Caesarstone Ltd.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F

(Mark One)

OR

OR

OR

Commission File Number 001-35464

CAESARSTONE LTD.

(Exact name of Registrant as specified in its charter)

ISRAEL

(Jurisdiction of incorporation or organization)

Kibbutz Sdot-Yam

MP Menashe,3780400

Israel

(Address of principal executive offices)

Yosef (Yos) Shiran

Chief Executive Officer

Caesarstone Ltd.

MP Menashe,3780400

Israel

Telephone: +972 (4)636-4555

Facsimile: +972 (4) 636-4400

(Name, telephone, email and/or facsimile number and address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Securities Act of 1933:

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of December 31, 2025: 34,573,899 ordinary shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:

Yes ☐No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934:

Yes ☐No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files):

Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes ☐ No☒

PRELIMINARY NOTES

Introduction

As used herein, and unless the context suggests otherwise, the terms “Caesarstone,” “Company,” “we,” “us” or “ours” refer to Caesarstone Ltd. and its consolidated subsidiaries. In this document, references to “NIS” or “shekels” are to New Israeli Shekels, and references to “dollars,” “USD” or “$” refer to U.S. dollars.

Our reporting currency is the United States (“U.S.”) dollar. The functional currency of each of our non-U.S. subsidiaries is the local currency in which it operates. These subsidiaries’ financial statements are translated into the U.S. dollar, the parent company’s functional currency, using the current rate method.

Other financial data appearing in this annual report that is not included in our consolidated financial statements and that relate to transactions that occurred prior to December 31, 2025 are reflected using the exchange rate on the relevant transaction date. With respect to all future transactions, U.S. dollar translations of NIS amounts presented in this annual report are translated at the rate of $1.00 = NIS 3.19, the representative exchange rate published by the Bank of Israel as of December 31, 2025.

Market and Industry Data and Forecasts

This annual report includes data, forecasts and information obtained from industry publications and surveys and other information available to us. Some data is also based on our good faith estimates, which are derived from management’s knowledge of the industry and independent sources. Forecasts and other metrics included in this annual report to describe the countertop industry are inherently uncertain and speculative in nature and actual results for any period may materially differ. We have not independently verified any of the data from third-party sources, nor have we ascertained the underlying assumptions relied upon therein. While we are not aware of any misstatements regarding the industry data presented herein, estimates and forecasts involve uncertainties and risks and are subject to change based on various factors, including those discussed under the headings “—Forward-Looking Statements” and “ITEM 3: Key Information—Risk Factors” in this annual report.

Unless otherwise noted in this annual report, Freedonia Custom Research, a division of MarketResearch.com, Inc. (“Freedonia”) is the source for third-party industry data and forecasts. The Freedonia report, dated March 1, 2025 (“Freedonia Report”), represents data, research opinion or viewpoints developed independently by Freedonia and does not constitute a specific guide to action. In preparing the report, Freedonia used various sources, including publicly available third-party financial statements; government statistical reports; press releases; industry magazines; and interviews with manufacturers of related products (including us), manufacturers of competitive products, distributors of related products, and government and trade associations. Growth rates in the Freedonia Report are based on many variables, such as currency exchange rates, raw material costs and pricing of competitive products, and such variables are subject to wide fluctuations over time. The Freedonia Report speaks as of its final publication date (and not as of the date of this filing), and the opinions and forecasts expressed in the Freedonia Report are subject to change by Freedonia without notice. Management believes this third-party report to be reputable, but has not independently verified the underlying data sources, methodologies, or assumptions. The report and other publications referenced are generally available to the public and were not commissioned by the Company.

Special Note Regarding Forward-Looking Statements and Risk Factor Summary

This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, potential market opportunities and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions that convey uncertainty of future events or outcomes and the negatives of those terms. These statements may be found in several sections of this annual report, including, but not limited to “ITEM 3: Key Information—Risk Factors,” “ITEM 4: Information on the Company,” “ITEM 5: Operating and Financial Review and Prospects,” “ITEM 10: Additional Information—Taxation—United States Federal Income Taxation—Passive foreign investment company considerations.” Forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties, including those described in “ITEM 3.D. Key Information—Risk Factors.”

You should not put undue reliance on any forward-looking statements. Actual results could differ materially from those anticipated in these forward-looking statements because of various factors described in this annual report, including factors beyond our ability to control or predict. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Any forward-looking statement made in this annual report speaks only as of the date hereof. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this annual report, to confirm these statements to actual results or to changes in our expectations.

TABLE OF CONTENTS

(i)

(ii)

PART I

ITEM 1: Identity of Directors, Senior Management and Advisers

ITEM 2: Offer Statistics and Expected Timetable

ITEM 3: Key Information

Our business faces significant risks and uncertainties. You should carefully consider all the information set forth in this annual report and in our other filings with the United States Securities and Exchange Commission (the “SEC”). Our business, financial condition and results of operations could be materially and adversely affected by any of these risks. In that event, the trading price of our ordinary shares would likely decline, and you might lose all or part of your investment. This report also contains forward-looking statements that involve risks and uncertainties. Our results could materially differ from those anticipated in these forward-looking statements, as a result of certain factors including the risks described below and elsewhere in this report and our other SEC filings. See also “Special Note Regarding Forward-Looking Statements and Risk Factor Summary”.

Risk Factors Summary

The following is a summary of the principal risks that could materially adversely affect our business, results of operations, and financial condition, all of which are more fully described below. This summary should be read in conjunction with the other information discussed in this Item 3.D and should not be relied upon as an exhaustive summary of the material risks facing our business. Please carefully consider all of the information discussed in this Item 3.D. “Risk Factors” and elsewhere in this annual report for a more thorough description of these and other risks. Such risks include, but are not limited to:

Risks Related to our Business

Risks Related to Legal Proceedings and Regulation of our Products

Adverse outcomes and potential losses from bodily injury claims may have a material adverse effect on our business, operating results, financial condition and cash flows.

Since 2008, we have been named, either directly or as a third-party defendant, in numerous lawsuits alleging damages caused by exposure to respirable crystalline silica, or RCS, related to our products. These lawsuits have been filed primarily by individuals (including fabricators and their employees), their successors, dependents and employers, as well as in subrogation claims by workers compensation or insurance bodies, such as the Israeli National Insurance Institute (the “NII”) and Australian state and territory workers' compensation authorities.

Inhalation of dust containing respirable particles may occur during fabrication of slabs if proper health and safety measures are not implemented. Exposure to RCS may in turn lead to major health issues, such as silicosis, a potentially fatal progressive occupational lung disease characterized by scarring of the lungs and damage to the breathing function.

As of December 31, 2025, we were subject to lawsuits with respect to 618 injured persons globally of which 40 were in Israel, 151 in Australia and 427 in the United States. Consistent with the experience of other companies, we may experience an increase in the number of asserted claims against us in the future. Generally, claims asserted against us do not typically specify the total damages sought, and the plaintiffs’ damages, if any, are determined at trial or in settlement discussions. Therefore, we are subject to 387 claims where the potential loss cannot be reasonably estimated at this time given the preliminary stage, complexity of the claims and the uncertainties around our liability and the insurance coverage.

With respect to the United States, we have received two verdicts, each of which is currently being appealed:

Given these outcomes, currently we believe the loss for 35 claims is only reasonably possible with a range of $0.5 million to $13 million per claim this range can vary significantly going forward. Remaining claims are in early stages.

We cannot estimate the aggregate exposure of potential claims that may be filed against us, the number of potential claimants that may file claims against us in the future, the jurisdiction in which such claims may be filed, whether such claims will be determined in jury trials, the identity of the claimants or the nature of the claims.

A class action lawsuit was recently filed against us and other manufacturers and suppliers of quartz surfaces in the Federal Court for the Northern District of California. The lawsuit seeks funding for medical monitoring of California workers allegedly exposed to artificial stone dust. We cannot predict the outcome of this matter, including whether the action will be certified as a class action or whether the claims will succeed on the merits.

We apply U.S. GAAP standard ASC450, when evaluating the need to make a provision. If we determine that it is both probable that a loss has occurred and the amount of loss can be reasonably estimated, a liability is recorded consistently with applicable accounting principles and as described in Note 10 to our financial statements. To the extent that such determination is made, and a liability is accrued with respect to the U.S. silicosis claims, the amount of such liability accrual may be substantial. To the extent not offset by insurance recoveries determined to be similarly probable and estimable, the liability would reduce the balance sheet equity, which could adversely impact our ability to meet financial obligations.

The outcome of any pending or future litigation is subject to significant uncertainty and is hard to predict. Our potential net exposure with respect to such pending claims is subject to change for a variety of reasons, including unfavorable judgements. If we further settle or decide that we wish to settle certain claims, we may need to make a provision with respect to other claims that have similar characteristics. We expect additional verdicts in the coming months. While each case is separate, an adverse decision could materially and adversely impact our business. In addition, punitive damages may be awarded in certain jurisdictions. We may be also subject to additional class action lawsuits, and we cannot be certain whether such claims will succeed in being certified or on their merits. An actual outcome of the pending litigations either individually or in aggregate could have a material adverse effect on our business, financial position, results of operations and cash flows.

Uninsured damages, the cost of defending claims, compliance costs, and the loss of business from fabricators who no longer find it practical to fabricate our products, may each have a material adverse impact on our revenues, cash flow and profits.

Media coverage regarding these claims, governmental actions and the hazards associated with exposure to RCS in the engineered stone (primarily quartz surfaces), may adversely affect consumer perception of our products, damage our brand and reputation, and in turn lead to loss of sales and a material adverse effect to our revenues and financial results.

The risks described above relating to claims regarding silicosis and other bodily injury claims may have a material adverse effect on our business, operating results and financial condition. Uncertainties relating to and market perception of these matters also could continue or increase volatility in the market for our shares and materially affect the price of our shares. Given their high value and the risk of high jury awards, multiple litigation losses in several silicosis cases could cause us to become insolvent or to engage in a restructuring. For more information, see “ITEM 8.A: Financial Information—Legal Proceedings— Claims related to alleged occupational illnesses.” See also Note 10 to the financial statements included elsewhere in this report.

We are unable to obtain insurance coverage for future claims relating to silicosis, our entitlement to receive coverage based on existing policies is being disputed by insurers, and our coverage will be insufficient if our position is not accepted by courts and juries.

We have been unable to obtain insurance coverage for silicosis related product liability in most jurisdictions in which we operate, and we are unlikely to obtain insurance in the future in general or on as favorable terms as previously obtained.

As of December 31, 2025, our insurance receivables for silicosis-related claims were $11.0 million. Although we believe that it is probable that such receivables will be paid to us when such payments are due, if our insurers deny such claims or future claims that we may make or otherwise contest their obligation to pay us in full or on a timely basis, such failure could have a material adverse effect on our financial results and cash flow. For example, in the United States, we are subject to legal disputes with our insurance carriers whose position was originally covered by reservation of rights letters arguing a range of possible limitations on our insurance coverage. We therefore cannot be certain as to payment of such coverage.

The Company is a party to reciprocal declaratory judgment actions in New York and California with its insurers regarding insurance coverage for silica-related claims, their allocation methodologies, whether policy limits have been exhausted, as well as claims to rescind policies for concealment of material facts in the policy application. These matters remain at an early stage. Accordingly, no insurance receivable has been recognized in the consolidated financial statements with respect to such claims therefore there can be no assurance that any portion of the pending U.S. silica-related claims will be reimbursed under the Company’s insurance policies, in whole or in part. If the insurers’ positions prevail, the amount of insurance coverage available to the Company will be materially reduced, which is likely to have a material adverse effect on the Company’s business, financial condition, and results of operations.

Changes in laws and regulations relating to hazards associated with engineered stone surfaces or with the crystalline silica in stone surfaces may adversely and materially affect our business.

Our global markets are subject to evolving legislation and regulation aimed at protecting workers from exposure to RCS. While we certainly support initiatives aimed at improving health and safety, some of these may have an adverse effect on our business and financial performance.

For example, in Australia, the federal government’s group of work safe ministers resolved to ban the use, supply and manufacture of engineered stone slabs containing crystalline silica (including quartz-based products, which constituted a major part of our Australian offering). The ban came into effect on July 1, 2024, in most of Australia’s states and territories. Our efforts to comply with new laws such as in Australia, and to adjust to the resulting market dynamics, may not be optimal or even successful and that may have a materially adverse impact on our financial results. With this precedent in place, other jurisdictions may follow the path of imposing new laws and regulations that may limit the materials available in such markets or place other limitation on the operations of suppliers, distributors and fabricators, which may have unforeseeable short and long term effects on our sector. As an example, in December 2025, a petition was submitted to California regulators seeking expedited rulemaking to prohibit the fabrication and installation of engineered stone containing more than 1% crystalline silica.

Another example is California’s occupational safety and health standards board action that on December 19, 2024, approved emergency temporary standards applicable to the fabrication process, and U.S. Occupational Safety and Health Administration’s (“OSHA”) National Emphasis Program addressing the hazards of silica, of February 2020, supplemented in September 2023 where OSHA announced a new initiative to conduct enhanced enforcement and compliance efforts (RCS focused inspection initiative in the engineered stone fabrication and installation industries). Additional regulatory changes regarding the ability to use, process or sell stone countertops, particularly engineered stone, the safety measures required in such activities, may disrupt markets in which we operate and have unforeseeable results. We may be required to incur additional expenses associated with compliance with future laws, regulations, or standards. Failure to comply with such regulatory requirements may expose us to regulatory actions (as detailed below in “—The extent of our liability for environmental, health and safety, product liability and other matters may be difficult or impossible to estimate and could negatively impact our financial condition and results of operations”) as well as lawsuits. Greater regulatory scrutiny and action may also lead to greater propensity for litigation against us or ultimately result in a government ban on our products.

Economic and External Risks

Global trade is affected by governmental involvement, including through antidumping and countervailing duties and these may cause unforeseeable market changes that could adversely impact our financial results.

Antidumping and countervailing duty (“AD/CVD”) orders are designed to provide relief from imports sold at unfairly low or subsidized prices by imposing special duties on such imports. Such orders normally benefit domestic suppliers in the country in which the duty orders are in place and foreign suppliers not covered by the orders.

We manufacture outside of the U.S using PBPs located primarily in the Far East and through inhouse porcelain production in India and 47% of our sales are generated in the U.S. Restrictions on international trade, such as tariffs and other controls on imports or exports of goods, can materially adversely affect the Company’s business and supply chain. The impact can be particularly significant if these restrictive measures apply to countries and regions where the Company has significant supply chain operations. Restrictive measures can increase the cost or limit the availability of the Company’s products and can also require the Company to change suppliers, restructure business relationships and operations, refrain from offering and distributing or cease to offer and distribute affected products and increase the prices of its products. Changing the Company’s business and supply chain in accordance with new or changed restrictions on international trade can be expensive, time-consuming and disruptive to the Company’s business and results of operations. Trade and other international disputes can also have an adverse impact on the overall macroeconomic environment and result in shifts and reductions in consumer spending and negative consumer sentiment for the Company’s products, all of which can further adversely affect the Company’s business and results of operations.

Such restrictions may be announced with little or no advance notice, and we may not be able to effectively mitigate their adverse impacts.

Global supply chains can be highly concentrated, and an escalation of geopolitical tensions or conflict could result in significant disruptions. Beginning in the second quarter of 2025, new tariffs were announced on imports to the U.S. (“U.S. Tariffs”), including additional tariffs on imports from China, India, Japan, South Korea, Taiwan, Vietnam and the European Union (“EU”), among others.

During 2018 and 2019, a U.S. quartz manufacturers filed AD and CVD petitions with the U.S. Department of Commerce (“DOC”) and the International Trade Commission (“ITC”) alleging that imports of quartz surface products (“QSP”) from China, and subsequently from India and Turkey, injured the U.S. domestic quartz industry and therefore duties were required to offset such unfair trade practices. Ultimately, DOC and ITC imposed AD/CVD duties ranging from approximately 265% and 340% on Chinese produced quartz engineered stone, and between 3.81% and 80.79% on Indian and Turkish quartz engineered stone.

The imposition of these duties has prompted some affected manufacturers to redirect their products into other markets where we operate, including Australia, where we hold a higher market share than in the U.S. This shift has contributed to increased competitive pressures on our operations and financial results.

Recent developments in U.S. trade policy have introduced additional complexities. In April 2025, DOC issued a final affirmative determination in the CVD investigation of ceramic tile from India, assigning a 3.18% subsidy rate to products imported from “All Other” producers/exporters, including our porcelain products imported from India. Beginning in 2025, the International Emergency Economic Powers Act (IEEPA) was invoked to impose a series of tariffs on imports from jurisdictions relevant to our operations. On February 20, 2026, the U.S. Supreme Court held that such tariffs exceeded the authority granted under IEEPA, and a subsequent executive order terminated their collection. The full implications of the ruling remain subject to further proceedings, and we continue to monitor these developments.

In November 2025, following a petition submitted by the Quartz Manufacturing Alliance of America (QMAA) the ITC instituted a global safeguards investigation under Section 201 of the Trade Act of 1974 on imports of QSPs from all countries into the U.S. (Investigation No. TA 201 79). The petition was deemed properly filed on November 17, 2025. The ITC determined that the investigation is “extraordinarily complicated,” given the scope of covered merchandise and the overlap with existing AD/CVD orders, and therefore extended its statutory deadline. The ITC is scheduled to make its serious injury determination by April 2026, and to submit its report and recommendations to the President by May, 2026.

The ITC safeguards investigation examines whether imports of QSP from all countries are a ”substantial cause of serious injury” to the U.S. domestic industry producing both QSP slabs and fabricated QSP. If the ITC makes an affirmative determination it will proceed to a remedy phase and recommend potential relief to the President. The President has broad discretion to impose quantitative restrictions such as quotas or tariffs (up to 50% ad valorem), as well as take other actions to support the domestic industry producing QSPs.

We cannot predict future changes to U.S. trade policy or the imposition of tariffs, quotas, safeguard measures, new trade agreements, nor their ultimate impact on our business. Such developments and any resulting negative sentiments towards the United States as a result of such changes, may materially and adversely affect our business, financial condition, results of operations and liquidity.

In addition to U.S. market dynamics, we are also impacted by developments in Europe. On October 29, 2021, the European Ceramic Tile Manufacturers’ Federation, filed a complaint with the European Commission (“Commission”) regarding imports of ceramic tiles from India and Turkey, leading to a tariff of 7.9% applicable to these imports. Such tariffs can further complicate our competitive landscape in European markets.

The shifting global trade environment, including potential changes in AD/CVD tariffs imposed by the U.S., Europe, or other regulators, has already increased and may continue to increase operational uncertainty and materially impact our cost of product, demand for our products and our ability to mitigate the impact of the tariffs which in turn can negatively impact our business, prospects, financial condition and results of operations. Furthermore, should Chinese, Indian, or Turkish exporters adapt by focusing on competing materials or markets to circumvent these duties, we could face heightened competitive pressures across all markets where we operate.

Economic downturns, particularly in home renovation and construction may materially and adversely impact end-consumers and lower demand for our products, which may cause our revenues and net income to decrease.

Our products are primarily used as countertops in residential kitchens. As a result, our sales depend significantly on home renovation and remodeling spending, as well as new residential construction spending, primarily in the United States, Australia (unless stated otherwise, reference to Australia in this report includes Australia and New Zealand), Canada and Israel. We estimate (based on part of Freedonia Report) that approximately 60%-70% of our revenue in our principal markets (U.S., Australia, Canada) is related to residential renovations and remodeling activities, while 30%-40% is related to new construction.

Recent economic downturns, high inflation and increased interest rates have had a major effect on the housing markets that, during 2025, experienced reduced levels of consumer demand for new homes as well as reduced levels of construction, and renovation. This may continue for longer than expected. During such periods, consumer confidence historically erodes, and individuals and businesses may choose to reduce their discretionary spending and, as a result, delay or cancel their home renovation or remodeling projects. If this trend continues we may face further decreases in demand for our products, which may adversely impact our business and financial results.

As many of our customers are homebuyers or homeowners that depend on financing for their purchases (construction and renovation), lack of availability of consumer credit or increased interest rates may hinder their ability to continue such purchasing. Interest rate increases in the U.S. and around the world have and may further increase the cost of financing for consumers who in turn limit their renovation and remodeling expenditures or home purchases. The current slowdown in the housing market has impacted the demand for our products. If these trends persist, they may materially and adversely affect our ability to grow or sustain our business, our revenues and net income.

Adverse global conditions, including macroeconomic slowdowns and recessions, and geopolitical instability, have in the past and may continue to negatively impact our financial results.

Global conditions in the financial markets, inflation and increasing interest rates have in the past and may continue in the future to adversely impact our business. The global macroeconomic environment has been and may continue to be negatively affected by, among other things, instability in global economic markets, increased trade tariffs and trade disputes, instability in the global credit markets, interest rates or even availability of credit, supply chain weaknesses, instability in the geopolitical environment as a result of the Russian Ukraine conflict, the withdrawal of the United Kingdom from the European Union, and other political tensions, and foreign governmental debt concerns. Houthi’s disruption to the movement of goods in the Red Sea has created global security concerns, resulted in higher sea freight expenses during 2024 and 2025 and had an adverse impact on regional and global economies and our Israeli production. Such challenges have caused, and may continue to cause, uncertainty and instability in local economies and in global financial markets, which may adversely affect our business where we operate or source our products. For example, higher interest rates and inflation during 2024 and 2025, negatively impacted consumer spending by avoiding or down-grading purchases, and we believe adversely affected our business. Changes and uncertainty in U.S. tariff policy during 2025 may increase our costs and can affect demand and our results of operations.

We face intense competitive pressures which could materially and adversely affect our results of operations and financial condition.

We have invested considerable resources to position our surfaces as premium branded products. Our surfaces competes with other surface materials and brands on a range of factors. These factors include, among other things, pricing, brand awareness and brand position, product quality, product differentiation, design and breadth of product offerings, surface dimensions, new product development and time to market, availability and supply time, technological innovation, popular home interior design trends, availability of inventory on demand, distribution coverage, customer service and versatility in products portfolio.

Due to our products’ relatively high quality and positioning, we generally set our prices - especially for our more differentiated products - at a higher level than alternate surfaces. It is possible that competitors may be able to produce or source similar surface products at a lower cost. Further penetration of these products into our active markets is reducing and may further reduce, our market share, limit our ability to increase prices and have a material adverse effect on our financial condition and results of operations.

In addition, as a significant majority of our production is carried out through third party PBP manufacturers, we may also face competition for manufacturing capacity and production resources, potentially leading to increased costs, supply constraints and adverse effects on our business, financial condition and results of operations.

Since certain competitors can produce products more efficiently, due to various factors, such as raw material location and availability, and offer products at lower prices, while adapting more quickly to changes in consumer preferences and demands, we may further lose market share, materially and adversely affecting our financial results.

Our results of operations may be materially and adversely affected by fluctuations in currency exchange rates, and we may not have adequately hedged against them.

We conduct business in multiple countries, which exposes us to risks associated with fluctuations in currency exchange rates between the U.S. dollar (our functional currency) and other currencies in which we conduct business. In 2025, 48.8% of our revenues were denominated in U.S. dollars, 17% in Australian dollars, 13.1% in Canadian dollars, 7.2% in Euros and 4.8% in NIS and a smaller portion in other currencies. In 2025, most of our expenses were denominated in U.S. dollars, NIS and Euros, and a smaller proportion in Canadian and Australian dollars and other currencies. As a result, devaluations of the Australian dollars, and to a lesser extent, the Canadian dollar relative to the U.S. dollar may unfavorably impact our profitability. As a result, appreciation of the NIS, and to a lesser extent, the Euro relative to the U.S. dollar may unfavorably affect our profitability. We attempt to limit our exposure to foreign currency fluctuations through forward contracts, which, except for U.S. dollar/NIS forward contracts, are not designated as hedging accounting instruments under ASC 815, Derivatives and Hedging. We usually engage in derivatives transactions, such as forward contracts, to hedge against the risks associated with our foreign currency exposure. Our strategy to hedge our cash flow exposures usually involves consistent hedging of exchange rate risk in variable ratios up to 100% of the exposure over 12 months. Given recent forex changes we had no outstanding forward contracts as of December 31, 2025. Hedging results are charged to finance expenses, net, and therefore, do not offset the impact of currency fluctuations on our operating income. Our U.S. dollar/NIS forward contracts are charged to operating expenses as designated hedge instruments, partially offsetting the impact of the U.S. dollar/NIS currency fluctuations on our operating income (loss). While we may decide to enter into additional hedging transactions in the future, the availability and effectiveness of these transactions may be limited and we may not be able to successfully hedge our exposure, which could adversely affect our financial condition and results of operations. For further discussion of our foreign currency derivative contracts, see “ITEM 11: Quantitative and Qualitative Disclosures About Market Risk.”

If we are unable to offset or pass on increases in costs or adverse changes in global sourcing, manufacturing and supply conditions, our business, financial condition and results of operations could be materially adversely affected.

The global sourcing, manufacturing, financing and supply chain environment in which our products are produced and supplied is subject to significant risks and uncertainties. We rely on production by our PBPs, and our ability to obtain products in sufficient quantities, at acceptable costs and within required timeframes depends on a variety of factors outside of our control. These factors may include, among others, global and regional economic conditions, inflation, interest rates and availability of credit, geopolitical developments, trade restrictions and tariffs, transportation and logistics costs, energy availability and costs, raw materials availability and cost, labor availability and labor cost pressures, foreign currency volatility, public health events, climate change, extreme weather conditions and natural disasters, changes in environmental and other regulatory requirements, and other events affecting global manufacturing and supply chain networks. Such developments may affect the availability, efficiency, timing and overall cost environment in which our products are manufactured and supplied to us. In addition, disruptions affecting manufacturing regions, transportation infrastructure, shipping routes or global logistics networks may reduce production capacity, delay deliveries or increase the cost of obtaining products. The magnitude and timing of these impacts may be difficult to predict and may vary by region, product or production partner. In certain cases, capacity constraints, supply disruptions or other operational challenges in global manufacturing or logistics networks may limit our ability to obtain sufficient product supply or require us to incur higher costs. While we may seek to mitigate or offset increases in cost of goods sold, transportation costs, tariffs and other supply chain-related costs, or pass such increases on to our customers, our ability to do so depends on a variety of factors, including competitive conditions in our markets, demand for our products, housing and construction market activity, availability of credit and overall macroeconomic conditions. If we are unable to offset or pass on such increases, our business, financial condition and results of operations could be materially adversely affected. In addition, a slowdown in our markets may reduce demand for our products and further limit our ability to pass cost increases on to our customers.

We may need to raise funds to finance our current and future capital needs, which may dilute the value of our outstanding ordinary shares, increase our financial expenses or limit our business activities.

We may need to raise funds to finance our existing and future capital needs, including funding ongoing working capital requirements or funding bodily injury claims or settlements. If we raise funds through the sale of equity securities, these transactions may dilute the value of our outstanding ordinary shares. Any debt financing would increase our level of indebtedness and could negatively affect our liquidity and restrict our operations and may also prove expensive in light of the increasing interest rates. We may be unable to raise additional funds on terms favorable to us or at all. If financing is not available or is not available on acceptable terms, we may be unable to fund our future needs. This may prevent us from increasing our market share, capitalizing on new business opportunities or remaining competitive in our industry, which could materially and adversely affect our business, prospects, financial condition and results of operations.

Operational Risks

Our reliance on our network of third-party Production Business Partners (PBP), including concentration risks relating to certain products, technologies or geographic regions, could materially adversely affect our competitive position, results of operations or profitability

In recent years we have executed on our strategy to source engineered stone products from third-party PBPs, and following the closure of all our engineered stone production facilities (in Sdot-Yam and Bar-Lev, Israel and Richmond-Hill, Georgia, U.S.), we expect to rely on PBPs for substantially all of our engineered stone products. While some products may be sourced from several PBPs, other, more complex models may only be effectively produced by a limited number of PBPs. As of the date of this report, approximately 24% of our products can be manufactured at more than one PBP manufacturing facility. We are continuously working to expand our network of PBPs and to increase the number of products that can be manufactured at multiple facilities in order to enhance manufacturing flexibility and supply continuity. We attempt to select PBPs based on stringent criteria, including, among other things, quality, reliability, manufacturing capability and capacity, operational track record and financial stability, to provide us with manufacturing flexibility and operational agility, including the ability to shift production between PBPs if required. There are no assurances these efforts will be successful. Termination or disruption of engagement with any such PBP could result in short-term delays in production or supply and, in exceptional cases, with respect to certain products or specialized processes, we may be required to identify and qualify an additional manufacturer, which could disrupt our operations for longer periods. Such disruptions, even if temporary, could materially and adversely affect our business, prospects, financial condition and results of operations.

Our ability to serve our markets with the right product offering at competitive prices depends on our ability to successfully manage these relationships. Failure to meet challenges such as IP leakage, raw material and finished goods quality control, logistics coordination, inventory and supply chain challenges and maintaining compliance by our PBPs and other supply chain with applicable laws but with market regarding ESG practices, could adversely affect our business and results of operations.

In addition, our ongoing efforts to develop, qualify and scale production of an expanded portfolio of products with our PBPs, including with newer manufacturing partners, may from time to time increase operational complexity and development workloads. These dynamics may contribute to delays in production readiness, product ramp-up or sample delivery for certain products, which could adversely affect our time-to-market, customer satisfaction and operating results.

If the quality of the raw materials sourced by our PBPs is compromised, defective, or altered, or if manufacturing standards are not implemented consistently across PBPs, it could result in defects in our products, which may not meet our quality standards or the expectations of our customers. We could also face costs associated with product recalls and related warranty claims. Such product issues, lack of product uniformity and operational disruptions could have a material adverse impact on our financial results and financial condition. To address these concerns, we conduct quality control testing designed to verify that finished products and, where applicable, raw materials meet the relevant specifications and our quality standards. In particular, with respect to our ICON™ collection (which may contain traces of crystalline silica of up to 1%) (“CSF”), we perform random and rigorous quality control testing to measure silica levels. These tests are conducted by a limited number of specialized laboratories.

Moreover, our failure to effectively manage our PBP supplier-partnerships could not only require us to locate alternative manufacturers or, if necessary, invest further in manufacturing capabilities, but could cause delays in manufacturing, increase our costs, negatively impact our brand, reputation, and the quality of our products. Even if we do effectively manage such relationships, and production processes, they may not help us to successfully optimize our operations and reduce costs.

We cannot guarantee a return on our efforts to develop new materials and design new products.

Our competitive advantage is due, in part, to our ability to design, develop, outpace competitors, introduce and sell innovative new and/or improved products and strengthen our brand. To maintain such an advantage, we invest considerable resources in research and development. Such new products may include entirely new types of products, new designs, new colors, sizes and thicknesses, new and alternative materials (including as recently done, replacing the composition of some traditional quartz-based products), new dry aggregates and binding materials and complementary products.

In connection with the development of new products or new collections, we may use new or modified materials, formulations and material combinations, including new aggregates or binding materials. Unlike our established formulations and manufacturing know-how, which in certain cases have been in commercial use for decades, new formulations and materials may require extended and expensive development cycles and involve a significant level of testing, trial-and-error and ongoing refinement. Research and development activities are costly and time consuming and do not guarantee successful commercialization or market acceptance. Certain product or material defects or performance issues may only be identified at later stages, including during processing, transportation, fabrication or installation by customers. Such issues could result in product rework, product returns, warranty claims, project delays or product recalls.

In addition to the development and manufacturing challenges, introducing new products also involves additional uncertainties, such as predicting changing consumer preferences, entering new market segments, timing the launch of new products to the markets, their success, and the need to outpace competitors.

Despite our efforts to expand our offering with new products, we may not be successful due to such uncertainties and challenges, which may result, among other things, in higher-than-expected expenses, lower than expected sales, loss of market share and a material adverse effect on our margins and results of operation. In addition, unsuccessful product launches or product performance issues could negatively impact our brand, reputation and customer satisfaction.

For example, as a result of the Lioli Acquisition in 2020, we commenced manufacturing and sales of porcelain slabs for different applications, including countertops as well as facades, flooring and cladding. As a result of the Omicron Acquisition (as defined below), we added natural stone and ancillary products for kitchen installation and fabrication to our list of products. In addition, during the second quarter of 2023, we incurred significant costs associated with the necessary R&D activities for the introduction of a new offering based on alternative materials. During 2025, we also encountered quality issues in certain newly introduced products utilizing new materials and formulations, which required additional testing, refinement and related costs, and may continue to require further development efforts. In response to certain of these issues, we implemented changes in certain manufacturing processes, changes in supply chain and transportation processes and provided additional training and guidance to fabricators and processors where needed. In one instance, these quality issues resulted in a limited and targeted recall from certain fabricator warehouses. Although we believe that the expansion into new products and materials may pose an opportunity to leverage our existing business, no guarantee can be given as to customer demand for the new products.

Addressing these markets entails additional risks and liabilities that should they materialize may have a material adverse effect on our financial results.

If we fail to effectively manage the required changes in our supply chain, we may be unable to serve the market or suffer additional inefficiencies.

Our production and supply chain processes are complex, and they rely on our estimates and forecasts in terms of volume, product mix, and delivery times. These processes involve independent and interdependent suppliers, PBPs, distribution networks, delivery centers and information systems, each of which supports our ability to provide our products to our customers. A failure to accurately forecast consumer preference and market trends or manage necessary inventories, disruptions to our production and supply chain processes, including managing our PBP product production and deliveries, disruption by weather conditions, availability and cost of shipping services, all may hinder the availability of our products in the market, result in loss of sales, increase shipping costs and harm our relationships with our suppliers and customers, damage our brand and reputation and have a material adverse effect on our results of operations.

A sizable proportion of our sales in North America is attributable to a limited number of large retailers; any deterioration of our relationships with such retailers or deterioration in their business performance (in fields relevant to the sale of our products) could adversely impact our results of operations.

We supply our products to retailers or directly to their customers in a manner that may include fabrication and installation services of the countertops. Such services are performed by selected third party contractors (engaged by either us or by the retailer). While we expect that these retailers will continue to offer our products, there is no assurance that such current agreements will continue, be renewed at all or on similar terms. In case these collaborations are terminated or not renewed, our revenue could significantly decrease. These collaborations also depend on our ability to meet the quality and service expectations of the retailers and their customers. Such collaborations also rely on our ability to effectively manage our PBP and their ability to meet customer expectations. If our PBP fail to meet these expectations in any respect, it could affect our customers' decisions regarding these collaborations. See also “— Our reliance on our network of third-party Production Business Partners (PBP), including concentration risks relating to certain products, technologies or geographic regions, could materially adversely affect our competitive position, results of operations or profitability”.

Our sales via retailers may be affected, among other things, by their focus, material preferences, reaction to the occupational safety issues, sales and promotional events: their timing, scope and other terms that are determined exclusively by such retailers, all of which may impact our sales volume. Accordingly, we may not be able to maintain or increase such sales or its current profitability level.

In addition, third parties fabricate and install our products as finished countertops. Their performance may impact our relationships with retailers or other business partners, our quality and service level, ESG performance, and ability to manage the installation and fabrication of countertops to meet the end consumers’ demands at reasonable prices. These collaborations also depend on our ability to meet the quality and service expectations of these third-party fabricators and installers. If we are unable to successfully manage the installation and fabrication services performed for us by these third-party fabricators and installers, we may experience relatively high waste of our products used by fabricators for such works, and complaints from end-consumers with respect to supply time, quality and service level of the fabrication and installation, including defects and damages. Such risks could expose us to warranty-related damages, which, if not covered back-to-back by the fabricators engaged by us, could have a materially adverse effect on our financial results, reputation and brand position, and could lead to the termination of our agreements with retailers and end customers.

Our ability to fully integrate acquisitions, joint ventures and/or investments, could be more difficult, costly and time-consuming than we expect and therefore disrupt our business and adversely affect our financial results.

Our success will depend, in part, on our ability to expand our product offerings and grow our business in response to customer demands, competitive pressures and industry trends in the home renovation and construction sectors. We pursue our growth strategy by acquiring complementary businesses across the globe. For example, our latest acquisitions of Lioli, an India-based porcelain countertop slab producer, in October 2020, Omicron, a stone supplier based in Pompano Beach, Florida, in December 2020 and Caesarstone Scandinavia (formerly named Magrab), a leading distributor in Sweden in July 2022.

The combination of independent businesses is a complex, costly and time-consuming process. While we continue to make progress in integrating acquired businesses with ours, such efforts are often ongoing and may take several years to complete. During this time, we and our management have encountered, and are likely to continue encountering, challenges with respect to achieving anticipated synergies. These challenges may include high turnover rates of key employees, difficulties in assimilating employees into our workplace culture, and maintaining consistent operational standards and processes. While we seek to manage these transitions carefully, any continued retention issues at our acquired companies or integration difficulties could result in a loss of institutional knowledge, disrupt business operations, and negatively impact our financial results.

In addition, we may be exposed to unforeseen or undisclosed claims and liabilities arising from the operations of acquired businesses, including those incurred prior to the dates we acquired them. For example, discrepancies in local and regional authorities records regarding property ownership or title could lead to challenges in our ownership of acquired facilities or assets. Our ability to seek indemnification from the former owners for these and other claims or liabilities could be significant and limited by various factors, including the specific limitations in the respective acquisition agreements and the financial ability of the former owners. If we are unable to enforce any indemnification rights, or if we do not have such rights, we could be held liable for the costs or obligations associated with these claims, which could adversely affect our operating performance.

Furthermore, acquisitions may result in carrying a significant amount of intangible assets (including goodwill) on our balance sheet. We have taken impairment changes in the past and may do so again in the future if integration challenges or unforeseen liabilities arise, potentially leading to significant write-downs that could adversely affect our financial condition.

For example, we recognized an impairment charge totaling $3.2 million in 2024 as a result of a slowdown in demand due to global market conditions and the impact on the integration of the acquired businesses.

Our revenues are subject to significant geographic concentration and any disruption to sales within one of our key existing markets, or to sales to a major customer therein, could materially and adversely impact our results of operations and prospects.

Our sales are subject to significant geographic concentration, with the four largest direct markets accounting for 82% of revenues. In 2025, sales in the United States, Australia (including New Zealand), Canada and Israel accounted for 47%, 17%, 13.1% and 4.9% of our revenues, respectively. Our results of operations could be materially and adversely impacted by a range of factors, including spending on home renovation and remodeling and new residential construction in the region (as discussed above), local competitive changes, changes in consumers’ preference regarding engineered stone surfaces, particularly quartz-based and its low silica variations surfaces or countertop preferences in general, and regulatory changes that specifically impact these markets. For example, as recently published Australian regulators have resolved to ban crystalline silica containing engineered stones during 2024, and while we offer alternative products, the introduction of such alternative products in our active markets remains subject to uncertainties and challenges. Since the Australian market is our second largest, loss of any such market share and corresponding revenues would materially and adversely affect our results of operations. In addition, other states and jurisdictions may follow suit and adopt similar legislation adversely impacting our business, and if such occurs in one of our principal markets, the impact may be major. Likewise, our principal markets may also be impacted by other general economic conditions, including in a global or local recession, depression, high inflation or other sustained adverse market events and increases in imports of cheaper engineered stone surfaces from low-cost countries manufacturers into such markets, especially the United States, Australia and Canada. Stronger local currencies could make lower-priced imported goods more competitive than our products. Although we face different challenges and risks in each of the markets in which we operate, due to the existence of a high level of geographic concentration, should an adverse event occur in any of these jurisdictions, our results of operations and prospects could be impacted disproportionately.

A key element of our strategy is to expand our sales in certain markets, such as the United States and segments, such as services. Failure to expand such sales would have a material adverse effect on our future growth and prospects.

A key element of our strategy is to expand sales of our products in certain of our key existing markets, as well as additional new markets and offerings that we believe have high growth potential. In line with our strategic restructuring plan, we are making efforts to optimize our distribution network in the United States, including through the expansion of our brand into the South, Southeast and Ohio Valley markets via the Omicron Acquisition. In addition, a growing portion of our revenues is attributable to installation and fabrication services.

We estimate we can continue to expand our brand and the sales of our products in the United States where, according to Freedonia, engineered surfaces represented 4.9% of the total countertops by volume installed in 2024.

We face several challenges in generating demand for our products in the United States or other markets for various reasons. If the market for our products in these regions does not develop as we expect, our future growth, business, prospects, financial condition, and operating results will be adversely affected. In addition, changes to trade environments, including imposition of import tariffs or withdrawal from or revisions to international trade policies or agreements, may affect our growth potential globally, and further impact other markets in which we operate. See “—We face intense competitive pressures which could materially and adversely affect our results of operations and financial condition”.

Even if we are able to increase our brand awareness and the demand for our products in these and other regions, which we consider to be viable markets, we may face certain challenges in supplying materials to large retailers in these regions. For more information, see “—A sizable proportion of our sales in North America is attributable to a limited number of large retailers; any deterioration of our relationships with such retailers or deterioration in their business performance (in fields relevant to the sale of our products) could adversely impact our results of operations” Additionally, our reliance on third-party suppliers to provide installation and fabrication services to large retailers could impair our relationship with our customers, which could also materially harm our business and results of operations. Our success will depend, in large part, upon consumer acceptance and adoption of our products and brand in these markets, on the level of our execution, our go-to market strategy and its implementation and the timely availability of our products across regions, and if we do not effectively expand into these markets, there could be an adverse impact on our sales and financial condition.

Our distributors’ actions may have a materially adverse effect on our business and the results of operations. Our results of operations may be further impacted by the actions of our re-sellers.

Sales to third-party distributors accounted for approximately 11% of our revenues in 2025. In our indirect markets, we depend on the success of the selling and marketing efforts of our third-party distributors, and any disruption in our distribution network could materially impair our ability to sell our products or market our brand, which could materially and adversely affect our business and results of operations. As we have limited control over these distributors, their actions could also materially harm our brand and company reputation in the marketplace.

In the majority of our distribution arrangements, we operate based on an initial agreement or general terms of sale or, in certain cases, without any agreement, in writing or at all. The lack of a written agreement with many of our distributors may lead to ambiguities, costs and challenges in enforcing the terms of such arrangements, including where we wish to terminate early due to the distributor’s failure to meet annual sales targets. We have experienced difficulties, including litigation, in connection with the termination of certain of our distributors due to disputes regarding their terms of engagement. See “ITEM 8.A: Financial Information—Consolidated Financial Statements and Other Financial Information—Legal proceedings.” Additionally, we may be unable to distribute our products through another distributor within the territory during the period in which we must give prior termination notice, or to identify and retain new distributors upon termination, which may materially and adversely impact our market share, results of operations, relationships with our customers and end-consumers and brand reputation. Because some of our distributors operate on nonexclusive terms, distributors may also distribute competitors’ countertop surfaces or other surface materials, which may cause us to lose market share. If we opt to distribute our products directly upon termination of existing arrangements with our distributors, ramping up our logistics and shipping capabilities could require significant time and financial commitments, which could materially and adversely impact our market share and results of operations. We cannot assure you that we will be able to successfully transition to direct distribution in a timely or profitable manner.

In several regions including United States, we supply our products in part to sellers who in turn re-sell them to fabricators, contractors, developers and builders. Certain actions by such third parties may also materially harm our brand and reputation. The failure of one or more of our re-sellers or retailers to effectively promote our products, or changes in the financial or business condition of these re-sellers or retailers could adversely affect results of our operations.

The termination of arrangements with distributors and re-sellers may lead to litigation, resulting in significant legal fees for us and detracting from our management’s effort, time and resources. In addition, our distributors and re-sellers generally disclose to us sales volumes and other information on a monthly or quarterly basis. Inaccurate sales forecasts, on which we have already relied on in our production planning or our failure to understand correctly the information in a sales report could cause significant, unexpected volatility in our sales and may impact our ability to make plans regarding our supply chain. Any of these events could materially and adversely affect or cause unexpected fluctuations in the results of operations.

Our business is subject to disruptions and quarterly fluctuations in revenues and net income (loss) as a result of seasonal factors, weather-related conditions, natural disasters, building construction cycles and actions by third parties over which we have no control, which are hard to predict with certainty.

Our results of operations have in the past and may in the future be impacted by seasonal factors, weather-related conditions, and construction and renovation cycles. The levels of manufacturing, fabrication, distribution, and installation of our products generally follow activity in the construction and renovation industries. Severe weather conditions, such as unusually prolonged cold conditions, hurricanes, severe storms, earthquakes, floods, fires, droughts, other natural disasters or similar events could reduce, delay or halt the construction and renovation industries in the markets in which we operate, and our businesses may be adversely affected. Markets in which we operate that are impacted by winter weather, such as snowstorms and extended periods of rain, may experience a slowdown in construction activity during the beginning and the end of each calendar year, and this winter slowdown contributes to lower sales in our first and fourth quarters. Natural disasters including tornadoes, hurricanes, floods and earthquakes may damage our facility, the logistic facilities we use or those of our PBPs, which could have a material adverse effect on our business, financial condition and results of operations. For more information, see “ITEM 5.A: Operating and Financial Review and Prospects—Operating Results—Factors impacting our results of operations”. Adverse weather in a particular quarter or a prolonged winter period can also impact our quarterly results. Our future results of operations may experience substantial fluctuations from period to period as a consequence of such adverse weather. Increased or unexpected quarterly fluctuations in our results of operations may increase the volatility of our share price and cause declines in our share price even if they do not reflect a change in the overall performance of our business.

Furthermore, our ability, and that of our suppliers, PBPs, distributors, customers and other third parties, to develop, manufacture, transport, distribute, sell, install, and use our products is critical to our success. Damage or disruption to our or their operations could occur due to various factors, some of which cannot be foreseen, including, among others, telecommunications failures; power, fuel, or water shortages; strikes, labor disputes or lack of availability of qualified personnel; or other reasons beyond our control or the control of such third parties. Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, could continue to result in adverse effects on our business, financial condition or results of operations.

Regulatory, Safety and Security Risks

Disruptions to or our failure to upgrade and adjust our information technology systems globally may materially impair our operations, hinder our growth, and materially and adversely affect our business and results of operations.

We believe that an appropriate information technology (“IT”) infrastructure is important to support our daily operations and the growth of our business. To this end, we are implementing a digital transformation within the Company to better streamline processes and support our business strategy. Our technological and digital investments are geared towards operational enhancements in supply chain management and production, along with improvement of our go-to-market tools.

If we experience difficulties in implementing new or upgraded information systems or experience significant system failures, or if we are unable to successfully modify our management information systems or respond to changes in our business needs, we may not be able to effectively manage and grow our business, and we may fail to meet our reporting obligations. Additionally, if our current back-up storage arrangements and our disaster recovery plan are not operated as planned, we may not be able to effectively recover our information system in the event of a crisis, which may materially and adversely affect our business and results of operations.

In the current environment, there are numerous and evolving risks to cybersecurity and privacy, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, employee malfeasance and human or technological error. High-profile security breaches at other companies and in government agencies have increased in frequency and sophistication in recent years. Although we take steps designed to secure our IT infrastructure and sensitive data and enhance our business continuity and disaster recovery capabilities, we can provide no assurance that our current IT system or any updates or upgrades thereto, the current or future IT systems of our distributors or re-sellers or the IT systems of online paying agents that we use or may use in the future, are fully protected against third-party intrusions, viruses, hacker attacks, information or data theft or other similar risks. We carry data protection liability insurance against cyber-attacks, however the potential magnitude of cyber events and the exception to these policies means that we may not be able to recover our damages from such an event.

We have experienced and expect to continue to experience actual and attempted cyber-attacks of our IT networks, such as through phishing scams and ransomware. Although none of these actual or attempted cyber-attacks has had a material adverse impact on our operations or financial condition, we cannot guarantee that any such incidents will not have such an impact in the future. Furthermore, a cyber-attack that bypasses our IT security systems or those of our distributors, re-sellers, online paying agents or other third party contractors, causing an IT security breach, could lead to a material disruption of our information systems, the loss of business information and loss of service to our customers, which could, among other things, disrupt our business, force us to incur costs or cause reputational damage. There is no assurance that we will be insulated from claims relating to cyber-attacks or withstand legal challenges in relation to our agreements with third parties. Additionally, we have access to sensitive information relating to our employees as well as business partners and customers in the ordinary course of business. Any failure or perceived failure by us, or our third-party contractors on our behalf, to comply with local and foreign laws regarding privacy and data security, as well as contractual commitments in this respect, may result in governmental enforcement actions, fines, or litigation, which could have an adverse effect on our reputation and business. If a significant data breach occurred, our reputation could be materially and adversely affected, confidence among our customers may be diminished, or we may be subject to legal claims, any of which may contribute to the loss of customers and have a material adverse effect on us. To the extent that such disruptions or uncertainties result in delays or cancellations of customer orders or the manufacture or shipment of our products, or in theft, destruction, loss, misappropriation or release of our confidential data or our intellectual property, our business and results of operations could be materially and adversely affected.

In addition, the devotion of additional resources to the security of our information technology systems in the future could significantly increase the cost of doing business or otherwise adversely impact our financial results.

The steps that we have taken to protect our brand, technology and other intellectual property may not be adequate, and we may not succeed in preventing others from appropriating our intellectual property.

We believe that our trademarks (registered and unregistered) are important to our brand, success, and competitive position. We anticipate that, as the countertop market becomes increasingly competitive, maintaining and enhancing our brand, proprietary technology and other intellectual property may become more important, difficult, and expensive. In the past, some of our trademark applications for certain classes of applications, our products, have been rejected or opposed in certain markets. We have in the past, are currently, and may in the future be, subject to opposition proceedings with respect to applications for registration of our intellectual property, such as our trademarks. As with all intellectual property rights, such application may be rejected entirely or awarded subject to certain limitations such as territories, any current or future markets or applications. These limitations to registering our brand names and trademarks in various countries and applications may restrict our ability to promote and maintain a cohesive brand throughout our key markets, which could materially harm our competitive position and materially and adversely impact our results of operations. Additionally, if we are unsuccessful in challenging a third party’s products based on trademark infringement, continued sales of such products could materially and adversely affect our sales and our brand and result in the shift of consumer preference away from our products.

There can be no assurance that new or pending patent applications for our technologies and products will be approved in a timely manner or at all, or that, if granted, such patents will effectively protect our intellectual property. There can be no assurance that we will develop patentable intellectual property in the future, and we have chosen and may further choose not to pursue patents for innovations that are material to our business.

While we continue to make significant investments in innovating the design of our products and register design patents on selected models, it may not be adequate to prevent our competitors from imitating our designs and copying our innovative ideas.

We also retain significant trade secrets & know how, that for various reasons we are not pursuing their formal registration but rely on retaining their confidentiality through confidentiality agreements with our consultants, suppliers, customers, employees and managers, our know-how and trade secrets could be disclosed to third parties, which could cause us to lose any competitive advantage resulting from such know-how or trade secrets, as well as related intellectual property protections in certain cases. The potential for know-how leakage has increased during the last years, with our increased sourcing of more advanced products from our PBPs.

The actions we take to establish and protect our intellectual property may not be adequate to prevent unlawful copy and use of our technology by third parties or the imitation of our products and the offering of them under our trademarks by others. These actions may also not be adequate to prevent others, including our competitors, from obtaining intellectual property rights overcoming ours, and limiting or blocking the production and sales of our existing or future products and applying certain technologies. Our competitors may seek to limit our marketing and offering of products relying on their alleged intellectual property rights.

We may face significant expenses and liability in connection with the protection of our intellectual property rights in and outside the United States. The laws of certain foreign countries may not protect intellectual property rights to the same extent as the laws of the United States.

Third parties have claimed, and may from time-to-time claim, that our current or future products infringe their patent or other intellectual property rights. Under such circumstances, we may be required to expend significant resources to contest such claims and, in the event that we do not prevail, we may be required to seek a license for certain technologies, develop non-infringing technologies or discontinue some of our products. In addition, any future intellectual property litigation, regardless of its outcome, may be expensive, divert the efforts of our personnel and disrupt or damage relationships with our customers.

For more information, see “ITEM 4.B: Information on the Company—Business Overview—Intellectual Property.”

Compliance with continuously evolving privacy and data protection laws and regulations, and any actual or perceived failure to comply with such laws and regulations may result in significant liability, negative publicity, and/or erosion of trust and could have an adverse effect on our revenues, results of operations and financial condition.

We are subject to complex and evolving privacy and data protection laws and regulations in multiple jurisdictions worldwide, including laws governing the collection, use, disclosure and processing of personal data. These laws and regulations, including those applicable to data in used artificial intelligence and machine learning technologies, are rapidly evolving and subject to differing interpretations, which may create uncertainty regarding compliance requirements. Any actual or perceived failure to comply, with applicable privacy and data protection laws, could result in significant fines, penalties, regulatory investigations, litigation, reputational harm or loss of customer trust, which could adversely affect our business and financial condition.

In the United States, state privacy laws including the California Consumer Privacy Act (CCPA), as amended by the California Privacy Rights Act (CPRA), impose extensive obligations with respect to the collection, use, disclosure, and protection of personal data, and provide for regulatory enforcement and, in certain circumstances, private rights of action. Failure to comply with these laws may expose us to significant fines, penalties, litigation and reputational harm. Additionally, the U.S. has recently seen an increase in claims and litigation based on the California Invasion of Privacy Act (CIPA) and the Electronic Communications Privacy Act (ECPA) in regard to tracking tools such as cookies and similar technologies. This trend exposes companies to potential statutory damages, class action lawsuits, and reputational harm. Similarly, in the European Economic Area (EEA) and the United Kingdom, the General Data Protection Regulation (GDPR) and the UK GDPR impose comprehensive requirements on the processing of personal data, with potentially severe administrative fines and other sanctions for violations. In addition, we face ongoing legal and regulatory uncertainty with respect to cross-border transfers of personal data, including evolving laws, regulatory guidance and enforcement practices, which may increase our compliance costs, restrict our ability to transfer personal data internationally or require us to implement additional safeguards.

We are also subject to evolving European privacy laws on cookies and tracking technologies, including the Privacy and Electronic Communications (EC Directive) Regulations 2003, “ePrivacy Directive.” Therein informed and freely given consent is required for the placement of non- essential cookies and similar technologies on websites available in the EEA. The GDPR also imposes conditions on obtaining valid consent for cookies collecting personal data, such as a prohibition on pre-checked consents and a requirement to ensure separate consents are sought for each type of cookie or similar technology. Recent European court and regulatory decisions have been driving increased attention to cookies and tracking technologies, which could increase compliance costs and subject us to additional liabilities.

In Israel, we are subject to the Privacy Protection Law, 1981 (the “PPL”) its regulations and the guidelines of the Israeli Privacy Protection Authority (“PPA”). Material amendments to the PPL were approved by the Israeli Parliament in August 2025 (“Amendment 13”). The PPL, following Amendment 13, expands the PPA’s authority regarding investigation and enforcement powers, introduces additional obligations relating to the processing of personal data and significantly increases the scope and amount of potential monetary sanctions. We are in the process of implementing the requirements of Amendment 13. Failure to comply with the PPL, its regulations and guidelines issued by the PPA may expose us to administrative fines (which in some cases may reach millions of NIS), civil claims (including class actions), and, in certain cases, criminal liability. In addition, developments relating to the transfer of personal data from the European Union to Israel or other jurisdictions may require us to modify our data practices and incur additional compliance costs.

We may have exposure to greater-than-anticipated tax liabilities.

The determination of our worldwide provision for income taxes and other tax liabilities requires significant judgment, and there are many transactions and calculations where the ultimate tax determination is uncertain. We have applied the guidance in ASC 740, “Income Taxes” in determining our accrued liability for unrecognized tax benefits, which totaled approximately $5.3 million in 2025, $1.7 million in 2024 and $2.9 million in 2023. See also note 11 to our financial statements included elsewhere in this report. Although we believe our estimates are reasonable, the ultimate outcome may differ from the amounts recorded in our financial statements and may materially affect our financial results in the period or periods for which such determination is made.

We have entered into transfer pricing arrangements that establish transfer prices for our inter-company operations. However, our transfer pricing procedures are not binding on the applicable taxing authorities. The amount of income tax that we pay could be materially and adversely affected by earnings being lower than anticipated in jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates. From 2015 to 2023, our U.S. manufacturing operations also carry inter-company transactions at transfer prices and arrangements set by us (following the closure of our U.S. manufacturing operations during 2023). We cannot be certain that tax authorities will not disfavor our inter-company arrangements and transfer prices in the relevant jurisdictions. Taxing authorities outside of Israel could challenge our allocation of income between us and our subsidiaries and contend that a larger portion of our income is subject to tax in their jurisdictions, which may have higher tax rates than the rates applicable to such income in Israel. Any adjustment in one country while not followed by counter-adjustment in the other country, may lead naturally to double taxation for the group. Any change to the allocation of our income as a result of review by such taxing authorities could have a negative effect on our operating results and financial condition.

Our facility in Israel receives different tax benefits as “Preferred Enterprises” under the Israeli Law for the Encouragement of Capital Investments, 1959 (“Investment Law”), with our production lines qualifying to receive different grants and/or reduced company tax rates (7.5% for Bar-Lev activity which was closed during December 2025, 16% for Sdot-Yam activity which was closed during 2023, while 23% is the statutory tax rate in Israel). Therefore, some of our production lines also received tax benefits based on our revenues and the allocation of those revenues between our facilities in Israel. In addition, the portion of our products manufactured by our PBPs is growing, and as a result of these factors, the Israeli Tax Authority (“ITA”) could challenge our allocation of income and contend that a larger portion of our income is subject to higher tax rates. In Israel, there are no tax benefits to production outside of the country. As such, our portion of taxable income in Israel that relates to the growing portion produced by our PBPs might not have tax benefits, based on certain interpretations. The ITA could challenge the allocation of income related to production in Israel and income related to production outside of Israel, which may result in significantly higher taxes. There are currently no legal regulations governing this allocation and certain of the ITA’s internal guidelines have ambiguities. Moreover, we may lose all our tax benefits in Israel since the manufacturing operations outside of Israel exceeds 50% production levels.

The ITA may consider the recent changes in our operations and challenge our tax benefits for prior years’ tax positions further taxes since we are no longer eligible under the Investment Law.

In the United States, H.R. 1, originally known as the 2017 Tax Cuts and Jobs Act (the “TCJA”) made significant changes to the U.S. Internal Revenue Code, including a reduction in the federal income corporate tax rate from a top marginal rate of 35% to a flat rate of 21% and limitations on certain corporate deductions and credits. Subsequent tax legislation, including the recently enacted 2025 One Big Beautiful Bill Act (“OBBA”), generally preserves the core provisions of the TCJA, including the federal income corporate tax rate structure, while modifying, clarifying, or extending certain provisions. The TCJA, as continued and modified by OBBA, requires complex computations to be performed that were not previously required in U.S. tax law, significant judgments to be made in interpreting statutory and regulatory provisions, significant estimates in calculations, and the preparation and analysis of information not previously relevant or regularly produced. The U.S. Treasury Department, the IRS, and other standard-setting bodies could interpret or issue guidance on how provisions of the TCJA and OBBA will be applied or otherwise administered that is different from our interpretation.

Finally, foreign governments may enact tax laws in response to the newly enacted OBBA that could result in further changes to global taxation and materially affect our financial position and results of operations. While we have provided the effect of the TCJA, including OBBA, in our Consolidated Financial Statements as included in Note 11 to our financial statements included elsewhere in this report, the application of accounting guidance for various items and the ultimate impact of the TCJA and OBBA on our business are currently uncertain.

Environmental, health and safety regulations, industry standards and other similar matters may be costly, difficult or impossible to comply with under our existing operations and could negatively impact our financial condition and results of operations.

Our manufacturing facility in India (Gujarat) is subject to Indian federal and Gujarati laws and regulations which may cause us to incur significant costs and liabilities. We are also subject to industry standards and policies imposed by our customers (such as large retailers), relating to environmental, health and safety, as further detailed in “ITEM 4.B: Information on the Company—Business Overview—Environmental and Other Regulatory Matters.” Other aspects of our activities are subject to local laws wherever we operate. These laws, ordinances and regulations can be subject to change, and such changes could result in increased compliance costs or otherwise adversely affect us.

Violations of environmental, health and safety laws and regulations may lead to civil and criminal sanctions against us, our directors, officers or employees. Liability under these laws and regulations and compliance with various industry standards and policies involves inherent uncertainties and, in some cases, may compel the installation of additional equipment and subject us to substantial penalties, injunctive orders and facility shutdowns, as well as damages to our reputation and brand and may therefore lead to loss in revenue. If our operations are enjoined because of failure to comply with such regulations, or if we are required to install expensive equipment to meet regulatory requirements, it could materially adversely affect the results of operations. Any contemplated expansion of our Indian facility will also need to meet standards imposed by laws, regulations, and other industry standards. Violations of environmental laws could also result in obligations to investigate or remediate potential contamination, third-party property damage or personal injury claims resulting from potential migration of contaminants off-site. Violations of such laws and regulations may also constitute a breach of current or future commercial contracts we have with third parties and impact our cooperation with customers and suppliers.

In addition, the operation of our manufacturing facility in India is subject to applicable permits, standards, licenses and approvals, and, as applicable, permits and approvals required for wind-down, decommissioning and dismantling activities per the Israeli site. Any contemplated expansions or improvements to our Indian facility will be subject to obtaining appropriate permits, and we cannot be certain that such permits will be obtained in a timely matter, or at all. For detailed information, see “ITEM 4.B: Information on the Company—Business Overview—Environmental and Other Regulatory Matters”. We expect our business licenses to be extended by the relevant authorities for a specified term and we intend to seek subsequent extensions on an ongoing basis. Generally, failure to obtain a permit or license required for the operation of our facilities, or failure to comply with the requirements thereunder, may result in civil and criminal penalties, fines, court injunctions, imprisonment, and operations stoppages. If we are unable to obtain, extend or maintain the business license for any of our facilities, we would be required to cease operations there, which would materially adversely affect the results of operations. Our ability to obtain necessary permits and approvals for our manufacturing facility may be subject to additional costs and possible delays beyond our initial projections. In addition, in order to demonstrate compliance with underlying permits, licenses or approvals, we are required to perform a considerable amount of monitoring, record-keeping and reporting and may incur material costs or liabilities in connection with any violations, or in connection with remediation at our site or certain third-party manufacturing sites if we are found liable in relation thereto.

From time to time, we face compliance issues related to our current or former manufacturing facilities. See “ITEM 4.B: Information on the Company—Business Overview—Environmental and Other Regulatory Matters” for additional information on compliance with environmental, health and safety and other relevant regulations relating to our facilities.

New environmental laws and regulations, new interpretations of existing laws and regulations, increased governmental enforcement or other developments in India (Gujarat) could require us to make additional unforeseen expenditures. These expenditures and other costs for environmental compliance could have a material adverse effect on our business’ results of operations, financial condition and profitability. The range of reasonably possible losses from our exposure to environmental liabilities in excess of the amounts accrued to date cannot be reasonably estimated at this time.

From time to time, we have encountered workplace safety and environmental, health and safety compliance matters at our facilities.

In addition, our manufacturing, distribution, and other facilities are subject to health and safety regulations. Although we introduced safety rules and procedures at all our facilities and provided safety training to our employees and contractors on a regular basis, breaches of such safety measures have occurred in the past and may occur in the future. If our employees or contractors do not follow and we do not successfully enforce the safety procedures established in our facilities or otherwise do not meet the relevant laws and standards, our employees or contractors may be subject to work-related injuries. As a result, we and our officers and directors could be subject to claims, fines, orders and injunctions due to workplace accidents involving our employees or contractors. Although we maintain workers’ compensation and liability insurance, it may not provide adequate coverage against potential liabilities and can expose us, our directors and officers, to administrative and criminal proceedings.

Other than as described above, we cannot predict whether we may become liable under environmental, product liability and health and safety statutes, rules, regulations and case law of the countries in which we operate. The amount of any such liability in the future or its impact on our business operation otherwise could be significant and may adversely impact our financial condition and results of operations.

Regulations and industry standards relevant to the closures of our production facilities could negatively impact our financial condition and results of operations.

We are currently managing the dismantling of our manufacturing facilities in Israel and in the U.S. The wind-down and dismantling process may involve additional environmental and workplace safety challenges and liabilities, including with respect to the handling and disposal of materials and waste, and evaluating and addressing the effect of our operations on nearby air, soil or water. While we endeavor to manage these matters through established procedures and oversight, such activities may result from time-to-time regulatory inspections, investigations audits followed by additional compliance requirements and costs. As an example, following the closure of our Richmond-hill, GA facility, county as well as the EPA have launched investigations aimed at ensuring we have in compliance with applicable rules and regulations. While we do not foresee any adverse finding at this stage, the cost and liabilities arising from such addressing findings may have a material adverse effect on our financial results.

From time to time, we are subject to litigation, disputes, or other proceedings, which could result in unexpected expenses and time and resources that could have a materially adverse impact on our results of operation, profit margins, financial condition, and liquidity.

In addition to the product liability tort claims, insurance coverage disputes, and tariff investigations described above we are also involved in several legal disputes, with vendors, competitors, employees, and customers (including a consumer class action), automobile accidents. referenced in “ITEM 8.A: Financial Information—Consolidated Financial Statements and Other Financial Information—Legal Proceedings.” In addition to the bodily injury claims (which are detailed under ITEM 3.D. Key Information—Risk Factors – “Results of bodily injury claims may have a material adverse effect on our business, operating results, and financial condition”), from time to time, we are involved in other legal proceedings and claims in the ordinary course of business related to a range of matters, including contract law, intellectual property rights, employment, product liability and warranty claims (including class actions), and claims related to modification and adjustment, or replacement of product surfaces sold.

The outcome of litigation and other legal matters is always uncertain, and the actual outcome of any such proceedings may materially differ from estimates. An adverse ruling in these proceedings could have a materially adverse effect on us. If we are unsuccessful in defending such claims or elect to settle any of these claims, we could incur material costs and could be required to pay varying amounts of monetary damages, some of which may be significant, and/or incur other penalties or sanctions, some, or all of which may not be covered by insurance. Although we maintain product liability insurance, we cannot be certain that our coverage, if applicable, will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all. These material costs could have a materially adverse effect on our business, results of operations and financial condition.

Failure to meet ESG expectations or standards or a failure to effectively pursue our ESG goals could adversely affect our business, results of operations, financial condition, or stock price.

Environmental Social and Governance (or “ESG”) matters, including greenhouse gas emissions, diversity and inclusion, responsible sourcing, human rights, and corporate governance, have gained increased attention from regulators, customers and other stakeholders. In line with our commitment to ESG, as demonstrated by our latest ESG report (2024 Report), we have established certain ESG goals; however, achieving these goals is not guaranteed and may be hindered by operational, regulatory, reputational, financial, legal, and other factors. Additionally, accounting standards and regulations surrounding ESG are subject to change and may result in additional costs for compliance. As the pathway towards achieving such evolving goals is uncertain, we may exert extensive efforts that would not yield our desired results or become a high financial burden. If we fail to meet ESG expectations, it could harm our reputation, negatively impact customer and talent retention, and lead to increased scrutiny from investors and authorities. Damage to our reputation could also reduce demand for our products and services and negatively impact our financial results.

In addition, a lack of harmonization globally in relation to ESG laws and regulations leads to a risk of fragmentation across global jurisdictions. This may create conflicts across our global business, which could impact our competitiveness in the market and damage our reputation resulting in a material adverse effect on our business. The lack of economic and regulatory certainty surrounding ESG may have an adverse impact on our business and results of operations.

Our operating results may suffer due to our failure to manage our international operations effectively or due to regulatory changes in the jurisdictions where we operate

Our products are sold in approximately 60 countries throughout the world. Our raw materials, equipment, and machinery are acquired in different countries, our products are manufactured by us in Israel and India, and by our PBP across the world, while our global management operates from Israel. We are therefore subject to risks associated with having global operations, including risks related to complying with the laws and regulations of various foreign governments and regulatory authorities. These laws and regulations may apply to us, our subsidiaries, individual directors, officers, employees, and agents, and may restrict our operations, trade practices, investment or acquisition decisions or partnership opportunities. Accordingly, our sales, purchases and operations are subject to risks and uncertainties, including, but not limited to:

Significant political developments could also have a materially adverse effect on us.

In the United States, due to our substantial sales, distribution, import and manufacturing operations, potential or actual changes in fiscal, tax and labor policies could have uncertain and unexpected consequences that materially impact our business, results of operations and financial condition.

In Australia, federal governments’ group of work safe ministers resolved to ban the use, supply and manufacture of engineered stone slabs containing crystalline silica (including quartz-based products, that constituted a major part of our Australian offering). The ban came into effect on July 1, 2024, in most of Australia’s states and territories. See ITEM 3.D. Key Information—Risk Factors – “Changes in laws and regulations relating to hazards associated with engineered stone surfaces or with the crystalline silica in stone surfaces may adversely and materially affect our business”.

Tariffs, taxes, new laws and regulations or tariffs, safeguards or other trade barriers could require us to change manufacturing sources, increase spending on marketing or product development, withdraw from or not enter certain markets or otherwise take actions that could be adverse to us. We cannot predict what changes to trade policy will be made, nor can we predict the effects that any such changes would have on our business. Another example is the expansive sanctions being imposed by the U.S., EU and other countries against Russia, and any proposed changes to the prior imposition of tariffs on imports from China, Mexico, India and others. Given the unpredictable nature of the U.S.-China relationship and its sizable impact on global economic stability, our business and operating success may be materially adversely affected if recent normalization attempts by these two countries do not endure and additional tariffs or other restrictions on free trade are imposed by either country. Any such changes may impact the level of free trade or tariff prices on goods imported into the United States. Moreover, changes in U.S. political, regulatory, and economic conditions or in its policies governing international trade and foreign manufacturing and investment in the U.S. could adversely affect our sales in the U.S.

The regulatory framework for privacy and data security issues worldwide is currently in flux and is likely to remain so for the foreseeable future. A failure by us or a third-party contractor providing services to us to comply with applicable privacy and data security laws and regulations may result in sanctions, statutory or contractual damage or litigation.

All these risks could also result in increased costs or decreased revenues, either of which could have a materially adverse effect on our profitability. As we continue to expand our business globally, we may have difficulty anticipating and effectively managing these and other risks that our global operations may face, which may materially and adversely affect our business outside of Israel and our financial condition and results of operations.

Certain U.S. holders of our ordinary shares may suffer adverse tax consequences if we or any of our non-U.S. subsidiaries are characterized as a “controlled foreign corporation”, or a CFC, under Section 957(a) of the Internal Revenue Code of 1986, as amended.

A non-U.S. corporation is considered a CFC if more than 50% of (1) the total combined voting power of all classes of stock of such corporation entitled to vote, or (2) the total value of the stock of such corporation, is owned, or is considered as owned by applying certain constructive ownership rules, by United States shareholders who each own stock representing 10% or more of the vote or 10% or more of the value on any day during the taxable year of such non-U.S. corporation (“10% U.S. Shareholder”). Because our group includes one or more U.S. subsidiaries, certain of our non-U.S. subsidiaries could be treated as CFCs (regardless of whether we are treated as a CFC). Generally, 10% U.S. Shareholders of a CFC are required to report annually and include currently in its U.S. taxable income such 10% U.S. Shareholder’s pro rata share of the CFC’s “Subpart F income”, “net CFC tested income”, and investments in U.S. property by CFCs, regardless of whether we make an actual distribution to such shareholders. “Subpart F income” includes, among other things, certain passive income (such as income from dividends, interests, royalties, rents and annuities or gain from the sale of property that produces such types of income) and certain sales and services income arising in connection with transactions between the CFC and a person related to the CFC. An individual that is a 10% U.S. Shareholder with respect to a CFC generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a 10% U.S. Shareholder that is a U.S. corporation. Failure to comply with these reporting obligations may subject a 10% U.S. Shareholder to significant monetary penalties and may prevent the statute of limitations with respect to such shareholder’s U.S. federal income tax return for the year for which reporting was due from starting. We cannot provide any assurances that we will assist investors in determining whether any of our non-U.S. subsidiaries is treated as a CFC or whether any investor is treated as a 10% U.S. Shareholder with respect to any such CFC or furnish to any 10% U.S. Shareholders information that may be necessary to comply with the aforementioned reporting and tax payment obligations. A United States investor should consult its tax advisors regarding the potential application of these rules to an investment in our ordinary shares.

Our U.S. shareholders may suffer adverse tax consequences if we are classified as a “passive foreign investment company.

Generally, if for any taxable year, after the application of certain look-through rules, 75% or more of our gross income is passive income, or at least 50% of the average quarterly value of our assets (which may be measured in part by the market value of our ordinary shares, which is subject to change) are held for the production of, or produce, passive income (as defined in the relevant provisions of the Internal Revenue Code of 1986, as amended (Code), we would be characterized as a “passive foreign investment company” (PFIC), for U.S. federal income tax purposes under the Code. Based on our market capitalization and the nature of our income, assets and business, we believe that we should not be classified as a PFIC for the taxable year that ended December 31, 2025. However, PFIC status is determined annually and requires a factual determination that depends on, among other things, the composition of our income, assets and activities in each taxable year, and can only be made after the close of each taxable year. Furthermore, because the value of our gross assets is likely to be determined in part by reference to our market capitalization, a decline in the value of our ordinary shares may result in our becoming a PFIC. Accordingly, there can be no assurance that we will not be considered a PFIC for any taxable year. If we are a PFIC for any taxable year during which a U.S. Holder (as defined in “Item 10.E. Taxation — United States federal income taxation”) holds our ordinary shares, certain adverse U.S. federal income tax consequences could apply to such U.S. Holder. Prospective U.S. Holders should consult their tax advisors regarding the potential application of the PFIC rules to them.

Risks Related to our Relationship with Kibbutz Sdot-Yam

Our directors and employees who are members of Kibbutz Sdot-Yam and Tene may have conflicts of interest with respect to matters involving the Company.

As of February 27, 2026, the Kibbutz, together with Tene, being parties to a Shareholders Agreement, beneficially owned 14,029,494 constituting approximately 40.6% of our shares. Both the Kibbutz and Tene are deemed our controlling shareholders under the Israeli Companies Law, 5759-1999 (the “Companies Law”). For more information, see “ITEM 7.A. Major Shareholders and Related Party Transactions-Major Shareholders.” Two members of our board of directors and a number of our employees are members of the Kibbutz, and we continue to have an operational and business relationship with the Kibbutz. One of our directors, which is a member of the Kibbutz, is also an employee of the Company and serves in a senior position at the Kibbutz (Chairman of the Kibbutz’s Economic Council). As a result, our directors who are members of the Kibbutz may have real or apparent conflicts of interest on matters affecting both us and the Kibbutz and, in some circumstances, such individuals may have interests adverse to us. For example, in the past, the Kibbutz opposed the independent nominees our board of directors proposed to nominate to the board and suggested two alternative nominees identified by the Kibbutz as independent. In addition, our chairman of the board of directors, also serve as partner in Tene. Since such individuals have fiduciary duties to both us and Tene, there may be real or apparent conflicts of interest in this respect as well. See “ITEM 6.A: Directors, Senior Management and Employees—Directors and Senior Management.”

Regulators and other third parties may question whether our agreements with Kibbutz Sdot-Yam are no less favorable to us than if they had been negotiated with unaffiliated third parties.

Our headquarters, and research and development facility in Israel is located on lands owned or leased by the Kibbutz. We have entered into certain land use and other agreements with the Kibbutz pursuant to which the Kibbutz provides us with, among other things, certain services. We are constantly monitoring these services and believe that such services are rendered to us in the normal course of business, and they represent at arm’s length terms. Nevertheless, a determination with respect to such matters requires subjective judgments regarding valuations. Regulators and other third parties may question whether our agreements with the Kibbutz are in the ordinary course of our business and are no less favorable to us than if they had been negotiated with unaffiliated third parties. The tax treatment for these transactions may also be called into question, which could have a materially adverse impact on our operating results and financial condition. See “ITEM 7.B: Major Shareholders and Related Party Transactions—Related Party Transactions.”

Under Israeli law, our board, audit committee and sometimes also the shareholders may be required to reapprove certain of our agreements with our controlling shareholders every three years, and absence, or improper approval, may expose us to liability and cause significant disruption to our business.

The Companies Law requires that the authorized corporate organs of a public company approve every three years any extraordinary transaction in which a controlling shareholder has a personal interest and that has a term of more than three years, unless a company’s audit committee determines, solely with respect to agreements that do not involve compensation to a controlling shareholder or his or her relatives, in connection with services rendered by any of them to the company or their employment with the company, that a longer term is reasonable under the circumstances. Our implementation of this requirement with respect to the agreements entered between us and the controlling shareholders may be challenged by regulators and other third parties.

Our audit committee has determined that the terms of all such agreements entered between us and the shareholders are in the best interest of the Company and our shareholders under the relevant circumstances. See “ITEM 7.B: Major Shareholders and Related Party Transactions—Related Party Transactions.”

If the relevant corporate organs do not re-approve the agreements in accordance with the Companies Law, we will be required to terminate such agreements, which may expose us to damage claims and legal fees, and cause disruption to our business. In addition, we would be required to find suitable replacements for the services provided to us by the controlling shareholders under these agreements, which may take time, and we can provide no assurance that we can obtain the same or better terms with a third party than those we have agreed to with the controlling shareholders.

Risks Related to our Ordinary Shares

The price of our ordinary shares may be volatile.

The market price of our ordinary shares could be highly volatile and may fluctuate substantially (as indeed occurred in recent years during which our share price declined significantly) as a result of many factors, including but not limited to (i) actual or anticipated fluctuations in our results of operations; (ii) our financial performance and the expectations of market analysts; (iii) announcements by us or our competitors of significant business developments, changes in distributor relationships, acquisitions or expansion plans; (iv) changes in the prices of our raw materials or the products we sell; (v) impact of regulatory changes on our industry (vi) our increased involvement in litigation, specifically, adverse precedent set in U.S. and Australia in connection with silica related claims; (vii) our sale of ordinary shares or other securities in the future; (viii) market conditions in our industry; (ix) changes in key personnel; (x) the trading volume of our ordinary shares; (xi) changes in the estimation of the future size and growth rate of our markets; (xii) changes in our board of directors, including director resignations; (xiii) actions of investors and shareholders, including short seller reports and proxy contests; (xiv) general economic and market conditions unrelated to our business or performance, such as increased shipping and handling markets, (xv) amount or timing of any dividend payments and may decide to pay dividends in the future or lack thereof nor their applicable tax rate.

Any inability to meet the Nasdaq listing requirements may have an adverse effect on our share price and lead to our delisting from Nasdaq.

We are required to meet the continued listing requirements of Nasdaq, including those regarding minimum share price. In particular, we are required to maintain a minimum bid price for our listed ordinary shares of $1.00 per share. If the closing bid price of our ordinary shares falls below the minimum $1.00 per share bid price requirement for continued listing on the Nasdaq Capital Market for 31 consecutive business days, we will not be in compliance with Nasdaq Listing Rule 5550(a)(2). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the applicable grace period to regain compliance will be 180 days. During the period between November 6, 2025, and November 24, 2025, the closing bid price of our ordinary shares alternately fell below $1.00 per share, and reached a low closing price of $0.86 per share on November 21, 2025.

In the event that our ordinary shares are delisted from Nasdaq due to our failure to continue to comply with the requirements for continued listing on Nasdaq, and are not eligible for listing on another national securities exchange, trading in our ordinary shares could be conducted in the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board. In such event, it could become more difficult to dispose of, or obtain accurate price quotations for, our Ordinary Shares, and it would likely be more difficult to obtain coverage by securities analysts and the news media, which could cause the price of our ordinary shares to decline further. Also, it may be difficult for us to raise additional capital if we are not listed on a national exchange and we could suffer reputational damage and diminished investor, supplier and employee confidence.

Our goodwill or other intangible assets or long-lived assets may become subject to impairment.

As per the U.S. GAAP (ASC 360), we are required to test our long-lived assets for impairment on an annual basis or whenever indicators for potential impairment exist. The Company identifies indicators for impairment, among others, market capitalization, higher interest rates and global slowdown in our markets and the closure of our Sdot-Yam and Richmond Hill and Bar-Lev facilities..

During 2023, we recorded an impairment of $28.5 million mainly related to the Richmond Hill facility and impairment of $16.6 million related to right of use asset at the Sdot-Yam facility.

During 2024, we recorded an impairment of $3.8 million related to the Richmond Hill facility, which we presented as held for sale asset in 2024, and impairment of $3.2 million related to intangible assets related to Omicron and Magrab.

During 2025, we recorded an impairment of $32.7 million related to the Bar Lev plant, an impairment of $6.9 million related to right of use asset at the Bar Lev facility, and impairment of $6.1 million related to Richmond Hill facility.

For additional information, see Note 2, 5 and 9 to the financial statements included in this annual report.

During 2025 and 2024, we sub leased majority of available land in Sdot-Yam facility, and realized partially the lands related to our Richmond-Hill facility and part of the production equipment. We continue to take steps to realize the sale of the main Richmond-Hill facility, including Real-estate and the rest of the production equipment, however our efforts may still not be as successful as we plan.

This testing involves estimates and significant judgments by management. We believe our assumptions and estimates are reasonable and appropriate; however additional adverse changes in key assumptions, including a failure to meet expected earnings or other financial plans, unanticipated events and circumstances such as changes in assumptions about the duration and magnitude of increased supply chain and commodities costs and our planned efforts to mitigate such impacts, further disruptions in the supply chain, increases in tax rates (including potential tax reform) or a significant change in industry or economic trends could affect the accuracy or validity of such estimates and may result in an additional impairment. Any charge or charges could adversely affect our results of operations. See “Critical Accounting Estimates” herein for more information regarding goodwill and other long lived assets impairment testing. Therefore, although we have recorded said impairment charges this year, we cannot guarantee that we will not experience goodwill, other intangible assets or long-lived assets impairments in the future.

Our share price is impacted by reports from research analysts, publicly announced financial guidance, investor perceptions and our ability to meet other expectations about our business.

The trading market for our ordinary shares relies in part on the research and reports that equity research analysts publish about us and our business. As of the date of this Annual Report, we do not have active equity research analyst coverage of our business. If analysts do not establish or reestablish research coverage, we could lose visibility in the market and demand for our shares may decline, which might cause our share price and trading volume to decline.

The price of our ordinary shares could also decline if one or more securities analysts downgrade our ordinary shares or if one or more of those analysts issue other unfavorable commentaries. The market price for our ordinary shares has been in the past, and may be in the future, materially and adversely affected by statements made in reports issued by short sellers regarding our business model, our management and our financial accounting. In the past, we have also faced difficulty accurately projecting our earnings and have missed certain of our publicly announced guidance. If our financial results for that period do not meet our guidance or if we reduce our guidance for future periods, the market price of our ordinary shares may decline. We have experienced in the past, and may experience in the future, a decline in the value of our shares as a result of the foregoing factors and the other various factors reflected in the Item. For example, during November 2025, our share price dropped to an all-time low of US$ 0.86 per share.

ESG and sustainability reporting is becoming more broadly expected by investors, shareholders and other third parties. We may face reputational damage in the event our corporate responsibility initiatives or objectives do not meet the standards set by our investors, shareholders, lawmakers, listing exchanges or other constituencies, or if we are unable to achieve an acceptable ESG score. A low ESG or sustainability rating by a third-party rating service could also result in the exclusion of our ordinary shares from consideration by certain investors. The ongoing focus on corporate responsibility matters by investors and other parties as described above may impose additional costs or expose us to new risks. See also “— Failure to meet ESG expectations or standards or a failure to effectively pursue our ESG goals could adversely affect our business, results of operations, financial condition, or stock price.”

The substantial share ownership position of Kibbutz Sdot-Yam and Tene will limit your ability to influence corporate matters.

As of February 27, 2026, the Kibbutz and Tene beneficially owned 14,029,494 ordinary shares constituting 40.6% of our outstanding ordinary shares. As a result of this concentration of share ownership and their voting agreement described above, the Kibbutz and Tene are considered controlling shareholders under the Israeli Companies Law, and, acting on their own or together, will continue to have significant voting power on all matters submitted to our shareholders for approval. These matters include:

This concentration of ownership of our ordinary shares could delay or prevent proxy contests initiated by other shareholders, mergers, tender offers, open-market purchase programs or other purchases of our ordinary shares that might otherwise give you the opportunity to realize a premium over then-prevailing market price of our ordinary shares. The interests of the Kibbutz or Tene may not always coincide with the interests of our other shareholders. This concentration of ownership may also materially and adversely affect our share price.

In recent years, Israeli issuers listed on securities exchanges in the United States have also been faced with governance-related demands from activist shareholders, unsolicited tender offers and proxy contests. Responding to these types of actions by activist shareholders could be costly and time-consuming for management and our employees and could disrupt our operations or business models in a way that would interfere with our ability to execute our strategic plan.

The market price of the Company’s ordinary shares could be negatively affected by future sales of our ordinary shares.

As of February 27, 2026, we had 34,577,075 shares outstanding. This included approximately 14,029,494 ordinary shares, or 40.6% of our outstanding ordinary shares, beneficially owned by the Kibbutz and Tene, which can be resold into the public markets in accordance with the restrictions of Rule 144 under the Securities Act, including volume limitations, applicable to resales by affiliates or holders of restricted securities.

Sales by our major shareholders, the Kibbutz, Tene or other large shareholders of a substantial number of our ordinary shares in the public market, or the perception that these sales might occur, could cause the market price of our ordinary shares to decline or could materially impair our ability to raise capital through a future sale of, or pay for acquisitions using, our equity securities.

As of February 27, 2026, 5,775,000 ordinary shares were reserved for issuance under our 2011 option plan and our 2020 Share Incentive Plan of which options to purchase 3,199,195 ordinary shares were outstanding, with a weighted average exercise price of $3.94 per share, and 48,653 restricted stock units (“RSUs”) were outstanding. To the extent they are covered by our registration statements on Form S-8, these shares may be freely sold in the public market upon issuance, except for shares held by affiliates who have certain restrictions on their ability to sell.

Our articles of association designate the federal district courts of the United States as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our shareholders.

Our articles of association provide that, unless we consent in writing to the selection of an alternative forum, the U.S. federal district courts shall be the sole and exclusive forum for any claim asserting a cause of action arising under the Securities Act. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims. We note that investors cannot waive compliance with U.S. federal securities laws and the rules and regulations thereunder. This choice of forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees and may increase the costs associated with such lawsuits, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our articles of association inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition. Any person or entity purchasing or otherwise acquiring any interest in our share capital shall be deemed to have notice of and to have consented to the choice of forum provisions of our articles of association described above. This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction.

As a foreign private issuer whose shares are listed on the Nasdaq Global Select Market, we may follow certain home country corporate governance practices instead of certain Nasdaq requirements.

As a foreign private issuer whose shares are listed on the Nasdaq Global Select Market, we are permitted to follow certain home country corporate governance practices instead of certain requirements of the rules of Nasdaq. We rely on this “home country practice exemption” with respect to the quorum requirement for shareholder meetings. Whereas under the listing rules of the Nasdaq Stock Market, a quorum requires the presence, in person or by proxy, of holders of at least 33 1/3% of the total issued outstanding voting power of our shares at each general meeting of shareholders, pursuant to our articles of association, and as permitted under the Companies Law, the quorum required for a general meeting of shareholders consists of at least two shareholders present in person or by proxy in accordance with the Companies Law, who hold or represent at least 33 1/3% of the total outstanding voting power of our shares, except if (i) any such general meeting of shareholders was initiated by and convened pursuant to a resolution adopted by the board of directors and (ii) at the time of such general meeting, we qualify to use the forms and rules of a “foreign private issuer,” the requisite quorum will consist of two or more shareholders present in person or by proxy who hold or represent at least 25% of the total outstanding voting power of our shares (and if the meeting is adjourned for a lack of quorum, the quorum for such adjourned meeting will be, subject to certain exceptions, any number of shareholders).

In the future, we may also choose to follow Israeli corporate governance practices instead of Nasdaq requirements with regard to, among other things, the composition of our board of directors, compensation of officers and director nomination procedures. In addition, we may choose to follow Israeli corporate governance practice instead of Nasdaq requirements with respect to shareholder approval for certain dilutive events (such as for issuances that will result in a change of control of the company, certain transactions other than a public offering involving issuances of a 20% or more interest in the company and certain acquisitions of the stock or assets of another company) and for the adoption of, and material changes to, equity incentive plans. Accordingly, our shareholders may not be afforded the same protection as provided under Nasdaq corporate governance rules. Following our home country governance practices, as opposed to the requirements that would otherwise apply to a U.S. company listed on the Nasdaq Global Select Market, may provide less protection than is accorded to investors of domestic issuers. See “ITEM 16G: Corporate Governance.”

As a foreign private issuer, we are not subject to the provisions of Regulation FD or U.S. proxy rules and are exempt from filing certain Exchange Act reports.

As a foreign private issuer, we are exempt from the rules and regulations under the Exchange Act related to the furnishing and content of proxy statements. Recently enacted U.S. legislation will require our directors and officers to make insider reports under Section 16(a) of the Exchange Act, effective March 18, 2026. Our principal shareholders continue to remain exempt from the reporting requirements contained in Section 16(a) of the Exchange Act and our officers, directors and principal shareholders continue to remain exempt from the short-swing profit recovery provisions contained in Section 16(b) of the Exchange Act.

In addition, we are not required under the Exchange Act to file annual and current reports and financial statements with the SEC as frequently or as promptly as U.S. domestic companies whose securities are registered under the Exchange Act, we are permitted to disclose limited compensation information for our executive officers on an individual basis and we are generally exempt from filing quarterly reports with the SEC under the Exchange Act. Moreover, we are not required to comply with Regulation FD, which restricts the selective disclosure of material nonpublic information to, among others, broker-dealers and holders of a company’s securities under circumstances in which it is reasonably foreseeable that the holder will trade in the company’s securities on the basis of the information. These exemptions and leniencies reduce the frequency and scope of information and protections to which you may otherwise have been eligible in relation to a U.S. domestic issuer.

We would lose our foreign private issuer status if (a) a majority of our outstanding voting securities were either directly or indirectly owned of record by residents of the United States and (b)(i) a majority of our executive officers or directors were United States citizens or residents, (ii) more than 50% of our assets were located in the United States or (iii) our business were administered principally in the United States. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and accordingly, we will re-evaluate our qualification as a foreign private issuer on June 30, 2026. In addition, in June 2025, the SEC issued a concept release soliciting public comment on potential changes to the definition of a foreign private issuer. This release is the first review of the foreign private issuer framework since 2008, and the SEC is considering revisions that could significantly impact which foreign companies qualify for the more-relaxed U.S. reporting requirements afforded to foreign private issuers. The concept release outlines several potential approaches to revising the foreign private issuer definition, including updating existing eligibility criteria, adding foreign trading volume requirements, and incorporating an assessment of foreign regulation. Our loss of foreign private issuer status would make U.S. regulatory provisions mandatory. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly higher. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. We would also be required to follow U.S. proxy disclosure requirements, including the requirement to disclose, under U.S. law, more detailed information about the compensation of our senior executive officers on an individual basis. We may also be required to modify certain of our policies to comply with accepted governance practices associated with U.S. domestic issuers. Such conversion and modifications will involve additional costs. In addition, we would lose our ability to rely upon Nasdaq exemptions from certain corporate governance requirements that are available to foreign private issuers.

Risks Relating to our Incorporation and Location in Israel

Conditions in Israel and regional instability may adversely affect our operations.

We are incorporated under Israeli law, and our headquarters and principal research and development are located in Israel. Many of our employees, including our Chief Executive Officer, Chief Financial Officer and other senior members of our management team, operate from our headquarters in Israel, and all of our directors are residents of Israel. Accordingly, military, political, and economic conditions in Israel may directly affect our business.

Israel has experienced, and may in the future experience, armed conflicts, terrorist activity, civil unrest, and political instability, which could disrupt our operations and supply chain. Such conditions may result in the call-up of our employees for military reserve duty for extended periods, reducing workforce availability. Armed conflict or terrorist activity may cause physical damage to our facilities or to public infrastructure, utilities, and telecommunications networks in Israel, and Israeli companies may face heightened cybersecurity threats during periods of regional tension. These disruptions could lead to increased operating costs, challenges to business continuity, risks to employee safety, and difficulties in delivering products and services in a timely manner. In addition, counterparties to our agreements may assert force majeure claims based on security conditions in Israel, which could affect our ability to meet contractual obligations or enforce the obligations of others.

Regional instability and armed conflict may have broader adverse effects on economic and financial conditions in Israel, including effects on credit markets, currency valuation, inflation, and labor markets. Prolonged conflicts have in the past required significant mobilization of military reservists, including personnel employed in the sector in which we operate, which may affect workforce availability across the industry. Such conditions may also result in credit rating changes for Israel, which could adversely affect access to capital and general business conditions.

Our commercial insurance does not cover losses resulting from war or terrorist attacks. While the Israeli government has in the past provided compensation for certain damages caused by such events, we cannot assure you that such government compensation programs will continue, or if continued, will be sufficient to compensate us fully for any losses incurred. As of the date of this report, the impact of regional security conditions on our results of operations and financial condition has not been material; however, such impact could increase and may become material if conditions deteriorate. Any significant losses or damages incurred by our Israeli operations as a result of armed conflict, terrorist activity, or related instability could have a material adverse effect on our business, financial condition, and results of operations.

The global perception of Israel and Israeli companies, influenced by actions by international judicial bodies, may lead to increased sanctions and other negative measures against Israel, as well as Israeli companies and academic institutions. There is also a growing movement among countries, activists, and organizations to boycott Israeli goods, services and academic research or restrict business with Israel, which could affect business operations. For instance, the current political tensions between Turkey and Israel have disrupted our commercial arrangements with Turkish suppliers, requiring us to find alternative solutions for our supply chain. If these efforts become widespread, along with any future rulings from international tribunals against Israel, they could and negatively impact our business operations.

Our operations may be affected by labor unrest in Israel.

General strikes or work stoppages, including at seaports, have occurred periodically or have been threatened in the past by trade unions due to labor disputes. These general strikes or work stoppages may have a materially adverse effect on the on our business, including our ability to effectively produce in our Indian facility, or at other PBP, as well disrupt our logistics, thereby having a materially adverse effect on our results of operations.

The tax benefits that are available to us require us to continue to meet various conditions and may be terminated or reduced in the future, which could increase our costs and taxes.

Our Israeli facilities have been granted “Preferred Enterprise” status by the Israeli Authority for Investment and Development of the Industry and Economy (“Investment Center”), which provides us with investment grants (in respect of certain Approved Enterprise programs) and makes us eligible for tax benefits under the Investment Law

In order to remain eligible for the tax benefits of a “Preferred Enterprise” we must continue to meet certain conditions stipulated in the Investment Law and its regulations, as amended, and in certificates of approval issued by the Investment Center (in respect of Approved Enterprise programs), which may include, among other things, selling more than 25% of our products to markets of over 14 million residents in 2012 (such export criteria will further be increased in the future by 1.4% per annum) in a specific tax year, making specified investments in fixed assets and equipment, financing a percentage of those investments with our capital contributions, filing certain reports with the Investment Center, complying with provisions regarding intellectual property and the criteria set forth in the specific certificate of approval issued by the Investment Center or the ITA. If we do not meet these requirements, the tax benefits could be canceled and we could be required to refund any tax benefits and investment grants that we received in the past adjusted to the Israeli consumer price index and interest, or other monetary penalties. Further, in the future, these tax benefits may be reduced or discontinued. If these tax benefits are cancelled, our Israeli taxable income would be subject to regular Israeli corporate tax rates. The standard corporate tax rate for Israeli companies has been 23% since 2018.

Effective as of January 1, 2011, the Investment Law was amended (“Amendment No. 68” or the “2011 Amendment”). Under Amendment No. 68, the criteria for receiving tax benefits were revised. In the future, we may not be eligible to receive additional tax benefits under this law. The termination or reduction of these tax benefits would increase our tax liability, which would reduce our profits. From 2017 onward, the tax rate for the portion of our income related to the Bar-Lev manufacturing facility was reduced to 7.5% and Sdot-Yam tax rate 16%.

During 2023 the company launched a restructuring plan, closing Sdot-Yam manufacturing facility in May 2023, and closing the Bar Lev facility in December 2025, resulting decrease in future tax benefits of the Company. The fact we closed our manufacturing sites in Israel increases our activities outside of Israel which might not be eligible to be included in future Israeli tax benefit programs. We may lose all our tax benefits in Israel and increase our exposure with respect to previous years exempt taxable income.

Historically, some portions of income were tax exempt, but that is no longer the case. In the event of a distribution of a dividend from the tax-exempt income described above, we will be subject to tax at the corporate tax rate applicable to our Approved Enterprise’s and Beneficiary Enterprise’s income on the amount distributed (grossed-up to reflect the pre-tax income that it would have had to earn in order to distribute the dividend) in accordance with the effective corporate tax rate that would have been applied had we not relied on the exemption. In addition to the reduced tax rate, a distribution of income attributed to an “Approved Enterprise” and a “Beneficiary Enterprise” to Israeli shareholders will be subject to 15% withholding tax (in the case of non-Israeli shareholders, subject to the receipt in advance of a valid certificate from the ITA allowing for a reduced tax rate of 15% or at a lower rate provided under an applicable tax treaty). As for a “Preferred Enterprise,” dividends paid to Israeli shareholders are generally subject to 20% withholding tax from 2014 (in the case of non-Israeli shareholders, subject to the receipt in advance of a valid certificate from the ITA allowing for a reduced tax rate of 20% or at a lower rate provided under an applicable tax treaty). However, because we announced our election to apply the provisions of Amendment No. 68 prior to June 30, 2015, we will be entitled to distribute exempt income generated by any Approved/Beneficiary Enterprise to our Israeli corporate shareholders tax free (See “ITEM 10.E: Additional Information—Taxation—Israeli tax considerations and government programs—Law for the Encouragement of Capital Investments, 1959”).

The amendment to the Investment Law stipulated those investments in subsidiaries, including in the form of acquisitions of subsidiaries from an unrelated party, may also be considered as a deemed dividend distribution event, increasing the risk of triggering a deemed dividend distribution event and potential tax exposure. The ITA’s interpretation is that this provision applies retroactively to investments and acquisitions made prior to the amendment.

It may be difficult to enforce a U.S. judgment against us, our officers and directors in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve process on our officers and directors.

We are incorporated in Israel. Other than one director, none of our directors, or our independent registered public accounting firm, is a resident of the United States. The majority of our assets and the assets of these persons are located outside the United States. Therefore, it may be difficult for an investor, or any other person or entity, to enforce a U.S. court judgment based upon the civil liability provisions of the U.S. federal securities laws against us or any of these persons in a U.S. or Israeli court, or to effect service of process upon these persons in the United States. Additionally, it may be difficult for an investor, or any other person or entity, to assert U.S. securities law claims in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws on the grounds that Israel is not the most appropriate forum in which to bring such a claim. Even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing the matters described above.

Our articles of association provide that unless we consent otherwise, the competent courts of Tel Aviv, Israel shall be the sole and exclusive forum for substantially all disputes between us and our shareholders under the Companies Law and the Israeli Securities Law, which could limit our shareholders’ ability to bring claims and proceedings against, as well as obtain a favorable judicial forum for disputes with, us and our directors, officers and other employees.

Unless we consent in writing to the selection of an alternative forum, the competent courts of Tel Aviv, Israel shall be the exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of fiduciary duty owed by any of our directors, officers or other employees to us or our shareholders, or (iii) any action asserting a claim arising pursuant to any provision of the Companies Law or the Israeli Securities Law. This exclusive forum provision is intended to apply to claims arising under Israeli Law and would not apply to claims brought pursuant to the Securities Act or the Exchange Act or any other claim for which U.S. federal courts would have exclusive jurisdiction. Such exclusive forum provision in our articles of association will not relieve us of our duties to comply with U.S. federal securities laws and the rules and regulations thereunder, and shareholders will not be deemed to have waived our compliance with these laws, rules, and regulations. This exclusive forum provision may limit a shareholder’s ability to bring a claim in a judicial forum of its choice for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers and other employees.

Your rights and responsibilities as our shareholder will be governed by Israeli law which may differ in some respects from the rights and responsibilities of shareholders of United States corporations.

Since we are incorporated under Israeli law, the rights and responsibilities of our shareholders are governed by our articles of association and Israeli law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in U.S.-based corporations. In particular, a shareholder of an Israeli company has a duty to act in good faith and in a customary manner in exercising its rights and performing its obligations towards the company and other shareholders and to refrain from abusing its power in the company, including, among other things, in voting at the general meeting of shareholders on certain matters, such as an amendment to the company’s articles of association, an increase of the company’s authorized share capital, a merger of the company and approval of related party transactions that require shareholder approval. A shareholder also has a general duty to refrain from discriminating against other shareholders. In addition, a controlling shareholder or a shareholder who knows that it possesses the power to determine the outcome of a shareholders’ vote or to appoint or prevent the appointment of an office holder in the company or has another power with respect to the company, has a duty to act in fairness towards the company. However, Israeli law does not define the substance of this duty of fairness. See “ITEM 6.C: Directors, Senior Management and Employees—Board Practices—Board Practices—Fiduciary duties and approval of specified related party transactions under Israeli law—Duties of shareholders.” Additionally, the parameters and implications of the provisions that govern shareholder behavior have not been clearly determined by the Israeli courts. These provisions may be interpreted to impose additional obligations and liabilities on our shareholders that are not typically imposed on shareholders of United States corporations.

Provisions of Israeli law and our articles of association may delay, prevent or make undesirable a merger transaction, or an acquisition of all or a significant portion of our shares.

Provisions of Israeli law, including the Companies Law and our articles of association could have the effect of delaying or preventing a change in control and may make it more difficult for a third-party to acquire us or our shareholders to elect different individuals to our board of directors, even if doing so would be considered to be beneficial by some of our shareholders, and may limit the price that investors may be willing to pay in the future for our ordinary shares. Among other things:

Israeli tax considerations may also make potential transactions undesirable to us or to some of our shareholders whose country of residence does not have a tax treaty with Israel granting tax relief to such shareholders from Israeli tax. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfilment of numerous conditions, including a holding period of up to two years from the date of the transaction during which certain sales and dispositions of shares of the participating companies are restricted. Moreover, with respect to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no disposition of the shares has occurred. See “ITEM 10.B: Additional Information—Memorandum and Articles of Association—Acquisitions under Israeli law.”

Under Israeli law, our two external directors have terms of office of three years and may serve up to three terms. Our current external directors have been elected by our shareholders to serve for a second term of a three-year term commencing December 1, 2023.

These provisions of Israeli law could have the effect of delaying or preventing a change in control and may make it more difficult for a third party to acquire us or our shareholders to elect different individuals to our board of directors, even if doing so would be beneficial to our shareholders, and may limit the price that investors may be willing to pay in the future for our ordinary shares.

General Risk Factors

If we do not manage our inventory effectively, our results of operations could be materially adversely affected.

We must manage our inventory effectively in order to meet the demand for our products. If our forecasts for any Specific Stock Keeping Unit (“SKU”) exceed actual demand, we could experience excess inventory, resulting in increased logistic costs. If we ultimately determine that we have excess inventory, we may have to reduce our prices and write-down inventory which could have an adverse effect on our business, financial condition and results of operations. If we have insufficient inventory levels, we may not be able to respond to the market demand for our products, resulting in reduced sales and market share.

We depend on our senior management team and other skilled and experienced personnel to operate our business effectively, and the loss of any of these individuals could materially and adversely affect our business and our future financial condition or results of operations.

We are dependent on the skills and experience of our senior management team and other skilled and experienced personnel. These individuals possess strategic, managerial, sales, marketing, operational, manufacturing, logistical, financial and administrative skills that are important to the operation of our business. There have been, and from time to time, there may continue to be, changes in our management team resulting from the hiring or departure of executives and key employees, or the transition of executives within our business. For example, during 2025, two members joined our management team. Such changes and transitions in our executive management team may divert resources and focus away from the operation of our business. Furthermore, in recent years we have experienced a trend of relatively high turnover in some sites and roles.

Retention of institutional knowledge and the ability to attract, motivate and retain personnel, as well as the ability to successfully onboard our senior management as a team comprised of several new members, are crucial for implementing our business strategy, without which our business and our future financial condition or results of operations could suffer materially and adversely. We do not carry key man insurance with respect to any of our executive officers or other employees. We cannot assure you that we will be able to retain all our existing senior management personnel and key personnel or to attract additional qualified personnel when needed.

The market for qualified personnel is competitive in the geographies in which we operate. Moreover, the COVID-19 pandemic has also caused a shift to virtual or hybrid recruitment and employment, which has increased the difficulty in timely attracting new employees, integrating, and introducing them into our corporate culture and retaining them for the longer term. Companies with whom we compete have expended and will likely continue to expend more resources than we do on employee recruitment and are often better able to offer more favorable compensation and incentive packages than we can. We seek to retain and motivate existing personnel through our compensation practices, company culture, and career development opportunities. If we are unable to attract and retain qualified personnel when and where they are needed, our ability to operate and grow our business could be impaired. Moreover, if we are not able to properly balance investment in personnel with sales, our profitability may be adversely affected.

In addition, factors beyond our control may damage or disrupt the ability of our senior management or key employees to perform their critical roles in the Company.

ITEM 4