Eltek Ltd 6-K, filed Aug 21, 2023

Eltek Ltd (ELTK)

6-K 2023-08-21 For: 2023-06-30

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Added on April 09, 2026

About this 6-K

Eltek Ltd filed this 6-K on August 21, 2023.

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INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS	F-2 - F-3

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	F-4

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY	F-5 - F-6

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	F-7 - F-8

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	F-9 - F-17

		June 30,		December 31,
	Note	2023		2022
		Unaudited

ASSETS

CURRENT ASSETS:

Cash and cash equivalents	3		8,330		7,366
Trade receivables (net of allowance for doubtful accounts of $310 and $162 at June 30, 2023 and December 31, 2022, respectively)			11,383		10,116
Inventories	4		5,688		5,130
Other accounts receivable and prepaid expenses			1,059		786

Total current assets			26,460		23,398

LONG-TERM ASSETS:

Severance pay fund			56		59
Restricted deposit			-		202
Long-term tax receivables			857		899
Deferred tax asset, net			951		1,597
Operating lease right-of-use assets			6,742		7,156

			8,606		9,913

Property and equipment, net			6,399		7,674

Total long-term assets			15,005		17,587

Total assets			41,465		40,985

		June 30,			December 31,
	Note	2023			2022
		Unaudited
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Current maturities of long-term debt			-			702
Trade payables			4,690			4,793
Other accounts payable and accrued expenses			6,352			4,133
Short-term operating lease liabilities			788			846

Total current liabilities			11,830			10,474

LONG-TERM LIABILITIES:

Long-term debt, excluding current maturities			-			2,768
Accrued severance pay			288			280
Long-term operating lease liabilities			6,058			6,443

Total long-term liabilities			6,346			9,491

COMMITMENTS AND CONTINGENT LIABILITIES	5		-			-

SHAREHOLDERS' EQUITY:	6
Share capital -
Ordinary shares of NIS 3.0 par value – Authorized: 10,000,000 shares at June 30, 2023 and December 31, 2022; Issued and outstanding: 5,907,715 shares at June 30, 2023 and 5,849,678 shares at December 31, 2022			5,353			5,305
Additional paid-in capital			23,113			22,862
Foreign currency translation adjustments			140			1,189
Capital reserves			1,681			1,537
Accumulated deficit			(6,998	)		(9,873	)

Total shareholders' equity			23,289			21,020

Total liabilities and shareholders' equity			41,465			40,985

	Note	Six months ended June 30,						Three months ended June 30,
		2023			2022			2023			2022
		Unaudited

Revenues	7		22,513			18,844			11,043			9,089
Cost of revenues			16,546			15,205			8,091			7,411

Gross profit			5,967			3,639			2,952			1,678

Operating expenses:
Research and development, net			24			44			15			26
Selling, general and administrative			2,960			2,598			1,543			1,306

Operating income			2,983			997			1,394			346
Finance income, net			477			732			190			611

Income before income taxes			3,460			1,729			1,584			957
Taxes on income	8		585			344			271			204

Net income			2,875			1,385			1,313			753

Other comprehensive income (loss):
Foreign currency translation adjustments			(1,049	)		(2,352	)		(468	)		(1,930	)

Total comprehensive income (loss)			1,826			(967	)		845			(1,177	)

Basic and diluted income per ordinary share			0.49			0.24			0.22			0.13

					Company's shareholders
	Ordinary shares		Amount		Additional paid-in capital		Accumulated other comprehensive income (loss)			Capital reserves		Accumulated deficit			Total


Balance as of April 1, 2023		5,849,678		5,305		22,862		608			1,609		(8,311	)		22,073

Share-based compensation		-		-		-		-			72		-			72
Exercise of stock options		58,037		48		251		-			-		-			299
Comprehensive income:
Foreign currency translation adjustments		-		-		-		(468	)		-		-			(468	)
Net income		-		-		-		-			-		1,313			1,313

Balance as of June 30, 2023		5,907,715		5,353		23,113		140			1,681		(6,998	)		23,289

Balance as of April 1, 2022		5,849,678		5,305		22,862		3,294			1,340		(11,441	)		21,360
Share-based compensation		-		-		-		-			64		-			64
Comprehensive income:
Foreign currency translation adjustments		-		-		-		(1,930	)		-		-			(1,930	)
Net income		-		-		-		-			-		753			753

Balance as of June 30, 2022		5,849,678		5,305		22,862		1,364			1,404		(10,688	)		20,247

	Six months ended June 30,
	2023			2022

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		2,875			1,385

Adjustments required to reconcile net income to net cash flows provided by operating activities:
Depreciation		630			880
Share-based compensation		144			117
Changes in deferred income tax assets, net		566			335
Increase (decrease) in employee severance benefits, net		22			-
Decrease (increase) in trade receivables, net		(1,784	)		(2,300	)
Decrease (increase) in operating lease right-of-use assets		575			145
Increase (decrease) in operating lease liabilities		(597	)		(149	)
Decrease (increase) in other receivables and prepaid expenses		(311	)		83
Decrease (increase) in inventories		(809	)		(731	)
Increase (decrease) in trade payables		105			786
Increase (decrease) in other liabilities and accrued expenses		1,477			302

Net cash provided by operating activities		2,893			853

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(711	)		(615	)
Insurance Proceeds		2,000			-
Restricted deposits		192			(1	)

Net cash used in investing activities		1,481			(616	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of options		299			25
Repayment of long-term loans		(3,348	)		(258	)
Repayment of property and equipment payables		-			(7	)

Net cash used in financing activities		(3,049	)		(240	)

	b.	Indemnification agreement: The Company entered into indemnification agreements with each of its directors and officers and undertook to enter into the same agreement with future directors and officers. Such indemnification amount will not exceed: (i) the value of 25% of the Company’s net equity according to the audited or reviewed financial statement known at the time the request for indemnification was submitted; or (ii) $3,000,000, whichever is greater.

		Stock Option Plan: The Company’s 2018 Share Incentive Plan (the "Plan") authorizes the grant of options to purchase shares and restricted shares units (“RSUs”) to officers, employees, directors and consultants of the Company and its subsidiaries. Awards granted under the Plan to participants in various jurisdictions may be subject to specific terms and conditions for such grants as may be approved by the Company’s board from time to time. Each option granted under the Plan is exercisable for a period of ten years from the date of the grant of the option or the expiration dates of the option plan. The options primarily vest gradually over four years of employment. As of June 30, 2023 options to purchase 337,134 ordinary shares were outstanding under the Plan, exercisable at an average exercise price of $5.07 per share. The share-based compensation expense related to employees' equity-based awards, recognized during the six months ended June 30, 2023 and 2022 was $144 and $117, respectively

	Number of options		Weighted-average exercise price		Weighted- average remaining contractual life (in months)		Aggregate intrinsic value (in thousands)

Outstanding at January 1, 2023		395,171		5.25		95		1
Exercised		58,037		5.15		-		-
Forfeited		-		-		-		-

Outstanding at June 30, 2023		337,134		5.07		91		1,442

Exercisable at June 30, 2023		193,046		4.90		86		859

	Six months ended June 30,						Three months ended June 30,
	2023			2022			2023			2022
	Unaudited

Customer A - sales of manufactured products		14.4	%		20.2	%		13.5	%		17.9	%
Customer B - Sales of manufactured products		11.0	%		9.8	%		11.9	%		9.3	%

	Six months ended June 30,		Year ended December 31,
	2023		2022
	Unaudited

Trade accounts receivable		190		151
Trade accounts payable		277		30

		PCB purchases by Nistec - Nistec purchases PCBs from the Company solely to provide assembled boards to its customers. The Company sells to Nistec based on its standard pricing, which may be subject to a discount of up to ten percent (10%). Should the order be for PCBs imported by the Company, the quote reflects the actual price of such PCBs, plus a mark-up of at least twenty percent (20%). Should the order be for PCBs from excess inventory of an original order, the quote will reflect the standard price of such PCBs, with a discount of up to fifty percent (50%) of the price actually paid for such PCBs in the original order (the “Excess Inventory Discount”). The Excess Inventory Discount will apply only to orders from excess inventory of the first original order of a specific PCB (i.e., should a second order of a specific PCBs generate any excess inventory, and Nistec would like to purchase such excess, the Excess Inventory Discount will not be applied to such purchase). Soldering and assembly services - The Company may acquire soldering services and/or purchase services from Nistec. Nistec’s pricing for its soldering services will be its standard pricing (the “Pricing”), less a five percent (5%) discount. Nistec may charge for Purchasing Services in accordance with the actual costs of the orders, plus a fourteen and a quarter (14.25%) commission, which reflects a five percent (5%) discount, as compared to the commission charged to third parties by Nistec for similar services. Prices of services not included in the Pricing will be negotiated by the parties in good faith (without participation of Mr. Nissan, the Company's controlling shareholder and CEO, or any of his relatives). Nistec standard procedures govern manufacturer warranties and restrictions regarding defective assembled products. In addition to requesting Nistec to provide the Company with a quote for soldering and assembly services, in the event that the Company requires design and/or design services for production of PCBs, it may ask Nistec to provide it with a quote for such services. Nistec may charge for design and/or design services in accordance with its standard pricing for such services, less a five percent (5%) discount. The Company’s purchases of services under the Soldering, Assembly and Design Services Procedure may not exceed NIS 300 per annum. Managements fees - In September 2019, the Company's Audit Committee, Compensation Committee and Board of Directors, as applicable, approved the terms of the amended Management Agreement. This amended Management Agreement was approved by the Company's shareholders in the annual general meeting, held on December 5, 2019. Nistec is entitled to a monthly management fee of NIS 90 ($28). Subject to Company’s reimbursement policy approved by the Audit Committee on May 15, 2016, Mr. Nissan receives reimbursement of travel expenses (other than food and beverage expenses) while traveling internationally on behalf of the Company, provided that such reimbursement will not exceed an aggregate amount of NIS 10,000 ($2,700) per calendar quarter. Mr. Nissan is reimbursed for food and beverage expenses while traveling internationally on behalf of the Company, against receipts, in accordance with the Israeli Income Tax Regulations (Deduction of Certain Expenses) 1972.


NOTE 1:-	DESCRIPTION OF BUSINESS AND GENERAL

	June 30,		December 31,
	2023		2022
	Unaudited

Denominated in U.S. dollars		3,235		2,334
Denominated in NIS		3,498		2,620
Denominated in Euro		1,597		2,412

		8,330		7,366

NOTE 4:-	INVENTORIES

	June 30,		December 31,
	2023		2022
	Unaudited

Raw materials		2,247		2,201
Work-in-progress		2,985		2,468
Finished goods		456		461

		5,688		5,130