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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
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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
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Title of each class
|
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Trading Symbol(s)
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Name of each exchange on which registered
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Large accelerated filer ☐
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Accelerated filer ☐
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Emerging growth company
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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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1 | |
1 | ||
1 | ||
1 | ||
A.
|
[RESERVED]
|
1 |
B.
|
Capitalization
and Indebtedness |
1 |
C.
|
Reasons
for the Offer and Use of Proceeds |
1 |
D.
|
Risk
Factors |
1 |
22 | ||
A.
|
History
and Development of the Company |
22 |
B.
|
Business
Overview |
23 |
C.
|
Organizational
Structure |
28 |
D.
|
Property,
Plants and Equipment |
29 |
29 | ||
29 | ||
A.
|
Operating
Results |
29 |
B.
|
Liquidity
and Capital Resources |
32 |
C.
|
Research
and Development, Patents and Licenses |
34 |
D.
|
Trend
Information |
34 |
E.
|
Critical
Accounting Estimates |
34 |
35 | ||
A.
|
Directors
and Senior Management |
35 |
B.
|
Compensation
|
38 |
C.
|
Board
Practices |
39 |
D.
|
Employees
|
48 |
E.
|
Share
Ownership |
50 |
F.
|
Disclosure
of a Registrant’s Action to Recover Erroneously Awarded Compensation |
51 |
51 | ||
A.
|
Major
Shareholders |
51 |
B.
|
Related
Party Transactions |
52 |
C.
|
Interests
of Experts and Counsel |
54 |
55 | ||
A.
|
Consolidated
Statements and Other Financial Information |
55 |
B.
|
Significant
Changes |
56 |
56 | ||
A.
|
Offer
and Listing Details |
56 |
B.
|
Plan
of Distribution |
56 |
C.
|
MARKETS |
56 |
D.
|
Selling
Shareholders |
56 |
E.
|
Dilution
|
56 |
F.
|
Expense
of the Issue |
56 |
56 | ||
A.
|
Share
Capital |
56 |
B.
|
Memorandum
and Articles of Association |
56 |
C.
|
Material
Contracts |
57 |
D.
|
Exchange
Controls |
57 |
E.
|
Taxation
|
58 |
F.
|
Dividends
and Paying Agents |
66 |
G.
|
Statement
by Experts |
66 |
H.
|
Documents
on Display |
66 |
I.
|
Subsidiary
Information |
66 |
66 | ||
67 | ||
|
67 | |
67 | ||
67 | ||
67 | ||
68 | ||
68 | ||
68 | ||
69 | ||
69 | ||
69 | ||
69 | ||
69 | ||
70 | ||
70 | ||
INSIDER TRADER POLICY |
70 | |
CYBERSECURITY |
70 | |
71 | ||
71 | ||
71 |
ITEM 1. |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
ADVISERS |
ITEM 2. |
OFFER STATISTICS AND EXPECTED TIMETABLE
|
ITEM 3. |
KEY INFORMATION |
• |
We will likely require additional capital in the future, which may not be available to us. |
• |
We are dependent on one-of-a-kind machinery that may malfunction and may not be easily replaced. |
• |
Because competition in the PCB market is intense, our business, operating results and financial condition may be adversely affected.
|
• |
Rapid changes in the Israeli and international electronics industries and recessionary pressures may adversely affect our business.
|
• |
Our products and product components need to meet certain industry standards. |
• |
Key customers account for a significant portion of our revenues. The loss of a key customer would have an adverse impact on our business
results. |
• |
We are dependent upon a select number of suppliers for timely delivery of key raw materials and the loss of one or more of these
suppliers or delays in supply of these raw materials would adversely affect our manufacturing ability. If these suppliers delay
or discontinue the manufacture or supply of these raw materials, we may experience delays in production and shipments, increased costs
and cancellation of orders for our products. |
• |
Our results of operations may be adversely affected by currency fluctuations. |
• |
Unfavorable national and global economic conditions could adversely affect our business, operating results and financial condition.
|
• |
We expect that our business insurance policies will be more limited in scope and our premiums will be higher than in prior years,
which could cause us to decrease our insurance coverage. As a result, we may incur uninsured losses. |
• |
We are subject to environmental laws and regulations. Compliance with those laws and regulations requires us to incur costs and we
are subject to fines or other sanctions for non-compliance. |
• |
We have in the past been, and currently are, subject to claims and litigation relating to environmental matters. If we are
found to be in violation of environmental laws, we could be liable for damages and costs of remediation and may be subject to a halt in
production, which may adversely affect our business, operating results and financial condition. |
• |
We may fail to be in compliance with financial covenants in our unutilized lines of credit. |
• |
While we have been profitable in recent years, we may not be able to sustain long term profitable operations and may not have sufficient
resources to fund our operations in the future, |
• |
We may not succeed in our efforts to expand our activity in the U.S. and other foreign markets. If we are unsuccessful, our
future revenues and profitability would be adversely affected. |
• |
We may be subject to the requirements of the National Industrial Security Program Operating Manual for our facility security clearance,
which is a prerequisite to our ability to work on classified contracts for the U.S. government. |
• |
We may encounter difficulties with our international operations and sales that may have a material adverse effect on our sales and
profitability. |
• |
Compliance with the conditions of a new business permit issued to us in 2018, if required, may be costly. We may become subject to
certain sanctions, including significant fines, criminal proceedings and in an unlikely event an order shutting down our factory.
|
• |
Damage to our manufacturing facilities due to fire, natural disaster, or other events could materially adversely affect our business,
financial condition, insurance premiums and results of operations. |
• |
We are vulnerable to the general economic effects of epidemics, pandemics and other public health crises, such as the COVID-19 pandemic
which began in 2020. |
• |
Our quarterly operating results fluctuate significantly. Results of operations in any period should not be considered indicative
of the results to be expected for any future period. |
• |
Our products and related manufacturing processes are often highly complex and therefore we may be delayed in product shipments. Our
products may at times contain manufacturing defects, which may subject us to product liability and warranty claims. Our operating margins
may be affected as a result of price increases for our principal raw materials. |
• |
Increasing scrutiny and changing expectations from investors, lenders, customers and other market participants with respect to our
Environmental, Social and Governance policies may impose additional costs on us or expose us to additional risks. |
• |
We compete with PCB manufacturers in Asia whose manufacturing costs are lower than ours. |
• |
We may fail to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley
Act of 2002, which could have a material adverse effect on our operating results, investor confidence in our reported financial information,
and the market price of our ordinary shares. |
• |
We are required to comply with “conflict minerals” rules which impose costs on us, may make our supply chain more complex,
and could adversely impact our business. |
• |
Increased regulation associated with climate change and greenhouse gas emissions could impose significant additional costs on operations.
|
• |
Obstacles in our transition to a new enterprise resource planning system may adversely affect our business and results of operations
and the effectiveness of our internal control over financial reporting. |
• |
Breaches of network or information technology security, natural disasters or terrorist attacks could have an adverse effect on our
business. |
• |
Technological change may adversely affect the market acceptance of our products. |
• |
The measures we take in order to protect our intellectual property may not be effective or sufficient. |
• |
Claims that our products infringe upon the intellectual property of third parties may require us to incur significant costs.
|
• |
We are affected by increasing global inflation and higher interest rates which may increase our cost of goods and services and borrowing
costs. |
• |
If our workforce will be represented by a labor union we could incur additional costs or experience work stoppages as a result of
the renegotiation of our labor contracts. |
• |
From time to time, we may be named as a defendant in actions involving the alleged violation of labor laws
related to employment practices, wages and benefits. |
• |
Under current Israeli law, we may not be able to enforce covenants not to compete and therefore may be unable to prevent our competitors
from benefiting from the expertise of some of our former employees. |
• |
We depend on key personnel for the success of our business. |
• |
Our ability to have access to insurance programs for directors and officers may be curtailed,
which may adversely affect our ability to retain and attract directors and officers. |
• |
Our share price has been volatile in the past and may continue to be susceptible to significant market price and volume fluctuations
in the future. |
• |
The voting interest of Mr. Nissan, individually and through Nistec Golan, our controlling shareholder, may conflict with the interests
of other shareholders. |
• |
We may in the future be classified as a passive foreign investment company, or PFIC, which would subject our U.S. investors to adverse
tax rules. |
• |
We do not guarantee that dividends will continue to be distributed in the foreseeable future. |
• |
Political, economic and military instability in Israel, including due to the recent attack by Hamas and other terrorist organizations
and Israel’s war against them, may disrupt our operations and negatively affect our business condition, harm our results of operations
and adversely affect our share price. |
• |
Our results of operations may be negatively affected by the obligation of our personnel to perform military reserve service.
|
• |
Service and enforcement of legal process on us and our directors and officers may be difficult to obtain. |
• |
Provisions of Israeli law may delay, prevent or make difficult an acquisition of us, which could prevent a change of control and
therefore impact the price of our shares. |
• |
The rights and responsibilities of our shareholders are governed by Israeli law and differ in some respects from the rights and responsibilities
of shareholders under U.S. law. |
• |
The termination or reduction of tax and other incentives that the Israeli government provides to domestic companies may increase
the costs involved in operating a company in Israel. |
• |
the impact of possible recessionary environments or economic instability in multiple foreign markets; |
• |
changes in regulatory requirements and complying with a wide variety of foreign laws; |
• |
tariffs and other trade barriers; |
• |
the imposition of exchange or price controls or other restrictions on the conversion of foreign currencies; and |
• |
difficulties and costs of staffing and managing foreign operations. |
• |
the size and timing of significant orders and their fulfillment; |
• |
demand for our products and the mix of products purchased by our customers; |
• |
competition from lower priced manufacturers; |
• |
fluctuations in foreign currency exchange rates, primarily the NIS against the Dollar and the Euro; |
• |
manufacturing yield; |
• |
plant utilization; |
• |
availability of raw materials; |
• |
plant or line shutdowns to repair or replace malfunctioning manufacturing equipment; |
• |
the length of our sales cycles; |
• |
changes in our strategy; |
• |
the number of working days in the quarter; |
• |
changes in seasonal trends; and |
• |
general domestic and international economic and political conditions. |
• |
retain our executive officers and key technical personnel; |
• |
attract and retain additional qualified personnel to provide technological depth and support to enhance existing products and develop
new products; and |
• |
attract and retain highly skilled operations, marketing and financial personnel. |
• |
quarterly variations in our operating results; |
• |
operating results that vary from the expectations of securities analysts and investors; |
• |
changes in expectations as to our future financial performance, including financial estimates by securities analysts and investors;
|
• |
announcements of technological innovations or new products by us or our competitors; |
• |
announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital
commitments; |
• |
changes in the status of our intellectual property rights; |
• |
announcements by third parties of significant claims or proceedings against us; |
• |
announcements by governmental or regulatory authorities of significant investigations or proceedings against us; |
• |
additions or departures of key personnel; |
• |
changes in our cost structure due to factors beyond our control, such as new laws or regulations relating to environmental matters
and employment; |
• |
future sales of our ordinary shares; |
• |
our involvement in litigation; |
• |
general stock market price and volume fluctuations; |
• |
changes in the prices of our products and services; and |
• |
devaluation of the dollar against the NIS. |
ITEM 4. |
INFORMATION ON THE COMPANY |
ITEM 4A. |
UNRESOLVED STAFF COMMENTS
|
ITEM 5. |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
Year Ended December 31, |
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Revenues |
100 |
% |
100 |
% |
100 |
% | ||||||
Cost of revenues |
(71.9 |
) |
(79.1 |
) |
(79.6 |
) | ||||||
Gross profit |
28.1 |
20.9 |
20.4 |
|||||||||
Research and development expenses |
(0.2 |
) |
(0.2 |
) |
(0.2 |
) | ||||||
Selling, general and administrative
expenses |
(12.3 |
) |
(13.1 |
) |
(14.4 |
) | ||||||
Operating profit |
15.6 |
7.6 |
5.8 |
|||||||||
Financial income (expenses), net |
0.9 |
2.2 |
(1.4 |
) | ||||||||
Other income (loss), net |
-
|
-
|
0.1
|
|||||||||
Profit before income tax expense
|
16.5 |
9.8 |
4.5 |
|||||||||
Income tax benefit (expense) |
(2.9 |
) |
(1.7 |
) |
10.4
|
|||||||
Net profit |
13.6
|
8.1
|
14.9
|
Year Ended December 31,
|
||||||||||||||||||||
2023
|
2022
|
2021
|
2020
|
2019
|
||||||||||||||||
Dollar |
3.1 |
% |
13.15 |
% |
(3.27 |
)% |
(6.97 |
)% |
(7.79 |
)% | ||||||||||
Euro |
6.9 |
% |
6.62 |
% |
(10.76 |
)% |
(1.7 |
)% |
(9.63 |
)% |
Year ended December 31, |
2023
|
2022
|
2021
|
|||||||||
($ in thousands)
|
||||||||||||
Net cash provided by operating activities
|
8,862 |
3,829 |
3,875 |
|||||||||
Net cash used in investing activities
|
(2,959 |
) |
(3,029 |
) |
(1,647 |
) | ||||||
Net cash provided by (used in) financing activities |
(3,806 |
) |
(1,638 |
) |
2,124 |
|||||||
Effect of translation adjustments
|
(185 |
) |
(1,079 |
) |
196 |
|||||||
Net increase (decrease) in cash and cash equivalents |
1,912 |
(1,917 |
) |
4,548 |
||||||||
Cash and cash equivalents at beginning of year |
7,366 |
9,283 |
4,735 |
|||||||||
Cash and cash equivalents at end of year
|
9,278 |
7,366 |
9,283 |
ITEM 6. |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
Name |
Age |
Position | ||
Yitzhak Nissan (3)
|
74 |
Chairman of the Board of Directors | ||
Mordechai Marmorstein (1)(2)
|
77 |
Director | ||
David Rubner(4) |
83 |
Director | ||
Erez Meltzer(4) |
66 |
Director | ||
Revital Cohen-Tzemach |
40 |
Director | ||
Gad Dovev(1)(2)(3)(4)
|
77 |
External Director | ||
Ilana Lurie (1)(2)(3)(4)
|
51 |
External Director |
Name |
Age |
Position | ||
Eli Yaffe |
69 |
Chief Executive Officer | ||
Ron Freund |
59 |
Chief Financial Officer | ||
Yitzhak Zemach |
48 |
Director of Operations | ||
Oriel Sallary |
61 |
VP Sales and Marketing | ||
Sagi Balter |
43 |
VP Process Engineering | ||
Shlomi Kisluk |
49 |
VP Quality Assurance |
Salaries, fees,
commissions and bonuses |
Pension, retirement
and similar benefits | ||
All directors and executive officers as a group (consisting of 13 persons)
|
$2.1 million (1)
|
$0.4 million (2)
|
(1) |
During the year ended December 31, 2023, we paid each of our directors an annual fee of approximately $8,000 and an attendance
fee of $255 per meeting. These fees are included in the above amount. |
(2) |
The benefits amount includes expenses for automobiles and other benefits that we provide to certain of our executive officers.
|
Name of Officer |
Position of Officer |
Compensation for services (USD)(1)
|
||||||||||||||||
Base salary |
Benefits
and
Perquisites
(2) |
Equity-
Based
(3)
|
Total compensation |
|||||||||||||||
Yitzhak Nissan (4)
|
Chairman of the Board |
292,937 |
- |
- |
292,937 |
|||||||||||||
Eli Yaffe |
Chief Executive Officer |
278,128 |
311,045 |
96,691 |
685,864 |
|||||||||||||
Ron Freund |
Chief Financial Officer |
160,119 |
120,914 |
23,188 |
304,222 |
|||||||||||||
Yitzhak Zemach |
VP Operations |
149,606 |
135,119 |
26,728 |
311,453 |
|||||||||||||
Oriel Sallary |
Vice President of Worldwide Sales and Marketing |
113,793 |
109,038 |
6,609 |
229,440 |
|
(1) |
Cash compensation amounts denominated in NIS were converted into U.S. dollars at the
rate of NIS 3.69 per $1.00 (the average exchange rate in 2023). |
|||||||||||||||||||||||
|
(2) |
Amounts reported in this column include benefits and perquisites, including those
mandated by applicable law. Such benefits and perquisites may include, to the extent applicable, bonuses, car related expenses, managers’
insurance and pension funds, payments to the National Insurance Institute, advanced education funds, medical insurance, vacation allowance
and other customary benefits. Bonuses represent accrued but not yet paid bonus payments for 2023, based on several criteria, including
revenues, profit, employees’ safety, yield and on time deliveries. |
|||||||||||||||||||||||
(3) |
Represents the equity-based compensation expenses recorded in the company’s
consolidated financial statements for the year ended December 31, 2023 based on the options’ grant date fair value in accordance
with accounting guidance for equity-based compensation. |
||||||||||||||||||||||||
(4) |
Paid to Nistec as management fees. |
Country of Principal Executive Offices
|
Israel | |||
Foreign Private Issuer |
Yes | |||
Disclosure Prohibited under Home Country
Law |
No | |||
Total Number of Directors |
7 | |||
Part I: Gender Identity
|
Female |
Male |
Non-Binary |
Did Not Disclose
Gender
|
Directors |
2 |
5 |
0 |
0 |
Part II: Demographic
Background |
||||
Underrepresented Individual in Home Country
Jurisdiction |
0 | |||
LGBTQ+ |
0 | |||
Did Not Disclose Demographic Background
|
7 |
(i) |
the board of directors proposed the nominee and his appointment was approved by the shareholders in the manner required to appoint
external directors for their initial term; |
(ii) |
a shareholder holding 1% or more of the voting rights proposed the nominee, and the nominee is approved by a majority of the votes
cast by the shareholders of the company on the matter, excluding the votes of controlling shareholders and those who have a personal interest
in the matter as a result of their relationship with any controlling shareholder and excluding abstentions, provided that the aggregate
votes cast by shareholders who are not controlling shareholders and do not have a personal interest in the matter as a result of their
relationship with the controlling shareholders voted in favor of the reelection of the nominee constitute more than 2% of the voting rights
in the company, and provided further that at the time of such nomination or in the two years preceding such nomination, such external
director or his relative are neither the shareholder who proposed such nomination, or a shareholder holding 5% or more of the company's
issued share capital or voting power, in each case who, or whose controlling shareholder or any entity controlled by them (i) has business
relations with the company, or (ii) is a competitor of the company; or |
(iii) |
such external director nominates himself or herself for each such additional term and his or her election is approved at a shareholders
meeting by the same disinterested majority as required for the election of an external director nominated by a 1% or more shareholder
(as described above). |
i. |
a monetary obligation imposed on the office holder in favor of another person pursuant to a judgment, including a judgment given
in settlement or an arbitrator's award that has been approved by a court; |
ii. |
reasonable litigation expenses, including advocates’ professional fees, incurred by the office holder pursuant to an investigation
or a proceeding commenced against the office holder by a competent authority and that was terminated without an indictment and without
having a monetary charge imposed on the office holder in exchange for a criminal procedure (as such terms are defined in the Israeli Companies
Law), or that was terminated without an indictment but with a monetary charge imposed on the office holder in exchange for a criminal
procedure in a crime that does not require proof of criminal intent or in connection with a financial sanction; |
iii. |
reasonable litigation expenses, including advocates’ professional fees, incurred by the office holder or which the office holder
is ordered to pay by a court, in proceedings filed against the office holder by the company or on its behalf or by another person, or
in a criminal indictment in which the office holder is acquitted, or in a criminal indictment in which the office holder is convicted
of an offence that does not require proof of criminal intent; |
iv. |
expenses, including reasonable litigation expenses and legal fees, incurred by an office holder as a result of a proceeding instituted
against such office holder in relation to (A) infringements that may result in imposition of financial sanction pursuant to the provisions
of Chapter H'3 under the Israeli Securities Law or (B) administrative infringements pursuant to the provisions of Chapter H'4 under the
Israeli Securities Law or (C) infringements pursuant to the provisions of Chapter I'1 under the Israeli Securities Law; and |
v. |
payments to an injured party of infringement under Section 52ND(a)(1)(a) of the Israeli Securities Law. |
Name |
Number of Ordinary Shares Beneficially Owned |
Percentage of Outstanding Ordinary Shares (1)
|
||||||
Principal Shareholders |
||||||||
Yitzhak Nissan (2)
|
3,456,820 |
51.6 |
% | |||||
jhhsSenior Management and Directors |
||||||||
Eli Yaffe (1), (3)
|
62,730 |
* |
||||||
Ron Freund (4) |
36,000 |
* |
||||||
Yitzhak Zemach (5)
|
15,500 |
* |
||||||
Oriel Sallary (6)
|
9,309 |
* |
||||||
Sagi Balter (7) |
12,084 |
* |
||||||
Shlomi Kisluk (8)
|
8,000 |
* |
||||||
Mordechai Marmorstein (9)
|
20,000 |
* |
||||||
David Rubner (10)
|
20,000 |
* |
||||||
Erez Meltzer (11)
|
30,000 |
* |
||||||
Revital Cohen-Tzemach (12)
|
11,750 |
* |
||||||
Gad Dovev (13) |
30,000 |
* |
||||||
Ilana Lurie (14)
|
20,000 |
* |
||||||
All executive officers and directors as a group (13 persons)
(15) |
3,732,193 |
55.7 |
% |
F. |
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation. |
ITEM 7. |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|
Name |
Number of Ordinary Shares
Beneficially Owned (1)
|
Percentage
of Ownership (2)
|
||||||
Nistec Golan Ltd. (3)
|
3,291,596 |
49.1 |
% | |||||
Yitzhak Nissan (3)
|
165,224 |
2.5 |
% |
(1) |
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with
respect to securities. Ordinary shares relating to options or convertible notes currently exercisable or exercisable within 60 days
of the date of this table are deemed outstanding for computing the percentage of the person holding such securities but are not deemed
outstanding for computing the percentage of any other person. Except as indicated by footnote, and subject to community property
laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares shown as
beneficially owned by them. |
(2) |
The percentages shown are based on 6,704,830 ordinary shares issued and outstanding as of March 12, 2024 |
(3) |
Based on a Schedule 13D/A filed on January 4, 2024. Nistec Golan is an Israeli private company controlled by Yitzhak Nissan. Accordingly,
Mr. Nissan may be deemed to be the beneficial owner of the ordinary shares held directly by Nistec Golan. |
• |
Reimbursement of travel expenses (other than food and beverage expenses) while traveling internationally on behalf of our company,
provided that such reimbursement shall not exceed an aggregate amount of NIS 10,000 per calendar quarter. |
• |
Reimbursement of food and beverage expenses while traveling internationally on behalf of our company, against receipts, in accordance
with the Israeli Income Tax Regulations (Deduction of Certain Expenses), 5732-1972. |
i. |
The extension of the Amended PCB Purchase Procedure with Nistec Ltd.; |
ii. |
The extension of the amended general engagement terms, processes and restrictions of the Soldering and Assembly Services Procedure with
Nistec Ltd.; |
iii. |
The extension of the procedure under which we and Nistec Ltd. may jointly acquire certain services related to employees social
activities, marketing services and insurance. |
ITEM 8. |
FINANCIAL INFORMATION |
ITEM 9. |
THE OFFER AND LISTING |
ITEM 10. |
ADDITIONAL INFORMATION |
• |
broker-dealers; |
• |
financial institutions or financial services entities; |
• | certain insurance companies; |
• |
investors liable for alternative minimum tax; |
• |
regulated investment companies, real estate investment trusts, or grantor trusts; |
• | dealers or traders in securities, commodities or currencies; |
• |
tax-exempt organizations; |
• |
retirement plans; |
• |
S corporations: |
• |
pension funds; |
• |
certain former citizens or long-term residents of the United States; |
• |
non-resident aliens of the United States or taxpayers whose functional currency is not the U.S. dollar; |
• |
persons who hold ordinary shares through partnerships or other pass-through entities; |
• |
persons who acquire their ordinary shares through the exercise or cancellation of employee stock options or otherwise as compensation
for services; |
• |
direct, indirect or constructive owners of investors that actually or constructively own at least 10% of the total combined voting
power of our shares or at least 10% of our shares by value; or |
• |
investors holding ordinary shares as part of a straddle, appreciated financial position, a hedging transaction or conversion transaction.
|
• |
an individual who is a citizen or a resident of the United States; |
• |
a corporation or other entity taxable as a corporation for United States federal income tax purposes, created or organized in or
under the laws of the United States or any political subdivision thereof; |
• |
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or |
• |
a trust if the trust has validly elected to be treated as a U.S. person for U.S. federal income tax purposes or if (1) a court within
the United States is able to exercise primary supervision over the trust’s administration and (2) one or more U.S. persons have
the authority to control all of the substantial decisions of the trust. |
ITEM 11. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
|
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 |
• |
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of
the assets of our company; |
• |
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of our company are being made only in accordance with
authorizations of management and directors of our company; and |
• |
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our company’s
assets that could have a material effect on our financial statements. |
ITEM 16. |
[RESERVED] |
ITEM 16A. |
AUDIT COMMITTEE FINANCIAL EXPERT
|
ITEM 16B. |
CODE OF ETHICS |
ITEM 16C. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Services Rendered. |
2023 |
2022 |
||||||
Audit (1) |
$ |
102,000 |
$ |
98,000 |
||||
Audit Related Fees |
$ |
13,500 |
- |
|||||
Tax (2) |
$ |
6,000 |
$ |
6,000 |
||||
All other Fees (3)
|
$ |
5,000 |
- |
|||||
Total |
$ |
126,500 |
$ |
104,000 |
(1) |
Audit fees relate to audit services provided for each of the years shown in the table, including fees associated with the annual
audit, consultations on various accounting issues and audit services provided in connection with statutory or regulatory filings.
|
(2) |
Tax fees relate to services performed regarding tax compliance. |
(3) |
Other fees are fees for professional services other than audit or tax related fees. |
ITEM 16D. |
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
|
ITEM 16E. |
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
|
ITEM 16F. |
CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT
|
ITEM 16G. |
CORPORATE GOVERNANCE |
• |
The requirement to maintain a majority of independent directors, as defined under the NASDAQ Stock Market Rules. Instead, we
follow Israeli law and practice which requires that we appoint at least two external directors, within the meaning of the Israeli Companies
Law, to our board of directors. We have the mandated three independent directors, within the meaning of the rules of the SEC and
NASDAQ, on our audit committee. See Item 6C. “Directors, Senior Management and Employees - Board Practices - External and
Independent Directors.” |
• |
The requirements regarding the directors’ nominations process. Under Israeli law and practice, our board of directors
is authorized to recommend to our shareholders director nominees for election. See Item 6C. –
“Directors, Senior Management and Employees - Board Practices - Election of Directors.” |
• |
The requirement regarding the quorum for any meeting of shareholders. Instead, we follow Israeli law and practice which provides
that, unless otherwise provided by a company’s articles of association, the quorum required for a general meeting of shareholders
is at least two shareholders present who hold, in the aggregate, 25% of the company’s voting rights. Our articles of association
provide that the quorum required for a shareholder meeting consists of at least two shareholders present in person or represented by proxy
who hold or represent, in the aggregate, at least 33% of the voting rights of the issued share capital. See Item 10B. “Additional
Information - Memorandum and Articles of Association- Annual and Extraordinary Meetings of Shareholders.” |
ITEM 16H. |
MINE SAFETY DISCLOSURE |
ITEM 16I. |
DISCLOSURES REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
|
ITEM16J. |
INSIDER TRADING POICIES |
ITEM16K. |
CYBERSECURITY |
ITEM 17. |
FINANCIAL STATEMENTS |
ITEM 18. |
FINANCIAL STATEMENTS |
Reports of Independent Registered Public Accounting Firms |
F - 2 | |
|
Consolidated Balance Sheets |
F - 4-F - 5 |
|
Consolidated Statements of Comprehensive Income (loss) |
F - 6 |
Consolidated Statements of Changes in Shareholders’ Equity |
F - 7 | |
|
Consolidated Statements of Cash Flows |
F - 8-F - 9 |
|
Notes to the Consolidated Financial Statements |
F - 10-F - 36 |
ITEM 19. |
EXHIBITS |
(1) |
Filed as Exhibit 1.1 to our registration statement on Form F-1, registration number 333-229740, as amended,
and incorporated herein by reference. |
(2) |
Included in Exhibit 99.1 to our Report of Foreign Issuer on Form 6-K filed on September
12, 2013 and incorporated herein by reference. |
(3) |
Filed as Exhibit 2.1 to our registration statement on Form F-1, registration number
333-229740, as amended, and incorporated herein by reference. |
(4) |
Filed as Exhibit 2.2 to our Annual Report on Form 20-F for the year ended December
31, 2019, and incorporated herein by reference. |
(5) |
Included as Exhibit A to Exhibit 99.1 to our Report of Foreign Issuer on Form 6-K filed on September 6,
2017 and incorporated herein by reference. |
(6) |
Included as Exhibit A to Exhibit 99.1 to our Report of Foreign Issuer on Form 6-K filed on August 8, 2023
and incorporated herein by reference |
(7) |
Filed as Exhibit 4.13 to our Annual Report on Form 20-F for the year ended December 31, 2014, and incorporated
herein by reference. |
(8) |
Included as Exhibit A to Exhibit 99.1 to our Report of Foreign Issuer on Form 6-K filed on August 8, 2023
and incorporated herein by reference |
(9) |
Filed as Exhibit 8.1 to our Annual Report on Form 20-F for the year ended December 31, 2021, and incorporated
herein by reference. |
* |
Filed herewith. |
Page
|
||
F - 2
|
||
(Firm Name: Brightman Almagor Zohar & Co / PCAOB ID No.
|
||
F - 4-F - 5
|
||
F - 6
|
||
F - 7
|
||
F - 8-F - 9
|
||
F - 10-F - 36
|
• |
We obtained an understanding of the process and assumptions used by management to develop the inventory excess and obsolete write offs, through inquiries of the Company's personnel and evaluation of the Company's methodology for determining inventory that is excess or obsolete.
|
• |
For a sample of inventory items with an associated write off for excess and obsolescence, we evaluated whether the write-off for each selection was reasonable by obtaining and evaluating evidence of past usage and aging of the inventory item.
|
• |
We tested the accuracy of the Company’s inventory valuation calculations utilizing its defined methodology and evaluated the completeness, accuracy, and relevance of the underlying data used in management's estimate.
|
• |
We compared management’s prior-year inventory reserve estimate to the amount of inventory written off or otherwise disposed of during the current year to consider potential bias in the determination of the inventory reserves.
|
December 31,
|
||||||||||||
Note
|
2023
|
2022
|
||||||||||
ASSETS
|
||||||||||||
CURRENT ASSETS:
|
||||||||||||
Cash and cash equivalents
|
3
|
|
|
|||||||||
Short-term bank deposits
|
4
|
|
|
|||||||||
Trade receivables (net of allowance for credit losses of $
|
2f
|
|
|
|
||||||||
Inventories
|
5
|
|
|
|||||||||
Other accounts receivable and prepaid expenses
|
6
|
|
|
|||||||||
Total current assets
|
|
|
||||||||||
LONG-TERM ASSETS:
|
||||||||||||
Severance pay fund
|
11
|
|
|
|||||||||
Restricted deposit
|
|
|
||||||||||
Long-term tax receivables
|
18
|
|
|
|||||||||
Deferred tax asset, net
|
18
|
|
|
|||||||||
Operating lease right-of-use assets
|
12
|
|
|
|||||||||
|
|
|||||||||||
Property and equipment, net
|
7
|
|
|
|||||||||
Total long-term assets
|
|
|
||||||||||
Total assets
|
|
|
F - 4
December 31,
|
||||||||||||
Note
|
2023
|
2022
|
||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||||||
CURRENT LIABILITIES:
|
||||||||||||
Current maturities of long-term debt
|
8
|
|
|
|||||||||
Trade payables
|
|
|
||||||||||
Other accounts payable and accrued expenses
|
9
|
|
|
|||||||||
Short-term operating lease liabilities
|
12
|
|
|
|||||||||
Total current liabilities
|
|
|
||||||||||
LONG-TERM LIABILITIES:
|
||||||||||||
Long-term debt, excluding current maturities
|
10
|
|
|
|||||||||
Accrued severance pay
|
11
|
|
|
|||||||||
Long-term operating lease liabilities
|
12
|
|
|
|||||||||
Total long-term liabilities
|
|
|
||||||||||
COMMITMENTS AND CONTINGENT LIABILITIES
|
13
|
|
|
|||||||||
SHAREHOLDERS' EQUITY:
|
||||||||||||
Share capital -
|
||||||||||||
Ordinary shares of NIS
Authorized:
|
|
|
||||||||||
Additional paid-in capital
|
|
|
||||||||||
Foreign currency translation adjustments
|
|
|
||||||||||
Capital reserves
|
|
|
||||||||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||||||
Total shareholders' equity
|
14
|
|
|
|||||||||
Total liabilities and shareholders' equity
|
|
|
F - 5
ELTEK LTD. AND ITS SUBSIDIARIES
Year ended
December 31,
|
||||||||||||||||
Note
|
2023
|
2022
|
2021
|
|||||||||||||
Revenues
|
16b
|
|
|
|
|
|||||||||||
Cost of revenues
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||
Gross profit
|
|
|
|
|||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development, net
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||
Selling, general and administrative
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||
Operating income
|
|
|
|
|||||||||||||
Financial income (expenses), net
|
17
|
|
|
(
|
)
|
|||||||||||
Other income, net
|
|
|
|
|||||||||||||
Income before income taxes
|
|
|
|
|||||||||||||
Income tax benefit (expenses), net
|
18
|
(
|
)
|
(
|
)
|
|
||||||||||
Net income
|
|
|
|
|||||||||||||
Other comprehensive income:
|
||||||||||||||||
Foreign currency translation adjustments
|
(
|
)
|
(
|
)
|
|
|||||||||||
Total comprehensive income
|
|
|
|
|||||||||||||
Basic income per ordinary share attributable to Eltek Ltd. shareholders
|
15
|
|
|
|
||||||||||||
Diluted income per ordinary share attributable to Eltek Ltd. shareholders
|
15
|
|
|
|
F - 6
Company's shareholders
|
||||||||||||||||||||||||||||
Ordinary shares
|
Amount
|
Additional paid-in capital
|
Accumulated other comprehensive income
|
Capital reserves
|
Accumulated deficit
|
Total
|
||||||||||||||||||||||
Balance as of January 1, 2021
|
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||||
Share-based compensation
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Foreign currency translation adjustments
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance as of December 31, 2021
|
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||||
Share-based compensation
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Dividend distribution
|
-
|
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
Exercise of stock options
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Foreign currency translation adjustments
|
-
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance as of December 31, 2022
|
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||||
Share-based compensation
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Dividend distribution
|
-
|
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
Exercise of stock options
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Foreign currency translation adjustments
|
-
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance as of December 31, 2023
|
|
|
|
|
|
(
|
)
|
|
F - 7
ELTEK LTD. AND ITS SUBSIDIARIES
Year ended
December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net income
|
|
|
|
|||||||||
Adjustments required to reconcile net income to net cash flows provided by operating activities:
|
||||||||||||
Depreciation
|
|
|
|
|||||||||
Share-based compensation
|
|
|
|
|||||||||
Changes in deferred income tax assets, net
|
|
|
(
|
)
|
||||||||
Decrease (increase) in long-term tax receivables
|
(
|
)
|
|
(
|
)
|
|||||||
Increase (decrease) in employee severance benefits, net
|
|
(
|
)
|
(
|
)
|
|||||||
Decrease (increase) in trade receivables, net
|
(
|
)
|
(
|
)
|
|
|||||||
Decrease in operating lease right-of-use assets
|
|
|
|
|||||||||
Decrease in operating lease liabilities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Decrease (increase) in other receivables and prepaid expenses
|
(
|
)
|
|
(
|
)
|
|||||||
Increase in inventories
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Increase (decrease) in trade payables
|
|
|
(
|
)
|
||||||||
Increase (decrease) in other liabilities and accrued expenses
|
|
|
(
|
)
|
||||||||
Net cash provided by operating activities
|
|
|
|
|||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchase of property and equipment
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Investment in short-term bank deposits
|
(
|
)
|
|
|
||||||||
Restricted deposit
|
|
(
|
)
|
(
|
)
|
|||||||
Proceeds from disposals of property and equipment and repayment from insurance
|
|
|
|
|||||||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Short-term bank credit, net
|
|
|
(
|
)
|
||||||||
Exercise of options
|
|
|
|
|||||||||
Dividend distribution
|
(
|
)
|
(
|
)
|
|
|||||||
Repayment of property and equipment payables
|
|
|
(
|
)
|
||||||||
Proceeds from long-term loans
|
|
|
|
|||||||||
Repayment of long-term loans
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net cash provided by (used in) financing activities
|
(
|
)
|
(
|
)
|
|
F - 8
Year ended
December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Effect of exchange rate on cash and cash equivalents
|
(
|
)
|
(
|
)
|
|
|||||||
Increase in cash and cash equivalents
|
|
(
|
)
|
|
||||||||
Cash and cash equivalents at the beginning of the year
|
|
|
|
|||||||||
Cash and cash equivalents at end of the year
|
|
|
|
|||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES:
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Interest
|
|
|
|
|||||||||
Income taxes
|
|
|
|
|||||||||
Supplemental Disclosures of non-cash activity:
|
||||||||||||
Purchase of property and equipment in credit
|
|
|
|
|||||||||
Right-of-use assets recognized with corresponding lease liabilities
|
|
|
|
F - 9
NOTE 1:- |
DESCRIPTION OF BUSINESS AND GENERAL
|
a. |
General:
|
- |
Eltek Ltd. ("the Company") was established in Israel in 1970, and its ordinary shares have been publicly traded on the NASDAQ Capital Market ("NASDAQ") since 1997. Eltek Ltd. and its subsidiaries (Eltek USA Inc. and Eltek Europe GmbH) are collectively referred to as "the Company". As of December 31, 2023, Eltek Europe GmbH is inactive.
|
- |
The Company manufactures, markets and sells custom made printed circuit boards ("PCBs"), including high density interconnect, flex-rigid and multi-layered boards. The principal markets of the Company are in Israel, Europe, India and North America.
|
- |
The Company markets its products mainly to the medical technology, defense and aerospace, industrial, telecom and networking equipment industries, as well as to contract electronic manufacturers.
|
- |
The Company is controlled by Nistec Golan Ltd ("Nistec Golan"). Nistec Golan is controlled indirectly by Mr. Yitzhak Nissan, who owns, indirectly through Nistec Holdings Ltd., all of the shares of Nistec Ltd and Nistec Golan (Nistec Holdings Ltd. and/or any of its subsidiaries are referred to as "Nistec").
|
b. |
Financial covenants:
|
c. |
Business risks and condition:
|
- |
The Company’s business is subject to numerous risks including, but not limited to, the impact of currency exchange rates (mainly NIS/US$), the Company's ability to implement its sales and manufacturing plans, the impact of competition from other companies, the Company's ability to receive regulatory clearance or approval to market its products, changes in regulatory environment, domestic and global economic conditions and industry conditions, and compliance with environmental laws and regulations.
|
- |
As of December 31, 2023, the Company's working capital amounted to $
|
F - 10
U.S. dollars in thousands (except share and per share data)
NOTE 1:- |
DESCRIPTION OF BUSINESS AND GENERAL (CONT.)
|
- |
On October 7, 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. Following the attack, Israel’s security cabinet declared war against Hamas and the Israeli military began to call-up reservists for active duty. At the same time, and because of the declaration of war against Hamas, the clash between Israel and Hezbollah in Lebanon has escalated and there is a possibility that it will turn into a greater regional conflict in the future. As of March 2024, these events have had no material impact on the Company's operations.
|
NOTE 2:- |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
A. |
Basis of presentation:
|
B. |
Functional and reporting currency:
|
F - 11
U.S. dollars in thousands (except share and per share data)
NOTE 2:- |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
|
C. |
Exchange rates and linkage bases:
|
1. |
Balances linked to the Israeli Consumer Price Index ("CPI"), are recorded pursuant to contractual linkage terms of the specific assets and liabilities.
|
2. |
Details of the CPI (2016 base) and the representative exchange rates are as follows:
|
Exchange rate
|
Exchange rate |
|||||||||||
Israeli CPI
|
of one US dollar
|
of one Euro |
||||||||||
Points
|
NIS
|
NIS
|
||||||||||
December 31, 2023
|
|
|
|
|||||||||
December 31, 2022
|
|
|
|
|||||||||
December 31, 2021
|
|
|
|
|||||||||
%
|
||||||||||||
December 31, 2023
|
|
|
|
|||||||||
December 31, 2022
|
|
|
|
|||||||||
December 31, 2021
|
|
(
|
)
|
(
|
)
|
D. |
Use of estimates:
|
E. |
Cash and cash equivalents:
|
F - 12
U.S. dollars in thousands (except share and per share data)
NOTE 2:- |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
|
F. |
Trade accounts receivable:
|
Year ended
December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Opening balance
|
|
|
|
|||||||||
Provision for credit losses
|
|
|
|
|||||||||
Customers write-offs/collection during the year
|
|
|
(
|
)
|
||||||||
Foreign currency translation adjustments
|
|
(
|
)
|
|
||||||||
Closing balance
|
|
|
|
G.
|
Inventories:
|
H. |
Severance pay:
|
F - 13
U.S. dollars in thousands (except share and per share data)
NOTE 2:- |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
|
I. |
Property and equipment:
|
%
|
||
Machinery and equipment
|
|
|
Leasehold improvements
|
|
|
Motor vehicles
|
|
|
Office furniture and equipment
|
|
J. |
Impairment of long-lived assets:
|
F - 14
U.S. dollars in thousands (except share and per share data)
NOTE 2:- |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
|
K. |
Income taxes:
|
L.
|
Accounting for share-based compensation:
|
F - 15
U.S. dollars in thousands (except share and per share data)
NOTE 2:- |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
|
2023
|
2022
|
2021
|
||||||||||
Dividend yield
|
|
|
|
|||||||||
Expected volatility
|
|
|
|
|||||||||
Risk-free interest
|
|
|
|
|||||||||
Expected term
|
|
|
|
|||||||||
Forfeiture rate
|
|
|
|
M.
|
Revenue recognition:
|
F - 16
U.S. dollars in thousands (except share and per share data)
NOTE 2:- |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
|
N. |
Earnings per ordinary share:
|
O. |
Concentration of credit risk:
|
P. |
Research and development costs:
|
Q. |
Commitments and contingencies:
|
F - 17
U.S. dollars in thousands (except share and per share data)
NOTE 2:- |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
|
R. |
Fair value measurements:
|
Level 1 | - | Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
Level 2 | - | Significant other observable inputs based on market data obtained from sources independent of the reporting entity. |
Level 3 | - | Unobservable inputs which are supported by little or no market activity. |
S. |
Comprehensive income (loss):
|
F - 18
U.S. dollars in thousands (except share and per share data)
NOTE 2:- |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
|
T. |
Leases:
|
U. |
Impact of recently issued and adopted accounting standards:
|
V. |
New accounting pronouncements not yet effective:
|
F - 19
U.S. dollars in thousands (except share and per share data)
NOTE 2:- |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
|
W. |
Reclassifications:
|
NOTE 3:- |
CASH AND CASH EQUIVALENTS
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
Denominated in U.S. dollars
|
|
|
||||||
Denominated in NIS
|
|
|
||||||
Denominated in Euro
|
|
|
||||||
|
|
NOTE 4:- |
SHORT-TERM BANK DEPOSITS
|
NOTE 5:- |
INVENTORIES
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
Raw materials
|
|
|
||||||
Work-in-progress
|
|
|
||||||
Finished goods
|
|
|
||||||
|
|
F - 20
U.S. dollars in thousands (except share and per share data)
NOTE 6:- |
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
Prepaid expenses
|
|
|
||||||
Receivables from government authorities
|
|
|
||||||
Others
|
|
|
||||||
|
|
NOTE 7:- |
PROPERTY AND EQUIPMENT, NET
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
Cost:
|
||||||||
Machinery and equipment
|
|
|
||||||
Equipment advanced payments
|
|
|
||||||
Leasehold improvements
|
|
|
||||||
Motor vehicles
|
|
|
||||||
Office furniture and equipment
|
|
|
||||||
|
|
|||||||
Accumulated depreciation:
|
||||||||
Machinery and equipment
|
(
|
)
|
(
|
)
|
||||
Leasehold improvements
|
(
|
)
|
(
|
)
|
||||
Motor vehicles
|
(
|
)
|
(
|
)
|
||||
Office furniture and equipment
|
(
|
)
|
(
|
)
|
||||
(
|
)
|
(
|
)
|
|||||
Depreciated cost
|
|
|
NOTE 8:- |
CURRENT MATURITIES OF LONG-TERM DEBT
|
Annual
interest rate at
|
||||||||||||
December 31,
|
December 31,
|
|||||||||||
2022
|
2023
|
2022
|
||||||||||
Long-term debt from banks in NIS bears interest of Prime+1.5% to Prime+1.75%
|
|
|
|
|
||||||||
|
|
F - 21
U.S. dollars in thousands (except share and per share data)
NOTE 9:- |
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
Accrued payroll including amounts due to government authorities
|
|
|
||||||
Provision for vacation and other employee benefits
|
|
|
||||||
Accrued expenses
|
|
|
||||||
Provision for contingent liabilities (Note 13c)
|
|
|
||||||
Other liabilities
|
|
|
||||||
|
|
NOTE 10:- |
LONG-TERM DEBT, EXCLUDING CURRENT MATURITIES
|
Annual
interest
|
||||||||||||
rate at
|
||||||||||||
December 31
|
December 31,
|
|||||||||||
2022
|
2023
|
2022
|
||||||||||
Linkage terms:
|
||||||||||||
NIS
|
|
|
|
|
||||||||
Euro
|
|
|
||||||||||
|
|
|||||||||||
Less - current maturities
|
|
(
|
)
|
|||||||||
|
|
NOTE 11:- |
EMPLOYEE SEVERANCE BENEFITS
|
a. |
The Company has an approval from the Israeli Ministry of Labor and Social Welfare, pursuant to the terms of Section 14 of the Israeli Severance Pay Law, 1963, according to which the Company's current deposits in the pension fund and/or with the insurance company exempt it from any additional severance obligations to the employees for whom such depository payments were made.
|
b. |
The Company's employees participate in a pension plan or individual insurance policies that are purchased by them. The Company's liability for severance obligations for the employees employed for
|
F - 22
U.S. dollars in thousands (except share and per share data)
NOTE 11:- |
EMPLOYEE SEVERANCE BENEFITS (CONT.)
|
c. |
Expenses (income) recorded in respect of the unfunded liability for employee severance payments for the years ended December 31, 2023, 2022, and 2021 were $
|
NOTE 12:- |
LEASES
|
a. |
The components of operating lease costs were as follows:
|
Year ended
December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Operating lease cost
|
|
|
|
|||||||||
Total net lease costs
|
|
|
|
F - 23
U.S. dollars in thousands (except share and per share data)
NOTE 12:- |
LEASES (CONT.)
|
b. |
Supplemental balance sheet information related to operating leases is as follows:
|
As of December 31,
|
||||||||
2023
|
2022
|
|||||||
Operating lease ROU assets
|
|
|
||||||
Operating lease liabilities, current
|
|
|
||||||
Operating lease liabilities, long-term
|
|
|
||||||
Weighted average remaining lease term (in years)
|
|
|
||||||
Weighted average discount rate
|
|
%
|
|
%
|
c. |
Future lease payments under operating leases as of December 31, 2023, are as follows:
|
As of
December 31,
2023
|
||||
|
||||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
2028 - 2032
|
|
|||
Total undiscounted lease payments
|
|
|||
Less: imputed interest
|
(
|
)
|
||
Present value of lease liabilities
|
|
NOTE 13:- |
COMMITMENTS AND CONTINGENT LIABILITIES
|
a. |
Pledges:
|
1. |
The Company has pledged certain items of its equipment and the rights to any insurance claims on such items to secure its debts to banks, as well as placed floating liens on all of its remaining assets in favor of the banks.
|
2. |
The Company has also pledged machines to secure its indebtedness to certain suppliers that provided financing for such equipment.
|
b. |
Indemnification agreement:
|
F - 24
U.S. dollars in thousands (except share and per share data)
NOTE 13:- |
COMMITMENTS AND CONTINGENT LIABILITIES (CONT.)
|
c. |
Contingent Liabilities:
|
F - 25
U.S. dollars in thousands (except share and per share data)
NOTE 13:- |
COMMITMENTS AND CONTINGENT LIABILITIES (CONT.)
|
F - 26
U.S. dollars in thousands (except share and per share data)
NOTE 14:- |
SHAREHOLDERS' EQUITY
|
Number of options
|
Weighted-average exercise
price
|
Weighted- average remaining contractual life
(in years)
|
Aggregate intrinsic
value
(in thousands)
|
|||||||||||||
Outstanding at January 1, 2023
|
|
|
|
|
||||||||||||
Granted
|
|
|
|
|
||||||||||||
Exercised
|
|
|
|
-
|
||||||||||||
Forfeited
|
|
|
-
|
-
|
||||||||||||
Outstanding at December 31, 2023
|
|
|
|
|
||||||||||||
Exercisable at December 31, 2023
|
|
|
|
|
F - 27
U.S. dollars in thousands (except share and per share data)
NOTE 14:- |
SHAREHOLDERS' EQUITY (CONT.)
|
NOTE 15:- |
BASIC AND DILUTED NET EARNINGS PER SHARE
|
Year ended
December 31,
|
||||||||||||
2023
|
2023
|
2022
|
||||||||||
Numerator:
|
||||||||||||
Profit attributable to Eltek Ltd shareholders
|
|
|
|
|||||||||
Denominator:
|
||||||||||||
Denominator for basic profit per share weighted-average number of shares outstanding
|
|
|
|
|||||||||
Effect of diluting securities:
|
||||||||||||
Employee share options
|
|
|
|
|||||||||
Denominator for diluted profit per share - adjusted weighted average shares and assumed exercises
|
|
|
|
F - 28
U.S. dollars in thousands (except share and per share data)
NOTE 16:- |
ENTITY WIDE DISCLOSURES
|
a. |
Customers who accounted for over 10% of the total consolidated revenues:
|
Year ended
December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Customer A - Sales of manufactured products
|
|
%
|
|
%
|
|
%
|
||||||
Customer B - Sales of manufactured products
|
|
%
|
|
%
|
|
%
|
b. |
Revenues by geographic areas:
|
Israel
|
|
|
|
|||||||||
North America
|
|
|
|
|||||||||
Netherlands
|
|
|
|
|||||||||
India
|
|
|
|
|||||||||
Others
|
|
|
|
|||||||||
|
|
|
NOTE 17:- |
FINANCIAL EXPENSES (INCOME), NET
|
Year ended
December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Interest on long-term bank loans
|
|
|
|
|||||||||
Interest on bank deposits
|
(
|
)
|
|
|
||||||||
Bank charges
|
|
|
|
|||||||||
Foreign exchange loss (gain), net
|
(
|
)
|
(
|
)
|
|
|||||||
Other financing expenses (income), net
|
(
|
)
|
(
|
)
|
|
|||||||
(
|
)
|
(
|
)
|
|
F - 29
U.S. dollars in thousands (except share and per share data)
NOTE 18:- |
TAXES ON INCOME
|
a. |
Tax laws applicable to the Company:
|
F - 30
U.S. dollars in thousands (except share and per share data)
NOTE 18:- |
TAXES ON INCOME (CONT.)
|
b. |
Tax rates applicable to the Company:
|
1. |
The Israeli corporate income tax rate is
|
2. |
The tax rates of the Company's non-Israeli subsidiaries is
|
c. |
Carryforward losses for tax purposes:
|
d. |
Income tax assessments:
|
F - 31
U.S. dollars in thousands (except share and per share data)
NOTE 18:- |
TAXES ON INCOME (CONT.)
|
e. |
Profit before tax and taxes on income included in the consolidated statements of comprehensive income:
|
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Income before income tax expense:
|
||||||||||||
Israel
|
|
|
|
|||||||||
Foreign jurisdictions
|
|
|
|
|||||||||
|
|
|
||||||||||
Current tax expense:
|
||||||||||||
Israel
|
|
|
|
|||||||||
Foreign jurisdictions
|
|
|
|
|||||||||
|
|
|
||||||||||
Deferred taxes (income) expenses:
|
||||||||||||
Israel
|
|
|
(
|
)
|
||||||||
|
|
(
|
)
|
|||||||||
Income tax (benefit) expense, net
|
|
|
(
|
)
|
f. |
Reconciliation of the theoretical income tax benefit to the actual income tax expense:
|
Year ended
December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Income before income tax expense as reported in the consolidated statements of comprehensive income
|
|
|
|
|||||||||
Statutory tax rates
|
|
%
|
|
%
|
|
%
|
||||||
Theoretical tax expense calculated
|
|
|
|
|||||||||
Losses and other items for which a valuation allowance was provided (released)
|
|
|
(
|
)
|
||||||||
Realization of carryforward tax losses for which valuation allowance was provided
|
|
|
(
|
)
|
||||||||
Tax benefit arising from "Preferred enterprises"
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Foreign tax rate differential in subsidiaries
|
(
|
)
|
(
|
)
|
|
|||||||
Non-deductible items and others
|
|
|
|
|||||||||
Total
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Income tax (benefit) expense
|
|
|
(
|
)
|
F - 32
U.S. dollars in thousands (except share and per share data)
NOTE 18:- |
TAXES ON INCOME (CONT.)
|
g. |
Deferred tax assets and liabilities:
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
Deferred tax assets:
|
||||||||
Net operating loss carryforwards (in Israel)
|
|
|
||||||
Capital loss carryforwards (in Israel)
|
|
|
||||||
Reserves and other
|
|
|
||||||
Total gross deferred taxes
|
|
|
Less valuation allowance
|
(
|
)
|
(
|
)
|
||||
Deferred tax assets, net
|
|
|
||||||
Deferred tax liabilities:
|
||||||||
Undistributed income of subsidiaries
|
(
|
)
|
(
|
)
|
||||
Property and equipment
|
(
|
)
|
(
|
)
|
||||
Total deferred tax liabilities
|
(
|
)
|
(
|
)
|
||||
Net deferred tax assets (liabilities)
|
|
|
F - 33
U.S. dollars in thousands (except share and per share data)
NOTE 18:- |
TAXES ON INCOME (CONT.)
|
h. |
Accounting for uncertainty in income taxes:
|
NOTE 19:- |
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
|
NOTE 20:- |
RELATED PARTY BALANCES AND TRANSACTIONS
|
a. |
Balances with related parties:
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
Trade accounts receivable
|
|
|
||||||
Trade accounts payable
|
|
|
b. |
Transactions with related parties:
|
Year ended
December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Revenues
|
|
|
|
|||||||||
Purchases, general and administrative expenses
|
|
|
|
F - 34
U.S. dollars in thousands (except share and per share data)
NOTE 20:- |
RELATED PARTY BALANCES AND TRANSACTIONS (CONT.)
|
F - 35
U.S. dollars in thousands (except share and per share data)
NOTE 20:- |
RELATED PARTY BALANCES AND TRANSACTIONS (CONT.)
|
a. |
The extension of the Directors and Officers' Indemnity Agreement with Mr. Yitzhak Nissan.
|
b. |
The extension of the Exculpation Letter with respect to Mr. Nissan for an additional three (3) year period
|
c. |
The application of the Company’s directors and officers' liability insurance policy with respect to Mr. Nissan
|
d. |
The revised terms of employment of Mr. Nissan's daughter who is employed by the Company as a special project manager.
|
NOTE 21:- |
SUBSEQUENT EVENTS
|
ELTEK LTD. | |||
By: | /s/ Eli Yaffe | ||
Name: | Eli Yaffe | ||
Title: | Chief Executive Officer | ||
By: | /s/ Ron Freund | ||
Name: | Ron Freund | ||
Title: | Chief Financial Officer |
• |
the merger does not require the alteration of the memorandum or articles of association of the acquiring company;
|
• |
the acquiring company would not issue more than 20% of the voting rights thereof to the shareholders of the target company in the course of the merger and no person will become, as a result of the merger, a
controlling shareholder of the acquiring company, on a fully diluted basis;
|
• |
neither the target company, nor any shareholder that holds 25% of the means of control of the target company is a shareholder of the acquiring company and there is no person that holds 25% or more of the means
of control in both companies.
|
1. |
I have reviewed this annual report on Form 20-F of Eltek Ltd.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for,
the periods presented in this report;
|
4. |
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
|
(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 annual report that has materially affected, or is reasonably likely to materially affect, the
company’s internal control over financial reporting; and
|
5. |
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or
persons performing the equivalent function):
|
(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.
|
1. |
I have reviewed this annual report on Form 20-F of Eltek Ltd.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for,
the periods presented in this report;
|
4. |
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
|
(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 annual report that has materially affected, or is reasonably likely to materially affect, the
company’s internal control over financial reporting; and
|
5. |
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or
persons performing the equivalent function):
|
(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.
|
1. |
Policy Purpose. The purpose of this Eltek Ltd. (the “Company”) Incentive-Based Compensation Recovery Policy (this “Policy”)
is to enable the Company to recover Erroneously Awarded Compensation in the event that the Company is required to prepare an Accounting Restatement. This Policy is intended to comply with the requirements set forth in Listing Rule 5608 of
the corporate governance rules of The NASDAQ Stock Market (the “Listing Rule”) and shall be construed and interpreted in accordance with such intent.
Unless otherwise defined in this Policy, capitalized terms shall have the meaning ascribed to such terms in Section 7.
|
2. |
Policy Administration. This Policy shall be administered by the
Compensation Committee of the Board (the “Committee”) unless the Board determines to administer this Policy itself. The Committee has full and final
authority to make all determinations under this Policy, in each case to the extent permitted under the Listing Rule and in compliance with (or pursuant to an exemption from the application of) Section 409A of the Code. All determinations
and decisions made by the Committee pursuant to the provisions of this Policy shall be final, conclusive and binding on all persons, including the Company, its affiliates, its shareholders and Executive Officers. Any action or inaction by
the Committee with respect to an Executive Officer under this Policy in no way limits the Committee’s actions or decisions not to act with respect to any other Executive Officer under this Policy or under any similar policy, agreement or
arrangement, nor shall any such action or inaction serve as a waiver of any rights the Company may have against any Executive Officer other than as set forth in this Policy.
|
3. |
Policy Application. This Policy applies to all Incentive-Based Compensation
received by a person: (a) after beginning service as an Executive Officer; (b) who served as an Executive Officer at any time during the performance period for such Incentive-Based Compensation; (c) while the Company had a class of
securities listed on a national securities exchange or a national securities association; and (d) during the three completed fiscal years immediately preceding the Accounting Restatement Date. In addition to such last three completed fiscal
years, the immediately preceding clause (d) includes any transition period that results from a change in the Company’s fiscal year within or immediately following such three completed fiscal years; provided, however, that a transition period between the last day of the Company’s
previous fiscal year end and the first day of its new fiscal year that comprises a period of nine to twelve months shall be deemed a completed fiscal year. For purposes of this Section 3, Incentive-Based Compensation is deemed received in the Company’s fiscal period during which the Financial Reporting Measure specified in the Incentive-Based Compensation award is attained, even if
the payment or grant of the Incentive-Based Compensation occurs after the end of that period. For the avoidance of doubt, Incentive-Based Compensation that is subject to both a Financial Reporting Measure vesting condition and a
service-based vesting condition shall be considered received when the relevant Financial Reporting Measure is achieved, even if the Incentive-Based Compensation continues to be subject to the service-based vesting condition.
|
4. |
Policy Recovery Requirement. In the event of an Accounting Restatement, the
Company must recover, reasonably promptly, Erroneously Awarded Compensation, in amounts determined pursuant to this Policy. The Company’s obligation to recover Erroneously Awarded Compensation is not dependent on if or when the Company
files restated financial statements. Recovery under this Policy with respect to an Executive Officer shall not require the finding of any misconduct by such Executive Officer or such Executive Officer being found responsible for the
accounting error leading to an Accounting Restatement. In the event of an Accounting Restatement, the Company shall satisfy the Company’s obligations under this Policy to recover any amount owed from any applicable Executive Officer by
exercising its sole and absolute discretion in how to accomplish such recovery, to the extent permitted under the Listing Rule and in compliance with (or pursuant to an exemption from the application of) Section 409A of the Code. The
Company’s recovery obligation pursuant to this Section 4 shall not apply to the extent that the Committee, or in the absence of the Committee, a
majority of the independent directors serving on the Board, determines that such recovery would be impracticable and:
|
a. |
The direct expense paid to a third party to assist in enforcing this Policy would exceed the amount to be recovered. Before concluding that it would be impracticable
to recover any amount of Erroneously Awarded Compensation based on expense of enforcement, the Company must make a reasonable attempt to recover such Erroneously Awarded Compensation, document such reasonable attempt(s) to recover, and
provide that documentation to the Stock Exchange;
|
b. |
Recovery would violate Israeli law where that law was adopted prior to November 28, 2022. Before concluding that it would be impracticable to recover any amount of
Erroneously Awarded Compensation based on violation of Israeli law, the Company must obtain an opinion of Israeli counsel, acceptable to the Stock Exchange, that recovery would result in such a violation, and must provide such opinion to
the Stock Exchange; or
|
c. |
Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the registrant, to fail to meet the
requirements of Section 401(a)(13) or Section 411(a) of the Code.
|
5. |
Policy Prohibition on Indemnification and Insurance Reimbursement. The
Company is prohibited from indemnifying any Executive Officer or former Executive Officer against the loss of Erroneously Awarded Compensation. Further, the Company is prohibited from paying or reimbursing an Executive Officer for
purchasing insurance to cover any such loss.
|
6. |
Required Policy-Related Filings. The Company shall file all disclosures
with respect to this Policy in accordance with the requirements of the federal securities laws, including disclosures required by U.S. Securities and Exchange Commission filings.
|
7. |
Definitions.
|
a. |
“Accounting Restatement” means an accounting restatement due to the
material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the
previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
|
b. |
“Accounting Restatement Date” means the earlier to occur of: (i) the date
the Board, a committee of the Board, or the officer or officers of the Company authorized to take such action if the Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an
Accounting Restatement; and (ii) the date a court, regulator, or other legally authorized body directs the Company to prepare an Accounting Restatement.
|
c. |
“Board” means the board of directors of the Company.
|
d. |
“Code” means the U.S. Internal Revenue Code of 1986, as amended. Any
reference to a section of the Code or regulation thereunder includes such section or regulation, any valid regulation or other official guidance promulgated under such section, and any comparable provision of any future legislation or
regulation amending, supplementing, or superseding such section or regulation.
|
e. |
“Erroneously Awarded Compensation” means, in the event of an Accounting
Restatement, the amount of Incentive-Based Compensation previously received that exceeds the amount of Incentive-Based Compensation that otherwise would have been received had it been determined based on the restated amounts in such
Accounting Restatement, and must be computed without regard to any taxes paid by the relevant Executive Officer; provided, however, that for Incentive-Based Compensation based on share price or total shareholder return, where the amount of Erroneously Awarded Compensation is not subject to
mathematical recalculation directly from the information in an Accounting Restatement: (i) the amount of Erroneously Awarded Compensation must be based on a reasonable estimate of the effect of the Accounting Restatement on the share price
or total shareholder return upon which the Incentive-Based Compensation was received; and (ii) the Company must maintain documentation of the determination of that reasonable estimate and provide such documentation to the Stock Exchange.
|
f. |
“Executive Officer” means the Company’s president, principal financial
officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice-president of the Company in charge of a principal business unit, division, or function (such as sales, administration, or finance),
any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the Company. An executive officer of the Company’s parent or subsidiary is deemed an “Executive Officer” if the
executive officer performs such policy making functions for the Company.
|
g. |
“Financial Reporting Measure” means any measure that is determined and
presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measure that is derived wholly or in part from such measure; provided, however, that a Financial Reporting Measure is not required to be presented within the Company’s financial
statements or included in a filing with the U.S. Securities and Exchange Commission to qualify as a “Financial Reporting Measure.” For purposes of this Policy, “Financial Reporting Measure” includes, but is not limited to, share price and
total shareholder return.
|
h. |
“Incentive-Based Compensation” means any compensation that is granted,
earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure.
|
i. |
“Stock Exchange” means the U.S. national stock exchange on which the
Company’s ordinary shares are listed (e.g., Nasdaq.)
|
8. |
Acknowledgement. Each Executive Officer shall sign and return to the
Company, within 30 calendar days following the later of (i) the effective date of this Policy first set forth above or (ii) the date the individual becomes an Executive Officer, the Acknowledgement Form attached hereto as Exhibit A, pursuant to which the Executive Officer agrees to be bound by, and to comply with, the terms and conditions of this Policy.
|
9. |
Severability. The provisions in this Policy are intended to be applied to
the fullest extent of the law. To the extent that any provision of this Policy is found to be unenforceable or invalid under any applicable law, such provision shall be applied to the maximum extent permitted, and shall automatically be
deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable law.
|
10. |
Amendment; Termination. The Board may amend this Policy from time to time
in its sole and absolute discretion and shall amend this Policy as it deems necessary to reflect the Listing Rule, to comply with (or maintain an exemption from the application of) Section 409A of the Code. The Board may terminate this
Policy at any time.
|
11. |
Other Recovery Obligations; General Rights. To the extent that the
application of this Policy would provide for recovery of Incentive-Based Compensation that the Company recovers pursuant to Section 304 of the Sarbanes-Oxley Act or other recovery obligations (including under the Israeli Companies Law,
5759-1999), the amount the relevant Executive Officer has already reimbursed the Company will be credited to the required recovery under this Policy. This Policy shall not limit the rights of the Company to take any other actions or pursue
other remedies that the Company may deem appropriate under the circumstances and under applicable law, in each case to the extent permitted under the Listing Rule and in compliance with (or pursuant to an exemption from the application of)
Section 409A of the Code. Nothing contained in this Policy shall limit the Company’s ability to seek recoupment, in appropriate circumstances (including circumstances beyond the scope of this Policy) and as permitted by applicable law, of
any amounts from any individual, in each case to the extent permitted under the Listing Rule and in compliance with (or pursuant to an exemption from the application of) Section 409A of the Code.
|
12. |
Successors. This Policy is binding and enforceable against all Executive
Officers and their beneficiaries, heirs, executors, administrators or other legal representatives.
|
13. |
Effective Date. This policy shall come into effect on, and shall apply to
an Incentive-Base Compensation received on or after, the day on which the Listing Rule becomes effective.
|
|
EXECUTIVE OFFICER
__________________________
Signature
__________________________
Print Name
__________________________
Date
|
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