7. |
Payments
|
|
7.1 |
The Lender undertakes to pay: (a) Bank Hapoalim in its position as the credit manager, and (b) every Financier, via the credit manager, a complex transactions fee in connection with amendment of the Financing Agreement, as set forth in the
accompanying letter, which will be executed together with the execution of this amendment by the Lender.
|
|
7.2 |
Payment whatsoever as set forth above will be considered final and definitive, and will not be refunded to the Lender for any reason whatsoever.
|
|
8. |
Miscellaneous
|
|
8.1 |
Unless explicitly established otherwise in this amendment, the terms and undertakings as set forth in this amendment do not derogate, impinge upon, or change any other undertaking of the Lender toward the Financiers or the validity of any
security whatsoever that was provided for the securities trustee for the Financiers according and by virtue of the Financing Agreement or the other Credit Documents or any other document or agreement that was provided or will be provided to
the Financiers or to a functionary in connection with the credit, and these will continue to remain fully valid and binding, including all of the provisions related to the rights of the Financiers to provide the credit for immediate payment,
all subject and according to the provisions and terms of the Credit Documents.
|
|
8.2 |
This amendment, unless explicitly noted otherwise, is meant to add to the provisions of the Financing Agreement and the amendments, and not to derogate from or impinge upon them, and except as explicitly noted in this amendment, all of the
rights of the Financiers and the Lender pursuant to the Financing Agreement, the amendments, and the law, are fully reserved.
|
|
8.3 |
This amendment may be executed by the Parties thereto in one copy or in several separate copies by any of the Parties, and they will jointly constitute one document.
|
|
[Stamp+ 2 Signatures]
|
|
Ceragon Networks Ltd.
|
Bank Hapoalim Ltd.
(As Financier, in its position as credit
manager and in its position as
securities trustee)
|
|
|
||
First International Bank of Israel
Ltd. (as a Financier)
|
Bank Leumi Le’Israel Ltd. (as a Financier) |
|
HSBC BANK PLC
(as a Financier)
|
Bank Mizrahi Tefahot Ltd.
(as a Financier)
|
|
Attorney’s Certification
I, the undersigned, Adv. ______, acting as the legal advisor to Ceragon Networks Ltd. (the “Lender”), hereby certify that this amendment was executed by the Lender via _________, ID No. _________, and _________, ID No. _________, pursuant to the decision of the Lender made in accordance with the law and the updated incorporation documents of the Lender. Moreover, I hereby certify that this agreement was executed by an entity authorized to obligate the Lender, and their signature on this agreement binds the Lender for all intents and purposes. |
||
|
|
|
Date
|
Signature and stamp of attorney
|
|
|
|
Ceragon Networks Ltd.
|
Bank Hapoalim Ltd.
(As Financier, in its position as credit
manager and in its position as
securities trustee)
|
|
|
|
|
First International Bank of Israel
Ltd. (as a Financier)
[Stamp+ 2 Signatures]
|
Bank Leumi Le’Israel Ltd. (as a Financier) |
|
HSBC BANK PLC
(as a Financier)
|
Bank Mizrahi Tefahot Ltd.
(as a Financier)
|
|
Attorney’s Certification
I, the undersigned, Adv. ______, acting as the legal advisor to Ceragon Networks Ltd. (the “Lender”), hereby certify that this amendment was executed by the Lender via _________, ID No. _________, and _________, ID No. _________, pursuant to the decision of the Lender made in accordance with the law and the updated incorporation documents of the Lender. Moreover, I hereby certify that this agreement was executed by an entity authorized to obligate the Lender, and their signature on this agreement binds the Lender for all intents and purposes. |
||
|
|
|
Date
|
Signature and stamp of attorney
|
|
|
|
Ceragon Networks Ltd.
|
Bank Hapoalim Ltd.
(As Financier, in its position as credit
manager and in its position as
securities trustee)
|
|
|
[Stamp+ 2 Signatures]
|
|
First International Bank of Israel
Ltd. (as a Financier)
|
Bank Leumi Le’Israel Ltd. (as a Financier) |
|
HSBC BANK PLC
(as a Financier)
|
Bank Mizrahi Tefahot Ltd.
(as a Financier)
|
|
Attorney’s Certification
I, the undersigned, Adv. ______, acting as the legal advisor to Ceragon Networks Ltd. (the “Lender”), hereby certify that this amendment was executed by the Lender via _________, ID No. _________, and _________, ID No. _________, pursuant to the decision of the Lender made in accordance with the law and the updated incorporation documents of the Lender. Moreover, I hereby certify that this agreement was executed by an entity authorized to obligate the Lender, and their signature on this agreement binds the Lender for all intents and purposes. |
||
|
|
|
Date
|
Signature and stamp of attorney
|
|
|
|
Ceragon Networks Ltd.
|
Bank Hapoalim Ltd.
(As Financier, in its position as credit
manager and in its position as
securities trustee)
|
|
[Stamp+ 2 Signatures]
|
|
|
First International Bank of Israel
Ltd. (as a Financier)
|
Bank Leumi Le’Israel Ltd. (as a Financier) |
|
HSBC BANK PLC
(as a Financier)
|
Bank Mizrahi Tefahot Ltd.
(as a Financier)
|
|
Attorney’s Certification
I, the undersigned, Adv. ______, acting as the legal advisor to Ceragon Networks Ltd. (the “Lender”), hereby certify that this amendment was executed by the Lender via _________, ID No. _________, and _________, ID No. _________, pursuant to the decision of the Lender made in accordance with the law and the updated incorporation documents of the Lender. Moreover, I hereby certify that this agreement was executed by an entity authorized to obligate the Lender, and their signature on this agreement binds the Lender for all intents and purposes. |
||
|
|
|
Date
|
Signature and stamp of attorney
|
|
|
|
Ceragon Networks Ltd.
|
Bank Hapoalim Ltd.
(As Financier, in its position as credit
manager and in its position as
securities trustee)
|
|
|
|
|
First International Bank of Israel
Ltd. (as a Financier)
|
Bank Leumi Le’Israel Ltd.
(as a Financier) [Stamp+ 2 Signatures]
|
|
HSBC BANK PLC
(as a Financier)
|
Bank Mizrahi Tefahot Ltd.
(as a Financier)
|
|
Attorney’s Certification
I, the undersigned, Adv. ______, acting as the legal advisor to Ceragon Networks Ltd. (the “Lender”), hereby certify that this amendment was executed by the Lender via _________, ID No. _________, and _________, ID No. _________, pursuant to the decision of the Lender made in accordance with the law and the updated incorporation documents of the Lender. Moreover, I hereby certify that this agreement was executed by an entity authorized to obligate the Lender, and their signature on this agreement binds the Lender for all intents and purposes. |
||
|
|
|
Date
|
Signature and stamp of attorney
|
|
|
|
Ceragon Networks Ltd.
|
Bank Hapoalim Ltd.
(As Financier, in its position as credit
manager and in its position as
securities trustee)
|
|
|
|
|
First International Bank of Israel
Ltd. (as a Financier)
|
Bank Leumi Le’Israel Ltd.
(as a Financier) |
|
HSBC BANK PLC
(as a Financier)
|
Bank Mizrahi Tefahot Ltd.
(as a Financier)
|
|
Attorney’s Certification
I, the undersigned, Adv. Gil Yahav, acting as the legal advisor to Ceragon Networks Ltd. (the “Lender”),
hereby certify that this amendment was executed by the Lender, via Moshik Albahari ID No. 060842978 and Ronen Stein, ID No. 022934949, pursuant to the decision of the Lender made in
accordance with the law and the updated incorporation documents of the Lender. Moreover, I hereby certify that this agreement was executed by an entity authorized to obligate the Lender, and their signature on this agreement
binds the Lender for all intents and purposes.
|
||
December 4, 2023
|
[Stamp+signature]
|
|
Date
|
Signature and stamp of attorney
|
Form for execution
|
Appendix 1 to the Financing Agreement (Amendment No. 17)
|
2
|
|
1. |
All of the terms in this appendix will bear the meaning attributed to them in the Financing Agreement.
|
|
2. |
The list of financing bodies is as set forth in this appendix.
|
Amount of the loan limit allocated by the Financier
|
Amount of the bank guarantee limit allocated by the Financier
|
Amount of the permitted risk limit
|
|||
1.
|
Bank Hapoalim Ltd.
|
Name: Ms. Sivan Miezler.
Address: Business Wing of the Business Division, Headquarters, Bank Hapoalim Ltd, 23 Menachem Begin Blvd., Tel Aviv-Yafo. Tel.: 03-5675636; Fax: 03-6014926 Email: sivan.miezler@poalim.co.il |
USD 35,697,917 (thirty-five million six hundred and ninety-seven thousand, nine hundred and seventeen.
|
USD 25,394,576 (twenty-five million three hundred and ninety-four thousand, five hundred and seventy-six).
|
USD 5,427,586 (five million, four hundred and twenty-seven thousand, five hundred and eighty-six).
|
2.
|
Bank Leumi Le’Israel Ltd.
|
Name: Ms. Noa Doani Joseph.
Address: Technology and Industry Branch, Business Division, Bank Leumi, 34 Yehuda Halevi St., Tel Aviv-Yafo, 65136.
Telephone: 076-885-9184; Fax: 077-8959184.
Email: Noa.DoaniJoseph@BankLeumi.co.il
|
USD 13,800,000 (thirteen million eight hundred thousand).
|
USD 8,659,260 (eight million six hundred and fifty-nine thousand, two hundred and sixty).
|
USD 2,000,000 (two million).
|
3.
|
First International Bank of Israel Ltd.
|
Name: Ms. Naama Magid
Tel.: 03-5196239; Fax: 03-5196944
Email: magid.n@fibi.co.il
Name: Mr. Hezi Cupryk
Tel.: 03-619599; Fax: 03-5196944
Email: Cupryk.H@fibi.co.il
Address: Energy, Chemistry, and Technology Sector in the Business Division, First International Bank of Israel Ltd., 42 Rothschild St., Tel Aviv-Yafo.
|
USD 11,068,750 (eleven million sixty-eight thousand seven hundred and fifty).
|
USD 5,093,682 (five million ninety-three thousand six hundred and eighty-two).
|
USD 3,982,759 (three million nine hundred and eighty-two thousand, seven hundred and fifty-nine).
|
4.
|
HSBC BANK PLC (Tel-Aviv Branch)
|
Name: Ms. Nirit Frey Markman
Address: 2 Jabotinsky St., Ramat Gan, Amot Atrium Building, Level 30, 5250501
Tel.: 03-7101120; Fax: 03-7101144
Email: nirit.frey.markman@hsbc.com
|
USD 8,433,333 (eight million four hundred and thirty-three thousand, three hundred and thirty-three).
|
USD 3,738,482 (three million seven hundred and thirty-eight thousand, four hundred and eighty-two).
|
USD 400,000 (four hundred thousand).
|
5.
|
Bank Mizrahi Tefahot Ltd.
|
Name: Mr. Danny Maor.
Address: 7 Jabotinsky St., Ramat Gan, Moshe Aviv Tower.
Telephone: 03-7559076
Email: dani_maor@umtb.co.il
|
USD 8,000,000 (eight million).
|
USD 3,000,000 (three million).
|
USD 1,000,000 (one million).
|
Total
|
USD 77,000,000 (seventy-seven million).
|
USD 45,886,000 (eight million eight hundred and eighty-six thousand).
|
USD 12,810,345 (twelve million eight hundred and ten thousand, three hundred and forty-five).
|
Form for execution
|
Appendix 16.28.5 to the Financing Agreement (Amendment No. 17)
|
|
1. |
All of the terms in this appendix will bear the meaning attributed to them in the Financing Agreement.
|
|
2. |
The utilization amounts set forth in this Appendix 16.28.5 below are correct as of ___ of _____ ______ (for calendar quarter no. ___ of the year _____).
|
Amount of the loan limit
|
Amount of the loan limit utilized by the Lender1
|
Amount of the bank guarantee limit
|
Amount of the bank guarantee limit utilized by the Lender
|
|
Total
|
USD 77,000,000 (seventy-seven million).
|
USD ______ (____________).
|
USD 45,886,000 (eight million eight hundred and eighty-six thousand).
|
USD ______ (____________).
|
Business Division
Bank Mizrahi Tefahot Ltd.
7 Jabotinsky St. POB 3450, Ramat Gan, 52136
|
||
December 3, 2023
|
|
1.1 |
As of the date of this letter, the balance of your debt in Account No. 198498 at the Petach Tikva Business Center Branch (429) of the bank (hereinafter: the “Account”)
is as follows:
|
|
1.1.1 |
Bank guarantees provided by the bank at your request, for NIS 570,077.
(hereinafter: the “Bank Guarantees”). |
|
1.1.2 |
Credit card limits of NIS 150,000 - not utilized (hereinafter: the “Credit Card Limits”).
|
|
1.1.3 |
An uncleared balance with respect to shekel loans of NIS 6,412,975. An early repayment fee will not be charged.
|
|
1.1.4 |
A debit balance in the checking account of NIS 3,302,152 as of the date of this letter and an accrued interest balance with respect to overdraft of NIS 103,857.
|
|
1.1.5 |
An uncleared balance of USD 1,715,158 in loans for financing customer debt (ILA).
|
|
1.1.6 |
Amounts in arrears with respect to dollar loans that were not paid on time of USD 3,656,128.
|
|
1.1.7 |
A debit balance in the checking account of USD 178,469 as of the date of this letter.
|
|
1.1.8 |
A debit balance in the checking account of EUR 3,424 as of the date of this letter.
|
|
1.1.9 |
A debit balance of GBP 199,056 as of the date of this letter.
|
|
1.2 |
As of the date of this letter, the balance of your debt in Account No. 262803 at the Petach Tikva Business Center Branch (429) of the bank (hereinafter: the “COVID-19
Loan Account”) is as follows:
|
|
1.2.1 |
An uncleared balance of NIS 3,288,657 for loan number 914201.
The amounts set forth in Subsections 1.1 and 1.2 (and the secondary sections) will hereinafter be referred to as: the “Aforementioned Amounts.”
The Aforementioned Amounts do not include linkage/exchange rate differences, interest, fees, bank charges, and expenses that accumulated but were not yet attributed to your account at the
bank.
The final amount of your debit balance (including the early repayment fee) will be provided to you on the date that the payment is made in practice. Please contact Ms. Hadar Cohen at 03-7552062 or Mr. Dani Maor at 03-7559076 to receive the payment balance.
|
|
1. |
Confirms that, effective immediately as of the date hereof, the Unlimited Security Agreement dated November 16, 2016, signed by Siklu Inc (the "Security Agreement")
is released, terminated and no longer of any force of effect and all security interests, liens, pledges, encumbrances, assignments and all other charges of whatever nature created or arising under the Security Agreement (the "Security Interests") are immediately and automatically released, and
|
|
2. |
Authorized and directs you to cancel the Registration of Charges under the Security Agreement (the "Registration") and to file on our behalf any statement of termination of Registration and such
other releases, terminations as are required or terminate the Security Interests.
|
|
1. |
I have reviewed this annual report on Form 20-F of Ceragon Networks Ltd.;
|
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and
for, the periods presented in this report;
|
|
4. |
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
|
|
(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c) |
evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
|
|
(d) |
disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the
company’s internal control over financial reporting; and
|
|
5. |
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or
persons performing the equivalent functions):
|
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report
financial information; and
|
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
|
|
1. |
I have reviewed this annual report on Form 20-F of Ceragon Networks Ltd.;
|
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for,
the periods presented in this report;
|
|
4. |
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
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(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c) |
evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
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(d) |
disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the
company’s internal control over financial reporting; and
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5. |
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or
persons performing the equivalent functions):
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(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report
financial information; and
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(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
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1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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(1) |
Registration Statements (Form F-3 No. 333-237809 and 333-271637) of Ceragon Networks Ltd. and
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(2) |
Registration Statements (Form S-8 No. 333-117849, 333-136633, 333-158983, 333-164064, 333-173480, 333-187953, 333-204090, 333-231529, 333-237509, 333-259877, 333-268602 and 333-276299) pertaining to securities to be offered to employees in
employee benefit plans of Ceragon Networks Ltd. of our reports dated March 21, 2024, with respect to the consolidated financial statements of Ceragon Networks Ltd. and the effectiveness of internal control over financial reporting of Ceragon
Networks Ltd. included in this Annual Report (Form 20-F) of Ceragon Networks Ltd. for the year ended December 31, 2023.
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/s/ KOST FORER GABBAY & KASIERER
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Tel-Aviv
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KOST FORER GABBAY & KASIERER
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March 21, 2024
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A Member of EY Global
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1. |
Persons Subject to Clawback Policy
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2. |
Compensation Subject to Clawback Policy
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3. |
Recovery of Compensation
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4. |
Manner of Recovery; Limitation on Duplicative Recovery
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5. |
Administration
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6. |
Interpretation
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7. |
No Indemnification; No Liability
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8. |
Application; Enforceability
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9. |
Severability
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10. |
Amendment and Termination
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11. |
Miscellaneous
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12. |
Definitions
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_______________________
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Signature
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Name
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__________________________________________
Title
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