6-K 1 zk51733.htm 6-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

F O R M 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2005

ROBOGROUP T.E.K. LTD.
(Name of Registrant)


Rechov Hamelacha 13, Afeq Industrial Estate, Rosh HaAyin 48091 Israel
(Address of Principal Executive Office)

             Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F x Form 40-F o

             Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):______

             Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):______

             Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No x

             If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-______

SIGNATURES


             Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ROBOGROUP T.E.K. LTD.
(Registrant)


By: /s/ Rafael Aravot
———————————
Rafael Aravot
Chairman of the Board and CEO

Date: August 4, 2005

For Immediate Release

RoboGroup Announces Net Profit and 27% Increase in Revenues in Second-Quarter 2005

RoboGroup’s Board Approved Voluntarily Deregistration and Delisting from the NASDAQ SmallCap Market

ROSH HA’AYIN, Israel, August 4, 2005 – RoboGroup T.E.K. Ltd. (Nasdaq: ROBO) today reported second-quarter and first-half 2005 financial results. Revenues for the second quarter increased by 27% to NIS 16.9 million (US$3.7 million) from NIS 13.3 million (US$2.9 million) for the comparable quarter in 2004. Gross profit for the second quarter was NIS 8.1 million (US$1.8 million) compared with NIS 5.9 million (US$1.3 million) for the comparable period in 2004.

The company reported second-quarter net profit of NIS 0.4 million (US$0.1 million) compared with a net loss of NIS 2.9 million (US$0.6 million) in second-quarter of 2004. Backlog, as of June 30, 2005 increased significantly to NIS 13.5 million (US$3 million) from NIS 7.9 million (US$1.7) as of June 30, 2004.

Revenues for the six month period totaled NIS 27.8 million (US$6.1 million) compared with NIS 27.7 million (US$6.1 million) for the comparable period in 2004. The net loss for the six month period decreased significantly to NIS 2.2 million (US$0.5 million) from NIS 5.8 million (US$1.3 million) in the comparable period in 2004.

Rafael Aravot, chief executive officer of RoboGroup, commented: “I am pleased with our second quarter results. In addition to generating higher revenues and increased backlog, we managed to keep our cost level low as a result of the efficiency improvement measures we have implemented during the last quarters, and we achieved net profit. Looking forward, we plan to focus on realizing the full potential of the market opportunities, while continuing to focus our attention on operating efficiency, thereby maximizing revenues while controlling costs”.

Deregistration and delisting from the NASDAQ SmallCap Market

The Company’s board of directors today resolved to voluntarily deregister the Company’s shares under the Securities Exchange Act of 1934 and upon deregistration, to delist from the NASDAQ SmallCap Market. To deregister its ordinary shares, the Company will file a Form 15 with the SEC thereby suspending its obligations for filing annual and other reports with the SEC. The Company intends to seek authorization from NASDAQ to maintain the listing of its shares on the NASDAQ SmallCap Market for the period of 90 days from the filing of the Form 15, or such shorter period until the deregistration of its shares becomes effective, and will undertake to continue file reports on a voluntary basis until delisting. In its decision, the Company’s board resolved to authorize RoboGroup’s management to determine the exact timing for filing the Form 15 and to take all measures and acts required for the implementation of the deregistration and delisting process. Subject to the SEC’s review, the Company anticipates completing the process within 90-days.

The board’s plan to deregister and delist its ordinary shares was made after careful consideration of the advantages and disadvantages of continuing the Company’s share registration in the United States and the rising costs and demands on management time arising in connection with SEC and NASDAQ compliance requirements. The Company’s board believes that the current burdens associated with being a “reporting company” under the 1934 Act, including the recent obligations arising under the provisions of the Sarbanes-Oxley Act of 2002 outweigh the advantages of being traded both in the US and in Israel. The board estimates that the deregistration and delisting will achieve a substantial reduction in the Company’s annual expenses associated with being a reporting company in the US.

The Company’s shares shall continue to trade on the Tel Aviv Stock Exchange and the Company will continue to issue periodic and other reports in accordance with the rules and regulations of the Israeli Securities Authority.

In the opinion of the Company’s board, the delisting and deregistration will benefit the Company and all of its shareholders, including its US shareholders, who will be able to continue to trade the Company’s shares on the Tel-Aviv Stock Exchange.

Mr. Aravot commented on the delisting decision: “As part of our cost control efforts our Board approved the voluntarily delisting and deregistration of our shares from the Nasdaq SmallCap market. We believe that this step will significantly reduce reporting-related expenses, avoid potentially higher future expenses, enable our management to focus more of its time on operating the Company, and create greater value for our shareholders”

A complete Directors’ Report for the second quarter of 2005 is available on the Company’s Website at http://www.robo-group.com or as a PDF file upon request. Please contact Ayelet Shiloni at Integrated IR, toll-free +1-866-447-8633.

RoboGroup

RoboGroup and its subsidiaries are engaged in two major fields of activity. The first is the field of education devoted to RoboGroup’s training products and e-learning systems. RoboGroup is a world leader in engineering and manufacturing technology training systems. The Company is market driven, deriving its growth from technological leadership, strong partnerships and management expertise. The other field of activity is the development, manufacturing and marketing of motion control products for the industrial market, which is performed through the Company’s subsidiary, Yaskawa Eshed Technologies (YET). For more information, visit http://www.robo-group.com.

To the extent that this press release discusses expectations about market conditions or about market acceptance and future sales of the Company’s products, or otherwise makes statements about the future, such statements are forward-looking and are subject to a number of risks and uncertainties that could cause results to differ materially from the statements made. These factors include the rapidly changing technology and evolving standards in the industries in which the Company and its subsidiaries operate, risks associated with the acceptance of new products by individual customers and by the market place and other factors discussed in the business description and management discussion and analysis sections of the Company’s Annual Report on Form 20-F.

Company Contact:
Michal Afuta
RoboGroup
michala@robotec.co.il
+972-3-900-4112

Agency Contact:
Ayelet Shiloni
Integrated IR
ayelet@integratedir.com
+1-866-447-8633

RoboGroup T.E.K. Limited

Directors' Report for Six-Month Period Ended June 30, 2005

We are pleased to present the Directors’ Report on the financial condition of the Company for the six month period ended June 30, 2005.

1. Main data out of the Company’s business description

The Company engages, by itself and through its subsidiaries (the Company and its subsidiaries, hereinafter: “The Group”), in two major fields of activity:

1.1 The first field of activity is the Company’s traditional field of activity – the field of education, performed mainly abroad but also in Israel. The Company’s activities in the field of education includes research and development, operation, marketing and sales of the Company’s products, and the sale and to a much smaller degree the marketing of third party products to the training and education markets in Israel. Overseas, this activity is performed mainly through the Company and its U.S. subsidiary, Intelitek Inc. In Israel, the activity is performed through the Company and its subsidiary, Robotec Technologies Ltd.

1.2 The second field of activity is industrial motion control. The Group engages, through its subsidiary, Yaskawa Eshed Technology Ltd (“YET”), in the development, manufacturing and marketing of industrial motion controllers for motorized systems, marketed to the international and domestic industrial markets. The motion controllers are electronic systems with embedded software whose function is to supervise the process of regular, day to day operation of machines and motors of various kinds and sizes.

Data and developments that have occurred in the six month period ended June 30, 2005

For the three months ended June 30, 2005 the Company recorded net profits of approximately NIS 0.4 million and positive cash flows from operating activities in the amount of approximately NIS 1.1 million, compared to net losses of approximately NIS 2.9 million and negative cash flows from operating activities of approximately NIS 5.5 million for the three months ended June 30, 2004.

The Company’s return to profit in the second quarter of 2005, resulted from an increase in sales compared to the corresponding period of 2004and from a reduction in expenses compared to the corresponding period of 2004..

For the six months ended June 30, 2005 the Company incurred net losses of approximately NIS 2.2 million and had positive cash flows from operating activities in the amount of approximately NIS 0.1 million compared to net losses of approximately NIS 5.8 million and negative cash flows from operating activities in the amount of approximately NIS 7.9 million for the six months ended June 30, 2004.

In the years ended December 31, 2004 and 2003, the Company incurred net losses of approximately NIS 8 million and NIS 18 million, respectively. In addition, during those two years the Company’s negative cash flows from operating activities were approximately NIS 6 million and NIS 9 million, respectively.

RoboGroup T.E.K. Limited

Directors' Report for Six-Month Period Ended June 30, 2005

As part of the Company’s efforts to reduce expenses, the Company’s management took steps to consolidate activities, reduce manpower, reduce salary costs of senior executives and cut general expenses.

As a result of the foregoing, the Company’s losses in 2004 and in the first quarter of 2005 were reduced, compared with the corresponding periods in the previous years, and it turned to profit in the second quarter of 2005.

Events after balance sheet date – decision regarding deregistration and delisting from the NASDAQ SmallCap Market

On August 3, 2005, the Company’s board of directors resolved to voluntarily deregister the Company’s shares under the Securities Exchange Act of 1934 and to delist from the NASDAQ Small Cap Market. To deregister its ordinary shares, the Company will file a Form 15 with the SEC thereby suspending its obligations for filing annual and other reports with the SEC. The Company intends to seek authorization from NASDAQ to maintain the listing of its shares on the NASDAQ SmallCap Market for the period of 90 days from the filing of the Form 15, or such shorter period until the deregistration of its shares becomes effective, and will undertake to continue file reports on a voluntary basis until delisting.

In its decision, the Company’s board resolved to authorize RoboGroup’s management to determine the exact timing for filing the Form 15 and to take all measures and acts required for the implementation of the deregistration and delisting process. Subject to the SEC’s review, the Company anticipates completing the process within 90-days. The Company’s shares shall continue to trade on the Tel Aviv Stock Exchange and the Company will continue to issue periodic and other reports in accordance with the rules and regulations of the Israeli Securities Authority.

For additional details regarding this issue, see immediate disclosure filed by the Company on August 4, 2005.

Backlog of Orders
The Company’s backlog of orders as of June 30, 2005 was approximately NIS 13.5 million, compared to approximately NIS 7.9 million at June 30, 2004.

Previous names of the Company
The Company’s name at the time of incorporation was Robotec (GAL) Industrial Robot Technologies Ltd. In 1983, the Company changed its name to Eshed Robotec (1982) Ltd., and in 2000, the Company changed its name to RoboGroup T.E.K. Ltd.

RoboGroup T.E.K. Limited

Directors' Report for Six-Month Period Ended June 30, 2005

2. Financial Results

Sales
The Company’s revenues for the second quarter of 2005 totaled approximately NIS 16.9 million, compared with NIS 13.3 million for the corresponding period of 2004.

The Company’s revenues for the six months ended June 30, 2005 amounted to approximately NIS 27.8 million, as compared to approximately NIS 27.7 million for the corresponding period of 2004.

The increase in revenues in the second quarter of 2005, stemmed from an increase in sales of the Company’s products in the education activity field, in the sum of approximately NIS 3 million and from an increase of approximately NIS 0.5 million in the Company’s revenues in the industrial motion control field.

Gross profit
The Company’s gross profit for the second quarter of 2005 totaled approximately NIS 8.1 million (approximately 48% of sales), compared with approximately NIS 5.9 million (approximately 44% of sales) for the corresponding period of 2004.

The Company’s gross profit for the six months ended June 30, 2005 was approximately NIS 12.3 million (44% of the total revenues), compared to approximately NIS 12 million (44% of the total revenues) for the corresponding period of 2004.

Research and development expenses, net
Research and development expenses, net, for the second quarter of 2005 totaled approximately NIS 1.6 million, compared with approximately NIS 2 million i for the corresponding period of 2004.

Research and development expenses, net, for the six months ended June 30, 2005 were approximately NIS 3.3 million as compared to approximately NIS 4.3 million for the corresponding period of 2004.

The decrease in research and development expenses stemmed mainly from a reduction in the Company’s development expenses of the education activity field.

Sales and marketing expenses
Sales and marketing expenses for the second quarter of 2005 totaled approximately NIS 3.3 million, compared with approximately NIS 3.3 million for the corresponding period of 2004.

Sales and marketing expenses for the six months ended June 30, 2005 were approximately NIS 6.3 million as compared to approximately NIS 7.1 million for the corresponding period of 2004. The decrease in sales and marketing expenses in the six months ended June 30, 2005 is attributed mainly to the reduction in the Company’s marketing expenses in the education activity field, which was offset partially by an increase in its sales and marketing expenses in the industrial motion control field.

RoboGroup T.E.K. Limited

Directors' Report for Six-Month Period Ended June 30, 2005

General and administrative expenses
General and administrative expenses for the second quarter of 2005 totaled approximately NIS 2 million, compared with approximately NIS 2.5 million for the corresponding period of 2004.

General and administrative expenses for the six months ended June 30, 2005 were approximately NIS 3.9 million as compared to approximately NIS 5 million for the corresponding period of 2004.

The reduction in administrative expenses stemmed mainly from a reduction in general and administrative expenses in the education activity field.

Operating income (loss)
The operating income for the second quarter of 2005 totaled approximately NIS 1.2 million, compared with an operating loss of approximately NIS 1.9 million for the corresponding period of 2004.

The Company’s operating loss for the six months ended June 30, 2005 was approximately NIS 1.3 million as compared to approximately NIS 4.3 million for the corresponding period of 2004.

Financial income (expenses), net
Financial expenses, net, for the second quarter of 2005 totaled approximately NIS 0.3 million, representing no change from the corresponding period of 2004.

The financial expenses, net, for the six months ended June 30, 2005 were approximately NIS 0.4 million as compared to approximately NIS 1.1 million for the corresponding period of 2004.

The decrease in financial expenses was mainly due to a reduction in exchange rate differences.

Other income (expenses), net
Other expenses, net, for the second quarter of 2005 totaled approximately NIS 0.3 million, compared with other income, net, of approximately NIS 0.5 million for the corresponding period of 2004.

The decrease is attributed mainly to a write-off of prepaid issuance expenses of approximately NIS 0.6 million in the second quarter of 2005, and to a reduction in income net of expenses from renting space in the Company’s building in Rosh Ha’Ayin.

Income (loss) before tax
The income before tax for the second quarter of 2005 totaled approximately NIS 0.5 million, compared with a loss before tax of approximately NIS 2 million for the corresponding period of 2004.

The loss before tax for the six months ended June 30, 2005 was approximately NIS 2 million as compared to approximately NIS 4.9 million for the corresponding period of 2004.

Taxes on income
The tax expenses for the second quarter of 2005 totaled approximately NIS 0.2 million, compared to approximately NIS 0.9 million for the corresponding period of 2004.

Tax expenses for the six months ended June 30, 2005 were approximately NIS 0.3 million as compared to approximately NIS 0.9 million for the corresponding period of 2004.

RoboGroup T.E.K. Limited

Directors' Report for Six-Month Period Ended June 30, 2005

Tax expenses for the six months ended June 30, 2005 stemmed mainly from the industrial motion control field.

Net income (loss)
The Company’s net income for the second quarter of 2005 totaled approximately NIS 0.4 million, compared with a net loss of approximately NIS 2.9 million for the corresponding period of 2004.

The Company’s net loss for the six months ended June 30, 2005 was approximately NIS 2.2 million as compared to approximately NIS 5.8 million for the corresponding period of 2004.

3. The Financial Position of the Company

  a) The Company’s assets as of June 30, 2005 totaled approximately NIS 72.2 million, compared to approximately NIS 72 million at December 31, 2004.

  b) The Company’s equity was approximately NIS 21 million at June 30, 2005, compared with approximately NIS 23.1 million as at December 31, 2004. The decrease in equity was mainly due to the Company’s net loss of approximately NIS 2.2 million for the six months ended June 30, 2005.

4. Liquidity

a) The Company’s cash and cash equivalents at June 30, 2005 were approximately NIS 7 million as compared to approximately NIS 7 million at December 31, 2004.

b) Cash flows from operating activities:

  In the six months ended June 30, 2005 the Company had a surplus from operating activities of approximately NIS 0.1 million as compared to a deficit from operating activities of approximately NIS 7.9 million in the corresponding period of 2004.

c) Cash flows used in investing activities:

  In the six months ended June 30, 2005 the Company invested approximately NIS 0.1 million in fixed assets as compared to approximately NIS 0.6 million in the corresponding period of 2004.

RoboGroup T.E.K. Limited

Directors' Report for Six-Month Period Ended June 30, 2005

d) Cash flows from financing activities:

  In the six months ended June 30, 2005 the Company had a deficit from financing activities of approximately NIS 0.4 million as compared to a surplus of approximately NIS 0.7 million in the corresponding period of 2004.

5. Sources of Financing

  a) The Company’s current ratio was 1.02 at June 30, 2005, compared with 1.08 at the end of 2004. The Company’s quick ratio was 0.68 at June 30, 2005 compared with 0.78 at December 31, 2004.

  b) The Company’s shareholders’ equity of approximately NIS 21 million at June 30, 2005, accounted for approximately 29% of its total balance sheet, in comparison to shareholders’ equity of approximately NIS 23.1 million that accounted for approximately 32% of the company’s balance sheet at December 31, 2004.

  c) The average amount of credit provided to the Company’s customers in the six months ended June 30, 2005 was approximately NIS 14.6 million and the average credit the Company obtained from its suppliers and service providers was approximately NIS 6.5 million, as compared with approximately NIS 14.2 million and approximately NIS 5.6 million, respectively, in 2004.

  d) The average amount of short-term credit from banks in the six months ended June 30, 2005 was approximately NIS 15.7 million as compared with approximately NIS 15.6 million in 2004.

  e) The average amount of long-term bank credit in the six months ended June 30, 2005 was approximately NIS 16.6 million as compared with approximately NIS 17.3 million in 2004.

6. Exposure to and Management of Market Risks

  No significant changes occurred during the period covered by this report in the Company’s exposure to market risks and their management relative to the Company’s report on this issue in the Director’s report on the period ending December 31, 2004.

RoboGroup T.E.K. Limited

Directors' Report for Six-Month Period Ended June 30, 2005

Linked Balances:

June 30, 2005
Linked
to US
dollar
 Linked
to Euro
 Linked
to
Japanese
Yen
 Linked
to Swiss
Franks
 Linked
to the
CPI
 Unlinked
 Autonomous
Unit &
Non-monetary
items
 Total
NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
 
Assets                                    
Cash and cash equivalents    5,540    717    13    -    -    675    31    6,976  
Short-term investments    61    -    -    -    -    -    -    61  
Trade receivables    2,119    635    -    -    -    3,171    8,033    14,008  
Other receivables and debit  
 balances    19    8    -    -    -    2,467    195    2,689  
Inventories    -    -    -    -    -    -    11,683    11,683  
Funds in respect of employee  
 rights upon retirement, net    -    -    -    -    -    836    -    836  
Fixed assets, net    -    -    -    -    -    -    35,527    35,527  
Other assets and deferred  
 expenses    -    -    -    -    -    -    404    404  
  
     7,739    1,360    13    -    -    7,149    55,923    72,184  
  
Liabilities  
Short-term bank credits    736    -    645    2,496    1,158    8,171    2,994    16,200  
Trade payables    298    56    641    -    -    3,344    2,741    7,080  
Other payables and credit  
 balances    4,162    -    -    -    -    6,397    957    11,516  
Long-term loans    5,707    -    4,996    -    5,376    -    -    16,079  
Deferred taxes    -    -    -    -    -    134    -    134  
Liability for termination of  
 employee/employer relationship,  
 net    -    -    -    -    -    184    -    184  
 
     10,903    56    6,282    2,496    6,534    18,230    6,692    51,193  
  
Excess of assets (liabilities)    (3,164 )  1,304    (6,269 )  (2,496 )  (6,534 )  (11,081 )  49,231    20,991  

RoboGroup T.E.K. Limited

Directors' Report for Six-Month Period Ended June 30, 2005

Linked Balances (cont.’)

December 31, 2004
Linked
to US
dollar
 Linked
to Euro
 Linked
to
Japanese
Yen
 Linked
to Swiss
Franks
 Linked
to the
CPI
 Unlinked
 Autonomous
Unit &
Non-monetary
items
 Total
NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
 
Assets                                    
Cash and cash equivalents    4,842    990    -    -    -    870    255    6,957  
Short-term investments    99    -    -    -    -    -    -    99  
Trade receivables    5,893    1,493    -    -    -    2,205    5,691    15,282  
Other receivables and debit  
 balances    40    -    -    -    -    1,811    242    2,093  
Inventories    -    -    -    -    -    -    9,372    9,372  
Funds in respect of employee  
 rights upon retirement, net    -    -    -    -    -    563    -    563  
Fixed assets, net    -    -    -    -    -    -    36,548    36,548  
Other assets and deferred  
 expenses    -    -    -    -    -    564    472    1,036  
  
     10,874    2,483    -    -    -    6,013    52,580    71,950  
  
Liabilities   
Short-term bank credits    694    -    656    2,664    1,087    7,854    2,273    15,228  
Trade payables    173    105    599    -    -    3,176    1,800    5,853  
Other payables and credit  
 balances    3,408    -    -    -    -    6,279    646    10,333  
Long-term loans    5,722    -    5,409    -    5,969          -    17,100  
Deferred taxes    -    -    -    -    -    163    -    163  
Liability for termination of  
 employee/employer relationship,  
 net    -    -    -    -    -    139    -    139  
  
     9,997    105    6,664    2,664    7,056    17,611    4,719    48,816  
  
Excess of assets (liabilities)    877    2,378    (6,664 )  (2,664 )  (7,056 )  (11,598 )  47,861    23,134  

RoboGroup T.E.K. Limited

Directors' Report for Six-Month Period Ended June 30, 2005

7. Disclosure regarding approval to peer review

  The Company has given its approval to transmitting the relevant documentations for the purpose of a sample connected to peer review in Israel.




——————————————
Rafael Aravot
Chairman of the Board and CEO


——————————————
Noam Kra-Oz
Director and Joint General Manager

Date: August 3, 2005

Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: This report contains forward-looking statements, which express the beliefs and expectations of management. Such statements are based on current plans, estimates and expectations and involve a number of known and unknown risks and uncertainties that could cause the Company’s future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to fluctuations in currency, exchange and interest rates, operating results, and other factors that are discussed in the Company’s Annual Report on Form 20-F and the Company’s other filings with the U.S. Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

RoboGroup T.E.K. Ltd.

Interim Consolidated Financial Statements
At June 30, 2005

Financial statements:
Balance Sheets 2-3
Statement of Operations 4
Statement of Changes in Shareholders' Equity 5-6
Statement of Cash Flows 7-8
Notes to the Financial Statements 9-12

1

RoboGroup T.E.K. Ltd.
Balance Sheets
NIS in Thousands

June, 30
 December, 31
2005
 2005
 2004
 2004
US$ (K)
 NIS (K)
 NIS (K)
 NIS (K)
Unaudited
 Unaudited
 Unaudited
 Audited
Convenience
translation
to US dollars
 Reported
amounts
 Reported amounts
 ASSETS                    
 
 Current assets  
 
 Cash and cash equivalents    1,525    6,976    7,656    6,957  
 Short-term investments    13    61    -    99  
 Trade receivables    3,063    14,008    14,735    15,282  
 Other receivables and debit balances    588    2,689    2,959    2,093  
 Inventories    2,554    11,683    12,823    9,372  
  
     7,743    35,417    38,173    33,803  
  
 Long-term investments  
  
 Investments in investee and other  
 companies    -    -    15    -  
 Funds in respect of employee rights upon  
 retirement, net    183    836    276    563  
  
     183    836    291    563  
  
 Fixed assets    7,767    35,527    37,322    36,548  
  
 Other assets and deferred expenses    88    404    740    1,036  
  
     15,781    72,184    76,526    71,950  

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

2

RoboGroup T.E.K. Ltd.
Balance Sheets
NIS in Thousands

June, 30
 December, 31
2005
 2005
 2004
 2004
US$ (K)
 NIS (K)
 NIS (K)
 NIS (K)
Unaudited
 Unaudited
 Unaudited
 Audited
Convenience
translation
to US dollars
 Reported
amounts
 Reported amounts
LIABILITIES                    
 
Current liabilities  
 
Credit from banks    3,542    16,200    16,036    15,228  
Trade payables    1,548    7,080    6,066    5,853  
Other payables and credit balances    2,518    11,516    10,878    10,333  
  
     7,608    34,796    32,980    31,414  
Long-term liabilities  
  
Loans from banks    3,515    16,079    18,494    17,100  
Provision for deferred taxes    29    134    -    163  
Liability for termination of employee/employer  
 relationship, net    40    184    249    139  
  
     3,584    16,397    18,743    17,402  
  
Shareholders' equity  
  
Share capital    2,492    11,400    11,400    11,400  
Capital reserves and premium on shares    9,677    44,262    44,178    44,179  
Accumulated deficit    (7,408 )  (33,882 )  (29,772 )  (31,656 )
Treasury stock    (172 )  (789 )  (1,003 )  (789 )
  
     4,589    20,991    24,803    23,134  
  
     15,781    72,184    76,526    71,950  


——————————————
Rafael Aravot
Chairman of the Board and CEO
——————————————
Noam Kra-Oz
Director and Joint General Manager
——————————————
Hanan Eibushitz
Chief Financial Officer

Date of approval of the financial statements: August 3, 2005

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

3

RoboGroup T.E.K. Ltd.
Statement of Operations
NIS in Thousands

For the six months ended
 For the three months ended
 Year ended
June 30
 June 30
 December, 31
2005
 2005
 2004
 2005
 2004
 2004
US$ (K)
 NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
Unaudited
 Unaudited
 Unaudited
 Unaudited
 Unaudited
 Audited
Convenience
translation to
US dollars
 Reported amounts
 
Revenues      6,069    27,762    27,681    16,947    13,316    61,734  
Cost of revenues    3,389    15,503    15,632    8,855    7,401    35,843  
  
Gross profit    2,680    12,259    12,049    8,092    5,915    25,891  
  
Operating expenses  
Research and development expenses, net    721    3,300    4,287    1,610    1,985    7,619  
Marketing and selling expenses    1,375    6,290    7,067    3,349    3,312    13,204  
Administrative and general expenses    860    3,933    5,020    1,995    2,498    10,042  
  
     2,956    13,523    16,374    6,954    7,795    30,865  
  
Operating profit (loss)    (276 )  (1,264 )  (4,325 )  1,138    (1,880 )  (4,974 )
Financial expenses, net    (86 )  (392 )  (1,075 )  (276 )  (310 )  (2,111 )
Other income (expenses), net    (65 )  (298 )  498    (329 )  216    809  
Profit (loss) before taxes on income    (427 )  (1,954 )  (4,902 )  533    (1,974 )  (6,276 )
Income tax expenses    60    272    901    160    901    1,411  
  
Net profit (loss)    (487 )  (2,226 )  (5,803 )  373    (2,875 )  (7,687 )
  
Profit (loss) per share ("EPS")    (0.04 )  (0.21 )  (0.54 )  0.03    (0.27 )  (0.71 )
  
Weighted average number of shares used   
 in computation of EPS (in thousands)    10,851    10,851    10,746    10,851    10,746    10,757  

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

4

RoboGroup T.E.K. Ltd.
Statement of Changes in Shareholders' Equity
NIS in Thousands

Number of
shares
 Share
capital
 Premium
on shares
 Capital
reserves
 Adjustments
on
translation
of
financial
statement
of an
autonomous
consolidated
company
 Shares
purchase
cost &
assigned
loans
guaranteed
by
company's
shares
 Accumulated
earnings
(deficit)
 Total
NIS
 NIS
 NIS
 NIS
 NIS
 NIS
 NIS
Reported amounts
 
For the six months ended June                                    
  30, 2005 (Unaudited)  
  
Balance as of January 1, 2005    10,851,027    11,400    42,452    2,260    (533 )  (789 )  (31,656 )  23,134  
Adjustments on translation of  
  financial statement of an  
  autonomous consolidated  
  company    -    -    -    -    83    -    -    83  
Net loss    -    -    -    -    -    -    (2,226 )  (2,226 )
  
Balance at June 30, 2005    10,851,027    11,400    42,452    2,260    (450 )  (789 )  (33,882 )  20,991  
  
  
For the six months ended June  
  30, 2004 (Unaudited)  
  
Balance as of January 1, 2004    10,744,031    11,399    42,214    2,260    (453 )  (1,003 )  (23,969 )  30,448  
Exercise of options    1,600    1    3    -    -    -    -    4  
Adjustments on translation of  
  financial statement of an  
  autonomous consolidated  
  company    -    -    -    -    154    -    -    154  
Net loss    -    -    -    -    -    -    (5,803 )  (5,803 )
  
Balance at June 30, 2004    10,745,631    11,400    42,217    2,260    (299 )  (1,003 )  (29,772 )  24,803  

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

5

RoboGroup T.E.K. Ltd.
Statement of Changes in Shareholders' Equity
NIS in Thousands

Number of
shares
 Share
capital
 Premium
on shares
 Capital
reserves
 Adjustments
on
translation
of
financial
statement
of an
autonomous
consolidated
company
 Shares
purchase
cost &
assigned
loans
guaranteed
by
company's
shares
 Accumulated
earnings
(deficit)
 Total
NIS
 NIS
 NIS
 NIS
 NIS
 NIS
 NIS
Reported amounts
 
For the three months ended June                                    
  30, 2005 (Unaudited)  
  
Balance as of April 1, 2005    10,851,027    11,400    42,452    2,260    (493 )  (789 )  (34,255 )  20,575  
Adjustments on translation of  
  financial statement of an  
  autonomous consolidated  
  company    -    -    -    -    43    -    -    43  
Net profit    -    -    -    -    -    -    373    373  
  
Balance at June 30, 2005    10,851,027    11,400    42,452    2,260    (450 )  (789 )  (33,882 )  20,991  
  
  
For the three months ended June  
  30, 2004 (Unaudited)  
  
Balance as of April 1, 2004    10,744,031    11,399    42,214    2,260    (267 )  (1,003 )  (26,897 )  27,706  
Exercise of options    1,600    1    3    -    -    -    -    4  
Adjustments on translation of  
  financial statement of an  
  autonomous consolidated  
  company    -    -    -    -    (32 )  -    -    (32 )
Net loss    -    -    -    -    -    -    (2,875 )  (2,875 )
  
Balance at June 30, 2004    10,745,631    11,400    42,217    2,260    (299 )  (1,003 )  (29,772 )  24,803  
  
  
For the year ended December 31,  
  2004 (audited)  
  
Balance at January 1, 2004    10,744,031    11,399    42,214    2,260    (453 )  (1,003 )  (23,969 )  30,448  
Exercise of options    1,600    1    3    -    -    -    -    4  
Granting of treasury stock    105,396    -    235    -    -    214    -    449  
Adjustments on translation of  
  financial statement of an  
  autonomous consolidated  
  company    -    -    -    -    (80 )  -    -    (80 )
Net loss    -    -    -    -    -    -    (7,687 )  (7,687 )
  
Balance at December 31, 2004    10,851,027    11,400    42,452    2,260    (533 )  (789 )  (31,656 )  23,134  

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

6

RoboGroup T.E.K. Ltd.
Statement of Cash Flows
NIS in Thousands

For the six months ended
 For the three months ended
 Year ended
June 30
 June 30
 December, 31
2005
 2005
 2004
 2005
 2004
 2004
US$ (K)
 NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
Unaudited
 Unaudited
 Unaudited
 Unaudited
 Unaudited
 Audited
Convenience
translation
to US
dollars
Reported amounts
 
Cash flows from operating activities:                            
Net profit (loss)    (487 )  (2,226 )  (5,803 )  373    (2,875 )  (7,687 )
Adjustments to reconcile net profit  
 (loss) to net cash provided by operating  
 activities (Appendix A):    504    2,304    (2,095 )  707    (2,588 )  1,667  
   
Net cash provided by (used in) operating   
 activities     17    78    (7,898 )  1,080    (5,463 )  (6,020 )
   
Cash flows from investing activities:   
Acquisition of fixed assets    (24 )  (110 )  (598 )  (45 )  (189 )  (700 )
Proceeds from sales of fixed assets    86    395    538    303    419    117  
   
Net cash provided by (used in) investing   
 activities     62    285    (60 )  258    230    (583 )
   
Cash flows from financing activities:   
Increase in short term credit from banks,  
 net    190    869    1,398    196    1,106    614  
Long-term loans received    -    -    21,414    -    7,506    21,414  
Repayment of long -term loans    (268 )  (1,226 )  (22,087 )  (612 )  (7,814 )  (23,315 )
Exercise of options by employees    -    -    4    -    4    4  
   
Net cash provided by (used in) financing   
 activities     (78 )  (357 )  729    (416 )  802    (1,283 )
   
Effect of exchange rate changes on cash   
 and cash equivalents     3    13    7    10    (4 )  (35 )
   
Increase (decrease) in cash and cash   
 equivalents     4    19    (7,222 )  932    (4,435 )  (7,921 )
Cash and cash equivalents at the   
 beginning of the period     1,521    6,957    14,878    6,044    12,091    14,878  
   
Cash and cash equivalents at the end of   
 the period     1,525    6,976    7,656    6,976    7,656    6,957  

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

7

RoboGroup T.E.K. Ltd.
Statement of Cash Flows
NIS in Thousands

For the six months ended
 For the three months ended
 Year ended
June 30
 June 30
 December, 31
2005
 2005
 2004
 2005
 2004
 2004
US$ (K)
 NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
Unaudited
 Unaudited
 Unaudited
 Unaudited
 Unaudited
 Audited
Convenience
translation
to US
dollars
Reported amounts
 
Appendix A: Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:   
   
Income and expenses not involving cash                            
 flows:   
Depreciation and amortization    184    840    1,145    363    602    2,589  
Increase (decrease) in liability for  
 termination of employee/employer  
 relationship    (50 )  (228 )  (146 )  (109 )  5    (543 )
Write-down of loans    67    308    348    424    (297 )  158  
Decrease (increase) in value of  
 marketable securities    8    38    -    (33 )  -    (84 )
Decrease (increase) in deferred taxes    (10 )  (48 )  683    40    653    1,054  
Other    136    623    -    623    -    (136 )
   
     335    1,533    2,030    1,308    963    3,038  
   
Changes in assets and liabilities:   
Decrease (increase) in trade receivables    326    1,491    (1,395 )  (2,362 )  (4,279 )  (2,163 )
Decrease (increase) in other receivables  
 and debit balances    (50 )  (229 )  (659 )  (311 )  661    201  
Decrease (increase) in inventories    (502 )  (2,298 )  1,000    (727 )  424    4,111  
Increase (decrease) in trade payables    268    1,227    672    1,804    (232 )  459  
Increase (decrease) in other payables  
 and credit balances    127    580    (3,743 )  995    (125 )  (3,979 )
   
     169    771    (4,125 )  (601 )  (3,551 )  (1,371 )
   
     504    2,304    (2,095 )  707    (2,588 )  1,667  
   
   
Appendix B: Non-monetary events:   
   
Granting of treasury stocks    -    -    -    -    -    449  

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

8

RoboGroup T.E.K. Ltd.
Notes to the Financial Statements
NIS in Thousands

NOTE 1 – GENERAL

  (a) These financial statements have been prepared in a condensed format as of June 30, 2005, and for the six and three months then ended (“interim financial statements”). The above mentioned financial statements have been prepared in conformity with chapter 4 of the Securities Regulations (Interim and Immediate Statements), 1970. These financial statements should be read in conjunction with the Company’s audited annual financial statements and accompanying notes as of December 31, 2004 and for the year then ended.

  (b) These financial statements have been reviewed by the Company’s certified public accountants. The review was conducted in accordance with the procedures established by the Institute of Certified Public Accountants in Israel regarding interim periods. The review was limited in scope and did not constitute an audit in accordance with generally accepted auditing standards and therefore no opinion was expressed by the Company’s certified public accountants.

  (c) In management’s opinion all necessary adjustments were made in order to present correctly these interim financial statements.

  (d) In the years ended December 31, 2004 and 2003, the Company incurred net losses of approximately NIS 8 million and NIS 18 million, respectively. In addition, the Company had negative cash flows from operating activities in the amount of approximately NIS 6 million and NIS 9 million, respectively.

  The Company’s management took steps to strengthen and improve the Company’s financial state and its profitability. Those steps included consolidating activities, reducing manpower, reducing salary costs of senior executives and cutting general expenses. Those steps were implemented mainly during the year 2004.

  For the three months ended June 30, 2005 the Company had net profit of approximately NIS 0.4 million and positive cash flows from operating activities in the amount of approximately NIS 1.1 million, compared to net losses of approximately NIS 2.9 million and negative cash flows from operating activities of approximately NIS 5.5 million for the three months ended June 30, 2004.

  For the six months ended June 30, 2005 the Company incurred net losses of approximately NIS 2.2 million and had positive cash flows from operating activities in the amount of approximately NIS 0.1 million compared to net losses of approximately NIS 5.8 million and negative cash flows from operating activities in the amount of approximately NIS 7.9 million for the six months ended June 30, 2004.

  In addition, on March 2005, a proportionally consolidated company distributed a dividend as detailed in Note 3 (1). Another possible distribution of dividend in the same amount was approved for August 2005.

  (e) On August 3, 2005 the Company’s board of directors has resolved to voluntarily terminate the registration of the the Company’s shares under the Securities Exchange Act of 1934 and upon deregistration, to delist from the NASDAQ SmallCap Market. In order to terminate the registration of its ordinary shares, the Company will file a Form 15 with the SEC thereby suspending its obligations for filing annual and other reports with the SEC. The Company will seek authorization from NASDAQ to maintain the listing of its shares on the NASDAQ SmallCap Market for the period of 90 days from the filing of the Form 15, or such shorter period until the deregistration of its shares becomes effective, and will undertake to continue file reports on a voluntary basis until delisting.

  The Company’s board resolved to authorize RoboGroup’s management to determine the exact timing for filing the Form 15 and to take all measures and acts required for the implementation of the deregistration and delisting process. Subject to SEC review, the Company anticipates completing the process within 90-days of the filing.

The Company’s shares shall continue to trade on the Tel Aviv Stock Exchange and the Company will continue to issue periodic and other reports in accordance with the rules and regulations of the Israeli Securities Authority.

  The Company wrote-off differed issuance expenses in the amount of approximately NIS 0.6 million in the second quarter of 2005, which had been accounted in connection with the Equity Line agreement with Cornell.

9

RoboGroup T.E.K. Ltd.
Notes to the Financial Statements
NIS in Thousands

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

  A. General

  The interim financial statements have been prepared in accordance with generally accepted accounting principles for the preparation of financial statements for interim periods, as prescribed in Accounting Standard No. 14 of the Israel Accounting Standards Board.

  B. Impact of recently issued Accounting Standards

  On July 2004, the Israeli Accounting Standards Board published Accounting Standard No. 19, “Taxes on Income”. The Standard provides that a liability for deferred taxes is to be recorded for all temporary differences subject to tax, except for a limited number of exceptions. In addition, a deferred tax asset is to be recorded for all temporary differences that may be deducted, losses for tax purposes and tax benefits not yet utilized, if it is anticipated that there will be taxable income against which they can be offset, except for a limited number of exceptions. The new Standard applies to financial statements for periods beginning on January 1, 2005. The Standard provides that it is to be implemented by means of a cumulative effect of a change in accounting method. Applying the new Standard had now material effect on the company’s financial statements.

  C. Following are data regarding the Israeli CPI and the exchange rate of the U.S. dollar:

As of
 Israeli CPI
 Exchange rate of
one U.S. dollar
Points (*)
 NIS
 
June 30, 2005      114 .9  4 .574
June 30, 2004    100 .8  4 .497
December 31, 2004    114 .3  4 .308
           
Change during the period
 %
 %
           
June 2005 (six months)    0 .5  6 .2
June 2004 (six months)    1 .4  2 .7
June 2005 (three months)    1 .1  4 .9
June 2004 (three months)    1 .5  (0 .7)
December 2004 (12 months)    1 .2  (1 .6)

  (*) The index on an average basis of 1998 = 100.

  D. The financial statements at June 30, 2005 and for the six months then ended have been translated into US dollars solely for the convenience of the American reader. This translation was made at the US Dollar/New Israeli Shekel exchange rate in effect on the said date, i.e. US$ 1 = NIS 4.574.

NOTE 3 – TRANSACTION WITH INTERESTED RELATED PARTIES

  1. The Board of Directors of a proportionally consolidated company approved on March 10, 2005, a distribution of dividend to its shareholders in the amount of NIS 1,725 thousand. The net dividend received by the Company amounted to NIS 733 thousand.

  2. In July 2004 the Company entered into a contract with Yaskawa Electric Corporation (“YEC”) for the supply of an e-learning system in consideration of approximately NIS 3.3 million. The system is being supplied gradually during several quarters.

  For the period of six months that ended June 30, 2005, the revenues from this contract were included in the amount of approximately NIS 650 thousand. The remaining differed revenues from this contract amount to approximately NIS 350 thousand.

RoboGroup T.E.K. Ltd.
Notes to the Financial Statements
NIS in Thousands

NOTE 4 – FINANCIAL INFORMATION IN REGARD TO BUSINESS SEGMENTS

For the six months ended June 30, 2005
Education
segment
 Motion control
for industry
 Adjustment
 Total
NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
Reported amounts
 
Revenues from customers      21,656    6,106    -    27,762  
Segment operations     (791 )  169    689    67  
Non allocated expenses                   (1,331 )
Operating loss                   (1,264 )
      
For the six months ended June 30, 2005
Education
segment
 Motion control
for industry
 Adjustment
 Total
$ (K)
 $ (K)
 $ (K)
 $ (K)
      
Revenues from customers     4,734    1,335    -    6,069  
Segment operations     (173 )  37    151    15  
Non allocated expenses                   (291 )
Operating loss                   (276 )

For the six months ended June 30, 2004
Segment A
 Segment B
 Segment C
 Adjustments
 Total
NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
Reported amounts (*)
 
Revenues from customers      22,994    4,687    -    -    27,681  
Inter segment revenues    -    74    -    (74 )  -  
      
     22,994    4,761    -    (74 )  27,681  
      
Segment loss    (4,674 )  (702 )  (427 )  -    (5,803 )

11

RoboGroup T.E.K. Ltd.
Notes to the Financial Statements
NIS in Thousands

NOTE 4 – FINANCIAL INFORMATION IN REGARD TO BUSINESS SEGMENTS (cont.)

For the three months ended June 30, 2005
Education
segment
 Motion control
for industry
 Adjustment
 Total
NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
Reported amounts
 
Revenues from customers      13,928    3,019    -    16,947  
      
Segment operations     1,533    (53 )  361    1,841  
Non allocated expenses                   (703 )
Operating profit                   1,138  

For the three months ended June 30, 2004
Segment A
 Segment B
 Segment C
 Adjustments
 Total
NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
 NIS (K)
Reported amounts (*)
 
Revenues from customers      10,732    2,584    -    -    13,316  
Inter segment revenues    -    9    -    (9 )  -  
      
     10,732    2,593    -    (9 )  13,316  
      
Segment loss    (2,281 )  (498 )  (96 )  -    (2,875 )

12