Senstar Technologies : 20F (Senstar Technologies Quarterly Report 2025 Q4 Form 20 F 1)

Published: 2026-05-04 09:11:09 ET SNT

Published on 05/04/2026 at 09:11 am EDT

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report .................

(Exact Name of Registrant as specified in its charter and translation of Registrant's name into English)

(Jurisdiction of incorporation or organization)

(Address of principal executive offices)

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

Common Shares, No Par Value

SNT Nasdaq Global Market

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 the close of the period covered by the annual report: 23,331,653 Common Shares, no par value, as of December 31, 2025.

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 Securities Exchange Act of 1934 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 and posted pursuant to Rule 405 of Regulation S-T 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 "accelerated filer", "large accelerated filer" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☒ Emerging growth company ☐

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:

U.S. GAAP ☒ International Financial Reporting Standards as issued by the International Accounting Standards Board ☐

Other ☐

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 ☒

Page No

PART I

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

ITEM 3.

KEY INFORMATION

[Reserved].

Capitalization and Indebtedness.

Reasons for the Offer and Use of Proceeds.

Risk Factors.

ITEM 4.

Information on the Company

History and Development of the Company.

Business Overview.

Organizational Structure.

Property, Plants and Equipment.

ITEM 4A.

Unresolved Staff Comments

ITEM 5.

Operating and Financial Review and Prospects

Operating Results.

Liquidity and Capital Resources

Research and Development, Patents and Licenses.

Trend Information.

Critical Accounting Estimates.

ITEM 6.

Directors, Senior Management and Employees

Directors and Senior Management.

Compensation

Board Practices

Employees

Share Ownership.

Disclosure of a registrant's action to recover erroneously awarded compensation

ITEM 7.

Major Shareholders and Related Party Transactions

Major Shareholders

Related Party Transactions.

Interests of Experts and Counsel.

ITEM 8.

Financial Information

Consolidated Statements and Other Financial Information.

Significant Changes.

ITEM 9.

The Offer and Listing

Offer and Listing Details.

Plan of Distribution.

Markets.

Selling Shareholders.

Dilution.

Expenses of the Issue.

ITEM 10.

Additional Information

Share Capital.

Articles and By-laws.

Material Contracts.

Exchange Controls.

Taxation.

Dividends and Paying Agents.

Statements by Experts.

Documents on Display.

Subsidiary Information.

Annual Report to Security Holders

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ITEM 11.

Q uantitative and Qualitative Disclosures about Market Risk

ITEM 12.

Description of Securities Other Than Equity Securities

PART II

ITEM 13.

Defaults, Dividend Arrearages and Delinquencies

ITEM 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds

ITEM 15.

Controls and Procedures

ITEM 16A.

Audit Committee Financial Expert

ITEM 16B.

Code of Ethics

ITEM 16C.

Principal Accountant Fees and Services

ITEM 16D.

Exemptions from the Listing Standards for Audit Committees

ITEM 16E.

Purchase of Equity Securities by the Issuer and Affiliated Purchasers

ITEM 16F.

Changes in Registrant's Certify ing Accountant

ITEM 16G.

Corporate Governance

ITEM 16H.

Mine Safety Disclosure

ITEM 16I.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

ITEM 16J.

Insider Trading Policies

ITEM 16K.

Cybersecurity

PART III

ITEM 17.

Financial Statements

ITEM 18.

Financial Statements

ITEM 19.

Exhibits

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We are a leading international provider of comprehensive physical, video security products and solutions. We offer comprehensive solutions for critical sites, which leverage our broad portfolio of homegrown Perimeter Intrusion Detection Systems ("PIDS"), advanced Video Management Software ('VMS") and Security Management Software ("SMS") with native Intelligent Video Analytics ("IVA") security solutions, as well as access control products and technologies.

Based on our industry experience and interaction with customers for over 40 years, we have developed a comprehensive set of solutions and products, optimized for perimeter, outdoor, and general security applications. Our broad portfolio of critical infrastructure protection and site protection technologies includes a variety of fence mounted sensors, buried and concealed detection systems, and sophisticated sensors for sub-surface intrusion such as to secure pipelines, as well as advanced video analytics software, security management software and video management systems. We have successfully delivered customized solutions and products in more than 100 countries worldwide.

We were incorporated under the laws of the State of Israel on March 27, 1984 under the name Magal Security Systems Ltd., and on September 30, 2021, we changed our name to Senstar Technologies Ltd. On September 26, 2023, Senstar Technologies Ltd., Senstar Technologies Corporation, a newly established Ontario corporation, and Can Co Sub Ltd., a company organized under the laws of the State of Israel and a wholly-owned subsidiary of Senstar Technologies Corporation entered into a merger agreement (the "Merger Agreement"), pursuant to which Senstar Technologies Corporation became the parent company of Senstar Technologies Ltd., with Senstar Technologies Ltd. surviving the Merger as a wholly-owned subsidiary of Senstar Technologies Corporation (the "Merger"). Pursuant to the Merger Agreement, Senstar Technologies Ltd. agreed to become domiciled in Ontario and become Senstar Technologies Corporation, an Ontario organized company (the "Redomiciliation").

Effective March 18, 2024, as a result of the Merger, (a) the separate corporate existence of Can Co Sub Ltd. ceased and Senstar Technologies Ltd. continued as the surviving company; (b) all the properties, rights, privileges, powers and franchises of Senstar Technologies Ltd. and Can Co Sub Ltd. vested in Senstar Technologies Ltd. (as the surviving company); (c) all debts, liabilities and duties of Senstar Technologies Ltd. and Can Co Sub Ltd. became the debts, liabilities and duties of Senstar Technologies Ltd. (as the surviving company); and (d) all the rights, privileges, immunities, powers and franchises of Senstar Technologies Ltd. continued unaffected by the Merger in accordance with the Israeli Companies Law, 5759-1999.

Each Senstar Technologies Ltd. ordinary share issued and outstanding immediately prior to the consummation of the Merger represented the right to receive, less any applicable withholding taxes, one (1) validly issued, fully paid and non-assessable common share of Senstar Technologies Corporation, representing the same proportional equity interest in Senstar Technologies Corporation as that shareholder held in Senstar Technologies Ltd.. The number of Common Shares of Senstar Technologies Corporation outstanding immediately after the Redomiciliation continued to be the same as the number of ordinary shares of Senstar Technologies Ltd. outstanding immediately prior to the Redomiciliation. Upon effectiveness of the Redomiciliation, the name of our company became Senstar Technologies Corporation. Following the Redomiciliation, the Common Shares of Senstar Technologies Corporation as the successor to Senstar Technologies Ltd., continued to be listed for trading on Nasdaq under the ticker symbol "SNT". On December 15, 2025, the predecessor entity, Senstar Technologies Ltd., was dissolved.

Our website is https://www.senstar.com. The information on our website is not incorporated by reference into this annual report. As used in this annual report, the terms "we," "us," "our," and "Senstar" mean Senstar Technologies Corporation and its subsidiaries, and, with respect to periods prior to the effective date of the Redomiciliation, Senstar Technologies Ltd. and its subsidiaries, unless the context requires otherwise.

Our fully registered marks are FIBERPATROL®, FLEXZONE®, OMNITRAX®, SENSTAR® (INCLUDING LOGO DESIGN), XFIELD®, FLEXPS®, ultraWave Design®, FLEXPI®, PINPOINTER®.All other marks used to identify particular products and services associated with our business are trademarks, including but not limited to SENSTAR SYMPHONY™, SENSTAR MULTISENSOR™, SENSOR FUSION™, SENSTAR ULTRAWAVE™, SENSTAR CARE™, SENSTAR FLOW™. Any other trademarks and trade names appearing in this annual report are owned by their respective holders.

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Our consolidated financial statements appearing in this annual report are prepared in U.S. dollars and in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. All references in this annual report to "dollars" or "$" are to U.S. dollars, all references to "CAD" are to Canadian dollars.

Statements made in this annual report concerning the contents of any contract, agreement or other document are summaries of such contracts, agreements or documents and are not complete descriptions of all of their terms. If we filed any of these documents as an exhibit to this annual report or to any registration statement or annual report that we previously filed, you may read the document itself for a complete description of its terms.

This Annual Report on Form 20-F contains various "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and within the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements reflect our current view with respect to future events and financial results. Forward-looking statements usually include the verbs, "anticipates," "believes," "estimates," "expects," "intends," "plans," "projects," "understands" and other verbs suggesting uncertainty. We remind readers that forward-looking statements are merely predictions and therefore inherently subject to uncertainties and other factors and involve known and unknown risks that could cause the actual results, performance, levels of activity, or our achievements, or industry results, to be materially different from any future results, performance, levels of activity, or our achievements expressed or implied by such forward- looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. We have attempted to identify additional significant uncertainties and other factors affecting forward-looking statements in the Risk Factors section which appears in Item 3.D "Key Information - Risk Factors."

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Not applicable.

Investing in our Common Shares involves a high degree of risk and uncertainty. You should carefully consider the risks and uncertainties described below before investing in our Common Shares. If any of the following risks actually occurs, our business, prospects, financial condition and results of operations could be harmed. In that case, the value of our Common Shares could decline, and you could lose all or part of your investment. These risks include, but are not limited to, the following:

While we were profitable in 2025 and 2024, we incurred a loss in 2023 and have incurred losses in past years and may not operate profitably in the future.

Our operating results may fluctuate from quarter to quarter and year to year.

Our financial results may be significantly affected by currency fluctuations.

M&A, which requires the integration of multiple acquired companies and their respective businesses, operations and employees with our own, involves significant risks.

Our revenues depend in great measure on government procurement procedures and practices.

Because competition in our industry is intense, our business, operating results and financial condition may be adversely affected.

Our business involves significant risks and uncertainties that may not be covered by indemnities or insurance.

The markets for our products may be affected by changing technology, requirements, standards and products.

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Increasing scrutiny and changing expectations with respect to our ESG policies may impose additional costs on us or expose us to additional risks.

Our failure to retain and attract personnel could harm our business, operations and product development efforts.

We face risks associated with doing business in international markets.

Our failure to comply with anti-corruption laws and regulations could adversely affect our reputation, business, financial condition and results of operations.

We may be vulnerable to physical and electronic security breaches and cyber-attacks which could disrupt our operations.

We may not be able to protect our proprietary technology and unauthorized use of our proprietary technology by third parties may impair our ability to compete effectively.

Claims that our products infringe upon the intellectual property of third parties may require us to incur significant costs, enter into licensing agreements or license substitute technology.

Undetected defects in our products may increase our costs and harm the market acceptance of our products.

If suppliers terminate our arrangements with them, or amend them in a manner detrimental to us, we may experience delays in production and implementation of our products.

We currently benefit from government programs and tax benefits that may be discontinued or reduced in the future, which would increase our future tax expenses.

We may fail to maintain effective internal control over financial reporting, which could result in material misstatements in our financial statements.

We may be adversely affected by regulations and market expectations related to sourcing and our supply chain, including conflict minerals.

Our success depends on our ability to develop and maintain advanced security technologies, and failure to keep pace with rapid technological changes could make our solutions less competitive.

We rely on proprietary technology, software, and intellectual property, and any inability to protect these rights or unauthorized use by third parties could harm our business.

Our products incorporate third-party technologies and components, and disruptions in access to these technologies or licensing issues could affect our ability to deliver solutions.

We may face intellectual property infringement claims, which could result in costly litigation, damages, or the need to redesign products.

Cybersecurity threats, including hacking, data breaches, or vulnerabilities in our software or systems, could damage our reputation and expose us to liability.

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Our solutions must integrate with complex customer environments, and failures, defects, or performance issues in our systems could result in customer dissatisfaction, contract penalties, or loss of future business.

We may not be able to successfully develop, introduce, or commercialize new technologies, including AI-driven or analytics-based security solutions, in a timely or cost-effective manner.

Our intellectual property protections (including patents, trade secrets, and copyrights) may be limited in certain jurisdictions, particularly in countries where enforcement is weaker.

We are exposed to political, economic, and security instability in certain regions, which may disrupt our operations, projects, and supply chains.

Our international operations expose us to foreign currency exchange rate fluctuations, which can materially affect our revenues and operating results.

We are subject to complex and changing regulatory environments, including export controls, trade sanctions, and anti-corruption laws, which may limit our ability to sell products in certain jurisdictions or increase compliance costs.

A significant portion of our revenues is derived from government and critical infrastructure customers worldwide, making us vulnerable to changes in government budgets, procurement policies, and geopolitical tensions affecting cross-border contracts.

Our global operations require us to manage logistics, supply chains, and third-party partners across multiple jurisdictions, which may be impacted by trade restrictions, tariffs, or disruptions in international transportation.

We may face restrictions on the repatriation of earnings, taxation complexities, and differing legal systems, which could adversely impact our financial condition and cash flows.

Operating internationally exposes us to cultural, language, and operational challenges, as well as risks related to hiring, retaining, and managing personnel across diverse regions.

Volatility of the market price of our Common Shares could adversely affect our shareholders and us.

We may not pay dividends in the future.

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

We may in the future be classified as a passive foreign investment company, or PFIC, which would subject our U.S. investors to adverse tax rules.

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The rights and obligations of a holder of Common Shares will be governed by Ontario law and may differ from the rights and obligations of shareholders of companies organized under the laws of other jurisdictions.

The Articles, together with the By-Laws, and Canadian laws and regulations applicable to us may adversely affect our ability to take actions that could be deemed beneficial to holders of our Common Shares, or the ability of another party to acquire control of the Company.

Canadian take-over bid laws may discourage take-over bids being made for the Company and may discourage the acquisition of large numbers of our Common Shares.

Canadian issuer bid laws restrict our ability to purchase our Common Shares.

We are able to issue an unlimited amount of additional Common Shares, which may cause our shareholders to experience dilution in the future.

Our Common Shares are subject to Canadian insolvency laws which may offer less protection to its shareholders compared to U.S. insolvency laws.

While we were profitable in 2025 and 2024, we incurred a loss in 2023 and have incurred losses in past years and may not operate profitably in the future.

We may not be able to sustain profitable operations in the future due to a number of factors. If we do not generate sufficient cash from operations, we may be required to obtain financing or reduce our level of expenditures. Such financing may not be available in the future, or, if available, may not be on terms favorable to us. If adequate funds are not available to us, our business, results of operations and financial condition will be materially and adversely affected.

Our sales and operating results may vary significantly from quarter to quarter and from year to year in the future. Our operating results are characterized by a seasonal pattern, with different volumes of revenues towards the end of the year compared with the first part of the year. In addition, our operating results are affected by a number of factors, many of which are beyond our control. Factors contributing to these fluctuations include the following:

changes in customers' or potential customers' budgets as a result of, among other things, government funding (influenced by long shutdowns) and procurement policies;

changes in demand for our existing products and services;

our long and variable sales cycle;

our ability to maintain sales volumes at a level sufficient to cover fixed manufacturing and operating costs; and

the timing of the introduction and market acceptance of new products, product enhancements and new applications.

Our expense levels are based, in part, on expected future sales. If the level of sales in a particular quarter does not meet expectations, we may be unable to adjust operating expenses quickly enough to compensate for the shortfall of sales, and our results of operations may be adversely affected. Due to these and other factors, we believe that quarter to quarter and year to year comparisons of our past operating results may not be meaningful. You should not rely on our results for any quarter or year as an indication of our future performance. Our operating results in future quarters and years may be below expectations, which would likely cause the price of our Common Shares to fall.

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Most of our sales are made in North America, Europe, Middle East and Africa, APAC and Latam. Our revenues are primarily denominated in U.S Dollars and Euros while a portion of our expenses, primarily labor expenses, is incurred in Canadian Dollars and Euros. As a result, fluctuations in exchange rates between the dollar and non-dollar currencies may affect our operating results and financial condition. The dollar cost of our operations in Canada may be adversely affected by the appreciation of the CAD against the dollar. In addition, the value of our non-dollar revenues could be adversely affected by the depreciation of the dollar against such currencies. Our financial expenses may also be adversely affected by the depreciation of a currency in which we maintain our monetary assets.

We recorded a foreign exchange, net loss of $0.2 million and of $0.1 million in the years ended December 31, 2025 and 2023, respectively and foreign exchange gain, net of $0.5 million in the year ended December 31, 2024. This is due to the adjustment of monetary assets and liabilities, denominated in currencies, other than the functional currency of the operational entities in the group. At the end of each period, a change in currency valuation of monetary assets and liabilities is recorded as a non-cash financial expense or income. The Canadian dollar depreciated by 4.8% and 2.3% against the U.S. dollar in 2025 and 2023, respectively and appreciated by 8.7% against the U.S. dollar in 2024. We may incur exchange losses in the future which may materially affect our operating results.

We have made a number of acquisitions in the past, including our recent acquisition of Blickfeld GmbH announced in December 2025 and completed February 13, 2026. Future acquisitions by us could result in potentially dilutive issuances of our equity securities, the incurrence of debt and contingent liabilities and amortization expenses related to identifiable intangible assets, any of which could materially adversely affect our operating results and financial position. Mergers and acquisitions of companies are inherently risky and subject to many factors outside of our control and no assurance can be given that our future acquisitions will be successful and will not adversely affect our business, operating results, or financial condition. In the future, we may seek to acquire or make strategic investments in complementary businesses, technologies, services or products, or enter into strategic partnerships or alliances with third parties in order to expand our business. Failure to manage and successfully integrate such acquisitions could materially harm our business and operating results. Prior acquisitions have resulted in a wide range of outcomes, from successful introduction of new products, technologies and professional services to a failure to do so. Even when an acquired company has previously developed and marketed products, there can be no assurance that new product enhancements will be made in a timely manner or that pre-acquisition due diligence will have identified all possible issues that might arise with respect to such products. If we acquire other businesses, we may face difficulties, including:

Difficulties in integrating the operations, systems, technologies, products, and personnel of the acquired businesses or enterprises;

Diversion of management's attention from normal daily operations of the business and the challenges of managing larger and more widespread operations resulting from acquisitions;

Integrating financial forecasting and controls, procedures and reporting cycles;

Difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets have stronger market positions;

Insufficient revenue to offset increased expenses associated with acquisitions; and

The potential loss of key employees, customers, distributors, vendors and other business partners of the companies we acquire following and continuing after announcement of acquisition plans.

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The benefits we expect to realize from these acquisitions are, necessarily, based on projections and assumptions about the combined businesses of our company, and assume, among other things, the successful integration of these acquired entities into our business and operations. Our projections and assumptions concerning our acquisitions may be inaccurate, however, and we may not successfully integrate the acquired companies and our operations in a timely manner, or at all. We may also be exposed to unexpected contingencies or liabilities of the acquired companies. If we do not realize the anticipated benefits of these transactions, our growth strategy and future profitability could be adversely affected.

Many of our products are sold to governmental agencies, governmental authorities and government-owned companies, many of which have complex and time-consuming procurement procedures. A substantial period of time often elapses from the time we begin marketing a product until we actually sell that product to a particular end-user. In addition, our sales to governmental agencies, authorities and companies are directly affected by these customers' budgetary constraints and the priority given in their budgets to the procurement of our products. A decrease in governmental funding for our end-users' budgets would adversely affect our results of operations. This risk is heightened during periods of global economic slowdown or government shutdowns. Accordingly, governmental purchases of our systems, products and services may decline in the future as the governmental purchasing agencies may terminate, reduce or modify contracts or subcontracts if:

their requirements or budgetary constraints change;

they cancel multi-year contracts and related orders if funds become unavailable; or

they shift spending priorities into other areas or for other product.

Any such event may have a material adverse effect on us.

The global market for security, safety, site management solutions and products are highly fragmented and intensely competitive. We compete principally in the market for perimeter intrusion detection systems, PIDS, Video Management Software, VMS, Security Management Software, SMS and Intelligent Video Analytics, or IVA. Some of our competitors and potential competitors have greater research, development, financial and personnel resources, including governmental support, as well as established greater penetration into certain vertical markets or geographical market segments. We cannot assure you that we will be able to compete effectively relative to our competitors or continue to develop and market new products effectively. Continued competitive pressures could cause us to lose significant market share or erode profitability margins.

A significant portion of our business relates to designing, developing, and manufacturing advanced security, systems and products. New technologies may be untested or unproven. Failure of some of these products and services could result in extensive loss of life or property damage. Accordingly, we also may incur liabilities that are unique to our products and services. In some, but not all circumstances, we may be entitled to certain legal protections or indemnifications from our customers, either through regulatory protections, contractual provisions or otherwise. The insurance coverage that we maintain may not be adequate to cover all claims or liabilities, and it is not possible to obtain insurance to protect against all operational risks and liabilities.

Substantial claims resulting from an accident, failure of our products or services, or other incident, or liability arising from our products and services in excess of any indemnity and our insurance coverage (or for which indemnity or insurance is not available or not obtained) could adversely impact our financial condition, cash flows, or operating results. Any accident, even if fully indemnified or insured, could negatively affect our reputation among our customers and the public, and make it more difficult for us to compete effectively. It also could affect the cost and availability of adequate insurance in the future.

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The markets for our products may be affected by evolving technologies, changing industry standards, changing regulatory environments, new product introductions and changes in customer requirements. The introduction of products embodying new technologies and the emergence of new industry standards and practices can render existing products obsolete and unmarketable. Our future success will depend on our ability to enhance our existing products and to develop and introduce, on a timely and cost-effective basis, new products and product features that keep pace with technological developments and emerging industry standards. In the future:

we may not be successful in developing and marketing new products or product features that respond to technological change or evolving industry standards;

we may experience difficulties that could delay or prevent the successful development, introduction and marketing of these new products and features; or

our new products and product features may not adequately meet the requirements of the marketplace and achieve market acceptance.

If we are unable to respond promptly and effectively to changing technologies and market requirements, we will be unable to compete effectively in the future.

Companies across all industries are facing increasing scrutiny relating to their ESG policies. Investors, lenders and other market participants are increasingly focused on ESG practices and in recent years have placed increasing importance on the implications and social cost of their investments. The increased focus and activism related to ESG may hinder our access to capital, as investors and lenders may reconsider their capital investment allocation as a result of their assessment of our ESG practices. If we do not adapt to or comply with investor, lender or other industry shareholder expectations and standards, which are evolving, or if we are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, we may suffer from reputational damage and the business, financial condition and the price of our company's shares could be materially and adversely affected.

Our products require sophisticated research and development, marketing and sales and technical customer support. Our success depends on our ability to attract, train and retain qualified research and development, marketing and sales and technical customer support personnel. Competition for personnel in all of these areas is intense and we may not be able to hire adequate personnel to achieve our goals or support the anticipated growth in our business. Competition may be amplified by evolving restrictions on immigration, travel, or the availability of visas for skilled technology workers. If we fail to attract and retain qualified personnel, our business, operations and product development efforts would suffer.

A party who is able to compromise the security measures on our networks or the security of our infrastructure could, among other things, misappropriate our proprietary information and the personal information of our customers and employees, cause interruptions or malfunctions in our or our customers' operations, cause delays or interruptions to our ability to meet customer needs, cause us to breach our legal, regulatory or contractual obligations, create an inability to access or rely upon critical business records or cause other disruptions in our operations. These breaches may result from human errors, equipment failure, or fraud or malice on the part of employees or third parties. Our exposure to cybersecurity threats and negative consequences of cybersecurity breaches will likely increase as we store increasing amounts of customer data. Additionally, as we increasingly market the security features in our data centers, our data centers may be targeted by computer hackers seeking to compromise data security.

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We have experienced and defended against certain threats to our systems and security (such as phishing attempts), none of which have had a material adverse effect on our business or operations to date. However, we could incur significant costs in order to investigate and respond to future attacks, to respond to evolving regulatory oversight requirements, to upgrade our cybersecurity systems and controls, and to remediate security compromise or damage. In response to past threats and attacks, we have implemented further controls and planned for other preventative actions to further strengthen our systems against future attacks. However, we cannot assure that such measures will provide absolute security, that we will be able to react in a timely manner, or that our remediation efforts following past or future attacks will be successful. Consequently, our financial performance and results of operations would be materially adversely affected.

In the event of a breach resulting in loss of data, such as personally identifiable information or other such data protected by data privacy or other laws, we may be liable for damages, fines and penalties for such losses under applicable regulatory frameworks despite not handling the data. Furthermore, if a high-profile security breach or cyber-attack occurs with respect to another provider of mission-critical data center facilities, our customers and potential customers may lose trust in the security of these business models generally, which could harm our reputation and brand image as well as our ability to retain existing customers or attract new ones. We could incur significant costs in order to investigate and respond to future attacks, to respond to evolving regulatory oversight requirements, to upgrade our cybersecurity systems and controls, and to remediate security compromise or damage. In addition, the regulatory framework around data custody, data privacy and breaches varies by jurisdiction and is an evolving area of law. We cannot assure that we will be able to react in a timely manner in the future, or that our remediation efforts following past or future attacks will be successful. Consequently, our financial performance and results of operations would be materially adversely affected. We may not be able to limit our liability or damages in the event of such a loss.

Despite our regular quality assurance testing, the development, enhancement and implementation of our complex systems entail substantial risks of product defects or failures. Undetected errors or "bugs" may be found in existing or new products, resulting in delays, loss of revenues, warranty expense, loss of market share, failure to achieve market acceptance, adverse publicity, product returns, loss of competitive position or claims against us by customers. Any such problems could be costly to remedy and could cause interruptions, delays, or cessation of our product sales, which could cause us to lose existing or prospective customers and could negatively affect our results of operations. Moreover, the complexities involved in implementing our systems entail additional risks of performance failures. We may encounter substantial difficulties due to such complexities which could have a material adverse effect upon our business, financial condition and results of operations.

We acquire most of the components utilized in our products from a limited number of suppliers. We may not be able to obtain such items from these suppliers in the future or we may not be able to obtain them on satisfactory terms. Temporary disruptions of our manufacturing operations would result if we were required to obtain materials from alternative sources, which may have an adverse effect on our financial results.

We benefit from tax credits we receive pursuant to the Scientific Research and Experimental Development Tax Incentive Program in Canada and from research grant programs such as the "Industrial Research Assistance Program" (IRAP). If we fail to comply with the conditions imposed by these Canadian tax programs in the present or future, the benefits we receive could be cancelled and we could be required to refund any payments previously received under these programs, including any accrued interest, or pay increased taxes or royalties. Canadian research grant programs are dependent on the Government's continued commitment to support R&D, on availability of funding, and may be more difficult to realize or may not be available in the future. Such a result would adversely affect our results of operations and financial condition. Further, if the Canadian government resolves to end these programs and benefits, our business, financial condition, results of operations and net income could be materially adversely affected.

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The Sarbanes-Oxley Act of 2002 imposes certain duties on us and our executives and directors. Our efforts to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 governing internal controls and procedures for financial reporting have resulted in increased general and administrative expense and a diversion of management time and attention, and we expect these efforts to require the continued commitment of significant resources. Section 404 of the Sarbanes-Oxley Act requires management's annual review and evaluation of our internal control over financial reporting in connection with the filing of the annual report on Form 20-F for each fiscal year. We may identify material weaknesses or significant deficiencies in our internal control over financial reporting. Failure to maintain effective internal control over financial reporting could result in material misstatements in our financial statements. Any such failure could also adversely affect the results of our management's evaluations and annual auditor reports regarding the effectiveness of our internal control over financial reporting. We have documented and tested our internal control systems and procedures in order for us to comply with the requirements of Section 404. While our assessment of our internal control over financial reporting resulted in our conclusion that as of December 31, 2025, our internal control over financial reporting was effective, we cannot predict the outcome of our testing in future periods. If we fail to maintain the adequacy of our internal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting. Failure to maintain effective internal control over financial reporting could result in investigation or sanctions by regulatory authorities and could have a material adverse effect on our operating results, investor confidence in our reported financial information and the market price of our Common Shares.

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, the SEC has adopted requirements for companies that use certain minerals and metals, known as conflict minerals, in their products, whether or not these products are manufactured by third parties. These requirements require companies to perform due diligence, disclose and report whether or not such minerals originate from the Democratic Republic of the Congo and adjoining countries. These requirements could adversely affect the sourcing, availability and pricing of minerals used in the manufacture of our products. While these requirements continue to be subject to administrative uncertainty, we have incurred, and may continue to incur, costs to comply with the disclosure requirements, including costs related to determining the source of any of the relevant minerals and metals used in our products. Since our supply chain is complex, we may not be able to sufficiently verify the origins for these minerals and metals used in our products through the due diligence procedures that we implement, which may harm our reputation. In such event, we may also face difficulties in satisfying customers who require that all of the components of our products be certified as conflict mineral free.

Risks Relating to Protecting Our Technology and Intellectual Property

Our success and ability to compete depend in large part upon protecting our proprietary technology. We have a patent application pending. We also rely on a combination of trade secret and copyright law and confidentiality, non-disclosure and assignment-of-inventions agreements to protect our proprietary technology. It is our policy to protect our proprietary rights in our products and operations through contractual obligations, including confidentiality and non-disclosure agreements with certain employees, distributors and agents, suppliers and subcontractors. These measures may not be adequate to protect our technology from third-party infringement, and our competitors may independently develop technologies that are substantially equivalent or superior to ours. Additionally, our products may be sold in foreign countries that provide less protection to intellectual property than that provided under U.S. and Canadian laws.

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Third parties may in the future assert infringement claims against us or claims asserting that we have violated a patent or infringed upon a copyright, trademark or other proprietary right belonging to them. Any infringement claim, even one without merit, could result in the expenditure of significant financial and managerial resources to defend against the claim. In addition, we purchase components for our products from independent suppliers. Certain of these components contain proprietary intellectual property of these independent suppliers. Third parties may in the future assert claims against our suppliers that such suppliers have violated a patent or infringed upon a copyright, trademark or other proprietary right belonging to them. If such infringement by our suppliers or us were found to exist, a party could seek an injunction preventing the use of their intellectual property. Moreover, a successful claim of product infringement against us or a settlement could require us to pay substantial amounts or obtain a license to continue to use such technology or intellectual property. Infringement claims asserted against us could have a material adverse effect on our business, operating results and financial condition.

A large portion of our sales is to markets outside of Canada. For the years ended December 31, 2025, 2024 and 2023 approximately 94.5%, 95.4% and 93.6%, respectively, of our revenues were derived from sales to markets outside of Canada. A key component of our strategy is to continue to expand in such international markets. Our international sales efforts are affected by costs associated with the shipping of our products and risks inherent in doing business in international markets, including:

different and changing regulatory requirements in the jurisdictions in which we currently operate or may operate in the future;

fluctuations in foreign currency exchange rates;

export restrictions, tariffs and other trade barriers;

difficulties in staffing, managing and supporting foreign operations;

longer payment cycles;

difficulties in collecting accounts receivable;

political and economic changes, hostilities and other disruptions in regions where we currently sell our products or may sell our products in the future; and

seasonal changes in business activity.

Negative developments in any of these areas in one or more countries could result in a reduction in demand for our products, the cancellation or delay of orders already placed, difficulty in collecting receivables, and a higher cost of doing business, any of which could adversely affect our business, results of operations or financial condition.

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Geopolitical uncertainties and increasing trade protectionism, including the escalation of international conflicts, trade wars and economic sanctions, may negatively impact global economic conditions. These factors could have a material adverse effect on our business, results of operations and financial condition.

The ongoing war between Russia and Ukraine continues to affect international operations. In response to Russia's invasion of Ukraine, the European Union, the

U.K. and the U.S. introduced extensive sanctions on Russia and Belarus, including targeted restrictions on individuals and entities, export controls, restrictions on economic relations, trade and financial transactions. These sanctions have had and may continue to have a disruptive effect on global markets.

On February 28, 2026, the United States and Israel launched a joint military operation against Iran-codenamed "Operation Epic Fury"-targeting the country's leadership, nuclear facilities, missile sites, and security forces, Iran launched hundreds of ballistic missiles and drones against Israel, United Arab Emirates, Qatar, and U.S. military bases in the region. Ongoing geopolitical tensions, including the potential for military escalation and broader regional conflict, may adversely affect economic conditions and create uncertainty that could negatively impact our business, financial condition and results of operations. In addition, the virtual closure of shipping through the Strait of Hormuz has raised concerns about broader disruptions to global supply chains, which could in turn contribute to elevated inflation and slower economic growth in major economies.

In addition to the ongoing conflict in the Middle East, on January 3, 2026, United States military forces conducted a large-scale operation in Venezuela known as "Operation Absolute Resolve," which resulted in the capture of Venezuelan President Nicolás Maduro and his wife, Cilia Flores, in Caracas and their transfer to the United States to face federal charges. The intervention has elicited strong international reactions and underscored the potential for rapid shifts in political dynamics in the region, which could influence investor perceptions of risk and volatility in emerging markets.

We cannot predict the progress, outcome or consequences of the conflicts in Ukraine or Israel, or their broader impacts in Ukraine, Russia, Belarus, Europe, the U.S., the Middle East, Iran or Venezuela. The duration and effects of military conflicts are highly unpredictable and could lead to significant market and other disruptions, including significant volatility in prices, instability in financial markets, supply chain disruptions, political and social instability, trade disputes or, changes in consumer or purchaser preferences, as well as an increase in cyberattacks and espionage. These geopolitical tensions may affect our profitability. Sanctions, trade disputes, or other governmental action related to tariffs or international trade agreements, could have a material adverse effect, on our business and financial results.

The current state of the world financial market and current economic conditions could have a material adverse impact on our results of operations, financial condition and cash flows.

Various macroeconomic factors, including rising inflation, higher interest rates, global supply chain constraints and the effects of overall economic conditions and uncertainties such as those resulting from the current and future conditions in the global financial markets, could adversely affect our results of operations, financial condition and supply chains. Inflation and rising interest rates may negatively impact us by increasing our operating costs and our cost of borrowing. Interest rates, the liquidity of the credit markets and the volatility of the capital markets could also affect the operation of our business and our ability to raise capital on favorable terms, or at all.

In Europe, concerns regarding the possibility of sovereign debt defaults by European Union ("EU"), member countries, although generally alleviated, have in the past disrupted financial markets throughout the world, and may lead to weaker consumer demand in the European Union, the U.S. and other parts of the world. The withdrawal of the UK from the European Union ("Brexit"), further increases the risk of additional trade protectionism. Brexit, or similar events in other jurisdictions, could impact global markets, including foreign exchange and securities markets; any resulting changes in currency exchange rates, tariffs, treaties and other regulatory matters could in turn adversely impact our business, operating results, cash flows and financial condition.

In addition, the recent economic slowdown in the Asia Pacific region, particularly in China, may exacerbate the effect of the weak economic trends in the rest of the world. Before the global economic financial crisis that began in 2008, China had one of the world's fastest growing economies in terms of gross domestic product, or GDP, which had a significant impact on shipping demand. China's GDP growth rate for the year ended December 31, 2022, was approximately 3.0%, one of its lowest rates in 50 years, thought to be mainly caused by the country's zero-COVID policy and strict lockdowns. China claims that its GDP growth rate for each of the years ended December 31, 2024 and 2025 was approximately 5.0%. Although the Chinese government has implemented economic stimulus measures, it is possible that China and other countries in the Asia Pacific region will continue to experience volatile, slowed or even negative economic growth in the near future. Changes in the economic conditions of China, and changes in laws or policies adopted by its government or the implementation of these laws and policies by local authorities, including with regards to tax matters and environmental concerns (such as achieving carbon neutrality), could affect vessels that are either chartered to Chinese customers or that call to Chinese ports, vessels that undergo drydocking at Chinese shipyards and Chinese financial institutions that are generally active in ship financing, and could have a material adverse effect on our business, operating results, cash flows and financial condition.

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Furthermore, governments have and may continue to turn to trade barriers to protect their domestic industries against foreign imports, thereby depressing shipping demand. In April 2025, the U.S. government announced a baseline tariff of 10% on products imported from all countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits. Many of these reciprocal tariffs went into effect in August 2025. Some of these tariffs, including the 10% baseline tariff, were imposed under the International Emergency Economic Powers Act (the "IEEPA"). In February 2026, the Supreme Court of the United States struck down the tariffs imposed under the IEEPA. Although the IEEPA tariffs were ruled illegal, tariffs imposed through other measures still remain in effect. Further, President Trump, using the Trade Act of 1974, has implemented a temporary, 150-day, 10% tariff on all imports. The tariff imposed under the Trade Act of 1974 is set to expire on July 24, 2026, and the Trump administration may increase the tariff to 15%. The scope and durability of current and future tariff measures are uncertain. Increased tariffs by the United States have led and may continue to lead to the imposition of retaliatory tariffs by foreign jurisdictions. Additionally, the U.S. government has announced and rescinded multiple tariffs on several foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of the tariffs on economic conditions. Although we are continuing to monitor the economic effects of such announcements, as well as opportunities to mitigate their related impacts, costs and other effects associated with the tariffs remain uncertain.

Protectionist developments, or the perception that they may occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade. Moreover, increasing trade protectionism may cause an increase in (i) the cost of materials exported from regions globally, particularly from the Asia-Pacific region, (ii) the length of time required to transport materials and (iii) the risks associated with exporting products. Such increases may further reduce the quantity of materials to be shipped, shipping time schedules, voyage costs and other associated costs, which could have an adverse impact on our operating results and financial condition.

Doing business on a worldwide basis requires us and our subsidiaries to comply with the laws and regulations of various governments and different international jurisdictions, and our failure to successfully comply with these rules and regulations may expose us to liabilities. These laws and regulations apply to companies, individual directors, officers, employees and agents, and may restrict our operations, trade practices, investment decisions and partnering activities. In particular, as a company registered with the Securities and Exchange Commission, or the SEC, we are subject to the regulations imposed by the Foreign Corrupt Practices Act ("FCPA"). The FCPA prohibits us from providing anything of value to foreign officials for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment and requires companies to maintain adequate record-keeping and internal accounting practices to accurately reflect the transactions of the company. As part of our business, we deal with state-owned business enterprises, the employees and representatives of which may be considered foreign officials for purposes of the FCPA. If our efforts to screen third-party agents and detect cases of potential misconduct fail, we could be held responsible for the noncompliance of these third parties under applicable laws and regulations, which may have a material adverse effect on our reputation and our business, financial condition and results of operations. In addition, some of the international locations in which we operate lack a developed legal system and have elevated levels of corruption. As a result of the above activities, we are exposed to the risk of violating anti-corruption laws. We have established policies and procedures designed to assist us and our personnel to comply with applicable U.S. and international laws and regulations. However, there can be no assurance that our policies and procedures will effectively prevent us from violating these regulations in every transaction in which we may engage, and such a violation could adversely affect our reputation, business, financial condition and results of operations.

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Our operations have been negatively affected by the worldwide shortage of various materials and sub-components required to produce certain products. We acquire most of the components utilized in our products, and certain services from a limited number of suppliers and subcontractors. The disruption to global supply chains has led to longer supplier delivery times and an increase in material prices. Despite the supply chain said disruptions we were able to source the material and sub-components needed to continue manufacturing and deliveries to our customers, we cannot assure you that we will continue to be able to obtain such items from our suppliers on satisfactory terms. Alternative sources of supply may be difficult to obtain. Therefore, temporary disruptions of our manufacturing operations would result if we were required to obtain materials from alternative sources, which may have an adverse effect on our financial results. We also maintain an inventory of systems and spare parts in order to enable us to overcome potential temporary supply shortages until an alternate source of supply is available. Nevertheless, temporary disruptions of our manufacturing operations would result if we were required to obtain materials from alternative sources, which may have an adverse effect on our financial results. We have seen improvements in the supply chain during 2024 and 2025, and we continue to monitor the impact of the supply chain shortage on our ongoing and forecasted manufacturing requirements, while implementing various procurement methodologies to meet current and forecast demand for our products. Our ability to continue to meet the demand for our products is dependent among others, on our ability to maintain an effective procurement plan and support from our suppliers, and when needed establish a contractual relationship with alternative suppliers. Our failure to do so, or continued increases in goods prices, could have a material adverse effect on our business.

Our business may be materially affected by future pandemics.

Potential future pandemics may disrupt our business and operational plans. In the past, the COVID 19 pandemic led to disruption to global supply chains and to longer supplier delivery times and an increase in material prices. Despite the supply chain disruptions we were able to source the needed material and sub-components to continue manufacturing and deliveries to our customers. In such cases in the future, alternative sources of supply may be difficult to obtain. We also maintain an inventory of systems and spare parts in order to enable us to overcome potential temporary supply shortages until an alternate source of supply is available. These disruptions may include disruptions resulting from (i) shortages of employees, (ii) unavailability of contractors and subcontractors, (iii) interruption of, or price fluctuations in, supplies from third parties upon which we rely, (iv) restrictions that governments impose to address the pandemic, and

(v) restrictions that we and our contractors and subcontractors impose to ensure the safety of employees and others. Any such pandemic may adversely affect our ability to produce goods or purchase goods from third parties as well as consumer demand for such goods.

Inflation could adversely affect our financial results.

The market prices of certain materials and components used by us and our suppliers in manufacturing our products can be volatile. Significant increases in inflation, particularly those related to wages and increases in the cost of raw materials, may have an adverse impact on the business, financial condition, and results of operations of us or our suppliers, and our suppliers may in turn pass such increases along to us by raising the cost of our inventories. In addition, customers often finance their purchases. Inflation, along with a rise in interest rates, could translate into an increased cost of ownership. If inflation continues to occur and if agencies like the Federal Reserve fail to cut interest rates further or raises interest rates again, prospective consumers may choose to forego or delay their purchases or buy a less expensive product in the event credit is not available to finance their purchases.

The market price of our Common Shares has been, and is likely to be, highly volatile and could be subject to wide fluctuations in response to numerous factors, including the following:

actual or anticipated variations in our quarterly operating results or those of our competitors;

announcements by us or our competitors of technological innovations or new and enhanced products;

developments or disputes concerning proprietary rights;

introduction and adoption of new industry standards;

changes in financial estimates by securities analysts;

market changes or trends in our industry;

changes in the market valuations of our competitors;

announcements by us or our competitors of significant acquisitions;

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entry into strategic partnerships or joint ventures by us or our competitors;

additions or departures of key personnel;

political and economic conditions, such as a recession or interest rate or currency rate fluctuations or political events;

general economic conditions, including conditions related to the banking industry or caused by pandemics and high inflation, and slow or negative market growth; and

other events or factors in any of the countries in which we do business, including those resulting from war, incidents of terrorism, natural disasters or responses to such events.

In addition, the stock market in general, and the market for homeland security companies in particular, has been highly volatile. Many of these factors are beyond our control and may materially adversely affect the market price of our Common Shares, regardless of our performance. In the past, following periods of market volatility, shareholders have often instituted securities class action litigation relating to the stock trading and price volatility of the company in question. If we were involved in any securities litigation, it could result in substantial cost to us to defend and divert resources and the attention of management from our business.

The FIMI partnerships owned approximately 42.2% of our outstanding Common Shares as of April 29, 2026. For as long as FIMI has a controlling interest in our Company, it will have the ability to exercise a controlling influence over our business and affairs, including any determinations with respect to potential mergers or other business combinations involving us, our acquisition or disposition of assets, our incurrence of indebtedness, our issuance of any additional Common Shares or other equity securities, our repurchase or redemption of Common Shares and our payment of dividends. Because the interests of FIMI may differ from the interests of our other shareholders, actions taken by FIMI with respect to us may not be favorable to our other shareholders.

We have not paid any dividend since September 2021 and currently expect to retain our earnings in the future to finance operations and expand our business. The declaration of dividends is subject to the discretion of our board of directors, and would depend on various factors, including our operating results, financial condition, future prospects and any other factors deemed relevant by our board of directors. You should not rely on an investment in our company if you require dividend income from your investment.

As a foreign private issuer listed on the NASDAQ Global Market, we may also follow home country practice with regards to, among other things, the composition of the board of directors and quorum at shareholders' meetings. In addition, we may follow home country practice instead of the NASDAQ requirement to obtain shareholder approval for certain dilutive events (such as for the establishment or amendment of certain equity-based compensation plans, an issuance 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). A foreign private issuer that elects to follow a home country practice instead of NASDAQ requirements must submit to NASDAQ in advance a written statement from an independent counsel in such issuer's home country certifying that the issuer's practices are not prohibited by the home country's laws. In addition, a foreign private issuer must disclose in its annual reports filed with the SEC, each such requirement that it does not follow and describe the home country practice followed by the issuer instead of any such requirement. We currently have elected to follow Ontario corporate law instead of the Nasdaq Listing Rule 5635(c), which requires that we obtain shareholder approval for the establishment or amendment of certain equity based compensation plans and arrangements. Under Ontario corporate law and practice, in general, the approval of the board of directors is required for the establishment or amendment of equity based compensation plans and arrangements. Accordingly, our shareholders may not be afforded the same protection as provided under NASDAQ's corporate governance rules.

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U.S. holders of our Common Shares may face income tax risks. Based on the composition of our income, assets (including the value of our goodwill, going-concern value or any other unbooked intangibles, which may be determined based on the price of the Common Shares, and operations, [we believe we will not be classified as a "passive foreign investment company", or PFIC, for the 2025 taxable year. However, because PFIC status is based on our income, assets and activities for the entire taxable year, it is not possible to determine whether we will be characterized as a PFIC for our current taxable year or future taxable years until after the close of the applicable taxable year. Moreover, we must determine our PFIC status annually based on tests that are factual in nature, and our status in the current year and future years will depend on our income, assets and activities in each of those years and, as a result, cannot be predicted with certainty as of the date hereof. Furthermore, fluctuations in the market price of our Common Shares may cause our classification as a PFIC for the current or future taxable years to change because the aggregate value of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, generally will be determined by reference to the market price of our shares from time to time (which may be volatile). The IRS or a court may disagree with our determinations, including the manner in which we determine the value of our assets and the percentage of our assets that are passive assets under the PFIC rules. Therefore, there can be no assurance that we will not be a PFIC for the current taxable year or for any future taxable year. Our treatment as a PFIC could result in a reduction in the after-tax return to U.S. Holders (as defined below under Item 10E. "Additional Information - Taxation") of our Common Shares and would likely cause a reduction in the value of such shares. A foreign corporation will be treated as a PFIC for U.S. federal income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of "passive income," or (2) at least 50% of the average value of the corporation's gross assets produce, or are held for the production of, such "passive income." For purposes of these tests, "passive income" includes dividends, interest, gains from the sale or exchange of investment property and rents and royalties other than rents and royalties that are received from unrelated parties in connection with the active conduct of a trade or business. If we are treated as a PFIC, U.S. Holders of our Common Shares would be subject to a special adverse U.S. federal income tax regime with respect to the income derived by us, the distributions they receive from us, and the gain, if any, they derive from the sale or other disposition of their Common Shares. U.S. Holders should carefully read Item 10E. "Additional Information - Taxation" for a more complete discussion of the U.S. federal income tax risks related to owning and disposing of our Common Shares.

We are a corporation incorporated and existing under Ontario law. Accordingly, the rights and obligations of the holders of our Common Shares may be different from, and may be less favorable to, the rights and obligations of shareholders of companies incorporated or organized under the laws of other jurisdictions. See Item 10B. "Additional Information - Certificate and Articles of Incorporation and By-Laws".

As a corporation incorporated under the laws of the Province of Ontario, the Articles, the By-Laws as well as the Business Corporations Act (Ontario) (the "OBCA"), set forth various rights and obligations that are unique to us as an Ontario corporation. These requirements may limit or otherwise adversely affect our ability to take actions that could be beneficial to our shareholders.

Provisions of the laws of the Province of Ontario and the federal laws of Canada may also have the effect of delaying or preventing a change of control or changes in our management. For example, under the OBCA, in order for a proposal to include nominations of directors, it must be signed by one or more holders of shares representing not less than 5% of the shares or 5% of the shares of a class or series of shares of the corporation entitled to vote at the meeting to which the proposal is to be presented.

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In addition, the Investment Canada Act (Canada) may impose limitations on the ability of a non-Canadian to acquire and hold Senstar Common Shares. The Investment Canada Act (Canada) requires that where prescribed financial thresholds are exceeded, a non-Canadian must file an application for review with the responsible Minister and obtain approval prior to acquiring control of a "Canadian business". The responsible Minister is required to determine whether the acquisition of control is likely to be of net benefit to Canada with reference to certain statutory factors. Where a non-Canadian acquires control of a Canadian business and the prescribed financial thresholds are not exceeded, there is a reporting obligation only. The Investment Canada Act (Canada) also provides that any investment by a non-Canadian in a Canadian business, including where control is not acquired, can be reviewed on national security grounds. Where an investment is determined to be injurious to national security, the applicable Minister can negotiate undertakings to address the national security concern, or federal Cabinet can issue a prohibition or divestiture order or impose terms or conditions on the investment to address the national security concern.

Furthermore, the Competition Act (Canada) may impose limitations on the ability to acquire and hold our Common Shares. This legislation permits the Commissioner of Competition to review any "merger" which is defined as the acquisition or establishment, direct or indirect, including through the acquisition of shares, of control over or of a significant interest in the whole or a part of a business. Where the Commissioner of Competition is of the view that a merger prevents or lessens or is likely to prevent or lessen competition substantially, they may within one year of substantial completion of the merger apply to the Competition Tribunal for a remedial order (where the merger was not notified to the Commissioner of Competition, the period to apply for a remedial order is three years following substantial completion). In addition, Part IX of the Competition Act (Canada) requires that certain classes of transactions that exceed certain prescribed thresholds be notified to the Commissioner of Competition prior to closing. Where a merger is subject to notification, the applicable statutory waiting period must expire or be terminated early or waived before the merger can be completed.

We are subject to the Canadian take-over bid regime which requires a party seeking to acquire 20% or more of the outstanding shares of any class of voting or equity securities to do so by way of a formal public tender offer, unless an exemption from that requirement is available. These rules may discourage take-over bids being made for the Company and the ability of holders of our Common Shares to realize a potential premium for the sale of their shares. See "Provisions Restricting a Change in Control of the Company - Take-Over Bids" in Exhibit 2.1 to this Annual Report.

We are subject to the Canadian issuer bid regime, which requires an issuer seeking to repurchase its own securities to do so by way of a formal public self-tender offer, unless an exemption from that requirement is available. These rules and the available exemption for ordinary course market repurchases made on a stock exchange outside Canada will generally limit us to purchase no more than 5% of the outstanding Common Shares in any 12-month period on a published market (such as the Nasdaq Global Market) for not more than their market price plus reasonable brokerage fees or commissions actually paid. See "Description of the rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934 - Common Shares - Purchases" in Exhibit 2.1 to this Annual Report.

As is conventional for public companies in Canada, our constating documents authorize us to issue an unlimited number of Common Shares. Our board of directors has the authority to cause the Company to issue additional Common Shares without the consent of our shareholders. We may issue additional Common Shares or other securities that are dilutive to existing shareholders in the future. The issuance of any such securities may result in a reduction of the book value or market price of our Common Shares.

As a corporation incorporated under the laws of the Province of Ontario, we are subject to Canadian insolvency laws and may also be subject to the insolvency laws of other jurisdictions in which we conduct business or hold assets. These laws may apply where any insolvency proceedings or procedures are to be initiated against or by us. Canadian insolvency laws may offer our shareholders less protection than they would have had under U.S. insolvency laws and it may be more difficult (or even impossible) for shareholders to recover the amount they could expect to recover in a liquidation under U.S. insolvency laws.

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We are a leading international provider of products and solutions for physical security. We commenced operations in 1969 as a department of Israel Aircraft Industries Ltd., specializing in perimeter security systems and have delivered products, tailor-made solutions and turnkey projects to thousands of satisfied customers in over 100 countries in some of the world's most demanding locations. We offer a broad portfolio of homegrown PIDS, VMS and SMS combined with EAC, and IVA.

Our strategy is to increase our revenues from our products segment, which includes our PIDS, VMS, SMS, EAC and IVA products by (i) focusing our efforts on our strategic verticals; (ii) locating new channels to promote and market our products; (iii) investing in research and development thus maintaining technology leadership; (iv) entering into OEM agreements which will increase our offerings for the verticals on which we focus; and (v) acquiring new technologies relevant to our target verticals independently or through mergers and acquisitions.

We were incorporated under the laws of the State of Israel on March 27, 1984 under the name Magal Security Systems Ltd., and on September 30, 2021, we changed our name to Senstar Technologies Ltd. On September 26, 2023, Senstar Technologies Ltd., Senstar Technologies Corporation, a newly established Ontario corporation, and Can Co Sub Ltd., a company organized under the laws of the State of Israel and a wholly-owned subsidiary of Senstar Technologies Corporation, entered into a Merger Agreement, pursuant to which Senstar Technologies Corporation became the parent company of Senstar Technologies Ltd., with Senstar Technologies Ltd. surviving the Merger as a wholly-owned subsidiary of Senstar Technologies Corporation. Pursuant to the Merger Agreement, Senstar Technologies Ltd. agreed to become domiciled in Ontario and become Senstar Technologies Corporation, an Ontario organized company.

Each Senstar Technologies Ltd. ordinary share issued and outstanding immediately prior to the consummation of the merger represented the right to receive, less any applicable withholding taxes, one (1) validly issued, fully paid and nonassessable common share of Senstar Technologies Corporation, representing the same proportional equity interest in Senstar Technologies Corporation as that shareholder held in Senstar Technologies Ltd. The number of Common Shares of Senstar Technologies Corporation outstanding immediately after the Redomiciliation continued to be the same as the number of ordinary shares of Senstar Technologies Ltd. outstanding immediately prior to the Redomiciliation. Upon effectiveness of the Redomiciliation, the name of our company became Senstar Technologies Corporation. Following the Redomiciliation, the Common Shares of Senstar Technologies Corporation as the successor to Senstar Technologies Ltd., continued to be listed for trading on Nasdaq under the ticker symbol "SNT". On December 15, 2025, Senstar Technologies Ltd. was dissolved.

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On December 9, 2025, we entered into a definitive agreement to acquire Munich-based Blickfeld GmbH, a pioneer in 3D LiDAR sensors and software. The transaction, which closed on February 13, 2026, was valued at €10.4 million in cash, with an additional €1 million in performance-based earnouts, fully funded from our cash reserves. This strategic acquisition follows a fruitful partnership, including a December 2024 announcement to expand our collaboration globally, allowing us to integrate Blickfeld's high-precision 3D LiDAR technology into our existing security portfolio. By acquiring Blickfeld, we strengthened our position in critical infrastructure security and expanded our capabilities into high-growth verticals such as 3D traffic management and volume monitoring. Post-acquisition, Blickfeld GmbH and its North American subsidiary have continued to operate under their current names as our subsidiaries, maintaining their Munich headquarters while utilizing our global sales and support network to accelerate market penetration.

Our principal executive offices are located at 119 John Cavanaugh Drive, Ottawa, ON, Canada K0A 1L0, and our telephone number is

+1-613-839-5572. Our agent for service of process in the United States is Senstar Inc., 13800 Coppermine Road, Second Floor, Herndon, Virginia 20171.Our website address is https://www.senstar.com. The information on, or that can be accessed through, our website is not incorporated by reference into this annual report.

We develop, manufacture, market and sell comprehensive lines of perimeter intrusion detection sensors, video analytics and video and security management systems, as well as security video observation and surveillance systems to high profile customers. Our systems are used in more than 100 countries to protect sensitive facilities, including national borders, military bases, power plants, airports, seaports, prisons, industrial sites, large retailer organizations, banks, oil and gas facilities, solar farms, data centers, telecom infrastructure, logistic premises such as warehouses, sporting events including athlete villages and stadiums, and municipalities from intrusion, terror, crime, sabotage or vandalism to infrastructure, assets and personnel. Our objective is to become a leading international provider of security products and solutions.

Based on our decades of experience and interaction with customers, we have developed a comprehensive set of solutions and products, optimized for perimeter, outdoor and general security applications. Our portfolio of mission critical infrastructure and site protection technologies includes a variety of fence mounted sensors, fence mounted sensors with perimeter lighting, virtual (volumetric) fences and gates, buried and concealed detection systems and tunneling sensors to secure prisons, bank vaults and pipelines. We deliver comprehensive IP technology and traditional closed-circuit television, or CCTV, solutions, supported by our own advanced Security Management Software, Video Management Software, or VMS solutions, which include Video Motion Detection, or VMD and Intelligent Video Analytics, or IVA.

We acquired Aimetis in April 2016 to integrate our VMS with its perimeter security portfolio. Since the addition of Aimetis' products and expertise, we have been able to address new markets and offer solutions incorporating advanced video analytics and VMS for physical indoor and outdoor security applications. In addition, we were able to expand our overall solutions, offer a wider range of products in addition to our PIDS solutions, and address new markets.

We plan to leverage our industry-leading position in the security sector as a technology platform to optimize future strategic acquisitions and achieve incremental growth in our global markets. To achieve this objective, we have initiated a business strategy incorporating the following key elements:

Leverage existing customer relationships. We believe that we have the capability to offer certain of our customers a comprehensive security package. As part of our product development process, we seek to maintain close relationships with our customers to identify market needs and to define appropriate product specifications. We intend to expand the depth and breadth of our existing customer relationships while initiating similar new relationships. Our Software (SMS,VMS) offering is an excellent opportunity to revisit our existing customers.

Refine and broaden our product portfolio. We have identified the security needs of our customers and intend to enhance our current products' capabilities, develop new products, acquire complementary technologies and products and enter into OEM agreements with third parties in order to meet those needs. The extension of our solution might broaden our addressable market by using our sensors and information management to offer vertical solutions outside of the strict security applications.

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Develop and enhance our presence in verticals which we have identified as strategic. We intend to enhance our presence in our target vertical markets: utilities, correctional facilities logistics and energy (among other, oil and gas terminals as well as oil and gas pipelines infrastructure), airports and military /border sites. Many if not all, of the verticals are highly regulated and require unique security solutions. As a solution provider with a wide selection of security technologies and products, we believe that we can offer a comprehensive security solution that meets the standards required by the applicable regulations.

Enhance our presence in emerging markets. We intend to enhance our presence in emerging markets such as Asia, Latam and eastern Europe in order to increase our exposure and sales.

Strengthen our presence in existing markets. We intend to increase our marketing efforts in our existing markets mainly in North America, the EMEA Union, and APAC region and to acquire or invest in complementary businesses and joint ventures.

We believe that the proliferation of digital communication and information technology into the security market provides us with the opportunity to consolidate safety and site management with security applications. Air and seaports, chemical factories, green energy plants and distribution facilities, oil and gas terminals and pipeline infrastructure, large logistics warehouses, telecom infrastructure and data centers and critical infrastructure sites are currently utilizing the benefits of this approach to security management. This integration allows users to share diverse sensors (such as cameras and intrusion detection sensors), IT systems, traffic management tools and other resources and feed them into a single command and control platform. Users from different departments within organizations can now share the same information, allowing for improved communication and coordination, whether it is a routine operation or crisis situation. [We believe that we are well positioned and are in the forefront of this emerging market opportunity. In addition, our Senstar MultiSensor when used in a standalone version, together with our recently acquired LiDar solutions, will provide advanced intrusion detection solutions for critical spots of non-critical infrastructure, broadening our addressable market.

General

Our principal physical (PIDS), VMS, SMS and EAC products and solutions include:

Perimeter Intrusion Detection Systems (PIDS), fence mounted, buried and free standing;

PIDS fence sensor with intelligent perimeter LED based lighting;

A common operating platform for VMS and SMS, including IVA applications, PIDS applications

Surveillance systems and LIDAR solutions

Pipeline security, third party interference (TPI) and fiber infrastructure monitoring

Perimeter security products enable customers to monitor, limit and control access by unauthorized personnel to specific regions or areas. High-end perimeter products are sophisticated in nature and are used for correctional facilities, borders, nuclear and conventional power plants, solar farms, air and seaports, military installations, logistics centers, data centers and Telecom infrastructure and other high-security installations. We do assist to detect, deter, delay and defend potential threats to those critical infrastructure.

Our line of perimeter security products utilizes sophisticated sensor devices to detect and locate intruders and identify the nature of intrusions. Our perimeter security products have been installed along tens of thousands of kilometers of borders and facility boundaries throughout the world, including hundreds of correctional institutions and prisons in the United States and several other countries.

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Our line of outdoor perimeter security products consists of the following:

Fence mounted detection systems - "microphonic" wire sensors, fiber optic sensors and electronic ranging sensors;

Buried sensors - buried coaxial cable volumetric sensors and buried fiber sensors to secure pipelines, borders and critical assets against intrusion by targets on the surface and excavation;

Electrical field disturbance sensors (volumetric);

Microwave sensors;

Hybrid perimeter intrusion detection and intelligent lighting system;

MultiSensor - next generation of sensors, using multiple sensing technologies, processed by intelligent algorithms (AI software): and

Lidar sensors

Fence Mounted Detection Systems

We offer various types of detection systems. The adaptability of these systems to a wide range of pre-existing barrier structures makes these products viable and effective alternatives for cost-conscious customers. Our detection devices are most effective when installed on common metal fabric perimeter systems, such as chain link or welded mesh. Once attached to the fence, each sensor detects vibrations in the underlying structures. The sensor system's built-in electro-mechanical filtering combines with system input from a weather analysis component to minimize the rate of alarms from wind, hail or other sources of nuisance vibrations.

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FlexZone, our coaxial cable based fence mounted ranging sensor can pinpoint intrusions to within ±3 m (±10 ft); it provides long physical cable lengths (up to 600 m (1,968 ft) per processor) configurable through software to many smaller virtual zones for site operations. Power and data between processors is supported through the sensor cable significantly reducing the requirement for supporting infrastructure. A novel wireless gate sensor module is available with FlexZone providing an accelerometer based gate sensor integrated via wireless communications into a FlexZone network eliminating the need to have sensor cables attached to sliding gates.

FiberPatrol, our advanced FP1150 product, is a perimeter intrusion detection system that can be fence-mounted, buried, or deployed in a wall-top configuration. Featuring long distance ranging to 80 Km (50 mi) via a fence mounted fiber optic cable detects and locates fence cut and climb events with an accuracy of approximately 4m (13 ft). Released in 2019 our FP400 product zone-based fiber optic cable PIDS solution replaces the IntelliFiber product line. Its advanced features include the processing of 4 detection zones from a single remote processor with an alarm given for each zone independently with up to 300 m (984 ft) per zone.

Buried Sensors

Omnitrax is a fifth generation covert outdoor perimeter security intrusion detection sensor that generates an invisible radar detection field around buried sensor cables. The exact location of an intruder is identified within approximately one meter when an intruder disturbs the detection field. Targets are detected by their conductivity, size and movement and the digital processor is able to filter out nuisance alarms that could be caused by environmental conditions and small animals.

FiberPatrol, our advanced FP1150 product featuring long distance ranging fiber optic cable based detection technology in a single rack mount unit is also offered as a buried solution detecting surface intrusion and to protect pipelines*, as well as providing Data Conduit protection against sabotage or accidental third party interference (TPI) for example by manual or machine excavation. FiberPatrol has the capability to protect distances of up to 80 Km (50 mi) or up to 100 Km (62 mi) for Pipeline TPI and Data Conduit protection with a single processor. FiberPatrol is also being used to monitor health check or Fiber cable between telecom infrastructure, such as Data Centers by detecting and localizing excavation and sabotage attempts to cable infrastructure.

Electro-static Field Disturbance Sensors

Terrain following volumetric sensors detect intrusions without requiring an intruder to touch the sensor. They can be installed on buildings, free-standing posts, existing fences, walls or rooftops, and will sense changes in the electrostatic field when events, such as intruders penetrating through the wires take place. The system's tall, narrow, well contained detection zone allows the sensor to be installed in almost any application and minimizes nuisance alarms caused by nearby moving objects. Our product X-Field; consists of a set of four to as many as eight parallel field generating and sensing wires that form a volumetric detection height as much as 6m (20 ft) in height for free standing and wall applications and up to 7.3m (24 ft) for fence installations.

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Microwave Products

Ultrawave is our K-band all digital bi-static microwave beam perimeter intrusion detection system designed for reliable operation in extreme outdoor environments. Coverage distance range from 5 meters to 200 meters (16 to 656 ft). Older generations of X band microwaves are retired but still supported.

Hybrid Perimeter Intrusion Detection and Intelligent Lighting System

The Senstar LM100 is the world's first 2-in-1 perimeter intrusion detection and intelligent lighting system. Combining high performance LED lighting with accelerometer-based vibration sensors, the LM100 deters potential intruders by detecting and illuminating them at the fence line.

Video Products

VMS / IVA Solutions - Senstar Symphony Common Operating Platform

The Senstar Symphony Common Operating Platform with Sensor Fusion Engine or "Senstar Symphony" is a modular solution for security management and data intelligence. In addition to being an open, highly scalable video management system with built-in video analytics, it includes full-featured access control and perimeter intrusion detection modules. We believe that what truly sets Senstar Symphony apart from other systems is its sensor fusion engine. By intelligently combining low-level sensor data with video analytics, the sensor fusion engine achieves the highest levels of performance, far beyond that of the individual devices. Senstar Symphony seamlessly incorporates sensor fusion, event algorithms, and rule-based actions to provide unmatched capabilities, flexibility, and performance.

Senstar Symphony's Sensor Fusion Engine synthesizes data from separate systems to generate actionable information. More than just a simple Boolean logic integration, the sensor fusion engine accesses low level data to intelligently characterize potential risks. Data synthesis enables the system to achieve levels of performance that exceed those of the individual sensors. For security applications, this has direct, practical benefits, namely the ability to maximize the strengths of individual sensor technologies while avoiding their shortcomings. When signal response data from outdoor sensors is synthesized with video analytic data, nuisance alarms generated by wind, debris, or background activity are virtually eliminated while maintaining the system's high probability of detection.

The Senstar Symphony Common Operating Platform includes a full-featured Windows®-based client, a HTML5-client web client, a thin client hardware appliance, and mobile apps (iOS and Android). With Senstar Symphony's camera-based licensing scheme, our customers and end-users can install and use as many clients as they need. The Windows® client includes on-screen camera hotlinks, a full-featured alarm console that integrates alarms with video feeds and sensor data, timeline view, and intuitive graphical maps with precise alarm location data. Senstar Symphony installs on standard commercial off-the-shelf hardware and supports thousands of network devices as well as ONVIF profiles S and T (H.265 and metadata). Senstar Symphony integrates with a wide variety of security and access control products, while its RESTful API and TCP/IP listener services enable it to interact with virtually any network-based device.

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The Senstar Symphony Common Operating Platform is highly scalable, easy to set up and use, and can be used in both single server installations and multi-server deployments. Senstar Symphony can meet any business requirements, both today and in years to come. Functionality sets including video management, video analytics, security management, , and data intelligence can be used individually, added when needed, or combined together as a complete integrated solution. It is a highly cost-effective solution, licensed per security device (camera,), so that our customers only license what they need. All managed devices report to a shared rules and alarms management system, enabling operators to perform site security or operational functions from a 'single pane of glass'.

The Senstar Symphony solution offers web-based administrator capabilities, centralized cloud management, native analytics applications which include motion tracking, auto-PTZ (pan-tilt-zoom) tracking, people counting, and high security and server and storage failover reducing the need for costly Microsoft clustering and extra servers. We intend to expand the Symphony product line over time to address a broad new market of applications.

Our intelligent video analytics (IVA) transforms IP video into more than a passive monitoring tool with video analytics that are seamlessly incorporated into Senstar Symphony. Each video analytic is specially designed for physical security and business intelligence applications, providing value across many vertical markets.

Next generation sensors MultiSensor™

MultiSensor is our compact, AI-powered system that leverages the power of sensor fusion to intelligently detect and characterize intrusions while virtually eliminating nuisance alarms. MultiSensor collects data from several technologies sensors and processes them simultaneously via the use of AI technologies. In order to provide full situational awareness and to eliminate nuisance alarms. When used in a standalone version, the MultiSensor will target critical points of non-critical infrastructure such as hospital, warehouses, universities and schools, office building, by providing unrivaled intrusion solutions using a single device.

Thermal Cameras and LiDar

In order to complete our range of sensors to provide the strongest performance and latest technology, we added to our sensor range LiDar sensing technology by partnering and eventually acquiring Blickfeld, Founded in 2017 and headquartered in Munich, Blickfeld is an international company that develops LiDAR sensors with integrated software. Blickfeld's solutions provide real-time 3D data for a wide range of innovative use cases - from volume monitoring and security system enhancement to privacy-compliant people counting and functions in traffic applications.

Our intelligent video analytics (IVA) capabilities include:

Face Recognition - Senstar Symphony-based video analytic identifies known and unknown individuals. Using a combination of patented 2D to 3D pose correction technology, this analytic is designed for fast, reliable identification under real-world challenges, including lighting, angles, facial hair, pose, glasses and other occlusions, motion, crowds, and expression.

Automatic License Plate Recognition - Senstar Symphony-based video analytic reads license plates and other vehicle markings and seamlessly integrates the data into the site's security and operational processes. The analytic can be used for automating vehicle access systems such as gates and other barriers, flag vehicle in/out times in surveillance footage, notifying customer management systems of client arrivals, and track vehicles crossing toll and border checkpoints.

Outdoor People and Vehicle Tracking - Senstar Symphony-based video analytic optimized for detecting and monitoring the movement of vehicles and people in outdoor environments. Typical applications include perimeter intrusion detection, parking lot monitoring, public safety, and wrong-way detection. The analytic retains its extremely high tracking and object classification accuracy even in the presence of challenging weather and lighting conditions. Organizations can use tracked events to trigger alarms and direct operators to specific concerns, making it the perfect addition to any video surveillance system.

Left and Removed Item Detection - Monitor changes in an environment to detect when objects are added or removed from a scene. Set alarms to notify security staff when an item has been removed from an area or left unattended for a designated amount of time. This solution is designed for use in airports, train stations, and other public spaces.

Indoor People Tracking - Detect and track people moving within the frame of a camera. Alarms can be set when unauthorized entry into an area is detected and dwell times can be tracked and recorded for the detection of unwanted loitering. Heat maps can also be created in retail stores and public spaces to determine areas of highest traffic and interest.

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Crowd Detection - Real-time occupancy estimation for indoor and outdoor deployments, ideal for monitoring public spaces, event venues, and capacity restricted environments. Crowd Detection also offers numerous business intelligence applications.

PTZ Auto-Tracking (Auto PTZ) - Auto PTZ can automatically control a PTZ camera, enabling it to zoom in and follow moving people and vehicles within the field of the camera. This is designed for use in outdoor perimeter monitoring and provides a closer look at people and vehicles for future forensic purposes.

Hardware solutions supporting our VMS software products are an "R series" of preconfigured servers, "E series" of physical appliances for smaller applications and a novel POE powered "Thin Client" device for convenient network access for monitors or other applications.

The Senstar Thin Client - is a simple and cost-effective device designed to display 1080p video from 30+ network video camera manufacturers via ONVIF Profile S, as well as from the Senstar Symphony VMS or any RTSP-compatible video source. The device is ideal for space-constrained environments due to its compact design while its web-based interface makes it easy to configure and manage.

The R-Series Operator Station complements the R-Series Network Video Recorders (NVR). Featuring validated hardware, the Operator Station is ideal for customers looking for a preconfigured video surveillance client. "Senstar Fusion, is a software solution that neutralizes false alarms using sophisticated AI techniques analyzing simultaneously detection signals from PIDS and video sensors.

We do not provide high availability functionalities on our Symphony servers.

In December 2025, we announced our acquisition of Blickfeld. Blickfeld offers both hardware and perception software solutions for security, traffic, industrial automation, and logistic applications. Blickfeld offers security and safety solutions as well as volumetric and industrial applications:

Security and safety solutions

We sell primarily through system integrators, security solution providers, and selected distributors who integrate our LiDAR sensors and perception software into perimeter protection and surveillance systems. For strategic projects and key accounts, our sales and application engineering teams engage directly with end customers to support system design and ensure proper implementation.

Volumetric and industrial applications:

Our LiDAR-based volumetric solutions for bulk material measurement and automation are sold through direct channels as well as through selected OEM and technology partners. Blickfeld's sales organization operates internationally with a primary hub in Germany and direct representation in key markets across EMEA, North America, and Asia. The team is trained to cross-sell both sensor and software solutions across our core verticals.

Command and Control Systems

The development of communication and IT technology has significantly affected the security market. Multiple security systems and technologies, sometimes supplied by different vendors, can now be integrated into a unified command and control system. We offer two types of command and control systems:

Senstar Symphony Common Operating Platform - Video, Security and Data Intelligence Platform with Sensor Fusion Engine; and

Network Manager - a middleware (software) package interfacing between our family of PIDS sensors and any command and control solution, be it our own system or an external third party application. It is provided to integrators with a full software development kit to enable fast integration of our PIDS into any other SMS and physical security information system. It offers an entry level operator display system called the Alarm Information Module (AIM), typically for management of a single PIDS sensor.

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We believe that our reputation as a leading global vendor of sophisticated security products and our global presence provide us and our sales representatives with access to decision-makers in all of our main four verticals: energy, corrections, utilities and logistics.

Our sales efforts focus on:

PIDS products are sold indirectly through system integrators and distribution or VAR channels. Due to the sophistication of our products, we often need to approach end-users directly and be in contact with system integrators; however, sales are directed through third parties. Our sales team is trained on cross-selling PIDS, VMS, SMS, IVA .

VMS, and IVA. Video management system software and Intelligent Video Applications licenses, the associated maintenance and support services, are sold primarily through locally based distributor or VAR partners. Some key accounts are managed directly with the end-users. Our sales team is trained on cross-selling PIDS, VMS, SMS, IVA.

In addition to our global corporate office in Canada and our principal facilities in Canada, the United States and Germany, we have sales and technical support offices in China and other countries.

The following table shows the geographical breakdown of our consolidated revenues with respect to our continuing operations for the three years ended December 31, 2025, 2024 and 2023:

Year ended in December 31,

2025 2024 2023

(in thousands)

North America

$ 17,959

$ 16,262

$ 14,835

Europe

12,830

12,763

11,393

APAC

4,942

5,410

3,863

South and Latin America

467

975

2,197

Others

176

343

504

Total

$ 36,374

$ 35,753

$ 32,792

Our systems are generally installed by an integration partner or in some cases by the customer after appropriate training, depending on the size of the specific project and the location of the customer's facilities, as well as prior experience with our systems. We generally provide our customers with training on the use and maintenance of our systems, design and commissioning assistance which we conduct either on-site or at our facilities. In addition, some of our local perimeter security products customers have signed maintenance contracts with us. The life expectancy of a high-security perimeter system is approximately ten years. Consequently, many miles of perimeter systems need to be replaced each year. We also provide services, maintenance and support on an "as needed" basis, as well as on a subscription basis, through the Senstar Care Program - our multi-year maintenance and support program. During the years ended December 31, 2025, 2024 and 2023, we derived approximately 16.6%, 15.2% and 16.2% of our total revenues, respectively, from maintenance and services.

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We place considerable emphasis on research and development to improve our existing products and technology and to develop new products and technology. We believe that our future success will depend upon our ability to enhance our existing products and technology and to introduce on a timely basis new commercially viable products and technology addressing the needs of our customers. We intend to continue to devote a significant portion of our personnel and financial resources to research and development. As part of our product development process, we seek to maintain close relationships with our customers to identify market needs and to define appropriate product specifications. Our development activities are a direct result of the input and guidance we receive from our sales and marketing personnel during our annual or regular meetings with such personnel. In addition, the heads of research and development for each of our development centers discussed below meet annually to identify market needs for new products.

We have centralized most of our development centers in Canada, in Carp near Ottawa and Waterloo near Toronto, each of which develops products and technologies based on its area of expertise. Our research and development expenses during 2025, 2024 and 2023 were $3.3 million, $4.2 million and $4.0 million, respectively. In addition to our own research and development activities, we also acquire know-how from external sources. We cannot assure you that any of our research and development projects will yield profitable results in the future.

Our manufacturing operations consist of engineering, fabricating, assembly, quality control, final testing and shipping of finished products. Substantially all of our manufacturing operations are currently performed at our facilities in Canada. In 2018 we launched a "Made in USA" version of our FlexZone product to better serve our U.S. - based partners and customers. See Item 4D. "Information on the Company - Property, Plants and Equipment." Senstar is undertaking efforts to establish domestic production of FibrePatrol and FlexZone within the United States in order to mitigate potential impacts from future tariffs.

We acquire most of the components utilized in our products, and certain services from a limited number of suppliers and subcontractors. We maintain an inventory of systems and spare parts in order to enable us to overcome potential temporary supply shortages until an alternate source of supply is available. Nevertheless, temporary disruptions of our manufacturing operations would result if we were required to obtain materials from alternative sources, which may have an adverse effect on our financial results.

Our operations across Canada, the U.S., EMEA, and APAC expose us to risks arising from changes in U.S. trade policies, including the imposition of tariffs and other trade restrictions, which may adversely affect our business, financial condition, and results of operations. The U.S. government has implemented various trade measures, including tariffs and import restrictions, that have affected and may continue to affect the flow of goods across borders. These measures, as well as retaliatory tariffs from other jurisdictions, could increase the cost of imported materials, components, and finished products, particularly those sourced from or sold into the APAC region (notably China), Europe, and Canada.

Canada: As a close trading partner with the U.S., our operations in Canada may be directly impacted by changes in U.S. tariffs and trade agreements, such as revisions to the USMCA. These measures may disrupt cross-border supply chains, impact pricing, and introduce regulatory complexities that could increase compliance costs.

EMEA (Europe, the Middle East, and Africa): Ongoing trade tensions between the U.S. and the European Union, as well as post-Brexit trade uncertainties, may increase customs duties, delay shipments, or result in regulatory misalignments. If the U.S. expands tariffs on EMEA-sourced products or components, or if reciprocal trade actions are introduced, it could affect our cost structure and sales strategy in the region.

USA: As a significant market and operating base, any expansion of protectionist trade policies within the U.S., including sector-specific tariffs (e.g., on steel, aluminum, or technology products), could raise input costs or limit sourcing options. Additionally, regulatory unpredictability may hinder long-term supply planning and pricing stability.

APAC: The Asia-Pacific region plays a critical role in our global supply chain, especially in manufacturing and sourcing. Escalating U.S.-China trade tensions, as well as tariffs on key APAC-origin goods, could lead to increased material costs, longer lead times, and potential reconfiguration of supplier relationships. This could negatively affect product availability, pricing, and competitiveness in both domestic and international markets.

Trade restrictions and geopolitical tensions may also lead to broader market volatility, impact demand, and necessitate strategic shifts in our global sourcing and distribution networks. While we continue to monitor developments and diversify our supply base where feasible, the unpredictable nature of trade policy changes creates significant operational uncertainty.

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PIDS Sensors. The principal factors affecting competition in the market for security systems are a system's high probability for detection and low probability of false and nuisance alarms. We believe that a manufacturer's reputation for reliable equipment is a major competitive advantage, and that such a reputation will usually be based on the performance of the manufacturer's installed systems. Additional competitive factors include quality of customer support, maintenance and price.

The PIDS market is very fragmented. Our most frequently encountered competitors include Southwest Microwave Inc., AVA (formerly named Future Fibre Technologies Pty. Ltd.), Fiber Sensys Inc. (an Optex Company), CIAS Elettronica Srl, Vitaprotech (now known as Hirsch), in France and Gallagher (New Zealand). We believe that our principal competitors for our pipeline security products (FiberPatrol) are AVA, Optasense, a Luna Innovations company, Sintela, Omnisens SA, Febus, Hik Vision, Hanwha and Fotas. The video management software market is well developed internationally with several large manufacturers. Our most frequently encountered competitors are Genetec Inc., Milestone Systems A/S, Cognify part of the Hexagon Group, Digifort and Network Optix. We also face indirect competition from competing technologies such as ground based radar, LiDar and thermal and optical cameras with IVA as PIDS sensors with principal competitors being, SpotterRF, Navtech, Magos, FLIR, SightLogix, Axis, Hanwha, Hik Vision, Dahua, PureTech and Quanergy. In LiDar we also face competition from Hesia, Quanergy, Opsys, Ouster, Seyond, and Sick.

Some of our competitors and potential competitors have greater research, development, financial and personnel resources, including governmental support, or more extensive business experience than we do. We cannot assure you that we will be able to maintain the quality of our products relative to those of our competitors or continue to develop and market new products effectively.

We have one patent application pending in a number of different global jurisdictions and have obtained licenses to use proprietary technologies developed by third parties.

We cannot assure you:

that patents will be issued from any pending applications, or that the claims allowed under any patents will be sufficiently broad to protect our technology;

that any patents issued or licensed to us will not be challenged, invalidated or circumvented; or

as to the degree or adequacy of protection any patents or patent applications may or will afford.

In addition, we claim proprietary rights in various technologies, know-how, trade secrets and trademarks relating to our principal products and operations. We cannot assure you as to the degree of protection these claims may or will afford. It is our policy to protect our proprietary rights in our products and operations through contractual obligations, including confidentiality and non-disclosure agreements with certain employees and distributors. We cannot assure you as to the degree of protection these contractual measures may or will afford. Although we are not aware that we are infringing upon the intellectual property rights of others, we cannot assure you that an infringement claim will not be asserted against us in the future. We believe that our success is less dependent on the legal protection that our patents and other proprietary rights may or will afford than on the knowledge, ability, experience and technological expertise of our employees. We cannot provide any assurance that we will be able to protect our proprietary technology. The unauthorized use of our proprietary technology by third parties may impair our ability to compete effectively. We could become subject to litigation regarding intellectual property rights, which could seriously harm our business.

Our fully registered marks are FIBERPATROL®, FLEXZONE®, OMNITRAX®, SENSTAR® (INCLUDING LOGO DESIGN), XFIELD®, FLEXPS®, ultraWave Design®, FLEXPI®, PINPOINTER®. All other marks used to identify particular products and services associated with our business are trademarks, including but not limited to SENSTAR SYMPHONY™, SENSTAR MULTISENSOR™, SENSOR FUSION™, SENSTAR ULTRAWAVE™, SENSTAR CARE™, SENSTAR FLOW. Any other trademarks and trade names appearing in this annual report are owned by their respective holders.

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At present, none of our products require a permit or license for export at the exception of our thermal camera range. We cannot assure that we will receive all the required permits and licenses for which we may apply in the future. Furthermore, solicitations for procurements by governmental purchasing agencies are usually governed by laws, regulations and procedures relating to procurement integrity, including avoiding conflicts of interest and corruption in the procurement process.

In addition, antitrust laws and regulations in countries in which we operate may require governmental approvals for transactions that are considered to limit competition. Such transactions may include cooperative agreements for specific programs or areas, as well as mergers and acquisitions.

Set forth below are our significant operational subsidiaries.

Subsidiary Name

Country of Incorporation/Organization

Ownership Percentage

Senstar Corporation

Canada

100%

Senstar Inc.

United States (Delaware)

100%

Senstar GmbH.

Germany

100%

Blickfeld GmbH

Germany

100% Senstar GMBH

Blickfeld North America Inc.

United States

100% Blickfeld GMBH

Property, Plants and Equipment.

We own a 33,000 square foot facility in Carp, Ontario, Canada. Approximately 9,000 square feet are devoted to administrative, marketing and management functions, and approximately 8,000 square feet are used for engineering, system integration and customer service. We use the remaining area of approximately 16,000 square feet for production operations, including cable manufacturing, assembly, testing, warehousing, shipping and receiving. We own an additional 4.2 acres of vacant land adjacent to this property, which is being held for future expansion. We also lease 8.2 acres of land near this facility for use as an outdoor sensor test and demonstration site for our products including the Omnitrax buried cable intrusion detection system, Fiber Patrol, the X-Field volumetric system, the FlexZone microphonic fence detection system and various perimeter monitoring and control systems. The lease expense for this site is approximately $5,200 per year plus taxes under a lease that expires in November 2030. We lease office space in Waterloo, Canada, which houses our video management software operations. We also lease other sites worldwide. The aggregate annual rent for such offices was approximately $264,000 in 2025.

We believe that our facilities are suitable and adequate for our current operations and the foreseeable future.

Not applicable.

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The following discussion of our results of operations and financial condition should be read in conjunction with our consolidated financial statements and the related notes thereto included elsewhere in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth in Item 3.D. "Key Information-Risk Factors."

Overview

Effective March 18, 2024, we redomiciled as an Ontario organized company. The operating and financial review of our results in with respect to periods prior to the effective time of the Redomiciliation, refers to the financial results of Senstar Technologies Ltd. and its subsidiaries. Historically, we had two operating segments, which also represented our reportable segments and reporting units. Magal Integrated Solutions ("Projects" segment) and Senstar Product division ("Products" segment). On June 30, 2021, the Projects segment was sold. Therefore, the results of the Projects segment were classified as discontinued operations in our consolidated statements of operations and thus excluded from both continuing operations and segment results for all periods presented. Accordingly, we have one reportable segment with the change reflected in all periods presented. Our consolidated revenues for the years ended December 31, 2025, 2024 and 2023 for our continuing operations were approximately $36.4 million, $35.8 million and $32.8 million, respectively.

Products (PIDS, VMS, IVA )

We sell our products worldwide. Our products include Video Management Software (VMS), Security Management Software (SMS), Intelligent Video Analytics (IVA) and PIDS products. The PIDS, SMS, VMS and IVA activities offer an unmatched portfolio of PIDS technologies, as well as integrated intelligent video and security management solutions for security surveillance and business intelligence applications worldwide.

Business Challenges/Areas of Focus

Our primary business challenges and areas of focus include:

continuing the growth of revenues and profitability of our perimeter security systems and video and security management systems lines of products;

enhancing the introduction and recognition of our new products;

penetrating new markets and strengthening our presence in existing markets;

strengthening our presence in our strategic verticals;

cross selling at existing customers security and non -security applications provided thanks to our suite of sensors and information management systems;

succeeding in selling our comprehensive PIDS, VMS, SMS products as a combined solution;

expand our addressable market with the introduction of the Senstar MultiSensor and LIDAR solutions, designed to provide intrusion detection systems dedicated to critical spots of non-critical infrastructure; and

deliver technological and functional innovation to compete techno competition and address future needs.

Our business is subject to the effects of general global economic conditions. If general economic conditions or economic conditions in key markets will be uncertain or weaken further, demand for our products could be adversely affected.

Key Performance Indicators and Sources of Revenues

Our management believes that our revenues and operating income are the two key performance indicators for our business.

Our operations and the operating metrics discussed below have been and will likely continue to be affected by certain key factors as well as certain historical events and actions. The key factors affecting our business and results of operations include, among others, reliance on public sector projects, and competition. For further discussion of the factors affecting our results of operations, see "Risk Factors."

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Growth Strategy

During 2025 we continued to implement our strategic growth plan focusing on the sale of our products and solutions. Pursuant to this plan, we streamlined our product sales activity in our three main regions, the Americas (including LATAM), EMEA, and APAC. We are continuing to focus on our strategic verticals: Utilities, Energy (oil and gas), logistics, correctional facilities, airports and military and borders applications. We intend to continue to expand our sales to these verticals through allocation of resources and funds, including the acquisition of complementary technologies that will increase our offerings to these targeted verticals.

If we are successful in the implementation of our strategic plan, we may be required to hire additional employees in order to meet customer demands. If we are unable to attract or retain qualified employees, our business could be adversely affected. We may not be able to implement our growth strategy plan and may not be able to successfully expand our business activity and increase our sales. Our failure to successfully integrate the operations of an acquired business or to retain key employees of acquired businesses and integrate and manage our growth may have a material adverse effect on our business, financial condition, results of operation or prospects. We may not be able to realize the anticipated benefits of any acquisition. Moreover, future acquisitions by us could result in potentially dilutive issuances of our equity securities, the incurrence of debt and contingent liabilities and amortization expenses related to identifiable intangible assets, any of which could materially adversely affect our operating results and financial position. Acquisitions also involve other risks, including risks inherent in entering markets in which we have no or limited prior experience.

Reliance on government contracts

Our products are primarily sold to end-users such as governmental agencies, government authorities, and government-owned companies, many of which have complex and time-consuming procurement procedures. A substantial period of time often elapses from the time we begin marketing a product until we actually sell that product to a particular customer. In addition, our sales to government agencies', authorities' and companies' projects are directly affected by these end-users budgetary constraints and the priority given in their budgets to the procurement of our products. A decrease in governmental funding for our end-users' budgets would adversely affect our results of operations. This risk is heightened during periods of global economic slowdown. Accordingly, governmental purchases of our systems, products and services may decline in the future if governmental purchasing agencies terminate, reduce or modify contracts.

Competition

The global market for safety, security, video and security management software, site management solutions and products is highly fragmented and intensely competitive. It is characterized by changing technology, new product introductions and changing customer requirements. We compete principally in the market for perimeter intrusion detection systems, or PIDS and security and video management software. Some of our competitors and potential competitors have greater research, development, financial and personnel resources, including governmental support. We cannot assure you that we will be able to maintain the quality of our products relative to those of our competitors or continue to develop and market new products effectively. Continued competitive pressures could cause us to lose significant market share.

Functional Currency and Financial Statements in U.S. Dollars

While our functional currency during 2025 is the CAD, our reporting currency is the U.S. dollar. Translation adjustments resulting from translating our financial statements from CAD and other local operation currencies to the U.S. dollar are reported as a separate components in shareholders' equity.

The first step in the translation process is to identify the functional currency for each entity included in the financial statements. The accounts of each entity are then "re-measured" in its functional currency. All transaction gains and losses from the re-measurement of monetary balance sheet items are reflected in the statement of operations as financial income or expenses, as appropriate. Non-monetary assets and liabilities denominated in foreign currency and measured at cost are translated at the exchange rate at the date of the transaction.

After the re-measurement process is complete the financial statements are translated into our reporting currency, which is the U.S. dollar, using the current rate method. Equity accounts are translated using historical exchange rates. All other balance sheet accounts are translated using the exchange rates in effect at the balance sheet date. The statement of operations amounts have been translated using the average exchange rate for the year. The resulting translation adjustments are reported as a component of shareholders' equity. For the years ended December 31, 2025, 2024 and 2023, our foreign currency translation adjustments totaled $9.7 million, $8.4 million and $9.6 million, respectively. We recorded foreign exchange loss net of $0.2 million, and $0.1 million in the years ended December 31, 2025 and 2023, respectively and a foreign exchange gain, net of $0.5 million in the year ended December 31, 2024. This is due to the adjustment of monetary assets and liabilities, denominated in currencies, other than the functional currency of the operational entities in the group. At the end of each period, a change in currency valuation of monetary assets and liabilities is recorded as a non-cash financial expense or income. The Canadian dollar depreciated by 4.8% and 2.3% against the U.S. dollar in 2025 and 2023, respectively and appreciated by 8.7% against the U.S. dollar in 2024.

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Concentrations of Credit Risk

Financial instruments that are potentially subject to concentrations of credit risk consist principally of cash and cash equivalents, short and long-term bank deposits, unbilled accounts receivable, trade receivables, long-term trade receivables and long-term loans.

As of December 31, 2025, our cash and cash equivalents and restricted cash and short-term deposits were invested in major Canadian, U.S. and European banks. We are exposed to credit risk in the event of default by financial institutions to the extent of the amounts recorded on the accompanying consolidated balance sheets exceed insured limits. Generally, these deposits may be redeemed upon demand and therefore, bear low risk.

The trade receivables and the unbilled accounts receivable of our company and our subsidiaries are derived from sales to large and solid organizations located mainly the U.S., Canada, Europe and APAC. We perform ongoing credit evaluations of our customers and to date have generally not experienced any material losses. An allowance for credit losses is recognized with respect to those amounts that we have determined to be doubtful of collection. In certain circumstances, we may require letters of credit, other collateral or additional guarantees. We also use credit insurance in some cases. During each of the years ended December 31, 2025, 2024 and 2023 we recorded less than $0.1 million of credit losses. As of December 31, 2025, our allowance for credit losses amounted to $0.2 million.

We have no significant off-balance sheet concentration of credit risks, such as foreign exchange contracts or foreign hedging arrangements.

Explanation of Key Income Statement Items

Cost of revenues. Our cost of revenues for perimeter products consists of component and material costs, direct labor costs, subcontractor costs, shipping expenses, overhead related to manufacturing and depreciation. Our cost of revenues for Video Security sales consists primarily of direct labor costs, some component, material and subcontractor costs and overhead related to those sales.

Research and development expenses, net. Research and development expenses, net consists primarily of expenses for on-going research and development activities.

Selling and marketing expenses. Selling and marketing expenses consist primarily of commission payments, compensation and related expenses of our sales teams, attendance at trade shows and advertising expenses and related costs for facilities and equipment.

General and administrative expenses. Our general and administrative expenses consist primarily of salary and related costs associated with our executive and administrative functions, public company related expenses, legal and accounting expenses, allowances for credit losses and other miscellaneous expenses. Staff costs include direct salary costs and related costs, such as severance pay, social security and retirement fund contributions, vacation and other pay.

Depreciation and Amortization and impairment of goodwill. The amount of depreciation and amortization for the years ended December 31, 2025, 2024 and 2023 were approximately $0.7 million, $0.7 million and $0.9 million, respectively.

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Financial Expenses, Net. Financial expenses, net include exchange rate differences arising from changes in the value of monetary assets and monetary liabilities stated in currencies other than the functional currency of each entity, currency transactions as well as interest income on our cash and cash equivalents and short term investments.

The following table presents certain financial data expressed as a percentage of revenues for the periods indicated for the continuing operations:

Year Ended December 31

2025

2024

2023

Revenues

100%

Cost of revenues

34%

36%

43%

Gross profit

66%

64%

57%

Operating expenses:

Research and development, net

12%

Selling and marketing, net

27%

25%

30%

General and administrative

22%

16%

19%

Operating income (loss)

11%

(4)%

Financial income (expenses), net

Income (loss) before income taxes

13%

(4)%

Taxes on income (tax benefit)

Income (loss) from continuing operations

Year Ended December 31, 2025 Compared with Year Ended December 31, 2024

(4)%

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For a discussion of our results of operations for the year ended December 31, 2024, including a year-to-year comparison between the years ended December 31, 2024 and December 31, 2023, as well as a discussion of our liquidity and capital resources for the year ended December 31, 2024, refer to Item 5. "Operating and Financial Review and Prospects" in our Annual Report on Form 20-F for the year ended December 31, 2024, filed with the SEC on April 23, 2025.

Our operating results are characterized by a seasonal pattern, with typically a higher volume of revenues towards the end of the year and lower revenues in the first part of the year. This pattern, which is expected to continue, is mainly due to two factors:

our customers are mainly budget-oriented organizations with lengthy decision processes, which tend to mature late in the year; and

due to harsh weather conditions in certain areas in which we operate during the first quarter of the calendar year, certain projects and services are put on hold and consequently revenues are delayed.

Our revenues are partly dependent on government procurement procedures and practices therefore our revenues and operating results are subject to substantial periodic variations.

We sell most of our products in North America, Europe and APAC. Our financial results, which are reported in U.S. dollars, are affected by changes in foreign currency. Our revenues are primarily denominated in U.S. dollars and Euros, while a portion of our expenses, primarily labor expenses, is incurred in CAD and Euros. Additionally, certain assets, especially cash, trade receivables and other accounts receivables, as well as part of our liabilities are denominated in CAD. As a result, fluctuations in rates of exchange between the U.S. dollar and non-U.S. dollar currencies may affect our operating results and financial condition. The dollar cost of our operations in Canada may be adversely affected by the appreciation of the CAD against the U.S. dollar. In addition, the value of our non-U.S. dollar revenues could be adversely affected by the depreciation of the U.S. dollar against such currencies.

The appreciation of the CAD and the Euro in relation to the U.S. dollar has the effect of increasing the U.S. dollar value of any unlinked assets and the

U.S. dollar amounts of any unlinked liabilities and increasing the U.S. dollar value of revenues and expenses denominated in other currencies. Conversely, the depreciation of the CAD and the Euro in relation to the U.S. dollar has the effect of reducing the U.S. dollar value of any of our liabilities which are payable in Canadian dollars and Euro (unless such costs or payables are linked to the U.S. dollar). Such depreciation also has the effect of decreasing the U.S. dollar value of any asset that is denominated in CADs and Euros, or receivables payable in CAD and Euro (unless such receivables are linked to the U.S. dollar). In addition, the U.S. dollar value of revenues and expenses denominated in CAD and Euro would increase. Because foreign currency exchange rates fluctuate continuously, exchange rate fluctuations may have an impact on our profitability and period-to-period comparisons of our results. The effects of foreign currency re-measurements are reported in our consolidated financial statements in current operations.

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The following table presents the rate of devaluation or appreciation of the CAD against the dollar. These metrics provide insight on the impact of currency fluctuations on our financial results.

Year ended

December

CAD appreciation

(devaluation)

31,

rate %

2021

(0.1)

2022

6.4

2023

(2.3)

2024

8.7

2025

(4.8)

In 2025 and 2023 foreign currency fluctuations had a negative impact on our results of operations as we recorded foreign exchange loss, net of $0.2 million and $0.1 million, respectively. In 2024, foreign currency fluctuations had a positive impact on our results of operations as we recorded a foreign exchange gain, net of $0.5 million. We expect that our results of operations will continue to be affected by currency fluctuations in the future.

We are a Canadian corporation, incorporated under the laws of Ontario.

Our effective corporate tax rate for the years ended 2025, 2024 and 2023 may substantially exceed the Canadian tax rate since our U.S.-based subsidiaries will generally be subject to applicable federal, state, local and foreign taxation, and we may also be subject to taxation in the other foreign jurisdictions in which we own assets, have employees or conduct activities. Because of the complexity of these local tax provisions, it is not possible to anticipate the actual combined effective corporate tax rate which will apply to us.

As of December 31, 2025, we had a net deferred tax assets of $0.1 million, of which $0.2 million in domestic deferred tax liability, net offset by $0.3 million in foreign deferred tax asset, net. We had total estimated available operating tax loss carryforwards of $1 million with respect to our operations in Canada to offset against future taxable income. We have recorded a full valuation allowance for such carryforward tax losses due to the uncertainty of their future realization. As of December 31, 2025, our foreign subsidiaries outside of Ontario had estimated total available carryforward operating tax losses of $1.4 million, out of which $1.1 million was attributable to our U.S. subsidiary and $0.3 million to our U.K. subsidiary. Utilization of U.S. net operating losses may be subject to a substantial annual limitation due to the "change in ownership" provisions of the Internal Revenue Code of 1986 and similar state tax law provisions. The annual limitation may result in the expiration of net operating losses before utilization.

Please refer to "Impact of recently issued and adopted accounting standards" in Note [2] of our consolidated financial statements included elsewhere in this annual report for more information.

Cash and cash equivalents and short-term deposits amounted to $22.5 million on December 31, 2025 compared to $20.6 million at December 31, 2024. The increase in cash and cash equivalents is primarily due to net cash provided by operating activities which was offset by net cash used in investing activities net. Our cash and cash equivalents and short -term bank deposits are held in various banks, mainly in U.S. dollars, Euros, CAD and GBP.

Since inception until our initial public offering in March 1993, we financed our activities mainly through cash flow from operations. In March 1993, we received proceeds of $9.8 million from our initial public offering of 1,380,000 ordinary shares. Subsequently, we made follow-on public offerings in February 1997 (of 2,085,000 ordinary shares) and in April 2005 (of 1,700,000 ordinary shares), in which we raised $9.4 million and $14.9 million, respectively. To allow us to begin to implement a new strategic plan, on September 8, 2010, a company affiliated with our former principal shareholder, provided us with a bridge loan of $10.0 million. To repay the loan and to raise permanent capital for general working capital purposes including facilitating the implementation of our new business strategy, we raised $16.2 million from a rights offering of 5,273,274 ordinary shares and a private placement of 150,000 of ordinary shares in 2011. In October 2016, we completed a rights offering in which we received gross proceeds of approximately $23.8 million from the sale of 6,170,386 ordinary shares. Our controlling shareholders, FIMI V Funds purchased 3,392,869 ordinary shares including through its exercise of over-subscription rights.

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Disclaimer

Senstar Technologies Corp. published this content on May 04, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 04, 2026 at 13:10 UTC.