ELTK 20-F Report ended Dec. 31, 2020

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 20-F

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

OR

☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report...........

Commission file number 0‑28884

ELTEK LTD.

(Exact name of Registrant as specified in its charter

and translation of Registrant's name into English)

Israel

(Jurisdiction of incorporation or organization)

20 Ben Zion Gelis Street, Sgoola Industrial Zone, Petach Tikva 4927920, Israel

(Address of principal executive offices)

Alon Mualem, +972-3-9395025 (phone), +972-3- 9342584 (fax)
20 Ben Zion Gelis Street, Sgoola Industrial Zone, Petach Tikva 4927920, Israel

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to section 15(d) of the act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:

Yes ☐       No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934:

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒        No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 ☐      Item 18 ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes ☐       No ☒

INTRODUCTION

Statements made in this annual report concerning the contents of any contract, agreement or other document are summaries of such contracts, agreements or documents and are not complete descriptions of all of their terms.  If we filed any of these documents as an exhibit to this annual report or to any registration statement or annual report that we previously filed, you may read the document itself for a complete description of its terms.

Except for the historical information contained in this annual report, the statements contained in this annual report are “forward‑looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the Private Securities Litigation Reform Act of 1995, as amended, with respect to our business, financial condition and results of operations.  Such forward-looking statements reflect our current view with respect to future events and financial results.  We urge you to consider that statements which use the terms “anticipate,” “believe,” “do not believe,” “expect,” “plan,” “intend,” “estimate” and similar expressions are intended to identify forward‑looking statements.  We remind readers that forward-looking statements are merely predictions and therefore inherently subject to uncertainties and other factors and involve known and unknown risks that could cause the actual results, performance, levels of activity, or our achievements, or industry results, to be materially different from any future results, performance, levels of activity, or our achievements expressed or implied by such forward-looking statements.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  Except as required by applicable law, including the securities laws of the United States, we undertake no obligation to publicly release any update or revision to any forward‑looking statements to reflect new information, future events or circumstances, or otherwise after the date hereof.  We have attempted to identify significant uncertainties and other factors affecting forward-looking statements in the Risk Factors section that appears in Item 3.D. “Key Information- Risk Factors.”

i

TABLE OF CONTENTS

iii

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

ITEM 3.

KEY INFORMATION

Year ended December 31,		2020				2019				2018				2017				2016
		($ and share data in thousands, except per share data)
Revenues			36,707				34,794				33,939				32,754				37,065
Cost of revenues			(28,969	)			(28,787	)			(31,342	)			(31,427	)			(34,248	)
Gross profit			7,738				6,007				2,597				1,327				2,817
R&D expenses			(2	)			(16	)			-				(41	)			(117	)
Selling, general and administrative expenses			(4,704	)			(4,604	)			(4,669	)			(4,704	)			(4,699	)
Total operating expenses			(4,706	)			(4,620	)			(4,669	)			(4,744	)			(4,816	)
Operating profit (loss)			3,032				1,387				(2,072	)			(3,418	)			(1,999	)
Financial expenses, net			(337	)			(440	)			(475	)			(298	)			(309	)
Other income (loss), net			(16	)			923				3				15				(259	)
Profit (loss) before income tax expense			2,679				1,870				(2,544	)			(3,701	)			(2,567	)
Income tax (expense) benefit			(71	)			(77	)			(63	)			(74	)			(1,158	)
Net profit (loss)			2,608				1,793				(2,607	)			(3,775	)			(3,725	)
Net profit (loss) attributable to non-controlling interest			-				-				-				-				101
Net profit (loss) attributable to Eltek Ltd. shareholders			2,608				1,793				(2,607	)			(3,775	)			(3,624	)
Basic and diluted net profit (loss) per ordinary share attributable to Eltek Ltd.			0.58				0.48				(1.28	)			(1.58	)			(1.82	)
Weighted average number of ordinary shares used to compute basic net profit (loss) per ordinary share			4,495				3,734				2,029				2,029				2,029
Weighted average number of ordinary shares used to compute diluted net profit (loss) per ordinary share			4,501				3,734				2,029				2,029				2,029

		As at December 31,
		2020				2019				2018				2017				2016
						($ and share data in thousands)
Working capital (deficit)			9,119				(1,248	)			(5,314	)			(4,565	)			(93	)
Total assets			35,157				22,829				18,160				22,145				20,145
Long-term liabilities			10,189				1,794				519				911				2,098
Total shareholders’ equity			15,267				6,269				882				3,459				6,634
Number of issued and outstanding shares			5,840				4,380				2,029				2,029				2,029

•	We have a history of operating losses and may not be able to achieve and sustain long term profitable operations.  We may not have sufficient resources to fund our operations in the future.

•	We will require additional capital in the future, which may not be available to us.

•	The spread of novel strain of coronavirus, COVID-19, may adversely affect our business operations and financial condition.

•	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 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 loan agreements.

•	We may not succeed in our efforts to expand our activity in the U.S. market.  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.

•	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.

•	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.

•	If we fail to maintain compliance with NASDAQ’s continued listing requirements our shares may be delisted from the NASDAQ Capital Market.

•	Penny stock rules may limit the ability of our stockholders to sell their stock.

•	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 expect to distribute dividends in the foreseeable future.

•	Political, economic and military instability in Israel 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 4A.

UNRESOLVED STAFF COMMENTS

ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

		Year Ended December 31,
		2020				2019				2018
Revenues			100	%			100	%			100	%
Cost of revenues			(78.9	)			(82.7	)			(92.3	)
Gross profit			21.1				17.3				7.7
Selling, general and administrative expenses			(12.8	)			(13.3	)			(13.8	)
Operating profit (loss)			8.3				4.0				(6.1	)
Financial expenses, net			(0.9	)			(1.3	)			(1.4	)
Other income (loss), net			(0.1	)			2.7				*
Profit (loss) before income tax expense			7.3				5.4				(7.5	)
Income tax (expense)			(0.2	)			(0.2	)			(0.2	)
Net profit (loss)			7.1				5.2				(7.7	)

		Year Ended December 31,
		2020				2019				2018				2017				2016
Dollar			(7.0	)%			(7.8	)%			8.1	%			(9.8	)%			(1.5	)%
Euro			1.7	%			(9.6	)%			3.3	%			2.7	%			(4.8	)%
Israeli CPI			(0.7	)%			0.6	%			0.8	%			0.4	%			(0.2	)%

•

A loan amount of NIS 5 million carried interest of Prime + 1% from September 26, 2019 until January 7, 2020.

•

A second loan amount of NIS 5 million carried interest of Prime + 1.75%, from January 1, 2019  until it was repaid in full in December 2020.

Year ended December 31,		2020				2019				2018
		($ in thousands)
Net cash provided by (used in) operating activities			3,252				2,578				(813	)
Net cash used in investing activities			(1,140	)			(806	)			(619	)
Net cash provided by (used in) financing activities			814				(1,132	)			1,527
Effect of translation adjustments			181				(4	)			10
Net increase  in cash and cash equivalents			3,107				636				105
Cash and cash equivalents at beginning of year			1,628				992				887
Cash and cash equivalents at end of year			4,735				1,628				992

Contractual Obligations		Payments due by period ($ in thousands)
		Total				less than 1 year				2-3 years				4-5 years				more than 5 years
Short-term bank credit (1)			676				676				-				-				-
Long-term debt obligations (1)			1,562				66				1,011				485				-
Operating lease			6,419				1,021				2,059				2,119				1,220
Other contractual obligations			2,761				612				882				737				530
Purchase obligations			1,358				1,358				-				-				-
Other short-term liabilities reflected on the company’s balance sheet )			3,703				3,703				-				-				-
Other long-term liabilities reflected on the company’s balance sheet			410				-				-				-				410
Estimate of interest payments on long-term debt obligations (2)			113				49				54				10				-
Total			17,002				7,485				4,006				3,351				2,160

(1)	Long-term debt obligations include current maturities to be paid in the next 12 months. For information on the interest rates of our short-term bank credit and long-term debt obligations, see Item 5B. “Operating and Financial Review and Prospects - Liquidity and Capital Resources.”

(2)

The estimate of interest payments on long-term debt obligations is based on current interest rates as of December 31, 2020 (including current variable rates on the existing long-term debt obligations) and on the current volume of debt obligations, assuming loan repayment in future years as disclosed in Note 8 to the consolidated financial statements.

ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Name	Age	Position
Yitzhak Nissan (3)	71	Chairman of the Board of Directors
Mordechai Marmorstein (1)(2)	74	Director
David Rubner (4)	81	Director
Erez Meltzer (4)	63	Director
Gad Dovev (1)(2)(3)(4)	74	External Director
Ilana Lurie (1)(2)(3)(4)	48	External Director

Name	Age	Position
Eli Yaffe	66	Chief Executive Officer
Alon Mualem	53	Chief Financial Officer
Yitzhak Zemach Oriel Sallary	45 58	Director of Operations VP Sales and Marketing
Sagi Balter	40	VP Process Engineering
Shmuel Meidan	60	VP Quality Assurance

	Salaries, fees, commissions and bonuses		Pension, retirement and similar benefits
All directors and executive officers as a group (consisting of 12 persons)	$1.6 million (1)		$365,000 (2)

(1)

During the year ended December 31, 2020, we paid each of our directors an annual fee of approximately $8,400 and an attendance fee of $270 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			314,255				-			-			314,255
Eli Yaffe		Chief Executive Officer			272,723				330,708			40,346			643,777
Alon Mualem		Chief Financial Officer			156,273				148,087			5,722			310,082
Yitzhak Zemach		VP Operations			119,937				100,717			11,758			232,412
Richard Smith		Vice President of Sales, US  Western Region			164,051				27,392			-			191,443

	(1)	Cash compensation amounts denominated in NIS were converted into U.S. dollars at the rate of NIS 3.437 per $1.00 (the average exchange rate in 2020).
	(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 2020, 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, 2020 based on the options’ grant date fair value in accordance with accounting guidance for equity-based compensation.
	(4)	Paid to Nistec as management fees.

(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 (2)
Yitzhak Nissan (1)			4,065,912				69.6	%
All executive officers and directors as a group (12 persons) (3)			4,134,105				70.0	%

ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Name		Number of Ordinary Shares Beneficially Owned (1)				Percentage of Ownership (2)
Nistec Golan Ltd. (3)			3,891,596				66.63	%
Yitzhak Nissan (3)			174,316				2.98	%

(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 5,840,357 ordinary shares issued and outstanding as of March 22, 2021.

(3)

Based on a Schedule 13D/A filed on February 16, 2021. In addition, Nistec Ltd. transferred its shares to Nistec Golan in December 2018. 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.

•

Mr. Nissan will receive 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.

•

Mr. Nissan will receive 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.

•

In June 2017, we received a loan of NIS 5.0 million (approximately $1.4 million) from Nistec. In March 2018, we received additional loans from Nistec, of NIS 4.0 million (approximately $1.2 million), and in July 2018, we received a third loan from Nistec, of NIS 1.0 million (approximately $290,000) (together, the “Loans”). In December 2018, the Loans and Nistec’s shares were transferred internally within the Nistec group to an affiliated company, Nistec Golan Ltd.  On December 5, 2019, our shareholders approved the execution of an amended  interest agreement with Nistec Golan (the “Interest Agreement”).  Under the terms of the Interest Agreement (any accrued interest prior to the date of the Interest Agreement was waived by Nistec Golan), the Loans, which were repaid from the proceeds of our December 2020 rights offering, carried interest, as follows: A loan in the amount of NIS 5 million carried interest of Prime + 1%, from September 26, 2019 until January 7, 2020.

•

A second loan amount of NIS 5 million carried interest of Prime + 1.75%, from January 1, 2019 until December 2020.

ITEM 8.

FINANCIAL INFORMATION

ITEM 9.

THE OFFER AND LISTING

ITEM 10.

ADDITIONAL INFORMATION

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broker-dealers;

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financial institutions or financial services entities;

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investors liable for alternative minimum tax;

•

regulated investment companies, real estate investment trusts, or grantor trusts;

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tax-exempt organizations;

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retirement plans;

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S corporations:

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pension funds;

•

certain former citizens or long-term residents of the United States;

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non-resident aliens of the United States or taxpayers whose functional currency is not the U.S. dollar;

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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

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investors holding ordinary shares as part of a straddle, appreciated financial position, a hedging transaction or conversion transaction.

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an individual who is a citizen or a resident of the United States;

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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;

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an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

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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

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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 16B.

CODE OF ETHICS

ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Services Rendered.		2020				2019				2018
Audit (1)		$	75,000			$	85,000			$	85,000
Audit Related Fees			27,500				33,700				55,000
Tax (2)			-				-				-
All other Fees (3)			5,600				7,620				6,700
Total		$	108,100			$	126,320			$	146,700

(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

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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.”

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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.”

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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 10A. “Additional Information - Share Capital - Annual and Extraordinary Meetings of Shareholders.”

ITEM 16H.

MINE SAFETY DISCLOSURE

ITEM 17.

FINANCIAL STATEMENTS

ITEM 18.

FINANCIAL STATEMENTS

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)	Included as Exhibit B to Exhibit 99.1 to our Report of Foreign Issuer on Form 6-K filed on October 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 October 31, 2019 and incorporated herein by reference.
		(6)	Filed as Exhibit 4.11 to our Annual Report on Form 20-F for the year ended December 31, 2014, and incorporated herein by reference.
		(7)	Filed as Exhibit 4.12 to our Annual Report on Form 20-F for the year ended December 31, 2014, and incorporated herein by reference.
		(8)	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.
		(9)	Filed herewith.