6-K

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 under the Securities Exchange Act of 1934

For the Month of September 2022

CAMTEK LTD.

(Translation of Registrant’s Name into English)

Ramat Gavriel Industrial Zone P.O. Box 544 Migdal Haemek 23150 ISRAEL(Address of Principal Corporate Offices)

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

Form 20-F ☒    Form 40-F ☐

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

Yes ☐    No ☒

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. This Form 6-K, including all exhibits hereto, is hereby incorporated by reference into all effective registration statements filed by the registrant under the Securities Act of 1933.

CAMTEK LTD.<br>(Registrant)<br> <br>By: /s/ Moshe Eisenberg<br>——————————————<br>Moshe Eisenberg,<br>Chief Financial Officer

Dated: September 14, 2022

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Exhibit<br><br> <br>Number	Description of Exhibit
99.1	Unaudited interim condensed consolidated financial statements as of June 30, 2022.
99.2	Operating and Financial Review and Prospects.
101	The following financial information from Camtek Ltd.’s Report on Form 6-K, formatted in XBRL (eXtensible Business Reporting Language): (i) Unaudited interim condensed consolidated balance sheets on June 30, 2022 and December 31, 2021; (ii) Unaudited interim condensed consolidated statements of operations for the six months ended June 30, 2022 and 2021 and the year ended December 31, 2021; (iii) Unaudited interim condensed consolidated statements of changes in shareholders’ equity for the six months ended June 30, 2022 and 2021 and the year ended December 31, 2021; (iv) Unaudited interim condensed consolidated statements of cash flows for the six months ended June 30, 2022 and 2021 and the year ended December 31, 2021; and (v) notes to the Unaudited interim condensed consolidated financial statements.

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CAMTEK LTD - 1109138 - 2022

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Exhibit 99.1

Camtek Ltd.<br><br>and its Subsidiaries<br><br>Interim Condensed Consolidated Financial Statements<br><br>As of June 30, 2022<br><br>(Unaudited)

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Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Financial Statements as at June 30, 2022

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Contents

	Page
Interim Unaudited Condensed Consolidated Balance Sheets	F-3
Interim Unaudited Condensed Consolidated Statements of Operations	F-4 to F-5
Interim Unaudited Condensed Consolidated Statements of Shareholders’ Equity	F-6
Interim Unaudited Condensed Consolidated Statements of Cash Flows	F-7 to F-8
Notes to the Interim Unaudited Condensed Consolidated Financial Statements	F-9 to F-15

F - 2

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Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Balance Sheets

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			June 30,			December 31,
			2022			2021
	Note		U.S. Dollars (in thousands)
Assets
Current assets
Cash and cash equivalents		4A		56,041			241,943
Short-term deposits				335,000			156,000
Trade accounts receivable, net				73,114			57,825
Inventories		4B		70,075			58,759
Other current assets		4C		7,497			5,653
Total current assets				541,727			520,180
Long term deposits				47,000			32,000
Long term inventory		4B		4,878			5,150
Deferred tax assets				117			227
Other assets				427			190
Property, plant and equipment, net		4D		30,419			25,400
Intangible assets, net		4E		584			610
Total non-current assets				83,425			63,577
Total assets				625,152			583,757
Liabilities and shareholders’ equity
Current liabilities
Trade accounts payable				35,135			33,550
Other current liabilities		4F		51,130			56,137
Total current liabilities				86,265			89,687
Long term liabilities
Other long-term liabilities				6,915			5,800
Convertible notes				195,190			194,643
				202,105			200,443
Total liabilities				288,370			290,130
Shareholders’ equity
Ordinary shares NIS 0.01 par value, 100,000,000 shares authorized at June 30, 2022 and at December 31, 2021;
46,355,859 issued shares at June 30, 2022 and 45,939,019 at December 31, 2021;
44,263,483 shares outstanding at June 30, 2022 and 43,846,643 at December 31, 2021;		3		172			172
Additional paid-in capital				182,176			176,582
Retained earnings				156,332			118,771
				338,680			295,525
Treasury stock, at cost (2,092,376 shares as of June 30, 2022 and December 31, 2021)				(1,898	)		(1,898	)
Total shareholders' equity				336,782			293,627
Total liabilities and shareholders' equity				625,152			583,757

The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.

F - 3

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Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Statements of Operations

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(In thousands, except per share data)

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		Six months ended<br><br> <br>June 30,						Year ended<br><br> <br>December 31,
		2022			2021			2021
	Note	U.S. dollars						U.S. dollars
Revenues			156,744			124,802			269,659
Cost of revenues			76,693			60,831			132,315
Gross profit			80,051			63,971			137,344
Research and development costs			15,199			11,244			23,473
Selling, general and
administrative expenses	5A		24,451			21,288			42,973
			39,650			32,532			66,446
Operating income			40,401			31,439			70,898
Financial income, net	5B		860			562			1,030
Income before income taxes			41,261			32,001			71,928
Income tax expense			(3,700	)		(2,989	)		(11,651	)
Net income			37,561			29,012			60,277

F - 4

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Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Statements of Operations (contd.)

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Net income per ordinary share:

		Six months ended<br><br> <br>June 30,				Year ended<br><br> <br>December 31,
		2022		2021		2021
	Note	U.S. dollars				U.S. dollars
Basic net earnings per share			0.86		0.67		1.38
Diluted net earnings per share			0.78		0.60		1.34
Weighted average number of
ordinary shares outstanding
(in thousands):
Basic			43,929		43,450		43,644
Diluted			48,150		44,612		45,035

The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.

F - 5

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Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Statements of Shareholders’ Equity

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	Ordinary Shares				Number of						Additional				Total
	NIS 0.01 par value				Treasury			Treasury			paid-in		Retained		shareholders'
	Number of		U.S. Dollars		Shares			Shares			earnings		earnings		equity
	Shares Issued		(in thousands)					U.S. Dollars (in thousands)
Balances at
December 31, 2020		45,365,354		171		(2,092,376	)		(1,898	)		170,497		58,494		227,264
Share-based
compensation
expense		-		-		-			-			2,681		-		2,681
Exercise of share
options and RSUs		439,508		1		-			-			205		-		206
Net income		-		-		-			-			-		29,012		29,012
Balances at
June 30, 2021		45,804,862		172		(2,092,376	)		(1,898	)		173,383		87,506		259,163
Share-based
compensation
expense		-		-		-			-			3,134		-		3,134
Exercise of share
options and RSUs		134,157		*		-			-			65		-		65
Net income		-		-		-			-			-		31,265		31,265
Balances at
December 31, 2021		45,939,019		172		(2,092,376	)		(1,898	)		176,582		118,771		293,627
Share-based
compensation
expense		-		-		-			-			5,592		-		5,592
Exercise of share
options and RSUs		416,840		*		-			-			2		-		2
Net income		-		-		-			-			-		37,561		37,561
Balances at
June 30, 2021		46,355,859		172		(2,092,376	)		(1,898	)		182,176		156,332		336,782

The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.

F - 6

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Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Statements of Cash Flows

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(In thousands)

	Six months ended<br><br> <br>June 30,						Year ended<br><br> <br>December 31,
	2022			2021			2021
	U.S. dollars						U.S. dollars
Cash flows from operating activities:
Net income		37,561			29,012			60,277
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization		1,849			1,278			2,811
Deferred tax expense		110			668			255
Amortization of debt issuance costs		547			-			113
Loss on disposal of fixed assets		-			31			4
Share based compensation expense		5,592			2,681			5,815
Change in provision for doubtful debts		-			(33	)		(32	)
Changes in operating assets and liabilities:
Trade accounts receivable, gross		(14,252	)		(19,234	)		(17,338	)
Inventories		(13,512	)		(15,182	)		(21,702	)
Due from related parties, net		(2	)		(12	)		(12	)
Other assets		(2,079	)		(1,067	)		(2,380	)
Trade accounts payable		1,244			6,040			6,190
Other current liabilities		(4,111	)		18,440			26,956
Net cash provided by operating activities		12,947			22,622			60,957
Cash flows from investing activities:
Investment in short-term deposits		(179,000	)		(37,000	)		(84,000	)
Investment in long-term deposits		(15,000	)		(10,000	)		(32,000	)
Purchase of fixed assets		(3,786	)		(1,268	)		(4,065	)
Purchase of intangible assets		(28	)		(45	)		(111	)
Net cash used in investing activities		(197,814	)		(48,313	)		(120,176	)
Cash flows from financing activities:
Proceeds from exercise of share options		2			206			271
Issuance of convertible notes, net		-			-			194,530
Net cash provided by financing activities		2			206			194,801
Effect of change in exchange rate on cash and cash equivalents		(1,037	)		9			546
Net increase (decrease) in cash and cash
equivalents		(185,902	)		(25,476	)		136,128
Cash and cash equivalents at beginning of
the period		241,943			105,815			105,815
Cash and cash equivalents at end of the
period		56,041			80,339			241,943

The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.

F - 7

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Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Statements of Cash Flows

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(In thousands)

	Six months ended<br><br> <br>June 30,				Year ended<br><br> <br>December 31,
	2022		2021		2021
	U.S. dollars				U.S. dollars
Supplementary cash flows information:
Income taxes paid		454		153		558
Interest received		1,030		-		1,057
Lease payments		689		481		1,060
Non-cash transactions:
Fixed assets purchased with supplier credit		680		321		339

The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.

F - 8

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Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

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(Amounts in thousands, except per share data)

Note 1 - Nature of Operations

A.	Camtek Ltd. (“Camtek” or the “Company”), an Israeli corporation, is jointly controlled 21.0% by Priortech Ltd., an Israeli corporation listed on the Tel-Aviv Stock Exchange and 17.7% by Chroma Ate Inc., a Taiwanese company (“Chroma”). Camtek provides automated and technologically advanced solutions dedicated to enhancing production processes, increasing product yield and reliability, and enabling and supporting customers’ latest technologies in the semiconductor fabrication industry.
B.	As detailed in the annual financial statements as of December 31, 2021, since January 2020, the Covid-19 outbreak has dramatically expanded into a worldwide pandemic creating macro-economic uncertainty and disruption in the business and financial markets. At present, business activity is continuing at all of the Company’s locations, with new routines implemented as required by local Covid-19 regulations.<br><br> <br><br><br> <br>From the beginning of the outbreak, the Company has been carefully managing the risks and its global operations. The Israeli facility has been able to maintain its required production levels. Worldwide, the Company has benefitted from its strategy of having in place local professional teams in each of its territories that can independently install and support systems. As such, the Company has been able to deliver most of its orders on time and the impact of the Covid-19 pandemic on the its business activity has not been significant.
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F - 9

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Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

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(Amounts in thousands, except per share data)

Note 2 - Basis of Preparation

A.          Statement of compliance

Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the Company’s 2021 annual audited consolidated financial statement for the year ended December 31, 2021.

The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and do not include all of the information required for full annual financial statements. The unaudited condensed consolidated interim statements should be read in conjunction with the Company’s 2021 annual audited consolidated financial statements and footnotes, which were filed with the U.S. Securities and Exchange Commission as part of the Company’s Annual Report on Form 20-F for the year ended December 31, 2021.

In the opinion of management of the Company, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six-month period ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ended December 31, 2022 or for any other future period.

F - 10

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Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

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(Amounts in thousands, except per share data)

Note 3 - Shareholders’ Equity

A.          General

The Company’s shares are traded on the NASDAQ Global Market under the symbol “CAMT”, and also listed and traded on the Tel-Aviv stock exchange

B.          Changes in Stock Options and RSUs

The number of stock options exercised in the six-month period ended June 30, 2022, was 416,840.

In the first six months of 2022, 602,540 restricted share units (RSUs) were granted by the Company. The RSUs vest over a four-year period.

C.          Share-based Compensation Expense

The total share-based compensation expense amounted to $5,592, $2,681, and $5,815 for the six-month periods ended June 30, 2022 and 2021 and the year ended December 31, 2021, respectively.

F - 11

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Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

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(Amounts in thousands, except per share data)

Note 4 - Supplementary Financial Statements Information

A.          Cash and cash equivalents

The Company’s cash and cash equivalent balance at June 30, 2022 and December 31, 2021 is denominated in the following currencies:

	June 30,		December 31,
	2022		2021
	U.S. Dollars (in thousands)
US Dollars		32,542		225,283
New Israeli Shekels		21,563		13,566
Other currencies		1,936		3,094
		56,041		241,943

Short-term deposits are bank deposits in US Dollars with terms at the investment date of 3-12 months with average annual interest rates of 1.11%.

B.         Inventories

	June 30,		December 31,
	2022		2021
	U.S. Dollars (in thousands)
Components		41,852		33,212
Work in process		15,457		12,688
Finished products (including systems at customer locations not yet sold)		17,644		18,009
		74,953		63,909

Inventories are presented in:

	June 30,		December 31,
	2022		2021
	U.S. Dollars (in thousands)
Current assets		70,075		58,759
Long-term assets		4,878		5,150
		74,953		63,909

F - 12

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Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

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(Amounts in thousands, except per share data)

Note 4 - Supplementary Financial Statements Information (cont’d)

C.          Other Current Assets

	June 30,		December 31,
	2022		2021
	U.S. Dollars (in thousands)
Due from Government institutions		2,639		2,623
Interest receivable		1,638		463
Prepaid expenses		2,380		2,025
Other		840		542
		7,497		5,653

D.         Property, Plant and Equipment, Net

	June 30,		December 31,
	2022		2021
	U.S. Dollars (in thousands)
Land		863		863
Building		16,444		15,208
Machinery and equipment		17,855		13,911
Office furniture and equipment		943		881
Computer equipment and software		6,377		5,383
Automobiles		396		479
Leasehold improvements		1,718		1,642
Right of use assets		5,626		4,969
		50,222		43,336
Less accumulated depreciation		19,803		17,936
		30,419		25,400

F - 13

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Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

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(Amounts in thousands, except per share data)

Note 4 - Supplementary Financial Statements Information (cont’d)

E.          Intangible Assets, Net

	June 30,		December 31,
	2022		2021
	U.S. Dollars (in thousands)
Patent registration costs		2,067		2,038
Accumulated amortization and impairment		1,483		1,428
Total intangible assets, net		584		610

F.          Other Current Liabilities

	June 30,		December 31,
	2022		2021
	U.S. Dollars (in thousands)
Commissions		19,256		15,967
Advances from customers and deferred revenues		11,757		10,837
Accrued employee compensation and related benefits		9,682		10,923
Accrued warranty costs		3,095		3,265
Government institutions and income tax payable		4,017		11,566
Accrued expenses		2,283		2,561
Operating lease obligations		1,040		1,018
		51,130		56,137

F - 14

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Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

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(Amounts in thousands, except per share data)

Note 5 - Statements of Operations

A.	Selling, general and administrative expenses
	Six months ended<br><br> <br>June 30,				Year ended<br><br> <br>December 31,
---	---	---	---	---	---	---
	2022		2021		2021
	U.S. Dollars (in thousands)
Selling (1)		18,840		16,635		33,614
General and administrative		5,611		4,653		9,359
		24,451		21,288		42,973
(1)        Including shipping and handling costs		980		840		1,867

B.          Financial income (expenses), net

	Six months ended<br><br> <br>June 30,					Year ended<br><br> <br>December 31,
	2022			2021		2021
	U.S. Dollars (in thousands)
Interest income		2,488			561		1,408
Amortization of issuance costs of convertible notes		(547	)		-		(113	)
Other, net (1)		(1,081	)		1		(265	)
		860			562		1,030
(1)        Including foreign currency expense resulting from transactions not denominated in U.S. Dollars		(871	)		151		(351	)

F- 15

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Exhibit 99.2

Operating and Financial Review and Prospects.

A.	Operating Results

General

The following discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes to those statements included therein, which have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP.

Overview

We design, develop, manufacture and market automated solutions dedicated for enhancing production processes and yield for the semiconductor fabrication market, principally based on core AOI technology.

We sell our systems worldwide. The vast majority of our sales are to manufacturers in the Asia Pacific region, including China, South East Asia, Korea and Taiwan, due to, among other factors, the migration of the electronic manufacturers into this region.

In the first half of 2022, our sales to customers in the Asia Pacific region accounted for approximately 79% of our total revenues.

In addition to revenues derived from the sale of systems and related products, we generate revenues from providing maintenance and support services for our products. We generally provide a one-year warranty with our systems. Accordingly, service revenues are not earned during the warranty period.

Critical Accounting Policies

Critical accounting policies are those that are, in management’s view, most important to the portrayal of a company’s financial condition and results of operations and most demanding judgment calls, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. We believe our most critical accounting policies relate to:

Revenue Recognition. The Company’s contracts with its customers include performance obligations to provide its products or to service the installed products. A product sale contract may include an extended warranty (that is, for longer than the twelve-month standard warranty) as well as installation, both of which are considered separate performance obligations.

The Company recognizes revenue from contracts for sales of products when the Company transfers control of the product to the customer. This generally occurs upon shipment as pre-shipment calibration and testing processes ensure simplified and streamlined installation at the customer site. Revenues from the contract are recognized in an amount that reflects the consideration the Company expects to be entitled to receive once the product is operating in accordance with its specifications and signed documentation of the arrangement, such as a signed contract or purchase order, has been received. Payment terms with customers may vary, but are generally based on milestones within the delivery process such as shipping and installation. Payment terms do not include significant financing components.

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The Company does not incur costs in obtaining a contract except for agents’ commissions, which are incurred upon the recognition of revenues. Revenues are recognized over a period of less than a year and as such, there are no underlying sales commissions to be capitalized.

Service revenues consist mainly of contracts charged under time and material arrangements. Service revenues from maintenance contracts are recognized ratably over the contract period.

Contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on the prices charged to customers.

The Company’s multiple performance obligations consist of product sales, installation services and non-standard warranties. A fixed amount is deferred in respect of installation services for machines that have been recognized but not installed as of the balance sheet date. A non-standard warranty is one that is for a period longer than 12 months. Accordingly, income from a non-standard warranty is deferred as unearned revenue and is recognized ratably as revenue commencing with and over the applicable warranty term.

The Company records contract liabilities when the customer has been billed in advance of the Company completing its performance obligations. These amounts are recorded as deferred revenue in the Consolidated Balance Sheets.

Valuation of Accounts Receivable.  We review accounts receivable to determine which are doubtful of collection. In making this determination of the appropriate allowance for doubtful accounts, we consider information at hand regarding specific customers, including aging of the receivable balance, evaluation of the security received from customers, our history of write-offs, relationships with our customers and the overall credit worthiness of our customers. Changes in the credit worthiness of our customers, the general economic environment and other factors may impact the level of our future write-offs.

Valuation of Inventory.  Inventories consist of completed systems, partially completed systems and components, and are recorded at the lower of cost, determined by the moving – average basis, or market. We review inventory for obsolescence and excess quantities to determine that items deemed obsolete or excess inventory are appropriately reserved. In making the determination, we consider forecasted future sales or service/maintenance of related products and the quantity of inventory at the balance sheet date, assessed against each inventory item’s past usage rates and future expected usage rates. Changes in factors such as technology, customer demand, competing products and other matters could affect the level of our obsolete and excess inventory in the future.

In the first half of 2022 there were no write-offs of inventory. In the year 2021 we wrote-off inventory in the amount of approximately $0.4 million. The write-off amounts are included in the line item called "Cost of products sold", in the consolidated statements of operations. The write-offs create a new cost basis and are a permanent reduction of inventory cost. The write-offs in in 2021 were made against damaged, obsolete, excess and slow-moving inventory. Inventory that is not expected to be converted or consumed in the following 12 months is classified as non-current. As of June 30, 2022, a $4.9 million portion of our inventory was classified as non-current. Management periodically evaluates our inventory composition, giving consideration to factors such as the probability and timing of anticipated usage and the physical condition of the items, and then estimates a charge (reducing the inventory) to be provided for slow moving, technologically obsolete or damaged inventory. These estimates could vary significantly from actual requirements based upon future economic conditions, customer inventory levels or competitive factors that were not foreseen or did not exist when the inventory write-offs were established.

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Intangible assets. Patent registration costs are capitalized at cost and amortized, beginning with the first year of utilization, over its expected life of ten years.

We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the long lived asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized as computed by subtracting the fair market value of the asset from its carrying value.

Provisions for contingent liabilities. A contingency (provision) in accordance with ASC Topic 450-10-05, Contingencies, is an existing condition or situation involving uncertainty as to the range of possible loss to the entity. A provision for claims is recognized if it is probable (likely to occur) that a liability has been incurred and the amount can be estimated reasonably. Provisions in general are highly judgmental, especially in cases of legal disputes. We assess the probability of an adverse event and if the probability is evaluated to be probable, we are required to fully provide for the total amount of the estimated contingent liability. We continually evaluate our pending provisions to determine if accruals are required. It is often difficult to accurately estimate the ultimate outcome of a contingent liability. Different variables can affect the timing and amount we provide for certain contingent liabilities. Our assessments are therefore subject to estimates made by us and our legal counsel, adverse revision in our estimates of the potential liability could materially impact our financial condition, results of operations or liquidity.

Valuation of Long Lived Assets. We apply ASC Subtopic 360-10, "Property, Plant and Equipment".  This Statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset.  If the carrying amount of the long lived asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized as computed by subtracting the fair market value of the asset from its carrying value. We prepare future cash flows based on our best estimates including projections and financial statements, future plans and growth estimates.

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Income Taxes. We account for income taxes under ASC Subtopic 740-10 Income Taxes – Overall.  Deferred tax assets or liabilities are recognized in respect of temporary differences between the tax bases of assets and liabilities and their financial reporting amounts as well as in respect of tax losses and other deductions which may be deductible for tax purposes in future years, based on tax rates applicable to the periods in which such deferred taxes will be realized. The rates applied are those enacted in law as of June 30, 2022. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and during which the carry-forwards are available. Valuation allowances are established when necessary to reduce deferred tax assets to the amount considered more likely than not to be realized.

Our financial statements include deferred tax assets, net, which are calculated according to the above methodology. If there is an unexpected critical deterioration in our operating results and forecasts, we would have to increase the valuation allowance with respect to those assets. We believe that it is more likely than not that those net deferred tax assets included in our financial statements will be realized in subsequent years.

Stock Option and Restricted Share Plans. We account for our employee stock-based compensation awards in accordance with ASC Topic 718, Compensation - Stock Compensation. ASC Topic 718 requires that all employee stock‑based compensation is recognized as a cost in the financial statements and that for equity-classified awards such cost is measured at the grant date fair value of the award. We estimate grant date fair value using the Black‑Scholes-Merton option‑pricing model. Forfeitures are recognized when they occur.

Leases. On January 1, 2019, we adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02) using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under Topic 842.

The adoption did not impact our beginning retained earnings, or prior year consolidated statements of income and statements of cash flows.

Under Topic 842, we determine if an arrangement is a lease at inception. ROU assets and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, we consider only payments that are fixed and determinable at the time of commencement. As most of our leases do not provide an implicit rate, we use its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our incremental borrowing rate is a hypothetical rate based on its understanding of what our credit rating would be (3.0% in 2022). Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. When determining the probability of exercising such options, we consider contract-based, asset-based, entity-based, and market-based factors. Lease agreements may contain variable costs such as common area maintenance, insurance, real estate taxes or other costs. Variable lease costs are expensed as incurred on the consolidated statements of income. Our lease agreements generally do not contain any residual value guarantees or restrictive covenants.

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Operating lease ROU assets are presented as property, plant and equipment on the consolidated balance sheet. The current portion of operating lease liabilities is included in other current liabilities and the long-term portion is presented within long-term liabilities on the consolidated balance sheet.

For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

ROU assets for operating leases are periodically reduced by impairment losses. We use the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment – Overall, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize.

Comparison of Period to Period Results of Operations

The following table presents consolidated statement of operations data for the periods indicated as a percentage of total revenues from continuing operations:

	Six Months Ended June 30,
	2022			2021
Revenues		100.0	%		100.0	%
Cost of revenues		48.9	%		48.7	%
Gross profit		51.1	%		51.3	%
Operating expenses:
Research and development, net		9.7	%		9.0	%
Selling, general and administrative expenses		15.6	%		17.1	%
Total operating expenses		25.3	%		26.1	%
Operating income		25.8	%		25.2	%
Financial income, net		0.5	%		0.5	%
Income tax (expenses) benefit		(2.4	)%		(2.4	)%
Net income		24.0	%		23.2	%

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Six months Ended June 30, 2022 compared to Six months ended June 30, 2021

Revenues. Revenues increased by 26% to $156.7 million in 2022 from $124.8 million in 2021. The increase is mainly due to the sale of a higher number of tools due to increased demand in the semiconductor market.

Gross Profit. Gross profit consists of revenues less cost of revenues, which includes the cost of components, production materials, labor, service related expenses, depreciation, factory and overhead expenses and provisions for warranties. These expenditures are partially affected by sales volume. Our total gross profit increased to $80.1 million in 2022 from $64.0 million in 2021, an increase of $16.1 million, or 25%. Our gross margin reduced slightly to 51.1% in 2022, compared to a gross margin of 51.3% in 2021.

Research and Development Costs. Research and development expenses consist primarily of salaries, materials consumption and costs associated with subcontracting certain development efforts. Total research and development expenses for 2022 increased to $15.2 million from $11.2 million in 2021 due to increased activity for improving capabilities and developing additional features and products.

Selling, General and Administrative Expenses. Selling, general and administrative expenses consist primarily of expenses associated with salaries, commissions, promotion and travel, professional services and rent costs. Our selling, general and administrative expenses increased by 15% to $24.5 million in 2022 from $21.3 million in 2021, mainly due to an increase in sales channels activity on increased revenues.

Financial Income (Expenses), Net. Financial income/expenses consist of interest, revaluation and other bank fees. We had net financial income of $0.9 million in 2022, compared to net financial income of $0.6 million in 2021. These changes relate to interest income on increased short- and long-term deposits, offset by losses from changes in the exchange rate.

Provision for Income Taxes. Income tax expense was $3.7 million in compared to expense of $3.0 million in 2021, mainly due to increased income before tax.

Net Income. We realized net income of $37.6 million in 2022 compared to net income of $29.0 million in 2021, in light of the factors discussed above.

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B.    Liquidity and Capital Resources

Our cash and cash equivalent and short-term deposit balances totalled approximately $391.0 million on June 30, 2022 and $397.9 million on December 31, 2021. In addition, there was $47 million and $32 million, respectively, in long-term deposits. Our cash is invested in bank deposits spread among several banks, primarily in Israel.

In November 2021, we raised $194.5 million, net, in a private offering for 0% Convertible Senior Notes due 2026.

Our working capital was approximately $455.4 million at June 30, 2022 and $430.5 million at December 31, 2021. The increase is mainly attributed to the increase in short-term deposits, trade accounts receivable and inventory and the decrease in other current liabilities, offset by the decrease in cash and cash equivalents and the increase in trade accounts payable.

Our capital expenditures during the first half of 2022 were approximately $3.8 million, mainly in support of our operating activities.

Cash flow from operating activities

Net cash and cash equivalents provided by operating activities for the six months ended June 30, 2022, totalled $12.9 million. Net cash and cash equivalents provided by operating activities for the six months ended June 30, 2021 totalled $22.6 million.

During the first half of 2022, cash provided by operating activities was primarily attributed to the positive net income and the increase in trade accounts payable, offset by the increase in trade accounts receivable and inventory.

Cash flow from investing activities

Cash flow used in investing activities in the first half of 2022 was $197.8 million, primarily due to investment in short- and long-term deposits, compared to $48.3 million in the first half of 2021.

Cash flow from financing activities

Cash flow provided by financing activities the first half of 2022 was zero compared to $0.2 million in the first half of 2021.

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