What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-26 compared with 2023-02-22 · 990 added, 754 removed, 1120 unchanged (61% of the section changed)

6 unchanged sentences

Statements of Comprehensive Income for the year ended December 31, 2023, 2022 and 2021

of Changes in Stockholders’ Equity for the year ended December 31, 2022, 2021 and 2020

Statements of Stockholders’ Equity for the year ended December 31, 2023, 2022 and 2021

Statements of Cash Flows for the year ended December 31, 2023, 2022 and 2021

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have audited the accompanying consolidated balance sheets of SolarEdge Technologies Inc.

and subsidiaries (the "Company")

as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows

for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated

financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial

position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years

in the period ended December 31, 2022, in conformity with U.S.

(the "Company") as of December 31, 2023 and 2022,

the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in

the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company

at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December

31, 2023, in conformity with U.S.

generally accepted accounting principles.

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basis for our opinion.

critical audit matter communicated below is a matter arising from the current period audit of the financial statements that

was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material

to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical

audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating

the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it

of the Matter

As described in Notes 2w

and 13 to the consolidated financial statements, as of December 31, 2022, the warranty obligation was $385,057 thousand.

Substantially

all of the Company's warranty obligations are related to the solar business.

The Company's products include a warranty of up to 12 years

for inverters and up to 25 years for its power optimizers.

In order to predict the failure rate of each product, the Company established

a reliability model based on the estimated mean time between failures ("MTBF") and an additional model to capture non-systematic failures.

Predicted failure rates are updated periodically based on new product versions and analysis of the root cause of actual failures, as are

warranty related replacement costs.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated

or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial

statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matters

does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the

critical audit matters below, providing separate opinions on the critical audit matters or on the account or disclosures to which they

Description of the Matter

described in Notes 2w and 14 to the consolidated financial statements, as of December 31, 2023, the warranty obligation was $512,748 thousand.

Substantially all of

the Company's warranty obligations are related to the solar business.

The Company's products include a warranty of up to 12 years for

inverters, up to 25 years for its power optimizers and 10 years for batteries for PV applications.

In order to predict the failure rate

of each product, the Company established a reliability model based on the estimated mean time between failures ("MTBF") and an additional

model to capture non-systematic failures.

Predicted failure rates are updated periodically based on new product versions and analysis

of the root cause of actual failures, as are warranty related replacement costs.

the management’s warranty obligations valuation of the solar business was complex and subject to judgment due to the significant

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Matter in Our Audit

We obtained an understanding,

evaluated the design and tested the operating effectiveness of internal controls over the accounting for warranty obligations of solar

business, including controls over management's review of the significant assumptions and data underlying the warranty obligations valuation.

obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the accounting for warranty

obligations of solar business, including controls over management's review of the significant assumptions and data underlying the warranty

obligations valuation.

test the Company’s warranty obligations our substantive audit procedures included, among others, look back analysis and testing

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them to actual warranty claims.

In addition, we involved a specialist to assess the assumptions and the precision of the inputs underlying

the MTBF model, including, evaluating the appropriateness of the MTBF model and its consistency with data obtained from external sources.

of Inventories - Provisions for Excess Inventories and excess product for the contractual obligations

Description of the Matter

of December 31, 2023, the Company’s consolidated inventories balance was $1,443 thousand and the Company’s contractual obligations

to purchase inventories from contract manufacturers ("contractual purchase obligations") were $543 thousand.

As described in Notes

1, 5 and 20 to the consolidated financial statements, the Company values its inventories at the lower of cost or net realizable value.

Reserves for potentially excess inventories and excess product contractual purchase obligations are made based on management's analysis

of inventory levels, future sales forecasts, and market conditions.

Auditing the valuation

of inventory reserves for the excess inventories and excess product contractual purchase obligations were complex and subject to judgment

due to the significant estimates and assumptions required by management to calculate the reserves, especially, the future salability of

the inventories.

These assumptions include the assessment by inventory category of future demand and market conditions for the Company's

How We Addressed the

Matter in Our Audit

obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company's excess

inventory reserve process and excess product contractual purchase obligations including management's assessment of the underlying assumptions

test the valuation of inventory reserve for the excess inventories and excess product contractual purchase obligations our substantive

audit procedures included, among others, evaluating the reasonableness of the significant assumptions used by management including those

related to forecasted inventory usage, future demand, and market conditions.

We examined the completeness, accuracy, and relevance of

the underlying data used in management's estimate.

We held discussions with appropriate non-financial personnel including sales, R&D

and operating management, regarding strategic or operational changes in the business would impact expected demand or related carrying

value of inventories, introduction of new products and other factors to corroborate management's assertions regarding excess inventories.

We performed an examination of historical forecasted sales estimation to actual utilization of inventories and performed sensitivity analysis

on demand assumptions to evaluate the changes in the inventory reserve that would result from changes in the assumptions.

Kost Forer Gabbay & Kasierer

Member of Ernst & Young Global

Member of EY Global

have served as the Company's auditor since 2007.

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on Internal Control Over Financial Reporting

have audited SolarEdge Technologies Inc.

and subsidiaries’ internal control over financial reporting as of

December 31, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring

Organizations of the Treadway Commission (2013 framework), (the COSO criteria).

have audited SolarEdge Technologies Inc.'s internal control over financial reporting as of December 31, 2023, based on criteria established

in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework),

(the COSO criteria).

In our opinion, SolarEdge Technologies Inc.

and subsidiaries

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based

on the COSO criteria.

also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)

(PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of income,

comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2022, and the related

notes and our report dated February 22, 2023 expressed an unqualified opinion thereon.

(the Company) maintained, in all material respects, effective internal

control over financial reporting as of December 31, 2023, based on the COSO criteria.

also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated

balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income, stockholders'

equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February

26, 2024 expressed an unqualified opinion thereon.

Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of

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of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, proj ections

of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in

conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Also, projections of any

evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,

or that the degree of compliance with the policies or procedures may deteriorate.

Kost Forer Gabbay & Kasierer

Member of Ernst & Young Global

February 22, 2023

Member of EY Global

TECHNOLOGIES INC.

1 unchanged sentence

thousands, except per share data)

CURRENT ASSETS:

and cash equivalents

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current assets

LONG-TERM ASSETS:

tax assets, net

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long-term assets

The accompanying notes

are an integral part of the consolidated financial statements.

accompanying notes are an integral part of the consolidated financial statements.

TECHNOLOGIES INC.

1 unchanged sentence

thousands, except per share data)

LIABILITIES AND STOCKHOLDERS’

CURRENT LIABILITIES:

AND STOCKHOLDERS’ EQUITY

payables, net

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current liabilities

LONG-TERM LIABILITIES:

senior notes, net

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long-term liabilities

COMMITMENTS AND CONTINGENT

STOCKHOLDERS’ EQUITY:

AND CONTINGENT LIABILITIES

STOCKHOLDERS’

stock of $ 0.0001

par value - Authorized:

shares as of December 31, 2022 and December 31, 2021;

31, 2023 and December 31, 2022;

issued and outstanding:

and 56,133,404

52,815,395 shares

as of December 31, 2022 and December 31, 2021, respectively

shares as of December 31, 2023 and December 31, 2022, respectively

paid-in capital

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liabilities and stockholders’ equity

The accompanying notes

are an integral part of the consolidated financial statements.

accompanying notes are an integral part of the consolidated financial statements.

TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF INCOME

STATEMENTS OF INCOME

thousands, except per share data)

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and administrative

impairment and other operating expenses (income), net

operating expenses, net

operating expenses

income (expense), net

income (loss), net

before income taxes

loss from equity method investments

basic earnings per share of common stock

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ended December 31,

Other comprehensive income

(loss), net of tax:

change related to available-for-sale securities

change related to cash flow hedges

comprehensive income (loss), net of tax:

Available-for-sale

marketable securities

currency translation adjustments on intra-entity transactions that are of a long-term investment nature

currency translation adjustments, net

Total other comprehensive

income (loss)

Comprehensive income

The accompanying notes

are an integral part of the consolidated financial statements.

currency translation adjustments

other comprehensive income (loss)

Comprehensive

accompanying notes are an integral part of the consolidated financial statements.

TECHNOLOGIES INC.

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as of December 31, 2020

effect of adopting ASU 2020-06

of common stock upon exercise of stock-based awards

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based compensation

component of convertible senior notes, net

comprehensive gain adjustments

comprehensive loss adjustments, net

as of December 31, 2021

effect of adopting ASU 2020-06

of common stock upon exercise of stock-based awards

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based compensation

comprehensive loss adjustments

of common stock in a secondary public offering, net of underwriters' discounts and commissions of $ 27,140

of offering costs

comprehensive loss adjustments, net

as of December 31, 2022

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based compensation

of common stock in a secondary public offering, net of underwriters' discounts and commissions of $ 27,140

of offering costs

comprehensive loss adjustments

comprehensive income adjustments, net

as of December 31, 2023

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flows from operating activities:

to reconcile net income to net cash provided by operating activities:

of property, plant and equipment

of intangible assets

of debt discount and debt issuance costs

of premium and accretion of discount on available-for-sale marketable securities, net

of goodwill and intangible assets

to reconcile net income to net cash provided by (used in) operating activities:

and amortization

(gain) from exchange rate fluctuations

compensation expenses

sale of privately held company

of goodwill and long-lived assets

income taxes, net

rate fluctuations and other items, net

in assets and liabilities:

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expenses and other liabilities, net

cash provided by operating activities

cash provided by (used in) operating activities

flows from investing activities:

Proceed from sales and maturities

of available-for-sale marketable securities

of property, plant and equipment

in available-for-sale marketable securities

in a privately-held company

Proceeds from sale of a privately-held

from (investment in) bank deposits, net

from (investment in) restricted bank Deposits, net

from sales and maturities of available-for-sale marketable securities

of property, plant and equipment

Disbursements for loans receivables

combinations, net of cash acquired

of intangible assets

in privately-held companies

from governmental grant

from sale of a privately-held company

from bank deposits, net

investing activities

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flows from financing activities:

Proceeds from secondary public

offering, net of issuance costs

withholding in connection with stock-based awards, net

of finance lease liability

from secondary public offering, net of issuance costs

of bank loans

from exercise of stock-based award

Tax withholding in connection

with stock-based awards, net

from issuance of convertible senior notes, net

from bank loans

financing activities

Net cash provided by

(used in) financing activities

Increase (decrease) in

cash and cash equivalents

Cash and cash equivalents

at the beginning of the period

Effect of exchange rate

differences on cash and cash equivalents

Cash and cash equivalents

at the end of the period

provided by (used in) financing activities

(decrease) in cash and cash equivalents

cash equivalents at the beginning of the period

exchange rate differences on cash and cash equivalents

cash equivalents at the end of the period

disclosure of non-cash activities:

Right-of-use asset recognized

with corresponding lease liability

Purchase of property, plant

and equipment

of intangible assets and business combinations

asset recognized with corresponding lease liability

of property, plant and equipment

disclosure of cash flow information:

Cash paid for income

The accompanying notes

are an integral part of the consolidated financial statements.

for income taxes

The accompanying

notes are an integral part of the consolidated financial statements.

TECHNOLOGIES INC.

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per module, (ii) inverters which invert direct current (DC) from the PV module to alternating current (AC) including the Company's future

ready energy hub inverter which supports among other things, connection to a DC - coupled battery for backup capabilities, (iii) a remote

cloud-based monitoring platform, that collects and processes information from the power optimizers and inverters to enable customers and

system owners, to monitor and manage the solar PV system (iv) a residential storage and backup solution that is used to increase energy

independence and maximize self-consumption for homeowners including a battery ,and (v) additional smart energy management solutions.

ready energy hub inverter which supports, among other things, connection to a DC-coupled battery for full or partial home backup capabilities,

and optional connection to the Company's smart EV charger, (iii) a remote cloud-based monitoring platform, that collects and processes

information from the power optimizers and inverters to enable customers and system owners, to monitor and manage the solar PV system (iv)

batteries for PV applications that are used to increase energy independence and maximize self-consumption for PV system's owners including

a battery ,and (v) additional smart energy management solutions.

Company and its subsidiaries sell products worldwide through large distributors, electrical equipment wholesalers, as well as directly

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Company has expanded its activity to other areas of smart energy technology organically and through acquisitions.

The Company now offers

a variety of energy solutions, which include lithium-ion cells, batteries and energy storage systems (“Energy Storage”), full

powertrain kits for electric vehicles, or EVs (“e-Mobility”), as well as automated machines for industrial use (“Automation

June 2022, the Company decided to discontinue its stand-alone uninterrupted power supply solutions or UPS (“Critical Power”).

The Company determined that the discontinuance of the Critical Power business does not represent a strategic shift that will have a major

effect on the Company's operations and financial results and therefore it did not meet the criteria for discontinued operations classification.

OF SIGNIFICANT ACCOUNTING POLICIES

The Company offers a

variety of energy solutions, which include lithium-ion cells, batteries and energy storage systems (“Energy Storage”), full

powertrain kits and batteries for electric vehicles, or EVs (“e-Mobility”), as well as automated machines for industrial use

(“Automation Machines”).

April 6, 2023, the Company completed the acquisition of all outstanding shares of Hark Systems Ltd.

("Hark"), a UK-based energy IoT company

for the commercial and industrial ("C&I") sector.

October 2023, the Company decided to discontinue its light commercial vehicle e-Mobility ("LCV") activity (see Note 24).

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

consolidated financial statements are prepared according to United States generally accepted accounting principles (“U.S.

of consolidation:

Principles of consolidation:

consolidated financial statements include the accounts of the Company and its subsidiaries.

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profit from intercompany sales not yet realized outside the Company have been eliminated upon consolidation.

of estimates:

Use of estimates:

preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported

amounts of assets, liabilities, revenues, costs and expenses and related disclosures in the accompanying notes.

The duration, scope and

effects of the ongoing Covid-19 pandemic and the conflict in Ukraine, government and other third-party responses to it, and the related

macroeconomic effects, including to the Company’s business and the business of the Company’s suppliers and customers are uncertain,

rapidly changing and difficult to predict.

As a result, the Company’s accounting estimates and assumptions may change over time

in response to this evolving situation.

Such changes could result in future impairments of goodwill, intangibles, long-lived assets, inventories,

incremental credit losses on receivables and available-for-sale marketable debt securities, or an increase in the Company’s insurance

liabilities as of the time of a relevant measurement event.

amounts of assets, liabilities, revenues, costs and expenses, government grants, income taxes and related disclosures in the accompanying

Actual results could differ from those estimates.

preparing the Company’s consolidated financial statements, management also considered the economic implications of inflation expectations

on its critical and significant accounting estimates.

In addition, the duration, scope and effects of the war in Israel and the conflict

in Ukraine, government and other third-party responses to it, and the related macroeconomic effects, including to the Company’s

business and the business of the Company’s suppliers and customers are uncertain, rapidly changing and difficult to predict.

a result, the Company’s accounting estimates and assumptions may change over time in response to these evolving situations.

changes could result in future impairments of goodwill and long-lived assets, inventories write-offs, incremental credit losses on receivables

and available-for-sale marketable debt securities and changes in warranty obligations as of the time of a relevant measurement event.

TECHNOLOGIES INC.

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except per share data)

statements in U.S.

Financial statements in U.S.

major part of the Company’s operations is carried out in the United States, Israel and certain other countries.

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Assets and liabilities have been translated using the exchange rates in effect as of the balance sheet date.

of income amounts have been translated using the date of the transaction or at the average exchange rate to for the relevant period.

of income amounts have been translated using the date of the transaction or at the average exchange rate for the relevant period.

resulting translation adjustments are reported as a component of stockholders’ equity in accumulated other comprehensive income

1 unchanged sentence

in the same manner as translation adjustments.

and cash equivalents:

Cash and cash equivalents:

equivalents are short-term, highly liquid investments that are readily convertible to cash, with original maturities of three months or

less at the date acquired.

bank deposits:

bank deposits are deposits with an original maturity of more than three months and less than a year from the date of investment and which

do not meet the definition of cash equivalents.

The deposits are presented according to their term deposits.

bank deposits:

Restricted bank deposits:

restricted bank deposits possess an original maturity of more than three months and less than a year from the date of investment.

2 unchanged sentences

primarily used as collateral for the Company's office leases and credit cards.

Marketable Securities:

securities consist of corporate and governmental bonds.

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Realized gains and losses on sales of marketable securities, as determined

on a specific identification basis, are included in financial income (expenses), net.

The amortized cost of marketable securities is adjusted

for amortization of premium and accretion of discount to maturity, both of which, together with interest, are included in financial income

(expenses), net.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

on a specific identification basis, are included in other income (loss), net on the consolidated statements of income.

The amortized cost

of marketable securities is adjusted for amortization of premium and accretion of discount to maturity, both of which, together with interest,

are included in financial income (expenses), net.

Company classifies its marketable securities as either short-term or long-term based on each instrument’s underlying contractual

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well as the ability and intent to hold the investment until a forecasted recovery occurs, in accordance with ASC 326.

Allowance for credit

losses on AFS debt securities are recognized as a charge in financial income (expenses), net, on the consolidated statements of income,

and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income (loss) in stockholders' equity.

Company has not recorded credit losses for the years ended December 31, 2022, 2021 and 2020.

Company determines realized gains or losses on sale of marketable securities on a specific identification method and records such gains

or losses in financial income (expenses), net on the consolidated statements of income.

in privately-held companies:

for credit losses on AFS debt securities are recognized as a charge in financial income (expenses), net, on the consolidated statements

of income, and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income (loss) in stockholders'

Company has not recorded credit losses on AFS debt securities for the years ended December 31, 2023, 2022 and 2021.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Investment in privately-held companies:

Company's equity investments are investments in equity securities of privately-held companies, that are not traded and therefore not supported

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conditions in which the privately-held companies operate or based on the price observed from the most recent completed financing.

gains and losses on investments in privately-held companies, realized and unrealized, are recognized in other income.

gains and losses on investments in privately-held companies, realized and unrealized, are recognized in other income (loss).

Trade receivables:

receivables are stated net of credit losses allowance.

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the full amount have been exhausted.

following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of trade receivables

to present the net amount expected to be collected:

Balance, at beginning

of the period

Increase in provision

for expected credit losses

Recoveries collected

Amounts written off charged against the allowance

Foreign currency translation

Balance, at end of the

Loan receivables:

receivables are carried at the outstanding principal amount.

An allowance for credit loss on loan receivables is established when, based

on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual

terms of the loan agreement.

The Company determines this by considering several factors, including the credit risk and current financial

condition of the borrower, the borrower’s ability to pay current obligations, historical trends, and economic and market conditions.

The Company performs a credit quality assessment on the loan receivable on a quarterly basis and reviews the need for an allowance in

accordance with ASC 326.

The Company evaluates the extent and impact of any credit deterioration that could affect the performance and

the value of the secured property, as well as the financial and operating capability of the borrower.

income is recorded on an accrual basis at the stated interest rate and is recorded in financial income (expense) in the accompanying consolidated

statements of income.

Expected provision for credit loss regarding the Company's loans was immaterial.

The amortized cost of the loan

receivable approximates its fair value as of December 31, 2023.

TECHNOLOGIES INC.

2 unchanged sentences

except per share data)

following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of trade receivables

to present the net amount expected to be collected:

at beginning of the period

in provision for expected credit losses

written off charged against the allowance and others

at end of the period

Inventories are stated at the lower

of cost or net realizable value.

Cost includes depreciation, labor, material and overhead costs.

Inventory reserves are provided to cover

risks arising from slow-moving items or technological obsolescence.

The Company periodically evaluates the quantities on hand relative

to historical, current and projected sales volume.

Based on this evaluation, an impairment charge is recorded when required to write-down

inventory to its net realizable value.

Cost of finished goods and raw materials is determined using the moving average cost method.

plant and equipment:

are stated at the lower of cost or net realizable value.

Cost includes depreciation, labor, material, shipment and overhead costs.

reserves are provided to cover risks arising from slow-moving, excess inventory items or technological obsolescence.

The Company periodically

evaluates the quantities on hand relative to historical, current and projected sales volume.

Based on this evaluation, an impairment charge

is recorded when required to write-down inventory to its net realizable value.

Cost of finished goods and raw materials is determined

using the moving average cost method.

Property, plant and equipment:

plant and equipment are stated at cost, net of accumulated depreciation and government grants.

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is calculated by the straight-line method over the estimated useful life of the assets, at the following rates:

Buildings and plants

(mainly 2.5 )

and peripheral equipment

Computers and peripheral

(mainly 33.3 )

furniture and equipment

and equipment

and testing equipment

Office furniture and

Machinery and equipment

Laboratory and testing

the shorter of the lease term or useful economic life

Government assistance

manufacturing production tax credits

August 2022, the U.S.

government enacted the Inflation Reduction Act of 2022 (the “IRA”), which contains several provisions

intended to accelerate U.S.

manufacturing and adoption of clean energy such as solar.

Some of the applicable provisions in the IRA include

the extension of the Production Tax Credit (“PTC") through 2034.

These provisions of the law are new and regulations and guidance

concerning their implementation are gradually being published by the U.S.

Treasury Department.

Section 45X of the IRA offers advanced

manufacturing production tax credits ("AMPTC"), which incentivize the production of eligible components within the United States.

end, the Company established manufacturing capabilities in the United States in 2023 and announced additional capacity expected in 2024.

In addition to using the tax credits to offset tax due to the U.S.

government, the IRA allows taxpayers to elect to have AMPTCs refunded

in cash ("Direct Pay") or transfer these credits to a third party.

The Direct Pay option is available as a one-time election, in any taxable

year after December 31, 2022, for a facility in which eligible components are produced, and is applicable for five years.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Refundable and transferable tax credits are

similar in essence to government grants.

This is because the taxpayer can realize the benefit regardless of whether they owe income tax

or not in the relevant years.

Therefore, these amounts are not considered income taxes and fall outside the scope of Topic 740.

they are treated as government grants.

grants are recognized when there is reasonable assurance that:

(1) the Company will comply with the relevant conditions and (2) the grant

disbursement will be received.

The Company recognize's AMPTCs as a reduction in the cost of revenues in the statement of income.

does this systematically over time as it recognizes the related expenses.

Alternatively, the Company recognizes the grant immediately

if the grant compensates the Company for expenses that it has already incurred.

The AMPTCs are also reflected in the consolidated balance

sheet as a reduction of income tax payable within accrued expenses and other liabilities, as a tax prepayment, or as AMPTCs to be sold

within prepayment and other assets.

The way the Company expects to utilize the AMPTCs determines where they are recorded.

the year that ended December 31, 2023, the Company recognized AMPTCs worth $ 6,020

as a reduction in the cost of revenues for the inverters produced in the United States and sold to customers.

As of December 31, 2023,

benefits recognized from AMPTCs of $ 6,020

were recorded as a tax prepayment within prepayment and other current assets.

plant and equipment

2020, SolarEdge Ltd, a wholly owned subsidiary of the Company, entered into an agreement with the Israeli Ministry of Economy and Industry

3 unchanged sentences

amount of approximately $ 12,000 .

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

The assistance

is in the form of a cash subsidy, which the government will pay as a grant upon the satisfaction of predetermined construction completion

When the defined milestones are reached and the right to receive a subsidy amount becomes virtually certain, the amount of

the grant is recorded as a reduction of the related asset's value under “Property, plant and equipment, net”.

assistance is in the form of a cash subsidy, which the government will pay as a grant upon the satisfaction of predetermined construction

completion milestones.

When the defined milestones are reached and the right to receive a subsidy amount becomes virtually certain, the

amount of the grant is recorded as a reduction of the related asset's value under “Property, plant and equipment, net”.

Company did not record reduction of property, plant and equipment for the year ended December 31, 2023.

Company recorded reduction of property, plant and equipment in the amount of $ 7,359

for the years ended December 31, 2022 and 2021, respectively.

for the year ended December 31, 2022.

of December 31, 2023, the Company has a right to receive of $ 2,018

that has yet to be paid which was recorded under “Prepaid expenses and other current assets”.

that has yet to be received which was recorded under “Prepaid expenses and other current assets”.

Company determines if an arrangement is a lease at inception.

2 unchanged sentences

In determining the leases classification the Company assesses among other criteria:

(i) 75% or more of

the remaining economic life of the underlying asset is a major part of the remaining economic life of that underlying asset;

90% or more of the fair value of the underlying asset comprises substantially all of the fair value of the underlying asset.

leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities and long-term operating lease

liabilities in the Company’s consolidated balance sheets.

Finance leases are included in property, plant and equipment, net, other

current liabilities, and long-term finance lease liabilities in the Company’s consolidated balance sheets.

ROU assets represent

the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments

arising from the lease.

For leases with terms greater than 12 months, the Company records the ROU asset and liability at commencement

date based on the present value of lease payments according to their term.

(i) The lease term

is for a major part of the remaining economic life of the underlying asset (ii) The present value of the sum of the lease payments and

any residual value guaranteed by the lessee that is not already included in the lease payments equals or exceeds substantially all of

the fair value of the underlying asset.

Operating leases are included in operating lease right-of-use (“ROU”) assets, other

current liabilities and long-term operating lease liabilities in the Company’s consolidated balance sheets.

Finance leases are included

in property, plant and equipment, net, other current liabilities, and long-term finance lease liabilities in the Company’s consolidated

balance sheets.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s

obligation to make lease payments arising from the lease.

For leases with terms greater than 12 months, the Company records the ROU asset

and liability at commencement date based on the present value of lease payments according to their term.

Certain lease agreements include

rental payments that are adjusted periodically for the consumer price index ("CPI").

The ROU and lease liability were calculated using

the CPI as of the adoption date and will not be subsequently adjusted, unless the liability is reassessed for other reasons.

Company uses incremental borrowing rates based on the estimated rate of interest for collateralized borrowing over a similar term of the

lease payments at commencement date.

The ROU asset also includes any lease payments made and excludes lease incentives.

The ROU asset also includes any lease payments made and net of lease incentives.

Lease terms may

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a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Business Combination:

Company allocates the fair value of the purchase price to the tangible assets acquired, liabilities assumed and intangible assets acquired

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Upon the finalization of the measurement period, any subsequent adjustments are recorded to earnings.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Intangible Assets:

identifiable finite-lived intangible assets are amortized on a straight-line basis or accelerated method over the estimated useful lives

3 unchanged sentences

In case the Company reduces the

estimated useful life for any asset, the remaining unamortized balance is amortized or depreciated over the revised estimated useful life

(see Note 8).

of long-lived assets:

The Company’s long-lived assets to

be held and used, including ROU assets and identifiable intangible assets that are subject to amortization, other than goodwill, are reviewed

for impairment in accordance with ASC 360 “Property, Plants and Equipment”, whenever events or changes in circumstances indicate

that the carrying amount of an asset (or asset group) may not be recoverable.

Recoverability of assets to be held and used is measured

by a comparison of the carrying amount of an asset (or asset group) to the future undiscounted cash flows expected to be generated by

the assets (or asset group).

If such evaluation indicates that the carrying amount of the asset (or asset group) is not recoverable, the

assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets

exceeds their fair value (see Note 8).

the years ended December 31, 2022, 2021 and 2020, the Company recorded impairment charges of $ 29,037 ,

estimated useful life for any asset, the remaining unamortized balance is amortized over the revised estimated useful life (see Note 9).

Impairment of long-lived assets:

Company’s long-lived assets to be held and used, including property, plants and equipment, ROU assets and identifiable intangible

assets that are subject to amortization, other than goodwill, are reviewed for impairment in accordance with ASC 360 “Property,

Plants and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group)

may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset (or

asset group) to the future undiscounted cash flows expected to be generated by the assets (or asset group).

If such evaluation indicates

that the carrying amount of the asset (or asset group) is not recoverable, the assets are considered to be impaired, the impairment to

be recognized is measured as the amount by which the carrying amount of the assets exceeds their fair value (see Note 9).

the years ended December 31, 2023, 2022 and 2021, the Company recorded impairment charges of long-lived assets in the amount of $ 30,790 ,

and $ 2,209 ,

under Goodwill impairment and other operating expenses (income), net, respectively.

respectively, presented under Other operating expenses, net.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

reflects the excess of the consideration transferred, including the fair value of any contingent consideration and any non-controlling

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goodwill impairment test is performed according to the following principles:

An initial qualitative assessment may be performed to determine whether it

is more likely than not that the fair value of the reporting unit is less than its carrying amount.

If the Company concludes it is more likely than not that the fair value of the

reporting unit is less than its carrying amount, a quantitative impairment test is performed.

An impairment charge for the amount by which

the carrying amount exceeds the reporting unit’s fair value is recognized (see Note 9).

initial qualitative assessment may be performed to determine whether it is more likely than not that the fair value of the reporting unit

is less than its carrying amount.

the Company concludes it is more likely than not that the fair value of the reporting unit is less than its carrying amount, a quantitative

impairment test is performed.

An impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair

value is recognized (see Note 10).

the year ended December 31, 2023, the Company did not record any impairment charges.

the year ended December 31, 2022, the Company recorded impairment charges of goodwill in the amount of $ 90,104 .

the years ended December 31, 2021 and 2020, the Company did not record any impairment charges.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

computing arrangements:

In 2021, due to the growing size and

complexity of the Company, the Company decided to implement a new global enterprise resource planning ("ERP") system, which will replace

the Company's existing operating and financial systems.

During the year ended December 31, 2022, the Company began implementing a cloud-based

the year ended December 31, 2021, the Company did not record any impairment charges.

Cloud computing arrangements:

2021, due to the growing size and complexity of the Company, the Company decided to implement a new global enterprise resource planning

("ERP") system, which will replace the Company's existing operating and financial systems.

During 2022, the Company began implementing

a cloud-based ERP system.

The implementation is expected to occur in phases over the next several years.

The Company incurs costs to implement

cloud computing arrangements ("CCA") that are hosted by third party vendors.

Implementation costs associated with CCA are capitalized

when incurred during the application development phase until the software is ready for its intended use.

The costs are then amortized

on a straight-line basis over the contractual term of the cloud computing arrangement and are recognized as an operating expense within

the consolidated statements of income.

Capitalized amounts related to such arrangements are recorded within other long-term assets in

the consolidated balance sheets.

Cash payments for CCA implementation costs are classified as cash outflows from operating activities.

the year ended December 31, 2022, the Company has capitalized implementation costs related to its upcoming ERP conversion in the amount

and presented it under other long-term assets in the consolidated balance sheet.

Company incurs costs to implement cloud computing arrangements ("CCA") that are hosted by third party vendors.

Implementation costs associated

with CCA are capitalized when incurred during the application development phase until the software is ready for its intended use.

costs are then amortized on a straight-line basis over the contractual term of the cloud computing arrangement and are recognized as an

operating expense within the consolidated statements of income.

Capitalized amounts related to such arrangements are recorded within other

long-term assets in the consolidated balance sheets.

Cash payments for CCA implementation costs are classified as cash outflows from operating

of December 31, 2023, and 2022 the Company had capitalized implementation costs related to its upcoming ERP conversion in the amounts

and $ 3,457 ,

respectively presented under other long-term assets in the consolidated balance sheet.

Severance pay:

employees of the Company’s Israeli subsidiary are included under Section 14 of the Severance Pay Law, 1963, under which these employees

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the years ended December 31, 2023, 2022 and 2021, the Company recorded $ 23,643 ,

and $ 10,598 in

severance expenses related to its employees, respectively.

in severance expenses related to its employees, respectively.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Derivatives and Hedging:

Company accounts for derivatives and hedging based on ASC 815 (“Derivatives and Hedging”).

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as defined by ASC 815 and are all effective hedges.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

The Company al so entered into derivative instrument

arrangements to hedge the Company’s exposure to currencies other than the U.S.

These derivative instruments are not designated

as cash flow hedges, as defined by ASC 815, and therefore all gains and losses, resulting from fair value remeasurement, were recorded

immediately in the statement of income, as a financial income (expense), net..

Company also entered into derivative instrument arrangements to hedge the Company’s exposure to currencies other than the U.S.

These derivative instruments are not designated as cash flow hedges, as defined by ASC 815, and therefore all gains and losses, resulting

from fair value remeasurement, were recorded immediately in the statement of income, as a financial income (expense), net.

Company classifies cash flows related to its hedging as operating activities in its consolidated statement of cash flows.

Revenue recognition:

are recognized in accordance with ASC 606;

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is transferred to the customers, in an amount that the Company expects in exchange for those goods or services.

Company’s products and services consist mainly of (i) power optimizers, (ii) inverters, (iii) residential batteries, (iv) a related

cloud-based monitoring platform, (v) communication services, (vi) warranty extension services, (vii) Lithium-ion cells and other storage

solutions (viii) EV components, and (ix) automated machinery for manufacturing lines.

Company’s products and services consist mainly of (i) power optimizers, (ii) inverters, (iii) batteries for PV applications, (iv)

a related cloud-based monitoring platform, (v) communication services, (vi) warranty extension services, (vii) Lithium-ion cells and other

storage solutions (viii) EV components, and (ix) automated machinery for manufacturing lines.

Company recognizes revenue under the core principle that transfer of control to the Company’s customers should be depicted in an

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performance obligations in the contract, and (5) recognize revenue when the performance obligation is satisfied.

the contract with a customer

Identify the contract with a customer

contract is an agreement or purchase order between two or more parties that creates enforceable rights and obligations.

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ability to pay, and typically assigns a credit limit based on that review.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

the performance obligations in the contract

9 unchanged sentences

of the goods as promised services to its customers.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

(3) Determine

the transaction price

Determine the transaction price

transaction price is the amount of consideration to which the Company is entitled in exchange for transferring promised goods or services

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financing component expenses are reflected in the Company’s deferred revenues balance.

the transaction price to the performance obligations in the contract

Allocate the transaction price to the performance obligations in the contract

Company performs an allocation of the transaction price to each separate performance obligation, in proportion to their relative standalone

selling prices.

(5) Recognize

revenue when a performance obligation is satisfied

Recognize revenue when a performance obligation is satisfied

is recognized when or as performance obligations are satisfied by transferring control of a promised good or service to a customer.

either transfers over time or at a point in time, which affects when revenue is recorded.

Revenues from sales of products are

recognized based on the transfer of control, which includes but is not limited to, the agreed International Commercial terms, or “INCOTERMS”.

Revenues related to warranty extension services, cloud-based monitoring, and communication services are recognized over time on a straight-line

from sales of products are recognized based on the transfer of control, which includes but is not limited to, the agreed International

Commercial terms, or “INCOTERMS”.

Revenues related to warranty extension services, cloud-based monitoring, and communication

services are recognized over time on a straight-line basis.

revenues consist of deferred cloud-based monitoring services, communication services, warranty extension services and advance payments

6 unchanged sentences

except per share data)

Cost of revenues:

of revenues includes the following:

1 unchanged sentence

indirect manufacturing costs, shipping and handling, support, warranty expenses, provision for losses related to slow moving and dead

inventory, personnel and logistics costs.

inventory, personnel and government grants related to the AMPTCs.

and handling costs, which amounted to $ 214,349 ,

3 unchanged sentences

goods from the Company’s point of sale directly to its customers.

the year ended December 31, 2023, the Company recognized AMPTCs worth approximately $ 6,020

as a reduction in the cost of revenues for the inverters produced in the United States and sold to customers.

Warranty obligations:

Company provides a product warranty for its solar segment related products as follows:

a standard 10 -year

limited warranty for its residential batteries, a standard 12 -year

limited warranty for its batteries for PV applications, a standard 12 -year

limited warranty for the majority of its inverters, that is extendable up to 25

years for an additional cost and a 25 -year

limited warranty for power optimi z ers.

limited warranty for power optimizers.

Company maintains reserves to cover the expected costs that could result from the standard warranty.

28 unchanged sentences

except per share data)

senior notes:

Convertible senior notes:

January 1, 2021, the Company early adopted ASU 2020-06 using the modified retrospective approach.

12 unchanged sentences

unless the Notes are antidilutive (see Note 22).

Advertising costs

costs are expensed when incurred and are included in sales and marketing expenses in the consolidated statements of income.

1 unchanged sentence

for the years ended December 31, 2023, 2022, and 2021, respectively.

and development costs:

Research and development costs:

and development costs, are charged to the consolidated statement of income as incurred.

Concentrations

of credit risks:

instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, short-term

bank deposits, restricted bank deposits, marketable securities, trade receivables, derivative instruments and other accounts receivable.

and cash equivalents, short-term bank deposits and restricted bank deposits are mainly invested in major banks in the U.S., Israel, Germany

Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly,

minimal credit risk exists with respect to these investments.

Concentrations of credit risks:

instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, restricted

bank deposits, marketable securities, trade receivables, loan receivables, derivative instruments and other accounts receivable.

and cash equivalents and restricted bank deposits are mainly invested in major banks in the U.S., Israel, Germany, Italy and Korea.

believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit

risk exists with respect to these investments.

Company's debt marketable securities include investments in highly-rated corporate debentures (located mainly in U.S., Canada, France,

UK, Cayman Islands and other countries) and governmental bonds .

The financial institutions that hold

the Company's debt marketable securities are major financial institutions located in the United States.

The Company believes its debt

marketable securities portfolio is a diverse portfolio of highly-rated securities and the Company's investment policy limits the amount

the Company may invest in an issuer (see Note 2g.).

UK, Australia, Cayman Islands and other countries) and governmental bonds.

The financial institutions that hold the Company's debt marketable

securities are major financial institutions located in the United States.

The Company believes its debt marketable securities portfolio

is a diverse portfolio of highly-rated securities and the Company's investment policy limits the amount the Company may invest in an issuer

(see Note 2f.).

trade receivables of the Company derive from sales to customers located primarily in the United States and Europe.

Company performs ongoing credit evaluations of its customers for the purpose of determining the appropriate allowance for credit losses

(see Note 2i.).

(see Note 2h.).

The Company generally does not require collaterals, however, in certain circumstances, the Company may require letters

1 unchanged sentence

From time to time, the Company may purchase trade credit insurance.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

had one major customer (customers with attributable revenues that represents more than 10% of total revenues) for the year ended December

31, 2022, two major customers for the year ended December 31, 2021, and one major customer for the year ended December 31, 2020 that accounted

for approximately 18.5 %,

Company had two major customers (customers with attributable revenues that represents more than 10% of total revenues) for the year ended

December 31, 2023, one major customer for the year ended December 31, 2022, and two major customers for the year ended December 31, 2021

that accounted for approximately 24.0 %,

of the Company’s consolidated revenues, respectively.

1 unchanged sentence

Company had three major customers (customer with a balance that represents more than 10% of total trade receivables, net) as of December

31, 2022 and two major customers for the year ended December 31, 2021 that accounted in the aggregate for approximately 42.2 %

31, 2023 and as of December 31, 2022 that accounted in the aggregate for approximately 47.1 %

of the Company’s consolidated trade receivables, net, respectively.

Concentrations

of supply risks:

Company depends on two contract manufacturers and several limited or single source component suppliers, including, Samsung SDI, that provides

lithium-ion battery cells required for the Company's residential storage solution.

Reliance on these vendors makes the Company vulnerable

to possible capacity constraints and reduced control over component availability, delivery schedules, manufacturing yields, and costs.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Concentrations of supply risks:

Company depends on two contract manufacturers and several limited or single source component suppliers.

Reliance on these vendors makes

the Company vulnerable to possible capacity constraints and reduced control over component availability, delivery schedules, manufacturing

yields, and costs.

of December 31, 2023 and 2022, two contract manufacturers collectively accounted for 58.5 %

2 unchanged sentences

manufacturing facility located in South Korea.

Sella 2 is in the ramp-up phase, that is expected to continue throughout 2023.

2 is the Company's second owned manufacturing facility following the establishment of Sella 1 in 2020.

Sella 1 is the Company's manufacturing

facility in the North of Israel that produces power optimizers and inverters for the Company's solar activities.

value of financial instruments:

Sella 2 began producing and shipping cells at the end of 2022 and is expected to gradually

increase manufacturing capacity throughout 2024.

Sella 2 is the Company's second owned manufacturing facility following the establishment

of Sella 1 in 2020.

Sella 1 is the Company's manufacturing facility in the North of Israel that produces power optimizers and inverters.

Fair value of financial instruments:

following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:

carrying value of cash and cash equivalents, short-term bank deposits, restricted bank deposits, trade receivables, net, long term bank

loans and current maturities, prepaid expenses and other current assets, trade payables, net, employee and payroll accruals and accrued

expenses and other current liabilities approximate their fair values due to the short-term maturities of such instruments.

measured at fair value on a recurring basis as of December 31, 2022 and 2021 are comprised of money market funds, derivative

instruments and marketable securities (see Note 12).

carrying value of cash and cash equivalents, short-term bank deposits, restricted bank deposits, trade receivables, net, bank loans, prepaid

expenses, loan receivables and other current assets, trade payables, net, employee and payroll accruals and accrued expenses and other

current liabilities approximate their fair values due to the short-term maturities of such instruments.

measured at fair value on a recurring basis as of December 31, 2023 and 2022 are comprised of money market funds, derivative instruments

and marketable securities (see Note 13).

Company applies ASC 820 “Fair Value Measurements and Disclosures”, with respect to fair value measurements of all financial

4 unchanged sentences

be determined based on assumptions that market participants would use in pricing an asset or a liability.

three-tiered fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies

in measuring fair value:

1- Observable

inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

other inputs that are directly or indirectly observable in the marketplace.

3- Unobservable

inputs which are supported by little or no market activity.

fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when

measuring fair value.

TECHNOLOGIES INC.

2 unchanged sentences

except per share data)

A three-tiered fair value hierarchy

is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets

or liabilities in active markets.

2 - Include other inputs that are directly or indirectly observable in the marketplace.

3 - Unobservable inputs which are supported by little or no market activity.

fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when

measuring fair value.

compensation:

Company uses the closing trading price of its common stock on the day before the grant date as the fair value of awards of restricted

stock units ("RSUs"), and performance stock units that are based on the Company's financial performance targets ("PSUs").

The compensation

expense for RSUs is recognized using a straight-line attribution method over the requisite employee service period while compensation

expense for PSUs is recognized using an accelerated amortization model.

The Company estimates the forfeitures at the time of grant and

revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Estimated forfeitures are based on actual

historical pre-vesting forfeitures.

Stock-based compensation:

Company uses the closing trading price of its common stock on the day of the grant date as the fair value of awards of restricted stock

units ("RSUs"), and performance stock units that are based on the Company's financial performance targets ("PSUs").

The compensation expense

for RSUs is recognized using a straight-line attribution method over the requisite employee service period while compensation expense

for PSUs is recognized using an accelerated amortization model.

The Company estimates the forfeitures at the time of grant and revised,

if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Estimated forfeitures are based on actual historical

pre-vesting forfeitures.

Company granted under its 2015 Plan, PSU awards to certain employees and officers which vest upon the achievement of certain performance

or market conditions subject to their continued employment with the Company.

market condition for the PSUs is based on the Company’s total shareholder return ("TSR") compared to the TSR of companies listed

in the S&P 500 index over a one to three year performance period.

The Company uses a Monte-Carlo simulation to determine the grant

date fair value for these awards, which takes into consideration the market price of a share of the Company’s common stock on the

date of grant less the present value of dividends expected during the requisite service period, as well as the possible outcomes pertaining

to the TSR market condition.

Company's PSUs is based on the Company’s total shareholder return ("TSR") compared to the TSR of companies listed in the S&P

500 index over a one to three year performance period.

For market conditions awards, the Company uses a Monte-Carlo simulation to determine

the grant date fair value for these awards, which takes into consideration the market price of a share of the Company’s common stock

on the date of grant less the present value of dividends expected during the requisite service period, as well as the possible outcomes

pertaining to the TSR market condition.

The Company recognizes such compensation expenses on an accelerated vesting method.

18 unchanged sentences

except per share data)

The fair value for options granted to employees and ESPP in the years ended December 31, 2022, 2021 and 2020, is

estimated at the date of grant using the following assumptions:

Year ended December 31,

The fair value for options, PSU and ESPP

granted to employees is estimated at the date of grant using the following assumptions:

ended December 31,

Stock Options (1)

1 unchanged sentence

Dividend yields

Expected option term in years

Estimated forfeiture rate

Expected option term

Estimated forfeiture

Risk-free interest

4 unchanged sentences

Expected term

No new options were granted in 2022.

No new options were granted in 2023 and 2022.

Earnings per share

net EPS is computed by dividing the net earnings attributable to SolarEdge Technologies, Inc.

4 unchanged sentences

260, "Earnings Per Share."

Income taxes:

Company and its subsidiaries account for income taxes in accordance with ASC 740, “Income Taxes”.

25 unchanged sentences

as the largest amount that is more than 50% (cumulative probability) likely to be realized upon ultimate settlement.

accounting pronouncements not yet effective:

New accounting pronouncements not yet effective:

November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures”

(“ASU 2023-07”).

Additional segment reporting information required by ASU 2023-07 includes:

disclosing the title and position

of the individual or the name of the group or committee identified as the CODM, provide in interim periods all disclosures about a reportable

segment’s profit or loss and assets that are currently required annually, and additional disclosures regarding significant segment

ASU 2023-07 is effective for fiscal periods beginning after December 15, 2023, and interim periods within fiscal years beginning

after December 15, 2024.

The Company is currently evaluating the impact of adopting ASU 2023-07.

December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures” (“ASU

ASU 2023-09 requires additional categories of information about federal, state and foreign income taxes to be included

in effective tax rate reconciliation disclosure.

Additionally, the newly added categories also apply to the income taxes paid disclosure.

Implementation of said additions are subject to quantitative thresholds.

ASU 2023-09 is effective for fiscal years beginning after December

The Company is currently evaluating the impact of adopting ASU 2023-09.

Recently issued and adopted pronouncements:

time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting

bodies are adopted by the Company as of the specified effective date.

The Company believes that the impact of recently issued standards

that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

issued and adopted pronouncements:

October 2021, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2021-08, Accounting for Contract Assets and

Contract Liabilities from Contracts with Customers (Topic 805).

This ASU requires an acquirer in a business combination to recognize and

measure contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in

At the acquisition date, the acquirer applies the revenue model as if it had originated the acquired contracts.

effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years.

Adoption of the ASU

should be applied prospectively.

Early adoption is also permitted, including adoption in an interim period.

The Company elected to early

adopt ASU 2021-08 on January 1, 2022, and will apply this new guidance to all business combinations consummated subsequent to this date.

Currently, this ASU has no impact on the Company's consolidated financial statements.

November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No.

2021-10, Government

Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance.

Under ASU 2021-10, the accounting entities with

transactions with a government that are accounted for by analogy to a grant or contribution accounting model are required to annually

disclose certain information regarding the transaction including:

(i) nature and related accounting policy used;

(ii) line items on the

balance sheet and income statement affected by the transactions;

(iii) amounts applicable to each line item;

and (iv) significant terms

and conditions.

This guidance is effective for financial statements issued for annual periods beginning after December 15, 2021.

of this ASU has a minor impact on the disclosures to the annual consolidated financial statements.

prior period amounts have been reclassified to conform to the current period presentation.

The Company believes that the impact of recently issued or newly

effective standards were not applicable to the Company, did not have a material impact on the condensed consolidated financial statements

or are not expected to have a material impact on the condensed consolidated financial statements.

TECHNOLOGIES INC.

2 unchanged sentences

except per share data)

BUSINESS COMBINATIONS

April 6, 2023, the Company completed the acquisition of all outstanding shares of Hark Systems Ltd.

("Hark"), a UK-based energy IoT company

for the commercial and industrial ("C&I") sector for approximately $ 18,346

in cash, out of which $ 1,245

held by the company for a period of one year.

Hark's platform is expected to enable the Company to offer its commercial and industrial

customers expanded capabilities in energy management and connectivity, including identification of potential energy savings, detection

of anomalies in assets’ energy consumption, and optimization of energy usage and carbon emissions through load orchestration and

storage control.

to ASC 805, "Business Combination", the Company accounted for the Hark acquisition as a business combination using the acquisition method

of accounting.

Identifiable assets and liabilities of Hark, including identifiable intangible assets, were recorded based on their estimated

fair values as of the date of the closing of the acquisition.

The excess of the purchase price over the fair value of the net assets acquired

was recorded as goodwill.

The Company recorded preliminary estimates for the fair value of assets acquired and liabilities assumed as

of the acquisition date.

Such preliminary valuation required estimates and assumptions including, but not limited to, estimating future

cash flows and direct costs in addition to developing the appropriate discount rates and current market profit margins.

The Company’s

management believes the fair values recognized for the assets acquired and the liabilities assumed were based on reasonable estimates

and assumptions.

following table summarizes the fair values estimation of assets acquired and liabilities assumed as of the date of the acquisition:

Net liabilities assumed

Identified intangible

relationships

costs were immaterial and are included in general and administrative expenses in the consolidated statements of income.

generated from this acquisition was primarily attributable to the assembled workforce and expected post-acquisition synergies from combining

Hark platform with the Company's product offering to its commercial and industrial customers.

All of the Goodwill was assigned to the

Solar segment (see Note 21).

Goodwill was not deductible for tax purposes.

The fair values of technology, customer relationships and trade

name were derived by applying the multi-period excess earnings method, with-and-without method, and the relief-from-royalty method, respectively,

all of which are under the income approach whose underlying inputs are considered Level 3.

The fair values assigned to assets acquired

and liabilities assumed were based on management's estimates and assumptions.

results of Hark have been included in the Company's consolidated statements of income since the acquisition date and are not material.

Pro forma financial information has not been presented because the impact of the acquisition was not material to the Company's statement

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

MARKETABLE SECURITIES

following is a summary of available-for-sale marketable securities at December 31, 2023:

Available-for-sale –

Matures within one year:

Corporate bonds

Governmental bonds

Available for-sale –

Treasury securities

Government agency

Government securities

Matures after one year:

Corporate bonds

Governmental bonds

Treasury securities

Government agency

Government securities

following is a summary of available-for-sale marketable securities at December 31, 2022:

Available-for-sale –

Matures within one year:

Corporate bonds

Governmental bonds

Available for-sale –

Treasury securities

Government securities

Matures after one year:

Corporate bonds

Governmental bonds

Treasury securities

Government securities

from maturity of available-for-sale marketable securities during the years ended December 31, 2023, 2022 and 2021, were $ 277,382 ,

5 unchanged sentences

which led to realized losses of $ 434 .

Company had no proceeds from sales of available-for sale, marketable securities during the year ended December 31, 2020, therefore no

realized gains or losses from the sale of available-for-sale marketable securities were recognized.

from sales of available-for-sale marketable securities during the year ended December 31, 2021 were $ 14,813 ,

which led to realized losses of $ 16 .

TECHNOLOGIES INC.

4 unchanged sentences

of December 31,

Raw materials

Work in process

Finished goods

Company recorded inventory write-downs of $ 46,369 ,

5 unchanged sentences

Government authorities

Loan receivables 2

Interest from marketable

Prepaid expenses

Vendor non-trade receivables derived from the sale of components to manufacturing vendors who manufacture products for the Company.

Company purchases these components directly from other suppliers.

The Company does not reflect the sale of these components to the contract

manufacturers in its revenues (see Note 19b).

Total prepaid expenses

and other current assets

Vendor non-trade receivables derived from the sale of components to manufacturing vendors who manufacture products, components and other

testing equipment for the Company.

The Company purchases these components directly from other suppliers.

The Company does not reflect

the sale of these components to the contract manufacturers in its revenues.

Loan receivables are loans to third parties.

The loan repayments are expected on a monthly or annual basis as per the contractual terms

of each loan agreement.

The loans bear interest that represent market interest rate.

The amortized cost of the loan receivable approximates

its fair value as of December 31, 2023.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

PROPERTY, PLANT AND EQUIPMENT, NET

of December 31,

Buildings and plants

Computers and peripheral

and peripheral equipment

Office furniture

and equipment

Laboratory and

testing equipment

Machinery and equipment

Leasehold improvements

Assets under construction

and payments on account

and testing equipment

and equipment

construction and payments on account

Gross property,

4 unchanged sentences

expenses for the years ended December 31, 2023, 2022 and 2021, were $ 49,544 ,

and $ 29,359 ,

respectively.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

the year ended December 31, 2023, impairment loss of $ 25,168

was recorded as a result of Company's decision to discontinue its LCV activity and other restructuring efforts related

to the Solar segment (see Note 23).

losses for the years ended December 31, 2022, and 2021, were $ 649

and $ 2,113 ,

respectively.

following table summarizes the Company’s lease-related assets and liabilities recorded in the consolidated balance sheets:

1 unchanged sentence

on the consolidated Balance Sheet

lease assets, net of lease incentive obligation

Operating lease assets,

net of lease incentive obligation

lease right-of use assets, net

Finance lease assets

plant and equipment, net

leases short term

Total lease assets

Operating leases short

expenses and other current liabilities

leases short term

Finance leases short

expenses and other current liabilities

leases long term

lease liabilities

leases long term

Operating leases long

lease liabilities

Finance leases long term

lease liabilities

Total lease liabilities

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

following table presents certain information related to the operating and finance leases:

6 unchanged sentences

ended December 31,

paid for amounts included in measurement of lease liabilities:

Cash paid for amounts

included in measurement of lease liabilities:

cash flows for operating leases

1 unchanged sentence

cash flows for finance leases

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

following table reconciles the undiscounted cash flows for each of the first five years and the total of the remaining years of the operating

9 unchanged sentences

except per share data)

INTANGIBLE ASSETS, NET

October 2023, the Company has decided to cease the use of SolarEdge Korea's (formerly Kokam) trade name and solar technology, as such,

the Company recognized an impairment charge of $ 4,798

and the assets were disposed.

June 2022, the Company decided to discontinue its stand-alone uninterrupted power supply activities or UPS (“Critical Power”).

1 unchanged sentence

pertaining to Critical Power's current technology and customer relationships.

October 2022, following the e-Mobility and Automation Machines reporting unit’s goodwill analysis, an impairment test for long-lived

assets was performed.

The test included comparing the sum of the estimated undiscounted future cash flow attributable to the identified

assets group and its carrying amounts, and recognizing an impairment for the amount to which the carrying amount exceeds the fair value

of the assets groups.

As a result, the Company recorded a current technology impairment of $ 26,917

related to e-Mobility's asset group and a $ 245

trade name impairment related to Automation Machines' asset group.

The impairments are recorded under Goodwill impairment and other operating

expenses (income), net in the consolidated statement of income.

October 2022, following the e-Mobility and Automation Machines reporting unit’s analysis, an impairment test for long-lived assets

was performed.

The test included comparing the sum of the estimated undiscounted future cash flow attributable to the identified assets

group and its carrying amounts, and recognizing an impairment for the amount to which the carrying amount exceeds the fair value of the

assets groups.

As a result, the Company recorded a current technology impairment

related to e-Mobility's asset group and a $ 245 trade

name impairment related to Automation Machines' asset group.

impairments are recorded under Other operating expenses, net in the consolidated statement of income (see Note 23) additional information.

intangible assets consisted of the following as of December 31, 2023, and 2022:

of December 31,

assets with finite lives:

relationships

Intangible assets

- accumulated amortization

intangible assets, net

expenses for the years ended December 31, 2022 , 2021 and 2020 ,

were $ 9,096 ,

with finite lives:

relationships

Gross intangible

Less - accumulated

Total intangible

expenses for the years ended December 31, 2023, 2022 and 2021, were $ 7,652 ,

and $ 10,176 ,

1 unchanged sentence

future amortization expenses of intangible assets as of December 31, 2023 are as follows:

and thereafter

TECHNOLOGIES INC.

4 unchanged sentences

change that would indicate the carrying amount may be impaired.

Company completed its annual goodwill impairment test in the fourth quarter of 2023 for all reporting units and determined the following:

to impairment indicators of the solar reporting unit, which include, among other things, a deterioration in the environment in which the

Company operates, a qualitative assessment of the Company’s solar reporting unit was performed in order to determine whether it

is necessary to conduct the quantitative goodwill impairment test.

Based on the results, the Company believes that it is more likely than

not that the fair value of said reporting unit is greater than its carrying value and therefore a quantitative goodwill impairment test

was not performed, and no goodwill impairment was recorded for the year ended December 31, 2023.

to impairment indicators of the Energy Storage reporting unit, which include, among other things, a decline in planned revenue and earnings

compared with the projected results, the Company performed a quantitative goodwill impairment test and determined that the fair value

of this reporting unit is greater than its carrying value and therefore no goodwill impairment was recorded for the year ended December

Company completed its annual goodwill impairment test in the fourth quarter of 2022 for all reporting units and determined the following:

June 2022, the Company decided to discontinue its stand-alone Critical Power activities.

The Company recorded a loss in the

amount of $ 2,782

The Company recorded an impairment in the amount

pertaining to Critical Power's goodwill.

Company completed its annual goodwill impairment test in the fourth quarter of 2022 for all reporting units and determined the following:

assessment of the Company’s storage reporting unit was performed in order to determine w hether it is necessary to conduct

the quantitative goodwill impairment test .

Based on the results, the Company believes that it is more likely than not that the

fair value of said reporting unit is greater than its carrying value and therefore a quantitative goodwill impairment test was not performed,

and no goodwill impairment was recorded.

to impairment indicators of the e-Mobility reporting unit, which include, among other things, a shift in the Company's strategy that may

1 unchanged sentence

As a result, the Company recorded goodwill impairment in the amount of $ 80,534

which is presented under Goodwill impairment and other operating expenses (income), net in the consolidated statement of

addition, a quantitative test has also been performed for the Automation Machines reporting unit due to indicators of impairment

identified, which include, amo ng other things, managerial changes and a decline in the overall financial performance compared

with past projections.

for the year ended December 31, 2022, which is presented under Goodwill impairment in the consolidated statement of income.

addition, a quantitative test has also been performed for the Automation Machines reporting unit due to indicators of impairment identified,

which include, among other things, managerial changes and a decline in the overall financial performance compared with past projections.

As a result, the Company recorded goodwill impairment in the amount of $ 6,788 ,

which was recorded under Goodwill impairment and other operating expenses (income), net in the consolidated statement of

for the year ended December 31, 2022, which was recorded under Goodwill impairment in the consolidated statement of income.

fair value of the reporting units was estimated using a discounted cash flow analysis.

1 unchanged sentence

considered multiples of earnings from comparable public companies.

The decline in fair value primarily resulted from an increased discount

rate and reduced estimated future cash flows.

The decline in fair value of the e-Mobility and Automation Machines

reporting units was primarily resulted from an increased discount rate and reduced estimated future cash flows.

The following summarizes

the goodwill activity for the year ended December 31, 2022 , and 2021 :

at December 31, 2020

during the year:

the goodwill activity for the years ended December 31, 2023, and 2022:

Goodwill at December

Changes during the year:

currency adjustments

at December 31, 2021

during the year:

Goodwill at December

Changes during the year:

currency adjustments

impairment losses

at December 31, 2022

of December 31, 2022 there were $ 90,104

Goodwill at December

of December 31, 2023 and December 31, 2022 there were $ 90,104

accumulated goodwill impairment losses.

As of December 31, 2021 and 2020 there were no accumulated goodwill impairment losses.

TECHNOLOGIES INC.

2 unchanged sentences

except per share data)

INVESTMENT IN PRIVATELY-HELD COMPANY

OTHER LONG TERM ASSETS

of December 31,

Cloud computing arrangements

Severance pay fund

Investments in privately

held companies 1

Loan receivables

Prepaid expenses and

Total other long term

January 2023, the Company completed an investment of $ 5,500

in the preferred stock of AutoGrid Systems, Inc.

("AutoGrid"), a privately held company.

February 1, 2021, the Company signed on a preferred stock purchase agreement for an additional investment of $ 5,000

in AutoGrid's preferred stock (the "second investment").

On April 28, 2021, the Company completed the second investment.

Company accounted for the AutoGrid investment as an equity investment without readily determinable fair values .

July 20, 2022, the Company completed the sale of its investment in AutoGrid for proceeds of $ 24,362 ,

thus recognizing a gain of $ 7,719

which was recorded in the statement of income under "Other income".

in privately-held companies are included within other long-term assets in the consolidated balance sheets.

As of December 31,

2022 , the Company had no investments in privately-held companies.

As of December 31, 2021 , the carrying value of investments

in privately-held companies was $ 16,643 .

impairment or other adjustments related to observable price changes in orderly transactions for identical or similar investments were

identified up to the date of the sale.

INSTRUMENTS AND HEDGING ACTIVITIES

of December 31, 2022 , the Company entered into forward contracts and put and call options to sell

dollars (“USD”) for NIS in the amount of approximately NIS 194

million and NIS 18

in the common stock of a privately-held company which represents 34.8 %

of its outstanding shares.

The Company accounted for this investment using the equity method of accounting.

The Company's share of net

loss for the year ended December 31, 2023 was $ 350 .

April and July of 2023, the Company completed a total investment of $ 2,500

in the preferred stock of a privately-held company which represents 4.5 %

of its outstanding shares on a fully diluted basis.

The Company accounted for this investment as an equity investment without readily

determinable fair values.

No impairment or other adjustments related to observable price changes in orderly transactions for identical

or similar investments were identified.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

of December 31, 2023, the Company entered into contracts of put and call options to sell U.S.

dollars (“USD”) for NIS and

Euro ("EUR") for USD in the amounts of approximately NIS 541

million and EUR 60

million, respectively.

1 unchanged sentence

sheet location

December 31 ,

assets of options and forward contracts:

10 unchanged sentences

derivative liabilities

Gains (losses) on derivative

instruments recognized in the consolidated statements of income are summarized below:

(losses) on derivative instruments are summarized below:

ended December 31,

1 unchanged sentence

Designated Hedging Instruments

income (expense), net

Statements of Income - Financial income (expense), net

Hedging Instruments

Statements of Comprehensive Income - Cash flow hedges

Note 21 for information regarding gains (losses) from designated hedging instruments reclassified from accumulated other comprehensive

3 unchanged sentences

except per share data)

(losses) on derivative instruments recognized in the consolidated statements of comprehensive income were as follows:

ended December 31

exchange contracts:

Hedging Instruments

As of December 31, 2022, the Company

estimates that all of the net derivative losses related to the Company's foreign exchange cash flow hedges included in accumulated other

comprehensive loss will be reclassified into earnings within the next 12 months.

FAIR VALUE MEASUREMENTS

7 unchanged sentences

value measurements as of

Value Hierarchy

Cash and cash equivalents:

2 unchanged sentences

Short-term marketable

Treasury securities

Government agency securities

Government securities

Long-term marketable

Treasury securities

Government agency securities

Government securities

Derivative instruments

to assets and liabilities that are recorded at fair value on a recurring basis, impairment indicators may subject goodwill and long-lived

assets to nonrecurring fair value measurements.

The implied fair values of the e-Mobility and Automation Machines reporting units were

estimated using the discounted cash flow approach (see Notes 8 and 9).

The inputs to these models are considered Level 3.

TECHNOLOGIES INC.

4 unchanged sentences

31, 2023 , 2022 and 2021 were as follows:

at the beginning of the period

and adjustments to cost of revenues

and current warranty expenses

at end of the period

current portion

DEFERRED REVENUES

Balance, at the beginning of the period

Accruals for warranty during the period

Changes in estimates

Balance, at end of the period

Less current portion

Long term portion

revenues consist of deferred cloud-based monitoring services, communication services, warranty extension services and advance payments

3 unchanged sentences

changes in the balances of deferred revenues during the period are as follows:

at the beginning of the period

in deferred revenues and customer advances

at the end of the period

current portion

Balance, at the beginning

of the period

Revenue recognized

Increase in deferred

revenues and customer advances

Balance, at the end of

Less current portion

Long term portion

following table includes estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied

(or partially unsatisfied) as of December 31, 2023:

Total deferred revenues

deferred revenues

TECHNOLOGIES INC.

3 unchanged sentences

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

of December 31,

lease liabilities

for sales incentives

for legal claims

accrued expenses and other current liabilities

As of December 31,

Accrued expenses

Government authorities

Operating lease liabilities

Accrual for sales incentives

Finance lease

Total accrued expenses and other current liabilities

CONVERTIBLE SENIOR NOTES

23 unchanged sentences

on the second scheduled trading day immediately preceding the stated maturity date of the Notes, without regard to the foregoing circumstances.

initial conversion rate for the Notes was 3.5997

The initial conversion rate for the Notes was 3.5997

shares of common stock per $ 1,000

17 unchanged sentences

carrying amount

January 1, 2021, the Company early adopted ASU 2020-06 using the modified retrospective approach and therefore the Company did not record

amortized debt discount costs related to the Notes in the years ended December 31, 2022 and 2021.

For the year ended December 31, 2020,

the Company recorded amortized debt discount costs related to the Notes in the amount of $ 2,480 .

the years ended December 31, 2022 , 2021 and 2020

the Company recorded amortized debt issuance costs related to the Notes in the amount of $ 2,916 ,

the years ended December 31, 2023, 2022 and 2021 the Company recorded amortized debt issuance costs related to the Notes in the amount

and $ 2,903 ,

1 unchanged sentence

of December 31, 2023, the issuance costs of the Notes will be amortized over the remaining term of approximately 1.70

annual effective interest rate of the liability component following the adoption of ASU 2020-06 is 0.47 %.

annual effective interest rate of the Notes is 0.47 %.

of December 31, 2023, the estimated fair value of the Notes, which the Company has classified as Level 2 financial instruments, is $ 577,156 .

1 unchanged sentence

of the reporting period.

of December 31, 2022, the if-converted value of the Notes exceeded the principal amount by $ 12,452 .

of December 31, 2023, the if-converted value of the Notes did not exceed the principal amount.

OTHER LONG TERM LIABILITIES

of December 31,

severance pay

Tax liabilities

Accrued severance pay

TECHNOLOGIES INC.

2 unchanged sentences

except per share data)

stock rights:

STOCK CAPITAL

Common stock rights:

stock confers upon its holders the right to receive notice of, and to participate in, all general meetings of the Company, where each

share of common stock shall have one vote for all purposes, to share equally, on a per share basis, in bonuses, profits, or distributions

out of fund legally available therefor, and to participate in the distribution of the surplus assets of the Company in the event

of liquidation of the Company.

public offering:

out of fund legally available therefor, and to participate in the distribution of the surplus assets of the Company in the event of liquidation

of the Company.

Secondary public offering:

March 17, 2022, the Company offered and sold 2,300,000

10 unchanged sentences

and commissions of $ 834 .

Incentive Plans:

Equity Incentive Plans:

Company’s 2007 Global Incentive Plan (the “2007 Plan”) was adopted by the board of directors on August 30, 2007.

8 unchanged sentences

employees, officers, and non-employees of the Company and its subsidiaries.

As of December 31,

2022, a total of 18,047,085

shares of common stock were reserved for issuance pursuant to stock awards under the 2015 Plan (the “Share Reserve”) ,

an aggregate of 9,410,816

As of December 31, 2023, a total of 20,853,755

shares of common stock were reserved for issuance pursuant to stock awards under the 2015 Plan (the “Share Reserve”), an aggregate

of 11,042,805

shares are still available for future grants.

Share Reserve will automatically increase on January 1 st of each year during the term of the 2015 Plan, commencing on

January 1 st of the year following the year in which the 2015 Plan becomes effective, in an amount equal to 5 %

Share Reserve will automatically increase on January 1 st of

each year during the term of the 2015 Plan, commencing on January 1 st

of the year following the year in which the 2015 Plan becomes effective, in an amount equal to 5 %

of the total number of shares of capital stock outstanding on December 31 st

8 unchanged sentences

as PSUs for accounting purposes.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

market condition for the PSUs is based on the Company’s total shareholder return ("TSR") compared to the TSR of companies listed

5 unchanged sentences

The Company recognizes such compensation expenses on an accelerated vesting method.

The aggregate maximum number of shares

of common stock that may be issued on the exercise of incentive stock options is 10,000,000 .

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

aggregate maximum number of shares of common stock that may be issued on the exercise of incentive stock options is 10,000,000 .

As of December 31, 2023, an aggregate of 8,617,974

1 unchanged sentence

summary of the activity in stock options and related information is as follows:

as of December 31, 2021

as of December 31, 2022

and expected to vest as of December 31, 2022

as of December 31, 2022

aggregate intrinsic value in the tables above represents the total intrinsic value (the difference between the fair value of the Company’s

common stock as of the last day of each period and the exercise price, multiplied by the number of in-the-money options) that would have

been received by the option holders had all option holders exercised their options on the last day of each period.

average exercise price

average remaining contractual term in years

intrinsic Value

Outstanding as

of December 31, 2022

Outstanding as

of December 31, 2023

Vested and expected

to vest as of December 31, 2023

Exercisable as

of December 31, 2023

intrinsic value is the amount by which the closing price of the Company’s common stock on December 31, 2023 of $ 93.60

or the price on the day of exercise exceeds the exercise price of the stock options multiplied by the number of in-the-money options.

total intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021 was $ 3,572 ,

1 unchanged sentence

respectively.

were no options granted in 2022.

average grant date fair value of options granted to employees and directors during the years ended December 31, 2021 and 2020, was $ 168.71

and $ 62.11 ,

respectively.

options were granted in 2023.

summary of the activity in the RSUs and related information is as follows:

Unvested as of January 1, 2022

Unvested as of December 31, 2022

average grant date fair value

as of January 1, 2023

as of December 31, 2023

summary of the activity in the PSUs and related information is as follows:

average grant date fair value

as of January 1, 2023

as of December 31, 2023

TECHNOLOGIES INC.

2 unchanged sentences

except per share data)

of the activity in the PSUs and related information is as follows:

Unvested as of January 1, 2022

Unvested as of December 31, 2022

Stock Purchase Plan:

Employee Stock Purchase Plan:

Company adopted an ESPP effective upon the consummation of the IPO.

As of December 31, 2022 , total

As of December 31, 2023, total of 4,150,380

shares were reserved for issuance under this plan.

16 unchanged sentences

718, the ESPP is compensatory and, as such, results in recognition of compensation cost.

compensation expenses:

Stock-based compensation expenses:

Company recognized stock-based compensation expenses related to all stock-based awards in the consolidated statement of income for the

1 unchanged sentence

ended December 31,

Stock-based compensation

and development

1 unchanged sentence

and administrative

stock-based compensation expenses

the year ended December 31, 2022, the Company capitalized $ 380

stock-based compensation related to the ERP implementation within other long-term assets in the consolidated

balance sheets for the year ended December 31, 2022.

In 2021 and 2020 the Company did not capitalize any stock-based compensation

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Total stock-based

compensation expenses

Stock-based compensation

long-term assets

Total stock-based

compensation capitalized

total tax benefit associated with share-based compensation for the year ended December 31, 2023, 2022 and 2021 was $ 27,551 ,

6 unchanged sentences

related to non-vested equity-based compensation arrangements granted.

These expenses are expected to be recognized

during the period from October 1, 2022 through November 30, 2026.

AND CONTINGENT LIABILITIES

These expenses are expected to be recognized during the period from

January 1, 2024 through November 30, 2027.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

COMMITMENTS AND CONTINGENT LIABILITIES

of December 31, 2023, contingent liabilities exist regarding guarantees in the amounts of $ 6,123

in respect of office rent lease agreements and customs and other transactions, respectively.

purchase obligations:

Contractual purchase obligations:

Company has contractual obligations to purchase goods and raw materials.

8 unchanged sentences

These commitments reflect purchases of automated assembly lines and other machinery related to the Company’s manufacturing process.

as well as capital expenditures associated with the construction of Sella 2, the Company’s second lithium-ion cell and battery factory

Legal claims:

time to time, the Company may be involved in various claims and legal proceedings.

6 unchanged sentences

particular matter.

September 2018, the Company’s German subsidiary, SolarEdge Technologies GmbH received a complaint filed by competitor SMA Solar

Technology AG (“SMA”).

The complaint, filed in the District Court Düsseldorf, Germany, alleges that SolarEdge's 12.5kW

- 27.6kW inverters infringed on two of the plaintiff’s patents.

SMA asserted a value in dispute of EUR 5.5

million (approximately $ 5,866 )

for both patents.

The Company challenged the validity of both patents.

With respect to one of the claims, in October 2020, the German

Patent Court rendered the SMA patent invalid, the invalidity was appealed by SMA and in January 2023, the German Supreme Court upheld

the finding of invalidity.

With respect to the other claim, in November 2019, the first instance court stayed the infringement proceedings

since it considered it to be highly likely that the second SMA patent would also be rendered invalid.

In August 2021, the German Patent

Court rendered SMA's second patent invalid, and this invalidity has been appealed by SMA and a hearing is pending.

The Company believes

that it has meritorious defenses to these claims and intends to vigorously defend against the remaining lawsuit.

July 28, 2022, the Company was served with complaints filed by Ampt LLC in the International Trade Commission (the “Commission”)

pursuant to Section 337 of the Tariff Act of 1930, as amended, in the District Court for the District of Delaware alleging patent infringement

against the Company and its subsidiary SolarEdge Technologies Ltd.

On October 24, 2022, the complaint filed in the District Court of Delaware

was administratively stayed until the Commission's action is resolved.

The Company believes that it has meritorious defenses to the complaints

and intend to vigorously defend against them.

November 3, 2022, the Company received notice that a class action lawsuit was filed in the U.S District Court or the Southern District

of New York against the Company, SolarEdge Technologies Ltd., the Company’s CEO and the Company’s CFO, by a purported stockholder

of the Company, alleging violations of the Federal Securities Act in connection with complaints filed against the Company by Ampt LLC,

detailed above.

On February 14, 2023, the lawsuit was voluntarily withdrawn by the plaintiffs and dismissed by the court.

November 3, 2023, Daphne Shen, a purported stockholder of the Company, filed a proposed class action complaint for violation of federal

securities laws, individually and putatively on behalf of all others similarly situated, in the U.S District Court of the Southern District

of New York against the Company, the Company’s CEO and the Company’s CFO.

The complaint alleges violations of Section 10(b)

and Rule 10b-5 of the Exchange Act, as well as violations of Section 20(a) of the Exchange Act against the individual defendants.

complaint seeks class certification, damages, interest, attorneys’ fees, and other relief.

On December 13, 2023, Javier Cascallar

filed a similar proposed class action.

On February 7, 2024, the Court consolidated the two actions, and appointed co-lead plaintiffs and

lead counsel.

Due to the early stage of this proceeding, the Company cannot reasonably estimate the potential range of loss, if any, or

the likelihood of a potential adverse outcome.

The Company disputes the allegations of wrongdoing and intends to vigorously defend against

August 2019, the Company was served with a lawsuit filed in the civil courts of Milan, Italy against the Italian subsidiary of SolarEdge

e-Mobility S.r.l (previously SMRE S.p.A) that purchased the shares of SolarEdge e-Mobility in the tender offer that followed the SolarEdge

e-Mobility Acquisition by certain former shareholders of SolarEdge e-Mobility who tendered their shares.

The lawsuit asked for damages

of approximately $ 3,000 ,

representing the difference between the amount for which they tendered their shares ( 6

Euro per share) and 6.7

Euros per share.

In December 2023 the court of Milan, rendered a decision ordering SolarEdge to pay, in favor of each plaintiff, the difference

between the price paid ( 6

Euro per share) and 6.44

Euro per share, i.e.

euros per share.

The Company is currently evaluating whether to appeal this decision.

of December 31, 2023, the Company recorded an accrual of $ 2,011

for legal claims which was recorded under accrued expenses and other current liabilities.

TECHNOLOGIES INC.

20 unchanged sentences

Tax on reclassification

Gains reclassified from accumulated other comprehensive income

Net current period other comprehensive income (loss)

Losses reclassified from accumulated other comprehensive income

Net current period other comprehensive loss

Ending balance as of December 31, 2022

Tax on revaluation

Other comprehensive loss before reclassifications

Other comprehensive income (loss) before reclassifications

Reclassification

1 unchanged sentence

Losses reclassified from accumulated other comprehensive income

Net current period other comprehensive loss

Net current period other comprehensive income (loss)

Ending balance as of December 31, 2023

5 unchanged sentences

31, 2023, 2022 and 2021:

about Accumulated Other Comprehensive Income (Loss)

Amount Reclassified from

Accumulated Other Comprehensive Income (Loss)

Line Item in the Statement of Income

Unrealized gains (losses) on available-for-sale

marketable securities

income (expenses), net

net of income taxes

Unrealized gains (losses) on cash

and development

and marketing

and administrative

before income taxes

about Accumulated Other

Comprehensive

Income (Loss) Components

Reclassified from Accumulated Other

Comprehensive

Income (Loss)

Line Item in the

Unrealized gains (losses) on available-for-sale marketable securities

Financial income (expenses), net

Total, net of income taxes

reclassifications for the period

Unrealized gains (losses) on cash flow hedges

Cost of revenues

Research and development

Sales and marketing

General and administrative

Total, before income taxes

Total, net of income taxes

Total reclassifications for the period

TECHNOLOGIES INC.

4 unchanged sentences

following table presents the computation of basic and diluted EPS attributable to SolarEdge Technologies Inc.:

ended December 31,

used in computing net earnings per share of common stock, basic

income attributable to common stock, basic

income attributable to common stock, diluted

used in computing net earnings per share of common stock, basic

of stock-based awards

used in computing net earnings per share of common stock, diluted

excluded from the calculation of diluted net EPS due to their anti-dilutive effect

Year ended December 31,

Shares used in computing net EPS of common stock, basic

Net income attributable to common stock, basic

Notes due 2025

Net income attributable to common stock, diluted

Shares used in computing net EPS of common stock, basic

Notes due 2025

Effect of stock-based awards

Shares used in computing net EPS of common stock, diluted

Earnings per share:

Shares excluded from the calculation of net diluted due to their anti-dilutive effect

TECHNOLOGIES INC.

2 unchanged sentences

except per share data)

IMPAIRMENT AND OTHER OPERATING EXPENSES (INCOME), NET

OTHER OPERATING EXPENSES, NET

ended December 31,

of goodwill 1

of long-lived assets 2

Korea (formerly Kokam) purchase escrow 3

goodwill impairment and other operating expenses (income)

In June 2022, the Company decided to discontinue its stand-alone Critical Power activities.

The Company recorded a loss related

to its Critical Power business in the amount of $ 2,782

( see Note 9 ).

in October 2022, as a result of an impairment test performed on the e-Mobility and Automation Machines reporting units, the Company recorded

a loss of $ 80,534

and $ 6,788 ,

respectively (see Note 9).

In October 2022, the Company recorded a loss of $ 26,917

as a result of an impairment test performed on e-Mobility and Automation Machines, respectively, a loss of $ 1,226

due to the discontinuance of Critical Power activities (see Note 8) and other miscellaneous items.

I n the year ended December 31, 2021, the Company received a payment of $ 859

Impairment of property,

plant and equipment

Impairment of intangible

Gain on sale of assets

Legal settlements and

contingencies 2

SolarEdge Korea (formerly

Kokam) purchase escrow 3

Total other operating

In the year ended December 31, 2021, the Company received a payment of $ 859

out of the SolarEdge Korea (formerly Kokam) acquisition escrow, with regards to a working capital adjustment.

In the year ended December

31, 2020, the Company was indemnified for an amount of $ 4,900

out of the escrow, with regards to a legal claim of SolarEdge Korea (formerly Kokam) that was settled in arbitration.

TECHNOLOGIES INC.

2 unchanged sentences

except per share data)

RESTRUCTURING AND OTHER EXIT ACTIVITIES

October of 2023, the Company made an announcement regarding its restructuring plans to adjust its manufacturing capacity and increase

operating efficiency, including terminating the manufacturing process in Mexico, reducing manufacturing capacity in China, and discontinuing

the Company’s LCV activity.

The program is expected to be completed by the end of the first half of 2024.

These decisions were made

in order to better align the Company with current market conditions.

Company determined that the discontinuation of the LCV activity does not represent a strategic shift that will have a major effect on

the Company's operations and financial results and therefore it did not meet the criteria for discontinued operations classification.

Restructuring

and other exit charges for the year ended December 31, 2023 by segments and type of cost were as follows:

termination costs

termination and other

Cost of revenues

Sales and marketing

General and administrative

the year ended December 31, 2022, the Company recorded $ 4,314

of inventory write-downs in cost of revenues as a result of Critical Power's discontinuation.

The Company did not record

any restructuring and other exit activities costs for the year ended December 31, 2021

The Company’s liability

balance for the restructuring and other exit charges is as follows:

termination costs

termination and other

Balance as of January

Cash payments

Foreign currency adjustments

Balance as of December

Inventory write-down is included under Inventories, net on the balance sheet.

The total amount expected

to be incurred for restructuring and other exit charges, which primarily consists of contract terminations related to the solar segment,

is $ 10,558 .

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Tax rates in the U.S:

6 unchanged sentences

Global Intangible Low Taxed Income (“GILTI”).

Furthermore, changes introduced by the Tax

Act to Section 174 of the Internal Revenue Code, that came into effect on January 1, 2022, require taxpayers to amortize research and

development expenditures over five years (if expensed by a U.S.

entity) or fifteen years (if expensed by non-U.S.

entities), thereby increasing

taxable income and payable tax.

Furthermore, changes introduced by the Tax Act to Section 174 of the Internal

Revenue Code, that came into effect on January 1, 2022, require taxpayers to amortize research and development expenditures over five

years (if incurred in the U.S.) or fifteen years (if incurred outside the U.S.), thereby increasing taxable income and payable tax.

Tax Act required the Company to pay U.S.

7 unchanged sentences

taxable income of Israeli companies is subject to corporate tax at the rate of 23 %.

Israeli subsidiary is also eligible for tax benefits as further described in note 23.j.

The Israeli subsidiary is also eligible for tax benefits as further described in note 25j.

Carryforward tax losses:

of December 31, 2022, the foreign subsidiaries have carryforward tax losses of $ 83,391 which

does not have an expiration date.

of December 31, 2023, the foreign subsidiaries have carryforward tax losses of $ 205,263

which do not have an expiration date.

Deferred taxes:

8 unchanged sentences

and Development carryforward expenses

Carryforward tax losses (1)

based compensation expenses

tax losses (1)

compensation expenses

Lease liabilities

Foreign currency

and other reserves

Gross deferred tax assets, net

Valuation Allowance

deferred tax assets, net

Less, Valuation

Total deferred

tax assets, net

tax liabilities, net:

R ight-of-use

price allocation

deferred tax liabilities, net

Property, plant and equipment

Total deferred

tax liabilities, net

tax assets, net

tax liabilities, net

deferred tax assets

to deferred tax assets that would only be realizable upon the generation of net income in certain foreign jurisdictions.

The Company’s Israeli subsidiary’s tax-exempt profit

from Benefited Enterprises (as defined in note 23.j) is permanently reinvested, Therefore, deferred taxes have not been provided for such

tax-exempt income.

Related to deferred tax assets that would only be realizable upon the generation of net income in certain foreign jurisdictions.

Company’s Israeli subsidiary’s tax-exempt profit from Benefited Enterprises (as defined in note 25j) is permanently reinvested,

Therefore, deferred taxes have not been provided for such tax-exempt income.

Company may incur additional tax liability in the event of intercompany dividend distributions by some of its subsidiaries.

2 unchanged sentences

and the Board of Directors has determined that the Company intends to reinvest earnings of its subsidiaries indefinitely.

Uncertain tax positions are comprised as follows:

Uncertain tax positions are comprised

at the beginning of the period

9 unchanged sentences

Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes.

The total amount of penalties

and interest were not material as of December 31, 2022 , 2021 and

As of December 31, 2023,

the Company accrued $ 2,927 .

total amount of penalties and interest were not material as of December 31, 2022 and 2021.

is reasonably possible that the Company’s gross unrecognized tax benefits will decrease by an insignificant amount in the next 12

months, primarily due to the lapse of the statute of limitations.

Income before income taxes are comprised as follows:

Year ended December 31,

Income before income taxes

Income taxes (tax benefit) are comprised as follows:

Year ended December 31,

Income before income taxes are comprised

ended December 31,

Income before

Income taxes (tax benefit) are comprised

ended December 31,

Current taxes:

Total current taxes

Deferred taxes:

Total deferred taxes

Income taxes, net

Reconciliation of theoretical tax expense to actual tax expense:

differences between the statutory tax rate of the Company and the effective tax rate are result of a variety of factors, including different

effective tax rates applicable to non-US subsidiaries that have tax rates different than the Company tax rate, tax benefits relating to

stock-based compensation and adjustments to valuation allowances on deferred tax assets on such subsidiaries.

Total current

Total deferred

Income taxes,

TECHNOLOGIES INC.

2 unchanged sentences

except per share data)

Reconciliation of theoretical tax

expense to actual tax expense:

differences between the statutory tax rate of the Company and the effective tax rate are result of a variety of factors, including different

effective tax rates applicable to non-US subsidiaries that have tax rates different than the Company tax rate, tax benefits relating to

stock-based compensation and adjustments to valuation allowances on deferred tax assets of such subsidiaries.

reconciliation between the theoretical tax expense and the actual tax expense as reported in the consolidated statements of income is

Year ended December 31,

Statutory tax rate

Income tax at rate other than the U.S.

ended December 31,

at rate other than the U.S.

statutory tax rate

Losses and timing differences for which valuation allowance was provided

Prior year income taxes (benefit)

R&D Capitalization and other effects of TCJA

Disallowable and allowable deductions

Other individually immaterial income tax items, net

Effective tax rate

timing differences for which valuation allowance was provided

income taxes (benefit)

R&D Capitalization

and other effects of TCJA

Non-deductible

Other individually

immaterial income tax items, net

Tax assessments:

37 unchanged sentences

December 31, 2023, the Israeli subsidiary had generated income under the provision of the Investments Law.

to amendment 73 to the Investments Law (the “2017 Amendment"), a preferred enterprise located in development area A will be

subject to a tax rate of 7.5 %

to amendment 73 to the Investments Law (the “2017 Amendment"), a preferred enterprise located in development area A will be subject

to a tax rate of 7.5 %

instead of 9 %

10 unchanged sentences

PTE, which is located in the center of Israel will be subject to tax at a rate of 12 %

on profits deriving from intellectual property, or 6% if its annual revenues exceed NIS 10

The Israeli subsidiary notified the ITA of its election to implement the PTE with effect from January 1, 2019, and its PTE income

was subject to a 12% tax rate in the years 2019-2021, and in 2022 to a 6% tax rate as the group surpassed NIS 10

billion revenues threshold.

on profits deriving from intellectual property, or 6 %

if its annual revenues exceed NIS 10

billion ("Threshold").

The Israeli subsidiary notified the ITA of its election to implement the PTE with effect from January 1, 2019,

and its PTE income was subject to a 12% tax rate in the years 2019-2021, and in 2022-2023 to a 6% tax rate as the group surpassed the

The Company currently expects not to meet the Threshold in 2024 and consequently expects its tax on its PTE income to be 12%

The Company adjusted its deferred taxes accordingly.

Benefits for Research and Development:

tax law (section 20A to the Israeli Tax Ordinance (New Version), 1961) allows, a tax deduction for research and development expenses,

including capital expenses, for the year in which they are paid.

Such expenses must relate to scientific research in industry, agriculture,

transportation or energy, and must be approved by the relevant Israeli government ministry, determined by the field of research.

expenses incurred in scientific research that is not approved by the relevant Israeli government ministry, they will be deductible over

a three-year period starting from the tax year in which they are paid.

The Company’s Israeli subsidiary intends to submit a formal

request to the relevant Israeli government ministry in order to obtain such approval for 2019 - 2021.

Tax benefits under the Law for the Encouragement of Industry (Taxes), 1969:

tax law (section 20A to the Israeli Tax Ordinance (New Version), 1961) allows a tax deduction for research and development expenses, including

capital expenses, in the year in which they are paid.

Such expenses must relate to scientific research in industry, agriculture, transportation

or energy, and must be approved by the relevant Israeli government ministry, determined by the field of research.

Expenses incurred in

scientific research that are not approved by the relevant government ministry are amortized over a three-year period starting from the

tax year in which they are paid.

The Company’s Israeli subsidiary intends to submit a formal request to the relevant government

ministry in order to obtain such approval for 2019 - 2021.

Tax benefits under the Law for the

Encouragement of Industry (Taxes), 1969:

Company’s Israeli subsidiary claims currently to be qualified as ‘industrial company’ as defined by this law and as

7 unchanged sentences

ended December 31,

rate (loss) gain, net

income on marketable securities

component expenses related to ASC 606

financial income (expenses), net

Exchange rate (loss)

Interest income on marketable

Convertible note

Financing component expenses

related to ASC 606

Interest income

Interest expense

Total financial income

(expenses), net

GEOGRAPHIC AND PRODUCT INFORMATION

Segment Information:

the discontinuation of Critical Power in June 2022, the Company operates in four different operating segments:

Solar, Energy Storage,

e-Mobility and Automation Machines.

the discontinuation of the Critical Power segment in June 2022, the Company operated in four different operating segments:

Solar, Energy

Storage, e-Mobility and Automation Machines.

In October 2023, the Company decided to discontinue its LCV activity.

Company's Chief Executive Officer, who is the chief operating decision maker (“CODM”), makes resource allocation decisions

4 unchanged sentences

from Contracts with Customers” (ASC 606).

profit is comprised of gross profit for the segment less operating expenses that do not include amortization and impairment of purchased

intangible assets, stock based compensation expenses and certain other items.

profit (loss) is comprised of gross profit for the segment less operating expenses that do not include amortization and impairment of

purchased intangible assets, stock based compensation expenses, restructuring charges, discontinued activity charges and

certain other items.

Company manages its assets on a group basis, not by segments, as many of its assets are shared or co-mingled.

1 unchanged sentence

does not regularly review asset information by segments and, therefore, the Company does not report asset information by segment.

Company identified one

operating segment as reportable – the Solar segment.

The other operating segments are insignificant individually and therefore their

results are presented together under “All other”.

Company identified two

operating segments as reportable – the Solar segment and the Energy Storage segment.

The other operating segments are insignificant

individually and therefore their results are presented together under “All other”.

Solar segment includes the design, development, manufacturing, and sales of an intelligent inverter solution designed to maximize power

generation at the individual PV module level and a residential storage solution, compatible with the Company’s energy hub inverter,

intended to store and supply power for back-up and to maximize self-consumption.

generation at the individual PV module level and batteries for PV applications.

The Solar segment solution consists mainly of the Company’s

power optimizers, inverters, batteries and cloud‑based monitoring platform.

Energy Storage segment includes the design, development, manufacturing, and sales of high-energy, high-power, lithium-ion cells and racks

and containerized battery systems for C&I and Utility markets.

The Energy Storage segment provides purpose-built components and solutions,

hardware and software, as well as pre and post sales engineering support to design, build, and manage battery and system solutions according

to the customer’s use cases and mission profiles.

TECHNOLOGIES INC.

2 unchanged sentences

except per share data)

other” category includes the design, development, manufacturing and sales of energy storage products, e-Mobility products, UPS products

and automated machines

following table presents information on reportable segments profit (loss) for the period presented:

“All other” category includes the e-Mobility products, automated machines and UPS products (in prior periods).

following tables presents information on reportable segments profit (loss) for the period presented:

ended December 31, 2023

Cost of revenues

Gross profit (loss)

Research and development

2 unchanged sentences

Segments profit (loss)

ended December 31, 2022

Cost of revenues

Gross profit (loss)

Research and development

Sales and marketing

General and administrative

Segments profit (loss)

ended December 31, 2021

Cost of revenues

Gross profit (loss)

Research and development

Sales and marketing

General and administrative

Segments profit (loss)

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

following table presents information on reportable segments reconciliation to consolidated revenues for the periods presented:

ended December 31,

segment revenues

other segment revenues

from financing component

Inter-segment

Solar segment revenues

Energy Storage segment

All other segment revenues

Revenues from financing

Consolidated revenues

following table presents information on reportable segments reconciliation to consolidated operating income for the periods presented:

1 unchanged sentence

Solar segment profit

Energy Storage segment

profit (loss)

All other segment loss

4 unchanged sentences

of goodwill and long-lived assets

of assets related to Critical Power

Restructuring

and other exit activities

unallocated income (expenses), net

Consolidated operating

Revenues by geographic, based on customers’

ended December 31,

United States

Rest of the world

Total revenues

Except for Germany, Netherlands and Italy

TECHNOLOGIES INC.

2 unchanged sentences

except per share data)

Revenues by geographic, based on Customers’ location:

ended December 31,

Except for Germany, Netherlands and Italy

Revenues by type:

ended December 31,

Residential batteries

components and telematics

Batteries for PV applications

e-Mobility components

and telematics

Communication

Total revenues

Long-lived assets by geographic location:

1 unchanged sentence

Total long-lived assets (*)

(*) Long-lived

assets are comprised of property and equipment, net and Operating lease right-of-use assets, net.

Long-lived assets are comprised of property and equipment, net and Operating lease right-of-use assets, net.

TECHNOLOGIES INC.

3 unchanged sentences

SUBSEQUENT EVENTS

In January 2023,

the Company entered into an agreement to acquire Hark Systems Ltd.

("Hark"), a UK-based energy IoT company for the C&I sector.

platform will enable the Company to grow its commercial and industrial energy management portfolio and offer additional services to its

C&I customers.

The acquisition is still subject to certain customary closing conditions and regulatory approvals and is expected to

close during the second quarter of 2023.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

In January 2024, the Company entered into an agreement

to acquire minority shares in Ampeers Energy GmbH ("Ampeers") from existing shareholders as well as through a share capital increase.

Ampeers, a German-based company, is involved in the programming, operation and marketing of an information and communications technology

The investment is subject to customary closing conditions and regulatory approvals and is expected to close during the first

half of 2024.

Also in January 2024, the Company completed a

minority investment in Ivy Energy, a U.S.

company that provides software to real estate owners for distribution of solar energy between

multi dwelling units.

On January 21, 2024, the Company announced adoption

of additional measures in response to challenging industry conditions, including reducing its headcount by approximately 16 %

over the first half of 2024 through an involuntary workforce reduction plan.

These decisions were made in order to better align the Company

with current market conditions.

The significant part of the workforce reduction occurred in January 2024.

- - - - - - - - - - - - - - - - - - - -

Changes in and Disagreements

with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data