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Exhibit 99.1
 
ELTEK LTD.
 
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
AS OF JUNE 30, 2024
 
U.S. Dollars in thousands
 
UNAUDITED
 
INDEX
 
 
Page
  
F-2 - F-3
  
F-4
  
F-5 - F-6
  
F-7 - F-8
  
F-9 - F-16
 
ELTEK LTD. AND ITS SUBSIDIARIES
 
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
 
         
June 30,
    
December 31,
  
   
Note
    
2024
    
2023
  
         
Unaudited
        
                   
ASSETS
                  
                   
CURRENT ASSETS:
                  
                   
Cash and cash equivalents
  
3
      
8,877
      
9,278
  
Short-term bank deposits
  
4
      
9,396
      
2,862
  
Trade receivables (net of allowance for doubtful accounts of $256 and $264 on June 30, 2024 and December 31, 2023, respectively)
          
9,948
      
10,898
  
Inventories
  
5
      
6,440
      
6,135
  
Other accounts receivable and prepaid expenses
          
593
      
934
  
                       
Total current assets
          
35,254
      
30,107
  
                       
LONG-TERM ASSETS:
                      
                       
Severance pay fund
          
55
      
57
  
Deferred tax asset, net
           964       1,098  
Operating lease right-of-use assets
          
5,965
      
6,555
  
                       
           
6,984
      
7,710
  
                       
Property and equipment, net
          
12,669
      
9,354
  
                       
Total long-term assets
          
19,653
      
17,064
  
                       
Total assets
          
54,907
      
47,171
  
 
The accompanying notes are an integral part of these consolidated financial statements.

F - 2

ELTEK LTD. AND ITS SUBSIDIARIES
 
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
 
         
June 30,
    
December 31,
  
   
Note
    
2024
    
2023
  
         
Unaudited
        
                   
LIABILITIES AND SHAREHOLDERS' EQUITY
                  
                   
CURRENT LIABILITIES:
                  
                   
Trade payables
          
5,273
      
7,503
  
Other accounts payable and accrued expenses
          
5,214
      
5,689
  
Short-term operating lease liabilities
          
763
      
789
  
                       
Total current liabilities
          
11,250
      
13,981
  
                       
LONG-TERM LIABILITIES:
                      
                       
Accrued severance pay
          
399
      
447
  
Long-term operating lease liabilities
          
5,306
      
5,871
  
                       
Total long-term liabilities
          
5,705
      
6,318
  
                       
COMMITMENTS AND CONTINGENT LIABILITIES
  
6
      
-
      
-
  
                       
SHAREHOLDERS' EQUITY:
  
7
                  
Share capital -
                      
Ordinary shares of NIS 3.0 par value –
Authorized: 10,000,000 shares on June 30, 2024 and December 31, 2023; Issued and outstanding: 6,708,522 shares on June 30, 2024 and 6,020,693 shares at December 31, 2023
          
6,006
      
5,443
  
Additional paid-in capital
          
32,597
      
23,587
  
Foreign currency translation adjustments
          
(486
)
    
783
  
Capital reserves
          
2,186
      
1,900
  
Accumulated deficit
          
(2,351
)
    
(4,841
)
                       
Total shareholders' equity
          
37,952
      
26,872
  
                       
Total liabilities and shareholders' equity
          
54,907
      
47,171
  
 
The accompanying notes are an integral part of these consolidated financial statements.

F - 3

ELTEK LTD. AND ITS SUBSIDIARIES
 
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
U.S. dollars in thousands (except per share data)
 
 
  
Note
    
Six months ended June 30,
    
Three months ended June 30,
  
 
        
2024
    
2023
    
2024
    
2023
  
         
Unaudited
  
                                       
Revenues
  
8
      
22,249
      
22,513
      
10,466
      
11,043
  
Cost of revenues
          
17,361
      
16,546
      
8,830
      
8,091
  
                                       
Gross profit
          
4,888
      
5,967
      
1,636
      
2,952
  
                                       
Operating expenses:
                                      
Research and development, net
          
62
      
24
      
47
      
15
  
Selling, general and administrative
          
2,700
      
2,960
      
1,184
      
1,543
  
                                       
Operating income
          
2,126
      
2,983
      
405
      
1,394
  
Financial income, net
          
839
      
477
      
489
      
190
  
                                       
Income before income taxes
          
2,965
      
3,460
      
894
      
1,584
  
Taxes on income
  
9
      
475
      
585
      
143
      
271
  
                                       
Net income
          
2,490
      
2,875
      
751
      
1,313
  
 
                                      
Other comprehensive income (loss):
                                      
Foreign currency translation adjustments
          
(1,269
)
    
(1,049
)
    
(731
)
    
(468
)
                                       
Total comprehensive income
          
1,221
      
1,826
      
20
      
845
  
 
                                      
Basic and diluted income per ordinary share
          
0.38
      
0.49
      
0.11
      
0.22
  
 
The accompanying notes are an integral part of these consolidated financial statements.

F - 4

ELTEK LTD. AND ITS SUBSIDIARIES
 
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
U.S. dollars in thousands (except share data)
 
               
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
    
6,704,830
      
6,003
      
32,584
      
245
      
2,032
      
(3,102
)
    
37,762
  
                                                         
Share-based compensation
    
-
      
-
      
-
      
-
      
154
      
-
      
154
  
Exercise of stock options
    
3,692
      
3
      
13
      
-
      
-
      
-
      
16
  
Comprehensive income:
                                                        
Foreign currency translation adjustments
    
-
      
-
      
-
      
(731
)
    
-
      
-
      
(731
)
Net income
    
-
      
-
      
-
      
-
      
-
      
751
      
751
  
                                                         
Balance as of June 30, 2024
    
6,708,522
      
6,006
      
32,597
      
(486
)
    
2,186
      
(2,351
)
    
37,952
  
 
Balance as of April 1, 2023
    
5,849,678
      
5,305
      
22,862
      
608
      
1,609
      
(8,311
)
    
22,073
  
                                                         
Share-based compensation
    
-
      
-
      
-
      
-
      
72
      
-
      
72
  
Exercise of stock options
    
58,037
      
48
      
251
      
-
      
-
      
-
      
299
  
Comprehensive income:
                                                        
Foreign currency translation adjustments
    
-
      
-
      
-
      
(468
)
    
-
      
-
      
(468
)
Net income
    
-
      
-
      
-
      
-
      
-
      
1,313
      
1,313
  
                                                         
Balance as of June 30, 2023
    
5,907,715
      
5,353
      
23,113
      
140
      
1,681
      
(6,998
)
    
23,289
  
 
The accompanying notes are an integral part of these consolidated financial statements.

F - 5

ELTEK LTD. AND ITS SUBSIDIARIES
 
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
U.S. dollars in thousands (except share data)
 
               
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
    
6,020,693
      
5,443
      
23,587
      
783
      
1,900
      
(4,841
)
    
26,872
  
                                                         
Share-based compensation
    
-
      
-
      
-
      
-
      
286
      
-
      
286
  
Issuance of shares, net
    
625,000
      
512
      
8,800
      
-
      
-
      
-
      
9,312
  
Exercise of stock options
    
62,829
      
51
      
210
      
-
      
-
      
-
      
261
  
Comprehensive income:
                                                        
Foreign currency translation adjustments
    
-
      
-
      
-
      
(1,269
)
    
-
      
-
      
(1,269
)
Net income
    
-
      
-
      
-
      
-
      
-
      
2,490
      
2,490
  
                                                         
Balance as of June 30, 2024
    
6,708,522
      
6,006
      
32,597
      
(486
)
    
2,186
      
(2,351
)
    
37,952
  
 
Balance as of January 1, 2023
    
5,849,678
      
5,305
      
22,862
      
1,189
      
1,537
      
(9,873
)
    
21,020
  
                                                         
Share-based compensation
    
-
      
-
      
-
      
-
      
144
      
-
      
144
  
Exercise of stock options
    
58,037
      
48
      
251
      
-
      
-
      
-
      
299
  
Comprehensive income:
                                                        
Foreign currency translation adjustments
    
-
      
-
      
-
      
(1,049
)
    
-
      
-
      
(1,049
)
Net income
    
-
      
-
      
-
      
-
      
-
      
2,875
      
2,875
  
                                                         
Balance as of June 30, 2023
    
5,907,715
      
5,353
      
23,113
      
140
      
1,681
      
(6,998
)
    
23,289
  
 
The accompanying notes are an integral part of these consolidated financial statements.

F - 6

ELTEK LTD. AND ITS SUBSIDIARIES
 
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
 
   
Six months ended
June 30,
  
   
2024
    
2023
  
             
CASH FLOWS FROM OPERATING ACTIVITIES:
            
Net income
    
2,490
      
2,875
  
                 
Adjustments required to reconcile net income to net cash flows provided by operating activities:
                
Depreciation
    
753
      
630
  
Accrued interest
    
(186
)
    
-
  
Share-based compensation
    
286
      
144
  
Changes in deferred income tax assets, net
    
91
      
566
  
Increase (decrease) in employee severance benefits, net
    
(30
)
    
22
  
Decrease (increase) in trade receivables, net
    
517
      
(1,784
)
Decrease (increase) in operating lease right-of-use assets
    
372
      
575
  
Increase (decrease) in operating lease liabilities
    
(369
)
    
(597
)
Decrease (increase) in other receivables and prepaid expenses
    
309
      
(311
)
Decrease (increase) in inventories
    
(565
)
    
(809
)
Increase (decrease) in trade payables
    
(536
)
    
105
  
Increase (decrease) in other liabilities and accrued expenses
    
(249
)
    
1,477
  
                 
Net cash provided by operating activities
    
2,883
      
2,893
  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Purchase of property and equipment
    
(5,947
)
    
(711
)
Insurance Proceeds
    
-
      
2,000
  
Investment in short-term bank deposits, net
    
(6,534
)
        
Restricted deposits
    
-
      
192
  
                 
Net cash used in investing activities
    
(12,481
)
    
1,481
  
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Exercise of options
    
261
      
299
  
Repayment of long-term loans
    
-
      
(3,348
)
Issuance of shares, net
    
9,312
      
-
  
                 
Net cash used in financing activities
    
9,573
      
(3,049
)
 
The accompanying notes are an integral part of these consolidated financial statements.

F - 7

ELTEK LTD. AND ITS SUBSIDIARIES
 
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT.)
U.S. dollars in thousands
 
   
Six months ended
June 30,
  
   
2024
    
2023
  
             
Effect of exchange rate on cash and cash equivalents
    
(376
)
    
(361
)
                 
Increase (decrease) in cash and cash equivalents
    
(401
)
    
964
  
Cash and cash equivalents at the beginning of the year
    
9,278
      
7,366
  
                 
Cash and cash equivalents at end of the year
    
8,877
      
8,330
  
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES:
                
                 
Cash paid during the year for:
                
                 
Interest
    
-
      
81
  
Income taxes
    
22
      
5
  
                 
Supplemental Disclosures of non-cash activity:
                
                 
Purchase of property and equipment, not yet paid
    
1,305
      
450
  
Right-of-use assets recognized with corresponding lease liabilities
    
42
      
432
  
 
The accompanying notes are an integral part of these consolidated financial statements.

F - 8

ELTEK LTD. AND ITS SUBSIDIARIES
 
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 8.7 million ($2.4 million). As of June 30, 2024, and December 31, 2023, the Company has no outstanding amounts under the facility.
 
  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

ELTEK LTD. AND ITS SUBSIDIARIES
 
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

ELTEK LTD. AND ITS SUBSIDIARIES
 
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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
    
706
      
1,218
  
Denominated in NIS
    
6,474
      
6,270
  
Denominated in Euro
    
1,697
      
1,790
  
                 
     
8,877
      
9,278
  

 

F - 11

ELTEK LTD. AND ITS SUBSIDIARIES
 
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

 

NOTE 4:-
SHORT-TERM BANK DEPOSITS
 
Short-term bank deposits are U.S. Dollar denominated and bear interest of 5.8%.

 

NOTE 5:-
INVENTORIES
 
   
June 30,
    
December 31,
  
   
2024
    
2023
  
   
Unaudited
        
             
Raw materials
    
3,378
      
3,064
  
Work-in-progress
    
2,635
      
2,537
  
Finished goods
    
427
      
534
  
                 
     
6,440
      
6,135
  
 
During the periods ended June 30, 2024 and June 30, 2023, the Company recorded inventory write-offs in the amounts of $67 and $192, respectively. Such write-offs were included in cost of revenues.

 

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 25% of the Company’s net equity according to the audited or reviewed financial statement known at the time the request for indemnification was submitted; or (ii) $3,000,000, whichever is greater.

 

F - 12

ELTEK LTD. AND ITS SUBSIDIARIES
 
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 $0.6 million for an alleged breach of the Clean Air Law during the years 2019-2020. The Company paid this penalty and recorded a relevant expense in its financial statements. The Company filed an administrative appeal to reduce the penalty and received a 10% refund of the paid penalty.
 
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 ten years from the date of the grant of the option or the expiration dates of the option plan. The options primarily vest gradually over four years of employment.
 
As of June 30, 2024 options to purchase 360,327 ordinary shares were outstanding under the Plan, exercisable at an average exercise price of $8.17 per share. The share-based compensation expense related to employees' equity-based awards, recognized during the six months ended June 30, 2024 and 2023 was $286 and $144, respectively.

 

F - 13

ELTEK LTD. AND ITS SUBSIDIARIES
 
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

 

NOTE 7:-
SHAREHOLDERS' EQUITY (CONT.)

 

A summary of employee option activity under the Plan as of June 30, 2024 and changes during the six months period ended June 30, 2024 are as follows:
 
   
Number of options
    
Weighted-average exercise
price
    
Weighted- average remaining contractual life
(in years)
    
Aggregate intrinsic
value
(in thousands)
  
                         
Outstanding at January 1, 2024
    
375,156
      
6.49
      
8.1
      
2,799
  
Exercised
    
(62,829
)
    
4.87
      
-
      
-
  
Granted
    
48,000
      
16.02
      
-
      
-
  
                                 
Outstanding at June 30, 2024
    
360,327
      
8.17
      
89
      
570
  
                                 
Exercisable at June 30, 2024
    
193,046
      
4.90
      
80
      
383
  
 
The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company's closing share price on the last trading day of the second quarter of fiscal 2024 and the exercise price, multiplied by the number of in-the-money options). This amount changes based on the fair market value of the Company's shares. As of June 30, 2024, there was approximately $1,413 of unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Company's share option plan. This cost is expected to be recognized over a period of up to 4 years.
 
Issuance of shares:
 
On February 15, 2024, the Company issued a total of 625,000 ordinary shares, at a price of $16.00 per share, for a total consideration of $10 million, before deducting underwriting discounts and offering expenses.

 

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
    
12.2
%
    
14.4
%
    
10.7
%
    
13.5
%
Customer B - Sales of manufactured products
    
16.0
%
    
11.0
%
    
18.8
%
    
11.9
%
 
  b.
Revenues by geographic areas:
 
   
Six months ended
June 30,
    
Three months ended
June 30,
  
   
2024
    
2023
    
2024
    
2023
  
   
Unaudited
  
                         
Israel
    
14,832
      
11,548
      
7,642
      
6,332
  
North America
    
1,664
      
2,911
      
716
      
1,826
  
Netherlands
    
1,980
      
2,884
      
864
      
1,187
  
India
    
2,144
      
3,222
      
901
      
908
  
Others
    
1,629
      
1,948
      
343
      
790
  
                                 
     
22,249
      
22,513
      
10,466
      
11,043
  

 

F - 14

ELTEK LTD. AND ITS SUBSIDIARIES
 
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 $2.6 million, which may be carried forward indefinitely for which deferred tax assets was created.
 
  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 23%) and the actual tax expenses are tax benefits arising from "Preferred enterprises" and non-deductible items and others.

 

NOTE 10:-
RELATED PARTY BALANCES AND TRANSACTIONS
 
Nistec, the controlling shareholder of the Company, is also a customer of the Company. The Company sells products to Nistec, pays management fees to Nistec, purchases certain services from Nistec and shares certain expenses with Nistec, for services that it acquires jointly with Nistec. The Company's transactions with Nistec were carried out on an arm's-length basis.
 
  a.
Balances with related parties:
 
   
Six months ended
June 30,
    
Year ended
December 31,
  
   
2024
    
2023
  
   
Unaudited
        
             
Trade accounts receivable
    
249
      
190
  
Trade accounts payable
    
30
      
277
  
 
  b.
Transactions with related parties:
 
   
Six months ended
June 30,
    
Three months ended
June 30,
  
   
2024
    
2023
    
2024
    
2023
  
   
Unaudited
  
                         
Revenues
    
517
      
419
      
358
      
182
  
Purchases, selling, general and administrative expenses
    
147
      
365
      
75
      
288
  

 

F - 15

ELTEK LTD. AND ITS SUBSIDIARIES
 
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

 

NOTE 10:-
RELATED PARTY BALANCES AND TRANSACTIONS (CONT.)

 

PCB purchases by Nistec - Nistec purchases PCBs from the Company solely to provide assembled boards to its customers. The Company sells to Nistec based on its standard pricing, which may be subject to a discount at such rate as offered by the Company from time to time to its other customers, provided that in no event shall the quoted price fall below 1.6 times the variable cost of such PCBs. Should the order be for PCBs imported by the Company, the quote reflects the actual price of such PCBs, plus a mark-up of at least twenty percent (20%).
 
Soldering and assembly services - The Company may acquire soldering services and/or purchase services from Nistec. Nistec’s pricing for its soldering services will be its standard pricing (the “Pricing”), less a five percent (5%) discount. Nistec may charge for Purchasing Services in accordance with the actual costs of the orders, plus a fourteen and a quarter (14.25%) commission, which reflects a five percent (5%) discount, as compared to the commission charged to third parties by Nistec for similar services. The Company’s purchases of services under the soldering and assembly and design services procedures may not exceed NIS 3,000,000 per annum.
 
Management fees - In March 2024, the Company's Audit Committee, Compensation Committee and Board of Directors, as applicable, approved the terms of the amended Management Agreement. This amended Management Agreement was approved by the Company's shareholders at the annual general meeting held on July 8, 2024. Nistec is entitled to a monthly management fee (the "Fee") of NIS 120 ($32).
 
I addition, it was approved that commencing on the year ended December 31, 2024, and each calendar year thereafter, in the event that the Company’s audited consolidated financial Statements reflect that the Company’s net income equals 4% or more of the Company’s revenues, Nistec will be entitled to receive an annual performance-based bonus with respect to Mr. Nissan’s active chairman services, in an amount equal to three (3) times the Fee.
 
Subject to Company’s reimbursement policy approved by the Audit Committee on May 15, 2016, Mr. Nissan receives reimbursement of his travel expenses (other than food and beverage expenses) while traveling internationally on behalf of the Company, provided that such reimbursement will not exceed an aggregate amount of NIS 10,000 ($2,700) per calendar quarter.
 
In addition, the Company's shareholders at the annual general meetings held on August 31, 2022 and July 8, 2024 approved the following:
 
  a.
The extension of the Directors and Officers Indemnity Agreement with Mr. Nissan.
  b.
The extension of the Exculpation Letter issued to Mr. Nissan for an additional three (3) year period
  c.
The application of the Company’s directors' and officers' liability insurance policy with respect to Mr. Nissan.
 
- - - - - - - - - - - - - - - - - - - 
F - 16