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| ☐ | 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 |
|---------|---------------------------------------------------------------------------------------------|

| Title of Each ClassOrdinary Shares, Par Value NIS 0.01 | Name of Exchange of Which RegisteredNasdaq Global Select Market |
|--------------------------------------------------------|-----------------------------------------------------------------|

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| Large accelerated filer o | Accelerated filer ☒ | Non-accelerated filer o |
|---------------------------|---------------------------|-------------------------|

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| ITEM 1. | Identity of Directors, Senior Management and Advisers |   | 1 |
|---------|-------------------------------------------------------|--------|---|

| ITEM 2. | Offer Statistics and Expected Timetable |   | 1 |
|---------|-----------------------------------------|--------|---|

| ITEM 3. | Key Information |   | 2 |
|---------|-----------------|--------|---|

| ITEM 4. | Information on the Company |   | 23 |
|---------|----------------------------|--------|----|

| ITEM 4A | Unresolved Staff Comments |   | 39 |
|---------|---------------------------|--------|----|

| ITEM 5. | Operating and Financial Review and Prospects |   | 39 |
|---------|----------------------------------------------|--------|----|

| ITEM 6. | Directors, Senior Management and Employees |   | 55 |
|---------|--------------------------------------------|--------|----|

| ITEM 7. | Major Shareholders and Related Party Transactions |   | 75 |
|---------|---------------------------------------------------|--------|----|

| ITEM 8. | Financial Information |   | 77 |
|---------|-----------------------|--------|----|

| ITEM 9. | The Offer and Listing |   | 78 |
|---------|-----------------------|--------|----|

| ITEM 10. | Additional Information |   | 79 |
|----------|------------------------|--------|----|

| ITEM 11. | Quantitative and Qualitative Disclosures about Market Risk |   | 93 |
|----------|------------------------------------------------------------|--------|----|

| ITEM 12. | Description of Securities Other than Equity Securities |   | 93 |
|----------|--------------------------------------------------------|--------|----|

| PART II |   |
|---------|--------|

| ITEM 13. | Defaults, Dividend Arrearages and Delinquencies |   | 93 |
|----------|-------------------------------------------------|--------|----|

| ITEM 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds  | 94 |
|----------|------------------------------------------------------------------------------------|----|

| ITEM 15. | Controls and Procedures |   | 94 |
|----------|-------------------------|--------|----|

| ITEM 16. | [RESERVED] |   | 95 |
|----------|------------|--------|----|

| ITEM 16A | Audit Committee Financial Expert |   | 95 |
|----------|----------------------------------|--------|----|

| ITEM 16B | Code of Ethics |   | 95 |
|----------|----------------|--------|----|

| ITEM 16C | Principal Accountant Fees and Services |   | 96 |
|----------|----------------------------------------|--------|----|

| ITEM 16D | Exemptions from the Listing Standards for Audit Committees |   | 96 |
|----------|------------------------------------------------------------|--------|----|

| ITEM 16E | Purchases of Equity Securities by the Issuer and Affiliated Purchasers  | 97 |
|----------|------------------------------------------------------------------------------|----|

| ITEM 16F | Change in Registrant’s Certifying Accountant |   | 97 |
|----------|----------------------------------------------------|--------|----|

| ITEM 16G | Corporate Governance |   | 97 |
|----------|----------------------|--------|----|

| ITEM 16H | Mine Safety Disclosure |   | 97 |
|----------|------------------------|--------|----|

| PART III |   |
|----------|--------|

| ITEM 17. | Financial Statements |   | 97 |
|----------|----------------------|--------|----|

| ITEM 18. | Financial Statements |   | 98 |
|----------|----------------------|--------|----|

| ITEM 19. | Exhibits |   | 98 |
|----------|----------|--------|----|

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RO

|  | ● | references to “Ceragon,” the “Company,” “us,” “we” and “our” refer to Ceragon Networks Ltd. (the “Registrant”), an Israeli company, and its consolidated subsidiaries; |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | references to “ordinary shares,” “our shares” and similar expressions refer to the Registrant’s Ordinary Shares, NIS 0.01 nominal (par) value per share; |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | references to “dollars,” “U.S. dollars” and “$” are to United States Dollars; |
|--|---------|-------------------------------------------------------------------------------------------------------------------|

|  | ● | references to “shekels” and “NIS” are to New Israeli Shekels, the Israeli currency; |
|--|---------|-------------------------------------------------------------------------------------------------------------|

|  | ● | references to the “Companies Law” are to Israel’s Companies Law, 5759-1999; |
|--|---------|-----------------------------------------------------------------------------------------------|

|  | ● | references to the “SEC” are to the United States Securities and Exchange Commission; and |
|--|---------|------------------------------------------------------------------------------------------------------|

|  | ● | references to the "Nasdaq Rules" are to rules of the Nasdaq Global Select Market. |
|--|---------|-----------------------------------------------------------------------------------|

----

|                                            |   | Year ended December 31,                         |    |
|-------------------------------------------------|--------|-------------------------------------------------|---------|
|                                            |   | 2011                                            |    |   | 2012 |   |   | 2013 |   |   | 2014 |   |   | 2015 |   |
|                                            |   | (In thousands, except share and per share data) |    |
| Consolidated Statement of Operations Data: |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                            |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                        |   | $                                               | 445,269 |   |   | $ | 446,651 |   |   | $ | 361,772 |   |   | $ | 371,112 |   |   | $ | 349,435 |   |
| Cost of revenues                                |   |                                            | 323,191 |   |   |   | 308,354 |   |   |   | 249,543 |   |   |   | 286,670 |   |   |   | 246,487 |   |
| Gross profit                                    |   |                                            | 122,078 |   |   |   | 138,297 |   |   |   | 112,229 |   |   |   | 84,442 |   |   |   |  102,948 |   |
|                                            |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                             |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Research and development                        |   |                                            | 50,456  |   |   |   | 47,487 |   |   |   | 42,962 |   |   |   | 35,004 |   |   |   |  22,930 |   |
| Selling and marketing                           |   |                                            | 81,716  |   |   |   | 77,326 |   |   |   | 67,743 |   |   |   | 56,059 |   |   |   | 40,816 |   |
| General and administrative.                     |   |                                            | 26,524  |   |   |   | 27,519 |   |   |   | 26,757 |   |   |   | 23,657 |   |   |   |  21,235 |   |
| Restructuring costs                             |   |                                            | 7,834   |   |   |   | 4,608 |   |   |   | 9,345 |   |   |   | 6,816 |   |   |   | 1,225 |   |
| Goodwill impairment                             |   |                                            | --      |   |   |   | -- |   |   |   | -- |   |   |   | 14,765 |   |   |   |   |   |
| Other income                                    |   |                                            | --      |   |   |   | -- |   |   |   | (7,657 | ) |   |   | (19,827 | ) |   |   | (4,849 | ) |
| Acquisition related cost                        |   |                                            | 4,919   |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |
| Total operating expenses                        |   |                                            | 171,449 |   |   |   | 156,940 |   |   |   | 139,150 |   |   |   | 116,474 |   |   |   | 81,357 |   |
| Operating income (loss)                         |   |                                            | (49,371 | ) |   |   | (18,643 | ) |   |   | (26,921 | ) |   |   | (32,032 | ) |   |   | 21,591 |   |
| Financial expenses, net                         |   |                                            | (2,024  | ) |   |   | (3,547 | ) |   |   | (14,018 | ) |   |   | (37,946 | ) |   |   |  (14,738 | ) |
| Income (loss) before taxes                      |   |                                            | (51,395 | ) |   |   | (22,190 | ) |   |   | (40,939 | ) |   |   | (69,978 | ) |   |   |  6,853 |   |
| Tax on income                                   |   |                                            | (2,259  | ) |   |   | (1,201 | ) |   |   | (6,539 | ) |   |   | (6,501 | ) |   |   | (5,842 | ) |
| Net income (loss)                               |   |                                            | (53,654 | ) |   |   | (23,391 | ) |   |   | (47,478 | ) |   |   | (76,479 | ) |   |   | 1,011 |   |
|                                            |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Basic net earnings (loss) per share   |   | $ | (1.49 | ) |   | $ | (0.64 | ) |   | $ | (1.23 | ) |   | $ | (1.22 | ) |   | $ | 0.01 |   |
|---------------------------------------|--------|---|-------|---|--------|---|-------|---|--------|---|-------|---|--------|---|-------|---|--------|---|------|--------|
| Diluted net earnings (loss) per share |   | $ | (1.49 | ) |   | $ | (0.64 | ) |   | $ | (1.23 | ) |   | $ | (1.22 | ) |   | $ | 0.01 |   |

| Weighted average number of shares used in computing basic earnings (loss) per share        |   |   |   35,975,434       |   |   |   |   36,457,989        |   |   |   | 38,519,606       |   |   |   | 62,518,602       |   |   |   |    77,239,409        |   |
|--------------------------------------------------------------------------------------------|--------|--------|-------------------------|--------|--------|--------|-------------------------------|--------|--------|--------|------------------|--------|--------|--------|------------------|--------|--------|--------|--------------------------------|--------|
| Weighted average number of shares used in computing diluted earnings (loss) per share |   |   |    35,975,434 |   |   |   |     36,457,989 |   |   |   |  38,519,606 |   |   |   |  62,518,602 |   |   |   |      77,296,681 |   |

----

|                                                                                                                                                                                                                                                                                                            |   |   | At December 31 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------|--------|
|                                                                                                                                                                                                                                                                                                            |   |   | 2011           |   |   |   | 2012 |   |   |   | 2013 |   |   |   | 2014 |   |   |   | 2015 |   |
|                                                                                                                                                                                                                                                                                                            |   |   | (In thousands) |   |
| Consolidated Balance Sheet Data:                                                                                                                                                                                                                                                                                |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents, short and long term bank deposits, short and long term marketable securities                                                                                                                                                                                                    |   | $      | 49,531         |   |   | $ | 51,589 |   |   | $ | 52,337 |   |   | $ | 42,371 |   |   | $ | 36,318 |   |
| Working capital                                                           |   |   | 154,987        |   |   |   | 129,407 |   |   |   | 106,765 |   |   |   | 87,748 |   |   |   | 84,311 |   |
| Total assets                                                              |   |   | 411,158        |   |   |   | 393,596 |   |   |   | 365,971 |   |   |   | 341,873 |   |   |   | 265,332 |   |
| Total long term liabilities                                               |   |   | 76,664         |   |   |   | 69,767 |   |   |   | 52,498 |   |   |   |  31,822 |   |   |   | 19,915 |   |
| Shareholders’ equity                                                |   |   | 161,051        |   |   |   | 143,709 |   |   |   | 135,078 |   |   |   | 104,552 |   |   |   | 102,821 |   |

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|   | ·  | unexpected changes in or enforcement of regulatory requirements, including security regulations relating to international terrorism and hacking concerns and regulations related to licensing and allocation processes; |
|--------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  unexpected changes in or imposition of tax or customs levies;                                                                      |
|------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·  fluctuations in foreign currency exchange rates;                                                                                   |
| ·  restrictions on currency and cash repatriation;                                                                                    |
| ·  imposition of tariffs and other barriers and restrictions;                                                                         |
| ·  burden of complying with a variety of foreign laws including foreign import restrictions which may be applicable to our products;  |
| ·  difficulties in protecting intellectual property;                                                                                  |
| ·  laws and business practices favoring local competitors;                                                                            |
| ·  demand for high-volume purchases with discounted prices;                                                                           |
| ·  collection delays and uncertainties;                                                                                               |
| ·  civil unrest, war and acts of terrorism;                                                                                           |
| ·  requirements to do business in local currency; and                                                                                 |
| ·  requirements to do manufacture or purchase locally;                                                                                |

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|  | ● | new generations of products replacing older ones, including changes in products because of technological advances and cost reduction measures; and |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the need of our contract manufacturers to order raw materials that have long lead times and our inability to estimate exact amounts and types of items thus needed, especially with regard to the frequencies in which the final products ordered will operate. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | The component suppliers may experience shortages in components and interrupt or delay their shipments to our contract manufacturers. Consequently, these shortages could delay the manufacture of our products and shipments to our customers, which could result in penalties or cancellation of orders for our products. |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | The component suppliers could discontinue the manufacture or supply of components used in our systems. In such an event, our contract manufacturers or we may be unable to develop alternative sources for the components necessary to manufacture our products, which could force us to redesign our products, or we may need to buy a large stock of the component into inventory before it is discontinued. Any such redesign of our products would likely interrupt the manufacturing process and could cause delays in our product shipments. Moreover, a significant modification in our product design may increase our manufacturing costs and bring about lower gross margins. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | The component suppliers may increase component prices significantly at any time and with immediate effect, particularly if demand for certain components increases dramatically in the global market. These price increases would increase component procurement costs and could significantly reduce our gross margins and profitability. |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | o | Pursuant to Section 1502 of the Dodd-Frank Act, as a United States publicly-traded company we are required to disclose use or potential use of certain minerals and their derivatives, including tantalum, tin, gold and tungsten, that are mined from the Democratic Republic of Congo and adjoining countries and deemed conflict minerals. These requirements necessitate due diligence efforts to assess whether such minerals are used in our products in order to make the relevant required annual disclosures. We timely file our conflict minerals reports. Yet, there are, and will be, ongoing costs associated with complying with these disclosure requirements, we may face reputational challenges that could impact future sales if we determine that certain of our products contain minerals not determined to be conflict free or if we are unable to verify with sufficient accuracy the origins of all conflict minerals used in our products. |
|--|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | o | Our business is subject to numerous laws and regulations designed to protect the environment, including with respect to discharges management of hazardous substances. Although we believe that we have complied with these requirements and that such compliance has not had a material adverse effect on our results of operations, financial condition or cash flows, the failure to comply with current or future environmental requirements could expose the company to criminal, civil and administrative charges, due to the nature of our business and environmental risks, we cannot provide assurance that any such material liability will not arise in the future. |
|--|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | o | Our wireless communications products emit electromagnetic radiation. While we are currently unaware of any negative effects associated with our products, there has been publicity in recent years, regarding the potentially negative direct and indirect health and safety effects of electromagnetic emissions from wireless telephones and other wireless equipment sources, including allegations that these emissions may cause cancer. Health and safety issues related to our products may arise that could lead to litigation or other actions against us or to additional regulation of our products. We may be required to modify our technology and may not be able to do so. Even if these concerns prove to be baseless, the resulting negative publicity could affect our ability to market these products and, in turn, could harm our business and results of operations. Claims against other wireless equipment suppliers or wireless service providers could adversely affect the demand for our backhaul solutions. |
|--|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | •  |  announcement of corporate transactions or other events impacting our revenues; |
|--------|---------------|--------------------------------------------------------------------------------------|

|   | •  | announcements of technological innovations by us or by others; |
|--------|---------------|----------------------------------------------------------------|

|   | •  | customer orders or new products or contracts; |
|--------|---------------|-----------------------------------------------|

|   | •  | competitors’ positions and other events related to this market; |
|--------|---------------|-----------------------------------------------------------------------|

|   | •  | changes in the Company’s estimations regarding looking forward statements and/or announcement of actual results that vary significantly from such estimations; |
|--------|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | •  | changes in financial estimates by securities analysts; |
|--------|---------------|--------------------------------------------------------|

|   | •  | our earnings releases and the earnings releases of our competitors; |
|--------|---------------|---------------------------------------------------------------------|

|   | •  | other announcements, whether by the Company or others, referring to the Company’s financial condition results of operations and changes in strategy; |
|--------|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | •  | the general state of the securities markets (with particular emphasis on the technology and Israeli sectors thereof); and |
|--------|---------------|---------------------------------------------------------------------------------------------------------------------------|

|   | •  | the general state of the credit markets, the current volatility of which could have an adverse effect on our investments. |
|--------|---------------|---------------------------------------------------------------------------------------------------------------------------|

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|  | ● | Hostilities involving Israel; |
|--|---------|-------------------------------|

|  | ● | The interruption or curtailment of trade between Israel and its present trading partners; |
|--|---------|-------------------------------------------------------------------------------------------|

|  | ● | A downturn in the economic or financial condition of Israel; and |
|--|---------|------------------------------------------------------------------|

|  | · | A full or partial mobilization of the reserve forces of the Israeli army; |
|--|--------|---------------------------------------------------------------------------|

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hoe 

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|   | ● | Shorthaul solutions, which typically provide a wireless link capacity of up to 1 Gbps per link and are used to carry voice and data services over distances of between several hundred feet to 10 miles. Short-haul links are deployed in access applications wirelessly connecting the individual base-stations and cellular towers to the core network. Short-haul solutions are also used in a range of non-carrier “vertical” applications such as broadcast, state and local government, public safety, education and off-shore communication for oil and gas platforms. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Long-haul solutions, which typically provide a capacity of up to 5 Gbps, are used in the “highways” of the telecommunication backbone network. These links are used to carry services at distances of 10 to 50 miles, and, using the right planning, configuration and equipment, can also bridge distances of 100 miles. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | ● | Software Defined Networking (SDN) is an emerging concept aimed at simplifying network operations and allowing network engineers and administrators to quickly respond to a fast-changing business environment. SDN delivers network architectures that transition networks from a world of task-specific dedicated network devices, to a world of optimization of network performance through network intelligence incorporated within network controllers performing control functions and network devices, which perform traffic (data-plane) transport. Our IP-20 platform, which we launched during 2013, is an SDN-ready solutions suite that is built around a powerful software-defined engine and may be incorporated within the SDN network architecture.  Our SDN architecture is envisioned to provide a set of applications that can achieve end-to-end wireless backhaul network optimization by intelligently making use of the scarce network resources, such as spectrum and power consumption. |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | The emergence of small cells presents backhaul challenges that differ from those of traditional macro-cells. Small cells can be used to provide a second layer of coverage in 4G/LTE networks, resulting in higher throughput and data rates for the end-user.  Although small cell deployments are still evolving and are as of yet not showing significant volumes, Ceragon already offers tailored solutions for forward looking mobile operators. Our small-cell wireless backhaul portfolio includes a variety of compact all-outdoor solutions that provide operators with optimal flexibility in meeting their unique physical, capacity, networking, and regulatory requirements. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | ● | The network sharing business model is growing in popularity among mobile network operators (MNOs) who are faced with increasing competition from over-the-top players and an ever-growing capacity crunch. Network sharing can be particularly effective in the backhaul portion of mobile networks, especially as conventional macro cells evolve into super-sized macro sites that require exponentially more bandwidth for wireless backhaul. It has become abundantly clear that in these new scenarios, a new breed of wireless backhaul solutions with a significant investment is required. Our IP-20 platform supports network sharing concepts by addressing both the ultra-high capacities required for carrying multiple operator traffic, as well as the policing for ensuring that each operator’s service level agreement (SLA) is maintained. The IP-20 platform can deliver up to several Gbps of data over a single link. At the same time, by employing advanced hierarchical quality of service (H-QoS) mechanisms, the IP-20 platform ensures fairness and policy enforcement on a shared network. |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | While green-field deployments tend to be all IP-based, the overwhelming portion of network infrastructure investments goes into upgrading, or “modernizing” existing cell-sites to fit new services with a lower total cost of ownership. Modernizing is more than a simple replacement of network equipment. It helps operators build up a network with enhanced performance, capacity and service support.  For example, Ceragon offers a variety of innovative mediation devices that eliminate the need to replace costly antennas that are already in deployment. In doing so, we help our customers to reduce the time and the costs associated with network upgrades.  The result: a smoother upgrade cycle, short network down-time during upgrades and faster time to revenue. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | A growing market for non-mobile backhaul applications which includes: Offshore communications for the oil and gas as well as the shipping industry, require a unique set of solutions for use on moving rigs and vessels; Broadcast networks that require robust, highly reliable communication for the distribution of live video content either as a cost efficient alternative to fiber, or as a backup for fiber installations. Smart Grid networks for utilities, as well as local and national governments that seek greater energy efficiency, reliability, and scale. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | A growing demand for high capacity, IP-based long haul solutions in emerging markets. This demand is driven by the need of operators to connect more communities to 3.5G and 4G  mobile added value services, and a lack of alternative (wire-line) backbone telecommunication infrastructure in these emerging markets. |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Market consolidation in the wireless backhaul segment continues. This trend was made evident in our acquisition of Nera and DragonWave’s acquisition of the microwave division of Nokia Siemens Networks. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Subscriber growth continues mainly in emerging markets such as India, Africa and Latin America. |
|--------|---------|-------------------------------------------------------------------------------------------------|

|   | ● | Increase business operational efficiency by reducing network related expenses: our customers are able to obtain the required capacity with one-quarter of the spectrum needed otherwise, double network capacity without adding more equipment simply by remotely expanding wireless link capacity, significantly reduce energy related expenses by utilizing our energy efficient products, use smaller antennas thereby reducing telecommunication tower leasing costs, and improve their staff productivity with the use of a single wireless backhaul platform for their longhaul, shorthaul and small cells backhaul needs. We offer a range of solutions for quick and simple modernization of wireless networks to 4G/LTE, 4.5G/LTE-A technologies, which significantly contribute to our customers’ ability to modernize and expand their service networks. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | ● | Enhance customers’ (subscribers) quality of experience: our multicore technology allows our customers to improve subscriber (user) quality of experience generated from the voice, data and multimedia services that they provide to their customers. Our solutions enable our customers deliver services with the flexibility to deploy wireless bases stations and other types of communication sites, exactly where needed, in order to maximize their customers’ quality of experience. We do so by providing a solution, which can dramatically reduce the interference between wireless backhaul links, thereby allowing more flexibility for deploying wireless backhaul wherever needed. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Ensure peace of mind: Our solutions utilize the latest in microwave and millimeter-wave technology, incorporated in-house developed System on Chips (baseband and RF integrated circuits), and use the latest advances in SMT (Surface-mount technologies) - based manufacturing – allowing our customers to benefit from the highest service availability across their Ceragon - based wireless backhaul network. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | ● | Split-mount solutions consist of: |
|--------|---------|-----------------------------------|

|   | ● | Indoor units which are used to convert the transmission signals from digital to intermediate frequency signals and vice versa, process and manage information transmitted to and from the outdoor unit, aggregate multiple transmission signals and provide a physical interface to wire-line networks. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Outdoor units or Radio Frequency Units (RFU), which are used to control power transmission, convert intermediate frequency signals to radio frequency signals and vice versa, and provide an interface between antennas and indoor units. They are contained in compact weather-proof enclosures fastened to antennas. Indoor units are connected to outdoor units by standard coaxial cables. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | All-indoor solutions refer to solutions in which the entire system (indoor unit and RFU) reside in a single rack inside a transmission equipment room. A waveguide connection transports the radio signals to the antenna mounted on a tower. All indoor equipment is typically used in long-haul applications. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | All-outdoor solutions combine the functionality of both the indoor and outdoor units in a single, compact device. This weather-proof enclosure is fastened to an antenna, eliminating the need for rack space or sheltering as well as the need for air conditioning. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Pointing accuracy solutions for high vibration environments. These are advanced microwave radio systems for use on moving rigs/vessels where the antenna is stabilized in one or two axes, azimuth or azimuth/elevation. |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Antennas are used to transmit and receive microwave radio signals from one side of the wireless link to the other. These devices are mounted on poles typically placed on rooftops, towers or buildings. We rely on third party vendors to supply this component. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | End-to-End Network Management.  Our network management system uses standard management protocol to monitor and control managed devices at both the element and network level and can be easily integrated into our customers’ existing network management systems. |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                 | Short-Haul                                                                                                                                                                                 | Long-Haul                                                                                                                                                                                  |                                                                                                                                        |
|----------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|
| Product              | FibeAir IP-20G & IP-20GX                                                                                                                                                               | FibeAir IP-20N / IP-20A*                                                                                                                                                                   | FibeAir IP-20C                                                                                                                              | FibeAir IP-20S | FibeAir IP-20E | FibeAir IP-20C HP | FibeAir IP-20LH | Evolution IP-20 LH | PointLink |
| Description          | Multi-Radio Technology Edge Node                                                                                                                                                      | Multi-Radio Technology Aggregation Node                                                                                                                                                    | Compact All-Outdoor Multi-Core Node                                                                                                    | Compact All-Outdoor Node   | Compact All-Outdoor Node for E-band (70-80GHz) | Compact, high power, multi-carrier trunk | Ultra-high power multi-carrier trunk with HP-radio ODUs | Ultra-high power multi-carrier trunk with Evolution ODUs | High capacity offshore communication |
| Interfaces           | 1GE, FE, andE1/T1                                                                                                                                                                          | 10GE, 1GE, FE, E1/T1                                                                                                                                                                       | 1GE                                                                                                                                         | 1GE | 1GE | 10GE, 1GE, STM-1/OC-3, E1/T1Note: support for some interfaces requires use of  IP-20N/IP-20A IDU |  10GE, 1GE, FE, STM-1/OC-3, E1/T1 | 10GE, 1GE, , FE, STM-1/OC-3, E1/T1 |   |
| Site Configuration   | Split-mount                                                                                                                                                                                | All-outdoor                                                                                                                                                                           | All-outdoor / Split Mount (with IP-20N or IP-20A IDU)                                                                                       | All-indoor /Split-mount | Split mount |
| TransportTechnology  | Hybrid and/or all-packet                                                                                                                                                                   | All-packet                                                                                                                                                                                 | All-packet and/or Hybrid                                                                                                                    | Hybrid and/or all-packet |   |
| Typical Applications | Cellular operators, Wireless service providers, Incumbent local exchange carriers, Private Networks (Public Safety, First Responders, state/local gov. institutions and Utility Companies) | Cellular operators, Wireless service providers, Incumbent local exchange carriers, Private Networks (Public Safety, First Responders, state/local gov. institutions and Utility Companies) | Cellularoperators,Wireless ISPs,, , Private Networks (Public Safety, First Responders, state/local gov. institutions and Utility Companies) | Cellularoperators,Wireless ISPs,, Private Networks (Public Safety, First Responders, state/local gov. institutions and Utility Companies) | Cellularoperators,Wireless ISPs,, Private Networks (Public Safety, First Responders, state/local gov. institutions and Utility Companies) | Cellular operators,Wireless ISPs,Private Networks (Public Safety, First Responders, state/local gov. institutions and Utility Companies) | Cellular operators, Wireless service providers,Incumbent local exchangecarriers, Private Networks (Public Safety, First Responders, state/local gov. institutions and Utility Companies) | Cellular operators, Wireless service providers,Incumbent local exchangecarriers Private Networks (Public Safety, First Responders, state/local gov. institutions and Utility Companies) | Offshore oil/gas rigs in high vibration environment |
| Type of Customers    | Cellular operators, Wireless ISPs, Private Network providers, Government institutions                                                                                                      | Cellular operators, Wireless ISPs, Private Network providers, Government institutions                                                                                                      | Cellular operators, Wireless ISPs, Private Network providers, Government institutions                                                       |  Cellular operators, Wireless ISPs, Private Network providers, Government institutions | Cellular operators, Wireless ISPs, Private Network providers, Government institutions | Cellular operators, Wireless service providers,  Incumbent local exchange carriers, Private Network providers | Cellular operators, Wireless service providers, Incumbent local exchange carriers, Private Network providers | Cellular operators, Wireless service providers, Incumbent local exchange carriers, Private Network providers | Oil and gas drilling companies, shipping industry |
| Operating system     | Unified operating system (CeraOS), uniformly supporting  End-to-End networking, services and radio capabilities across the entire IP-20 platform series of products              |                                                                                                                                                                                       |

----

|         | Network Management System (NMS)                                                                                                                                                                                                                                                                        |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                   |   |
| Description  | User-friendly Network Management System designed for managing large scale wireless back haul networks. Optimized for centralized operation and maintenance of a complete network with an intuitive graphical interface for managing performance, end-to-end configuration, faults and system security. |
| Key Features | Managing wireless backhaul networks; Fault management; Configuration & performance management; Network awareness; Full FCAPS Support Redundancy & Backup; Pay as you Grow with Software Key Mechanism; Northbound Interfaces; Multi-platform Operating System Support                          |

----

|                   |   |   | Year Ended December 31, |   |
|------------------------|--------|--------|-------------------------|--------|
|                   |   |   | 2013                    |   |   |   | 2014 |   |   |   | 2015 |   |
| Region                 |   |   |                    |   |   |   |   |   |   |   |   |   |
| North America          |   |   | 9                       | %      |   |   | 11 | % |   |   | 13 | % |
| Europe                 |   |   | 18                      | %      |   |   | 16 | % |   |   | 14 | % |
| Africa                 |   |   | 20                      | %      |   |   | 15 | % |   |   | 10 | % |
| India                  |   |   | 8                       | %      |   |   | 25 | % |   |   | 30 | % |
| APAC (excluding India) |   |   | 11                      | %      |   |   | 11 | % |   |   | 9 | % |
| Latin America          |   |   | 34                      | %      |   |   | 22 | % |   |   | 24 | % |

----

----

|  | ● | for the standard character mark Ceragon Networks and our logo in the United States, Israel, and the European Union; |
|--|---------|---------------------------------------------------------------------------------------------------------------------|

|  | ● | for the standard character mark Ceragon Networks in Canada; |
|--|---------|-------------------------------------------------------------|

|  | ● | for the standard character mark CERAGON in Russia, Morocco, Israel, Mexico, Malaysia, United States, South Africa, the Philippines, Argentina, Venezuela and Colombia and International Registration (protection granted in Australia, Iceland, Bosnia & Herzegovina, Switzerland, Croatia, Norway, Russia, South Korea, Ukraine, CTM (European Union), Turkey, Singapore and Macedonia); |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | for our design mark for FibeAir in the United States, Israel and the European Union; |
|--|---------|--------------------------------------------------------------------------------------|

|  | ● | for the standard character mark FibeAir in the United States; |
|--|---------|---------------------------------------------------------------|

|  | ● | for the standard character mark CeraView in Israel and the European Union; and |
|--|---------|--------------------------------------------------------------------------------|

|  | ● | For the standard character mark Native2 in India. |
|--|---------|---------------------------------------------------|

|  | ● | for the standard character mark CERAGON in Indonesia, India, Nigeria, and International Registration (protection pending in China, Egypt, Kenya and Vietnam). |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | ● | our focus on the mobile market and active involvement in shaping next generation standards and technologies, which deliver best customer value; |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Our ability to expand to other vertical markets such as oil and gas and public safety, by drawing upon the capabilities of our technologies and solutions; |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | product performance, reliability and functionality, which assist our customers to achieve the highest value; |
|--|---------|--------------------------------------------------------------------------------------------------------------|

|  | ● | range and maturity of product portfolio, including the ability to provide solutions in every widely available microwave and millimeter-wave licensed and license-exempt frequency, as well as our ability to provide both circuit switch and IP solutions and therefore to facilitate a migration path for circuit-switched to IP-based networks; |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | cost structure; |
|--|---------|-----------------|

|  | ● | focus on high-capacity, point-to-point microwave technology, which allows us to quickly adapt to our customers’ evolving needs; |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | range of rollout services offering for faster deployment of an entire network and reduced total cost of ownership; and |
|--|---------|------------------------------------------------------------------------------------------------------------------------|

|  | ● | support and technical service, experience and commitment to high quality customer service |
|--|---------|-------------------------------------------------------------------------------------------|

----

----

on

| Company                                  |   | Place of Incorporation |   | Ownership Interest |   |
|------------------------------------------|--------|------------------------|--------|--------------------|--------|
|                                     |   |                   |   |               |   |
| Ceragon Networks, Inc.                   |   | New Jersey             |   |               | 100    | % |
| Ceragon Networks AS                      |   | Norway                 |   |               | 100    | % |
| Ceragon Networks (India) Private Limited |   | India                  |   |               | 100    | % |

|   | ● | in the United States, we lease approximately 5,350 square feet of new premises in Overlook at Great Notch, New Jersey,  expiring September, 2021 and approximately 12,461 square feet of office space in Richardson, Texas expiring May 2018.  The lease of our old premises in Paramus New Jersey expired in April 2015. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | in Norway we lease approximately 12,000 square feet of office space in Bergen, expiring in May 2019; |
|--------|---------|------------------------------------------------------------------------------------------------------|

|   | ● | in India, we lease approximately 11,737 square feet of office space in New Delhi expiring in October 2019. |
|--------|---------|------------------------------------------------------------------------------------------------------------|

----

|  | A. | Operating Results |
|--|----|-------------------|

|  | ● | Growing Number of Global Wireless Subscribers. Growth in the number of global wireless subscribers is being driven by the availability of inexpensive cellular phones and more affordable wireless service, particularly in developing countries and emerging markets, and is being addressed by expanding wireless networks and by building new networks. |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | ● | Increasing Demand for Mobile Data Services. Cellular operators and other wireless service providers are facing increasing demand from subscribers to deliver voice and data services, including Internet browsing, music and video applications. |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | The emergence of small cells present wireless backhaul challenges that differ from those of traditional macro-cells. Small cells architectures can be used to provide a second layer of coverage in 4G networks, resulting in higher throughput and data rates for the end-user. |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Transition to IP-based Networks. Cellular operators and other wireless service providers are deploying all-IP networks and upgrading their infrastructure to interface with an IP-based core network in order to increase network efficiency, lower operating costs and more effectively deliver high-bandwidth data services. |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Software Defined Networking (SDN) deliver network architectures that transition networks from a world of task-specific dedicated equipment elements, to a world of optimization of network performance through network intelligence. |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Network sharing business models are being adopted by mobile network operators (MNOs) who are faced with increasing competition from over-the-top players and an ever-growing capacity crunch. Network sharing can be particularly effective in the backhaul portion of mobile networks, especially as conventional macro cells evolve into super-sized macro sites that require exponentially more bandwidth for backhaul. |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Increased Competition: Our target market is characterized by vigorous, worldwide competition for market share and rapid technological development. These factors have resulted in aggressive pricing practices and downward pricing pressures, and growing competition from both start-up companies and well-capitalized telecommunication systems providers. |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Regional Pricing Pressures: A significant portion of our sales derives from India, in response to the rapid build-out of cellular networks in this country. For the years ended December 31, 2013, 2014 and 2015, 8.0%, 24.8% and 30.3%, respectively, of our revenues were earned in India. Sales of our products in these markets are generally at lower gross margins in comparison to other regions.  Recently, network operators have started to share parts of their network infrastructure through cooperation agreements, which may adversely affect demand for network equipment |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Transaction Size: Competition for larger equipment orders is increasingly intense due to the fact that the number of large equipment orders in any year is limited. Consequently, we generally experience greater pricing pressure when we compete for larger orders as a result of this increased competition and demand from purchasers for greater volume discounts. As an increasing portion of our revenues is derived from large orders, we believe that our business will be more susceptible to these pressures. |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  | ● | Revenue recognition; |
|--|---------|----------------------|

|  | ● | Inventory valuation; |
|--|---------|----------------------|

|  | ● | Provision for doubtful accounts; |
|--|---------|----------------------------------|

|  | ● | Taxes on income; |
|--|---------|------------------|

|  | ● | Stock-based compensation expense; and |
|--|---------|---------------------------------------|

|  | ● | Impairment of goodwill and long-lived assets. |
|--|---------|-----------------------------------------------|

----

----

----

|                            |   | Year Ended December 31 |   |
|---------------------------------|--------|------------------------|--------|
|                            |   | 2013                   |   |   | 2014 |   |   | 2015 |   |
| Revenues                        |   |                   | 100    | % |   |   | 100 | % |   |   | 100 | % |
| Cost of revenues                |   |                   | 69.0   |   |   |   | 77.2 |   |   |   | 70.5 |   |
| Gross profit                    |   |                   | 31.0   |   |   |   | 22.8 |   |   |   | 29.5 |   |
| Operating expenses:             |   |                   |   |   |   |   |   |   |   |   |   |   |
| Research and development, net   |   |                   | 11.9   |   |   |   | 9.4 |   |   |   | 6.6 |   |
| Selling and marketing           |   |                   | 18.7   |   |   |   | 15.1 |   |   |   | 11.7 |   |
| General and administrative      |   |                   | 7.4    |   |   |   | 6.4 |   |   |   | 6.1 |   |
| Restructuring costs   |   |                   | 2.6    |   |   |   | 1.8 |   |   |   | 0.4 |   |
| Goodwill impairment             |   |                   | --     |   |   |   | 4.0 |   |   |   |   |   |
| Other income                    |   |                   | (2.1   | ) |   |   | (5.3 | ) |   |   | (1.4 | ) |
| Total operating expenses        |   |                   | 38.5   |   |   |   | 31.4 |   |   |   | 23.3 |   |
| Operating income (loss)         |   |                   | (7.4   | ) |   |   | (8.6 | ) |   |   | 6.2 |   |
| Financial expenses, net         |   |                   | 3.9    |   |   |   | 10.2 |   |   |   | 4.2 |   |
| Taxes on income                 |   |                   | 1.8    |   |   |   | 1.8 |   |   |   | 1.7 |   |
| Net income (loss)               |   |                   | (13.1  | ) |   |   | (20.6 | ) |   |   | 0.3 |   |

----

|  | ● | Lower direct material costs primarily resulting from lower volume of revenues |
|--|---------|-------------------------------------------------------------------------------|

|  | ● | The Company’s continued product-cost improvement |
|--|---------|--------------------------------------------------------|

|  | ● | Lower employees costs primarily as a result of the 2014 restructuring plan |
|--|---------|----------------------------------------------------------------------------|

----

|  | ● | Higher material costs primarily resulting from change in our revenue mix to one with lower prices of $38.8 million and inventory  write-off of discontinued product inventory , in the amount of $4.4 million; partially offset by |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Lower subcontractors’ expenses in the amount of $12.2 million resulting from change in our revenues mix. |
|--|---------|----------------------------------------------------------------------------------------------------------------|

----

----

|                    |   | Change in the U.S. dollar against local currencies |   |
|-------------------------|--------|----------------------------------------------------|--------|
| Year ended December 31, |   | NIS (%)                                            |   |   | NOK (%) |   |   | Euro (%) |   |   | ARS (%) |   |   | VEB (%) |   |   | BRL (%) |   |
| 2011                    |   |                                               | 7.7    |   |   |   | 3.0 |   |   |   | 3.3 |   |   |   | 7.9 |   |   |   | 0.0 |   |   |   | 8.2 |   |
| 2012                    |   |                                               | (2.3   | ) |   |   | (7.5 | ) |   |   | (2.1 | ) |   |   | 13.6 |   |   |   | 0.0 |   |   |   | 13.5 |   |
| 2013                    |   |                                               | (7.0   | ) |   |   | 9.0 |   |   |   | (4.2 | ) |   |   | 29.7 |   |   |   | 46.6 |   |   |   | 12.5 |   |
| 2014                    |   |                                               | 12.1   |   |   |   | 22.3 |   |   |   | 13.5 |   |   |   | 34.2 |   |   |   | 694.6 |   |   |   | 13.3 |   |
| 2015                    |   |                                               | 0.2    |   |   |   | 15.6 |   |   |   | 10.2 |   |   |   | 34.6 |   |   |   | 74.8 |   |   |   | 32.9 |   |

----

|   | a. | An increase in the allowed accounts receivable discounting activities of one of the Company’s main customers by $34 million to an amount of up to $54 million; |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | A gradual reduction of the maximum amount of credit facility for loans from $63.5 million (starting April 1, 2015) to $50 million by February 28, 2016; |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c. | A gradual reduction in minimum cash covenant from $20 million to $15 million by October 1, 2015; |
|--------|----|--------------------------------------------------------------------------------------------------|

|   | d. | An extension of the credit facility repayment date to June 30, 2016 (from March 14, 2016); |
|--------|----|--------------------------------------------------------------------------------------------|

|   | e. | Changes in the equity related covenants definition to exclude goodwill and Intangible Assets from the calculation, as well as reduction of the minimum total shareholders’ equity value to $85 million and reduction of the minimum ratio of total shareholders’ equity to total assets ratio to 0.27; and |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | f. | Other changes primarily increase in the maximum spread of interest chargeable to 3.5% and other bank fees |
|--------|----|-----------------------------------------------------------------------------------------------------------|

----

|  | ● | our net income of 1.0 million; and |
|--|---------|------------------------------------|

|  | ● | a $40.2 million decrease in trade and other receivables, net; and |
|--|---------|-------------------------------------------------------------------|

|  | ● | a $12.2 million of depreciation and amortization expenses; and |
|--|---------|----------------------------------------------------------------|

|  | ● | a $10.2 million decrease in inventories; |
|--|---------|------------------------------------------|

|  | ● | a $41.5 million decrease in trade payables and accrued expenses, net; and |
|--|---------|---------------------------------------------------------------------------|

|  | ● | a $8.8 million decrease in deferred revenues paid in advance; |
|--|---------|---------------------------------------------------------------|

|  | ● | our net loss of 76.5 million; and |
|--|---------|-----------------------------------|

|  | ● | a $22.6 million increase in trade and other receivables, net; |
|--|---------|---------------------------------------------------------------|

|  | ● | a $14.8 million impairment of goodwill; |
|--|---------|-----------------------------------------|

|  | ● | a $13.5 million of depreciation and amortization expenses; |
|--|---------|------------------------------------------------------------|

|  | ● | a $9.7 million increase in deferred revenues paid in advance; |
|--|---------|---------------------------------------------------------------|

|  | ● | a $8.9 million increase in trade payables and accrued expenses, net; and |
|--|---------|--------------------------------------------------------------------------|

|  | ● | a $9.8 million decrease in deferred tax asset; |
|--|---------|------------------------------------------------|

|  | ● | our net loss of $47.5 million; |
|--|---------|--------------------------------|

|  | ● | a $21.0 million decrease in trade payables, net of accrued expenses; and |
|--|---------|--------------------------------------------------------------------------|

|  | ● | a $8.8 million decrease in deferred revenues paid in advance; |
|--|---------|---------------------------------------------------------------|

|  | ● | a $15.6 million of depreciation and amortization expenses; |
|--|---------|------------------------------------------------------------|

----

|  | ● | a $15.5 million decrease in trade receivables, net; and |
|--|---------|---------------------------------------------------------|

|  | ● | a $3.6 million decrease in deferred tax asset; |
|--|---------|------------------------------------------------|

| C.  | Research and Development |
|----------|--------------------------|

----

| D. | Trend Information |
|----|-------------------|

| E.  | Off Balance Sheet Arrangements |
|----------|--------------------------------|

| F. | Tabular Disclosure of Contractual Obligations |
|----|-----------------------------------------------|

|                                  |   | Payments due by period (in thousands of dollars) |   |
|---------------------------------------|--------|--------------------------------------------------|--------|
|  Contractual Obligations         |   | Total                                            |   |   | Less than 1year |   |   | 1-3 years |   |   | 3-5 years |   |   | More than5 years |   |
|                                  |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating lease obligations1     |   |                                             | 9,413  |   |   |   | 4,259 |   |   |   | 4,825 |   |   |   | 329 |   |   |   |   |
| Purchase obligations2            |   |                                             | 21,882 |   |   |   | 21,882 |   |   |   |   |   |   |   |   |   |   |   |   |
| Other long-term commitment3      |   |                                             | 4,595  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 4,595 |   |
| Uncertain income tax positions4  |   |                                             | 6,642  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 6,642 |   |
| Loan Agreement                        |   |                                             | 2,072  |   |   |   | 2,072 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                 |   |                                             | 44,604 |   |   |   | 28,213 |   |   |   | 4,825 |   |   |   | 329 |   |   |   | 11,237 |   |

| (1)  | Consists of operating leases for our facilities and for vehicles. |
|-----------|-------------------------------------------------------------------|

| (2) | Consists of all outstanding purchase orders for our products from our suppliers. |
|-----|----------------------------------------------------------------------------------|

| (3) | Our obligation for accrued severance pay under Israel’s Severance Pay Law as of December 31, 2015 was approximately $6.9 million, of which approximately $4.7 million was funded through deposits in severance pay funds, leaving a net commitment of approximately $2.2 million. In addition, the commitment includes a net amount of approximately $2.4 million in pension accruals in other subsidiaries, mainly in Norway. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Uncertain income tax position under ASC 740-10, “Income Taxes,” are due upon settlement and we are unable to reasonably estimate the ultimate amount or timing of settlement. See Note 15g of our Consolidated Financial Statements for further information regarding the Company’s liability under ASC 740-10. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

TO

|  | A. | Directors and Senior Management |
|--|----|---------------------------------|

| Name                 |   | Age    |   | Position                                                  |
|----------------------|--------|--------|--------|-----------------------------------------------------------|
|                 |   |   |   |                                                      |
| Zohar Zisapel        |   | 67     |   | Chairman of the Board of Directors                        |
| Ira Palti            |   | 58     |   | President and Chief Executive Officer                     |
| Doron Arazi          |   | 52     |   | Executive Vice President & Chief Financial Officer    |
| John Earley          |   | 58     |   | Executive Vice President, Delivery1                       |
| Nurit Kruk-Zilca     |   | 42     |   | Executive Vice President, Human Resources                 |
| Yuval Reina          |   | 49     |   | Executive Vice President, Global Products                 |
| Oz Zimerman          |   | 52     |   | Executive Vice President, Global Marketing & Services |
| Flavio Perrucchetti  |   | 48     |   | Regional President, Europe                                |
| Ram Prakash Tripathi |   | 49     |   | Regional President, APAC                                  |
| Amit Ancikovsky      |   | 45     |   | Regional President, Latin America & Africa            |
| Charles Meyo         |   | 52     |   | Regional President, North America                         |
| Shlomo Liran         |   | 65     |   | Director                                                  |
| Yael Langer          |   | 51     |   | Director                                                  |
| Yair E. Orgler       |   | 76     |   | Director                                                  |
| Avi Patir            |   | 67     |   | Director                                                  |

----

----

----

|  | B. | Compensation |
|--|----|--------------|

|  | a) | Aggregate Executive Compensation |
|--|----|----------------------------------|

----

|  | b) | Individual Compensation of Office Holders |
|--|----|-------------------------------------------|

|  | ● | Salary Costs. Salary Costs include gross salary, benefits and perquisites, including those mandated by applicable law which may include, to the extent applicable to each Covered Office Holder’s, payments, contributions and/or allocations for pension, severance, vacation, travel and accommodation, car or car allowance, medical insurances and risk insurances (e.g., life, disability, accidents), phone, convalescence pay, relocation, payments for social security, and other benefits consistent with the Company's guidelines. |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Bonus Costs. Bonus Costs represent bonuses granted to the Covered Office Holder’s with respect to the year ended December 31, 2015, paid in accordance with the Covered Office Holder’s performance of targets as set forth in his bonus plan, and approved by the Company's compensation committee and board of directors. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Equity Costs. Represents the expense recorded in our financial statements for the year ended December 31, 2015, with respect to equity-based compensation granted in 2015 and in previous years. For assumptions and key variables used in the calculation of such amounts see note 14c of our audited consolidated financial statements. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | (1) |  Charles (Chuck) Meyo – Regional President North America. Salary Costs - $308,151; Bonus Costs - $661,408; Equity Costs -$55,011. |
|--|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

|  | (2) | Ira Palti – CEO. Salary Costs - $285,732; Bonus Costs - $125,651; Equity Costs - $216,550. |
|--|-----|--------------------------------------------------------------------------------------------------|

|  | (3) | Amit Ancikovsky – Regional President Latin America & Africa. Salary Costs - $287,800; Bonus Costs - $267,938; Equity Costs - $30,120. |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (4) | Flavio Perrucchetti – Regional President Europe. Salary Cost -  $401,540; Bonus Cost -  $73,256; Equity Cost - $31,994 |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (5) | Doron Arazi – EVP & CFO. Salary Cost - $252,250; Bonus Cost - $55,570; Equity Cost - $83,963 |
|--|-----|--------------------------------------------------------------------------------------------------------|

----

|  | ● | an employment relationship; |
|--|---------|-----------------------------|

|  | ● | a business or professional relationship maintained on a regular basis; |
|--|---------|------------------------------------------------------------------------|

|  | ● | “Control”; and |
|--|---------|----------------------------|

|  | ● | service as an office holder; the Companies Law defines the term “office holder” of a company to include a director, the chief executive officer, an executive vice president, a vice president, any other person fulfilling or assuming any of the foregoing positions without regard to such person’s title, and any manager who is directly subordinated to the chief executive officer general manager and any officer that reports directly to the chief executive officer or any other. |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | ● | the majority of the shares voted at the meeting, which are not held by controlling shareholders or shareholders with personal interest in approving the appointment (excluding personal interest not resulting from contacts with the controlling shareholder) ("Non-Related Votes"), not taking into account any abstentions, vote in favor of the election; or |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the total number of Non-Related Votes, voting against the election of the external director, does not exceed two percent of the aggregate voting rights in the company. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 1. | a shareholder holding one percent or more of a company's voting rights proposed the reelection of the nominee; |
|--|----|----------------------------------------------------------------------------------------------------------------|

|  | 2. | the board of directors proposed the reelection of the nominee and the election was approved by the shareholders by the majority required to appoint external directors for their initial term; or |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 3. | the external director who is up for renewal has proposed himself or herself for reelection. |
|--|----|---------------------------------------------------------------------------------------------|

----

----

----

----

----

|  | ● | transactions with office holders and third parties, where an office holder has a personal interest in the transaction; |
|--|---------|------------------------------------------------------------------------------------------------------------------------|

|  | ● | employment terms of office holders; and |
|--|---------|-----------------------------------------|

|  | ● | extraordinary transactions with controlling parties, and extraordinary transactions with a third party where a controlling party has a personal interest in the transaction, or any transaction with the controlling shareholder or his relative regarding terms of service provided directly or indirectly (including through a company controlled by the controlling shareholder) and terms of employment (for a controlling shareholder who is not an office holder). A “relative” is defined in the Companies Law as spouse, sibling, parent, grandparent, descendant, spouse’s descendant, sibling or parent and the spouse of any of the foregoing. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the majority of the shares of shareholders who have no personal interest in the transaction and who are present and voting, vote in favor; or |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | shareholders who have no personal interest in the transaction who vote against the transaction do not represent more than two percent of the aggregate voting rights in the company. |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|  | ● | a breach of his or her duty of care to us or to another person; |
|--|---------|-----------------------------------------------------------------|

|  | ● | a breach of his or her duty of loyalty to us, provided that the office holder acted in good faith and had reasonable cause to assume that his or her act would not prejudice our interests; |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | a financial liability imposed upon him or her in favor of another person; and |
|--|---------|-------------------------------------------------------------------------------|

|  | ● | any other event, occurrence or circumstance in respect of which we may lawfully insure an office holder. |
|--|---------|----------------------------------------------------------------------------------------------------------|

|  | ● | a financial liability imposed on him or her in favor of another person by any judgment, including a settlement or an arbitration award approved by a court. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | reasonable litigation expenses, including attorney’s fees, incurred by the office holder as a result of an investigation or proceeding instituted against him by a competent authority which concluded without the filing of an indictment against him and without the imposition of any financial liability in lieu of criminal proceedings, or  which concluded without the filing of an indictment against him but with the imposition of a financial liability in lieu of criminal proceedings concerning a criminal offense that does not require proof of criminal intent or  in connection with a financial sanction (the phrases “proceeding concluded without the filing of an indictment” and “financial liability in lieu of criminal proceeding” shall have the meaning ascribed to such phrases in section 260(a)(1a) of the Companies Law); |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | reasonable litigation expenses, including attorneys’ fees, expended by an office holder or charged to the office holder by a court, in a proceeding instituted against the office holder by the Company or on its behalf or by another person, or in a criminal charge from which the office holder was acquitted, or in a criminal proceeding in which the office holder was convicted of an offense that does not require proof of criminal intent; |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | ● | expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative proceeding instituted against such office holder, or payment required to be made to an injured party,  pursuant to certain provisions of the Securities Law; and |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | any other event, occurrence or circumstance in respect of which we may lawfully indemnify an office holder. |
|--|---------|-------------------------------------------------------------------------------------------------------------|

|  | ● | a breach by the office holder of his or her duty of loyalty, except that the company may enter into an insurance contract or indemnify an office holder if the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | a breach by the office holder of his or her duty of care, if such breach was  intentional or reckless, but unless such breach was solely negligent; |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | any act or omission intended to derive an illegal personal benefit; or |
|--|---------|------------------------------------------------------------------------|

|  | ● | any fine levied against the office holder. |
|--|---------|--------------------------------------------|

----

|  | D. | Employees |
|--|----|-----------|

----

| Name                                                                      |   | Number of Ordinary Shares(1) |       |   | Percentage ofOutstandingOrdinary Shares |   |   | Number of Stock Options Held (2) |   |   | Range of exercise prices per share of stock options |   |   | Number of RSUs Held (2) |                |
|---------------------------------------------------------------------------|--------|------------------------------|------------|--------|-----------------------------------------|--------|--------|----------------------------------|--------|--------|-----------------------------------------------------|--------|--------|-------------------------|---------------------|
| Zohar Zisapel(3)                                                          |   |                         | 10,788,341 |   |                                    |   | 13.9   |                             |   |   | 250,000                                             |   |   |                    | $1.08-$11.75        |   |   |   | - |   |
| Ira Palti                                                                 |   |                         | 803,313    |   |                                    |   | 1.0    |                             |   |   | 1,357,124                                           |   |   |                    | $1.16-$13.04        |   |   |   | 37,124 |   |
| All directors and senior management as a group consisting of 15 people(4) |   |                         | 12,572,105 |   |                                    |   | 16.2   |                             |   |   |         3,291,458               |   |   |                    |   $1.08-$13.04 |   |   |   |         40,124 |   |

| (1) | Consists of ordinary shares and options to purchase ordinary shares which are vested or shall become vested within 60 days as of March 16, 2016. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Each stock option is exercisable into one ordinary share, and expires between 6 and 10 years from the date of its grant. Of the number of stock options listed, 250,000, 801,250 and 2,030,701 options, are vested or shall become vested within 60 days of March 16, 2016 for Mr. Zisapel, Mr. Palti and all directors and senior management as a group, respectively. Of the number of RSU’s listed, 0, 2,063 and 3,063, respectively, are vested or expected to vest within 60 days as of March 16, 2016, for Mr. Zisapel, Mr. Palti and all directors and senior management as a group, respectively. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (3) | The number of ordinary shares held by Zohar Zisapel includes 10,717 shares held by RAD Data Communications Ltd., of which Mr. Zisapel is a principal shareholder and chairman of the board. |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Each of the directors and senior managers other than Messrs. Zohar Zisapel and Ira Palti beneficially owns less than 1% of the outstanding ordinary shares as of March 16, 2016 (including options held by each such person and which are vested or shall become vested within 60 days as of March 16, 2016) and have therefore not been separately disclosed. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Cumulative Ordinary Shares Reserved for Option Grants |   |   | Remaining Reserved Shares Available for Option Grants |   |   | Options Outstanding |   |   | Weighted Average Exercise Price |   |
|-------------------------------------------------------|--------|--------|-------------------------------------------------------|--------|--------|---------------------|--------|--------|---------------------------------|--------|
| 20,051,126                                            |   |   | 1,884,425                                             |   |   | 6,465,782           |   |   | $4.81                           |   |

| Cumulative Ordinary Shares Reserved for RSU Grants |   |   | Remaining Reserved Shares Available for RSU Grants |   |   | RSUs Outstanding |   |   | Weighted Average Exercise Price |   |
|----------------------------------------------------|--------|--------|----------------------------------------------------|--------|--------|------------------|--------|--------|---------------------------------|--------|
| 1,544,562                                          |   |   | ---                                                |   |   | 99,449           |   |   | $0.00                           |   |

|                            |   | Options and RSUs Outstanding |      |   | Unvested Options and RSUs |   |
|---------------------------------|--------|------------------------------|-----------|--------|---------------------------|--------|
|                            |   |                         |      |   |                      |   |
| Directors and senior management |   |                         | 3,294,649 |   |                      |   | 1,514,068 |   |
|                            |   |                         |      |   |                      |   |   |   |
| All other grantees              |   |                         | 3,270,582 |   |                      |   | 1,851,280 |   |

----

AR

| Name          |   | Number of Ordinary Shares |       |   | Percentage ofOutstanding Ordinary Shares(1) |   |
|---------------|--------|---------------------------|------------|--------|---------------------------------------------|--------|
| Zohar Zisapel |   |                      | 10,788,341 |   |                                        |   | 13.9 | % |

|   | (1) | Based on 77,660,983 ordinary shares issued and outstanding as of March 16, 2016. Zohar Zisapel’s address is 24 Raoul Wallenberg St., Tel Aviv 69719, Israel. The ordinary shares held by Zohar Zisapel include 10,717 shares held by RAD Data Communications Ltd., of which Mr. Zisapel is a principal shareholders and the chairman of the board. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| AB-NET Communications Ltd.      | Internet Binat Ltd.                               | RADWIN Ltd.            |
|---------------------------------|---------------------------------------------------|------------------------|
| BYNET Data Communications Ltd.  | Packetlight Networks Ltd.                         | SecurityDam Ltd.       |
| BYNET Electronics Ltd.          | RAD-Bynet Properties and Services (1981) Ltd.     | RADBIT Computers, Inc. |
| BYNET SEMECH (Outsourcing) Ltd. | RADCOM Ltd.                                       | SILICOM Ltd.           |
| BYNET Software Systems Ltd.     | RAD Data Communications Ltd. and its subsidiaries | RADiflow Ltd.     |
| BYNET Systems Applications Ltd. | RADWARE Ltd.                                      | BINAT Business Ltd.    |
| RADHEAR Ltd.                    |                                              |                   |

----

me

|  | ● | the holders of the ordinary shares resulting from the conversion of such preferred shares; and |
|--|---------|------------------------------------------------------------------------------------------------|

|  | ● | Yehuda Zisapel and Zohar Zisapel. |
|--|---------|-----------------------------------|

----

n 

|           |   |   | Ordinary Shares |   |
|----------------|--------|--------|-----------------|--------|
| Annual         |   |   | High            |   |   | Low |   |
| 2011           |   |   | $               | 14.34  |   |   | $ | 7.25 |   |
| 2012           |   |   |            | 9.76   |   |   |   | 3.91 |   |
| 2013           |   |   |            | 5.15   |   |   |   | 2.35 |   |
| 2014           |   |   |            | 3.84   |   |   |   | 0.93 |   |
| 2015           |   |   |            | 2.00   |   |   |   | 0.88 |   |
|           |   |   |            |   |   |   |   |   |   |
| Quarterly 2013 |   |   |            |   |   |   |   |   |   |
| First Quarter  |   |   | $               | 5.15   |   |   | $ | 4.25 |   |
| Second Quarter |   |   |            | 4.38   |   |   |   | 3.11 |   |
| Third Quarter  |   |   |            | 4.30   |   |   |   | 3.00 |   |
| Fourth Quarter |   |   |            | 4.35   |   |   |   | 2.35 |   |
|           |   |   |            |   |   |   |   |   |   |

| Quarterly 2014 |   |   |   |   |   |   |
|----------------|--------|--------|--------|--------|--------|--------|
| First Quarter  |   | $      | 3.84   |   |   | $      | 2.8 |   |
| Second Quarter |   |   | 2.95   |   |   |   | 2.13 |   |
| Third Quarter  |   |   | 2.69   |   |   |   | 2.0 |   |
| Fourth Quarter |   |   | 2.39   |   |   |   | 0.93 |   |
|           |   |   |   |   |   |   |   |   |

| Quarterly 2015 |   |   |   |   |   |   |
|----------------|--------|--------|--------|--------|--------|--------|
| First Quarter  |   | $      | 1.35   |   |   | $      | 0.88 |   |
| Second Quarter |   |   | 1.47   |   |   |   | 1.02 |   |
| Third Quarter  |   |   | 1.74   |   |   |   | 0.93 |   |
| Fourth Quarter |   |   | 2.00   |   |   |   | 1.09 |   |

----

| Monthly       |   | High   |   |   | Low    |   |
|---------------|--------|--------|--------|--------|--------|--------|
| October 2015  |   | $      | 2.00   |   |   | $      | 1.41 |   |
| November 2015 |   |   | 1.73   |   |   |   | 1.09 |   |
| December 2015 |   |   | 1.43   |   |   |   | 1.11 |   |
| January 2016  |   |   | 1.28   |   |   |   | 0.89 |   |
| February 2016 |   |   | 1.30   |   |   |   | 1.03 |   |

----

----

----

----

----

|  | ● | Similar to the available alternative route, exemption from corporate tax on undistributed income for a period of two to ten years, depending on the geographic location of the Benefited Enterprise within Israel, and a reduced corporate tax rate of 10% to 25% for the remainder of the benefits period, depending on the level of foreign investment in each year.  Benefits may be granted for a term of seven to ten years, depending on the level of foreign investment in the company.  If the company pays a dividend out of income derived from the Benefited Enterprise during the tax exemption period, such income will be subject to corporate tax at the applicable rate (10%-25%) in respect of the gross amount of the dividend that we may distribute. The company is required to withhold tax at the source at a rate of 20% from any dividends distributed from income derived from the Benefited Enterprise; and |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | A special tax route, which enables companies owning facilities in certain geographical locations in Israel to pay corporate tax at the rate of 11.5% on income of the Benefited Enterprise. The benefits period is ten years. Upon payment of dividends, the company is required to withhold tax at source at a rate of 20% for Israeli residents and at a rate of 4% for foreign residents. |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | ● | the expenditures are approved by the relevant Israeli government ministry, determined by the field of research; |
|--|---------|-----------------------------------------------------------------------------------------------------------------|

|  | ● | the research and development is for the promotion or development of the company; and |
|--|---------|--------------------------------------------------------------------------------------|

|  | ● | the research and development is carried out by or on behalf of the company seeking the deduction. |
|--|---------|---------------------------------------------------------------------------------------------------|

----

|  | ● | deduction of purchases of know-how, patents and the right to use a patent over an eight-year period for tax purposes; |
|--|---------|-----------------------------------------------------------------------------------------------------------------------|

|  | ● | deduction over a three-year period of specified expenses incurred with the issuance and listing of shares on the Tel Aviv Stock Exchange or on a recognized stock exchange outside of Israel (including Nasdaq); |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the right to elect, under specified conditions, to file a consolidated tax return with additional related Israeli industrial companies; and |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | accelerated depreciation rates on equipment and buildings. |
|--|---------|------------------------------------------------------------|

----

|  | ● | holds the ordinary shares as a capital asset; and |
|--|---------|---------------------------------------------------|

|  | ● | qualifies as a resident of the United States within the meaning of the U.S.-Israel tax treaty; and |
|--|---------|----------------------------------------------------------------------------------------------------|

|  | ● | is entitled to claim the benefits available to the person by the U.S.-Israel tax treaty. |
|--|---------|------------------------------------------------------------------------------------------|

----

|  | ● | an individual citizen or resident of the United States; |
|--|---------|---------------------------------------------------------|

|  | ● | a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States, any political subdivision thereof or the District of Columbia; |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | an estate, the income of which is subject to U.S. federal income tax regardless of its source; or |
|--|---------|---------------------------------------------------------------------------------------------------|

|  | ● | a trust if (i) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or (ii) that has in effect a valid election under applicable U.S. Treasury Regulations to be treated as a U.S. person. |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | are broker-dealers or insurance companies; |
|--|---------|--------------------------------------------|

|  | ● | have elected mark-to-market accounting; |
|--|---------|-----------------------------------------|

|  | ● | are tax-exempt organizations or retirement plans; |
|--|---------|---------------------------------------------------|

|  | ● | are grantor trusts; |
|--|---------|---------------------|

|  | ● | are S corporations; |
|--|---------|---------------------|

|  | ● | are certain former citizens or long-term residents of the United States; |
|--|---------|--------------------------------------------------------------------------|

|  | ● | are financial institutions; |
|--|---------|-----------------------------|

|  | ● | hold ordinary shares as part of a straddle, hedge or conversion transaction with other investments; |
|--|---------|-----------------------------------------------------------------------------------------------------|

|  | ● | acquired their ordinary shares upon the exercise of employee stock options or otherwise as compensation; |
|--|---------|----------------------------------------------------------------------------------------------------------|

|  | ● | are real estate investment trusts or regulated investment companies; |
|--|---------|----------------------------------------------------------------------|

|  | ● | own directly, indirectly or by attribution at least 10% of our voting power; or |
|--|---------|---------------------------------------------------------------------------------|

|  | ● | have a functional currency that is not the U.S. dollar. |
|--|---------|---------------------------------------------------------|

----

----

----

----

|  | ● | the item is effectively connected with the conduct by the Non-U.S. holder of a trade or business in the United States and in the case of a resident of a country which has a treaty with the United States, the item is attributable to a permanent establishment, or in the case of an individual, the item is attributable to a fixed place of business in the United States; or |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the Non-U.S. holder is an individual who holds the ordinary shares as a capital asset and is present in the United States for 183 days or more in the taxable year of the disposition, and certain other conditions are met. |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

is

| ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
|----------|-------------------------------------------------------------|

----

| ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS. |
|----------|-------------------------------------------------------------------------------|

----

|  | · | Retaining accounting personnel, which were more qualified and continuing to enhance our internal finance and accounting organizational structure in Brazil; |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Increasing our corporate supervision over the financial reporting and controls in Brazil; |
|--|--------|-------------------------------------------------------------------------------------------|

|  | · | Implementing and enhancing supervisory procedures to include additional levels of analysis and quality control reviews within the accounting and financial reporting functions in Brazil as well as in our corporate; |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Enhancing certain areas in our supporting system in order to improve controls; and |
|--|--------|------------------------------------------------------------------------------------|

|  | · | Engaging external independent advisors to support and assist us in issues that required more specific knowledge and experience. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------|

----

AL

|              |   | Year Ended December 31, |    |
|-------------------|--------|-------------------------|---------|
|              |   | 2014                    |    |   | 2015 |   |
| Services Rendered |   | Fees                    |    |   | Percentages |   |   | Fees |   |   | Percentages |   |
|              |   |                    |    |   |   |   |   |   |   |   |   |   |
| Audit Fees (1)    |   | $                       | 690,000 |   |   |   | 81 |   |   | $ | 605,518 |   |   |   | 71 |   |
| Tax Fees (2)      |   | $                       | 87,000  |   |   |   | 10 |   |   | $ | 176,341 |   |   |   | 21 |   |
| Other Services(3) |   | $                       | 75,000  |   |   |   | 9 |   |   | $ | 63,607 |   |   |   | 8 |   |
| Total             |   | $                       | 852,000 |   |   |   | 100 |   |   | $ | 845,466 |   |   |   | 100 |   |

| (1) | Audit fees consist of services that would normally be provided in connection with statutory and regulatory filings or engagements, including services that generally only the independent accountant can reasonably provide. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Tax fees relate to tax compliance, planning and advice |
|-----|--------------------------------------------------------|

| (3) | Other consulting services |
|-----|---------------------------|

| ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
|-----------|------------------------------------------------------------|

----

| ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
|-----------|------------------------------------------------------------------------|

| Period      | Total Number of Shares Purchased | Average Price Paid per Share | Acquirer of Equity Securities                           |
|-------------|----------------------------------|------------------------------|---------------------------------------------------------|
| August 2015 | 100,0001                         | $1.21                        | Zohar Zisapel, our chairman and a principal shareholder |

|  | 1. | Ordinary Shares purchased during the year. |
|--|----|--------------------------------------------|

| ITEM 16G. | CORPORATE GOVERNANCE |
|-----------|----------------------|

| ITEM 16H. | MINE SAFETY DISCLOSURE |
|-----------|------------------------|

----

L 

| Index to Consolidated Financial Statements                             | PAGE              |
|------------------------------------------------------------------------|-------------------|
| Reports of Independent Registered Public Accounting Firm               | F-2 – F-3   |
| Consolidated Balance Sheets                                       | F-4 – F-5   |
| Consolidated Statements of Operations                             | F-6               |
| Consolidated Statements of Comprehensive Loss                     | F-7               |
| Consolidated Statements of Changes in Shareholders’ Equity  | F-8               |
| Consolidated Statements of Cash Flows                             | F-9 – F-10  |
| Notes to Consolidated Financial Statements                        | F-11 – F-56 |
|                                                                   |              |

| 1.2 | Articles of Association, as amended July 15, 2014* |
|-----|----------------------------------------------------|

| 4.1 | Tenancy Agreement, dated as of February 22, 2000, by and among the Company, Zisapel Properties Ltd. and Klil & Michael Properties Ltd. (English translation)** |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.4 | Credit facility, dated as of March 14, 2013 (“Credit Facility”) by and among the Company and Bank Hapoalim B.M., HSBC Bank Plc, Bank Leumi Le’Israel Ltd. and First International Bank of Israel Ltd.  (English summary of the material terms) *** |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.5 | Amendment, effective as of October 1, 2013, to the Credit Facility (English summary of the material terms) **** |
|-----|-----------------------------------------------------------------------------------------------------------------|

| 4.6 | Amendment No. 2, effective as of April 29, 2014, to the Credit Facility (English summary of the material terms) * |
|-----|-------------------------------------------------------------------------------------------------------------------|

| 4.7 | Amendment No. 3, effective as of March 31, 2015, to the Credit Facility (English summary of the material terms) * |
|-----|-------------------------------------------------------------------------------------------------------------------|

| 4.8 | Amended and Restated Share Option and RSU Plan, as Amended August 10, 2014 * |
|-----|-----------------------------------------------------------------------------------|

| 4.9 | Amendment No. 4, effective as of March 10, 2016, to the Credit Facility (English summary of the material terms)***** |
|-----|----------------------------------------------------------------------------------------------------------------------|

| 8.1 | List of Significant Subsidiaries***** |
|-----|---------------------------------------|

| 10.1 | Consent of Independent Registered Public Accounting Firm***** |
|------|---------------------------------------------------------------|

| 12.1 | Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|------|----------------------------------------------------------------------------------------------------|

| 12.2 | Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|------|----------------------------------------------------------------------------------------------------|

| 13.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|------|------------------------------------------------------------------------------------------------------------------------|

| 101 | The following financial information from Ceragon Networks Ltd.’s Annual Report on Form 20-F for the year ended December 31, 2015, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013; (ii) Consolidated Statements of Comprehensive Loss at December 31, 2015 and 2014; (iii) Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2015,  2014 and 2013; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014and 2013; and (v) Notes to Consolidated Financial Statements. Users of this data are advised, in accordance with Rule 406T of Regulation S-T promulgated by the SEC, that this Interactive Data File is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.***** |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | CERAGON NETWORKS LTD. |                                         |
|--------|-----------------------|----------------------------------------------|
|   |                  |                                         |   |
|   | By:                   | /s/ Ira Palti                           |   |
|   |                  | Name: Ira Palti                              |   |
|   |                  | Title: President and Chief Executive Officer |   |
|   |                  | Date:  February 9, 2017                 |   |

----

|                                                                  | Page        |
|-----------------------------------------------------------------------|-------------|
|                                                                  |        |
| Reports of Independent Registered Public Accounting Firm              | F-2 - F-3   |
|                                                                  |        |
| Consolidated Balance Sheets                                           | F-4 - F-5   |
|                                                                  |        |
| Consolidated Statements of Operations                                 | F-6         |
|                                                                  |        |
| Consolidated Statements of Comprehensive Loss                         | F-7         |
|                                                                  |        |
| Consolidated  Statements of Changes in Shareholders' Equity | F-8         |
|                                                                  |        |
| Consolidated Statements of Cash Flows                                 | F-9 - F-10  |
|                                                                  |        |
| Notes to Consolidated Financial Statements                            | F-11 - F-56 |

----

|  |   Kost Forer Gabbay & Kasierer3 Aminadav St.Tel-Aviv 6706703, Israel  |   |   Tel: +972-3-6232525Fax: +972-3-5622555ey.com |   |
|--|------------------------------------------------------------------------------------------|--------|----------------------------------------------------------|--------|

DE

| Tel-Aviv, Israel | KOST FORER GABBAY & KASIERER     |
|------------------|--------------------------------------|
| March 23, 2016   | A Member of Ernst & Young Global |

----

|  |   Kost Forer Gabbay & Kasierer3 Aminadav St.Tel-Aviv 6706703, Israel  |   |   Tel: +972-3-6232525Fax: +972-3-5622555ey.com |   |
|--|------------------------------------------------------------------------------------------|--------|----------------------------------------------------------|--------|

| Tel-Aviv, Israel | KOST FORER GABBAY & KASIERER     |
|------------------|--------------------------------------|
| March 23, 2016   | A Member of Ernst & Young Global |

----

AG

----

|                                                                                                                                     |   |   | December 31, |    |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------|---------|
|                                                                                                                                     | Note   |   | 2014         |    |   | 2015 |   |
|                                                                                                                                     |   |   |         |    |   |   |   |
| ASSETS                                                                                                                                   |   |   |         |    |   |   |   |
|                                                                                                                                     |   |   |         |    |   |   |   |
| CURRENT ASSETS:                                                                                                                          |   |   |         |    |   |   |   |
| Cash and cash equivalents                                                                                                                |   |   | $            | 41,423  |   |   | $ | 36,318 |   |
| Short-term bank deposits                                                                                                                 |   |   |         | 413     |   |   |   | - |   |
| Marketable securities                                                                                                                    | 3      |   |         | 535     |   |   |   | - |   |
| Trade receivables (net of allowance for doubtful accounts of $ 8,404 and $ 12,229 at December 31, 2014 and 2015, respectively) |   |   |         | 162,626 |   |   |   | 116,683 |   |
| Other accounts receivable and prepaid expenses                                                                                           | 4      |   |         | 22,898  |   |   |   | 22,583 |   |
| Deferred tax assets, net                                                                                                                 | 15c    |   |         | 3,522   |   |   |   | 1,633 |   |
| Inventories                                                                                                                              | 5      |   |         | 61,830  |   |   |   | 49,690 |   |
|                                                                                                                                     |   |   |         |    |   |   |   |   |   |
| Total current assets                                                                                                                     |   |   |         | 293,247 |   |   |   | 226,907 |   |
|                                                                                                                                     |   |   |         |    |   |   |   |   |   |
| NON-CURRENT ASSETS:                                                                                                                      |   |   |         |    |   |   |   |   |   |
| Deferred tax assets, net                                                                                                                 | 15c    |   |         | 239     |   |   |   | 189 |   |
| Severance pay and pension fund                                                                                                           |   |   |         | 5,669   |   |   |   | 4,681 |   |
| Other non-current assets                                                                                                                 |   |   |         | 4,510   |   |   |   | 1,457 |   |
|                                                                                                                                     |   |   |         |    |   |   |   |   |   |
| PROPERTY AND EQUIPMENT, NET                                                                                                              | 6      |   |         | 33,138  |   |   |   | 28,906 |   |
|                                                                                                                                     |   |   |         |    |   |   |   |   |   |
| INTANGIBLE ASSETS, NET                                                                                                                   | 7      |   |         | 5,070   |   |   |   | 3,192 |   |
|                                                                                                                                     |   |   |         |    |   |   |   |   |   |
| Total long-term assets                                                                                                                   |   |   |         | 48,626  |   |   |   | 38,425 |   |
|                                                                                                                                     |   |   |         |    |   |   |   |   |   |
| Total assets                                                                                                                             |   |   | $            | 341,873 |   |   | $ | 265,332 |   |

----

----

|                                                                                                                                                                                                                                                     |   |   | December 31, |     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------|----------|
|                                                                                                                                                                                                                                                     | Note   |   | 2014         |     |   | 2015 |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                                                                                                                                     |   |   |         |     |   |   |   |
|                                                                                                                                                                                                                                                     |   |   |         |     |   |   |   |
| CURRENT LIABILITIES:                                                                                                                                                                                                                                     |   |   |         |     |   |   |   |
| Short-term loans                                                                                                                                                                                                                                         | 10     |   | $            | 40,600   |   |   | $ | 34,922 |   |
| Current maturities of long-term loan                                                                                                                                                                                                                     | 10     |   |         | 8,232    |   |   |   | - |   |
| Trade payables                                                                                                                                                                                                                                           |   |   |         | 101,752  |   |   |   | 71,721 |   |
| Deferred revenues                                                                                                                                                                                                                                        |   |   |         | 17,667   |   |   |   | 8,901 |   |
| Other accounts payable and accrued expenses                                                                                                                                                                                                              | 9      |   |         | 37,248   |   |   |   | 27,052 |   |
|                                                                                                                                                                                                                                                     |   |   |         |     |   |   |   |   |   |
| Total current liabilities                                                                                                                                                                                                                                |   |   |         | 205,499  |   |   |   | 142,596 |   |
|                                                                                                                                                                                                                                                     |   |   |         |     |   |   |   |   |   |
| LONG-TERM LIABILITIES:                                                                                                                                                                                                                                   |   |   |         |     |   |   |   |   |   |
| Long-term loan, net of current maturities                                                                                                                                                                                                                | 10     |   |         | 2,072    |   |   |   | - |   |
| Accrued severance pay and pensions                                                                                                                                                                                                                       | 12     |   |         | 11,452   |   |   |   | 9,276 |   |
| Other long-term liabilities                                                                                                                                                                                                                              |   |   |         | 18,298   |   |   |   | 10,639 |   |
|                                                                                                                                                                                                                                                     |   |   |         |     |   |   |   |   |   |
| Total long-term liabilities                                                                                                                                                                                                                              |   |   |         | 31,822   |   |   |   | 19,915 |   |
|                                                                                                                                                                                                                                                     |   |   |         |     |   |   |   |   |   |
| COMMITMENTS AND CONTINGENT LIABILITIES                                                                                                                                                                                                                   | 13     |   |         |     |   |   |   |   |   |
|                                                                                                                                                                                                                                                     |   |   |         |     |   |   |   |   |   |
| SHAREHOLDERS' EQUITY:                                                                                                                                                                                                                                    | 14     |   |         |     |   |   |   |   |   |
| Share capital -                                                                                                                                                                                                                                          |   |   |         |     |   |   |   |   |   |
| Ordinary shares of NIS 0.01 par value -                                                                                                                                                                                                                  |   |   |         |     |   |   |   |   |   |
| Authorized: 120,000,000  shares at December 31, 2014 and 2015; Issued: 80,612,389 and 81,118,387 shares at December 31, 2014 and 2015, respectively; Outstanding: 77,130,866 and 77,636,864 shares at December 31, 2014 and 2015, respectively |   |   |         | 212      |   |   |   | 214 |   |
| Additional paid-in capital                                                                                                                                                                                                                               |   |   |         | 406,413  |   |   |   | 408,174 |   |
| Treasury shares at cost – 3,481,523 ordinary shares as of December 31, 2014 and 2015                                                                                                                                                               |   |   |         | (20,091  | ) |   |   | (20,091 | ) |
| Accumulated other comprehensive loss                                                                                                                                                                                                                     |   |   |         | (4,111   | ) |   |   | (8,616 | ) |
| Accumulated deficit                                                                                                                                                                                                                                      |   |   |         | (277,871 | ) |   |   | (276,860 | ) |
|                                                                                                                                                                                                                                                     |   |   |         |     |   |   |   |   |   |
| Total shareholders' equity                                                                                                                                                                                                                               |   |   |         | 104,552  |   |   |   | 102,821 |   |
|                                                                                                                                                                                                                                                     |   |   |         |     |   |   |   |   |   |
| Total liabilities and shareholders' equity                                                                                                                                                                                                               |   |   | $            | 341,873  |   |   | $ | 265,332 |   |

----

GO

----

|                                                                                                  |   |   |   | Year endedDecember 31, |          |
|-------------------------------------------------------------------------------------------------------|--------|--------|--------|------------------------|---------------|
|                                                                                                  |   | Note   |   | 2013                   |          |   | 2014 |   |   | 2015 |   |
|                                                                                                  |   |   |   |                   |          |   |   |   |   |   |   |
| Revenues                                                                                              |   | 16b    |   | $                      | 361,772       |   |   | $ | 371,112 |   |   | $ | 349,435 |   |
| Cost of revenues                                                                                      |   |   |   |                   |  249,543 |   |   |   | 286,670 |   |   |   | 246,487 |   |
|                                                                                                  |   |   |   |                   |          |   |   |   |   |   |   |   |   |   |
| Gross profit                                                                                          |   |   |   |                   | 112,229       |   |   |   | 84,442 |   |   |   | 102,948 |   |
|                                                                                                  |   |   |   |                   |          |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                                                                   |   |   |   |                   |          |   |   |   |   |   |   |   |   |   |
| Research and development, net                                                                         |   | 2m     |   |                   | 42,962        |   |   |   | 35,004 |   |   |   | 22,930 |   |
| Selling and marketing                                                                                 |   |   |   |                   | 67,743        |   |   |   | 56,059 |   |   |   | 40,816 |   |
| General and administrative                                                                            |   |   |   |                   | 26,757        |   |   |   | 23,657 |   |   |   | 21,235 |   |
| Restructuring costs                                                                                   |   | 2w     |   |                   | 9,345         |   |   |   | 6,816 |   |   |   | 1,225 |   |
| Goodwill impairment                                                                                   |   |   |   |                   | -             |   |   |   | 14,765 |   |   |   | - |   |
| Other income                                                                                          |   | 1b     |   |                   | (7,657        | ) |   |   | (19,827 | ) |   |   | (4,849 | ) |
|                                                                                                  |   |   |   |                   |          |   |   |   |   |   |   |   |   |   |
| Total operating expenses                                                                              |   |   |   |                   | 139,150       |   |   |   | 116,474 |   |   |   | 81,357 |   |
|                                                                                                  |   |   |   |                   |          |   |   |   |   |   |   |   |   |   |
| Operating income (loss)                                                                               |   |   |   |                   | (26,921       | ) |   |   | (32,032 | ) |   |   | 21,591 |   |
| Financial expenses, net                                                                               |   | 17     |   |                   | 14,018        |   |   |   | 37,946 |   |   |   | 14,738 |   |
|                                                                                                  |   |   |   |                   |          |   |   |   |   |   |   |   |   |   |
| Income (loss)before taxes on income                                                                   |   |   |   |                   | (40,939       | ) |   |   | (69,978 | ) |   |   | 6,853 |   |
|                                                                                                  |   |   |   |                   |          |   |   |   |   |   |   |   |   |   |
| Taxes on income                                                                                       |   | 15b    |   |                   | 6,539         |   |   |   | 6,501 |   |   |   | 5,842 |   |
|                                                                                                  |   |   |   |                   |          |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                                                     |   |   |   | $                      | (47,478       | ) |   | $ | (76,479 | ) |   | $ | 1,011 |   |
|                                                                                                  |   |   |   |                   |          |   |   |   |   |   |   |   |   |   |
| Net Income (loss) per share:                                                                          |   |   |   |                   |          |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   |   |   |                   |          |   |   |   |   |   |   |   |   |   |
|     Basic net income (loss) per share                                                  |   |   |   | $                      | (1.23         | ) |   | $ | (1.22 | ) |   | $ | 0.01 |   |
|                                                                                                  |   |   |   |                   |          |   |   |   |   |   |   |   |   |   |
|     Diluted net income (loss) per share                                           |   |   |   | $                      | (1.23         | ) |   | $ | (1.22 |  ) |   | $ | 0.01 |   |
|                                                                                                  |   |   |   |                   |          |   |   |   |   |   |   |   |   |   |
| Weighted average number of ordinary shares used in computing basic net income (loss) per share   |   |   |   |                   | 38,519,606    |   |   |   | 62,518,602 |   |   |   | 77,239,409 |   |
|                                                                                                  |   |   |   |                   |          |   |   |   |   |   |   |   |   |   |
| Weighted average number of ordinary shares used in computing diluted net income (loss) per share |   |   |   |                   | 38,519,606    |   |   |   | 62,518,602 |   |   |   | 77,296,681 |   |

----

NE

----

|                                                                      |   | Year endedDecember 31, |    |
|---------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                      |   | 2013                   |    |   | 2014 |   |   | 2015 |   |
|                                                                      |   |                   |    |   |   |   |   |   |   |
| Net income (loss)                                                         |   | $                      | (47,478 | )  |   | $ | (76,479 | )  |   | $ | 1,011 |   |
| Other comprehensive loss:                                                 |   |                   |    |   |   |   |   |   |   |   |   |   |
|                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |
| Change in foreign currency translation adjustment                         |   |                   | 1,311   |   |   |   | 1,853 |   |   |   | 4,149 |   |
|                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |
| Available-for-sale investments:                                           |   |                   |    |   |   |   |   |   |   |   |   |   |
| Change in net unrealized (gains) losses                                   |   |                   | (223    | ) |   |   | (260 | ) |   |   | 423 |   |
| Reclassification adjustment for net (gains) losses included in net income |   |                   | 97      |   |   |   | 735 |   |   |   | (330 | ) |
|                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |
| Net change                                                                |   |                   | (126    | ) |   |   | 475 |   |   |   | 93 |   |
|                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |
| Cash flow hedges:                                                         |   |                   |    |   |   |   |   |   |   |   |   |   |
| Change in net unrealized (gains) losses                                   |   |                   | (1,295  | ) |   |   | 709 |   |   |   | 153 |   |
| Reclassification adjustment for net (gains) losses included in net income |   |                   | 1,189   |   |   |   | (495 | ) |   |   | 110 |   |
|                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |
| Net change                                                                |   |                   | (106    | ) |   |   | 214 |   |   |   | 263 |   |
|                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |
| Other comprehensive loss, net                                             |   |                   | 1,079   |   |   |   | 2,542 |   |   |   | 4,505 |   |
|                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |
| Total of comprehensive loss                                               |   | $                      | 48,557  |   |   | $ | 79,021 |   |   | $ | 3,494 |   |

----

N 

----

|                                                  |   | Ordinary shares |       |   | Sharecapital |   |   | Additionalpaid-incapital |   |   | Treasury shares at cost |   |   | Accumulated other comprehensive loss |    |   | Accumulated deficit |   |   | Total shareholders' equity |   |
|-------------------------------------------------------|--------|-----------------|------------|--------|--------------|--------|--------|--------------------------|--------|--------|-------------------------|--------|--------|--------------------------------------|---------|--------|---------------------|--------|--------|----------------------------|--------|
|                                                  |   |            |       |   |         |   |   |                     |   |   |                    |   |   |                                 |    |   |                |   |   |                       |   |
| Balance as of January 1, 2013                         |   |            | 36,565,168 |   |         | $      | 98     |                     |   | $      | 318,106                 |   |   | $                                    | (20,091 | )      |                | $      | (490   | )                          |   | $ | (153,914 | ) |   | $ | 143,709 |   |
|                                                  |   |            |       |   |         |   |   |                     |   |   |                    |   |   |                                 |    |   |                |   |   |                       |   |   |   |   |   |   |   |   |
| Exercise of options and RSU's                         |   |            | 292,000    |   |         |   | -      |                     |   |   | 1,145                   |   |   |                                 | -       |   |                |   | -      |                       |   |   | - |   |   |   | 1,145 |   |
| Issuance of shares, net of $ 361 issuance expenses    |   |            | 15,600,000 |   |         |   | 43     |                     |   |   | 34,916                  |   |   |                                 | -       |   |                |   | -      |                       |   |   | - |   |   |   | 34,959 |   |
| Share-based compensation expense                      |   |            | -          |   |         |   | -      |                     |   |   | 3,822                   |   |   |                                 | -       |   |                |   | -      |                       |   |   | - |   |   |   | 3,822 |   |
| Other comprehensive loss, net                         |   |            | -          |   |         |   | -      |                     |   |   | -                       |   |   |                                 | -       |   |                |   | (1,079 | )                          |   |   | - |   |   |   | (1,079 | ) |
| Net loss                                              |   |            | -          |   |         |   | -      |                     |   |   | -                       |   |   |                                 | -       |   |                |   | -      |                       |   |   | (47,478 | ) |   |   | (47,478 | ) |
|                                                  |   |            |       |   |         |   |   |                     |   |   |                    |   |   |                                 |    |   |                |   |   |                       |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2013                       |   |            | 52,457,168 |   |         |   | 141    |                     |   |   | 357,989                 |   |   |                                 | (20,091 | )      |                |   | (1,569 | )                          |   |   | (201,392 | ) |   |   | 135,078 |   |
|                                                  |   |            |       |   |         |   |   |                     |   |   |                    |   |   |                                 |    |   |                |   |   |                       |   |   |   |   |   |   |   |   |
| Exercise of options and RSU's                         |   |            | 573,698    |   |         |   | 1      |                     |   |   | -                       |   |   |                                 | -       |   |                |   | -      |                       |   |   | - |   |   |   | 1 |   |
| Issuance of shares, net of $ 400 issuance expenses    |   |            | 24,100,000 |   |         |   | 70     |                     |   |   | 45,079                  |   |   |                                 | -       |   |                |   | -      |                       |   |   | - |   |   |   | 45,149 |   |
| Share-based compensation expense                      |   |            | -          |   |         |   | -      |                     |   |   | 3,345                   |   |   |                                 | -       |   |                |   | -      |                       |   |   | - |   |   |   | 3,345 |   |
| Other comprehensive loss, net                         |   |            | -          |   |         |   | -      |                     |   |   | -                       |   |   |                                 | -       |   |                |   | (2,542 | )                          |   |   | - |   |   |   | (2,542 | ) |
| Net loss                                              |   |            | -          |   |         |   | -      |                     |   |   | -                       |   |   |                                 | -       |   |                |   | -      |                       |   |   | (76,479 | ) |   |   | (76,479 | ) |
|                                                  |   |            |       |   |         |   |   |                     |   |   |                    |   |   |                                 |    |   |                |   |   |                       |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2014                       |   |            | 77,130,866 |   |         |   | 212    |                     |   |   | 406,413                 |   |   |                                 | (20,091 | )      |                |   | (4,111 | )                          |   |   | (277,871 | ) |   |   | 104,552 |   |
|                                                  |   |            |       |   |         |   |   |                     |   |   |                    |   |   |                                 |    |   |                |   |   |                       |   |   |   |   |   |   |   |   |
| Exercise of options and RSU's                         |   |            | 505,998    |   |         |   | 2      |                     |   |   | 136                     |   |   |                                 | -       |   |                |   | -      |                       |   |   | - |   |   |   | 138 |   |
| Share-based compensation expense                      |   |            | -          |   |         |   | -      |                     |   |   | 1,625                   |   |   |                                 | -       |   |                |   | -      |                       |   |   | - |   |   |   | 1,625 |   |
|     Other comprehensive loss, net |   |            | -          |   |         |   | -      |                     |   |   | -                       |   |   |                                 | -       |   |                |   | (4,505 | )                          |   |   | - |   |   |   | (4,505 | ) |
|     Net income                    |   |            | -          |   |         |   | -      |                     |   |   | -                       |   |   |                                 | -       |   |                |   | -      |                       |   |   | 1,011 |   |   |   | 1,011 |   |
|                                                  |   |            |       |   |         |   |   |                     |   |   |                    |   |   |                                 |    |   |                |   |   |                       |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2015                       |   |            | 77,636,864 |   |         | $      | 214    |                     |   | $      | 408,174                 |   |   | $                                    | (20,091 | )      |                | $      | (8,616 | )                          |   | $ | (276,860 | ) |   | $ | 102,821 |   |

----

AG

----

|                                                                                                        |   | Year endedDecember 31, |    |
|-------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                                                        |   | 2013                   |    |   | 2014 |   |   | 2015 |   |
| Cash flows from operating activities:                                                                       |   |                   |    |   |   |   |   |   |   |
| Net income (loss)                                                                                           |   | $                      | (47,478 | ) |   | $ | (76,479 | ) |   | $ | 1,011 |   |
| Adjustments required to reconcile net income (loss) to net cash provided by (used in) operating activities: |   |                   |    |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                               |   |                   | 15,645  |   |   |   | 13,498 |   |   |   | 12,203 |   |
| Share-based compensation expense                                                                            |   |                   | 3,822   |   |   |   | 3,345 |   |   |   | 1,625 |   |
| Impairment of long-lived assets                                                                             |   |                   | 2,559   |   |   |   | 2,367 |   |   |   | - |   |
| Impairment of goodwill                                                                                      |   |                   | -       |   |   |   | 14,765 |   |   |   | - |   |
| Other than temporary impairment and loss from sale of marketable securities                                 |   |                   | 2,108   |   |   |   | 3,471 |   |   |   | 330 |   |
| Accrued severance pay and pensions, net                                                                     |   |                   | 1,422   |   |   |   | (787 | ) |   |   | (1,188 | ) |
| Accrued interest and amortization of premium on marketable securities                                       |   |                   | (40     | ) |   |   | - |   |   |   | - |   |
| Decrease (increase) in trade receivables, net                                                               |   |                   | 15,505  |   |   |   | (33,876 | ) |   |   | 39,545 |   |
| Decrease in other accounts receivable and prepaid expenses                                                  |   |                   | 2,767   |   |   |   | 11,283 |   |   |   | 626 |   |
| Decrease in inventories                                                                                     |   |                   | 401     |   |   |   | 1,792 |   |   |   | 10,240 |   |
| Increase (decrease) in trade payables                                                                       |   |                   | (24,067 | ) |   |   | 25,155 |   |   |   | (30,361 | ) |
| Increase (decrease) in deferred revenues                                                                    |   |                   | (8,751  | ) |   |   | 9,699 |   |   |   | (8,766 | ) |
| Decrease in deferred tax asset, net                                                                         |   |                   | 3,572   |   |   |   | 9,788 |   |   |   | 1,975 |   |
| Increase (decrease) in other accounts payable and accrued expenses (including other long term liabilities)  |   |                   | 3,023   |   |   |   | (16,300 | ) |   |   | (11,119 | ) |
|                                                                                                        |   |                   |    |   |   |   |   |   |   |   |   |   |
| Net cash provided by (used in) operating activities                                                         |   |                   | (29,512 | ) |   |   | (32,279 | ) |   |   | 16,121 |   |
|                                                                                                        |   |                   |    |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |
| Purchase of property and equipment                                                                          |   |                   | (16,423 | ) |   |   | (12,691 | ) |   |   | (5,266 | ) |
| Investment in short-term bank deposits                                                                      |   |                   | (679    | ) |   |   | (36 | ) |   |   | (19 | ) |
| Proceeds from maturities of short-term bank deposits                                                        |   |                   | 635     |   |   |   | 69 |   |   |   | 432 |   |
| Investment in marketable securities                                                                         |   |                   | (7,867  | ) |   |   | - |   |   |   | - |   |
| Proceeds from sale of marketable securities                                                                 |   |                   | 513     |   |   |   | 5,161 |   |   |   | 122 |   |
|                                                                                                        |   |                   |    |   |   |   |   |   |   |   |   |   |
| Net cash used in investing activities                                                                       |   |                   | (23,821 | ) |   |   | (7,497 | ) |   |   | (4,731 | ) |

----

----

|                                                   |   | Year endedDecember 31, |    |
|--------------------------------------------------------|--------|------------------------|---------|
|                                                   |   | 2013                   |    |   | 2014 |   |   | 2015 |   |
| Cash flows from financing activities:                  |   |                   |    |   |   |   |   |   |   |
| Proceeds and loans from financial institutions         |   |                   | 23,690  |   |   |   | 22,691 |   |   |   | 4,200 |   |
| Repayment of bank loan                                 |   |                   | (10,234 | ) |   |   | (29,012 | ) |   |   | (20,182 | ) |
| Proceeds from issuance of shares, net                  |   |                   | 34,959  |   |   |   | 45,149 |   |   |   | - |   |
| Proceeds from exercise of options                      |   |                   | 1,145   |   |   |   | - |   |   |   | 138 |   |
|                                                   |   |                   |    |   |   |   |   |   |   |   |   |   |
| Net cash provided by (used in) financing activities    |   |                   | 49,560  |   |   |   | 38,828 |   |   |   | (15,844 | ) |
|                                                   |   |                   |    |   |   |   |   |   |   |   |   |   |
| Effect of exchange rate changes on cash                |   |                   | (919    | ) |   |   | (36 | ) |   |   | (651 | ) |
|                                                   |   |                   |    |   |   |   |   |   |   |   |   |   |
| Decrease in cash and cash equivalents                  |   |                   | (4,692  | ) |   |   | (984 | ) |   |   | (5,105 | ) |
|                                                   |   |                   |    |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at the beginning of the year |   |                   | 47,099  |   |   |   | 42,407 |   |   |   | 41,423 |   |
|                                                   |   |                   |    |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at the end of the year       |   | $                      | 42,407  |   |   | $ | 41,423 |   |   | $ | 36,318 |   |
|                                                   |   |                   |    |   |   |   |   |   |   |   |   |   |
| Supplemental disclosure of cash flow information:      |   |                   |    |   |   |   |   |   |   |   |   |   |
|                                                   |   |                   |    |   |   |   |   |   |   |   |   |   |
| Cash paid during the year for income taxes             |   | $                      | 1,778   |   |   | $ | 2,572 |   |   | $ | 1,509 |   |
|                                                   |   |                   |    |   |   |   |   |   |   |   |   |   |
| Cash paid during the year for interest                 |   | $                      | 2,597   |   |   | $ | 3,541 |   |   | $ | 2,820 |   |

----

GO

----

| NOTE 1:- | GENERAL |
|----------|---------|

|   | a. | Ceragon Networks Ltd. ("the Company") is a wireless backhaul specialist.  It provides wireless backhaul solutions that enable cellular operators and other wireless service providers to deliver voice and data services, enabling smart-phone applications such as internet browsing, social networking applications, image sharing, music and video applications. Its wireless backhaul solutions use microwave radio technology to transfer large amounts of telecommunication traffic between base stations and small-cells and the core of the service provider's network. The Company also provides wireless fronthaul solutions that use microwave technology for ultra-high speed, ultra-low latency communication between LTE/LTE-Advanced base band digital units stations and remote radio heads. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | Acquisitions: |
|--------|----|---------------|

----

----

| NOTE 1:- | GENERAL (Cont.) |
|----------|-----------------|

|   | c. | Cost reduction plans: |
|--------|----|-----------------------|

|   | d. | Liquidity and Capital Resources |
|--------|----|---------------------------------|

----

----

| NOTE 1:- | GENERAL (Cont.) |
|----------|-----------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES |
|----------|---------------------------------|

|   | a. | Basis of presentation: |
|--------|----|------------------------|

|   | b. | Use of estimates: |
|--------|----|-------------------|

|   | c. | Financial statements in U.S. dollars: |
|--------|----|---------------------------------------|

|   | d. | Principles of consolidation: |
|--------|----|------------------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|   | e. | Cash equivalents: |
|--------|----|-------------------|

|   | f. | Short-term bank deposits: |
|--------|----|---------------------------|

|   | g. | Inventories: |
|--------|----|--------------|

|   | h. | Property and equipment: |
|--------|----|-------------------------|

|                                              | %                                                                     |
|---------------------------------------------------|-----------------------------------------------------------------------|
|                                              |                                                                  |
| Computers, manufacturing and peripheral equipment | 6 – 33                                                          |
| Enterprise Resource Planning systems ("ERP")      | 10                                                                    |
| Office furniture and equipment                    |  Mainly 15                                                       |
| Leasehold improvements                            | Over the shorter of the term of the lease or useful life of the asset |

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|   | i. | Impairment of long-lived assets: |
|--------|----|----------------------------------|

|   | j. | Income taxes: |
|--------|----|---------------|

|   | k. | Goodwill and other intangible assets: |
|--------|----|---------------------------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|   | l. | Revenue recognition: |
|--------|----|----------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|   | m.  | Research and development expenses, net: |
|--------|----------|-----------------------------------------|

|   | n. | Warranty costs: |
|--------|----|-----------------|

|   | o. | Derivative instruments: |
|--------|----|-------------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|   | p. | Concentrations of credit risk: |
|--------|----|--------------------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|   | q. | Allowance for doubtful debt: |
|--------|----|------------------------------|

|   | r. | Transfers of financial assets: |
|--------|----|--------------------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|   | s. | Severance pay: |
|--------|----|----------------|

|   | t.  | Pension accrual: |
|--------|----------|------------------|

|   | u.  | Accounting for stock-based compensation: |
|--------|----------|------------------------------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|                    |   | December 31, |      |
|-------------------------|--------|--------------|-----------|
|                    |   | 2013         |      |   | 2014 |   |   | 2015 |   |
|                    |   |         |      |   |   |   |   |   |   |
| Dividend yield          |   |         | 0         | % |   |   | 0 | % |   |   | 0 | % |
| Volatility              |   |         | 41%-56    | % |   |   | 49%-65 | % |   |   | 48%-70 | % |
| Risk free interest      |   |         | 0.1%-2.80 | % |   |   | 0.1%-2.40 | % |   |   | 0.1%-2.40 | % |
| Early exercise multiple |   |         | 1.60-1.90 |   |   |   | 2.20-2.80 |   |   |   | 2.60-3.40 |   |

|   | v. | Fair value of financial instruments: |
|--------|----|--------------------------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|  |    Level 1 - | Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. |
|--|------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  |    Level 2 - | Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. |
|--|------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  |    Level 3 - | Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
|--|------------------------|---------------------------------------------------------------------------------------------------------|

|   | w. | Restructuring costs: |
|--------|----|----------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|   | x. | Comprehensive income: |
|--------|----|-----------------------|

|                                                       |   | Unrealized Gains (Losses) on Available-for-Sale Investments |   |   | Unrealized Gains (Losses) on Cash Flow Hedges |   |   | Foreign Currency Translation Adjustments |   |   | Total  |   |
|------------------------------------------------------------|--------|-------------------------------------------------------------|--------|--------|---------------------------------------------------------|--------|--------|------------------------------------------|--------|--------|--------|--------|
|                                                       |   |                                                        |   |   |                                                    |   |   |                                     |   |   |   |   |
| Balance as of January 1, 2015                              |   | $                                                           | 93     |   |                                                    | $      | 100    |                                     |   | $      | (4,304 | )      |   | $ | (4,111 | ) |
|                                                       |   |                                                        |   |   |                                                    |   |   |                                     |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss) before reclassifications |   |                                                        | (423   | )      |                                                    |   | (153   | )                                        |   |   | (4,149 | )      |   |   | (4,725 | ) |
| Amounts reclassified from AOCI                             |   |                                                        | 330    |   |                                                    |   | (110   | )                                        |   |   | -      |   |   |   | 220 |   |
| Other comprehensive income (loss)                          |   |                                                        | (93    | )      |                                                    |   | (263   | )                                        |   |   | (4,149 | )      |   |   | (4,505 | ) |
|                                                       |   |                                                        |   |   |                                                    |   |   |                                     |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2015                            |   |                                                        | -      |   |                                                    | $      | (163   | )                                        |   | $      | (8,453 | )      |   | $ | (8,616 | ) |

|   | y.  | Treasury shares: |
|--------|----------|------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|   | z. | Basic and diluted net earnings per share: |
|--------|----|-------------------------------------------|

|   | aa. | Advertising expenses: Advertising expenses are charged to the statements of operations as incurred. Advertising expenses for the years ended December 31, 2013, 2014 and 2015 amounted to $ 325, $235 and $ 350, respectively. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ab. | Impact of recently issued Accounting Standards: |
|--------|-----|-------------------------------------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

----

----

| NOTE 3:- | MARKETABLE SECURITIES |
|----------|-----------------------|

|             |   | 2014      |   |   | 2015             |   |
|------------------|--------|-----------|--------|--------|------------------|--------|
|             |   | Amortized |   |   | Gross unrealized |   |   | Fairmarket |   |   | Amortized |   |   | Gross unrealized |   |   | Fairmarket |   |
|             |   | Cost      |   |   | gains            |   |   | value |   |   | cost |   |   | gains |   |   | value |   |
|             |   |      |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Government bonds |   | $         | 535    |   |             | $      | - |   |   | $ | 535 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |

----

----

| NOTE 4:- | OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES |
|----------|------------------------------------------------|

|                                  |   | December 31, |   |
|---------------------------------------|--------|--------------|--------|
|                                  |   | 2014         |   |   | 2015 |   |
|                                  |   |         |   |   |   |   |
| Government authorities                |   | $            | 11,036 |   |   | $ | 6,940 |   |
| Advances to suppliers                 |   |         | 1,568  |   |   |   | 3,593 |   |
| Deferred charges and prepaid expenses |   |         | 6,554  |   |   |   | 6,462 |   |
| Other                                 |   |         | 3,740  |   |   |   | 5,588 |   |
|                                  |   |         |   |   |   |   |   |   |
|                                  |   | $            | 22,898 |   |   | $ | 22,583 |   |

| NOTE 5:- | INVENTORIES |
|----------|-------------|

|              |   | December 31, |   |
|-------------------|--------|--------------|--------|
|              |   | 2014         |   |   | 2015 |   |
|              |   |         |   |   |   |   |
| Raw materials     |   | $            | 11,535 |   |   | $ | 6,984 |   |
| Work in progress  |   |         | 1,473  |   |   |   | 252 |   |
| Finished products |   |         | 48,822 |   |   |   | 42,454 |   |
|              |   |         |   |   |   |   |   |   |
|              |   | $            | 61,830 |   |   | $ | 49,690 |   |

----

----

| NOTE 6:- | PROPERTY AND EQUIPMENT, NET |
|----------|-----------------------------|

|                                           |   | December 31, |   |
|------------------------------------------------|--------|--------------|--------|
|                                           |   | 2014         |   |   | 2015 |   |
|                                           |   |         |   |   |   |   |
| Cost:                                          |   |         |   |   |   |   |
| Computers, manufacturing, peripheral equipment |   | $            | 81,855 |   |   | $ | 86,244 |   |
| Office furniture and equipment                 |   |         | 2,876  |   |   |   | 2,903 |   |
| Leasehold improvements                         |   |         | 1,049  |   |   |   | 1,161 |   |
|                                           |   |         |   |   |   |   |   |   |
|                                           |   |         | 85,780 |   |   |   | 90,308 |   |
| Accumulated depreciation:                      |   |         |   |   |   |   |   |   |
| Computers, manufacturing, peripheral equipment |   |         | 50,271 |   |   |   | 58,469 |   |
| Office furniture and equipment                 |   |         | 1,616  |   |   |   | 2,084 |   |
| Leasehold improvements                         |   |         | 755    |   |   |   | 849 |   |
|                                           |   |         |   |   |   |   |   |   |
|                                           |   |         | 52,642 |   |   |   | 61,402 |   |
|                                           |   |         |   |   |   |   |   |   |
| Depreciated cost                               |   | $            | 33,138 |   |   | $ | 28,906 |   |

----

----

| NOTE 7:- | INTANGIBLE ASSETS, NET |
|----------|------------------------|

|   | a.  | Intangible assets: |
|--------|----------|--------------------|

|                      |   | December 31, |   |
|---------------------------|--------|--------------|--------|
|                      |   | 2014         |   |   | 2015 |   |
| Original amounts:         |   |         |   |   |   |   |
|                      |   |         |   |   |   |   |
| Technology                |   | $            | 8,600  |   |   | $ | 8,600 |   |
| Trademarks                |   |         | 800    |   |   |   | 800 |   |
| Customer relationships *) |   |         | 8,023  |   |   |   | 7,970 |   |
|                      |   |         |   |   |   |   |   |   |
|                      |   |         | 17,423 |   |   |   | 17,370 |   |
|                      |   |         |   |   |   |   |   |   |
| Accumulated amortization: |   |         |   |   |   |   |   |   |
|                      |   |         |   |   |   |   |   |   |
| Technology                |   |         | 4,854  |   |   |   | 6,082 |   |
| Trademarks                |   |         | 800    |   |   |   | 800 |   |
| Customer relationships    |   |         | 6,699  |   |   |   | 7,296 |   |
|                      |   |         |   |   |   |   |   |   |
|                      |   |         | 12,353 |   |   |   | 14,178 |   |
|                      |   |         |   |   |   |   |   |   |
| Intangible assets, net    |   | $            | 5,070  |   |   | $ | 3,192 |   |

|   | b. | Amortization expense for the years ended December 31, 2013, 2014 and 2015 amounted to $ 2,534, $ 2,121 and $1,865 respectively. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | c. | The estimated future amortization expense of purchased intangible assets as of December 31, 2015 is as follows: |
|--------|----|-----------------------------------------------------------------------------------------------------------------|

|   |   |   |   |
|--------|--------|--------|--------|
| 2016   |   |   | 1,665  |   |
| 2017   |   |   | 1,527  |   |
|   |   |   |   |   |
|   |   | $      | 3,192  |   |

| NOTE 8:- | GOODWILL |
|----------|----------|

|                                                                  |   | Year endedDecember 31, |    |
|-----------------------------------------------------------------------|--------|------------------------|---------|
|                                                                  |   | 2014                   |    |
|                                                                  |   |                   |    |
| Beginning balance                                                     |   | $                      | 14,935  |   |
| Impairment of Goodwill (1)                                            |   |                   | (14,765 | ) |
| Functional currency translation adjustments and other adjustments (2) |   |                   | (170    | ) |
|                                                                  |   |                   |    |   |
| Ending balance                                                        |   | $                      | -       |   |

|  |    (1) | During the fourth quarter of 2014, the Company determined that sufficient indicators of potential impairment existed to require additional goodwill impairment analysis. These indicators included the trading value of the Company's stock at the time of the impairment test, coupled with existing market conditions and business trends. Based on the step one and step two analyses (see also note 2k), the Company recorded complete goodwill impairment charge in 2014, in the amount of $ 14,765. |
|--|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  |    (2) | Foreign currency translation differences resulting from goodwill allocated to subsidiaries, whose functional currency has been determined to be other than the U.S. dollar and adjustment related to provisions. |
|--|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                           |   | December 31, |   |
|--------------------------------|--------|--------------|--------|
|                           |   | 2014         |   |   | 2015 |   |
|                           |   |         |   |   |   |   |
| Employees and payroll accruals |   | $            | 11,392 |   |   | $ | 11,352 |   |
| Provision for warranty costs   |   |         | 2,851  |   |   |   | 2,712 |   |
| Government authorities         |   |         | 3,602  |   |   |   | 4,820 |   |
| Accrued expenses               |   |         | 16,337 |   |   |   | 5,035 |   |
| Other accounts payables        |   |         | 3,066  |   |   |   | 3,133 |   |
|                           |   |         |   |   |   |   |   |   |
|                           |   | $            | 37,248 |   |   | $ | 27,052 |   |

| NOTE 10:- | LOAN AND CREDIT LINES |
|-----------|-----------------------|

----

----

| NOTE 10:- | LOAN AND CREDIT LINES (Cont.) |
|-----------|-------------------------------|

|  |   a. | An increase in the allowed discounting activities of one of the Company’s main customers' long-term receivables to $ 54,000 and additional $ 20,000 for other customers. |
|--|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  |   b. | Gradual reduction of the credit facility for loans from $ 63, 500 (starting April 1, 2015) to $ 50,000 by February 28, 2016. |
|--|-----------|-----------------------------------------------------------------------------------------------------------------------------------|

|  |   c. | Gradual reduction in minimum cash covenant from $ 20,000 to $ 15,000 by October 1, 2015. |
|--|-----------|------------------------------------------------------------------------------------------|

|  |   d. | An extension of the credit facility repayment date to June 30, 2016 (from March, 14, 2016). |
|--|-----------|---------------------------------------------------------------------------------------------|

|  |   e. | Changes in the equity related covenants definition to exclude Goodwill and Intangible Assets from the calculation, as well as reduction for the minimum total shareholders’ equity value to $ 85,000 and reduction of the minimum total shareholders’ equity total assets ratio 0.27. |
|--|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  |   f. | Other changes primarily increase in the maximum spread of interest chargeable to 3.5% and other bank fees. |
|--|-----------|------------------------------------------------------------------------------------------------------------|

----

----

| NOTE 11:- | DERIVATIVE INSTRUMENTS |
|-----------|------------------------|

|                                               |   |                                                |   |              |               |                                                           |   |   |   |   |
|----------------------------------------------------|--------|-----------------------------------------------------|--------|-------------------|--------------------|----------------------------------------------------------------|--------|--------|--------|--------|
|                                               |   | Loss recognized in Statements of Comprehensive loss |   |              |               | Gain (loss) recognizedin consolidated statements of operations |   |
|                                               |   | December 31,                                        |   | Statement of |               | Year endedDecember 31,                                         |   |
|                                               |   | 2015                                                |   | Operations item   |               | 2013                                                           |   |   | 2014   |   |   | 2015 |   |
|                                               |   |                                                |   |              |               |                                                           |   |   |   |   |   |   |   |
| Derivatives designated as hedging instruments:     |   |                                                |   |              |               |                                                           |   |   |   |   |   |   |   |
| Foreign exchange option and forward contract       |   | $                                                   | 163    |              | Operating expenses |                                                           | $      | 1,189  |   |   | $ | (495 | ) |   | $ | 110 |   |
|                                               |   |                                                |   |              |               |                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Derivatives not designated as hedging instruments: |   |                                                |   |              |               |                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Foreign exchange forward contracts                 |   |                                                | -      |              | Financial expenses |                                                           |   | (2,150 | )      |   |   | (240 | ) |   |   | 705 |   |
|                                               |   |                                                |   |              |               |                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Total                                              |   | $                                                   | 163    |              |               |                                                           | $      | (961   | )      |   | $ | (735 | ) |   | $ | 815 |   |

----

----

| NOTE 11:- | DERIVATIVE INSTRUMENTS (Cont.) |
|-----------|--------------------------------|

|                                                                                                       |                                             |   | December 31, |       |
|------------------------------------------------------------------------------------------------------------|--------------------------------------------------|--------|--------------|------------|
|                                                                                                       | Balance sheet                                    |   | 2014         |       |   | 2015 |   |
|                                                                                                       |                                             |   |         |       |   |   |   |
| Derivatives designated as hedging instruments:Foreign exchange forward contracts                           | "Other account receivables and prepaid expenses" |   | $            | 100        |   |   | $ | - |   |
|                                                                                                       | "Other account payables and accrued expenses"    |   | $            | -          |   |   | $ | 163 |   |
|                                                                                                       | "Other comprehensive income (loss)"              |   | $            |   100 |   |   | $ | (163 | ) |
|                                                                                                       |                                             |   |         |       |   |   |   |   |   |
| Derivatives not designated as hedging instruments:Foreign exchange forward contracts and other derivatives | "Other receivables and prepaid expenses"         |   | $            | 26         |   |   | $ |   138 |   |
|                                                                                                       | "Other account payables and accrued expenses"    |   | $            | 139        |   |   | $ | 395 |   |

| NOTE 12:- | PENSION LIABILITIES, NET |
|-----------|--------------------------|

----

----

| NOTE 12:- | PENSION LIABILITIES, NET (Cont.) |
|-----------|----------------------------------|

|                                              |   | December 31, |   |
|---------------------------------------------------|--------|--------------|--------|
|                                              |   | 2014         |   |   | 2015 |   |
|                                              |   |         |   |   |   |   |
| Accumulated benefit obligation                    |   | $            | 3,243  |   |   | $ | 2,362 |   |
|                                              |   |         |   |   |   |   |   |   |
| Change in projected benefit obligation            |   |         |   |   |   |   |   |   |
| Projected benefit obligation at beginning of year |   | $            | 11,204 |   |   |   | 3,243 |   |
| Liability assumed at the acquisition date of Nera |   |         |   |   |   |   |   |   |
| Service cost                                      |   |         | 37     |   |   |   | 16 |   |
| Interest cost                                     |   |         | 271    |   |   |   | 53 |   |
| Plan settlements                                  |   |         | (7,007 | ) |   |   | - |   |
| Expenses paid                                     |   |         | (548   | ) |   |   | (315 | ) |
| Exchange rates differences                        |   |         | (963   | ) |   |   | (417 | ) |
| Actuarial loss (gain)                             |   |         | 249    |   |   |   | (218 | ) |
|                                              |   |         |   |   |   |   |   |   |
| Projected benefit obligation at end of year       |   | $            | 3,243  |   |   | $ | 2,362 |   |
|                                              |   |         |   |   |   |   |   |   |
| Change in plan assets                             |   |         |   |   |   |   |   |   |
| Fair value of plan assets at beginning of year    |   | $            | 7,124  |   |   | $ | - |   |
| Actual return on plan assets                      |   |         | 146    |   |   |   | - |   |
| Employer contributions to plan                    |   |         | 18     |   |   |   | - |   |
| Plan settlements                                  |   |         | (7,053 | ) |   |   | - |   |
| Exchange rates differences                        |   |         | (235   | ) |   |   | - |   |
|                                              |   |         |   |   |   |   |   |   |
| Fair value of plan assets at end of year          |   | $            | -      |   |   | $ | - |   |

|                          |   | December 31, |   |
|-------------------------------|--------|--------------|--------|
|                          |   | 2014         |   |   | 2015 |   |
| Weighted-average assumptions  |   |         |   |   |   |   |
| Discount rate                 |   |         | 3.00   | % |   |   | 2.70 | % |
| Rate of compensation increase |   |         | 3.25   | % |   |   | 2.5 | % |

----

----

| NOTE 12:- | PENSION LIABILITIES, NET (Cont.) |
|-----------|----------------------------------|

|                                    |   | December 31, |   |
|-----------------------------------------|--------|--------------|--------|
|                                    |   | 2014         |   |   | 2015 |   |
| Components of net periodic benefit cost |   |         |   |   |   |   |
| Service cost                            |   | $            | 37     |   |   | $ | 145 |   |
| Interest cost                           |   |         | 271    |   |   |   | 467 |   |
| Expected return on plan assets          |   |         | (146   | ) |   |   | - |   |
| Exchange rates differences              |   |         | 15     |   |   |   | - |   |
|                                    |   |         |   |   |   |   |   |   |
| Net periodic benefit cost               |   | $            | 177    |   |   | $ | 612 |   |

|                |   | December 31, |   |
|---------------------|--------|--------------|--------|
|                |   | 2014         |   |   | 2015 |   |
|                |   |         |   |   |   |   |
| 2015                |   | $            | 480    |   |   | $ | 315 |   |
| 2016                |   |         | 396    |   |   |   | 290 |   |
| 2017                |   |         | 241    |   |   |   | 240 |   |
| 2018                |   |         | 150    |   |   |   | 150 |   |
| 2019 and thereafter |   |         | 692    |   |   |   | 700 |   |
|                |   |         |   |   |   |   |   |   |
|                |   | $            | 1,959  |   |   | $ | 1,695 |   |

----

----

| NOTE 13:- | COMMITMENTS AND CONTINGENT LIABILITIES |
|-----------|----------------------------------------|

|   | a. | Lease commitments: |
|--------|----|--------------------|

|                |   | Facilities |   |   | Motor vehicles |   |   | Total  |   |
|---------------------|--------|------------|--------|--------|----------------|--------|--------|--------|--------|
|                |   |       |   |   |           |   |   |   |   |
| 2016                |   | $          | 3,484  |   |           | $      | 775    |   |   | $ | 4,259 |   |
| 2017                |   |       | 3,037  |   |           |   | 581    |   |   |   | 3,618 |   |
| 2018                |   |       | 489    |   |           |   | 379    |   |   |   | 868 |   |
| 2019                |   |       | 236    |   |           |   | 103    |   |   |   | 339 |   |
| 2020 and thereafter |   |       | 324    |   |           |   | 5      |   |   |   | 329 |   |
|                |   |       |   |   |           |   |   |   |   |   |   |   |
|                |   | $          | 7,570  |   |           | $      | 1,843  |   |   | $ | 9,413 |   |

|   | b. | During 2014 and 2015, the Company received several grants from the OCS. The grants require the Company to comply with the requirements of the Research and Development Law, however, the Company is not obligated to pay royalties on sales of products based on technology or know how developed from the grants. In a case involving the transfer of technology or know how developed from the grants outside of Israel, the Company may be required to pay royalties related to past sales of products based on the technology or the developed know how. The Company recorded income from OCS grants for the years ended December 31, 2013, 2014 and 2015 in the amount of $ 599, $ 1,092 and $ 1,318, respectively. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c. | Charges and guarantees: |
|--------|----|-------------------------|

----

----

| NOTE 13:- | COMMITMENTS AND CONTINGENT LIABILITIES (Cont.) |
|-----------|------------------------------------------------|

|   | d. | Litigations: |
|--------|----|--------------|

|   | e. | Inventory: |
|--------|----|------------|

| NOTE 14:- | SHAREHOLDERS' EQUITY |
|-----------|----------------------|

|   | a. | General: |
|--------|----|----------|

|   | b. | In November 2013, the Company completed a public offering of its shares on NASDAQ. The Company issued 14,000,000 of its ordinary shares, nominal value NIS 0.01 per share at a price of $ 2.40 per share before issuance expenses. The Company also granted to the underwriters the option to purchase up to 1,600,000 additional ordinary shares within 30 days, which was fully exercised. Total net proceeds from the issuance amounted to approximately $ 34,959, net of issuance expenses in the amount of $ 361. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| NOTE 14:- | SHAREHOLDERS' EQUITY (Cont.) |
|-----------|------------------------------|

|   | c. | Stock options plans: |
|--------|----|----------------------|

|  |   1. | In 2003, the Company adopted a share option plan (the "Plan"). Under the Plan, options may be granted to officers, directors, employees and consultants of the Company or its subsidiaries. The options vest primarily over four years. The options expire ten years from the date of grant. In December 2012, the Company extended the term of the Plan for an additional period of ten years.Upon adoption of the Plan, the Company reserved for issuance 8,639,000 ordinary shares in accordance with the respective terms thereof. Any options, which are canceled or forfeited before the expiration date, become available for future grants. As of December 31, 2015, the Company has 1,884,425 Ordinary shares available for future grant under the Plan. |
|--|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  |   2. | On September 6, 2010, the Company's board of directors amended the Plan so as to enable to grant Restricted share Units ("RSUs") pursuant to such Plan. |
|--|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|  |   3. | The following is a summary of the Company's stock options and RSUs granted among the various plans: |
|--|-----------|-----------------------------------------------------------------------------------------------------|

|                                   |   | Year endedDecember 31, 2015 |       |
|----------------------------------------|--------|-----------------------------|------------|
|                                   |   | Numberof options            |       |   | Weightedaverageexerciseprice |   |   | Weighted average remaining contractual term(in years) |   |   | Aggregateintrinsicvalue |   |
|                                   |   |                        |       |   |   |   |   |   |   |   |   |   |
| Outstanding at beginning of year       |   |                        | 5,699,012  |   |   | $ | 7.46 |   |   |   |   |   | $ | - |   |
| Granted                                |   |                        | 3,094,774  |   |   | $ | 1.19 |   |   |   |   |   |   |   |   |
| Exercised                              |   |                        | (125,000   | ) |   | $ | 1.03 |   |   |   |   |   |   |   |   |
| Forfeited or expired                   |   |                        | (2,203,004 | ) |   | $ | 6.78 |   |   |   |   |   |   |   |   |
|                                   |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding at end of the year         |   |                        | 6,465,782  |   |   | $ | 4.81 |   |   |   | 4.76 |   |   | $ | 88 |   |
|                                   |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options exercisable at end of the year |   |                        | 3,199,883  |   |   | $ | 8.14 |   |   |   | 4.13 |   |   | $ | 5 |   |
|                                   |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Vested and expected to vest            |   |                        | 5,512,842  |   |   | $ | 5.41 |   |   |   | 4.66 |   |   | $ | 64 |   |

----

----

| NOTE 14:- | SHAREHOLDERS' EQUITY (Cont.) |
|-----------|------------------------------|

|                             |   | Year endedDecember 31, 2015 |     |
|----------------------------------|--------|-----------------------------|----------|
|                             |   | Number of RSUs              |     |   | Aggregate intrinsic value |   |
|                             |   |                        |     |   |   |   |
| Outstanding at beginning of year |   |                        | 654,306  |   |   |   |   |
| Granted                          |   |                        | -        |   |   |   |   |
| Exercised                        |   |                        | (380,998 | ) |   |   |   |
| Forfeited                        |   |                        | (173,859 | ) |   |   |   |
|                             |   |                        |     |   |   |   |   |
| Outstanding at end of the year   |   |                        | 99,449   |   |   | $ | 120 |   |
|                             |   |                        |     |   |   |   |   |   |
| Vested and expected to vest      |   |                        | 81,691   |   |   | $ | 99 |   |

----

----

| NOTE 14:- | SHAREHOLDERS' EQUITY (Cont.) |
|-----------|------------------------------|

| Exercise price(range) |   |   | Options and RSUs outstandingas ofDecember 31, 2015 |      |   | Weightedaverageremainingcontractuallife (years) |   |   | Weightedaverageexerciseprice |   |   | Options and RSUs exercisableas ofDecember 31, 2015 |   |   | Remaining contractual life (years for exercisable options |      |   | Weightedaverageexerciseprice |   |
|-----------------------|--------|--------|----------------------------------------------------|-----------|--------|-------------------------------------------------|--------|--------|------------------------------|--------|--------|----------------------------------------------------|--------|--------|-----------------------------------------------------------|-----------|--------|------------------------------|--------|
| $                     |   |   |                                               |      |   |                                            |   |   | $                            |   |   |                                               |   |   |                                                      |      |   | $                            |   |
|                  |   |   |                                               |      |   |                                            |   |   |                         |   |   |                                               |   |   |                                                      |      |   |                         |   |
| RSUs 0.0              |   |   |                                               | 99,449    |   |                                            |   |   |                         |   | 0.00   |                                               |   |   | -                                                         |      |   |                         |   |   |   |   |
| 0.01-2.00             |   |   |                                               | 2,899,240 |   |                                            |   | 5.34   |                         |   |   | 1.19                                               |   |   |                                                      | 83,332    |   |                         |   | 5.34 |   |   |   | 1.15 |   |
| 2.01-4.00             |   |   |                                               | 537,188   |   |                                            |   | 4.98   |                         |   |   | 2.61                                               |   |   |                                                      | 240,394   |   |                         |   | 4.94 |   |   |   | 2.87 |   |
| 4.01-6.00             |   |   |                                               | 1,090,830 |   |                                            |   | 3.67   |                         |   |   | 5.23                                               |   |   |                                                      | 1,000,809 |   |                         |   | 3.36 |   |   |   | 5.27 |   |
| 6.01-8.00             |   |   |                                               | 46,500    |   |                                            |   | 6.42   |                         |   |   | 6.85                                               |   |   |                                                      | 38,179    |   |                         |   | 6.36 |   |   |   | 6.91 |   |
| 8.01-10.00            |   |   |                                               | 970,440   |   |                                            |   | 4.70   |                         |   |   | 9.02                                               |   |   |                                                      | 915,585   |   |                         |   | 4.59 |   |   |   | 9.02 |   |
| 10.01-14.29           |   |   |                                               | 921,584   |   |                                            |   | 4.08   |                         |   |   | 12.43                                              |   |   |                                                      | 921,584   |   |                         |   | 4.08 |   |   |   | 12.43 |   |
|                  |   |   |                                               |      |   |                                            |   |   |                         |   |   |                                               |   |   |                                                      |      |   |                         |   |   |   |   |   |   |   |
|                  |   |   |                                               | 6,565,231 |   |                                            |   |   |                         |   |   |                                               |   |   |                                                      | 3,199,883 |   |                         |   |   |   |   |   |   |   |

|                                                  |   | Year endedDecember 31, |   |
|-------------------------------------------------------|--------|------------------------|--------|
|                                                  |   | 2013                   |   |   | 2014 |   |   | 2015 |   |
|                                                  |   |                   |   |   |   |   |   |   |   |
| Cost of revenues                                      |   | $                      | 181    |   |   | $ | 215 |   |   | $ | 73 |   |
| Research and development                              |   |                   | 1,009  |   |   |   | 1,625 |   |   |   | 736 |   |
| Selling and marketing                                 |   |                   | 1,334  |   |   |   | 674 |   |   |   | 495 |   |
| General and administrative                            |   |                   | 1,298  |   |   |   | 831 |   |   |   | 321 |   |
|                                                  |   |                   |   |   |   |   |   |   |   |   |   |   |
| Total stock-based compensation expenses  *) |   | $                      | 3,822  |   |   | $ | 3,345 |   |   | $ | 1,625 |   |

|  |  *) | Including $ 674, $ 2,086 and $ 822 compensation expenses related to RSUs for the year ended December 31, 2013, 2014 and 2015, respectively |
|--|----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| NOTE 14:- | SHAREHOLDERS' EQUITY (Cont.) |
|-----------|------------------------------|

|   | d. | Dividends: |
|--------|----|------------|

| NOTE 15:- | TAXES ON INCOME |
|-----------|-----------------|

|   | a. | Israeli taxation: |
|--------|----|-------------------|

|   | 1. | Measurement of taxable income: |
|--------|----|--------------------------------|

|   | 2. | Tax benefits under the Law for the Encouragement of Capital Investments, 1959 (the "Law"): |
|--------|----|--------------------------------------------------------------------------------------------|

----

----

| NOTE 15:- | TAXES ON INCOME (Cont.) |
|-----------|-------------------------|

| The value of productiveassets before the expansion(NIS in millions) |   | The new proportion that the required investment bears to the value of productive assets |
|---------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|
|                                                                |   |                                                                                    |
| Up to NIS 140                                                       |   | 12%                                                                                     |
| NIS 140 - NIS 500                                                   |   | 7%                                                                                      |
| More than NIS 500                                                   |   | 5%                                                                                      |

----

----

| NOTE 15:- | TAXES ON INCOME (Cont.) |
|-----------|-------------------------|

|   | 3. | Tax benefits under the Law for the Encouragement of Industry (Taxes), 1969: The Encouragement Law provides several tax benefits for industrial companies. An industrial company is defined as a company resident and located in Israel, at least 90% of the income of which in a given tax year exclusive of income from specified Government loans, capital gains, interest and dividends, is derived from an industrial enterprise owned by it. An industrial enterprise is defined as an enterprise whose major activity in a given tax year is industrial production activity. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| NOTE 15:- | TAXES ON INCOME (Cont.) |
|-----------|-------------------------|

|   | 4. | Tax rates: |
|--------|----|------------|

|   | b. | The income tax expense (benefit) for the years ended December 31, 2013, 2014 and 2015 consisted of the following: |
|--------|----|-------------------------------------------------------------------------------------------------------------------|

|              |   | Year endedDecember 31, |   |
|-------------------|--------|------------------------|--------|
|              |   | 2013                   |   |   | 2014 |   |   | 2015 |   |
|              |   |                   |   |   |   |   |   |   |   |
| Current           |   | $                      | 2,967  |   |   | $ | (3,382 | ) |   | $ | 3,895 |   |
| Deferred          |   |                   | 3,572  |   |   |   | 9,883 |   |   |   | 1,947 |   |
|              |   |                   |   |   |   |   |   |   |   |   |   |   |
|              |   | $                      | 6,539  |   |   | $ | 6,501 |   |   | $ | 5,842 |   |
|              |   |                   |   |   |   |   |   |   |   |   |   |   |
| Domestic (Israel) |   | $                      | 1,150  |   |   | $ | 335 |   |   | $ | (606 | ) |
| Foreign           |   |                   | 5,389  |   |   |   | 6,166 |   |   |   | 6,448 |   |
|              |   |                   |   |   |   |   |   |   |   |   |   |   |
|              |   | $                      | 6,539  |   |   | $ | 6,501 |   |   | $ | 5,842 |   |

----

----

| NOTE 15:- | TAXES ON INCOME (Cont.) |
|-----------|-------------------------|

|   | c. | Deferred income taxes: |
|--------|----|------------------------|

|                                                                  |   | December 31, |    |
|-----------------------------------------------------------------------|--------|--------------|---------|
|                                                                  |   | 2014         |    |   | 2015 |   |
| Deferred tax assets:                                                  |   |         |    |   |   |   |
|                                                                  |   |         |    |   |   |   |
| Net operating loss carry forward                                      |   | $            | 66,489  |   |   | $ | 64,476 |   |
| Research and Development                                              |   |         | 7,702   |   |   |   | 5,147 |   |
| Other temporary differences mainly relating to reserve and allowances |   |         | 25,879  |   |   |   | 30,283 |   |
|                                                                  |   |         |    |   |   |   |   |   |
| Deferred tax asset before valuation allowance                         |   |         | 100,070 |   |   |   | 99,906 |   |
| Valuation allowance                                                   |   |         | (95,928 | ) |   |   | (97,899 | ) |
|                                                                  |   |         |    |   |   |   |   |   |
| Deferred tax asset                                                    |   |         | 4,142   |   |   |   | 2,007 |   |
|                                                                  |   |         |    |   |   |   |   |   |
| Deferred tax liabilities:                                             |   |         |    |   |   |   |   |   |
|                                                                  |   |         |    |   |   |   |   |   |
| Acquired intangibles                                                  |   |         | (381    | ) |   |   | (185 | ) |
|                                                                  |   |         |    |   |   |   |   |   |
| Deferred tax asset, net                                               |   | $            | 3,761   |   |   | $ | 1,822 |   |

|   | d. | Net operating loss carry forward and capital loss: |
|--------|----|----------------------------------------------------|

----

----

| NOTE 15:- | TAXES ON INCOME (Cont.) |
|-----------|-------------------------|

|   | e. | Income (Loss) before taxes is comprised as follows: |
|--------|----|-----------------------------------------------------|

|     |   | Year endedDecember 31, |    |
|----------|--------|------------------------|---------|
|     |   | 2013                   |    |   | 2014 |   |   | 2015 |   |
|     |   |                   |    |   |   |   |   |   |   |
| Domestic |   | $                      | (79,900 | ) |   | $ | (81,227 | ) |   | $ | 14,479 |   |
| Foreign  |   |                   | 38,961  |   |   |   | 11,249 |   |   |   | (7,626 | ) |
|     |   |                   |    |   |   |   |   |   |   |   |   |   |
|     |   | $                      | (40,939 | ) |   | $ | (69,978 | ) |   | $ | 6,853 |   |

----

----

| NOTE 15:- | TAXES ON INCOME (Cont.) |
|-----------|-------------------------|

|   | f. | Reconciliation of the theoretical tax expense to the actual tax expense: |
|--------|----|--------------------------------------------------------------------------|

|                                                                                |   | Year endedDecember 31, |    |
|-------------------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                                |   | 2013                   |    |   | 2014 |   |   | 2015 |   |
| Income (Loss) before taxes as reported in the consolidated statements of operations |   | $                      | (40,939 | ) |   | $ | (69,978 | ) |   | $ | 6,853 |   |
|                                                                                |   |                   |    |   |   |   |   |   |   |   |   |   |
| Statutory tax rate                                                                  |   |                   | 25      | % |   |   | 26.5 | % |   |   | 26.5 | % |
|                                                                                |   |                   |    |   |   |   |   |   |   |   |   |   |
| Theoretical tax income on the above amount at the Israeli statutory tax rate        |   | $                      | (10,235 | ) |   | $ | (18,544 | ) |   | $ | 1,816 |   |
| Non-deductible expenses                                                             |   |                   | 9,459   |   |   |   | 2,741 |   |   |   | 1,527 |   |
| Non-deductible expenses related to employee stock options                           |   |                   | 955     |   |   |   | 886 |   |   |   | 430 |   |
| Changes in valuation allowance, net                                                 |   |                   | 4,223   |   |   |   | 20,286 |   |   |   | 2,003 |   |
| Other                                                                               |   |                   | 2,137   |   |   |   | 1,132 |   |   |   | 66 |   |
|                                                                                |   |                   |    |   |   |   |   |   |   |   |   |   |
| Actual tax expense                                                                  |   | $                      | 6,539   |   |   | $ | 6,501 |   |   | $ | 5,842 |   |

|   | g. | The Company adopted the provisions of ASC topic 740-10, "Income Taxes". |
|--------|----|-------------------------------------------------------------------------|

|                                       |   | December 31, |   |
|--------------------------------------------|--------|--------------|--------|
|                                       |   | 2014         |   |   | 2015 |   |
|                                       |   |         |   |   |   |   |
| Uncertain tax positions, beginning of year |   | $            | 9,145  |   |   | $ | 4,659 |   |
| Decreases in tax positions for prior years |   |         | (4,486 | ) |   |   | (3,722 | ) |
| Increases in tax positions for prior years |   |         | -      |   |   |   | 2,875 |   |
| Increase in tax position for current year  |   |         | -      |   |   |   | 3,130 |   |
|                                       |   |         |   |   |   |   |   |   |
| Uncertain tax positions, end of year       |   | $            | 4,659  |   |   | $ | 6,942 |   |

----

----

| NOTE 16:- | SEGMENTS, CUSTOMERS AND GEOGRAPHIC INFORMATION |
|-----------|------------------------------------------------|

|   | a. | The Company applies ASC topic 280, "Segment Reporting", ("ASC 820"). The Company operates in one reportable segment (see note 1 for a brief description of the Company's business). The total revenues are attributed to geographic areas based on the location of the end customer. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | The following tables present total revenues for the years ended December 31, 2013, 2014 and 2015 and long-lived assets as of December 31, 2013, 2014 and 2015: |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                              |   | Year endedDecember 31, |    |
|---------------------------------------------------|--------|------------------------|---------|
|                                              |   | 2013                   |    |   | 2014 |   |   | 2015 |   |
| Revenues from sales to unaffiliated customers:    |   |                   |    |   |   |   |   |   |   |
|                                              |   |                   |    |   |   |   |   |   |   |
| North America                                     |   | $                      | 35,584  |   |   | $ | 40,353 |   |   | $ | 45,934 |   |
| Europe                                            |   |                   | 62,914  |   |   |   | 58,537 |   |   |   | 48,637 |   |
| Africa                                            |   |                   | 73,735  |   |   |   | 55,954 |   |   |   | 34,642 |   |
| Asia-Pacific and Middle East                      |   |                   | 40,731  |   |   |   | 42,095 |   |   |   | 31,929 |   |
| India                                             |   |                   | 26,646  |   |   |   | 92,066 |   |   |   | 105,990 |   |
| Latin America                                     |   |                   | 122,162 |   |   |   | 82,107 |   |   |   | 82,303 |   |
|                                              |   |                   |    |   |   |   |   |   |   |   |   |   |
|                                              |   | $                      | 361,772 |   |   | $ | 371,112 |   |   | $ | 349,435 |   |
|                                              |   |                   |    |   |   |   |   |   |   |   |   |   |
| Property and equipment, net, by geographic areas: |   |                   |    |   |   |   |   |   |   |   |   |   |
|                                              |   |                   |    |   |   |   |   |   |   |   |   |   |
| Israel                                            |   | $                      | 30,759  |   |   | $ | 29,418 |   |   | $ | 26,127 |   |
|                                              |   |                   |    |   |   |   |   |   |   |   |   |   |
| Others                                            |   |                   | 4,486   |   |   |   | 3,720 |   |   |   | 2,779 |   |
|                                              |   |                   |    |   |   |   |   |   |   |   |   |   |
|                                              |   | $                      | 35,245  |   |   | $ | 33,138 |   |   | $ | 28,906 |   |

|   | c. | Major customer data as a percentage of total revenues: |
|--------|----|--------------------------------------------------------|

----

----

| NOTE 17:- | SELECTED STATEMENTS OF OPERATIONS DATA |
|-----------|----------------------------------------|

|   | a. | Financial income, net: |
|--------|----|------------------------|

|                                                                |   | Year endedDecember 31, |    |
|---------------------------------------------------------------------|--------|------------------------|---------|
|                                                                |   | 2013                   |    |   | 2014 |   |   | 2015 |   |
|                                                                |   |                   |    |   |   |   |   |   |   |
| Financial income:                                                   |   |                   |    |   |   |   |   |   |   |
| Interest on marketable securities and bank deposits                 |   | $                      | 1,310   |   |   | $ | 140 |   |   | $ | 101 |   |
| Foreign currency translation differences and derivatives            |   |                   | 1,599   |   |   |   | 1,567 |   |   |   | 1,273 |   |
|                                                                |   |                   |    |   |   |   |   |   |   |   |   |   |
|                                                                |   |                   | 2,909   |   |   |   | 1,707 |   |   |   | 1,374 |   |
| Financial expenses:                                                 |   |                   |    |   |   |   |   |   |   |   |   |   |
| Bank charges and interest on loans                                  |   |                   | (5,260  | ) |   |   | (7,691 | ) |   |   | (5,885 | ) |
| Foreign currency translation differences (*)                        |   |                   | (9,559  | ) |   |   | (28,491 | ) |   |   | (9,897 | ) |
| Impairment and amortization of premium on marketable securities (*) |   |                   | (2,108  | ) |   |   | (3,471 | ) |   |   | (330 | ) |
|                                                                |   |                   |    |   |   |   |   |   |   |   |   |   |
|                                                                |   |                   | (16,927 | ) |   |   | (39,653 | ) |   |   | (16,112 | ) |
|                                                                |   |                   |    |   |   |   |   |   |   |   |   |   |
|                                                                |   | $                      | (14,018 | ) |   | $ | (37,946 | ) |   | $ | (14,738 | ) |

|  |   (*) | The amounts for the years ended December 2014 and 2015 include expenses of $ 20,452 and $1,634, respectively resulting from the devaluation of the local currency in Venezuela, pursuant to SICAD II, and the related re-measurement of certain assets denominated in or linked to the U.S. dollar due to restrictive government policies on payments in foreign currency. In addition for the year ended December 31, 2014 this amount also includes $ 2,170 related to certain transactions to expatriate cash from Venezuela and Argentina. |
|--|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | b. | Net income per share: |
|--------|----|-----------------------|

|                                                                                                                     |   | Year endedDecember 31, |       |
|--------------------------------------------------------------------------------------------------------------------------|--------|------------------------|------------|
|                                                                                                                     |   | 2013                   |       |   | 2014 |   |   | 2015 |   |
| Numerator:                                                                                                               |   |                   |       |   |   |   |   |   |   |
| Numerator for basic and diluted net income (loss) per share - income (loss) available to shareholders of Ordinary shares |   | $                      | (47,478    | ) |   | $ | (76,479 | ) |   | $ | 1,011 |   |
|                                                                                                                     |   |                   |       |   |   |   |   |   |   |   |   |   |
| Denominator:                                                                                                             |   |                   |       |   |   |   |   |   |   |   |   |   |
| Denominator for basic net income (loss) per share - weighted average number of shares                                    |   |                   | 38,519,606 |   |   |   | 62,518,602 |   |   |   | 77,239,409 |   |
|                                                                                                                     |   |                   |       |   |   |   |   |   |   |   |   |   |
| Effect of dilutive securities:                                                                                           |   |                   |       |   |   |   |   |   |   |   |   |   |
| Employee stock options and RSU                                                                                           |   |                   | *) -       |   |   |   | *) - |   |   |   | 57,272 |   |
|                                                                                                                     |   |                   |       |   |   |   |   |   |   |   |   |   |
| Denominator for diluted net income (loss) per share - adjusted weighted average number of shares                         |   |                   | 38,519,606 |   |   |   | 62,518,602 |   |   |   | 77,296,681 |   |

----

----

| NOTE 18:- | FAIR VALUE MEASUREMENT: |
|-----------|-------------------------|

|                    |   | Year endedDecember 31, 2015              |   |
|-------------------------|--------|------------------------------------------|--------|
|                    |   | Fair value measurements using input type |   |
|                    |   | Level 2                                  |   |   | Total |   |
|                    |   |                                     |   |   |   |   |
| Derivatives instruments |   | $                                        | (420   | ) |   | $ | (420 | ) |
|                    |   |                                     |   |   |   |   |   |   |
| Total liabilities       |   | $                                        | (420   | ) |   | $ | (420 | ) |

----

----

| NOTE 18:- | FAIR VALUE MEASUREMENT (Cont.) |
|-----------|--------------------------------|

|                                                                |   | Year endedDecember 31, 2014              |   |
|---------------------------------------------------------------------|--------|------------------------------------------|--------|
|                                                                |   | Fair value measurements using input type |   |
|                                                                |   | Level 1                                  |   |   | Level 2 |   |   | Total |   |
|                                                                |   |                                     |   |   |   |   |   |   |   |
| Marketable securities                                               |   | $                                        | 535    |   |   | $ | - |   |   | $ | 535 |   |
| Derivatives instruments (net of tax effect of  $ 36) |   |                                     | -      |   |   |   | (13 | ) |   |   | (13 | ) |
|                                                                |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Total assets (liabilities)                                          |   | $                                        | 535    |   |   | $ | (13 | ) |   | $ | 522 |   |

| NOTE 19:- | RELATED PARTY BALANCES AND TRANSACTIONS |
|-----------|-----------------------------------------|

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|                                |   | Year endedDecember 31, |   |
|-------------------------------------|--------|------------------------|--------|
|                                |   | 2013                   |   |   | 2014 |   |   | 2015 |   |
|                                |   |                   |   |   |   |   |   |   |   |
| Cost of revenues                    |   | $                      | 5,381  |   |   | $ | 4,613 |   |   | $ | 3,343 |   |
|                                |   |                   |   |   |   |   |   |   |   |   |   |   |
| Research and development expenses   |   | $                      | 1,011  |   |   | $ | 1,244 |   |   | $ | 1,465 |   |
|                                |   |                   |   |   |   |   |   |   |   |   |   |   |
| Selling and marketing expenses      |   | $                      | 1,189  |   |   | $ | 914 |   |   | $ | 737 |   |
|                                |   |                   |   |   |   |   |   |   |   |   |   |   |
| General and administrative expenses |   | $                      | 798    |   |   | $ | 1,123 |   |   | $ | 606 |   |
|                                |   |                   |   |   |   |   |   |   |   |   |   |   |
| Purchase of property and equipment  |   | $                      | 265    |   |   | $ | 100 |   |   | $ | 51 |   |

|                                                        |   | December 31, |   |
|-------------------------------------------------------------|--------|--------------|--------|
|                                                        |   | 2014         |   |   | 2015 |   |
|                                                        |   |         |   |   |   |   |
| Trade payables, other accounts payable and accrued expenses |   | $            | 1,400  |   |   | $ | 1,915 |   |

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