Equibles

6-K

CAMTEK LTD (CAMT)

6-K 2021-09-14 For: 2021-06-30
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Added on April 11, 2026

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 2021

CAMTEK LTD. (Translation of Registrant’s Name into English)

Ramat Gavriel Industrial ZoneP.O. Box 544Migdal Haemek 23150ISRAEL(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 ☒

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, 2021

Exhibit<br><br> <br>Number Description of Exhibit
99.1 Unaudited interim condensed consolidated financial statements as of June 30, 2021.
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, 2021 and December 31, 2020; (ii) Unaudited interim condensed consolidated statements of operations for the six months and three months ended June 30, 2021 and 2020 and the year ended December 31, 2020; (iii) Unaudited interim condensed consolidated statements of changes in shareholders’ equity for the six months and three months ended June 30, 2021 and 2020 and the year ended December 31, 2020; (iv) Unaudited interim condensed consolidated statements of cash flows for the six months and three months ended June 30, 2021 and 2020 and the year ended December 31, 2020; and (v) notes to the Unaudited interim condensed consolidated financial statements.

CAMTEK LTD - 1109138 - 2021

Exhibit 99.1

Camtek Ltd.<br><br>and its Subsidiaries<br><br>Interim Condensed Consolidated<br><br>Financial Statements<br><br>As of June 30, 2021<br><br>(Unaudited)

Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Financial Statements as at June 30, 2021

Contents

Page
Interim Unaudited Condensed Consolidated Balance Sheets F-3
Interim Unaudited Condensed Consolidated Statements of Operations F-4
Interim Unaudited Condensed Consolidated Statements of Shareholders’ Equity F-5
Interim Unaudited Condensed Consolidated Statements of Cash Flows F-6
Notes to the Interim Unaudited Condensed Consolidated Financial Statements F-7 to F-13

Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Balance Sheets

June 30, December 31,
2021 2020
Note U.S. Dollars (in thousands)
Assets
Current assets
Cash and cash equivalents 5A 80,339 105,815
Short-term deposits 109,000 72,000
Trade accounts receivable, net 60,259 41,001
Inventories 5B 54,346 39,736
Other current assets 5C 4,411 3,366
Total current assets 308,355 261,918
Long term deposits 10,000 -
Long term inventory 5B 4,694 4,416
Deferred tax assets - 482
Other assets, net 119 85
Property, plant and equipment, net 5D 20,377 20,398
Intangible assets, net 5E 602 609
35,792 25,990
Total assets 344,147 287,908
Liabilities and shareholders’ equity
Current liabilities
Trade accounts payable 32,980 27,180
Other current liabilities 5F 48,348 30,204
Total current liabilities 81,328 57,384
Long term liabilities
Deferred tax liabilities, net 186 -
Other long-term liabilities 3,470 3,260
3,656 3,260
Total liabilities 84,984 60,644
Shareholders’ equity
Ordinary shares NIS 0.01 par value, 100,000,000 shares authorized at June 30, 2021 and at December 31, 2020;
45,804,862 issued shares at June 30, 2021 and 45,365,354 at December 31, 2020;
43,712,486 shares outstanding at June 30, 2021 and 43,272,978 at December 31, 2020; 3 172 171
Additional paid-in capital 173,383 170,497
Retained earnings 87,506 58,494
261,061 229,162
Treasury stock, at cost (2,092,376 as of June 30, 2021 and December 31, 2020) (1,898 ) (1,898 )
Total shareholders' equity 259,163 227,264
Total liabilities and shareholders' equity 344,147 287,908

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

F - 3

Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share data)

Six months ended<br><br> <br>June 30, Three months ended<br><br> <br>June 30, Year ended<br><br> <br>December 31,
2021 2020 2021 2020 2020
Note U.S. dollars U.S. dollars U.S. dollars
Revenues 4 124,802 67,179 67,450 37,000 155,859
Cost of revenues 60,831 36,679 32,456 20,057 82,628
Gross profit 63,971 30,500 34,994 16,943 73,231
Research and development costs 11,244 8,884 5,766 4,754 19,575
Selling, general and
administrative expenses 6A 21,288 13,338 12,188 6,779 31,032
32,532 22,222 17,954 11,533 50,607
Operating income 31,439 8,278 17,040 5,410 22,624
Financial income, net 6B 562 651 176 276 775
Income from continuing
operations before taxes 32,001 8,929 17,216 5,686 23,399
Income tax expense (2,989 ) (841 ) (1,564 ) (378 ) (1,621 )
Net income 29,012 8,088 15,652 5,308 21,778
Basic net earnings 0.67 0.21 0.36 0.14 0.55
--- --- --- --- --- ---
Diluted net earnings 0.65 0.20 0.35 0.13 0.54
Weighted average number of
ordinary shares outstanding
(in thousands):
Basic 43,450 38,877 43,609 39,033 39,383
Diluted 44,612 39,785 44,750 39,945 40,372

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

F - 4

Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Statements of Shareholders’ Equity

Ordinary Shares Number of Additional Total
NIS 0.01 par value Treasury Treasury paid-in Retained shareholders'
Number of U.S. Dollars Shares capital earnings capital equity
Shares Issued (in thousands) U.S. Dollars (in thousands)
Balances at
December 31, 2019 40,742,355 157 (2,092,376 ) (1,898 ) 101,327 36,716 136,302
Share-based
compensation
expense - - - - 817 - 817
Exercise of share
options 23,557 * - - 58 - 58
Net income - - - - - 2,780 2,780
Balances at
March 31, 2020 40,765,912 157 (2,092,376 ) (1,898 ) 102,202 39,496 139,957
Share-based
compensation
expense - - - - 951 - 951
Exercise of share
options 358,802 1 - - 275 - 276
Net income - - - - - 5,308 5,308
Balances at
June 30, 2020 41,124,714 158 (2,092,376 ) (1,898 ) 103,428 44,804 146,492
Issuance of shares 4,025,000 12 - - 64,308 - 64,320
Exercise of share
options 215,640 1 - - 294 - 295
Share-based
compensation
expense - - - - 2,467 - 2,467
Net income - - - - - 13,690 13,690
Balances at
December 31, 2020 45,365,354 171 (2,092,376 ) (1,898 ) 170,497 58,494 227,264
Share-based
compensation
expense - - - - 1,211 - 1,211
Exercise of share
options 57,227 * - - 161 - 161
Net income - - - - - 13,360 13,360
Balances at
March 31, 2021 45,422,581 171 (2,092,376 ) (1,898 ) 171,869 71,854 241,996
Share-based
--- --- --- --- --- --- --- --- --- ---
compensation
expense - - - - 1,470 - 1,470
Exercise of share
options 382,281 1 - - 44 - 45
Net income - - - - - 15,652 15,652
Balances at
June 30, 2021 45,804,862 172 (2,092,376 ) (1,898 ) 173,383 87,506 259,163

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

F - 5

Camtek Ltd. and its Subsidiaries

Interim Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)

Six months ended<br><br> <br>June 30, Three months ended<br><br> <br>June 30, Year ended<br><br> <br>December 31,
2021 2020 2021 2020 2020
U.S. dollars U.S. dollars U.S. dollars
Cash flows from operating activities:
Net income 29,012 8,088 15,652 5,308 21,778
Adjustments to reconcile net income to net<br>  cash provided by operating activities:
Depreciation and amortization 1,278 1,057 648 531 2,234
Deferred tax expense 668 226 60 296 476
Loss on disposal of fixed assets 31 - 11 - -
Share based compensation expense 2,681 1,768 1,470 951 4,235
Change in provision for doubtful debts (33 ) - - - (87 )
Changes in operating assets and liabilities:
Trade accounts receivable, gross (19,234 ) (8,108 ) (6,115 ) (2,355 ) (9,696 )
Inventories (15,182 ) (7,014 ) (9,825 ) (3,991 ) (19,330 )
Due from related parties, net (12 ) 20 (2 ) 51 72
Other assets (1,067 ) (601 ) (505 ) (529 ) (501 )
Trade accounts payable 6,040 9,219 5,809 4,247 15,661
Other current liabilities 18,397 7,765 12,653 6,569 10,686
Liability for employee severance benefits, net 43 46 36 48 224
Net cash provided by operating activities 22,622 12,466 19,892 11,126 25,752
Cash flows from investing activities:
Release from (investment in) short-term deposits (37,000 ) (17,500 ) 6,000 (27,500 ) (20,500 )
Release from (investment in) long-term deposits (10,000 ) - - - -
Purchase of fixed assets (1,268 ) (775 ) (802 ) (365 ) (2,410 )
Purchase of intangible assets (45 ) (126 ) (13 ) (122 ) (216 )
Net cash provided by (used in) investing activities (48,313 ) (18,401 ) 5,185 (27,987 ) (23,126 )
Cash flows from financing activities:
Share issuance, net - - 1 - 64,288
Proceeds from exercise of share options 206 334 44 276 629
Net cash provided by financing activities 206 334 45 276 64,917
Effect of change in exchange rate on cash and cash equivalents 9 23 270 (32 ) 225
Net increase (decrease) in cash and cash  equivalents (25,476 ) (5,578 ) 25,392 (16,617 ) 67,768
Cash and cash equivalents at beginning of<br>    the period 105,815 38,047 54,947 49,086 38,047
Cash and cash equivalents at end of the     period 80,339 32,469 80,339 32,469 105,815
Supplementary cash flows information:
Income taxes paid 153 211 44 12 546
Lease payments 481 530 239 260 1,025
Non-cash transactions:
Fixed assets purchased with supplier credit 321 162 321 162 159

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

F - 6

Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(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 17.9% 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, 2020, 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.
--- ---

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.

F - 7

Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(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 2020 annual audited consolidated financial statement for the year ended December 31, 2020.

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 2020 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, 2020.

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 three and six-month periods ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ended December 31, 2021 or for any other future period.

B.          Recent Accounting Pronouncements

In December 2019, the FASB issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance became effective in the first quarter of 2021 on a prospective basis. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

F - 8

Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(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 three-month and six-month periods ended June 30, 2021, were 382,201 and 439,508, respectively.

In the first six months of 2021, 166,400 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 $2,681, $1,768, $1,470, $951 and $4,235 for the six-month periods ended June 30, 2021 and 2020, the three-month periods ended June 30, 2021 and 2020 and the year ended December 31, 2020, respectively.

Note 4 – Segment Information

Substantially all fixed assets are located in Israel and substantially all revenues are derived from shipments to other countries. Revenues are attributable to geographic areas/countries based upon the destination of shipment of products and related services as follows:

Six months ended<br><br> <br>June 30, Three months ended<br><br> <br>June 30, Year ended<br><br> <br>December 31,
2021 2020 2021 2020 2020
U.S. Dollars (in thousands)
Asia Pacific 109,345 61,914 59,145 35,130 137,555
United States 8,827 3,258 4,446 986 9,847
Europe 6,630 2,007 3,859 884 8,457
124,802 67,179 67,450 37,000 155,859

F - 9

Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

Note 5 - Supplementary Financial Statements Information

A.          Cash and cash equivalents

The Company’s cash and cash equivalent balance at June 30, 2021 and December 31, 2020 is denominated in the following currencies:

June 30, December 31,
2021 2020
U.S. Dollars (in thousands)
US Dollars 64,649 102,669
New Israeli Shekels 13,344 1,542
Euro 1,221 570
Other currencies 1,125 1,034
80,339 105,815

B.          Inventories

June 30, December 31,
2021 2020
U.S. Dollars (in thousands)
Components 27,907 19,630
Work in process 11,317 10,123
Finished products (including systems at customer locations not yet sold) 19,816 14,399
59,040 44,152

Inventories are presented in:

June 30, December, 31
2021 2020
U.S. Dollars (in thousands)
Current assets 54,346 39,736
Long-term assets 4,694 4,416
59,040 44,152

F - 10

Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

Note 5 - Supplementary Financial Statements Information (cont’d)

C.          Other Current Assets

June 30, December 31,
2021 2020
U.S. Dollars (in thousands)
Due from Government institutions 2,382 1,967
Interest receivable 368 207
Prepaid expenses 1,144 455
Income tax receivables 307 302
Deposits for operating leases 123 195
Other 87 240
4,411 3,366

D.          Property, Plant and Equipment, Net

June 30, December, 31
2021 2020
U.S. Dollars (in thousands)
Land 863 863
Building 14,481 14,438
Machinery and equipment 11,772 11,260
Office furniture and equipment 846 785
Computer equipment and software 5,222 4,760
Automobiles 281 263
Leasehold improvements 680 630
Right of use assets 3,284 3,014
37,429 36,013
Less accumulated depreciation 17,052 15,615
20,377 20,398

F - 11

Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

Note 5 - Supplementary Financial Statements Information (cont’d)

E.          Intangible Assets, Net

June 30, December 31,
2021 2020
U.S. Dollars (in thousands)
Patent registration costs 1,972 1,927
Accumulated amortization and impairment 1,370 1,318
Total intangible assets, net 602 609

F.          Other Current Liabilities

June 30, December 31,
2021 2020
U.S. Dollars (in thousands)
Commissions 14,286 7,965
Advances from customers and deferred revenues 12,900 6,155
Accrued employee compensation and related benefits 12,025 9,698
Accrued warranty costs 3,267 2,328
Government institutions 2,987 752
Accrued expenses 2,172 2,570
Operating lease obligations 711 736
48,348 30,204

F - 12

Camtek Ltd. and its Subsidiaries

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Amounts in thousands, except per share data)

Note 6 - Statements of Operations

A. Selling, general and administrative expenses
Six months ended<br><br> <br>June 30, Three months ended<br><br> <br>June 30, Year ended<br><br> <br>December 31,
--- --- --- --- --- --- --- --- --- --- ---
2021 2020 2021 2020 2020
U.S. Dollars (in thousands)
Selling (1) 16,635 9,551 9,879 4,807 22,969
General and administrative 4,653 3,787 2,309 1,972 8,063
21,288 13,338 12,188 6,779 31,032
(1)       Including shipping and handling costs 840 1,137 378 672 2,356

B.       Financial income (expenses), net

Six months ended<br><br> <br>June 30, Three months ended<br><br> <br>June 30, Year ended<br><br> <br>December 31,
2021 2020 2021 2020 2020
U.S. Dollars (in thousands)
Interest income 561 730 323 344 1,281
Other, net (1) 1 (79 ) (147 ) (68 ) (506 )
562 651 176 276 775
(1)       Including foreign currency expense resulting from transactions not denominated in U.S. Dollars 151 (22 ) (66 ) (39 ) (351 )

F - 13

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 2021, our sales to customers in the Asia Pacific region accounted for approximately 88% 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. From October 2020, this generally occurs upon shipment whereas previously it was generally upon installation at the customer’s premises. This policy change was made following changes to pre-shipment calibration and testing processes which have enabled the simplification and streamlining of the installation at the customer site. The change is not expected to have a material effect on revenues. 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.

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. Since October 2020, following the change in the point in time at which machine revenues are recognized, 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 2021 we wrote-off inventory of approximately $0.3 million. In the year 2020 we wrote-off inventory in the amount of approximately $0.1 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 and 2020 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, 2021, a $4.7 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.

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.

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, 2021. 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 (2.5% in 2020). 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.

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,
2021 2020
Revenues 100.0 % 100.0 %
Cost of revenues 48.7 % 54.6 %
Gross profit 51.3 % 45.4 %
Operating expenses:
Research and development, net 9.0 % 13.2 %
Selling, general and administrative expenses 17.1 % 19.9 %
Total operating expenses 26.1 % 33.1 %
Operating income 25.2 % 12.3 %
Financial income, net 0.5 % 1.0 %
Income tax (expenses) benefit (2.4 )% (1.3 )%
Net income 23.2 % 12.0 %

Six months Ended June 30, 2021 compared to Six months ended June 30, 2020

Revenues. Revenues increased by 86% to $124.8 million in 2020 from $67.2 million in 2020. 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 $64.0 million in 2021 from $30.5 million in 2020, an increase of $33.5 million, or 110%. Our gross margin increased to 51.3% in 2021, compared to a gross margin of 45.4% in 2020, primarily due to significantly increased revenues and sales mix.

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 2021 increased to $11.2 million from $8.9 million in
      2020 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 60% to $21.3 million in 2021 from $13.3 million in 2020, 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 $0.6 million in 2021, compared to net financial income of $0.7 million in 2020. These changes mainly relate to lower interest rates on increased
      short-term deposits.

Provision for Income Taxes. Income tax expense was $3.0 million in compared to expense of $0.8 million in 2020, mainly due to increased income before tax.

Net Income. We realized net income of $29.0 million in 2021 compared to net income of $8.1 million in 2020, in light of the factors discussed above.

B.          Liquidity and Capital Resources

Our cash and cash equivalent and short-term deposit balances totalled approximately $189.3 million on June 30, 2021 and $177.8.5 million on December 31, 2020. In addition, there was $10 million in long-term deposits. Our cash is invested in bank deposits spread among several banks, primarily in Israel.

In November 2020, we raised $64.3 million, net, in a public offering.

Our working capital was approximately $227.0 million at June 30, 2021 and $204.5 million at December 31, 2020. The increase is mainly attributed to the increase in cash and cash equivalents, short-term deposits, trade accounts receivable and inventory, offset by the increase in trade accounts payable and other current liabilities.

Our capital expenditures during the first half of 2021 were approximately $1.3 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, 2021, totalled $22.6 million. Net cash and cash equivalents provided by operating activities for the six months ended June 30, 2020 totalled $12.5 million.

During the first half of 2021, cash provided by operating activities was primarily attributed to the positive net income and the increase in trade accounts payable and other liabilities, 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 2021 was $48.3 million, primarily due to investment in short- and long-term deposits, compared to $18.4 million in the first half of 2020.

Cash flow from financing activities

Cash flow provided by financing activities the first half of 2021 totalled $0.2 million compared to $0.3 million in the first half of 2020. This related to proceeds from the exercise of share options.

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