Page | ||
F-2 - F-3 | ||
F-4 | ||
F-5 | ||
F-6 - F-7 | ||
F-8 - F-20 |
June 30, | December 31, | |||||||||||
Note | 2021 | 2020 | ||||||||||
Unaudited | ||||||||||||
ASSETS | ||||||||||||
CURRENT ASSETS: | ||||||||||||
Cash and cash equivalents | 3 | 9,169 | 4,735 | |||||||||
Trade receivables (net of allowance for doubtful accounts of $200 and $214 at June 30, 2021 and December 31, 2020, respectively) | 7,388 | 9,062 | ||||||||||
Inventories | 4 | 3,904 | 3,704 | |||||||||
Other accounts receivable and prepaid expenses | 1,206 | 1,319 | ||||||||||
Total current assets | 21,667 | 18,820 | ||||||||||
LONG-TERM ASSETS: | ||||||||||||
Severance pay fund | 63 | 64 | ||||||||||
Restricted deposit | 215 | 62 | ||||||||||
Operating lease right-of-use assets | 8,801 | 8,948 | ||||||||||
Property and equipment, net | 6,893 | 7,263 | ||||||||||
Total long-term assets | 15,972 | 16,337 | ||||||||||
Total assets | 37,639 | 35,157 |
F - 2
June 30, | December 31, | |||||||||||
Note | 2021 | 2020 | ||||||||||
Unaudited | ||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
CURRENT LIABILITIES: | ||||||||||||
Short-term credit and current maturities of long-term debt | 5 | 502 | 676 | |||||||||
Trade payables | 3,881 | 4,452 | ||||||||||
Other accounts payable and accrued expenses | 3,499 | 3,831 | ||||||||||
Short-term operating lease liabilities | 806 | 742 | ||||||||||
Total current liabilities | 8,688 | 9,701 | ||||||||||
LONG-TERM LIABILITIES: | ||||||||||||
Long-term debt, excluding current maturities | 6 | 4,125 | 1,495 | |||||||||
Accrued severance pay | 323 | 338 | ||||||||||
Deferred tax liabilities | 99 | 84 | ||||||||||
Long-term operating lease liabilities | 8,085 | 8,272 | ||||||||||
Total long-term liabilities | 12,632 | 10,189 | ||||||||||
COMMITMENTS AND CONTINGENT LIABILITIES | 7 | - | - | |||||||||
SHAREHOLDERS' EQUITY: | 8 | |||||||||||
Share capital - | ||||||||||||
Ordinary shares of NIS 3.0 par value – Authorized: 10,000,000 shares; Issued and outstanding: 5,840,357 shares | 5,296 | 5,296 | ||||||||||
Additional paid-in capital | 22,846 | 22,846 | ||||||||||
Foreign currency translation adjustments | 2,975 | 3,153 | ||||||||||
Capital reserves | 1,267 | 1,084 | ||||||||||
Accumulated deficit | (16,065 | ) | (17,112 | ) | ||||||||
Total shareholders' equity | 16,319 | 15,267 | ||||||||||
Total liabilities and shareholders' equity | 37,639 | 35,157 |
F - 3
Note | Six months ended June 30, | Three months ended June 30, | ||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||
Unaudited | ||||||||||||||||||||
Revenues | 9 | 16,338 | 17,949 | 9,132 | 8,792 | |||||||||||||||
Cost of revenues | 12,827 | 14,246 | 6,765 | 6,892 | ||||||||||||||||
Gross profit | 3,511 | 3,703 | 2,367 | 1,900 | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development expenses (income), net | 10 | (2 | ) | 10 | (4 | ) | ||||||||||||||
Selling, general and administrative | 2,421 | 2,284 | 1,413 | 1,095 | ||||||||||||||||
Operating income | 1,080 | 1,421 | 944 | 809 | ||||||||||||||||
Finance income (expenses), net | 20 | (139 | ) | (84 | ) | (83 | ) | |||||||||||||
Other expenses, net | (3 | ) | - | - | - | |||||||||||||||
Income before income taxes | 1,097 | 1,282 | 860 | 726 | ||||||||||||||||
Taxes on income | 10 | 50 | 38 | 35 | 22 | |||||||||||||||
Net income | 1,047 | 1,244 | 825 | 704 | ||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||
Foreign currency translation adjustments | (178 | ) | - | 337 | 169 | |||||||||||||||
Total comprehensive income | 869 | 1,244 | 1,162 | 873 | ||||||||||||||||
Basic and diluted income per ordinary share attributable to Eltek Ltd. shareholders | 0.18 | 0.28 | 0.14 | 0.16 |
F - 4
Company's shareholders | ||||||||||||||||||||||||||||
Ordinary shares | Amount | Additional paid-in capital | Accumulated other comprehensive income (loss) | Capital reserves | Accumulated deficit | Total | ||||||||||||||||||||||
Balance as of January 1, 2021 | 5,840,357 | 5,296 | 22,846 | 3,153 | 1,084 | (17,112 | ) | 15,267 | ||||||||||||||||||||
Stock-based compensation | - | - | - | - | 183 | - | 183 | |||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Foreign currency translation adjustments | - | - | - | (178 | ) | - | - | (178 | ) | |||||||||||||||||||
Net income | - | - | - | - | - | 1,047 | 1,047 | |||||||||||||||||||||
Balance as of June 30, 2021 | 5,840,357 | 5,296 | 22,846 | 2,975 | 1,267 | (16,065 | ) | 16,319 |
Balance as of January 1, 2020 | 4,380,268 | 3,964 | 18,583 | 2,479 | 963 | (19,720 | ) | 6,269 | ||||||||||||||||||||
Stock-based compensation | - | - | - | - | 43 | - | 43 | |||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Net income | - | - | - | - | - | 1,244 | 1,244 | |||||||||||||||||||||
Balance as of June 30, 2020 | 4,380,268 | 3,964 | 18,583 | 2,479 | 1,006 | (18,476 | ) | 7,556 |
F - 5
Six months ended June 30, | ||||||||
2021 | 2020 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | 1,047 | 1,244 | ||||||
Adjustments required to reconcile net income to net cash flows provided by operating activities: | ||||||||
Depreciation | 886 | 786 | ||||||
Revaluation of long term loans | - | 4 | ||||||
Stock-based compensation | 183 | 43 | ||||||
Increase (decrease) in employee severance benefits, net | (10 | ) | 40 | |||||
Decrease in trade receivables, net | 1,546 | 149 | ||||||
Decrease in operating lease right-of-use assets | 24 | 449 | ||||||
Decrease in operating lease liabilities | - | (453 | ) | |||||
Decrease in other receivables and prepaid expenses | 95 | 187 | ||||||
Decrease (increase) in inventories | (250 | ) | 248 | |||||
Decrease in trade payables | (411 | ) | (370 | ) | ||||
Increase in deferred tax liabilities | 16 | 12 | ||||||
Increase (decrease) in other liabilities and accrued expenses | (279 | ) | 538 | |||||
Net cash provided by operating activities | 2,847 | 2,877 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property and equipment | (538 | ) | (454 | ) | ||||
Restricted deposits | (154 | ) | (58 | ) | ||||
Net cash used in investing activities | (692 | ) | (512 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Short-term bank credit, net | (377 | ) | (765 | ) | ||||
Repayment of short-term loan from shareholder | - | (571 | ) | |||||
Repayment of long-term loans | (77 | ) | (108 | ) | ||||
Proceeds from long-term loans | 3,062 | 1,141 | ||||||
Repayment of property and equipment payables | (285 | ) | (304 | ) | ||||
Net cash provided by (used in) financing activities | 2,323 | (607 | ) |
F - 6
ELTEK LTD. AND ITS SUBSIDIARIES
Six months ended June 30, | ||||||||
2021 | 2020 | |||||||
Effect of exchange rate on cash and cash equivalents | (44 | ) | 21 | |||||
Increase in cash and cash equivalents | 4,434 | 1,779 | ||||||
Cash and cash equivalents at the beginning of the year | 4,735 | 1,628 | ||||||
Cash and cash equivalents at end of the year | 9,169 | 3,407 | ||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES: | ||||||||
Cash paid during the year for: | ||||||||
Interest | 6 | 95 | ||||||
Non-cash activities: | ||||||||
Purchase of property and equipment in credit | 140 | 141 | ||||||
Right-of-use asset recognized with corresponding lease liability | - | 153 |
F - 7
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, 2020, 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 and North America. |
- | The Company markets its product mainly to the medical technology, defense and aerospace, industrial, telecom and networking equipment, as well as to contract electronic manufacturers, among other industries. |
- | In June 2017, due to continued losses and the Company's limited ability to obtain additional loans from the banks at that time, the Company obtained a loan of NIS 5.0 million (approximately $ 1.4 million) from Nistec (the “First Loan”). In July 2017, the Company obtained a line of credit dedicated to a specific project of up to NIS 4.5 million (approximately $1.3 million) from Bank HaPoalim, guaranteed by Nistec for a period of up to one year. In July 2018, Bank HaPoalim extended the dedicated line of credit and, in January 2019, the Company reduced the line of credit to NIS 2.25 million (approximately $ 620). | |
During April 2020, Bank HaPoalim approved the increase of this line of credit back to NIS 4.5 million (approximately $1.3 million) and to make this facility available to use for any purpose and not just for a specific project. |
F - 8
U.S. dollars in thousands (except share and per share data)
NOTE 1:- DESCRIPTION OF BUSINESS AND GENERAL (Cont.)
1. | Interest Amount: |
2. | Payment Schedule: the interest was payable on the 10th day of each quarter, for the interest accumulated in the three (3) months prior to such payment date (except with respect to the first interest payment). |
F - 9
U.S. dollars in thousands (except share and per share data)
NOTE 1:- DESCRIPTION OF BUSINESS AND GENERAL (Cont.)
F - 10
U.S. dollars in thousands (except share and per share data)
NOTE 1:- DESCRIPTION OF BUSINESS AND GENERAL (Cont.)
- | The Company’s business is subject to numerous risks including, but not limited to, the impact of currency exchange rates (mainly NIS/US$), 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. Due to these conditions and other financial and business factors, the Company's liquidity position, as well as its operating performance, was negatively affected in the past. In the year ended December 31, 2018, the Company incurred a net loss of $2.6 million and suffered negative cash flows from its operating activities. In the year ended December 31, 2020, the Company had net income of $2.6 million as compared to net income of $1.8 million in the year ended December 31, 2019. During the six months period ended June 30, 2021 the Company had a net income of $1.1 million. As of June 30, 2021, the Company's working capital amounted to $13 million and its accumulated deficit amounted to approximately $16 million. The Company's liquidity position, as well as its operating performance, may be negatively affected by other financial and business factors, many of which are beyond its control. |
- | An outbreak of infectious respiratory illness caused by a novel coronavirus known as COVID-19 was first detected in China in December 2019 and has now spread globally. This outbreak has resulted in travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, prolonged quarantines, cancellations, supply chain disruptions, and lower consumer demand, layoffs, defaults and other significant economic impacts, as well as general concern and uncertainty. The impact of this outbreak has adversely affected the economies of many nations and the entire global economy and impacted and may impact the company in ways that cannot necessarily be foreseen. |
F - 11
U.S. dollars in thousands (except share and per share data)
NOTE 1:- DESCRIPTION OF BUSINESS AND GENERAL (Cont.)
NOTE 2:- | CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS |
F - 12
NOTE 3:- | CASH AND CASH EQUIVALENTS |
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Unaudited | ||||||||
Denominated in U.S. dollars | 4,794 | 3,920 | ||||||
Denominated in NIS | 3,406 | 166 | ||||||
Denominated in Euro | 969 | 649 | ||||||
9,169 | 4,735 |
NOTE 4:- | INVENTORIES |
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Unaudited | ||||||||
Raw materials | 2,162 | 1,821 | ||||||
Work-in-progress | 1,477 | 1,348 | ||||||
Finished goods | 265 | 535 | ||||||
3,904 | 3,704 |
During the periods ended June 30 2021 and December 31, 2020, the Company recorded inventory write-offs in the amounts of $293 and $588, respectively. Such write-offs were included in cost of revenues.
NOTE 5:- | SHORT-TERM CREDIT AND CURRENT MATURITIES OF LONG-TERM DEBT |
Interest | ||||||||||||
June 30, | June 30, | December 31, | ||||||||||
2021 | 2021 | 2020 | ||||||||||
% | Unaudited | |||||||||||
In NIS bears interest rate of Prime+0.85% | - | - | 373 | |||||||||
Long-term debt from banks in NIS bears interest of Prime rate rate of Prime+1.5% to Prime+1.75% | 3.1% - 3.35% | 502 | 303 | |||||||||
502 | 676 |
F - 13
NOTE 6:- | LONG-TERM DEBT, EXCLUDING CURRENT MATURITIES |
Interest | ||||||||||||
June 30, | June 30, | December 31, | ||||||||||
2021 | 2021 | 2020 | ||||||||||
Linkage terms: | % | Unaudited | ||||||||||
NIS | 3.1% - 3.35% | 4,627 | 1,659 | |||||||||
EURO | - | 206 | ||||||||||
4,627 | 1,865 | |||||||||||
Less - current maturities | (502 | ) | (370 | ) | ||||||||
4,125 | 1,495 |
Long-term loan | ||||
First year | 1,295 | |||
Second year | 675 | |||
Third year | 659 | |||
Fourth year | 338 | |||
Fifth year | 1,660 | |||
4,627 |
NOTE 7:- | 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 - 14
U.S. dollars in thousands (except share and per share data)
NOTE 7:- | COMMITMENTS AND CONTINGENT LIABILITIES (CONT.) |
c. | Contingent Liabilities: |
F - 15
NOTE 7:- | COMMITMENTS AND CONTINGENT LIABILITIES (CONT.) |
NOTE 8:- | SHAREHOLDERS' EQUITY |
F - 16
U.S. dollars in thousands (except share and per share data)
NOTE 8:- | SHAREHOLDERS' EQUITY (CONT.) |
NOTE 9:- | ENTITY WIDE DISCLOSURES |
a. | Customers who accounted for over 10% of the total consolidated revenues: |
Six months ended June 30, | Three months ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Unaudited | ||||||||||||||||
Customer A - sales of manufactured products | 21.6 | % | 17.2 | % | 16.5 | % | 17.1 | % | ||||||||
Customer B - Sales of manufactured products | 7.3 | % | 13.2 | % | 5.6 | % | 13.9 | % |
b. | Revenues by geographic areas: |
Six months ended June 30, | Three months ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Unaudited | ||||||||||||||||
Israel | 8,931 | 10,172 | 4,769 | 4,964 | ||||||||||||
North America | 3,659 | 3,163 | 2,269 | 1,644 | ||||||||||||
Netherlands | 1,957 | 1,788 | 1,061 | 874 | ||||||||||||
India | 786 | 1,110 | 527 | 426 | ||||||||||||
Others | 1,005 | 1,716 | 506 | 884 | ||||||||||||
16,338 | 17,949 | 9,132 | 8,792 |
NOTE 10:- | TAXES ON INCOME |
a. | Deferred tax assets and liabilities: |
b. | Reconciliation of the theoretical income tax (expense) benefit to the actual income tax expense: |
F - 17
NOTE 11:- | RELATED PARTY BALANCES AND TRANSACTIONS |
a. | Balances with related parties: |
Six months ended June 30, | Year ended December 31, | |||||||
2021 | 2020 | |||||||
Unaudited | ||||||||
Trade accounts receivable | 318 | 92 | ||||||
Trade accounts payable | 32 | 61 |
b. | Transactions with related parties: |
Six months ended June 30, | Three months ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Unaudited | ||||||||||||||||
Revenues | 235 | 216 | 136 | 123 | ||||||||||||
Purchases, selling, general and administrative expenses | 165 | 161 | 83 | 81 | ||||||||||||
Interest from Loans from controlling shareholder | - | 54 | - | 26 |
F - 18
NOTE 11:- | RELATED PARTY BALANCES AND TRANSACTIONS (CONT.) |
F - 19
U.S. dollars in thousands (except share and per share data)
NOTE 11:- | RELATED PARTY BALANCES AND TRANSACTIONS (CONT.) |
a. | Eltek pays Nistec monthly managements fees of NIS 90 ($28). |
b. | Subject to Company’s reimbursement policy approved by the Audit Committee on May 15, 2016, Mr. Nissan receives reimbursement of travel expenses (other than food and beverage expenses) while traveling internationally on behalf of the Company, provided that such reimbursement may not exceed an aggregate amount of NIS 10 per calendar quarter. |
c. | Mr. Nissan receives reimbursement of food and beverage expenses while traveling internationally on behalf of the Company, against receipts, in accordance with the Israeli Income Tax Regulations (Deduction of Certain Expenses) 1972. |
a. | The extension of the Directors and Officers Indemnity Agreement with Mr. Yitzhak Nissan. |
b. | The extension of the Exculpation Letter for an additional three (3) year period. |
c. | The application of the Company’s directors and officers liability insurance policy with respect to Mr. Yitzhak Nissan. |
d. | The revised terms of employment, bonus plan and options grant of Yitzhak Nissan's daughter who is employed by the Company as special project manager. |
e. | The extension of the Amended Management Agreement with Nistec Ltd., our controlling shareholder, for any additional period of up to three (3) years. |
f. | The extension of the Amended PCB Purchase Procedure with Nistec Ltd., our controlling shareholder, for any additional period of up to three (3) years. |
g. | The extension of the Amended Soldering, Assembly and Design Services Procedure with Nistec Ltd., our controlling shareholder, for any additional period of up to three (3) years. |
h. | The extension of the procedure under which the Company may jointly acquire certain services together with Nistec Ltd., our controlling shareholder, related to employees social activities, marketing services and insurance, for any additional period of up to three (3) years. |