REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report....................
For the transition period from to
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(Jurisdiction of incorporation
or organization)
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None
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None
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Title of each class
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Name of each exchange on which registered
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Large accelerated filer ☐
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Non-accelerated filer ☐
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Emerging growth company
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☒
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International Financial Reporting Standards as issued by the International Accounting Standards Board ☐
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Other ☐
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6 | ||
6 | ||
6 | ||
6 | ||
A. |
[Reserved] |
6 |
B. |
Capitalization and indebtedness |
6 |
C. |
Reason for the offer and use of proceeds
|
6 |
D. |
Risk Factors |
6 |
32 | ||
A. |
History and Development of the Company
|
32 |
B. |
Business Overview |
33 |
Principal Markets |
36 | |
Manufacturing and Suppliers |
36 | |
Marketing Channels |
38 | |
Patents and Licenses |
40 | |
Competition |
41 | |
Governmental Regulation Affecting the Company
|
42 | |
C. |
Organizational Structure |
43 |
D. |
Property, Plant and Equipment |
43 |
UNRESOLVED STAFF COMMENTS |
44 | |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
44 | |
A. |
Operating Results | 45 |
B. |
Liquidity and Capital Resources |
49 |
C. |
Research and development, patents and licenses,
etc. |
51 |
D. |
Trend Information |
53 |
E. |
Critical Accounting Estimates |
54 |
56 | ||
A. |
Directors and Senior Management |
56 |
B. |
Compensation |
58 |
Board of Directors |
63 | |
External Directors |
64 | |
Audit Committee |
68 | |
Compensation Committee |
70 | |
D. |
Employees |
75 |
E. |
Share Ownership |
77 |
78 | ||
A. |
Major Shareholders |
78 |
B. |
Related Party Transactions |
79 |
ITEM 8. | 81 | |
A. |
Consolidated Statements and Other Financial Information |
81 |
B. |
Significant Changes |
81 |
THE OFFER AND LISTING |
82 | |
A. |
Offer and Listing Details |
82 |
Markets and Share Price History |
82 |
83 | ||
A. |
Share Capital |
83 |
B. |
Memorandum and Articles of Association
|
83 |
C. |
Material Contracts |
93 |
D. |
Exchange Controls |
93 |
E. |
Taxation |
94 |
F. |
Dividends and Paying Agents |
104 |
G. |
Statement by Experts |
104 |
H. |
Documents on Display |
104 |
I. |
Subsidiary Information |
105 |
105 | ||
Interest Rate Risk |
105 | |
Foreign Currency Exchange Risk |
106 | |
108 | ||
108 | ||
108 | ||
108 | ||
108 | ||
Disclosure Controls and Procedures |
108 | |
Management's Annual Report on Internal Control
over Financial Reporting |
108 | |
Inherent Limitations on Effectiveness of Controls
|
109 | |
Changes in Internal Control over Financial
Reporting |
109 | |
109 | ||
109 | ||
109 | ||
109 | ||
110 | ||
Audit committee's pre-approval policies and
procedures |
110 | |
111 | ||
111 | ||
112 | ||
112 | ||
115 | ||
115 | ||
115 | ||
115 | ||
115 | ||
116 |
Item
1. |
IDENTITY
OF DIRECTORS, SENIOR MANAGEMENT, AND ADVISERS |
Item
2. |
OFFER
STATISTICS AND EXPECTED TIMETABLE |
Item
3. |
KEY
INFORMATION |
• |
The dollar cost of our operations in Israel may increase to the extent the results of inflation in Israel are not offset by a devaluation
of the NIS against the dollar. |
• |
We may not be able to capitalize, as planned, on our Design Wins. |
• |
The market for Cloud-based and Cloud-focused solutions is rapidly developing, and if it develops in ways that differ from our expectations,
our business could be harmed. |
• |
The market for Edge Networking Devices to Telcos and service providers for NFV or SD-WAN deployments is rapidly developing, and if
it develops in ways that differ from our expectations, our business could be harmed. |
• |
Should the market for Infrastructure Deployment of 4G/5G Distributed Units and User Plan Functionality, or UPF acceleration with
the Telcos and Mobile operators develops in ways that differ from our expectations, our business could be harmed. |
• |
Rapid development of our business in the Cloud-based, Telco and service providers' markets may require us to offer our potential
customers with longer payment terms to better position ourselves in these markets, to hold higher inventory levels and to significantly
increase our need for working capital. |
• |
Our networking and data infrastructure solution products which are targeted by us mainly to customers in the OEM, Cloud, Telco, Mobile
and related service providers' markets, are characterized by long sales cycles. |
• |
The loss of Design Wins from customers in the Cloud, Telco, Mobile and related service providers' markets may result in significant
quarterly and even annual fluctuations in our revenues. |
• |
Rapid development of our business in the Cloud, Telco, Mobile and related service providers' markets may lead to a decrease in our
gross margins which may result in a decrease in our profitability. |
• |
Should some of our customers explore various technologies during their development process in ways which are not compatible with
our solutions, this may result in them deciding to pursue different solutions even after we secured Design Wins with such customers, which
may impair our financial results. |
• |
A loss of a material Design Win may lead to a decrease in the volume of orders placed in relation to such Design Win, which would
impair our financial results. |
• |
Difficulties in the fulfillment of financial obligations of one or more of our customers may have an adverse effect on our ability
to collect consideration payable under purchase orders placed by such customers. |
• |
We may not be successful in achieving and consummating Design Wins for our products for the Cloud, Telco, Mobile and the service
providers markets, which constitute a main source of growth. |
• |
Significant growth in markets demanding functionality similar to the functionality offered by certain of our products may cause manufacturers
to integrate such characteristics into server motherboards or increase the market share of servers and appliances that already have such
functionality in-built, eliminating the need for our products. |
• |
Our customers may replace the servers and appliances they currently use, use or sell servers and appliances that do not require our
cards, and/or incorporate cards other than ours. |
• |
We may experience difficulty in developing solutions for servers and appliances with proprietary interfaces, which may be used by
some of our potential customers. |
• |
The short lead time of customer orders versus the long lead time of our component suppliers could result in either a surplus or lack
of sufficient supplies. |
• |
The tax benefits available to us under Israeli law require us to meet several conditions and may be terminated or reduced in the
future, which would increase our taxes. |
• |
The government programs and benefits, which we previously received, require us to meet several conditions in order to transfer intellectual
property and know-how developed using government funding abroad, or in order to consummate a change of control. |
• |
The political environment and hostilities in Israel could harm our business. |
• |
We may experience a decline in our share price, including during periods of uncertainty in global economic conditions, and there
is no guarantee that our share price will remain stable or not decline. |
• |
If we are characterized as a passive foreign investment company for U.S. federal income tax purposes, our U.S. shareholders may suffer
adverse tax consequences. |
• |
Our business may be adversely impacted by risks arising from a widespread outbreak of an illness or any other communicable disease.
|
• |
Unfavorable or unstable economic conditions in the markets in which we operate could have a material adverse effect on our business,
financial condition, or operating results. |
• |
Loss of our sources for certain key components could harm our operations. |
• |
The markets for our products change rapidly and demand for new products is difficult to predict. |
• |
We may need to invest significantly in research and development and business development in order to diversify our product offering
and enter new markets. |
• |
Our short lead time of customer orders introduces uncertainty into our revenues and severely limits our ability to accurately forecast
future sales. |
• |
The fluctuations in components' lead time and price may adversely affect our business. |
• |
The decrease in demand for basic/standard server adapters may adversely affect our business. |
• |
The loss or ineffectiveness of any of our key customer relationships or a reduction of purchase orders by such customers may have
a material adverse effect on our operations and financial results. |
• |
We are dependent on key personnel. |
• |
We may not be able to protect our intellectual proprietary rights. |
• |
Inability to cooperate with and receive information from our key component manufacturers could affect our ability to develop new
products. |
• |
We may make acquisitions or pursue mergers that could disrupt our business and harm our financial condition. |
• |
We may be subject to risks associated with laws, regulations, economic sanctions and customer initiatives, which may force us to
incur additional expenses and add complexities to our supply chain and operations. |
• |
We depend on governmental licenses for our exports. |
• |
Significant disruptions of our information technology systems or breaches of our data security could adversely affect our business.
|
• |
Substantial research and development and business development expenditures, which could divert funds from other corporate uses and/or
have a significant negative effect on our short-term results; |
• |
Diversion of management's attention from our core business; and |
• |
Entrance into markets in which we have little or no experience. |
• |
Post-merger integration problems resulting from the combination of any acquired operations with our own operations or from the combination
of two or more operations into a new merged entity; |
• |
Diversion of management's attention from our core business; |
• |
Substantial expenditures, which could divert funds from other corporate uses; |
• |
Entering markets in which we have little or no experience; and |
• |
Loss of key employees of the acquired operations. |
Item 4.
|
INFORMATION
ON THE COMPANY. |
(i) |
Server network interface cards (Server Adapters) - These adapters are used mostly in networking appliances which are used both in
the Cloud (including public cloud and On Premise cloud) and in the Edge. |
(ii) |
Smart Cards - Intelligent and/or programmable cards, with features such as encryption, Time Synchronization, acceleration, data compression,
redirection and switching, packet processing, time stamping, packet capture solutions, ultra-low latency solutions, and other offloading
features. These products are used mostly inside servers which are a part of Cloud and Enterprise Data centers or inside Distributed Units
and Central Units which are a part of mobile infrastructures. |
(iii) |
Smart Platforms - (Edge Products) - including virtualized Customer-Premises Equipment (vCPE) and universal Customer-Premises Equipment
(uCPE) (together, "CPE"), Edge devices for SD-WAN, SASE, Telco dedicated routers and NFV deployments. |
(i) |
Providers of applications on Network appliances, including mostly SD-WAN, Cyber Security and Application Delivery applications;
|
(ii) |
Telcos / Carriers / service providers deploying CPEs/Edge for SD-WAN, SASE and NFV; |
(iii) |
Mobile Operators/Telcos/Carriers deploying 4G/5G infrastructure; |
(iv) |
The "Cloud". |
• |
We approach a potential customer or are approached by such customer. |
• |
If the potential customer shows interest in the products and we believe that achievement of a business relationship with the potential
customer is possible, we ship products for such potential customer's evaluation. |
• |
During the evaluation process the potential customer receives a few units of the relevant product for initial basic testing. If the
evaluation process is successful, we ship products for qualification. |
• |
During the qualification process the potential customer usually purchases a larger amount of our products for more specific testing,
which may include certain adaptations of our products to its needs. |
• |
If the qualification process is successful, we enter into negotiations regarding the terms of a business relationship. |
• |
In some cases, typically with the larger customers and with respect to Smart Cards and Smart Platforms, the evaluation and qualification
process may take 12 months or more. |
• |
Silicom Connectivity Solutions, Inc. – a private company incorporated in the United States; and |
• |
Silicom Denmark (Fiberblaze A/S) – a private company incorporated in Denmark. |
Item
4A. |
UNRESOLVED
STAFF COMMENTS |
Item 5.
|
OPERATING
AND FINANCIAL REVIEW AND PROSPECTS |
A. |
Operating Results |
Year
Ended December 31, |
2020 |
2021 |
2022 |
Sales |
100% |
100% |
100% |
Cost of sales |
68.6 |
65.4 |
65.5 |
Gross profit |
31.4 |
34.6 |
34.5 |
Research and development expenses
|
16.1 |
15.6 |
13.7 |
Sales and marketing expenses |
5.8 |
5.1 |
4.6 |
General and administrative expenses
|
3.7 |
3.6 |
3.0 |
Operating Income |
5.8 |
10.2 |
13.2 |
Financial income, net |
1.0 |
(0.1) |
1.6 |
Income before income taxes |
6.8 |
10 |
14.9 |
Income tax expenses |
1.4 |
1.8 |
2.7 |
Net Income |
5.4 |
8.2 |
12.2 |
Item 6.
|
DIRECTORS,
SENIOR MANAGEMENT AND EMPLOYEES |
Name |
Age |
Position with Company |
Avi Eizenman(1) |
65 |
Active Chairman of the Board |
Shaike Orbach(2)
|
71 |
Executive Vice Chairman of the Board |
Ayelet Aya Hayak(3)
|
53 |
Director |
Ilan Erez(3) |
55 |
Director |
Eli Doron(4) |
70 |
Director |
Liron Eizenman(5)
|
37 |
President, Chief Executive Officer |
Eran Gilad |
55 |
Chief Financial Officer and Company Secretary |
(1) |
Serving an additional two-year term, commencing as of June 7, 2022. |
(2) |
Serving an additional three-year term, commencing as of June 8, 2020. |
(3) |
Serving an additional three-year term, commencing as of June 7, 2022. |
(4) |
Serving an additional three-year term, commencing as of June 3, 2021. |
(5) |
Liron Eizenman, who is the son of the active chairman of our board, Avi Eizenman, commenced serving as our President and Chief Executive
Officer, on July 1, 2022. |
(*) |
Yeshayahu ('Shaike') Orbach served as CEO and President until June 30, 2022, and Liron Eizenman has served as our CEO and President since July 1, 2022. |
• |
An employment relationship; |
• |
A business or professional relationship maintained on a regular basis; |
• |
Control; and |
• |
Service as an office holder. |
• |
the majority includes at least a majority of the shares held by non-controlling and disinterested shareholders who are present and
voting at the meeting; or |
• |
the total number of shares held by non-controlling and disinterested shareholders that voted against the election of the director
does not exceed two percent of the aggregate voting rights in the company. |
• |
The chairman of the board of directors; |
• |
Any director employed by or otherwise providing services to the company or to the controlling shareholder or entity under such controlling
shareholder’s control; |
• |
Any director who derives his salary primarily from a controlling shareholder; |
• |
A controlling shareholder; or |
• |
Any relative of a controlling shareholder. |
• |
The chairman of the board of directors; |
• |
Any director employed by or otherwise providing services to the company or to the controlling shareholder or entity under such controlling
shareholder’s control; |
• |
Any director who derives his salary primarily from a controlling shareholder; |
• |
A controlling shareholder; or |
• |
Any relative of a controlling shareholder. |
1. |
To recommend to the Board of Directors as to a compensation policy for office holders of the company, as well as to recommend, once
every three years to extend the compensation policy subject to receipt of the required corporate approvals; |
2. |
To recommend to the Board of Directors as to any updates to the compensation policy which may be required; |
3. |
To review the implementation of the compensation policy by the company; |
4. |
To approve transactions relating to terms of office and employment of certain company office holders, which require the approval
of the compensation committee pursuant to the Companies Law; and |
5. |
To exempt, under certain circumstances, a transaction relating to terms of office and employment from the requirement of approval
of the shareholders meeting. |
a. |
Advancement of the goals of the company, its working plan and its long term policy; |
b. |
The creation of proper incentives for the office holders while taking into consideration, inter alia, the company’s risk management
policies; |
c. |
The company’s size and nature of its operations; |
d. |
The contributions of the relevant office holders in achieving the goals of the company and profit in the long term in light of their
positions; |
e. |
The education, skills, expertise and achievements of the relevant office holders; |
f. |
The role of the office holders, areas of their responsibilities and previous agreements with them; |
g. |
The correlation of the proposed compensation with the compensation of other employees of the company, and the effect of such differences
in compensation on the employment relations in the company; and |
h. |
The long term performance of the office holder. |
(i) |
the majority of the votes includes at least a majority of all the votes of shareholders who are not controlling shareholders of the
company or who do not have a personal interest in the compensation policy and participating in the vote; abstentions shall not be included
in the total of the votes of the aforesaid shareholders; or |
(ii) |
the total of opposing votes from among the shareholders described in Sub-section (i) above does not exceed 2% of all the voting rights
in the company. |
As of December 31, |
2020
|
2021
|
2022
|
|||||||||
Total Employees |
289 |
315 |
306 |
|||||||||
Marketing, Sales, Customer Services |
24 |
25 |
27 |
|||||||||
Research & Development |
123 |
135 |
134 |
|||||||||
Manufacturing |
124 |
138 |
127 |
|||||||||
Corporate Operations and Administration |
18 |
17 |
18 |
Name
|
Number of Shares and Options
Owned1
|
Percent of Outstanding Shares
|
||||||
Avi Eizenman |
344,916 |
4.96 |
% | |||||
Shaike Orbach |
* |
* |
||||||
Eli Doron |
* |
* |
||||||
Ayelet Aya Hayak |
* |
* |
||||||
Ilan Erez |
* |
* |
||||||
Liron Eizenman |
* |
* |
||||||
Eran Gilad |
* |
* |
||||||
All directors and office holders as a group |
376,915 |
5.42 |
% |
* |
Denotes ownership of less than 1% of the outstanding shares. |
(1) |
The table above includes the number of shares and options that are exercisable within 60 days of April 15, 2023. Ordinary shares
subject to these options are deemed beneficially owned for the purpose of computing the ownership percentage of the person or group holding
these options, but are not deemed outstanding for purposes of computing the ownership percentage of any other person. Except where otherwise
indicated, and subject to applicable community property laws, based on information furnished to us by such owners or otherwise disclosed
in any public filings, to our knowledge, the persons and entities named in the table have sole voting and dispositive power with respect
to all shares shown as beneficially owned by them. |
Item
7. |
MAJOR
SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
Name
of Shareholder |
Number
of Shares and Options Owned(1) |
Percentage
of Outstanding Shares |
Wellington Management Group LLP(2)
|
618,848 |
9.16% |
Systemic Financial Management, LP(3)
|
591,091 |
8.75% |
First Wilshire Securities Management, Inc. (4)
|
558,510 |
8.28% |
(1) |
The table above includes the number of shares and options that are exercisable within 60 days of March 31, 2023. Ordinary shares
subject to these options are deemed beneficially owned for the purpose of computing the ownership percentage of the person or group holding
these options, but are not deemed outstanding for purposes of computing the ownership percentage of any other person. Except where otherwise
indicated, and subject to applicable community property laws, based on information furnished to us by such owners or otherwise disclosed
in any public filings, to our knowledge, the persons and entities named in the table have sole voting and dispositive power with respect
to all shares shown as beneficially owned by them. All the information detailed in this table is as set forth in major shareholders' public
filings, unless stated otherwise. |
(2) |
As reported on Schedule 13G/A filed by Wellington Management Group LLP, Wellington Group Holdings LLP, Wellington Investment Advisors
Holdings LLP and Wellington Management Company LLP with the SEC on February 6, 2023. The securities as to which the Schedule was filed
are owned of record by clients of one or more investment advisers, which are directly or indirectly owned by Wellington Management Group
LLP, the identities of which are set forth in Exhibit A of such Schedule 13G/A. |
(3) |
As reported on Schedule 13G filed by Systemic Financial Management, LP with the SEC on February 13, 2023. |
(4) |
As reported on Schedules 13G/A filed by First Wilshire Securities Management, Inc. with the SEC on February 15, 2023. |
• |
Gross monthly base salary of NIS 70,000. |
• |
Entitlement to the Chief Executive Officer annual bonus upon the terms and in accordance with the formula approved by the Company’s
shareholders at the Annual General Meeting held on June 8, 2016 (the “CEO Bonus”),
provided only that Mr. Liron Eizenman will only be entitled to 50% of the applicable CEO Bonus for 2022, as and when determined by the
Company's Compensation Committee and Board of Directors (with the remaining portion being payable to Mr. Shaike Orbach). |
• |
Standard social benefits package applicable to all full-time employees of the Company. |
• |
Severance/Termination provisions. |
Item 8. |
FINANCIAL INFORMATION
|
Item 9.
|
THE
OFFER AND LISTING |
PERIOD |
LOW |
HIGH |
||||||
March 2023 |
35.25 |
39.25 |
||||||
February 2023 |
37.55 |
42.53 |
||||||
January 2023 |
40.81 |
50.00 |
||||||
December 2022 |
40.75 |
46.94 |
||||||
November 2022 |
41.91 |
46.00 |
||||||
October 2022 |
34.36 |
45.78 |
||||||
FINANCIAL QUARTERS DURING THE PAST TWO YEARS |
||||||||
First Quarter 2023 |
35.25 |
50.00 |
||||||
Fourth Quarter 2022 |
34.36 |
46.94 |
||||||
Third Quarter 2022 |
32.30 |
44.47 |
||||||
Second Quarter 2022 |
31.30 |
39.57 |
||||||
First Quarter 2022 |
35.79 |
51.66 |
||||||
Fourth Quarter 2021 |
36.02 |
52.75 |
||||||
Third Quarter 2021 |
40.25 |
46.11 |
||||||
Second Quarter 2021 |
38.97 |
47.51 |
||||||
FIVE MOST RECENT FULL FINANCIAL YEARS |
||||||||
2022 |
31.30 |
51.66 |
||||||
2021 |
36.02 |
59.27 |
||||||
2020 |
20.93 |
42.55 |
||||||
2019 |
28.59 |
40.36 |
||||||
2018 |
32.00 |
77.95 |
Item 10. |
ADDITIONAL INFORMATION
|
• |
Appointment or termination of our auditors; |
• |
Appointment and dismissal of external directors, unless the company elects to opt-in to the exemptions promulgated under the Amendment
to the Relief Regulations as detailed above, under which there is no requirement to appoint external directors; |
• |
Approval of interested party acts and transactions requiring general meeting approval as provided in Sections 255 and 268 to 275
of the Companies Law; |
• |
A merger as provided in Section 320(a) of the Companies Law; |
• |
The exercise of the powers of the board of directors, if the board of directors is unable to exercise its powers and the exercise
of any of its powers is vital for our proper management, as provided in Section 52(a) of the Companies Law; |
• |
Amendments to our Articles of Association; and |
• |
Approval of an increase or decrease of the registered share capital. |
• |
All of the directors are permitted to vote on the matter and attend the meeting in which the matter is considered; and |
• |
The matter requires approval of the shareholders at a general meeting. |
1. |
A private placement that meets all of the following conditions: |
• |
The private placement will increase the relative holdings of a shareholder that holds five percent or more of the company's outstanding
share capital, assuming the exercise of all of the securities convertible into shares held by that person, or that will cause any person
to become, as a result of the issuance, a holder of more than five percent of the company's outstanding share capital. |
• |
20 percent or more of the voting rights in the company prior to such issuance are being offered. |
• |
All or part of the consideration for the offering is not cash or registered securities, or the private placement is not being offered
at market terms. |
2. |
A private placement which results in anyone becoming a "controlling shareholder" of the public company. |
• |
Any amendment to the articles of association; |
• |
An increase of the company's authorized share capital; |
• |
A merger; or |
• |
Approval of interested party acts and transactions that require general meeting approval as provided in Sections 255 and 268 to 275
of the Companies Law. |
• |
Distribution of annual and quarterly reports to shareholders –
Under Israeli law we are not required to distribute annual and quarterly reports directly to shareholders and the generally accepted business
practice in Israel is not to distribute such reports to shareholders. We do however make our audited financial statements available to
our shareholders prior to our annual general meeting and furnish our quarterly and annual financial results with the SEC on Form 6-K.
|
• |
Independence, Nomination and Compensation of Directors –
A majority of our board of directors may not necessarily be comprised of independent directors as defined in NASDAQ Listing Rule 5605(a)(2).
Our board of directors contains two external directors in accordance with the provisions of the Companies Law. Israeli law does not require,
nor do our external directors conduct, regularly scheduled meetings at which only they are present. In addition, with the exception of
our external directors, our directors are elected to our board of directors in accordance with the provisions set forth in our amended
and restated Articles of Association, as approved by our shareholders on the Annual General Meeting which took place on June 8, 2016.
According to our amended and restated Articles of Association, directors are divided into three groups, Group A, Group B and Group C.
Each group is brought for re-election once every three years, on a rotating basis, such that at each annual general meeting of the shareholders
a given group of directors is brought for election, to serve on a continuous basis for a three-year term, until the third annual general
meeting following the meeting on which such group was elected for service and until their respective successors are duly elected, at which
point their term in office shall expire. At each annual general meeting, the annual general meeting shall be entitled to elect directors
to replace the directors whose three-year term in office has expired, and so on ad infinitum, so that each year, the term in office of
one group of directors shall expire. The nominations for director which are presented to our shareholders are generally made by our board
of directors. One or more shareholders of a company holding at least one percent of the voting power of the company may nominate a currently
serving external director for an additional three-year term. Israeli law does not require the adoption of, and our board has not adopted,
a formal written charter or board resolution addressing the nomination process and related matters. Compensation of our directors and
other office holders of the Company is determined in accordance with Israeli law. |
• |
Audit Committee – Our audit committee
does not meet with all the requirements of NASDAQ Listing Rule 5605. We are of the opinion that the members of our audit committee comply
with the requirements of NASDAQ Listing Rule 5605(c)(3) and Rule 10A-3(b) of the general rules and regulations promulgated under the Securities
Act of 1933 and all requirements under Israeli law. Our audit committee has not adopted a formal written audit committee charter specifying
the items enumerated in NASDAQ Listing Rule 5605(c)(1). |
• |
Compensation Committee – We follow
the provisions of the Companies Law with respect to matters in connection with the composition and responsibilities of our compensation
committee, office holder compensation, and any required approval by the shareholders of such compensation. Israeli law, and our amended
and restated Articles of Association, do not require that a compensation committee composed solely of independent members of our board
of directors determine (or recommend to the board of directors for determination) an executive officer's compensation, as required under
NASDAQ's listing standards related to compensation committee independence and responsibilities; nor do they require that the Company adopt
and file a compensation committee charter. Instead, our compensation committee has been established and conducts itself in accordance
with provisions governing the composition of and the responsibilities of a compensation committee as set forth in the Companies Law. Furthermore,
the compensation of office holders is determined and approved by our compensation committee and our Board of Directors, and in certain
circumstances by our shareholders, either in consistency with our previously approved Executive Compensation Policy or, in special circumstances
in deviation therefrom, taking into account certain considerations set forth in the Companies Law. The requirements for shareholder approval
of any office holder compensation, and the relevant majority or special majority for such approval, are all as set forth in the Companies
Law. Thus, we will seek shareholder approval for all corporate actions with respect to office holder compensation requiring such approval
under the requirements of the Companies Law, including seeking prior approval of the shareholders for the Executive Compensation Policy
and for certain office holder compensation, rather than seeking approval for such corporate actions in accordance with NASDAQ Listing
Rules. |
• |
Quorum – Under Israeli law a company
is entitled to determine in its articles of association the number of shareholders and percentage of holdings required for a quorum at
a shareholders meeting. Our Articles of Association provide that a quorum of two or more shareholders, present in person or by proxy,
holding shares conferring in the aggregate more than thirty-three and a third (33 1/3 %) percent of the voting power of the Company is
required for commencement of business at a general meeting. |
• |
Approval of Related Party Transactions –
All related party transactions are approved in accordance with the requirements and procedures for approval of interested party acts and
transactions, set forth in Sections 268 to 275 of the Companies Law. |
• |
Shareholder Approval – We seek
shareholder approval for all corporate action requiring such approval, in accordance with the requirements of the Companies Law.
|
• |
Equity Compensation Plans – We
do not necessarily seek shareholder approval for the establishment of, and amendments to, stock option or equity compensation plans (as
set forth in NASDAQ Listing Rule 5635(c)), as such matters are not subject to shareholder approval under Israeli law. We will attempt
to seek shareholder approval for our stock option or equity compensation plans (and the relevant annexes thereto) to the extent required
in order to ensure they are tax qualified for our employees in the United States. However, even if such approval is not received, then
the stock option or equity compensation plans will continue to be in effect, but the Company will be unable to grant options to its U.S.
employees that qualify as Incentive Stock Options for U.S. federal tax purpose. Our stock option or other equity compensation plans are
also available to our non-U.S. employees, and provide features necessary to comply with applicable non-U.S. tax laws. |
(a) |
Amortization of expenses incurred in connection with certain public securities issuances over a three-year period; and |
(b) |
Accelerated depreciation rates on know-how, patents and/or right to use a patent or certain other intangible property rights.
|
Item
11. |
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Item
12. |
DESCRIPTION
OF SECURITIES OTHER THAN EQUITY SECURITIES |
Item
13. |
DEFAULTS,
DIVIDEND ARREARAGES AND DELINQUENCIES |
Item
14. |
MATERIAL
MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
Item
15. |
CONTROLS
AND PROCEDURES |
Item
15A. |
CONTROLS
AND PROCEDURES |
Item
16. |
Reserved. |
Item
16A. |
AUDIT
COMMITTEE FINANCIAL EXPERT |
Item
16B. |
CODE
OF ETHICS |
Item
16C. |
PRINCIPAL
ACCOUNTANT FEES AND SERVICES |
2022 |
2021 |
|||||||||||||||
PWC |
KPMG |
PWC |
KPMG |
|||||||||||||
Audit Fees(1)
|
$ |
120,000 |
$ |
20,000 |
$ |
120,000 |
$ |
20,000 |
||||||||
Audit-Related Fees(2)
|
$ |
7,500 |
$ |
5,757 |
- |
- |
||||||||||
Tax Fees(3)
|
$ |
50,128 |
$ |
27,534 |
$ |
2,800 |
$ |
56,744 |
(1) |
Audit Fees consist of fees for professional services rendered for the audit of the Company's annual consolidated financial statements
and services normally provided by the independent auditor in connection with statutory and regulatory filings or engagements. |
(2) |
Audit-Related Fees consist of accounting consultation and consultation on financial accounting standards, not arising as part of
the audit, as well as procedures performed over registration statements. |
(3) |
Tax Fees are the aggregate fees billed for professional services rendered for tax compliance, transfer pricing studies, and tax advice
other than in connection with the Audit. Tax compliance involves audit of original and amended tax returns, tax planning and tax advice.
|
Item
16D. |
EXEMPTIONS
FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
Item
16E. |
PURCHASES
OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
Period
|
Total Number of Shares Purchased |
Average Price Paid per Share (US$) |
Total Number of Shares Purchased as Part of
Publicly Announced Plan |
Approximate Dollar Value that May Yet Be Purchased
Under the Plan (US$) |
||||||||||||
January 1, 2022 - January 31, 2022(1)
|
25,767 |
46.797 |
1,104,003 |
4,754,032 |
||||||||||||
February 1, 2022 - February 28, 2022 |
21,554 |
43.280 |
1,125,557 |
3,821,184 |
||||||||||||
March 1, 2022 - March 31, 2022 |
30,499 |
39.330 |
1,156,056 |
2,621,661 |
||||||||||||
April 1 2022 - April 30, 2022 |
2,300 |
39.154 |
1,158,356 |
2,531,605 |
Item
16F. |
CHANGE
IN REGISTRANT'S CERTIFYING ACCOUNTANT |
Item
16G. |
CORPORATE
GOVERNANCE |
• |
We are not required to distribute annual and quarterly reports directly to shareholders, but we do make our audited financial statements
available to our shareholders prior to our annual general meeting and furnish our quarterly and annual financial results with the SEC
on Form 6-K; |
• |
A majority of our Board of Directors may not necessarily be comprised of independent directors as defined in the NASDAQ Listing Rules,
however, a majority of our audit committee are independent directors in accordance with NASDAQ Listing Rule 5605(a)(2). Our directors
are elected to our Board of Directors in accordance with the new directors voting mechanism approved by our shareholders on the Annual
General Meeting which took place on June 8, 2016. According to said directors voting mechanism, directors are divided into three groups,
Group A, Group B and Group C. Each group is brought for re-election once every three years, on a rotating basis, such that at each annual
general meeting of the shareholders a given group of directors is brought for election, to serve on a continuous basis for a three-year
term, until the third annual general meeting following the meeting on which such group was elected for service and until their respective
successors are duly elected, at which point their term in office shall expire. At each annual general meeting, the annual general meeting
shall be entitled to elect directors to replace the directors whose three-year term in office has expired, and so on ad infinitum, so
that each year, the term in office of one group of directors shall expire. The nominations for director which are presented to our shareholders
are generally made by our board of directors. Pursuant to the Companies Law, one or more shareholders of a company holding at least one
percent of the voting power of the company may nominate a currently serving external director for an additional three-year term. Israeli
law does not require the adoption of, and our board has not adopted, a formal written charter or board resolution addressing the nomination
process and related matters. Compensation of our directors and other office holders of the Company is determined in accordance with Israeli
law; |
• |
Our audit committee has not adopted a formal written audit committee charter specifying the items enumerated in NASDAQ Listing Rule
5605(c)(1). We believe that the members of our audit committee comply with the requirements of the Israeli law, as well as NASDAQ Listing
Rule 5605(c)(3) and Rule 10A-3(b) of the general rules and regulations promulgated under the Securities Act of 1933. For a detailed discussion
please refer to "Item 6 – Directors, Senior Management and Employees – Audit Committee"; |
• |
As opposed to NASDAQ Listing Rule 5620(c)(3), which sets forth a minimum quorum for a shareholders meeting, under Israeli law a company
is entitled to determine in its articles of association the number of shareholders and percentage of holdings required for a quorum at
a shareholders meeting. Our current Articles of Association provide that a quorum of two or more shareholders, present in person or by
proxy, holding shares conferring in the aggregate more than thirty-three and a third (33 1/3 %) percent of the voting power of the Company
is required; |
• |
All related party transactions are approved in accordance with the requirements and procedures for approval of interested party acts
and transactions set forth in the Companies Law, and are not subject to the review process set forth in NASDAQ Listing Rule 5630. For
a detailed discussion please refer to "Item 10 – Additional Information – the Companies Law"; |
• |
We seek shareholder approval for all corporate action requiring such approval in accordance with the requirements of the Companies
Law rather than under the requirements of the NASDAQ Marketplace Rules, including (but not limited to) the appointment or termination
of auditors, appointment and dismissal of directors, approval of interested party acts and transactions requiring general meeting approval
as discussed above and a merger; |
• |
We follow the provisions of the Companies Law with respect to matters in connection with the composition and responsibilities of
our compensation committee, office holder compensation, and any required approval by the shareholders of such compensation. Israeli law,
and our amended and restated Articles of Association, do not require that a compensation committee composed solely of independent members
of our board of directors determine (or recommend to the board of directors for determination) an executive officer's compensation, as
required under NASDAQ listing standards related to compensation committee independence and responsibilities; nor do they require that
the Company adopt and file a compensation committee charter. Instead, our compensation committee has been established and conducts itself
in accordance with provisions governing the composition of and the responsibilities of a compensation committee as set forth in the Companies
Law. Furthermore, the compensation of office holders is determined and approved by our compensation committee and our board of directors,
and in certain circumstances by our shareholders, either in consistency with our previously approved Executive Compensation Policy or,
in special circumstances in deviation therefrom, taking into account certain considerations set forth in the Companies Law. The requirements
for approval by the shareholders for any office holder compensation, and the relevant majority or special majority for such approval,
are all as set forth in the Companies Law. Thus, we will seek shareholder approval for all corporate actions with respect to office holder
compensation requiring such approval under the requirements of the Companies Law, including seeking prior approval of the shareholders
for the Executive Compensation Policy and for certain office holder compensation, rather than seeking approval for such corporate actions
in accordance with NASDAQ Listing Rules; and |
• |
We do not necessarily seek shareholder approval for the establishment of, and amendments to, stock option or equity compensation
plans (as set forth in NASDAQ Listing Rule 5635(c)), as such matters are not subject to shareholder approval under Israeli law. We will
attempt to seek shareholder approval for our stock option or equity compensation plans (and the relevant annexes thereto) to the extent
required in order to ensure they are tax qualified for our employees in the United States. However, if such approval is not received,
then the stock option or equity compensation plans will continue to be in effect, but the Company will be unable to grant options to its
U.S. employees that qualify as Incentive Stock Options for U.S. federal tax purpose. Our stock option or other equity compensation plans
are also available to our non-U.S. employees, and provide features necessary to comply with applicable non-U.S. tax laws. |
• |
Our Board of Directors determined that the Company meets all of the requirements of the Israeli Companies Regulations (Relief for
Companies Whose Shares Are Registered for Trading Outside of Israel), 2000 (the "Regulations"),
pursuant to which Israeli companies which meet all of the following conditions may opt-out of certain Israeli regulations governing the
appointment of external directors and the composition of the audit and compensation committees (the "Israeli
Dahatz Rules"): (1) the Company's shares are listed on a foreign stock exchange which is referenced in Section 5A(c) of the Regulations,
which includes, among others, the New York Stock Exchange (NYSE); NASDAQ Global Select Market; and NASDAQ Global Market; (2) the Company
does not have a controlling shareholder; and (3) the Company complies with the requirements of the foreign securities laws and stock exchange
regulations relating to appointment of independent directors and composition of the audit and compensation committees as applicable to
companies which are incorporated under the laws of such foreign countries. The Board of Directors approved the opt-out of the Israeli
Dahatz Rules and follow the requirements of the NASDAQ Listing Rules and the rules under the Securities Act relating to appointment of
independent directors and composition of the audit and compensation committees which are applicable to companies which are incorporated
under the laws of the United States, effective July 29, 2020. |
Item
16H. |
MINE
SAFETY DISCLOSURE |
Item
16I. |
DISCLOSURE
REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
Item
17. |
FINANCIAL
STATEMENTS |
Item
18. |
FINANCIAL
STATEMENTS |
Item
19. |
EXHIBITS
|
1.1 |
4.1 |
4.2 |
4.3 |
4.4 |
4.5 |
4.6 |
4.7 |
4.10 |
8.1 |
11.1 |
12.1 |
12.2 |
13.1 |
13.2 |
15.1 |
15.2 |
(*) |
Filed herewith. |
SILICOM LIMITED | |||
By: |
/s/ Liron Eizenman | ||
Liron Eizenman | |||
Chief Executive Officer |
Consolidated Financial Statements as of December 31, 2022
|
Page
|
||
Report of Independent Registered Public Accounting Firm (PCAOB id:
|
F-2
|
|
Report of Independent Registered Public Accounting Firm (PCAOB id:
|
F-4
|
|
F-5
|
||
F-7
|
||
F-8
|
||
F-9
|
||
F-10
|
/s/
|
Certified Public Accountants (Isr.)
|
A member firm of PricewaterhouseCoopers International Limited
|
|
March 20, 2023
|
/s/
|
Member Firm of KPMG International
We have served as the Company’s auditor since 1997 to 2021.
|
|
March 15, 2021
|
Consolidated Balance Sheets as of December 31
|
2021
|
2022
|
|||||||||||
Note
|
US$ thousands
|
US$ thousands
|
||||||||||
Assets
|
||||||||||||
Current assets
|
||||||||||||
Cash and cash equivalents
|
3
|
|
|
|||||||||
Marketable securities
|
2F, 4
|
|
|
|||||||||
Accounts receivable:
|
||||||||||||
Trade, net
|
2G
|
|
|
|||||||||
Other
|
5
|
|
|
|||||||||
Inventories
|
6
|
|
|
|||||||||
Total current assets
|
|
|
||||||||||
Marketable securities
|
2F, 4
|
|
|
|||||||||
Assets held for employees' severance benefits
|
11
|
|
|
|||||||||
Deferred tax assets
|
15G
|
|
|
|||||||||
Property, plant and equipment, net
|
7
|
|
|
|||||||||
Intangible assets, net
|
8
|
|
|
|||||||||
Operating leases right-of-use, net
|
10
|
|
|
|||||||||
Goodwill
|
|
|
||||||||||
Total assets
|
|
|
Avi Eizenman
|
Liron Eizenman
|
Eran Gilad
|
||
Chairman of the Board of Directors
|
Chief Executive Officer
|
Chief Financial Officer
|
Consolidated Balance Sheets as of December 31 (Continued)
|
2021
|
2022
|
|||||||||||
Note
|
US$ thousands
|
US$ thousands
|
||||||||||
Liabilities and shareholders' equity
|
||||||||||||
Current liabilities
|
||||||||||||
Trade accounts payable
|
|
|
||||||||||
Other accounts payable and accrued expenses
|
9
|
|
|
|||||||||
Operating lease liabilities
|
10
|
|
|
|||||||||
Total current liabilities
|
|
|
||||||||||
Long-term liabilities
|
||||||||||||
Operating lease liabilities
|
10
|
|
|
|||||||||
Liability for employees' severance benefits
|
11
|
|
|
|||||||||
Deferred tax liabilities
|
15G
|
|
|
|||||||||
Total liabilities
|
|
|
||||||||||
Shareholders' equity
|
12
|
|||||||||||
Ordinary shares, ILS
|
||||||||||||
|
|
|
||||||||||
Additional paid-in capital
|
|
|
||||||||||
Treasury shares (at cost)
|
(
|
)
|
(
|
)
|
||||||||
Retained earnings
|
|
|
||||||||||
Total shareholders' equity
|
|
|
||||||||||
Total liabilities and shareholders’ equity
|
|
|
Consolidated Statements of Operations for the Year Ended December 31
|
2020
|
2021
|
2022
|
||||||||||||||
US$ thousands
|
||||||||||||||||
Note
|
Except for share and per share data
|
|||||||||||||||
Sales
|
2N, 13
|
|
|
|
||||||||||||
Cost of sales
|
|
|
|
|||||||||||||
Gross profit
|
|
|
|
|||||||||||||
Operating expenses
|
||||||||||||||||
Research and development
|
|
|
|
|||||||||||||
Sales and marketing
|
|
|
|
|||||||||||||
General and administrative
|
|
|
|
|||||||||||||
Total operating expenses
|
|
|
|
|||||||||||||
Operating income
|
|
|
|
|||||||||||||
Financial income, net
|
14
|
|
(
|
)
|
|
|||||||||||
Income before income taxes
|
|
|
|
|||||||||||||
Income taxes
|
15
|
|
|
|
||||||||||||
Net income
|
|
|
|
|||||||||||||
Income per share:
|
||||||||||||||||
Basic income per ordinary share (US$)
|
2U
|
|
|
|
|
|||||||||||
Diluted income per ordinary share (US$)
|
|
|
|
|||||||||||||
Weighted average number of ordinary shares used to compute basic income per share (in thousands)
|
|
|
|
|||||||||||||
Weighted average number of ordinary shares used to compute diluted income per share (in thousands)
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Changes in Shareholders' Equity
|
Ordinary shares
|
Additional paid-in capital
|
Treasury shares(3)
|
Retained earnings
|
Total shareholders’ equity
|
||||||||||||||||||||
Number
of shares(1)
|
US$ thousands
|
|||||||||||||||||||||||
Balance at January 1, 2020
|
|
|
|
(
|
)
|
|
|
|||||||||||||||||
Exercise of options and RSUs(2)
|
|
*
|
|
|
|
|
||||||||||||||||||
Purchase of treasury shares
|
(
|
)
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Share-based compensation
|
-
|
|
|
|
|
|
||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2020
|
|
|
|
(
|
)
|
|
|
|||||||||||||||||
Purchase of treasury shares
|
(
|
)
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Reissuance of treasury shares under share-based compensation plan
|
|
*
|
|
|
|
|
||||||||||||||||||
Share-based compensation
|
-
|
|
|
|
|
|
||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2021
|
|
|
|
(
|
)
|
|
|
|||||||||||||||||
Purchase of treasury shares
|
(
|
)
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Reissuance of treasury shares under share-based compensation plan
|
|
|
(
|
)
|
|
(
|
)
|
|
||||||||||||||||
Share-based compensation
|
-
|
|
|
|
|
|
||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2022
|
|
|
|
(
|
)
|
|
|
(1)
|
|
||||||
(2)
|
|
||||||
(3)
|
Company shares held by the Company. Presented as a reduction of equity at their cost to the Company.
The treasury shares have no rights.
|
||||||
*
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F - 8
Consolidated Statements of Cash Flows for the Year Ended December 31
|
2020
|
2021
|
2022
|
||||||||||
US$ thousands
|
||||||||||||
Cash flows from operating activities
|
||||||||||||
Net income
|
|
|
|
|||||||||
Adjustments required to reconcile net income to net cash provided by (used in) operating activities:
|
||||||||||||
Depreciation and amortization
|
|
|
|
|||||||||
Impairment of intangible assets
|
|
|
|
|||||||||
Write-down of obsolete inventory
|
|
|
|
|||||||||
Changes in marketable securities
|
|
|
|
|
(
|
)
|
||||||
Share-based compensation expense
|
|
|
|
|||||||||
Deferred taxes, net
|
(
|
)
|
|
|
||||||||
Changes in assets and liabilities:
|
||||||||||||
Accounts receivable - trade
|
|
(
|
)
|
|
||||||||
Accounts receivable - other
|
(
|
)
|
|
|
||||||||
Change in liability for employees' severance benefits, net
|
|
|
|
|||||||||
Inventories
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Trade accounts payable
|
(
|
)
|
|
(
|
)
|
|||||||
Other accounts payable and accrued expenses
|
|
|
(
|
)
|
||||||||
Net cash provided by (used in) operating activities
|
|
|
(
|
)
|
||||||||
Cash flows from investing activities
|
||||||||||||
Proceeds from short term bank deposits, net
|
|
|
|
|||||||||
Purchase of property, plant and equipment
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Investment in intangible assets
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Proceeds from maturity of marketable securities
|
|
|
|
|||||||||
Purchases of marketable securities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Other
|
||||||||||||
Net cash provided by investing activities
|
|
|
|
|||||||||
Cash flows from financing activities
|
||||||||||||
Exercise of options
|
|
|
|
|||||||||
Purchase of treasury shares
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Proceeds from reissuance of treasury shares upon exercise of options
|
|
|
|
|||||||||
Net cash used in financing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Effect of exchange rate changes on cash balances held
|
|
|
(
|
)
|
||||||||
Increase in cash and cash equivalents
|
|
|
|
|||||||||
Cash and cash equivalents at beginning of year
|
|
|
|
|||||||||
Cash and cash equivalents at end of year
|
|
|
|
|||||||||
Supplementary cash flow information
|
||||||||||||
A. Non-cash transactions:
|
||||||||||||
Recognition of right of use assets and lease liabilities
|
|
|
|
|||||||||
Investments in property, plant and equipment
|
|
|
|
|||||||||
|
|
|
||||||||||
B. Cash paid (received) during the year for:
|
||||||||||||
Income taxes
|
|
|
(
|
)
|
The accompanying notes are an integral part of these consolidated financial statements.
F - 9
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
The significant accounting policies, which are applied consistently throughout the periods presented, are as follows:
A. |
Financial statements in US dollars
|
B. |
Basis of presentation |
F - 10
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
C. |
Estimates and assumptions |
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include revenue recognition over time, credit loss, income taxes, impairment of inventories, marketable securities, impairment of goodwill, intangible assets and the assumptions used to estimate the fair value of share-based compensation.
D. |
Cash and cash equivalents |
E. |
Short-term bank deposits |
F. |
Marketable securities |
The Company recognizes current expected credit losses for financial assets held at amortized cost. The Company uses forward-looking information to calculate credit loss estimates.
F - 11
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 2 - Summary of significant Accounting Policies (cont’d)
G. |
Trade accounts receivable, net |
The Company presents accounts receivable in the consolidated balance sheets net of allowance for expected credit losses for potential uncollectible amounts. The Company estimates the collectability of accounts receivable balances and adjust the allowance for expected credit losses based on the Company's assessment of collectability by reviewing accounts receivable on an aggregated basis where similar characteristics exist and on an individual basis when it identifies specific customers with known disputes or collectability issues. The Company also considers a number of factors to assess collectability, including the past due status, creditworthiness of the specific customer, payment history and reasonable and supportable forecasts of future economic conditions.
H. |
Inventories
|
I. |
Assets held for employees’ severance benefits
|
J. |
Property, plant and equipment |
|
%
|
Machinery and equipment
|
|
Office furniture and equipment
|
|
Leasehold improvements
|
|
*
|
Over the shorter term of the lease or the useful life of the asset
|
F - 12
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 2 - Summary of significant Accounting Policies (cont’d)
K. |
Goodwill and other intangible assets |
The Company performs its quantitative goodwill impairment test by comparing the fair value of its reporting unit with its carrying value. If the reporting unit’s carrying value is determined to be greater than its fair value, an impairment charge is recognized for the amount by which the carrying value exceeds the reporting unit’s fair value. If the fair value of the reporting unit is determined to be greater than its carrying amount, the applicable goodwill is not impaired.
Intangible assets that are not considered to have an indefinite useful life are amortized over their estimated useful lives in proportion to the economic benefits realized. This accounting policy results in amortization of such intangible assets in the straight-line method.
For the years ended December 31, 2020, 2021 and 2022, no impairment losses were recorded.
L. |
Impairment of long-lived assets |
F - 13
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
M. |
Leases |
After lease commencement, the Company measures the lease liability at the present value of the remaining lease payments using the discount rate determined at lease commencement (as long as the discount rate hasn’t been updated as a result of a reassessment event). The Company subsequently measures the ROU asset at the present value of the remaining lease payments, adjusted for the remaining balance of any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term.
The Company’s lease agreements have remaining lease terms of
F - 14
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 2 - Summary of significant Accounting Policies (cont’d)
N. |
Revenue recognition
|
O. |
Cost of sales
|
P. |
Research and development costs and capitalized software development costs
|
F - 15
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 2 - Summary of significant Accounting Policies (cont’d)
Q. |
Allowance for product warranty |
R. |
Treasury shares |
S. |
Income taxes |
T. |
Share-based compensation |
F - 16
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 2 - Summary of significant Accounting Policies (cont’d)
U. |
Basic and diluted earnings per share |
The following table summarizes information related to the computation of basic and diluted income per ordinary share for the years indicated.
|
|
Year ended December 31
|
|
|||||||||
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|||
Net income attributable to ordinary shares (US$ thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares outstanding used in basic income per ordinary share calculation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add of outstanding dilutive potential ordinary shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares outstanding
used in diluted income per ordinary share calculation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per ordinary shares (US$)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income per ordinary shares (US$)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares related to options and RSUs excluded from
the diluted earnings per share calculation because of anti-dilutive effect
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 17
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
V. |
Comprehensive Income |
W. |
Fair Value Measurements |
F - 18
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
X. |
Concentrations of risks |
Y. |
Liabilities for loss contingencies |
|
|
December 31
|
|
|||||
|
|
2021
|
|
|
2022
|
|
||
|
|
US$ thousands
|
|
|||||
|
|
|
|
|
|
|
||
Cash
|
|
|
|
|
|
|
|
|
Cash equivalents *
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
F - 19
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Gross
|
Gross
|
|||||||||||||||
unrealized
|
unrealized
|
|||||||||||||||
Amortized
|
holding
|
holding
|
Aggregate
|
|||||||||||||
cost basis**
|
gains
|
(losses)
|
fair value*
|
|||||||||||||
US$ thousands
|
||||||||||||||||
At December 31, 2022
|
||||||||||||||||
Held to maturity:
|
||||||||||||||||
Corporate debt securities and government debt securities
|
||||||||||||||||
Current
|
|
|
(
|
)
|
|
|||||||||||
Non-Current (1 to 3 years)
|
|
|
(
|
)
|
|
|||||||||||
|
|
(
|
)
|
|
||||||||||||
At December 31, 2021
|
||||||||||||||||
Held to maturity:
|
||||||||||||||||
Corporate debt securities and government debt securities
|
||||||||||||||||
Current
|
|
|
(
|
)
|
|
|||||||||||
Non-Current (1 to 4 years)
|
|
|
(
|
)
|
|
|||||||||||
|
|
(
|
)
|
|
*
|
|
**
|
|
|
The accrued interest is presented as part of other receivables on the balance sheet.
|
F - 20
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 4 - Marketable Securities (Cont’d)
Activity in marketable securities in 2022
|
US$ thousands
|
|||
Balance at January 1, 2021
|
|
|||
Purchases of marketable securities
|
|
|||
Changes in marketable securities, net |
(
|
)
|
||
Proceeds from maturity of marketable securities
|
(
|
)
|
||
Balance at January 1, 2022
|
|
|||
Purchases of marketable securities
|
|
|||
Changes in marketable securities, net |
(
|
)
|
||
Proceeds from maturity of marketable securities
|
(
|
)
|
||
Balance at December 31, 2022
|
|
Less than 12 months
|
12 months or more
|
Total
|
||||||||||||||||||||||
Unrealized Losses
|
Fair value
|
Unrealized Losses
|
Fair value
|
Unrealized Losses
|
Fair value
|
|||||||||||||||||||
Held to maturity:
|
||||||||||||||||||||||||
Corporate debt securities and government debt securities
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|
F - 21
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
|
|
December 31
|
|
|||||
|
|
2021
|
|
|
2022
|
|
||
|
|
US$ thousands
|
|
|||||
|
|
|
|
|
|
|
||
Advances to suppliers
|
|
|
|
|
|
|
|
|
Government authorities
|
|
|
|
|
|
|
|
|
Prepaid expense
|
|
|
|
|
|
|
|
|
Other receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31
|
|
|||||
|
|
2021
|
|
|
2022
|
|
||
|
|
US$ thousands
|
|
|||||
|
|
|
|
|
|
|
||
Raw materials and components
|
|
|
|
|
|
|
|
|
Products in process
|
|
|
|
|
|
|
|
|
Finished products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the years ended December 31, 2020, 2021 and 2022, the Company recorded inventory write-downs in the amount of US$
|
|
December 31
|
|
|||||
|
|
2021
|
|
|
2022
|
|
||
|
|
US$ thousands
|
|
|||||
|
|
|
|
|
|
|
|
|
Machinery and equipment
|
|
|
|
|
|
|
|
|
Office furniture and equipment
|
|
|
|
|
|
|
|
|
Leasehold improvements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
(
|
)
|
|
|
(
|
)
|
|
|
|
|
|
|
|
|
|
Property, Plant and equipment, net
|
|
|
|
|
|
|
|
|
Depreciation expense for the years ended December 31, 2020, 2021 and 2022 were US$
F - 22
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
December 31
|
||||||||||||
2021
|
2022
|
|||||||||||
Useful life
|
US$ thousands
|
|||||||||||
Original cost:
|
||||||||||||
Capitalization of software development costs
|
|
|
|
|||||||||
Licenses
|
|
|
|
|||||||||
|
|
|||||||||||
Accumulated amortization:
|
||||||||||||
Capitalization of software development costs
|
|
|
||||||||||
Licenses
|
|
|
||||||||||
|
|
|||||||||||
Intangible assets, net:
|
||||||||||||
Capitalization of software development costs
|
|
|
||||||||||
Licenses
|
|
|
||||||||||
|
|
Note 9 - Other accounts payable and accrued expenses
|
December 31
|
||||||||
2021
|
2022
|
|||||||
US$ thousands
|
||||||||
Accrued expenses
|
|
|
||||||
Employee benefits
|
|
|
||||||
Government authorities
|
|
|
||||||
Other payables
|
|
|
||||||
|
|
F - 23
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
A.
|
The components of operating lease cost for the year ended December 31, 2020, 2021 and 2022 were as follows:
|
Year ended
December 31
|
||||||||||||
2020
|
2021
|
2022
|
||||||||||
US$ thousands
|
||||||||||||
Operating lease costs (mainly plant and offices)
|
|
|
|
|||||||||
Variable lease payments not included in the lease liability
|
|
|
|
|||||||||
Short-term lease cost
|
|
|
|
|||||||||
Total operating lease cost
|
|
|
|
B.
|
Supplemental cash flow information related to operating leases was as follows:
|
Year ended
December 31
|
||||||||||||
2020
|
2021
|
2022
|
||||||||||
US$ thousands
|
||||||||||||
Cash paid for amounts included in the measurement of lease liabilities:
|
||||||||||||
Operating cash flows from operating leases
|
|
|
|
|||||||||
Right-of-use assets obtained in exchange for lease liabilities (non-cash):
|
||||||||||||
Operating leases
|
|
|
|
C. Supplemental balance sheet information related to operating leases was as follows:
|
|
December 31
|
|
|||||
|
|
2021
|
|
|
2022
|
|
||
|
|
US$ thousands
|
|
|||||
Operating leases:
|
|
|
|
|
|
|
|
|
Operating leases right-of-use
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current operating lease liabilities
|
|
|
|
|
|
|
|
|
Non-current operating lease liabilities
|
|
|
|
|
|
|
|
|
Total operating lease liabilities
|
|
|
|
|
|
|
|
|
F - 24
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
|
|
December 31
|
|
|||||
|
|
2021
|
|
|
2022
|
|
||
|
|
US$ thousands
|
|
|||||
|
|
|
|
|
|
|
|
|
Weighted average remaining lease term (years)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average discount rate
|
|
|
|
%
|
|
|
|
%
|
|
|
December 31,
2022
|
|
|
|
|
US$ thousands
|
|
|
|
|
|
|
|
2023
|
|
|
|
|
2024
|
|
|
|
|
2025
|
|
|
|
|
2026
|
|
|
|
|
After 2026
|
|
|
|
|
Total operating lease payments
|
|
|
|
|
Less: imputed interest
|
|
|
(
|
)
|
Present value of lease liabilities
|
|
|
|
|
F - 25
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
A. |
Under Israeli law and labor agreements, Silicom is required to make severance payments to retired or dismissed employees and to employees leaving employment in certain other circumstances.
|
B. |
According to Section 14 to the Severance Pay Law ("Section 14") the payment of monthly deposits by a company into recognized severance and pension funds or insurance policies releases it from any additional severance obligation to the employees that have entered into agreements with the company pursuant to such Section 14. Commencing July 1, 2008, the Company has entered into agreements with a majority of its employees in order to implement Section 14. Therefore, as of that date, the payment of monthly deposits by the Company into recognized severance and pension funds or insurance policies releases it from any additional severance obligation to those employees that have entered into such agreements and therefore the Company incurs no additional liability since that date with respect to such employees. Amounts accumulated in the pension funds or insurance policies pursuant to Section 14 are not supervised or administrated by the Company and therefore neither such amounts nor the corresponding accrual are reflected in the balance sheet.
|
C. |
Consequently, the assets held for employees' severance benefits reported on the balance sheet, in respect of deposits for those employees who have signed agreements pursuant to Section 14, represent the redemption value of deposits made through June 30, 2008. The liability for employee severance benefits, with respect to those employees, represents the liability of the Company for employees' severance benefits as of June 30, 2008.
|
D. |
Expenses recorded with respect to employees' severance payments for the years ended December 31, 2020, 2021 and 2022, mainly attributed to Section 14, were US$
|
F - 26
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
A. |
On October 21, 2013 the Board resolved to adopt the Global Share Incentive Plan (2013) (the "2013 Plan") and to reserve up to
|
|
B. |
Options or RSUs granted to Israeli residents may be granted under Section 102 of the Israeli Income Tax Ordinance pursuant to which the awards of options, or the ordinary shares issued upon their exercise, must be deposited with a trustee for at least two years following the date of grant. Under Section 102, any tax payable by an employee from the grant or exercise of the awards is deferred until the transfer of the awards or ordinary shares by the trustee to the employee or upon the sale of the awards or ordinary shares.
|
|
Capital gains on awards granted under the plans are subjected to tax of
|
||
Gains which are not capital gains on awards under the plans are subjected to regular tax rates on individuals, and the Company is entitled to a tax deduction for such gains.
|
F - 27
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 12 - Shareholders' Equity (cont'd)
C. |
During 2017, 2020 and 2022, the Company granted
|
1. |
The vesting period of the RSUs ranges between
|
|
2. |
The fair value of RSUs is estimated based on the market value of the Company’s stock on the date of grant, less an estimate of dividends that will not accrue to RSUs holders prior to vesting. |
|
3. |
The Company recognizes compensation expenses on these RSUs based on estimated grant date fair value, with the following assumptions:
|
2017
|
2020
|
2022 | |
Expected dividend yield
|
|
|
F - 28
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 12 - Shareholders' Equity (cont'd)
D. |
On January 31, 2019, the Company granted, in the aggregate,
|
1. |
The exercise price for the options (per ordinary share) was US$
|
|
2. |
The Company recognizes compensation expenses on these options based on estimated grant date fair value using the Binomial option-pricing model with the following assumptions: |
Average Risk-free interest rate (a)
|
|
Expected dividend yield
|
|
Average expected volatility (b)
|
|
Termination rate |
|
Suboptimal factor (c)
|
|
(a)
|
Risk-free interest rate represents risk free US$ zero-coupon US Government Bonds at time of grant.
|
(b)
|
Expected average volatility represents a weighted average standard deviation rate for the price of the Company’s ordinary shares on the NASDAQ National Market.
|
(c)
|
Suboptimal factor represents the multiple of the increase in the market share price on the day of grant of the option which, should it come to pass, will lead to exercise of the option by the employee. It is the average suboptimal factor of the Company and similar companies.
|
F - 29
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 12 - Shareholders' Equity (cont'd)
E. |
On June 8, 2020, the Company granted, in the aggregate,
|
1. |
The exercise price for the options (per ordinary share) was US$
|
|
2. |
The Company recognizes compensation expenses on these options based on estimated grant date fair value using the Binomial option-pricing model with the following assumptions: |
Average Risk-free interest rate (a)
|
|
Expected dividend yield
|
|
Average expected volatility (b)
|
|
Termination rate |
|
Suboptimal factor (c)
|
|
(a)
|
Risk-free interest rate represents risk free US$ zero-coupon US Government Bonds at time of grant.
|
(b)
|
Expected average volatility represents a weighted average standard deviation rate for the price of the Company’s ordinary shares on the NASDAQ National Market.
|
(c)
|
Suboptimal factor represents the multiple of the increase in the market share price on the day of grant of the option which, should it come to pass, will lead to exercise of the option by the employee. It is the average suboptimal factor of the Company and similar companies.
|
F - 30
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 12 - Shareholders' Equity (cont'd)
F. |
On June 3, 2021, the Company granted, in the aggregate,
|
1. |
The exercise price for the options (per ordinary share) was US$
|
|
2. |
The Company recognizes compensation expenses on these options based on estimated grant date fair value using the Binomial option-pricing model with the following assumptions:
|
Average Risk-free interest rate (a)
|
|
Expected dividend yield
|
|
Average expected volatility (b)
|
|
Termination rate |
|
Suboptimal factor (c)
|
|
(a)
|
Risk-free interest rate represents risk free US$ zero-coupon US Government Bonds at time of grant.
|
(b)
|
Expected average volatility represents a weighted average standard deviation rate for the price of the Company’s ordinary shares on the NASDAQ National Market.
|
(c)
|
Suboptimal factor represents the multiple of the increase in the market share price on the day of grant of the option which, should it come to pass, will lead to exercise of the option by the employee. It is the average suboptimal factor of the Company and similar companies.
|
F - 31
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 12 - Shareholders' Equity (cont'd)
G. |
On January 27, 2022, the Company granted, in the aggregate,
|
1. |
The exercise price for the options (per ordinary share) was US$
|
|
2. |
The Company recognizes compensation expenses on these options based on estimated grant date fair value using the Monte Carlo option-pricing model with the following assumptions:
|
Average Risk-free interest rate (a)
|
|
Expected dividend yield
|
|
Average expected volatility (b)
|
|
Termination rate |
|
Suboptimal factor (c)
|
|
(a)
|
Risk-free interest rate represents risk free US$ zero-coupon US Government Bonds at time of grant.
|
(b)
|
Expected average volatility represents a weighted average standard deviation rate for the price of the Company’s ordinary shares on the NASDAQ National Market.
|
(c)
|
Suboptimal factor represents the multiple of the increase in the market share price on the day of grant of the option which, should it come to pass, will lead to exercise of the option by the employee. It is the average suboptimal factor of the Company and similar companies.
|
F - 32
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 12 - Shareholders' Equity (cont'd)
H. |
On June 7, 2022, the Company granted, in the aggregate,
|
1. |
The exercise price for the options (per ordinary share) was US$
|
|
2. |
The Company recognizes compensation expenses on these options based on estimated grant date fair value using the Monte Carlo option-pricing model with the following assumptions:
|
Average Risk-free interest rate (a)
|
|
Expected dividend yield
|
|
Average expected volatility (b)
|
|
Termination rate |
|
Suboptimal factor (c)
|
|
(a)
|
Risk-free interest rate represents risk free US$ zero-coupon US Government Bonds at time of grant.
|
(b)
|
Expected average volatility represents a weighted average standard deviation rate for the price of the Company’s ordinary shares on the NASDAQ National Market.
|
(c)
|
Suboptimal factor represents the multiple of the increase in the market share price on the day of grant of the option which, should it come to pass, will lead to exercise of the option by the employee. It is the average suboptimal factor of the Company and similar companies.
|
F - 33
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 12 - Shareholders' Equity (cont'd)
I. |
On July 1, 2022, the Company granted, in the aggregate, |
1. |
The exercise price for the options (per ordinary share) was US$ |
|
2. |
The Company recognizes compensation expenses on these options based on estimated grant date fair value using the Monte Carlo option-pricing model with the following assumptions:
|
|
Average Risk-free interest rate (a)
|
|
Expected dividend yield
|
|
Average expected volatility (b)
|
|
Termination rate |
|
Suboptimal factor (c)
|
|
(a)
|
Risk-free interest rate represents risk free US$ zero-coupon US Government Bonds at time of grant.
|
(b)
|
Expected average volatility represents a weighted average standard deviation rate for the price of the Company’s ordinary shares on the NASDAQ National Market.
|
(c)
|
Suboptimal factor represents the multiple of the increase in the market share price on the day of grant of the option which, should it come to pass, will lead to exercise of the option by the employee. It is the average suboptimal factor of the Company and similar companies.
|
F - 34
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 12 - Shareholders' Equity (cont'd)
J. |
The following table summarizes information regarding stock options as at December 31, 2022: |
Options outstanding
|
Options exercisable
|
||||||||||||||||
Weighted average
|
Weighted average
|
||||||||||||||||
remaining
|
remaining
|
||||||||||||||||
Exercise price
|
Number
|
contractual life
|
Number
|
contractual life
|
|||||||||||||
US$
|
of options
|
(in years)
|
of options
|
(in years)
|
|||||||||||||
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|||||||||||||
|
|
The aggregate intrinsic value of options outstanding as of December 31, 2021 and 2022 is US$
The aggregate intrinsic value of options exercisable as of December 31, 2021 and 2022 is US$
The total intrinsic value of options exercised during the year ended December 31, 2021 and 2022, is US$
F - 35
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 12 - Shareholders' Equity (cont'd)
K. |
The stock option activity under the abovementioned plans is as follows: |
Weighted
|
||||||||||||
Weighted
|
average
|
|||||||||||
Number
|
average
|
grant date
|
||||||||||
of options
|
exercise price
|
fair value
|
||||||||||
US$
|
US$
|
|||||||||||
Balance at January 1, 2020
|
|
|||||||||||
Granted
|
|
|
|
|||||||||
Exercised
|
(
|
)
|
|
|
||||||||
Forfeited
|
(
|
)
|
|
|
||||||||
Balance at December 31, 2020
|
|
|||||||||||
Granted
|
|
|
|
|||||||||
Exercised
|
(
|
)
|
|
|
||||||||
Forfeited
|
(
|
)
|
|
|
||||||||
Balance at December 31, 2021
|
|
|||||||||||
Granted
|
|
|
|
|||||||||
Exercised
|
(
|
)
|
|
|
||||||||
Forfeited
|
(
|
)
|
|
|
||||||||
Balance at December 31, 2022
|
|
|||||||||||
Exercisable at December 31, 2022
|
|
F - 36
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 12 - Shareholders' Equity (cont'd)
L. |
The Restricted Share Units activity under the abovementioned plans is as follows: |
Weighted
|
||||||||
Number of
|
average
|
|||||||
Restricted
|
grant date
|
|||||||
Share Units
|
fair value
|
|||||||
US$
|
||||||||
Balance at January 1, 2020
|
|
|||||||
Granted
|
|
|
||||||
Vested
|
(
|
)
|
|
|||||
Balance at December 31, 2020
|
|
|||||||
Granted
|
|
|
||||||
Vested
|
|
|
||||||
Balance at December 31, 2021
|
|
|||||||
Granted
|
|
|
||||||
Forfeited
|
(
|
)
|
|
|||||
Vested
|
(
|
)
|
|
|||||
Balance at December 31, 2022
|
|
F - 37
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 12 - Shareholders' Equity (cont'd)
M. |
During 2020, 2021 and 2022, the Company recorded share-based compensation expenses. The following summarizes the allocation of the stock-based compensation expenses: |
Year ended December 31
|
||||||||||||
2020
|
2021
|
2022
|
||||||||||
US$ thousands
|
||||||||||||
Cost of sales
|
|
|
|
|||||||||
Research and development costs
|
|
|
|
|||||||||
Selling and marketing expenses
|
|
|
|
|||||||||
General and administrative expenses
|
|
|
|
|||||||||
|
|
|
F - 38
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
A.
|
Information on sales by geographic distribution:
|
The Company has one operating segment.
|
Sales are attributed to geographic distribution based on the location of the ultimate customer:
|
Year ended December 31
|
||||||||||||
2020
|
2021
|
2022
|
||||||||||
US$ thousands
|
||||||||||||
USA
|
|
|
|
|||||||||
North America - other
|
|
|
|
|||||||||
Israel
|
|
|
|
|||||||||
Europe
|
|
|
|
|||||||||
Asia-Pacific
|
|
|
|
|||||||||
|
|
|
B. Sales to single ultimate customers exceeding 10% of sales (US$ thousands):
|
|
Year ended December 31
|
|
|||||||||
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|||
|
|
US$ thousands
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|||
Customer "A"
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer "B"
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer "C"
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 39
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 13 - Geographic areas and major customers (cont'd)
C. Information on Long-Lived Assets - Property, Plant and Equipment and ROU assets by geographic areas:
|
|
Year ended December 31
|
|
|||||
|
|
2021
|
|
|
|
2022
|
|
|
|
|
US$ thousands
|
|
|||||
|
|
|
|
|
|
|
|
|
North America
|
|
|
|
|
|
|
|
|
Europe
|
|
|
|
|
|
|
|
|
Israel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 40
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 14 - Financial Income (Expenses), Net
Year ended December 31
|
||||||||||||
2020
|
2021
|
2022
|
||||||||||
US$ thousands
|
||||||||||||
Interest income
|
|
|
|
|||||||||
Changes in marketable securities, net |
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Exchange rate differences, net
|
(
|
)
|
(
|
)
|
|
|||||||
Bank charges
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
(
|
)
|
|
F - 41
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
A. |
Measurement of results for tax purposes under the Israeli Income Tax Regulations (Rules for Maintaining Accounting Records of Foreign Invested Companies and Certain Partnerships and Determining Their Taxable Income) - 1986
|
|
As a "foreign invested company" (as defined in the Israeli Law for the Encouragement of Capital Investments-1959), the taxable income or loss and the tax basis of assets and liabilities of the Company’s Israeli operations are denominated in US Dollars.
|
||
B. |
Corporate tax rate in Israel
|
|
The regular corporate tax rate applied to taxable income of Israeli companies is
|
||
C. |
Tax benefits under the Israeli Law for the Encouragement of Capital Investments, 1959 (hereinafter - the "Law")
|
1. |
On December 29, 2010 the Knesset approved the Economic Policy Law for 2011-2012, which includes an amendment to the Law for the Encouragement of Capital Investments – 1959 (hereinafter – "the Amendment to the Law"). The Amendment to the Law is effective from January 1, 2011 and its provisions will apply to preferred income derived or accrued in 2011 and thereafter by a Preferred Company, per the definition of these terms in the Amendment to the Law.
|
|
Companies can choose to not be included in the scope of the Amendment to the Law and to stay in the scope of the law before its amendment until the end of the benefits period.
Under the Amendment to the Law, upon an irrevocable election made by a company, a uniform corporate tax rate will apply to all preferred income of such company. The Company elected to apply the uniform corporate tax rate as of 2014. From 2017 onwards, the uniform tax rate is to be
Should the Company derive income from sources other than the Preferred Company, such income will be taxable at the regular corporate tax rates for the applicable year.
|
F - 42
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 15 - Taxes on Income (cont’d)
C. |
Tax benefits under the Israeli Law for the Encouragement of Capital Investments, 1959 (hereinafter - the "Law") (cont'd)
|
On December 29, 2016 the Israeli Parliament (the "Knesset") enacted the "Economic Efficiency Law (Legislative Amendments for Achieving Budget Objectives in the Years 2017 and 2018) – 2016" in which the Law was also amended (hereinafter: “the Amendment”). The Amendment added new tax benefit tracks for a “preferred technological enterprise” and a “special preferred technological enterprise” which award reduced tax rates to a technological industrial enterprise for the purpose of encouraging activity relating to the development of qualifying intangible assets.
The benefits will be awarded to a “preferred company” that has a “preferred technological enterprise” or a “special preferred technological enterprise” with respect to taxable “preferred technological income” per its definition in the Law.
Preferred technological income that meets the conditions required in the law, will be subject to a reduced corporate tax rate of
On June 14, 2017 the Knesset Finance Committee approved "Encouragement of Capital Investment Regulations (Preferred Technological Income and Capital Gain of Technological Enterprise) – 2017" (hereinafter: “the Regulations”), which provides rules for applying the “preferred technological enterprise” and “special preferred technological enterprise” tax benefit tracks, including the Nexus formula that provides the mechanism for allocating the technological income eligible for the benefits.
Should the Company derive income from sources other than the “preferred technological enterprise”, such income will be taxable at the "Preferred Company" tax rate (for manufacturing activity in Israel) or regular corporate tax rates for the applicable year.
As a result of the aforesaid legislation, starting 2021 the Company implement the “preferred technological enterprise” tax benefit track.
|
F - 43
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 15 - Taxes on Income (cont’d)
C. |
Tax benefits under the Israeli Law for the Encouragement of Capital Investments, 1959 (hereinafter - the "Law") (cont'd)
|
2.
|
In the event of distribution by the Company of dividends out of its retained earnings that were generated prior to the 2014 tax year and were tax exempt under the "Approved Enterprise" or "Benefited Enterprise" status, the Company would be subjected to a maximum of
|
|
Out of the Company’s retained earnings as of December 31, 2022, approximately US$
|
||
On November 15, 2021, the Israeli Parliament released its 2021-2022 Budget Law (“2021 Budget Law”). The 2021 Budget Law introduces a new dividend ordering rule that apportions every dividend between previously tax-exempt and previously taxed income. Consequently, distributions (including deemed distributions as per Section 51(h)/51B of the Investment Law) may entail additional corporate tax liability to the distributing company. Effective August 15, 2021, dividend distributions will be treated as if made on a pro-rata basis from all types of earnings, including Exempt Profits. If such tax-exempt income is distributed, it would be taxed at the reduced corporate tax rate applicable to such income. |
F - 44
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
D. |
Taxation of the subsidiaries |
1. |
The subsidiary Silicom Inc. files tax returns with US federal tax authorities and with state tax authorities in the states of New Jersey, California, Virginia, New York, New Mexico, Tennessee, Texas and Illinois.
The federal corporate income tax rate is
|
|
2. |
The subsidiary Silicom Denmark is taxed according to the tax laws in Denmark, subject to corporate tax of |
|
3. |
The Company has not provided for Israeli income tax and foreign withholding taxes on US$
The Company currently has no plans to repatriate those funds and intends to indefinitely reinvest them in its non-Israeli operations. The unrecognized deferred tax liability associated with these temporary differences was approximately US$
|
E. |
Tax assessments |
1. |
For the Israeli jurisdiction the Company has final tax assessments for all years up to and including the tax year ended December 31, 2017.
|
|
2. |
For the US federal jurisdiction, Silicom Inc. has final tax assessments for all years up to and including the tax year ended December 31, 2018. For the New Jersey and California state jurisdictions, Silicom Inc. has final tax assessments for all years up to and including the tax year ended December 31, 2017. For the Virginia, Tennessee, New York and New Mexico state jurisdictions, Silicom Inc. has final tax assessments for all years up to and including the tax year ended December 31, 2019. For the Texas state jurisdiction, Silicom Inc. has open tax assessments for the years 2018 through 2022. For the Illinois state jurisdiction, Silicom Inc. has open tax assessments for the years 2020 through 2022.
|
|
3. |
For the Danish jurisdiction, Silicom Denmark has final tax assessments for all years up to and including the tax year ended December 31, 2016.
|
F - 45
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 15 - Taxes on Income (cont’d)
F. |
Income before income taxes and income taxes expense (benefit) included in the consolidated statements of operations |
Year ended December 31
|
||||||||||||
2020
|
2021
|
2022
|
||||||||||
US$ thousands
|
||||||||||||
Income before income taxes:
|
||||||||||||
Israel
|
|
|
|
|||||||||
Foreign jurisdictions
|
|
|
|
|||||||||
|
|
|
||||||||||
Current taxes:
|
||||||||||||
Israel
|
|
|
|
|||||||||
Foreign jurisdictions
|
|
|
|
|||||||||
|
|
|
||||||||||
Current tax (benefits) expenses relating to prior years:
|
||||||||||||
Israel
|
|
(
|
)
|
(
|
)
|
|||||||
Foreign jurisdictions
|
(
|
)
|
(
|
)
|
|
|||||||
(
|
)
|
(
|
)
|
(
|
)
|
|||||||
Deferred taxes:
|
||||||||||||
Israel
|
|
|
|
|||||||||
Foreign jurisdictions
|
(
|
)
|
(
|
)
|
|
|||||||
(
|
)
|
|
|
|||||||||
Income tax expense
|
|
|
|
F - 46
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
G. |
Deferred tax assets and liabilities |
December 31
|
December 31
|
|||||||
2021
|
2022
|
|||||||
US$ thousands
|
US$ thousands
|
|||||||
Deferred tax assets:
|
||||||||
Accrued employee benefits
|
|
|
||||||
Research and development costs
|
|
|
||||||
Share based compensation
|
|
|
||||||
Intangible assets
|
|
|
||||||
Operating lease liabilities
|
|
|
||||||
Other
|
|
|
||||||
Total deferred tax assets
|
|
|
||||||
Deferred tax liabilities:
|
||||||||
Intangible assets
|
(
|
)
|
(
|
)
|
||||
Goodwill*
|
(
|
)
|
(
|
)
|
||||
Operating leases right-of-use, net
|
(
|
)
|
(
|
)
|
||||
Other
|
(
|
)
|
|
|||||
Total deferred tax liabilities
|
(
|
)
|
(
|
)
|
||||
Net deferred tax assets
|
|
|
||||||
In Israel
|
|
|
||||||
Foreign jurisdictions
|
(
|
)
|
(
|
)
|
||||
Net deferred tax assets
|
|
|
||||||
Non-current deferred tax assets
|
|
|
||||||
Non-current deferred tax liabilities
|
(
|
)
|
(
|
)
|
* The recognized goodwill is deductible for income tax purposes for 10 years.
F - 47
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
H. |
Reconciliation of the statutory tax expense to actual tax expense |
Year ended December 31
|
||||||||||||
2020
|
2021
|
2022
|
||||||||||
US$ thousands
|
||||||||||||
Income before income taxes
|
|
|
|
|||||||||
Statutory tax rate in Israel
|
|
%
|
|
%
|
|
%
|
||||||
|
|
|
||||||||||
Increase (decrease) in taxes resulting from:
|
||||||||||||
Non-deductible operating expenses
|
|
|
|
|||||||||
Prior years adjustments
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Tax effect due to "Preferred Enterprise" status
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Statutory rate differential
|
|
(
|
)
|
|
||||||||
Other
|
(
|
)
|
(
|
)
|
|
|||||||
Income tax expense
|
|
|
|
F - 48
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
I. |
Accounting for uncertainty in income taxes The accounting literature clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The standards prescribe a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. It also requires significant judgment in determining what constitutes an individual tax position as well as assessing the outcome of each tax position.
During 2020, 2021 and 2022 the Company and its subsidiaries did not have any significant unrecognized tax benefits and thus, no related interest and penalties were accrued.
In addition, the Company and its subsidiaries do not expect that the amount of unrecognized tax benefits will change significantly within the next twelve months.
|
F - 49
1) |
The term of Lease will be thirty-six (36) months, from March 1, 2022, through February 28, 2025 (the "Term of Lease").
|
1) |
During the Term of the Lease: NIS 72 per square meter, plus VAT. The aggregate monthly rental payment for the Additional Premises of 589.5 square meters shall be NIS
42,444, plus VAT. This amount is in addition to the required monthly rent per the Klimotech Agreement.
|
2) |
In addition, the Company shall pay the Lessor a monthly payment of NIS 472, plus VAT, for each parking space.
|
3) |
In addition, the Company shall pay management fees in the amount of NIS 18.5, plus vat, per square meter of the total leased area under the Klimotech Agreement and
the Additional Premises, for a total leased area of 2,148.5 square meters, which amounts to a monthly payment of NIS 39,747.25, plus VAT.
|
1) | The remaining terms of the Lease Agreement will be identical to the terms of the Klimotech Agreement. |
January 1st, 2023 - December 31st, 2023
|
$8,938.00
|
January 1st, 2024 - December 31st, 2024
|
$9,117.00
|
7/19/2022
|
7/26/2022
|
||||
Paul McFall, CTO, Silicom
Tenant
|
Date
|
Charles Lewis, Abington Place, LLC
Landlord
|
Date |
1) |
The term of Lease will be sixty (60) months, from November 1, 2022, through November 1, 2027 (the "Term of Lease").
|
2) |
We will have two options for extension of the Lease Agreement:
|
a) | Option A – 3-year extension, commencing August 1, 2027, through August 1, 2030, with a 7% percent increase of the monthly rent payment. |
b) | Option B – an additional two years following the termination of option A, commencing November 1, 2030, through November 1, 2032. There will not be an increase of the monthly rent during option B. |
3) |
The Lessor shall have the right to terminate the Agreement at the occurrence of a fundamental breach of the Agreement by the Company, as defined in the full
Agreement.
|
1) |
The Premises shall be used for industrial and storage purposes only.
|
1) |
Monthly rent payment of NIS 24,458, plus VAT, plus CPI.
|
1) |
During the Term of Lease, we will be responsible for payments with respect to use of electricity, water, gas, air conditioning, telephone, security,
maintenance services, cleaning services and other miscellaneous service-related expenses.
|
2) |
During the Term of Lease, we will be responsible for payments of all taxes, whether municipal, governmental or any kind of obligatory payments, projections,
tolls, and others which are with respect to the Premises.
|
1) |
We will be liable for any injury, damage or loss caused by us to the Premises or any other person or corporation, resulting from the holding and/or using the
Premises or any other action or omission by us or someone on our behalf.
|
2) |
We will be responsible for the current maintenance of the Premises and will make the repairs for the damages for which we are responsible under the Lease.
|
3) |
We will not make any changes in the Premises without the Lessor's prior written permission.
|
1) |
We will pay all taxes and fees related to the property and/or business.
|
2) |
We will be responsible for procuring any necessary licenses from the authorities.
|
3) |
We are liable for VAT, or any other taxes required on any and all payments required under the Lease Agreement, including electricity, maintenance, security
services, and cleaning services.
|
1) |
We may not assign or transfer our rights pursuant to the Lease Agreement without the prior written consent of the Lessor. We may not put a lien or pledge on
the property.
|
2) |
We may only use the Premises exactly as outlined in the Lease Agreement.
|
1) |
We will procure certain insurance policies as described in the Lease Agreement.
|
2) |
We are liable for any injury of any kind to third parties related to our use of the Premises or relating to business operations and will indemnify the Lessor
and/or their management company for any loss, litigation or obligation incurred due to injuries to third parties, including for attorneys' fees related to same.
|
1) |
Belated surrender of the Premises will obligate us to pay the Lessor compensation in an amount to equal three-days rent for each day of late surrender,
without derogating other rights the Lessor may have, whether due to the Agreement or any other instruction.
|
1) |
Notwithstanding the above, the Lessor may terminate the Lease Agreement and we will be obligated to vacate the Premises within 14 days, upon the occurrence of
a material breach, or a non-material breach which will not be cured within 14 days, as defined in the Lease Agreement.
|
2) |
Notwithstanding the above, the occurrence of one or more of the following events shall entitle the Lessor to terminate the Lease Agreement and demand that we
immediately vacate the Premises:
|
a. |
The issuance of a court order ordering to cancel the Lease Agreement, which was not revoked within 30 days of its issuance.
|
b. |
A Temporary or permanent lien was issued regarding our rights under this Lease Agreement, which was not cancelled within 30 days.
|
c. |
A motion for liquidation was filed against us or by us, and such motion was not revoked canceled within 30 days of its submission.
|
d. |
We abandon the Premises or cease to use it for over 30 straight days for any reason to due with us (aside for times of warfare or other emergencies).
|
For the avoidance of doubt, the occurrence of any of the above does not release us from the obligation to make all
payments under this Lease Agreement.
|
e. |
Not following the management company's instructions, and not remedying such deviation within 7 days of a written notice.
|
f. |
An attempt to assign rights against the instructions of this Lease Agreement.
|
3) |
If such termination shall occur, we will be obligated to pay NIS 75,000, plus VAT and CPI, in liquidated damages, in addition to any other damages which the
Lessor may be entitled to receive.
|
1) |
We are required to provide a deposit equal to three (3) months of rental payments and management fees, plus VAT and CPI.
|
1) |
The Lease will commence on November 1, 2020.
|
2) |
The Premises shall be used for office purposes only.
|
1) |
2nd floor - Monthly rent payment of DKK 27,483 plus VAT.
|
2) |
The monthly payment for the entire leased area, which amounts to approximately 1800 square meters, is DKK 99,165 plus VAT.
|
1) |
During the term of the Lease Agreement, we will be responsible for payments with respect to various operating costs.
|
1) |
We will be responsible for all internal maintenance and required repairs of the Premises.
|
2) |
We will be liable for any injury, damage or loss caused by us to the Premises or any other person or corporation, resulting from the holding and/or using the
Premises or any other action or omission by us or someone on our behalf.
|
3) |
We will be responsible for the current maintenance of the Premises and will make the repairs for the damages for which we are responsible under the Lease.
|
4) |
We will not make any changes in the Premises without the Lessor's prior written permission.
|
1) |
We will pay all taxes and fees related to the Premises.
|
2) |
We will be responsible for procuring any necessary licenses from the authorities.
|
3) |
We are liable for VAT, or any other taxes required on any and all payments required under the Lease Agreement, including electricity, heat, water, cleaning,
and other services.
|
1) |
We may not assign or transfer our rights pursuant to the Lease Agreement without the prior written consent of the Lessor. We may not put a lien or pledge on
the property.
|
2) |
We may only use the Premises exactly as outlined in the Lease Agreement.
|
1) |
The landlord is responsible for building and fire insurance.
|
2) |
We are liable for any injury of any kind to third parties related to our use of the Premises or relating to business operations and will indemnify the Lessor
and/or their management company for any loss, litigation or obligation incurred due to injuries to third parties, including for attorneys' fees related to same.
|
1) |
The Lease can be terminated with 6 months written notice.
|
2) |
If the Lease Agreement is terminated according to certain Danish law provisions (Section 69 of the Commercial Rent Act), we will need to vacate the Premises
immediately after the termination is recognized as legal, and we will be obligated to continue paying our rent per the Lease Agreement, until the Lessor has leased the Premises to another party.
|
1) |
We are required to provide a deposit equal to four (4) months of rental payments.
|
Company Name
|
Country of Incorporation
|
|
Silicom Connectivity Solutions, Inc.
|
The United States
|
|
Silicom Denmark A/S (Fiberblaze A/S)
|
Denmark
|
1. |
I have reviewed this annual report on Form 20-F of Silicom Ltd.;
|
(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the report that has
materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and
|
(a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the Company's ability to record, process, summarize and report financial information; and
|
(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial
reporting.
|
Date: April 27, 2023 |
|||
By:
|
/s/ Liron Eizenman | ||
Liron Eizenman | |||
Chief Executive Officer |
(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the report that has
materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and
|
(a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the Company's ability to record, process, summarize and report financial information; and
|
(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial
reporting.
|
Date: April 27, 2023 |
|||
By:
|
/s/ Eran Gilad | ||
Eran Gilad | |||
Chief Financial Officer |
1)
|
The Report fully complies with the requirements of sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: April 27, 2023 |
|||
By:
|
/s/ Liron Eizenman | ||
Liron Eizenman | |||
Chief Executive Officer |
1)
|
The Report fully complies with the requirements of sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: April 27, 2023 |
|||
By: | /s/ Eran Gilad |
||
Eran Gilad |
|||
Chief Financial Officer |
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