Page | |
F-2 - F-3 | |
F-4 | |
F-5 - F-6 | |
F-7 - F-8 | |
F-9 - F-16 |
June 30,
|
December 31,
|
||||||||||
Note
|
2024
|
2023
|
|||||||||
Unaudited
|
|||||||||||
ASSETS
|
|||||||||||
CURRENT ASSETS:
|
|||||||||||
Cash and cash equivalents
|
3
|
|
|
||||||||
Short-term bank deposits
|
4
|
|
|
||||||||
Trade receivables (net of allowance for doubtful accounts of $
|
|
|
|||||||||
Inventories
|
5
|
|
|
||||||||
Other accounts receivable and prepaid expenses
|
|
|
|||||||||
Total current assets
|
|
|
|||||||||
LONG-TERM ASSETS:
|
|||||||||||
Severance pay fund
|
|
|
|||||||||
Deferred tax asset, net
|
|||||||||||
Operating lease right-of-use assets
|
|
|
|||||||||
|
|
||||||||||
Property and equipment, net
|
|
|
|||||||||
Total long-term assets
|
|
|
|||||||||
Total assets
|
|
|
F - 2
June 30,
|
December 31,
|
||||||||||
Note
|
2024
|
2023
|
|||||||||
Unaudited
|
|||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|||||||||||
CURRENT LIABILITIES:
|
|||||||||||
Trade payables
|
|
|
|||||||||
Other accounts payable and accrued expenses
|
|
|
|||||||||
Short-term operating lease liabilities
|
|
|
|||||||||
Total current liabilities
|
|
|
|||||||||
LONG-TERM LIABILITIES:
|
|||||||||||
Accrued severance pay
|
|
|
|||||||||
Long-term operating lease liabilities
|
|
|
|||||||||
Total long-term liabilities
|
|
|
|||||||||
COMMITMENTS AND CONTINGENT LIABILITIES
|
6
|
|
|
||||||||
SHAREHOLDERS' EQUITY:
|
7
|
||||||||||
Share capital -
|
|||||||||||
Ordinary shares of NIS
Authorized:
|
|
|
|||||||||
Additional paid-in capital
|
|
|
|||||||||
Foreign currency translation adjustments
|
(
|
)
|
|
||||||||
Capital reserves
|
|
|
|||||||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
|||||||
Total shareholders' equity
|
|
|
|||||||||
Total liabilities and shareholders' equity
|
|
|
F - 3
|
Note
|
Six months ended June 30,
|
Three months ended June 30,
|
||||||||||||||||
|
2024
|
2023
|
2024
|
2023
|
|||||||||||||||
Unaudited
|
|||||||||||||||||||
Revenues
|
8
|
|
|
|
|
||||||||||||||
Cost of revenues
|
|
|
|
|
|||||||||||||||
Gross profit
|
|
|
|
|
|||||||||||||||
Operating expenses:
|
|||||||||||||||||||
Research and development, net
|
|
|
|
|
|||||||||||||||
Selling, general and administrative
|
|
|
|
|
|||||||||||||||
Operating income
|
|
|
|
|
|||||||||||||||
Financial income, net
|
|
|
|
|
|||||||||||||||
Income before income taxes
|
|
|
|
|
|||||||||||||||
Taxes on income
|
9
|
|
|
|
|
||||||||||||||
Net income
|
|
|
|
|
|||||||||||||||
|
|||||||||||||||||||
Other comprehensive income (loss):
|
|||||||||||||||||||
Foreign currency translation adjustments
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||
Total comprehensive income
|
|
|
|
|
|||||||||||||||
|
|||||||||||||||||||
Basic and diluted income per ordinary share
|
|
|
|
|
F - 4
Company's shareholders
|
||||||||||||||||||||||||||||
Ordinary
shares
|
Amount
|
Additional
paid-in
capital
|
Accumulated other comprehensive income (loss)
|
Capital
reserves
|
Accumulated
deficit
|
Total
|
||||||||||||||||||||||
Balance as of April 1, 2024
|
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||||
Share-based compensation
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Exercise of stock options
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Foreign currency translation adjustments
|
-
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance as of June 30, 2024
|
|
|
|
(
|
)
|
|
(
|
)
|
|
Balance as of April 1, 2023
|
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||||
Share-based compensation
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Exercise of stock options
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Foreign currency translation adjustments
|
-
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance as of June 30, 2023
|
|
|
|
|
|
(
|
)
|
|
F - 5
Company's shareholders
|
||||||||||||||||||||||||||||
Ordinary
shares
|
Amount
|
Additional
paid-in
capital
|
Accumulated other comprehensive income (loss)
|
Capital
reserves
|
Accumulated
deficit
|
Total
|
||||||||||||||||||||||
Balance as of January 1, 2024
|
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||||
Share-based compensation
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Issuance of shares, net
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Exercise of stock options
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Foreign currency translation adjustments
|
-
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance as of June 30, 2024
|
|
|
|
(
|
)
|
|
(
|
)
|
|
Balance as of January 1, 2023
|
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||||
Share-based compensation
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Exercise of stock options
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Foreign currency translation adjustments
|
-
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance as of June 30, 2023
|
|
|
|
|
|
(
|
)
|
|
F - 6
Six months ended
June 30,
|
||||||||
2024
|
2023
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
|
|
||||||
Adjustments required to reconcile net income to net cash flows provided by operating activities:
|
||||||||
Depreciation
|
|
|
||||||
Accrued interest
|
(
|
)
|
|
|||||
Share-based compensation
|
|
|
||||||
Changes in deferred income tax assets, net
|
|
|
||||||
Increase (decrease) in employee severance benefits, net
|
(
|
)
|
|
|||||
Decrease (increase) in trade receivables, net
|
|
(
|
)
|
|||||
Decrease (increase) in operating lease right-of-use assets
|
|
|
||||||
Increase (decrease) in operating lease liabilities
|
(
|
)
|
(
|
)
|
||||
Decrease (increase) in other receivables and prepaid expenses
|
|
(
|
)
|
|||||
Decrease (increase) in inventories
|
(
|
)
|
(
|
)
|
||||
Increase (decrease) in trade payables
|
(
|
)
|
|
|||||
Increase (decrease) in other liabilities and accrued expenses
|
(
|
)
|
|
|||||
Net cash provided by operating activities
|
|
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchase of property and equipment
|
(
|
)
|
(
|
)
|
||||
Insurance Proceeds
|
|
|
||||||
Investment in short-term bank deposits, net
|
(
|
)
|
||||||
Restricted deposits
|
|
|
||||||
Net cash used in investing activities
|
(
|
)
|
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Exercise of options
|
|
|
||||||
Repayment of long-term loans
|
|
(
|
)
|
|||||
Issuance of shares, net
|
|
|
||||||
Net cash used in financing activities
|
|
(
|
)
|
F - 7
Six months ended
June 30,
|
||||||||
2024
|
2023
|
|||||||
Effect of exchange rate on cash and cash equivalents
|
(
|
)
|
(
|
)
|
||||
Increase (decrease) in cash and cash equivalents
|
(
|
)
|
|
|||||
Cash and cash equivalents at the beginning of the year
|
|
|
||||||
Cash and cash equivalents at end of the year
|
|
|
||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES:
|
||||||||
Cash paid during the year for:
|
||||||||
Interest
|
|
|
||||||
Income taxes
|
|
|
||||||
Supplemental Disclosures of non-cash activity:
|
||||||||
Purchase of property and equipment, not yet paid
|
|
|
||||||
Right-of-use assets recognized with corresponding lease liabilities
|
|
|
F - 8
U.S. dollars in thousands (except share and per share data)
NOTE 1:- |
DESCRIPTION OF BUSINESS AND GENERAL
|
a. |
General:
Eltek Ltd. ("the Company") was established in Israel in 1970, and its ordinary shares have been publicly traded on the NASDAQ Capital Market ("NASDAQ") since 1997. Eltek Ltd. and its subsidiaries (Eltek USA Inc. and Eltek Europe GmbH) are collectively referred to as "the Company". As of June 30, 2024, Eltek Europe GmbH is inactive.
The Company manufactures, markets and sells custom made printed circuit boards ("PCBs") including, high density interconnect, flex-rigid and multi-layered boards. The principal markets of the Company are in Israel, Europe, North America and India.
The Company markets its products mainly to the medical device, defense and aerospace, industrial, telecom and networking equipment industries, as well as to contract electronic manufacturers.
The Company is controlled by Nistec Golan Ltd ("Nistec Golan"). Nistec Golan is controlled indirectly by Mr. Yitzhak Nissan, who owns, indirectly through Nistec Holdings Ltd., all of the shares of Nistec Golan (Nistec Holdings Ltd. and its subsidiaries are referred to as "Nistec").
|
b. |
Credit facilities
The Company has a revolving credit facility pursuant to which the Company may withdraw an aggregate amount of up to NIS
|
c. |
Business risks and condition:
|
- |
The Company’s business is subject to numerous risks including, but not limited to, the impact of currency exchange rates (mainly NIS/US$), the Company's ability to implement its sales and manufacturing plans, the impact of competition from other companies, the Company's ability to receive regulatory clearance or approval to market its products, changes in regulatory environment, domestic and global economic conditions and industry conditions, and compliance with environmental laws and regulations.
|
F - 9
U.S. dollars in thousands (except share and per share data)
NOTE 1:- |
DESCRIPTION OF BUSINESS AND GENERAL (CONT.)
|
- |
On October 7, 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. Following the attack, Israel’s security cabinet declared war against Hamas and the Israeli military began to call-up reservists for active duty. At the same time, and because of the declaration of war against Hamas, the clash between Israel and Hezbollah in Lebanon has escalated and there is a possibility that it will turn into a greater regional conflict in the future. As of June 2024, these events have had no material impact on the Company's operations.
|
- |
The Company's commercial insurance does not cover losses that may occur as a result of an event associated with the security situation in the Middle East. Although the Israeli government is currently committed to covering the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, the Company cannot assure that this government coverage will be maintained or, if maintained, will be sufficient to compensate fully the damages incurred.
|
NOTE 2:- |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
A. |
Basis of Presentation
The accompanying consolidated unaudited financial statements have been prepared in a condensed format and include the consolidated unaudited financial operations of the Company as of June 30, 2024 and for the six month periods then ended, in accordance with U.S. GAAP, relating to the preparation of financial statements for interim periods.
Accordingly, the accompanying consolidated unaudited financial statements do not include all the information and footnotes required by generally accepted accounting principles for a complete set of financial statements. These consolidated unaudited financial statements should be read in conjunction with the audited financial statements and the accompanying notes of the Company for the year ended December 31, 2023 that are included in the Company's Annual Report on Form 20-F, filed with the Securities and Exchange Commission on March 26, 2024 (the "Annual Report"). In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2024, are not necessarily indicative of the results that may be expected for the year ended December 31, 2024.
|
F - 10
U.S. dollars in thousands (except share and per share data)
NOTE 2:- |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
|
B. |
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods and accompanying notes. The Company bases these estimates on historical and anticipated results, trends and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events. Actual results could differ from those estimates.
|
C. |
Significant Accounting Policies
The Company’s significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, in the Company’s Annual Report on Form 20-F for the year ended December 31, 2023. There have been no significant changes to these policies during the six and three months ended June 30, 2024.
|
D. |
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standard Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. In addition, it provides new segment disclosure requirements for entities with a single reportable segment. The guidance will be effective for the Company for annual periods beginning January 1, 2024 and for interim periods beginning January 1, 2025. Early adoption is permitted. The Company is currently evaluating the impact on its financial statement disclosures.
|
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures, which requires disaggregated information about the effective tax rate reconciliation as well as information on income taxes paid. The guidance will be effective for the Company for annual periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the impact on its financial statement disclosures.
|
NOTE 3:- |
CASH AND CASH EQUIVALENTS
|
June 30,
|
December 31,
|
|||||||
2024
|
2023
|
|||||||
Unaudited
|
||||||||
Denominated in U.S. dollars
|
|
|
||||||
Denominated in NIS
|
|
|
||||||
Denominated in Euro
|
|
|
||||||
|
|
F - 11
U.S. dollars in thousands (except share and per share data)
NOTE 4:- |
SHORT-TERM BANK DEPOSITS
|
NOTE 5:- |
INVENTORIES
|
June 30,
|
December 31,
|
|||||||
2024
|
2023
|
|||||||
Unaudited
|
||||||||
Raw materials
|
|
|
||||||
Work-in-progress
|
|
|
||||||
Finished goods
|
|
|
||||||
|
|
NOTE 6:- |
COMMITMENTS AND CONTINGENT LIABILITIES
|
a. |
Pledges:
The Company has pledged certain items of its equipment and the rights to any insurance claims on such items, as well as placed floating liens on all of its remaining assets in favor of the banks.
|
b. |
Indemnification agreement:
The Company entered into indemnification agreements with each of its directors and officers and undertook to enter into the same agreement with future directors and officers. Such indemnification amount will not exceed: (i) the value of
|
F - 12
U.S. dollars in thousands (except share and per share data)
NOTE 6:- |
COMMITMENTS AND CONTINGENT LIABILITIES (CONT.)
|
The Israeli Companies Law provides that an Israeli company cannot exculpate an officer holder from liability with respect to a breach of his or her duty of loyalty. If permitted by its articles of association, a company may exculpate in advance an officer from his or her liability to the company, in whole or in part, with respect to a breach of his or her duty of care. However, a company may not exculpate in advance a director from his or her liability to the company with respect to a breach of his duty of care with respect to distributions.
The Company's articles of association allow it to exculpate any office holder from his or her liability for breach of duty of care, to the maximum extent permitted by law, before or after the occurrence giving rise to such liability.
|
c. |
Contingent Liabilities:
Environmental Related Matters
During 2022, the Company's permit providing for deviations from the standards for discharges into the municipal sewage system was extended. There can be no assurance that such an extension will be granted in the future.
In January 2023, the Company received a notification from the MinistryIsrael’s Ministry of Environmental Protection (the “Ministry”) that it intends to impose a penalty of approximately $
In October 2023, the Company received a notice from the Ministry regarding the suspicion of contamination of the soil from a drilling survey that was done in May 2021 at the factory. On January 24, 2024, representatives of the Ministry visited the Company's facility and informed the Company that an additional survey of the soil and groundwater in the facility area would be required. As of June 30, 2024 the Company is still in conversations with the Ministry as to the scope of the required survey.
|
NOTE 7:- |
SHAREHOLDERS' EQUITY
|
Share Option Plan:
The Company’s 2018 Share Incentive Plan (the "Plan") authorizes the grant of options to purchase shares and restricted shares units (“RSUs”) to officers, employees, directors and consultants of the Company and its subsidiaries. Awards granted under the Plan to participants in various jurisdictions may be subject to specific terms and conditions for such grants as may be approved by the Company’s board from time to time.
Each option granted under the Plan is exercisable for a period of
As of June 30, 2024 options to purchase
|
F - 13
U.S. dollars in thousands (except share and per share data)
NOTE 7:- |
SHAREHOLDERS' EQUITY (CONT.)
|
Number of options
|
Weighted-average exercise
price
|
Weighted- average remaining contractual life
(in years)
|
Aggregate intrinsic
value
(in thousands)
|
|||||||||||||
Outstanding at January 1, 2024
|
|
|
|
|
||||||||||||
Exercised
|
(
|
)
|
|
-
|
-
|
|||||||||||
Granted
|
|
|
-
|
-
|
||||||||||||
Outstanding at June 30, 2024
|
|
|
|
|
||||||||||||
Exercisable at June 30, 2024
|
|
|
|
|
NOTE 8:- |
ENTITY WIDE DISCLOSURES
|
a. |
Customers who accounted for over 10% of the total consolidated revenues:
|
Six months ended
June 30,
|
Three months ended
June 30,
|
|||||||||||||||
2024
|
2023
|
2024
|
2023
|
|||||||||||||
Unaudited
|
||||||||||||||||
Customer A - sales of manufactured products
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||
Customer B - Sales of manufactured products
|
|
%
|
|
%
|
|
%
|
|
%
|
b. |
Revenues by geographic areas:
|
Six months ended
June 30,
|
Three months ended
June 30,
|
|||||||||||||||
2024
|
2023
|
2024
|
2023
|
|||||||||||||
Unaudited
|
||||||||||||||||
Israel
|
|
|
|
|
||||||||||||
North America
|
|
|
|
|
||||||||||||
Netherlands
|
|
|
|
|
||||||||||||
India
|
|
|
|
|
||||||||||||
Others
|
|
|
|
|
||||||||||||
|
|
|
|
F - 14
U.S. dollars in thousands (except share and per share data)
NOTE 9:- |
TAXES ON INCOME
|
a. |
Deferred tax assets and liabilities:
The Company has net operating loss carryforwards for tax purposes of approximately $
|
b. |
Reconciliation of the theoretical income tax expense to the actual income tax expense:
For the six months period ended June 30, 2024 and 2023 the main differences between the theoretical tax expenses (statutory tax rate of
|
NOTE 10:- |
RELATED PARTY BALANCES AND TRANSACTIONS
|
a. |
Balances with related parties:
|
Six months ended
June 30,
|
Year ended
December 31,
|
|||||||
2024
|
2023
|
|||||||
Unaudited
|
||||||||
Trade accounts receivable
|
|
|
||||||
Trade accounts payable
|
|
|
b. |
Transactions with related parties:
|
Six months ended
June 30,
|
Three months ended
June 30,
|
|||||||||||||||
2024
|
2023
|
2024
|
2023
|
|||||||||||||
Unaudited
|
||||||||||||||||
Revenues
|
|
|
|
|
||||||||||||
Purchases, selling, general and administrative expenses
|
|
|
|
|
F - 15
U.S. dollars in thousands (except share and per share data)
NOTE 10:- |
RELATED PARTY BALANCES AND TRANSACTIONS (CONT.)
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a. |
The extension of the Directors and Officers Indemnity Agreement with Mr. Nissan.
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b. |
The extension of the Exculpation Letter issued to Mr. Nissan for an additional three (3) year period
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c. |
The application of the Company’s directors' and officers' liability insurance policy with respect to Mr. Nissan.
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