Napatech A/S : Report (Napatech Annual Report 2025)

About this update from Napatech A/s

NAPATECH A/S, TobakBvejen 23 A, 1., DK-2860 Soeborg • CVR no. 10109124 2025 CONTENTS Management's Review CEO Perspective 3 The Napatech Opportunity 4 Board and Management Presentation 6 Group Key Figures and Ratios 9 Financial Review 11 Corporate Governance 13 Corporate Social Responsibility 15 Shareholder Information 19 Financial Statements Consolidated Financial Statements 20 Notes to the Consolidated Statement 27 Parent Company Financial Statements 55 Notes to the Parent Company Financial Statement 62 Statements 73 CEO PERSPECTIVE Confident, Focused, and Built for the AI Data Center Era 2025 was a pivotal year for Napatech. We entered the year with a bold ambition: to transform Napatech into an indispensable acceleration platform for the AI data center era. Today, we stand stronger, more focused, and better positioned than at any point in our history. Our financial performance, technology leadership, and expanding ecosystem all point to one conclusion-Napatech is on the right trajectory, and the opportunity ahead of us is larger than ever. We delivered 33% annual revenue growth in 2025, with Q4 revenue rising 48% year-over-year, supported by stable 70% gross margins. We improved EBITDA by DKK 28 million in 2025, reduced net working capital from DKK 99 million to DKK 83 million, and strengthened our cash position to DKK 127 million up from DKK 64 million in 2024. These results reflect a disciplined execution and a business model that is scaling with efficiency and purpose. Our successful NOK 200 million capital raise early in the year enabled us to support a rapidly expanding design-win pipeline. And the true story of 2025 extends beyond the numbers. We deepened our strategic partnerships with industry leaders, including a tier-1 server OEM, Altera, Intel, and AI-inference innovator d-Matrix. The launch of the JetStream AI networking interface card-highlighted across industry and financial press-underscored Napatech's relevance in next-generation AI data center architectures. Our R&D organization delivered every milestone for our lead customers on time and to specification, even as requirements grew more complex and timelines more demanding. We strengthened our ecosystem with partners across AI infrastructure, cybersecurity, fintech, mobile networking, and network monitoring. Companies such as Broadcom-Symantec, Ei-deticom, Myrtle.ai, Xelera, Kontron, Supermicro, A5G, and Tru-minds are helping us bring complete, market-defining solutions to customers worldwide. We also remained laser-focused on design wins-the engine of our long-term growth. In 2025, we secured 27 unique design wins, each representing a future revenue stream and a validation of our technology. These wins came from both direct engagements and our expanding partner ecosystem, demonstrating the scalability of our go-to-market model. Across the industry, the forces shaping the next decade are unmistakable. AI workloads are exploding. Data movement is becoming the new bottleneck. Enterprises and cloud providers are rearchitecting their infrastructure around acceleration, efficiency, and security. This is the world Napatech was built for. Our SmartNIC and DPU platforms-powered by Altera and In-tel-are aligned with the highest-growth segments of AI, storage, networking, cybersecurity, and fintech. Our software investments are enabling scalable, repeatable solutions that can be deployed broadly across the mass market. And our leadership team, strengthened with seasoned industry veterans, is focused on disciplined execution and long-term value creation. As we enter 2026, Napatech is operating from a position of momentum, clarity, and confidence. We have a strong financial foundation, a differentiated technology roadmap, a growing ecosystem, and a design-win pipeline that will anchor our growth for years to come. Most importantly, we have a clear mission: to become the acceleration platform of the AI data center era-and to deliver sustainable, long-term value for our shareholders. We are executing with conviction. We are investing with purpose. And we are building a company designed to lead. Napatech's future is bright, and we are just getting started. Fully committed and focused, Kartik Srinivasan Chief Executive Officer THE NAPATECH OPPORTUNITY High-Performance Networking Powering Core and AI Infrastructure Napatech addresses two structurally converging markets - Core infrastructure and AI infrastructure - both of which increasingly depend on deterministic, hardware-accelerated networking to deliver predictable performance, efficiency, and economic value at scale. Across both markets, traditional best-effort networking is reaching its limits. Modern data centers are no longer defined solely by bulk throughput, but by distributed, latency-critical systems where tail latency, jitter, and predictability directly determine application performance and business outcomes. This shift is being driven by: Scale-out AI inferencing pipelines Retrieval-augmented generation and data-intensive work flows Real-time control and decision systems Multi-tenant, mixed-criticality infrastructure In these environments, the network sits on the critical execution path. Core Infrastructure Market: Where Determinism Is Mission-Critical In enterprise, cloud, telecom, government, and regulated environments, infrastructure workloads already demand deterministic performance. These systems support: Networking and Security Microservices Storage acceleration and data movement Network and Application Monitoring 5G mobile packet core with user plane functions Financial services and ultra-low latency systems Here, performance variability is not acceptable. Predictability, reliability, and efficiency define system value. Napatech's programmable NICs are embedded in performance-critical systems by delivering: Predictable low tail latency Line-rate processing under real-world load CPU isolation and offload Deterministic traffic handling This market represents Napatech's durable core infrastructure foundation. AI Infrastructure Market: Where Networking Becomes Part of the Compute Engine Unlike training workloads, inferencing systems are highly distributed, latency-sensitive, and economically driven by efficiency at scale. Inferencing pipelines increasingly involve fan-out and fan-in across accelerators, memory, storage, and services. In these systems, networking is no longer passive connectivity - it becomes a core component of the inference engine itself. System performance and cost per inference now depend on: Predictable tail latency Intelligent traffic steering Hardware-accelerated data movement Offload of critical control and processing functions Across hyperscalers, tier-2, neo-cloud, and sovereign cloud environments, as well as on-prem enterprise deployments, achieving this level of determinism increasingly requires specialized networking capabilities. While hyperscalers often rely on custom silicon and vertically integrated fabrics, the broader market must achieve similar outcomes using open, commercially supported infrastructure - creating a large and expanding opportunity for programmable, deterministic networking platforms. This market represents an unprecedented growth opportunity, driven by the structural need for deterministic, high-performance programmable networking in AI infrastructure . Napatech's Moat: Determinism Through Software Excellence While programmable NIC hardware is increasingly available, true differentiation lies in software. Napatech's competitive moat is its deep, production-proven software platform that transforms programmable silicon into deterministic, high-per-formance data planes. This platform enables: Application-aware packet processing directly in hardware Fine-grained flow control and steering Predictable latency under congestion and scale Efficient offload of complex networking functions Years of hardware-software co-design expertise allow Napatech to deliver capabilities that are extremely difficult to replicate with commodity NICs or software-only acceleration. AI inferencing is rapidly emerging as the primary driver of modern data center growth. Turnkey and Frontier Solutions Across Core and AI Infrastructure Napatech's programmable NIC portfolio is strategically positioned across two complementary solution domains: Turnkey Solutions Full-stack packaged platforms developed by Napatech, delivering deterministic performance for Core & AI infrastructure workloads including security, storage, telecom, monitoring, and regulated systems. These solutions: Drive repeatable, scalable revenue Enable rapid deployment across established architectures Deliver predictable performance with operational efficiency Frontier Solutions Advanced programmable platforms leveraging Napatech hardware and foundational software while partnering with Independent Software Vendor (ISVs) as needed. These solutions: Power distributed, latency-sensitive AI inferencing environments Maximize performance through hardware-accelerated data movement and intelligent traffic steering Require focused investment and deep customer collaboration Capture immediate growth in structurally expanding AI markets Turnkey solutions scale proven infrastructure with efficiency and repeatability. Frontier solutions operate at the cutting edge of AI data center design - delivering performance advantages that materially impact system economics. Together, this portfolio allows Napatech to drive durable revenue while expanding aggressively into high-growth AI infrastructure where smart networking is becoming foundational. Strategic Positioning for the Next Data Center Era Napatech sits at the intersection of two structurally converging markets - core infrastructure and AI infrastructure - both increasingly dependent on deterministic, hardware-ac-celerated networking. Through a focused portfolio of Turnkey Solutions that scale proven workloads and Frontier Solutions that unlock cutting-edge AI performance, Napatech is uniquely positioned to deliver predictable, efficient, and economically scalable systems. As data centers continue to decentralize and intensify in performance demands, deterministic networking becomes architectural necessity - compounding Napatech's strategic relevance and long-term growth opportunity. BOARD AND MANAGEMENT PRESENTATION BOARD OF DIRECTORS MANAGEMENT TEAM Lars Boilesen CEO - Kartik Srinivasan Christian Jebsen Lynn A. Comp CFO - Klaus H. Skovrup COO - Henrik Brill Jensen Parry Kummrow Shannon Poulin CR&DO - Flemming Andersen CMO - Jarrod J.S. Siket Svenn Tore Larsen Zane Ball BOARD OF DIRECTORS Lars Boilesen , Chairman of the Board. Born in 1967. Member of the Board since 2017, CEO of Napatech in 2024 and 2025, re-elected as Chairman in January 2026, term expires 2026. Holds a bachelor's degree in Business Economics from the Aarhus School of Business and a postgraduate diploma from Kolding Business School. Lars Boilesen does not fulfil the Committee of Corporate Governance definition of independence as he acted as CEO within the past 5 years. Other directorships: Chairman of the Board for Cobuilder AS. Special competencies: Lars Boilesen has extensive experience in the international software and technology industry. He currently serves as Chief Executive Officer for the Norwegian-listed software company Opera Software ASA (Opera), where he has overseen the sale of the company's browser, privacy and performance apps to a Chinese consortium. He has also been involved in a number of acquisitions, including that of AdColony in 2014. Prior to becoming the CEO of Opera in 2010, Boilesen served as the company's Executive Vice President of Sales & Distribution from 2000 to 2005 and was on the Board of Directors from 2007 to 2009. Boilesen spent several years at Tandberg as head of the Northern Europe and Asian-Pacific markets and as Vice President of Worldwide Sales and Sales Director. He also served as CEO for the Nordic and Baltic Region at Alcatel-Lucent and as Marketing Manager for Eastern Europe in LEGO Group. Christian Jebsen , Member of the Board. Born in 1967. Member of the Board since 2019, re-elected in 2025, term expires 2026. Holds a B.S. degree in economics and a B.A. from Copenhagen Business School. Christian Jebsen represents the second largest shareholder, controlling 9.1% of the shares in Napatech A/S. Christian Jebsen fulfills the Committee of Corporate Governance's definition of independence. Other directorships: Jebsen has multiple board positions in portfolio companies of Verdane Capital. Special competencies: Christian Jebsen is a partner at Verdane Capital. Prior to Verdane, Jebsen has had a number of executive management positions in listed and unlisted companies, including CEO of Kebony AS, CEO of Vmetro ASA, CFO/COO of Opera Software ASA, and CEO of Stavdal ASA. Jebsen's professional background also includes seven years of investment banking experience with Nomura International in London and Enskilda Securities (SEB) in Stockholm and Oslo. Lynn A. Comp , Board member. Born in 1968. Member of the Board since 2025, term expires 2026. Holds a Bachelor of Science in electrical engineering from Virginia Tech and an MBA from University of Phoenix. Lynn A. Comp fulfills the Committee of Corporate Governance's definition of independence. Other directorships: Member of the Board at Neu Reality. Special competencies: Lynn Comp has a wide range of experiences spanning her ~30 years in the tech industry, from strategic planning and go to market of RISC SOCs for both communications infrastructure and mobile phones, to software pipelines laying the groundwork for rapid video-based ser-vices innovation, to pioneering the foundational libraries that paved the way for 'software defined' networking with telecommunications operators. Lynn has extensive experience in marketing, product management, product planning, and strategy development across software, hardware, cloud, and communications service providers (CoSPs). Patty Kummrow , Board member. Born in 1970. Member of the Board since 2025, term expires 2026. Holds a B.S. in Electrical Engineering from the University of Texas and a M.S. in Technology Management from Walden University. Patty Kummrow fulfills the Committee of Corporate Governance's definition of independence. Other directorships: Board member and Independent Director for Synaptics (SYNA). Special competencies: Patty Kummrow has over 30 years of experience in the technology industry as an engineering leader, general manager, and board member. As General Manager of Intel's Cloud Networking Group, she grew revenue to >$1B by balancing longstanding foundational products with strategic growth, and drove large-scale efforts to accelerate innovation and access new markets. Previously, she led global engineering teams at Intel and Hewlett-Packard to develop data centre products to support the rapid growth of cloud, enterprise, and communications markets. Ms Kummrow has served as an Independent Board Director for Synaptics since 2020 and chairs the Nomination and Governance Committee. Shannon Poulin , Vice-Chairman of the Board. Born in 1971. Vice Chairman of the Board since 2025, re-elected in 2025, term expires 2026. Holds an undergraduate degree in Electrical Engineering and a graduate degree in Business Management, and he has been awarded multiple patents. Shannon Poulin fulfills the Committee of Corporate Governance's definition of independence. Other directorships: No other directorships or executive functions. Special competencies: Shannon Poulin has a proven track record of inspiring and leading teams with over 30 years of experience in the technology industry. He has spent his career in high-tech product development, management, and driving profitable business growth. He has held leadership and executive positions at Microchip, Intel, Altera, and Teradyne. Svenn Tore Larsen , Board member. Born in 1959. Member of the Board since 2024, re-elected in 2025, term expires 2026. He is is an electronic engineer from the University of Strathclyde, UK. Svenn Tore Larsen fulfils the Committee of Corporate Governance's definition of independence. Other directorships: Chairman of the board in Norwegian listed Elliptic Laboratories ASA, and a member of the Board in Norwegian listed Polight ASA. Special competencies: Svenn-Tore Larsen is a Norwegian citizen residing in Norway. He served as CEO of Nordic Semiconductor ASA from 2002 to 2023. Larsen has broad international experience in the semiconductor business, previously as Director for the Nordic region of Xilinx Inc. He has also worked at Philips Semiconductor. Zane Ball , Board member. Born in 1969. Member of the Board since 2025, term expires 2026. Holds a bachelor's degree, a master's degree, and a Ph.D. in electrical engineering, all earned from Rice University. He also holds six patents in high-speed electrical design. Zane Ball fulfills the Committee of Corporate Governance's definition of independence. Other directorships: No other directorships or executive functions. Special competencies: Zane Ball is a seasoned technology executive and semiconductor industry leader, bringing nearly three decades of experience in the development and enablement of silicon products and computing platforms for data center, AI, client computing, and foundry services. Formerly a key executive and corporate officer at Intel Corporation, Dr Ball has played a pivotal role in shaping industry standards and enabling new technologies for widespread adoption. Most recently Dr. Ball led Intel's Datacenter and AI product management team following years of leadership as the Corporate Vice President of Datacenter Platform Engineering and Architecture. Ball's team was responsible for designing and validating the latest Intel Xeon® data center platforms and enabling Intel's customers to deploy at scale. Prior to his data center role, Ball was co-general manager of Intel's silicon foundry business as a VP in the Technology and Manufacturing group. Ball has also served as a VP of the Client Computing Group, including roles as general manager of the desktop client business and leader of global customer engineering based in Taipei. EXECUTIVE MANAGEMENT Kartik Srinivasan, CEO. Born in 1977. CEO since January 2026. SHARES AND WARRANTS OF BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENT AS OF DECEMBER 31, 2025. Number of shares 31 Change in December fiscal year, 2024 shares Number of shares 31 December 2025 Total number of w arrants 31 December 2024 Number of w arrants granted in 2025 Number of Total w arrants number of exercised w arrants 31 or lapsed in December 2025 2025 Board of Directors Christian Jebsen - - - - - - - Lynn A. Comp - - - - - - - Patricia Kummrow - 10,000 10,000 - 10,000 - 10,000 Shannon Poulin - 18,330 18,330 - 10,000 - 10,000 Sven-Tore Larsen - - - - - - - Zane Ball - - - - 10,000 - 10,000 Executive Managem ent Lars Boilesen 512,564 - 512,564 2,312,376 - - 2,312,376 GROUP KEY FIGURES AND RATIOS KEY FIGURES (DKK '000) 2025 2024 2023 2022 2021 Revenue 146,609 116,408 182,674 158,628 195,471 Gross profit 101,876 79,359 133,548 89,697 140,358 Operating profit before depreciation, amortization and impairment (EBITDA) (58,602) (86,253) (438) (20,122) 52,915 Operating profit (EBIT) (80,734) (115,579) (32,899) (46,200) 30,662 Net finance income / (expense) (4,385) (1,508) (3,546) 2,056 6,336 Profit / (loss) before tax (85,119) (117,087) (36,445) (44,144) 36,998 Profit / (loss) for the year (80,655) (111,257) (32,016) (48,259) 40,228 Investments in intangible assets 8,081 6,665 10,376 30,296 28,503 Investments in tangible assets 1,390 9,009 8,493 2,888 7,633 Net working capital 83,209 98,643 65,462 55,708 44,526 Total assets 271,955 229,926 194,295 193,968 176,726 Equity 204,693 153,423 111,710 88,255 133,472 Net cash flows from operating activities (32,943) (102,841) (6,785) (23,966) 14,950 Free cash flow (42,230) (113,984) (19,475) (56,704) (16,003) Cash at the end of year 127,470 64,341 42,367 11,962 39,449 Average number of employees 86 82 77 82 81 FINANCIAL REPORTING RATIOS (%) Gross profit margin 69.5% 68.2% 73.1% 56.5% 71.8% EBITDA margin -40.0% -74.1% -0.2% -12.7% 27.1% Current ratio 457.4% 330.2% 226.5% 147.0% 313.3% Return on equity -45.0% -83.9% -32.0% -43.5% 38.0% SHARE RELATED RATIOS (DKK) Basic EPS (0.76) (1.15) (0.36) (0.58) 0.48 Diluted EPS (0.76) (1.15) (0.36) (0.58) 0.47 Operating cash flow per share (0.31) (1.07) (0.08) (0.29) 0.17 Free cash flow per share (0.40) (1.18) (0.22) (0.68) (0.19) Group Key Figures and Ratios Annual Report 2025 10 The financial highlights and ratios are defined and calculated as following: Ratio Calculation formula Explanation Gross profit margin Gross profit x 100 Revenue The ratio represents the percentage of the revenue less cost of goods sold to cover staff costs, other external costs, depreciation and amortization, and finance costs. EBITDA margin Earnings Before Interest, Taxes, Depreciation and Amortization x 100 Revenue The ratio represents an operating profitability measure. Current ratio Current assets x 100 Current liabilities The ratio represents the percentage of the Group's resources to meet its liabilities over the next 12 months. Return on equity Profit for the year x 100 Average equity The ratio represents the Group's ability to generate a return to shareholders taking into account its own capital base. Operating cash flow per share Cash flows from operating activities x 100 Average number of diluted shares The ratio represents the Group's ability to generate cash flow from operating activities per the average number of diluted shares. Free cash flow per share Free cash flow x 100 Average number of diluted shares The ratio represents the Group's ability to generate cash flow from operating and investing activities per the average number of diluted shares. Net working capital represents the value of inventories, trade receivables, and other current operating assets less trade payables, and other current operating liabilities. Cash and cash equivalents and income tax receivable or payable are not part of the net working capital. Cash flows from operating activities are profit or loss before tax added or deducted changes in the net working capital, added or deducted changes in provisions, and added the yearly depreciation and amortization. Free cash flow is net cash flow from operating activities added or deducted investing activities. The Group's basic and diluted earnings per share (EPS) is calculated in accordance with IAS 33 and specified in note 13 to the consolidated financial statements. FINANCIAL REVIEW FINANCIAL PERFORMANCE Revenue increased by 33% in USD. Revenue of USD 22.2 million in 2025 was within our latest expectations, whereas the revenue of DKK 146.6 million in 2025 was slightly below the latest guidance of DKK 150-190 million provided in November 2025 mainly due to foreign exchange and a few orders being postponed into 2026. Our gross margin was 69%, an increase of 1%-point compared to 2024, and within the latest guidance of 69-71%. Staff costs incl. staff costs transferred to development costs & Other external costs amounted to DKK 167.1 million, being below the latest guidance of DKK 170-180 million due to various cost saving initiatives implemented. This also impacted the staff costs transferred to development costs, which amounted to DKK 6.6 million and ended below the latest guidance of DKK 8-12 million. EBITDA of DKK -58.6 million ended within the derived guidance range due to the lower Staff costs & Other external costs. To support the next steps forward with our current customers and expanding design-win pipeline, Napatech successfully completed a private placement capital raise of NOK 200 million (DKK 130.7 million). FINANCIAL DEVELOPMENT (2024 FIGURES IN BRACKETS) In 2025, Napatech generated a total revenue of DKK 146.6 million (DKK 116.4 million), representing an increase of 26%. The increase reflects a pick-up in the 2025 market compared to the challenging market conditions faced in 2024. Revenue from Engineering Services was at the same level as 2024. Revenue from SmartNIC Products increased 26% in 2025 compared to 2024. Revenue in North America increased 26% in 2025 compared to 2024, and revenue in Rest of the World increased 27% in 2025 compared to 2024. The gross margin in 2025 was 69% compared to 68% in 2024. The increase in the gross margin reflects an increase in the gross margin for SmartNIC. The average gross margin on our SmartNIC grew from 67% in 2024 to 69% in 2025. In 2025, our Staff costs and Other external costs, before staff costs transferred to capitalized development costs, amounted to DKK 167.1 million, compared to DKK 171.8 million in 2024. The change from 2024 is due to reduced costs of subcontractors and personnel during 2025 to balance our costs to the revenue. Staff costs transferred to development costs in 2025 amounted to DKK 6.6 million compared to DKK 6.2 million in 2024. EBITDA in 2025 was negative DKK 58.6 million compared to negative DKK 86.3 million in 2024. Depreciation, amortization, and impairment in 2025 were DKK 22.1 million compared to DKK 29.3 million in 2024. The result for the year was negative DKK 80.7 million (negative DKK 111.3 million). Napatech had total assets of DKK 272.0 million on December 31, 2025, compared with DKK 229.9 million on December 31, 2024. The increase of DKK 42.0 million reflects an increase in current assets of DKK 54.6 million primarily related to increases in cash and cash equivalents due to the private placement, increase in trade receivables due to large orders late in 2025 partly countered by a decline in inventories following a focused effort to reduce the levels and a decline in non-current assets of DKK 12.6 million primarily due to a lower level of development costs. Napatech's total liabilities were DKK 67.3 million on December 31, 2025, compared to DKK 76.5 million on December 31, 2024. The decrease in total liabilities was driven by a decrease in interest-bearing loans and borrowings. The group's equity at the end of the year was DKK 204.7 million (DKK 153.4 million). The group has in-house development resources, developing new products and new functionality. The group also engages external consultants for specific development projects. In 2025 DKK 8.1 million was capitalized (DKK 6.7 million). The group had a positive net change in cash of DKK 63.1 million (positive DKK 22.0 million). The net change in cash was impacted by a positive net cash flows from financing activities of DKK 107.7 million due to a capital raise in May 2025, where Napatech raised DKK 130.7 million in gross proceeds from a private placement of 10,000,000 shares which was partly offset by a negative free cash flow of DKK 42.2 million primarily due to the negative EBITDA. FINANCIAL DEVELOPMENT IN THE PARENT COMPANY Net revenues for the parent company in 2025 came in at DKK 118.7 million (DKK 87.8 million), representing an increase of 35%. The EBITDA in the parent company for 2025 was negative DKK 61.2 million (negative DKK 88.1 million), and the result before tax was negative DKK 87.8 million (DKK 118.3 million). The same developments as in the group are taking place. DEVELOPMENT ACTIVITIES AND KNOWLEDGE Napatech has consistently emphasized innovation, especially in the development of cutting-edge SmartNIC-based products and solutions. This commitment remained strong throughout 2025, with continued investment in research and development for new and existing markets. Our leadership in technology is underscored by the continuous introduction of new and advanced products and functionalities across our extensive portfolio, ranging from 10 to 400 gigabits. In 2025, our strategic initiatives have not only enhanced our product offerings but also expanded their applicability, making them more versatile for a diverse array of customers and network environments. The majority of our R&D efforts in 2025 focused on developing DPU solutions and tapping into the growing market within data centers, cybersecurity, and network management. These initiatives have led to the formation of significant strategic partnerships, laying a strong foundation for anticipated revenue growth in the coming years. Our development teams, organized into agile, cross-functional units, foster optimal information exchange and nimble product development. We leverage advanced IT tools for efficient knowledge sharing, ensuring that our develop- EVENTS AFTER YEAR-END No material events occurred after December 31, 2025, that have consequences for the 2025 Annual Report. OUTLOOK 2026 guidance for the Company is the following: Target in DKK million Guidance Units sold 8,700-10,700 Revenue 200-240 Gross margin 60-70% Staff costs & Other external costs 170-180 ment activities, all centralized in Denmark, are marked by exceptional collaboration, focus, and operational excellence. This strategic approach positions Napatech optimistically for future Staff costs transferred to capitalized develop- ment costs 5-8 growth and innovation. DIVIDEND So far, the Company has not distributed any dividends and does not expect to do so in the near future. LIQUIDITY AND CAPITAL RESOURCES As of December 31, 2025, the Group had cash and cash equivalents of DKK 127.5 million. With the cash position at the end of 2025 and the Group's credit facilities for 2026, Napatech's operations in 2026 are fully funded. See note 27 in the notes to the consolidated financial statements for more information on financial risk management objectives and policies. LEGAL MATTERS There are currently no significant legal proceedings involving any company in the Napatech group. GROUP ENTITIES The United States subsidiary has an office in Portsmouth, NH. With performance in the middle of the guided ranges, EBITDA would be negative around DKK 25 million, and units sold would be around 9,700 which is slightly lower than earlier communicated following a shift to high value products coming with a higher average selling price. The Company is exposed to risks that might affect our ability to reach our goals, such as currency fluctuations, general market uncertainty, and material changes in our large OEMs' needs for Napatech's products. Additionally, in 2025 and ongoing in 2026, we have seen increasing market uncertainty, particularly related to potential trade barriers, including tariff increases in the United States. With our products manufactured in the US and the majority of our customers also located in the US, the group is not significantly exposed. However, the lack of predictability and uncertainty surrounding tariff increases is a concern, and we will be monitoring the development closely. CORPORATE GOVERNANCE CORPORATE GOVERNANCE The Company's Board of Directors recognizes the importance of good Corporate Governance. This is ensured through interaction between shareholders, the Board of Directors, and the administration. Napatech's goal is that all interested parties are confident that the group's activities are carried out acceptably and that the governing body has sufficient insight and influence to undertake their functions. The communication between the Company and shareholders primarily takes place at the annual general meeting, quarterly reporting, and via company announcements. The company shareholders are encouraged to subscribe to our newsletter service to receive company news via email. Guidelines on Corporate Governance are approved annually by the Board of Directors or when deemed necessary. Napatech A/S is subject to Danish law but is listed on Euronext Oslo. Napatech follows the Danish recommendations for good Corporate Governance. The Company follows the majority of the Danish recommendations for good Corporate Governance except for a few areas where Napatech has chosen a different approach compared to the recommendations. The statutory report on Corporate Governance is available at http://www.na-patech.com/corporate-governance/report2025 . The Board of Directors has established two committees within the Board: the Remuneration Committee and the Audit Committee, which both are sub-committees of the Board (the Board committees report to the Board of Directors) and operate according to the established internal procedures for each committee decided by the Board of Directors. Nomination Committee Board of Directors Remuneration Committee Audit Committee General Shareholder Meetings Executive Management Team The Remuneration Committee is composed of three members of the Board of Directors. Patricia Kummrow is the Chairman of the Remuneration Committee, and Lynnn Comp and Zane Ball are members. The Remuneration Committee handles the Company's remuneration policy and program and presents recommendations to the Board of Directors for decision according to its meeting protocols and underlying material prepared. The committee annually evaluates the CEO's remuneration and presents recommendations to the Board of Directors for a decision. When the Company's remuneration policy proposes a change, it is subject to approval in the annual general meeting. The committee has prepared a separate Remuneration Report to be presented at the annual general meeting. The remuneration report provides an overview of the total remuneration received by each member of the Board of Directors and the executive management board of Napatech. The report is available at http://www.na-patech.com/remuneration/report2025 . The Audit Committee is composed of two members of the Board of Directors. Svenn Tore Larsen is the Chairman of the committee, and Christian Jebsen is the other member. This committee supports the Board of Directors in fulfilling its responsibilities concerning financial reporting, auditing matters, internal control, and risk matters. The Audit Committee has two meetings per year with the company auditors. The Company's Board of Directors shall have a diverse composition and competence tailored to meet the Company's needs. The Board of Directors' work complies with the Company's internal instructions, guidelines, and procedures for the Board members. The Board normally also carries out a self-assessment of its activities and competence. The Company's corporate governance guidelines, including the annual Corporate Governance status, can be found in the investor relations section https://www.napatech.com/investor-relations . RISKS AND UNCERTAINTIES The group is, due to its normal course of business, exposed to many risk factors. The group operates in a technology market that could change the need for the solutions that Napatech provides. The customers are mainly large tier-one customers with normal credit terms. The group is not significantly exposed to credit risks, but as some customers are large, the outstanding amounts can potentially be substantial. The group is exposed to operational risks due to the dependence on suppliers to deliver both components and the finished products necessary to recognize revenue. The group's growth partly depends on the delivery and adoption of new products and functionalities by the market. As the group has all revenue in USD, as well as some financial assets in USD, there is a risk that fluctuations in the USD exchange rate will affect our financial performance. See notes 3 and 27 in the notes to the consolidated financial statements for more information on risks and uncertainties. RISK MANAGEMENT AND INTERNAL CONTROL Managing risk related to the group's financial performance is controlled by our CFO. The Board of Directors receives monthly financial reports from the finance department, including key financial and operational performance indicators. The Company presents interim management statements for Q1, Q3, and Q4 and a half-year report per IAS 34 to the market. DATA ETHICS POLICY In compliance with the requirements under section 99(d) of the Danish Financial Statements Act, Napatech has implemented a data ethics policy. Napatech complies with both Danish and EU laws on data and privacy protection, and we recognize that thoughtful and responsible decision-making guided by internal policies can be needed as laws and regulations sometimes do not necessarily provide clear ethical guidance. Napatech wants to be perceived as a respected, competent, and proper business partner who complies with current legislation and follows developments in good data ethics. We aspire to treat all the data we produce as part of our daily operations ethically and responsibly, and our approach to the handling of data is based on three key principles: trust, integrity, and security. Napatech uses and processes data, both nonpersonal data and personal data. We collect data regarding Napatech employees for administrative purposes and contact details on customers and their employees so we can deliver our consultancy services. We also collect data from our webpage mainly for marketing purposes and data directly from our customers when we create customer accounts in our systems. To earn the trust of our customers, employees, and shareholders, we process all data with the utmost respect for the sensitivity of the data and any privacy rights. We do not buy or sell customer data to third parties, and we do not use artificial intelligence and machine learning in the analysis of any data. Making sure that our processing activities and security measures match the requirements for the data we are handling, we always apply our standards for data ethics to the way we work, whether we process personal data or other types of data. CORPORATE SOCIAL RESPONSIBILITY CORPORATE SOCIAL RESPONSIBILITY In 2025, Napatech continued its efforts around the ESG development initiative. Napatech has taken the first steps towards the sustainability reporting requirements, including the EU Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) that underpin it. Reporting on the CSRD is a significant undertaking, and while Napatech is not legally obligated to report on CSRD, we have chosen to proactively enhance our sustainability reporting with some of the elements deemed relevant. The sustainability statement is prepared with reference to the ESRS. We have aimed to implement the key principles of the standards and to align them as closely as possible with the other sections of our annual report, demonstrating our steadfast commitment to sustainability. Our CSR reporting for 2025 regarding section 99a of the Danish Financial Statements Act on corporate social responsibility stated below is therefore based on the material topics determined by the ESRS guidelines. NAPATECH BUSINESS MODEL & VALUE CHAIN Napatech's business model centers on developing and selling high-performance, programmable network interface cards and software for programmable NICs. Production of the hardware is outsourced to a contract manufacturer. This model is designed to ensure efficiency and sustainability across our value chain, from product development to customer service. Napatech's solutions consist of three main components: The hardware devices. The software drivers and tools are software components that enable the integration of Napatech's programmable NICs with various applications and platforms. Professional services, such as engineering consulting, extended warranties, and support services. Napatech's strategy is to leverage its core competencies in network acceleration technology and innovation and to expand its market presence and customer base in emerging markets. Napatech's strategic objectives are to: Grow its revenue and profitability by increasing its market share, diversifying its product portfolio, and enhancing customer loyalty and satisfaction. Strengthen its competitive advantage by investing in research and development and collaborating with strategic partners. Enhance its sustainability performance by minimizing its environmental footprint, promoting social responsibility and ethical conduct, and engaging with its stakeholders and communities. Napatech's value chain consists of the following main activities: Research and development: designing, developing, and testing programmable network interface cards and software for programmable NICs. Procurement: sourcing components and services from suppliers. Manufacturing: outsourced assembly, testing, and quality control of Napatech's smart NICs. Distribution: outsourced storage, packaging, and delivery of Napatech's products to customers. Sales and Marketing: promotion, pricing, and selling Napatech's products and services to customers through direct and indirect channels. Support: troubleshooting Napatech's products and supporting customers. DOUBLE MATERIALITY ASSESSMENT The starting point for Napatech's sustainability reporting is the materiality assessment performed by our management and Board of Directors. As a key element of our work to prepare for CSRD reporting, we have conducted a double materiality assessment following the ideas of the ESRS guidelines. We have assessed how we affect the environment and society (impact materiality) and how sustainability issues can affect us financially (financial materiality). All evaluated impacts and risks are linked to their corresponding topical ESRS standard. The topic's highest-scored impact or risk decides the position in our double materiality matrix. We based our value chain assessments on internal knowledge and mostly looked at our first-tier suppliers. In our impact assessment, we considered both positive and negative effects and current and future effects related to sustainability. In our financial assessment, we measured possible sustainability-related risks that could have a negative financial impact on our business. We applied the ESRS guidance and used three criteria of 'scale', 'scope', and 'irremediable character' to assess the 'severity' of our actual impacts. Due to the complexity of assigning exact values for possible sustainability risk scenarios, we have primarily used qualitative assessments to evaluate the perceived risks when scoring them. The materiality threshold, set by our Board of Directors, is 'sig-nificant'. This means that impacts and risks perceived as 'signifi-cant' or higher, and the ESRS topic related to them, are considered material. MATERIAL ESRS TOPICS IN NAPATECH Our preliminary scoring of each ESRS topic highlights that the most important sustainability matters for Napatech are E1, E2, S1, S2, S4, and G1. ESRS STANDARD: ESRS E1 CLIMATE CHANGE Napatech is committed to conducting business operations in an environmentally responsible manner. Our strategy focuses on reducing emissions through energy efficiency, engaging with suppliers to lower our overall carbon footprint, and increasing the use of renewable energy. Napatech is using the Climate Compass provided by the Danish Business Authority to calculate its energy consumption and greenhouse gas emissions. Our ambition is to reduce our carbon intensity. In 2025, efforts have mainly been focused on getting an overview of emissions. In 2026, further work with the Climate Compass is needed to increase our knowledge of the mechanism involved, set a specific target for reducing our carbon intensity and develop an implementation plan to achieve our target. Most emissions are scope three emissions. Emissions in scope two relate to electricity and heating, while emissions in scope one relates to the company car fleet. The only greenhouse gas emission that Napatech has and accounts for is carbon dioxide. Most scope three emissions are related to consultants and IT assets used for research and development activities, and the use of Napatech's sold products by the customers. As a global company, our business activities include travel, which impacts the environment. Napatech is looking into different ways to improve our energy efficiency and will consider getting more of our electricity from renewable sources. In the office, Napatech recycles plastic, shredded paper, and printer cartridges to minimize the environmental effects of the production hereof. We aim to minimize our travel activities by using virtual meetings whenever possible. ESRS STANDARD: ESRS E2 POLLUTION Napatech is committed to conducting business operations in an environmentally responsible manner. We must take responsibility, mitigate potential risks, and install countermeasures. We provide green solutions in the form of energy-efficient products that save on data center power consumption, and we strive for products to be recycled or disposed of safely. Napatech has a Conflict Mineral policy with the objective of only using tin, tantalum, tungsten, and gold (3TG) that originate from conflict-free sources. We require all of our suppliers to provide reports on the use and sourcing of conflict minerals in products they supply to Napatech. The information acquired from the reports is screened against the Responsible Minerals Initiative's smelter database, and corrective steps are taken when needed. The screening and data collection procedure is outsourced to Greensoft. Since 2018, all our products have been 100% conflict-free. Our commitment to achieving 100% conflict-free products is supported by our membership in the Responsible Minerals Initiative. Napatech has contracted with Greensoft Technology to collect material information on the components from our suppliers. Greensoft Technology contacts our suppliers and requests Full Material Disclosures for each component, when possible, and if not, declarations of compliance with the following industry standards and environmental requirements: RoHS-2 per EU Directive of 2011/65/EU and EU Directive of 2015/863/EU. REACH SVHC per EU Regulation EC/1907/2006 and ECHA's updated Candidate List. REACH Annex-17 per EU Regulation EC/1907/2006. Substances of Concern In Products (SCIP) and the SCIP database reference number - per EU Waste Framework Directive 2008/98/EC, including its amendments Directive (EU) 2018/851 and Regulation (EU) 2023/1542. EU Persistent Organic Pollutants (EU POPs) per EU Regulation EU 2019/1021. Ozone Depleting Substances (ODS) per Regulation (EU) No 2024/590. Persistent, Bioaccumulative, and Toxic (PBT) substances as restricted under US Code of Federal Regulations Title 40, part 751, subpart E - "Regulation of Certain Chemical Substances and mixtures under section 6 of The Toxic Substances Control Act" (TSCA). Reporting and recordkeeping requirements for Perfluoroalkyl and Polyfluoroalkyl Substances (PFAS) under Section 8(a)(7) of the Toxic Substances Control Act (TSCA). Environmental Requirements per IBM Engineering Specification 46G3772. To reduce the negative impact of waste materials on the environment and to protect human health, Napatech provides information to the European SCIP database about hazardous substances in our products. This information enables proper handling, recycling, and disposal of products containing hazardous substances and informs consumers about the presence of such substances. Reporting on our compliance with various restrictions on substances under regulatory requirements such as RoHS, REACH/SVHC, POPs, ODS, TSCA-PBT, TSCA-PFAS, and others, along with our sourcing of conflict minerals is a testament to our commitment to the environment and ethical responsibility. As a manufacturing company, there is a risk that producing and delivering products to our customers will impact the environment. We work actively to limit adverse impacts that we cause or contribute to or that we are directly linked to through our business relationships. Napatech also supports and promotes environmental concerns with suppliers to help them conduct manufacturing activities in an environmentally safe and responsible manner. Our products are assembled by a contract manufacturer who shares our ambitions for social responsibility. We investigate each component regularly, as declared in our conformance declarations. By adhering to regulatory rules and guidelines, Napatech ensures that its products are free from specific hazardous substances that can cause significant harm to the environment and human health. When improperly disposed of, these substances can pollute our land, air, and water, posing serious environmental challenges. Furthermore, Napatech's conformance with environmental regulations is a testament to our commitment to environmental responsibility. For example, the REACH regulation is designed to protect human health and the environment from potential risks posed by chemicals. By complying with REACH, we ensure that the substances we use during manufacturing and in our products for the market are safe for both humans and the environment. Furthermore, we work closely with our contract manufacturer in the US to improve their environmental performance through more efficient resource use and waste reduction. On our request, our contract manufacturer is ISO 14001 certified. During 2024, we continued discussing the initiatives under their environmental management system with our contract manufacturer to evaluate the effectiveness of the processes. All our products are investigated and analyzed to comply with rules for substances and minerals. The following declarations apply to all Napatech products: RoHS Declaration of Compliance REACH Declaration of Compliance EU Declaration of Conformity We ensure that our products meet electromagnetic compatibility requirements. Accredited third parties verify all our products for electromagnetic compliance with international EMC standards. The declaration and report below cover all Napatech products: EU Declaration of Conformity EMC Test Reports Napatech has a regulatory compliance manager whose full-time job is to ensure that Napatech and our suppliers comply with the various legal requirements and certain ethical standards. ESRS STANDARD: ESRS S1 OWN WORKFORCE Napatech is committed to fostering a supportive and inclusive workplace. Napatech has a diversification strategy and employs more than 10 different nationalities. Salaries, positions, and duties are determined based on qualifications and experience. Our strategy promotes employee well-being, enhances diversity and inclusion, provides ongoing training and development, and ensures fair labor practices. Napatech adheres to national regulations on health, working environment, and safety. In Denmark, this includes regular inspections from the Danish Working Environment Authority, and Napatech has been awarded a 'green smiley' indicating that the company's work environment is satisfactory. In the US, Napatech provides a safe working environment following general guidelines from the Federal Occupational Safety and Health Administration (OSHA) and carries Worker's Compensation Insurance. At Napatech, the Board regularly reviews overall results and plans for health, environment, and safety. In 2025, Napatech continued its focus on developing and retaining employees via structured Employee Development Interviews and increased the number of one-on-one employee satisfaction interviews. Employee satisfaction surveys are carried out every third year as part of the mandatory health and safety risk assessment. Our latest employee satisfaction survey from 2025 placed us well above the benchmark level overall. We detected ergonomics within the working environment as a focus area and a visit from an external provider has already been planned for Q1 2026 to help address it. All employees are offered counseling to prevent injuries due to sedentary computer work. In 2025, Napatech continued our focus on the physical working environment. There are policies in place around stress and harassment to ensure a healthy and safe working environment where employees can thrive and feel secure. This is for preventative reasons and contributes to a good tone of communication. Napatech was 82 full-time employees, as of December 31st, 2025, including seven women (9%), compared to eight (9%) in 2024. In general, Napatech wants to increase the presence of women throughout the organization. Our efforts are focused on improving work-life balance as one way to attract more female applicants. It is, however, always the candidate who is deemed best suited for a position that will be offered the position. It has been difficult to raise the presence of women in the organization as women are significantly underrepresented in the workforce the group is recruiting within. The supreme governing board in Napatech consists of the Board of Directors, which, on December 31, 2025, included four men and two women (33%). In 2025, One female and one male member left the board. Two new female bord members were elected and one new male board member was elected, thereby increasing the representation of women. ESRS STANDARD: ESRS S2 WORKERS IN THE VALUE CHAIN Napatech is committed to ensuring fair labor practices and protecting human rights throughout our supply chain. Our strategy focuses on promoting ethical labor practices and enhancing health and safety for workers in our value chain. We have implemented a supplier code of conduct that outlines our expectations for fair labor practices and human rights protections. Our human rights due diligence process includes regular supplier audits and assessments to ensure compliance. We assess risks related to workers in our value chain when our sourcing department engages with our supplier in our regular supplier meetings. Additionally, we support initiatives to improve working conditions and provide training for workers in our supply chain. In 2025, our sourcing department discussed the approach to human rights with both Asian, European, and American suppliers on multiple different occasions. Napatech complies with The Responsible Business Alliance (RBA), formerly the Electronic Industry Citizenship Coalition (EICC), Code of Conduct that establishes standards to ensure that working conditions in the electronics industry, or industries in which electronics is a key component, and its supply chains are safe, that workers are treated with respect and dignity, and that business operations are environmentally responsible and conducted ethically. The Napatech RBA (EICC) conformance statement is available upon request through the company website. ESRS STANDARD: ESRS S4 CONSUMERS AND END-USERS Napatech is committed to ensuring the safety and satisfaction of our consumers and end-users. Our strategy focuses on maintaining high product safety standards and improving customer satisfaction. Our products' safety is ensured by accredited third parties. The following declarations, certificates, and reports apply to all Napatech products: EU Declaration of Conformity IEC CB Safety Certificates UL Safety Certificates IEC CB Safety Test Reports UL Safety Test Reports Our products comply with EU directives and carry the CE mark, as declared in our EU declaration of conformity. The CE mark is a certification mark that indicates a product's compliance with essential health and safety requirements set forth by EU directives. They also hold the UL mark for recognized components. The UL Mark is a certification mark issued by UL Solutions. It signifies that a product has been certified to meet scientific safety, quality, or security standards. They are manufactured under UL's inspection and follow-up service, ensuring that safety-critical components are authenticated and handled according to UL's procedures. We regularly assess risks related to consumers and end-users, focusing on product liability and changing consumer preferences. We also identify opportunities to innovate and offer superior products and services that meet consumer needs. ESRS STANDARD: ESRS G1 GOVERNANCE Napatech's governance practices include regular board meetings, transparent decision-making processes, and active stakeholder engagement. Our code of conduct outlines our commitment to ethical business practices, anti-corruption measures, and conflict-of-interest policies. Anti-corruption Napatech will conduct its business openly, honestly, and ethically. We commit to being open and transparent about our business activities and will not participate in or support any form of bribery, corruption, or fraudulent practices. Our code of conduct outlines our anti-corruption policies, including zero tolerance for bribery and corruption. Our sales and operations teams are regularly reminded of our position on anti-corruption, including recognizing and reporting any suspected corrupt practices and emphasizing our zero-toler-ance policy to the teams. In addition, a double-check reviewed process of all expense claims from the sales team is in place. Furthermore, a whistleblower hotline is implemented to report unethical behavior. No incidents of non-compliance or ethical breaches have occurred in the company's history until now. Our code of conduct is regularly reviewed to reflect best practices and regulatory requirements. Napatech's Corporate Social Responsibility policy is available at https://www.napatech.com/investor-relations/corporate-governance . SHAREHOLDER INFORMATION The group has a policy of continuously keeping shareholders, employees, and other stakeholders updated on the group's operations. Investor Number of shares % of total Country SUNDT AS 18,257,427 16.56% NO VERDANE CAPITAL VIII 10,013,618 9.08% DK ARBEJDSMARKEDETS TILLAEGSPENSION 7,800,000 7.08% DK LUDVIG LORENTZEN AS 6,763,890 6.14% NO BROWNSKE BEVEGELSER AS 4,230,483 3.84% NO DNB BANK ASA 4,061,460 3.68% NO BANK PICTET & CIE (EUROPE) AG 3,474,161 3.15% LUX MANARA AS 2,600,000 2.36% NO DANSKE BANK A/S 2,326,479 2.11% DK BAHIA AS 2,120,280 1.92% NO PRIVATE INVESTOR 2,000,000 1.81% NO SKANDINAVISKA ENSKILDA BANKEN AB 1,919,712 1.74% SE AREPO AS 1,915,200 1.74% NO THE BANK OF NEW YORK MELLON 1,879,749 1.71% UK FOLKETRYGDFONDET 1,452,701 1.32% NO NORDNET BANK AB 1,416,007 1.28% SE MP PENSJON PK 1,391,347 1.26% NO SKANDINAVISKA ENSKILDA BANKEN AB 1,125,673 1.02% LUX J.P. MORGAN SE 1,051,216 0.95% SE F2 FUNDS AS 1,045,000 0.95% NO Total number owned by top 20 76,844,403 69.72% Total 1,790 other shareholders 33,379,263 30.28% Total Number of shares 110,223,666 100% At the end of 2025, the Company had a total of 110,138,565 shares outstanding of a nominal value of DKK 0.25 each. The company owned 63,854 treasury shares at year-end. The company had 3,258 shareholders, and 43% of the shares were registered outside Norway. The total outstanding warrants at the end of the year were 5,073,353, with an average exercise price of DKK 9.22. Napatech has one class of shares and no restriction on the trading of the Company's shares. The group has a policy of continuously keeping shareholders, employees, and other stakeholders updated on the group's operations. This is achieved via open quarterly presentations, stakeholder meetings, and continuously updating the investor relations page on https://www.napatech.com . Napatech is a Danish company registered in the Danish Central Business Register under 10109124. The ISIN number is DK0060520450, and the Company trades on the Oslo Stock Exchange under the ticker NAPA. During 2025, several releases have been announced on the Oslo Stock market under the ticker NAPA. For a complete overview, please see https://www.newsweb.oslobors.no . The Company's financial calendar for the remainder of 2026 is as follows: Date Activity April 23 Annual General Meeting May 7 Q1 2026 Interim Management Statement August 27 Half-yearly Report November 5 Q3 2026 Interim Management Statement NAPATECH HAD BY 1ST MARCH 2026 THE FOLLOWING TOP 20 SHAREHOLDERS NAPATECH SHARE PRICE DEVELOPMENT 2025 (in NOK) 40 35 30 25 20 15 10 5 0 jan 2025 apr 2025 jun 2025 sep 2025 dec 2025 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED INCOME STATEMENT For the year ended 31 December 2025 In DKK'000 2025 2024 Revenue 146,609 116,408 Cost of goods sold (44,733) (37,049) Gross profit 101,876 79,359 Staff costs (111,572) (104,994) Other external costs (48,906) (60,618) Operating profit before depreciation, amortization and impairment (EBITDA) (58,602) (86,253) Depreciation, amortization and impairment (22,132) (29,326) Operating result (EBIT) (80,734) (115,579) Finance income 1,069 2,315 Finance costs (5,454) (3,823) Result before tax (85,119) (117,087) Income tax 4,464 5,830 Result for the year (80,655) (111,257) Earnings per share: Basic, DKK (0.76) (1.15) Diluted, DKK (0.76) (1.15) Note 4 4 5, 7 8 9 10 11 12 13 STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2025 DKK'000 2025 2024 Result for the year (80,655) (111,257) Other comprehensive income that may be reclassified to profit and loss in subsequent periods: Exchange differences on translation of foreign operations (1,940) 824 Net other income / (loss) that may be reclassified to profit or loss in subsequent periods (1,940) 824 Total other comprehensive income / (loss) for the year, net of tax (1,940) 824 Total comprehensive income / (loss) for the year, net of tax (82,595) (110,433) Note CONSOLIDATED STATEMENT OF FINANCIAL POSITION at 31 December 2025 In DKK'000 2025 2024 Development projects, completed 6,910 19,764 Development projects, in progress 9,226 4,269 Patents 691 1,042 Intangible assets 16,827 25,075 Plant and equipment 3,401 4,765 Right-of-use assets 6,180 9,200 Leasehold improvements 404 441 Tangible assets 9,985 14,406 Leasehold deposits 1,636 1,587 Other non-current assets 1,636 1,587 Non-current assets 28,448 41,068 Inventories 56,678 69,876 Trade receivables 37,733 19,381 Prepayments 4,446 5,153 Other receivables 12,350 23,762 Income tax receivable 4,830 6,345 Cash and cash equivalents 127,470 64,341 Current assets 243,507 188,858 Total assets 271,955 229,926 ASSETS Note 14 15 16 15 22 18 19, 22 19, 22 20 22 CONSOLIDATED STATEMENT OF FINANCIAL POSITION at 31 December 2025 In DKK'000 2025 2024 Share capital 27,535 24,999 Share premium 606,871 483,062 Treasury shares (619) (619) Foreign currency translation reserve (1,387) 553 Share-based payment reserve 25,120 18,946 Retained earnings (452,827) (373,518) Equity 204,693 153,423 Interest-bearing loans and borrow ings 4,678 6,806 Other financial liabilities 4,652 4,540 Lease liabilities 3,349 6,406 Contract liabilities 1,344 1,550 Non-current liabilities 14,023 19,302 Interest-bearing loans and borrow ings 23,374 36,098 Lease liabilities 3,211 3,124 Trade payables 8,109 5,789 Other payables 12,712 8,953 Contract liabilities 5,833 3,237 Current liabilities 53,239 57,201 Total liabilities 67,262 76,503 Total equity and liabilities 271,955 229,926 EQUITY AND LIABILITIES Note 21 21 21 21 22, 24 22, 24 16, 24 23 22, 24 16, 24 22 23 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2025 Foreign currency Share based Share Share Treasury translation paym ent Retained Total Note In DKK'000 capital premium shares reserve reserve earnings equity At 1 January 2024 22,544 343,064 (2,110) (271) 10,707 (262,224) 111,710 Result for the year - - - - - (111,257) (111,257) Total other comprehensive income - - - 824 - - 824 Total comprehensive income - - - 824 - (111,257) (110,433) Issue of shares 2,455 143,117 - - - - 145,572 Transaction costs - (5,382) - - - - (5,382) Increase (decrease) through treasury share transactions - - 1,491 - - - 1,491 Reversal, exercised and lapsed share options - 2,263 - - (2,660) (37) (434) 7 Share-based payments - - - - 10,899 - 10,899 Total transactions w ith shareholders 2,455 139,998 1,491 - 8,239 (37) 152,146 At 31 Decem ber 2024 24,999 483,062 (619) 553 18,946 (373,518) 153,423 Result for the year - - - - - (80,655) (80,655) Total other comprehensive income - - - (1,940) - - (1,940) Total comprehensive income - - - (1,940) - (80,655) (82,595) Issue of shares 2,536 128,188 - - - - 130,724 Transaction costs - (4,954) - - - - (4,954) Reversal, exercised and lapsed share options - 575 - - (1,921) 1,346 - 7 Share-based payments - - - - 8,095 - 8,095 Total transactions w ith shareholders 2,536 123,809 - - 6,174 1,346 133,865 At 31 Decem ber 2025 27,535 606,871 (619) (1,387) 25,120 (452,827) 204,693 CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 December 2025 In DKK'000 2025 2024 Operating activities Result bef ore tax (85,119) (117,087) Adjustments to reconcile profit before tax to net cash flows: Finance income (1,069) (2,315) Finance costs 5,454 3,823 Depreciation, amortization and impairment 22,132 29,326 Share-based payment expense 8,095 10,899 Working capital adjustments: Change in inventories 13,198 (34,304) Change in trade and other receivables and prepayments (9,335) 9,829 Change in trade and other payables and contract liabilities 8,447 (6,866) Interest received 1,069 1,617 Interest paid (1,794) (3,135) Income tax received, net 5,979 5,372 Net cash flow s from operating activities (32,943) (102,841) Investing activities Purchase of tangible assets (1,157) (4,432) Investments in intangible assets (8,081) (6,665) Investments in leasehold deposits (49) (46) Net cash from investing activities (9,287) (11,143) Free cash flow (42,230) (113,984) Financing activities Capital increase 130,724 145,572 Payments regarding share options - (246) Transaction costs on issue of shares (4,954) (5,382) Increase (decrease) through treasury share transactions - 1,491 Repayment of financial lease liabilities (3,199) (3,561) Repayment of borrow ings (14,838) (1,175) Net cash flow s from financing activities 107,733 136,699 Net change in cash and cash equivalents 65,503 22,715 Net foreign exchange difference (2,374) (741) Cash and cash equivalents at 1 January 64,341 42,367 Cash and cash equivalents at 31 Decem ber 127,470 64,341 Note NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 CORPORATE INFORMATION 28 NOTE 2 MATERIAL ACCOUNTING POLICY INFORMATION 28 NOTE 3 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES, AND ASSUMPTIONS 34 NOTE 4 OPERATING SEGMENTS 34 NOTE 5 STAFF COSTS 36 NOTE 6 RESEARCH AND DEVELOPMENT COSTS 36 NOTE 7 SHARE-BASED PAYMENTS 36 NOTE 8 AUDITORS' FEE 41 NOTE 9 DEPRECIATION, AMORTIZATION AND IMPAIRMENT 41 NOTE 10 FINANCE INCOME 41 NOTE 11 FINANCE COSTS 42 NOTE 12 INCOME TAX 42 NOTE 13 EARNINGS PER SHARE 43 NOTE 14 INTANGIBLE ASSETS 43 NOTE 15 TANGIBLE ASSETS 44 NOTE 16 LEASING 45 NOTE 17 DEFERRED TAX 46 NOTE 18 INVENTORIES 46 NOTE 19 TRADE AND OTHER RECEIVABLES 47 NOTE 20 INCOME TAX RECEIVABLES 47 NOTE 21 ISSUED CAPITAL AND RESERVES 47 NOTE 22 FINANCIAL ASSETS AND FINANCIAL LIABILITIES 49 NOTE 23 CONTRACT LIABILITIES 49 NOTE 24 LIABILITIES FROM FINANCING ACTIVITIES 50 NOTE 25 COMMITMENTS AND CONTINGENCIES 50 NOTE 26 RELATED PARTY DISCLOSURES 50 NOTE 27 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES 51 NOTE 28 EVENTS AFTER THE REPORTING PERIOD 54 ‌NOTE 1 CORPORATE INFORMATION The consolidated financial statements of Napatech A/S and its subsidiary (collectively, the Group) for the year ended were authorized for issue in accordance with the resolution of the management on March 19, 2026. ESEF data Name of reporting entity or other means of identification Napatech A/S Domicile of entity Denmark Description of nature of entity's operations and principal activities Tech company Country of incorporation Denmark Principal place of business Global Legal form of entity A/S Address of entity's registered office Tobaksvejen 23A, 2860 Soeborg ‌NOTE 2 MATERIAL ACCOUNTING POLICY INFORMATION General The financial statements have been prepared in accordance with IFRS Accounting Standards, as adopted by the EU and additional requirements in the Danish Financial Statement Act. The consolidated financial statements are prepared on a historical cost basis. The consolidated financial statements are presented in thousands of Danish kroner (DKK'000). Changes in accounting policies The accounting policies are consistent with those applied to the consolidated financial statements for 2024. New and amended standards and interpretations that have become operative All new or amended standards (IFRS) and interpretations (IFRIC) as adopted by the EU and which are effective for the financial year beginning on 1 January 2025 have been adopted. The implementation of these new or amended standards and interpretations had no material impact on the financial statements. For standards implemented prospectively, the comparative figures are not restated. New financial reporting standards not yet adopted Certain new accounting standards and interpretations have been published that are not yet in effect or endorsed by the EU and, therefore, not relevant for the preparation of 2025 consolidated financial statements. The Group expects to implement these standards as they take effect. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions besides from IFRS 18, which replaces IAS 1 effective from 1 January 2027. IFRS 18 will affect the presentation of the income statement. It will mainly affect the classification of 'financial income' and 'financial expenses', which will be divided into three new line items: 'operating financial income and expenses', 'investment income' and 'interest expenses'. The reclassification will result in a difference between IAS 1 operating profit and the IFRS-18 defined operating profit, which under IFRS18 will include operating foreign exchange rate differences in the operating profit. iXBRL reporting Napatech A/S has filed the Annual Report for 2025 in the European Single Electronic Format (ESEF), XHTML format, that can be displayed in a standard browser. The primary statements and notes in the consolidated financial statements are tagged using eXtensible Business Reporting Language (iXBRL), which complies with the ESEF taxonomy included in the ESEF Regulation. The consolidated financial statements The consolidated financial statements comprise the parent company, Napatech A/S, and its subsidiary. The subsidiary is fully consolidated from the date of acquisition and/or incorporation, being the date on which the parent company obtains control until the date when such control ceases. The financial statements of the subsidiary are prepared for the same reporting period as the parent company's financial statements, using consistent accounting policies. The consolidated financial statements are prepared as a consolidation of the parent company's and the subsidiary's financial statements, eliminating all intragroup balances, transactions, unrealized gains and losses, and dividends. NOTE 2 MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) Currency translation For each group entity, a functional currency is determined, and items recognized in the financial statements of the individual entities are measured using that functional currency. The functional currency is the currency used as the primary currency for the activities of the reporting entity. Transactions denominated in currencies other than the functional currency are considered transactions denominated in foreign currencies. On initial recognition, transactions denominated in foreign currencies are translated into the functional currency at the exchange rates at the transaction date. Foreign exchange differences arising between the exchange rates at the transaction date and the date of payment are recognized in the income statement as financial income or financial expenses. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates at the reporting date. Any exchange difference arising from the translation is recognized in the income statement as financial income or financial expenses. Non-monetary assets and liabilities measured in terms of historical cost in a foreign currency are translated using the exchange rates at the date of the initial transaction. Translation of group entities On recognition in the consolidated financial statements of foreign entities with a functional currency different from the parent company's presentation currency (DKK), the income statement and the statement of cash flows are translated at the exchange rates at the transaction date, while the statement of financial position items is translated at the exchange rates at the reporting date. Any foreign exchange differences arising from the translation are recognized as other comprehensive income in a separate reserve. On full or partial disposal of a foreign entity, the share of the currency reserve relating to that particular foreign entity is recognized in the income statement. Revenue Sales of goods The Group manufactures and sells network adapters, including software, to end-users and through third-party channel partners. The Group's sales contracts regarding network adapters do not include installation services or significant customization etc., and each sales transaction only relates to a single performance obligation. Revenue from contracts with customers is recognized in the income statement at the point in time when control of the goods is transferred to the customer, usually on delivery of the goods, and at an amount that reflects the consideration to which the Group expects to be entitled in exchange for these goods. Revenue is measured at the fair value of the consideration received, excluding rebates and VAT. Sales of services Extended warranties and technical product support regarding the network adapters are sold separately. The Group also provides specific engineering services according to separate contracts with customers. The revenue from engineering service contracts is recognized in the income statement based on the stage of completion (over time). Contract liabilities associated with engineering services are recognized as revenue in the income statement based on the stage of completion (over time), which is determined on the basis of the relationship between the Group's resources in relation to the recent total estimate of resource consumption. The degree of completion is assessed regularly, and the projects are closely monitored by management, and further adjustments are made to the stage of completion if deemed necessary. When performing this evaluation, all factors concerning the relevant contract are taken into consideration and assessed appropriately. Contract liabilities associated with extended warranties and technical product support are recognized as revenue in the income statement divided equally over the period stated in the contract, and the costs associated with providing the extended warranties and technical product support are recognized as they are incurred. The Group applies the practical expedient to recognize incremental costs of obtaining a contract as they are incurred. Cost of goods sold Cost of goods sold is incurred to generate the period's revenue. Cost of goods sold comprises costs relating to purchases of products that are to be resold. Cost of goods sold also includes movements in inventory write-down for the year. Cost of goods sold does not include staff costs. The Group uses sub-suppliers for the primary production of goods for resale. Staff costs Staff costs include salaries, bonuses, pensions and social costs, share-based payments, vacation pay, and other benefits. Staff costs are recognized in the year in which the associated services are rendered by the employees. Staff costs comprise all staff costs to employees in the Group except from the portion transferred to capitalized development costs as specified in the note related to staff costs. NOTE 2 MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) Share-based payments The Group's employees and management receive consideration in the form of share-based payments. The share-based consideration is an equity-settled program under which employees and management deliver services in return for share options. The share options are measured at fair value at the time of granting. The fair value of share options is determined using the Black-Scholes option-pricing model. Costs relating to equity-settled share-based payments are recognized on a straight-line-basis in the income statement under staff costs and in equity over the vesting period. The total expense recognized for equity-settled share-based payments at the reporting date reflects the share of the vesting period that has lapsed and management's best estimate of the number of equity instruments that will ultimately vest. Other external costs Other external costs comprise costs of research and development not qualifying for recognition as intangible assets, and costs of development associated with engineering service contracts. Other external costs also comprise costs of sales, including costs of sales campaigns, advertising, exhibitions, etc., and administration costs, including office-related expenses. Write-downs on trade receivables are also included. Finance income and cost Finance income and costs comprise interest income and expenses, unrealized exchange gains and losses on financial assets and liabilities in foreign currencies and realized exchange gains and losses on foreign currency transactions. For financial instruments measured at amortized cost, interest income, and expenses are recognized using the effective interest rate method. Income tax for the year Tax for the year, which comprises the current tax charge for the year and changes in the deferred tax charge, including changes arising from changes in the tax rate, is recognized in the income statement as regards the portion that relates to the profit or loss for the year and in other comprehensive income as regards the portion that relates to entries in other comprehensive income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date in the countries where the Group operates and generates taxable income. Intangible assets Intangible assets are initially recognized in the statement of financial position at cost. Subsequent to initial recognition, intangible assets are carried at cost less accumulated amortization and impairment losses. Intangible assets comprise development projects and patents with finite useful lives. Intangible assets with finite useful lives are amortized over their economic lives and tested for impairment whenever there is an indication that an asset might be impaired. Useful lives are reassessed on an annual basis. Changes in expected useful lives are accounted for as changes in accounting estimates. Amortization and impairment losses are recognized in the income statement. Development projects Research costs are recognized in the income statement as incurred. Development costs incurred for individual projects are recognized as an intangible asset when the Group can demonstrate the following: The technical feasibility of completing the development project so that it will be available for use or sale; The intention to complete the development project and the Group's ability to use or sell it; The probability that the development project will generate future economic benefits; The availability of adequate technical, financial, and other resources to complete the development project and to use or sell it; The ability to measure the costs reliably. Subsequent to the initial recognition of the development costs as an intangible asset, the development project is recognized at cost less any accumulated amortization and impairment losses. Amortization of the intangible asset begins when the development of the asset has been completed, and the asset is used as planned. Depreciation is provided on a straight-line basis over the expected useful lives of the assets. The expected useful life of development projects is 3 years. Patents Patents are recognized as intangible assets at the time of acquisition and measured at cost less accumulated amortization. Patents are amortized over their useful lives, starting at the time when the patent takes effect. Depreciation is provided on a straight-line basis over the expected useful lives of the assets. The useful life of patents is estimated at 10 years. NOTE 2 MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) Tangible assets Tangible assets include plant and equipment and leasehold improvements. Items of tangible assets are measured at cost less accumulated depreciation and impairment losses, the cost being the acquisition price and costs directly related to the acquisition until such time when the asset is ready for use. Depreciation is provided on a straight-line basis over the expected useful lives of the assets, as follows: Plant and equipment 3 years Leasehold improvements 5 years Gains and losses on the disposal of tangible assets are determined by comparing the proceeds from disposal with the carrying amount of the asset and are recognized in the income statement. Residual values and useful lives are reassessed on an annual basis. Changes in useful lives or residual values are accounted for as changes in accounting estimates. Leases The Group assesses at contract inception whether a contract is or contains a lease. That is if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option or extension option). The Group also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognized as expenses on a straight-line basis over the lease term. A right-of-use asset and a lease liability are recognized in the balance sheet when the specifically identifiable asset is made available under the lease agreement during the lease term and when the Group gains the right to virtually all the economic benefits from the use of the identified asset and the right to control the use of the identified asset. The Group applies the practical expedient to recognize payments related to service components in leasing contracts for plant and equipment as part of the right-of-use asset and a lease liability. Lease liabilities Lease liabilities are initially measured at the present value of future lease payments to be made over the lease term. The lease payments include fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease unless the Group is very unlikely to exercise the option to terminate. In assessing the expected lease term for property leases, the Group estimates for strategic reasons that the expected rental period is between 3-5 years. In calculating the present value of lease payments, the Group uses its alternative borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. The alternative borrowing rate is the cost of raising external financing for a corresponding asset with a financing period corresponding to the term of the lease in the currency in which the lease payments are settled. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, or a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. Right-of-use assets Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date, less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows: Properties 3-5 years Plant and equipment 3-6 years NOTE 2 MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) Impairment of non-financial assets In-progress development projects are tested for impairment at least once a year. Other long-term assets with finite useful lives are reviewed for impairment at each reporting date. Where indications of impairment are identified for in-progress development projects or other long-term assets with finite useful lives, the Group estimates the recoverable amount of the asset. The recoverable amount is determined for the individual asset or a group of assets constituting an integrated cash-generating unit. The recoverable amount is the higher of the asset or the cash-generating unit's fair value, less costs to sell and its value in use. When the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount, the asset is considered impaired, and the carrying amount is reduced to the recoverable amount. The impairment loss is recognized in the income statement. The value in use is calculated as the present value of expected future cash flows from the asset or the cash-generating unit of which the asset is a part. Inventories Inventories are measured at the lower of cost and net realizable value. The cost is determined using the first-in/first-out (FIFO) method. The cost of goods for resale, raw materials, and consumables comprises the purchase price plus delivery costs. The Group uses sub-suppliers for the primary production of goods for resale. The net realizable value of inventories is determined as the selling price less costs of completion and costs incurred to generate the revenue, taking into account marketability, obsolescence, and developments in the expected selling price. Receivables Receivables are measured at amortized cost less write-downs. Write-downs on trade receivables are based on the simplified expected credit loss model. Credit loss allowances on individual trade receivables and other receivables are provided for when objective indications of credit losses occur such as debtor's bankruptcy and uncertainty about the debtor's ability and/or willingness to pay, etc. Write-downs on receivables are recognized in the income statement under other external costs. Cash and cash equivalents Cash and cash equivalents comprise cash at banks. Equity Share premium Share premium is the value in excess of the nominal value of the shares that are contributed to the company upon formation or a capital increase. The share premium is part of the distributable reserves. Share-based payment reserve The value of share options granted is recognized in equity under share-based payment reserve over the vesting period as the employees deliver the relevant services. The reserve reflects the total value of share options granted based on the share of the vesting period that has lapsed and the Group's best estimate of the number of equity instruments that will ultimately vest. The reserve is part of the distributable reserves. Treasury shares Own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Group's own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognized in the share premium. Foreign currency translation reserve The foreign currency translation reserve comprises exchange differences arising upon translation of the financial statements of foreign operations from their functional currency to the parent company's presentation currency (DKK). Upon full or partial realization of the investment in the foreign operation, foreign exchange adjustments are recognized in the income statement in the same item as the gain/loss from the sale. The reserve is part of the distributable reserves. Financial liabilities Amounts owed to banks etc., are recognized at the date of borrowing at the amount of proceeds received net of transaction costs paid. In subsequent periods, the financial liabilities are measured at amortized cost using the effective interest method. Accordingly, the difference between the proceeds and the nominal value is recognized in financial expenses over the term of the loan. Non-financial liabilities are measured at net realizable value. NOTE 2 MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) Contract liabilities A contract liability is recognized if a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract liabilities are recognized as revenue when the Group performs under the contract. Income tax and deferred tax Current tax liabilities and current tax receivable are recognized in the statement of financial position as the estimated tax charge for the period, adjusted for tax on previous years' taxable income, and tax paid on account. Income tax return receivables are evaluated with respect to situations in which applicable tax regulations are subject to interpretation, and provisions are established where appropriate. Deferred tax is measured, using the "balance sheet liability" method, of all temporary differences at the reporting date between the tax base and the carrying amount of assets and liabilities. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantially enacted at the balance sheet date. Deferred tax is recognized for all taxable, temporary differences, except for taxable, temporary differences associated with investments in subsidiaries where the timing of the reversal of the temporary differences can be controlled, and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognized for all deductible, temporary differences, and all unutilized tax loss carry forward to the extent that it is probable that taxable profit will be available against which the deductible, temporary differences, and unutilized tax loss carry forward can be used. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reviewed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will be available against which the deferred tax asset can be utilized. Deferred tax assets and deferred tax liabilities relating to items recognized outside profit or loss are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. Statement of cash flows The statement of cash flows shows the Group's cash flows for the year, broken down into operating, investing, and financing activities, the period's changes in cash and cash equivalents, and the Group's cash and cash equivalents at the beginning and the end of the period. Cash flows from operating activities are presented using the indirect method and are stated as the profit or loss for the year before tax, adjusted for non-cash operating items, changes in working capital, paid and/or received interests, and paid and/or received income taxes. Cash flows from investing activities comprise payments related to purchases and/or proceeds of/from non-current assets. Cash flows from financing activities comprise dividends distributed to shareholders, capital increases and/ or reductions, repayments and/or proceeds of/from interest-bearing debt, and payments regarding lease agreements, including instalments but excluding interest payments. Segment information The segment information is provided on geographical markets and business segments. The segmentation is based on the Group's internal financial reporting and has been prepared in accordance with the Group's accounting policies. The Group monitors the performance of the segments to the level of gross profit. All other items of the income statement, as well as assets and liabilities, are managed on a group basis and, therefore, not allocated to individual segments. Income/expenses in the segments comprise the items directly attributable to the individual segments as well as the items that may be allocated to the individual segments on a reliable basis. ‌NOTE 3 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES, AND ASSUMPTIONS The preparation of the consolidated financial statements requires the management to make judgments, estimates, and assumptions that affect the reported amounts of revenues, expenses, assets, and liabilities. Significant accounting judgments, estimates, and assumptions are presented below. Accounting estimates and uncertainty of estimates The valuation of certain assets and liabilities requires the management to make estimates and assumptions related to future events. The estimates and assumptions are based on historical experience and other factors that, according to the management's assessment, are reasonable but also inherently subject to uncertainty and unpredictability. The assumptions may be incomplete and inaccurate, and unexpected events and/or circumstances may arise. Furthermore, the Group is subject to risks and uncertainties that may cause the actual results to differ from these estimates, both positively and negatively. The Group's specific risks are discussed in the relevant sections of the management's review and in the notes to the consolidated financial statements. The major assumptions concerning future events and other sources of estimation of uncertainties at the reporting date, which involve a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are presented below. Development projects There is an ongoing assessment of whether the development costs meet the criteria for capitalization as set out in the summary of accounting policies, note 2, and whether the development projects will generate future economic benefits. Development projects in progress are annually tested for impairment. Completed development projects are reviewed for impairment indicators. If there is evidence of impairment, an impairment test is carried out for the project concerned. The impairment test is prepared on the basis of factors such as the future use of the project and the present value of expected future income, interest, and risk. The carrying amount of completed development projects was DKK 6.9 million on December 31, 2025 (December 31, 2024: DKK 19.8 million). The accounting judgments, estimates, and assumptions that the management makes for development projects are consistent with previous years . ‌NOTE 4 OPERATING SEGMENTS The following tables present revenue and gross profit information about the Group's operating segments for the years ended December 31, 2025, and 2024, respectively: Geographical segments 2025 2024 DKK'000 AMERICAS ROW CONSOLI DATED AMERICAS ROW CONSOLI DATED Revenue Total revenue 101,553 45,056 146,609 80,886 35,522 116,408 - Sales of goods 94,538 43,914 138,452 72,389 34,554 106,943 - Sales of services 7,015 1,142 8,157 8,497 968 9,465 Cost of goods sold (33,486) (11,247) (44,733) (29,053) (7,996) (37,049) Segment gross profit 68,067 33,809 101,876 51,833 27,526 79,359 Explanation abbreviations AMERICAS = North & South America ROW = Rest of the World The geographical segmentation is based on the location of the customers. In 2025, revenue from sales to customers located in Denmark amounted to 0% of total revenue (2024: 0%). The Group has material revenue from customers located in the USA. In 2025, sales to customers in the USA accounted for 69% of total revenue (2024: 66%). NOTE 4 OPERATING SEGMENTS (CONTINUED) Business segments 2025 2024 SMARTNIC ENGINEERING CONSOLI- SMARTNIC ENGINEERING CONSOLI- DKK'000 PRODUCTS SERVICES DATED PRODUCTS SERVICES DATED Revenue Total revenue 141,903 4,706 146,609 112,147 4,261 116,408 - Sales of goods 138,452 - 138,452 106,943 - 106,943 - Sales of services 3,451 4,706 8,157 5,204 4,261 9,465 Cost of goods sold (44,610) (123) (44,733) (36,843) (206) (37,049) Segment gross profit 97,293 4,583 101,876 75,304 4,055 79,359 Revenue from Engineering services is considered a separate segment from SmartNIC products due to the difference in economic characteristics and the timing of recognition of revenue. The revenue from engineering service contracts is recognized in the income statement based on the stage of completion (over time) according to IFRS 15, while the main part of the revenue from SmartNIC products is recognized in the income statement at a point in time. The Group monitors the performance of the segments to the level of gross profit. All other items of the income statement, as well as assets and liabilities, are managed on a group basis and, therefore, not allocated to individual segments. Transactions with major customers Customers with revenue amounting to 10% or more of the total revenue of the Group is divided to segments as follows: 2025 2024 Geographical segments Revenue amount DKK'000 Revenue % of Group revenue Geographical segments Revenue amount DKK'000 Revenue % of Group revenue 1. significant customer AMERICAS 31,535 22% AMERICAS 22,720 20% - SMARTNIC products 31,535 20,646 - Engineering services - 2,074 2. significant customer AMERICAS 19,707 13% AMERICAS 14,085 12% - SMARTNIC products 19,707 14,085 - Engineering services - - See note 27 for Information about the customers payment terms. ‌NOTE 5 STAFF COSTS Employee benefits expense is reported as follows: DKK'000 2025 2024 Wages and salaries 102,157 92,525 Defined contribution schemes 4,538 4,250 Share-based payment expense (note 7) 8,095 10,900 Social security costs 3,391 3,551 Total employee benefits expense 118,181 111,226 Transferred to capitalized development costs (6,609) (6,232) Total staff costs 111,572 104,994 Average number of employees 86 82 Compensation of key management personnel of the Group is as follows: 2025 2024 Executive Other management management Board of Directors Executive management Other management Board of Directors Short-term staff benefits 2,307 11,317 1,238 2,416 9,939 637 Defined contribution schemes 138 342 - 143 342 - Share-based payment expense 4,318 833 69 5,831 1,717 978 Total compensation of key management personnel 6,763 12,492 1,307 8,390 11,998 1,615 Executive management consists of the CEO, while other management consists of the CFO, COO, CMO, and CRDO. ‌NOTE 6 RESEARCH AND DEVELOPMENT COSTS Research and development costs, including annual amortization and impairment of completed development projects and development projects in progress recognized in the consolidated income statement, are DKK 94,373 thousand (2024: DKK 102,089 thousand). All re...

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