{"url_path":"/sec/eltk/10-k/2026/item-19","section_key":"item-19","section_title":"Item 19 EXHIBITS","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-03-26","source_url":"https://www.sec.gov/Archives/edgar/data/1024672/0001178913-26-001768-index.html","accession_number":"0001178913-26-001768","cik":"0001024672","ticker":"ELTK","issuer_name":"ELTEK LTD","edgar_url":"https://www.sec.gov/Archives/edgar/data/1024672/0001178913-26-001768-index.html","primary_entity_key":"0001024672","primary_entity_name":"ELTEK LTD"},"word_count":12758,"has_tables":true,"body_markdown":"ITEM 19.\n\nEXHIBITS\n\nIndex to Exhibits\n\n \n\nExhibit          \n\nDescription\n\n[1.1](https://www.sec.gov/Archives/edgar/data/1024672/000117891319000640/exhibit_1-1.htm)\n\n[Memorandum of Association of the Registrant (1)](https://www.sec.gov/Archives/edgar/data/1024672/000117891319000640/exhibit_1-1.htm)\n\n[1.2](https://www.sec.gov/Archives/edgar/data/1024672/000117891313002674/exhibit_99-1.htm)\n\n[Articles of Association of the Registrant, as amended (2)](https://www.sec.gov/Archives/edgar/data/1024672/000117891313002674/exhibit_99-1.htm)\n\n[2.1](https://www.sec.gov/Archives/edgar/data/1024672/000117891319000640/exhibit_2-1.htm)\n\n[Specimen of Share Certificate (3)](https://www.sec.gov/Archives/edgar/data/1024672/000117891319000640/exhibit_2-1.htm)\n\n[2.2*](exhibit_2-2.htm)\n\n[Description of Ordinary Shares](exhibit_2-2.htm)\n\n[3.1](https://www.sec.gov/Archives/edgar/data/1024672/000117891319002546/exhibit_99-1.htm)\n\n[Form of Director and Officer Indemnity Agreement (4)](https://www.sec.gov/Archives/edgar/data/1024672/000117891319002546/exhibit_99-1.htm)\n\n[4.1](https://www.sec.gov/Archives/edgar/data/1024672/000117891325002891/exhibit_99-1.htm)\n\n[Fourth Amended and Restated Compensation Policy dated September 18, 2025 (5)](https://www.sec.gov/Archives/edgar/data/1024672/000117891325002891/exhibit_99-1.htm)\n\n[4.2](https://www.sec.gov/Archives/edgar/data/1024672/000117891315001168/exhibit_4-13.htm)\n\n[English summary of terms of Waste Water Treatment Facility Building and Operation Agreement, dated July 3, 2014, by and between the Registrant and Elad Technologies (L.S.) (6)](https://www.sec.gov/Archives/edgar/data/1024672/000117891315001168/exhibit_4-13.htm)\n\n[4.3](https://www.sec.gov/Archives/edgar/data/1024672/000117891323002750/exhibit_99-1.htm)\n\n[Underwriting Agreement dated February 12, 2024(7)](https://www.sec.gov/Archives/edgar/data/1024672/000117891323002750/exhibit_99-1.htm)\n\n[8.1](https://www.sec.gov/Archives/edgar/data/1024672/000117891322001230/exhibit_8-1.htm)\n\n[List of Subsidiaries of the Registrant(8)](https://www.sec.gov/Archives/edgar/data/1024672/000117891322001230/exhibit_8-1.htm)\n\n[11.1*](exhibit_11-1.htm)\n\n[Insider Trading Policy](exhibit_11-1.htm)\n\n[12.1*](exhibit_12-1.htm)\n\n[Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.](exhibit_12-1.htm)\n\n[12.2*](exhibit_12-2.htm)\n\n[Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1924, as amended.](exhibit_12-2.htm)\n\n[13.1*](exhibit_13-1.htm)\n\n[Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](exhibit_13-1.htm)\n\n[13.2*](exhibit_13-2.htm)\n\n[Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](exhibit_13-2.htm)\n\n[15.1*](exhibit_15-1.htm)\n\n[Consent of  Brightman Almagor Zohar & Co., a firm in the Deloitte Global Network for the year ending December 31, 2023.](exhibit_15-1.htm)\n\n[15.2*](exhibit_15-2.htm)\n\n[Consent of Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global for the year ending December 31, 2025 and December 31, 2024.](exhibit_15-2.htm)\n\n[97.1](https://www.sec.gov/Archives/edgar/data/1024672/000117891324001087/exhibit_97-1.htm)\n\n[Claw-back Policy dated August 3, 2023(9)](https://www.sec.gov/Archives/edgar/data/1024672/000117891324001087/exhibit_97-1.htm)\n\n101.INS\n\nInline  XBRL Instance Document.\n\n101.SCH\n\nInline  XBRL Taxonomy Extension Schema Document.\n\n101.PRE\n\nInline  XBRL Taxonomy Presentation Linkbase Document.\n\n101.CAL\n\nInline  XBRL Taxonomy Calculation Linkbase Document.\n\n101.LAB\n\nInline  XBRL Taxonomy Label Linkbase Document.\n\n101.DEF\n\nXBRL Taxonomy Extension Definition Linkbase Document.\n\n104\n\nCover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)\n\n \n\n(1)\n\nFiled as Exhibit 1.1 to our registration statement on Form F-1, registration number 333-229740, as amended, and incorporated herein by reference.\n\n(2)\n\nIncluded in Exhibit 99.1 to our Report of Foreign Issuer on Form 6-K filed on September 12, 2013 and incorporated herein by reference.\n\n(3)\n\nFiled as Exhibit 2.1 to our registration statement on Form F-1, registration number 333-229740, as amended, and incorporated herein by reference.\n\n(4)\n\nIncluded 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.\n\n(5)\n\nIncluded as Exhibit A to Exhibit 99.1 to our Report of Foreign Issuer on Form 6-K filed on August 14, 2025 and incorporated herein by reference.\n\n(6)\n\nFiled as Exhibit 4.13 to our Annual Report on Form 20-F for the year ended December 31, 2014, and incorporated herein by reference.\n\n(7)\n\nIncluded as Exhibit A to Exhibit 99.1 to our Report of Foreign Issuer on Form 6-K filed on August 8, 2023 and incorporated herein by reference\n\n(8)\n\nFiled as Exhibit 8.1 to our Annual Report on Form 20-F for the year ended December 31, 2021, and incorporated herein by reference.\n\n(9)\n\nFiled as Exhibit 97.1 to our Annual Report on Form 20-F for the year ended December 31, 2023, and incorporated herein by reference.\n\n*\n\nFiled herewith.\n\n70\n\n \n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nCONSOLIDATED FINANCIAL STATEMENTS\n\n \n\nAS OF DECEMBER 31, 2025\n\n \n\nIN U.S. DOLLARS\n\n \n\nINDEX\n\n \n\n \n\nPage\n\n \n \n\n[REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS](#REPORTOFINDEPENDENCEREGIS)\n\nF-2\n\n(Firm Name: Kost Forer Gabay & Kasierer / PCAOB ID No. 1281)\n\n(Firm Name: Brightman Almagor Zohar & Co / PCAOB ID No. 1197)\n\n \n\n \n \n\n[CONSOLIDATED BALANCE SHEETS](#CONSOLIDATEDBALANCESHEETS)\n\nF-5 - F-6\n\n \n \n\n[CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME](#CONSOLIDATEDSTATEMENTSOFC)\n\nF-7\n\n \n \n\n[CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY](#CONSOLIDATEDSTATEMENTSOFSHAREHOLDERSEQUITY)\n\nF-8\n\n \n \n\n[CONSOLIDATED STATEMENTS OF CASH FLOWS](#CONSOLIDATEDSTATEMENTSOFCASHFLOWS)\n\nF-9 - F-10\n\n \n \n\n[NOTES TO CONSOLIDATED FINANCIAL STATEMENTS](#NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTS)\n\nF-11 - F-36\n\n \n\n- - - - - - - - - - - - - - - - - - - - - - - -\n\n \n\nKost Forer Gabbay & Kasierer  \n\n144 Menachem Begin Road,\nBuilding A\n\nTel-Aviv 6492102, Israel\n\nTel: +972-3-6232525\n\nFax: +972-3-5622555\n\ney.com\n\n \n\nREPORT OF INDEPENDENCE REGISTERED PUBLIC ACCOUNTING FIRM\n\nTo the Shareholders and the Board of Directors of\n\n \n\nEltek Ltd.\n\n \n\nOpinion on the Consolidated Financial Statements\n\n \n\nWe have audited the accompanying consolidated balance sheets of Eltek Ltd. and its subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of comprehensive income, shareholders' equity and cash flows, for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.\n \nWe also audited the disclosure of significant expenses and other segment items in Note 14 that have been disclosed for 2023 due to the adoption of ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures. In our opinion, such disclosures are appropriate. However, we were not engaged to audit, review, or apply any procedures to the 2023 consolidated financial statements of the Company other than with respect to these disclosures and, accordingly, we do not express an opinion or any other form of assurance on the 2023 consolidated financial statements taken as a whole.\n\n \n\nBasis for Opinion\n\n \n\nThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.\n\n \n\nOur audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.\n\n \n\nF - 2\n\n \n\nKost Forer Gabbay & Kasierer  \n\n144 Menachem Begin Road,\nBuilding A\n\nTel-Aviv 6492102, Israel\n\nTel: +972-3-6232525\n\nFax: +972-3-5622555\n\ney.com\n\n \n\nCritical Audit Matter\n\n \n\nThe critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.\n\n \n\nMeasurement of Inventory Valuation Reserves\n\n \n\nDescription of the Matter\n\n \n\nAs of December 31, 2025, the Company’s net inventory balance was $11,154 thousand. As described in Note 2 to the consolidated financial statements, management records inventory at the lower of its cost or net realizable value. The Company reviews the components of its inventory on a periodic basis for excess and obsolescence and adjusts inventory to its net realizable value as necessary.\n\n \n\nWe determined that the write-offs for excess and obsolete inventory represent a critical audit matter due to the significant judgments involved in management’s estimation process and the level of audit effort required. Auditing these estimates demanded a high degree of professional judgment and an increased level of audit procedures to assess the methodology used and the reasonableness of the recorded write-offs.\n\n \n\n \n\n \n\nHow We Addressed the Matter in Our Audit\n\n \n\nOur audit procedures to test the adequacy of the Company’s excess and obsolete inventory write-offs included, among others, evaluating the appropriateness of management’s inputs and assumptions used in estimating excess and obsolete inventory. We tested the completeness and accuracy of the underlying data used in management’s calculation, such as historical usage patterns, inventory aging, and prior write-off activity. We also tested the mathematical accuracy of the calculation and performed inquiries of management to understand the rationale for the estimate. In addition, we performed a retrospective review by comparing prior year write-off estimates to actual inventory disposals or write-offs.\n\n \n\n/s/ KOST FORER GABBAY & KASIERER\n\nA Member EY Global\n\n \n\nWe have served as the Company’s auditor since 2024.\n\nTel-Aviv, Israel\n\nMarch 26, 2026\n\n \n\nF - 3\n\n \n\nREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n\nTo the shareholders and the Board of Directors of\n\n \n\nELTEK LTD.\n\n \n\nOpinion on the Financial Statements\n\n \n\nWe have audited, before the effects of the adjustments to retrospectively apply the change in accounting discussed in Note 14 to the consolidated financial statements, the consolidated statement of comprehensive income, shareholders’ equity, and cash flows of Eltek Ltd. and subsidiaries (the \"Company\") for the year ended December 31, 2023, and the related notes (collectively referred to as the \"financial statements\") (the 2023 financial statements before the effects of the retrospective adjustments discussed in Note 14 to the financial statements are not presented herein). In our opinion, the 2023 financial statements, before the effects of the adjustments to retrospectively apply the change in accounting as described in Note 14 to the financial statements, present fairly, in all material respects, the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.\n\n \n\nWe were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the change in accounting as described in Note 14 to the financial statements, and accordingly, we do not express an opinion or any other form of assurance about whether such retrospective adjustments are appropriate and have been properly applied. Those retrospective adjustments were audited by other auditors.\n\n \n\nBasis for Opinion\n\n \n\nThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.\n\n \n\nOur audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.\n\n \n\n/s/ Brightman Almagor Zohar & Co.\n\nBrightman Almagor Zohar & Co.\n\nCertified Public Accountants\n\nA Firm in the Deloitte Global Network\n\nTel Aviv, Israel \n\nMarch 26, 2024 \n\nWe began serving as the Company’s auditor in 2020. In 2024 we became the predecessor auditor.\n\n \n\nF - 4\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nCONSOLIDATED BALANCE SHEETS\n\nU.S. dollars in thousands\n\n \n\n \n \n \n \n \n\nDecember 31,\n\n \n\n \n \n\nNote\n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\n \n \n \n \n \n \n \n \n \n \n\nASSETS\n\n \n \n \n \n \n \n \n \n \n\n \n \n \n \n \n \n \n \n \n \n\nCURRENT ASSETS:\n\n \n \n \n \n \n \n \n \n \n\n \n \n \n \n \n \n \n \n \n \n\nCash and cash equivalents\n\n \n\n3\n\n \n \n \n\n2,481\n\n \n \n \n\n7,575\n\n \n\nShort-term bank deposits\n\n \n\n4\n\n \n \n \n\n9,643\n\n \n \n \n\n9,663\n\n \n\nTrade receivables\n\n \n\n2f\n\n \n\n \n \n\n14,789\n\n \n \n \n\n11,786\n\n \n\nInventories\n\n \n\n5\n\n \n \n \n\n11,154\n\n \n \n \n\n9,488\n\n \n\nOther accounts receivable and prepaid expenses\n\n \n\n6\n\n \n \n \n\n607\n\n \n \n \n\n602\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n\nTotal current assets\n\n \n \n \n \n \n\n38,674\n\n \n \n \n\n39,114\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n\nLONG-TERM ASSETS:\n\n \n \n \n \n \n \n \n \n \n \n \n\n \n \n \n \n \n \n \n \n \n \n \n \n\nSeverance pay fund\n\n \n\n9\n\n \n \n \n\n65\n\n \n \n \n\n56\n\n \n\nDeferred tax asset, net\n\n \n\n16\n\n \n \n \n\n387\n\n \n \n \n\n496\n\n \n\nOperating lease right-of-use assets\n\n \n\n10\n\n \n \n \n\n6,272\n\n \n \n \n\n5,911\n\n \n\nProperty and equipment, net\n\n \n\n7\n\n \n \n \n\n20,862\n\n \n \n \n\n14,578\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n\nTotal long-term assets\n\n \n \n \n \n \n\n27,586\n\n \n \n \n\n21,041\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n\nTotal assets\n\n \n \n \n \n \n\n66,260\n\n \n \n \n\n60,155\n\n \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF - 5\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nCONSOLIDATED BALANCE SHEETS (CONT.)\n\nU.S. dollars in thousands\n\n \n\n \n \n \n \n \n\nDecember 31,\n\n \n\n \n \n\nNote\n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\n \n \n \n \n \n \n \n \n \n \n\nLIABILITIES AND SHAREHOLDERS' EQUITY\n\n \n \n \n \n \n \n \n \n \n\n \n \n \n \n \n \n \n \n \n \n\nCURRENT LIABILITIES:\n\n \n \n \n \n \n \n \n \n \n\n \n \n \n \n \n \n \n \n \n \n\nTrade payables\n\n \n \n \n \n \n\n6,047\n\n \n \n \n\n7,367\n\n \n\nOther accounts payable and accrued expenses\n\n \n\n8\n\n \n \n \n\n6,565\n\n \n \n \n\n5,136\n\n \n\nShort-term operating lease liabilities\n\n \n\n10\n\n \n \n \n\n1,100\n\n \n \n \n\n827\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n\nTotal current liabilities\n\n \n \n \n \n \n\n13,712\n\n \n \n \n\n13,330\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n\nLONG-TERM LIABILITIES:\n\n \n \n \n \n \n \n \n \n \n \n \n\n \n \n \n \n \n \n \n \n \n \n \n \n\nAccrued severance pay\n\n \n\n9\n\n \n \n \n\n515\n\n \n \n \n\n443\n\n \n\nLong-term operating lease liabilities\n\n \n\n10\n\n \n \n \n\n5,296\n\n \n \n \n\n5,190\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n\nTotal long-term liabilities\n\n \n \n \n \n \n\n5,811\n\n \n \n \n\n5,633\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n\nCOMMITMENTS AND CONTINGENT LIABILITIES\n\n \n\n11\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n\nSHAREHOLDERS' EQUITY:\n\n \n \n \n \n \n \n \n \n \n \n \n\n Share capital -\n\n \n \n \n \n \n \n \n \n \n \n \n\n Ordinary shares of NIS 3.0 par value –\n\n Authorized: 10,000,000 shares at December 31, 2025 and December 31, 2024; Issued and outstanding: 6,719,827 shares at December 31, 2025 and 6,714,040 shares at December 31, 2024\n\n \n \n \n \n \n\n6,012\n\n \n \n \n\n6,011\n\n \n\nAdditional paid-in capital\n\n \n \n \n \n \n\n32,662\n\n \n \n \n\n32,627\n\n \n\nForeign currency translation adjustments\n\n \n \n \n \n \n\n6,111\n\n \n \n \n\n664\n\n \n\nCapital reserves\n\n \n \n \n \n \n\n3,019\n\n \n \n \n\n2,507\n\n \n\nAccumulated deficit\n\n \n \n \n \n \n\n(1,067\n\n)\n\n \n \n\n(617\n\n)\n\n \n \n \n \n \n \n \n \n \n \n \n \n\nTotal shareholders' equity\n\n \n\n12\n\n \n \n \n\n46,737\n\n \n \n \n\n41,192\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n\nTotal liabilities and shareholders' equity\n\n \n \n \n \n \n\n66,260\n\n \n \n \n\n60,155\n\n \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF - 6\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME\n\nU.S. dollars in thousands (except per share data)\n\n \n\n \n \n \n \n \n\nYear ended\n\nDecember 31,\n\n \n\n \n \n\nNote\n\n \n \n\n2025\n\n \n \n\n2024\n\n \n \n\n2023\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nRevenues\n\n \n\n14b\n\n \n\n \n \n\n51,790\n\n \n \n \n\n46,527\n\n \n \n \n\n46,695\n\n \n\nCost of revenues\n\n \n \n \n \n \n\n(43,806\n\n)\n\n \n \n\n(36,188\n\n)\n\n \n \n\n(33,593\n\n)\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nGross profit\n\n \n \n \n \n \n\n7,984\n\n \n \n \n\n10,339\n\n \n \n \n\n13,102\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nOperating expenses:\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nResearch and development, net\n\n \n \n \n \n \n\n(50\n\n)\n\n \n \n\n(187\n\n)\n\n \n \n\n(85\n\n)\n\nSelling, general and administrative\n\n \n \n \n \n \n\n(5,587\n\n)\n\n \n \n\n(5,760\n\n)\n\n \n \n\n(5,722\n\n)\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nOperating income\n\n \n \n \n \n \n\n2,347\n\n \n \n \n\n4,392\n\n \n \n \n\n7,295\n\n \n\nFinancial (expense) income\n\n \n\n15\n\n \n \n \n\n(1,274\n\n)\n\n \n \n\n705\n\n \n \n \n\n422\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nIncome before income taxes\n\n \n \n \n \n \n\n1,073\n\n \n \n \n\n5,097\n\n \n \n \n\n7,717\n\n \n\nIncome tax benefit (expenses), net\n\n \n\n16\n\n \n \n \n\n(247\n\n)\n\n \n \n\n(873\n\n)\n\n \n \n\n(1,364\n\n)\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nNet income\n\n \n \n \n \n \n\n826\n\n \n \n \n\n4,224\n\n \n \n \n\n6,353\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nOther comprehensive income, net:\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nForeign currency translation adjustments\n\n \n \n \n \n \n\n5,447\n\n \n \n \n\n(119\n\n)\n\n \n \n\n(406\n\n)\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nTotal comprehensive income\n\n \n \n \n \n \n\n6,273\n\n \n \n \n\n4,105\n\n \n \n \n\n5,947\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nBasic income per ordinary share attributable to Eltek Ltd. shareholders\n\n \n\n13\n\n \n \n \n\n0.12\n\n \n \n \n\n0.64\n\n \n \n \n\n1.08\n\n \n\nDiluted income per ordinary share attributable to Eltek Ltd. shareholders\n\n \n\n13\n\n \n \n \n\n0.12\n\n \n \n \n\n0.63\n\n \n \n \n\n1.07\n\n \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF - 7\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nCONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY\n\nU.S. dollars in thousands (except share data)\n\n \n\n \n \n \n \n \n \n \n \n\nCompany's shareholders\n\n \n\n \n \n\nOrdinary shares\n\n \n \n\nAmount\n\n \n \n\nAdditional\n\npaid-in capital\n\n \n \n\nAccumulated other comprehensive income\n\n \n \n\nCapital\n\nreserves\n\n \n \n\nAccumulated deficit\n\n \n \n\nTotal\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nBalance as of January 1, 2023\n\n \n \n\n5,849,678\n\n \n \n \n\n5,305\n\n \n \n \n\n22,862\n\n \n \n \n\n1,189\n\n \n \n \n\n1,537\n\n \n \n \n\n(9,873\n\n)\n\n \n \n\n21,020\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nShare-based compensation\n\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n363\n\n \n \n \n\n-\n\n \n \n \n\n363\n\n \n\nDividend distribution\n\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n(1,321\n\n)\n\n \n \n\n(1,321\n\n)\n\nExercise of stock options\n\n \n \n\n171,015\n\n \n \n \n\n138\n\n \n \n \n\n725\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n863\n\n \n\nComprehensive income:\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nForeign currency translation adjustments\n\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n(406\n\n)\n\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n(406\n\n)\n\nNet income\n\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n6,353\n\n \n \n \n\n6,353\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nBalance as of December 31, 2023\n\n \n \n\n6,020,693\n\n \n \n \n\n5,443\n\n \n \n \n\n23,587\n\n \n \n \n\n783\n\n \n \n \n\n1,900\n\n \n \n \n\n(4,841\n\n)\n\n \n \n\n26,872\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nShare-based compensation\n\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n607\n\n \n \n \n\n-\n\n \n \n \n\n607\n\n \n\nExercise of stock options\n\n \n \n\n68,347\n\n \n \n \n\n56\n\n \n \n \n\n240\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n296\n\n \n\nIssue of Share capital\n\n \n \n\n625,000\n\n \n \n \n\n512\n\n \n \n \n\n8,800\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n9,312\n\n \n\nComprehensive income:\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nForeign currency translation adjustments\n\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n(119\n\n)\n\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n(119\n\n)\n\nNet income\n\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n4,224\n\n \n \n \n\n4,224\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nBalance as of December 31, 2024\n\n \n \n\n6,714,040\n\n \n \n \n\n6,011\n\n \n \n \n\n32,627\n\n \n \n \n\n664\n\n \n \n \n\n2,507\n\n \n \n \n\n(617\n\n)\n\n \n \n\n41,192\n\n \n\nShare-based compensation\n\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n512\n\n \n \n \n\n-\n\n \n \n \n\n512\n\n \n\nDividend distribution\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n(1,276\n\n)\n\n \n \n\n(1,276\n\n)\n\nExercise of stock options\n\n \n \n\n5,787\n\n \n \n \n\n1\n\n \n \n \n\n35\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n36\n\n \n\nComprehensive income:\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nForeign currency translation adjustments\n\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n5,447\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n5,447\n\n \n\nNet income\n\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n826\n\n \n \n \n\n826\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nBalance as of December 31, 2025\n\n \n \n\n6,719,827\n\n \n \n \n\n6,012\n\n \n \n \n\n32,662\n\n \n \n \n\n6,111\n\n \n \n \n\n3,019\n\n \n \n \n\n(1,067\n\n)\n\n \n \n\n46,737\n\n \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF - 8\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nCONSOLIDATED STATEMENTS OF CASH FLOWS\n\nU.S. dollars in thousands\n\n \n\n \n \n\nYear ended\n\nDecember 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n \n\n2023\n\n \n\nCASH FLOWS FROM OPERATING ACTIVITIES:\n\n \n \n \n \n \n \n \n \n \n\nNet income\n\n \n \n\n826\n\n \n \n \n\n4,224\n\n \n \n \n\n6,353\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nAdjustments required to reconcile net income to net cash flows provided by operating activities:\n\n \n \n \n \n \n \n \n \n \n \n \n \n\nDepreciation\n\n \n \n\n2,104\n\n \n \n \n\n1,546\n\n \n \n \n\n1,317\n\n \n\nShare-based compensation\n\n \n \n\n512\n\n \n \n \n\n607\n\n \n \n \n\n363\n\n \n\nChanges in deferred income tax assets, net\n\n \n \n\n166\n\n \n \n \n\n621\n\n \n \n \n\n1,327\n\n \n\nDecrease (increase) in long-term tax receivables\n\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n(25\n\n)\n\nAccrued Interest, net and exchange rate effects\n\n \n \n\n1,260\n\n \n \n \n\n(463\n\n)\n\n \n \n\n-\n\n \n\nIncrease (decrease) in employee severance benefits, net\n\n \n \n\n8\n\n \n \n \n\n(2\n\n)\n\n \n \n\n172\n\n \n\nDecrease (increase) in trade receivables, net\n\n \n \n\n(1,215\n\n)\n\n \n \n\n(988\n\n)\n\n \n \n\n(1,010\n\n)\n\nDecrease in operating lease right-of-use assets\n\n \n \n\n1,028\n\n \n \n \n\n859\n\n \n \n \n\n888\n\n \n\nDecrease in operating lease liabilities\n\n \n \n\n(1,025\n\n)\n\n \n \n\n(857\n\n)\n\n \n \n\n(911\n\n)\n\nDecrease (increase) in other receivables and prepaid expenses\n\n \n \n\n75\n\n \n \n \n\n341\n\n \n \n \n\n(169\n\n)\n\nIncrease in inventories\n\n \n \n\n(283\n\n)\n\n \n \n\n(3,532\n\n)\n\n \n \n\n(1,139\n\n)\n\nIncrease (decrease) in trade payables\n\n \n \n\n(2,951\n\n)\n\n \n \n\n929\n\n \n \n \n\n989\n\n \n\nIncrease (decrease) in other liabilities and accrued expenses\n\n \n \n\n641\n\n \n \n \n\n1,255\n\n \n \n \n\n707\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nNet cash provided by operating activities\n\n \n \n\n1,146\n\n \n \n \n\n4,540\n\n \n \n \n\n8,862\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nCASH FLOWS FROM INVESTING ACTIVITIES:\n\n \n \n \n \n \n \n \n \n \n \n \n \n\nPurchase of property and equipment\n\n \n \n\n(5,351\n\n)\n\n \n \n\n(9,506\n\n)\n\n \n \n\n(2,432\n\n)\n\nInvestment in short-term bank deposits, net\n\n \n \n\n20\n\n \n \n \n\n(6,365\n\n)\n\n \n \n\n(2,719\n\n)\n\nRestricted deposit\n\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n192\n\n \n\nRepayment from insurance\n\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n2,000\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nNet cash used in investing activities\n\n \n \n\n(5,331\n\n)\n\n \n \n\n(15,871\n\n)\n\n \n \n\n(2,959\n\n)\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nCASH FLOWS FROM FINANCING ACTIVITIES:\n\n \n \n \n \n \n \n \n \n \n \n \n \n\nIssuance of shares, net\n\n \n \n\n-\n\n \n \n \n\n9,312\n\n \n \n \n\n-\n\n \n\nExercise of options\n\n \n \n\n36\n\n \n \n \n\n296\n\n \n \n \n\n863\n\n \n\nDividend distribution\n\n \n \n\n(1,276\n\n)\n\n \n \n\n-\n\n \n \n \n\n(1,321\n\n)\n\nRepayment of long-term loans\n\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n(3,348\n\n)\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nNet cash provided by (used in) financing activities\n\n \n \n\n(1,240\n\n)\n\n \n \n\n9,608\n\n \n \n \n\n(3,806\n\n)\n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF - 9\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nCONSOLIDATED STATEMENTS OF CASH FLOWS (CONT.)\n\nU.S. dollars in thousands\n\n \n\n \n \n\nYear ended\n\nDecember 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n \n\n2023\n\n \n\n \n \n \n \n \n \n \n \n \n \n\nEffect of exchange rate on cash and cash equivalents\n\n \n \n\n331\n\n \n \n \n\n20\n\n \n \n \n\n(185\n\n)\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nIncrease (decrease) in cash and cash equivalents\n\n \n \n\n(5,094\n\n)\n\n \n \n\n(1,703\n\n)\n\n \n \n\n1,912\n\n \n\nCash and cash equivalents at the beginning of the year\n\n \n \n\n7,575\n\n \n \n \n\n9,278\n\n \n \n \n\n7,366\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nCash and cash equivalents at end of the year\n\n \n \n\n2,481\n\n \n \n \n\n7,575\n\n \n \n \n\n9,278\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nSUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES:\n\n \n \n \n \n \n \n \n \n \n \n \n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nCash paid for interest\n\n \n \n\n4\n\n \n \n \n\n-\n\n \n \n \n\n84\n\n \n\nCash paid for income taxes\n\n \n \n\n30\n\n \n \n \n\n61\n\n \n \n \n\n37\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nSupplemental Disclosures of non-cash activity:\n\n \n \n \n \n \n \n \n \n \n \n \n \n\nPurchase of property and equipment in credit\n\n \n \n\n756\n\n \n \n \n\n1,238\n\n \n \n \n\n2,125\n\n \n\nRight-of-use assets recognized with corresponding lease liabilities\n\n \n \n\n581\n\n \n \n \n\n225\n\n \n \n \n\n506\n\n \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF - 10\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\n \n\nNOTE 1:-\n\nDESCRIPTION OF BUSINESS AND GENERAL\n\n \n\n \na.\n\nGeneral:\n\n \n\n \n-\n\nEltek Ltd. (\"the Company\") was established in Israel in 1970, and its ordinary shares have been publicly traded on the NASDAQ Capital Market (\"NASDAQ\") since 1997. Eltek Ltd. and its subsidiaries (Eltek USA Inc. and Eltek Europe GmbH) are collectively referred to as \"the Company\". As of December 31, 2025, Eltek Europe GmbH is inactive.\n\n \n\n \n-\n\nThe Company manufactures, markets and sells custom made printed circuit boards (\"PCBs\"), including high density interconnect, flex-rigid and multi-layered boards. The principal markets of the Company are in Israel, Europe, India and North America.\n\n \n\n \n-\n\nThe Company markets its products mainly to the medical technology, defense and aerospace, industrial, telecom and networking equipment industries, as well as to contract electronic manufacturers.\n\n \n\n \n-\n\nThe Company is controlled by Nistec Golan Ltd (\"Nistec Golan\"). Nistec Golan is controlled indirectly by Mr. Yitzhak Nissan, who owns, indirectly through Nistec Holdings Ltd., all of the shares of Nistec Ltd and Nistec Golan (Nistec Holdings Ltd. and/or any of its subsidiaries are referred to as \"Nistec\").\n\n \n\n \nb.\n\nCredit facilities:\n\n \n\nThe Company has a revolving credit facility pursuant to which the Company may withdraw an aggregate amount of up to NIS 8.7 million ($2.7 million), subject to several financial covenants. As of December 31, 2025, and December 31, 2024, the Company has no outstanding amounts under the facility.\n\n \n\n \nc.\n\nBusiness risks and conditions:\n\n \n\n \n-\n\nThe Company’s business is subject to numerous risks including, but not limited to, the impact of currency exchange rates (mainly NIS/US$), the Company's ability to implement its sales and manufacturing plans, the impact of competition from other companies, the Company's ability to receive regulatory clearance or approval to market its products, changes in regulatory environment, domestic and global economic conditions and industry conditions, and compliance with environmental laws and regulations.\n\n \n\n \n-\n\nMechanical malfunction – The Company’s operations depend on specialized and, in some cases, aging manufacturing equipment that may malfunction and is not easily replaced, which could disrupt production and adversely affect its business. I addition, the Company may not be able to obtain insurance coverage to fully cover all losses, including business interruptions resulting from mechanical failures, and may be subject to higher premiums, increased deductibles, reduced coverage, or non-renewal.\n\n \n\nF - 11\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 1:-\n\nDESCRIPTION OF BUSINESS AND GENERAL (CONT.)\n\n \n \n\n \n-\n\nThe Company's liquidity position, as well as its operating performance, may be negatively affected by other financial and business factors, many of which are beyond its control.\n\n \n\n \n-\n\nSince October 7, 2023, Israel has faced ongoing hostilities, including the armed conflict with Hamas in the Gaza Strip and periodic escalations with Hezbollah in Lebanon, which have continued to contribute to heightened regional tensions and uncertainty. In 2025 and 2026, this volatility further extended to include significant confrontations involving Iran and elements of the wider international community, with hostilities and military actions occurring between Israeli forces and Iranian targets that have exacerbated geopolitical instability in the region. Although there have been efforts toward temporary ceasefires and de-escalation, the risk of renewed or expanded military engagement involving Iran, Iran-backed actors in neighboring countries, and the potential for broader regional spillover remains. As of March 2026, these events have had no material impact on the Company's operations.\n\n \n\nThe Company's commercial insurance does not cover losses that may occur as a result of an event associated with the security situation in the region. Although the Israeli government is currently committed to covering the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, the Company cannot assure that this government coverage will be maintained or, if maintained, will be sufficient to compensate fully the damages incurred.\n\n \n\nNOTE 2:-\n\nSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES\n\n \n\n \nA.\n\nBasis of presentation:\n\n \n\nThe consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (\"U.S. GAAP\"), followed on a consistent basis.\n\n \n\nThe consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany transactions and balances, including profits from intercompany sales not yet realized outside the Company, have been eliminated upon consolidation.\n\n \n\n \nB.\n\nFunctional and reporting currency:\n\n \n\nThe Company’s functional currency is the New Israeli Shekel (\"NIS\"). Transactions denominated in foreign currencies are translated into NIS using the prevailing exchange rates at the date of the transaction. Gains and losses from the translation of foreign currency transactions are recorded in financial income or expenses.\n\n \n\nIn accordance with ASC 830, assets and liabilities are translated into the reporting currency using the exchange rate at the end of the year. Revenues and expenses are translated into the reporting currency using the average exchange rate for each quarter. Translation adjustments are reported separately as a component of accumulated other comprehensive income.\n\n \n\nF - 12\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2:-\n\nSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)\n\n \n\nThe functional currency of the Company's active foreign subsidiary is the local currency in which such subsidiary operates. For this subsidiary, assets and liabilities are translated at year-end exchange rates and statement of income items are translated at average exchange rates prevailing during the year. Such translation adjustments are reported separately as a component of accumulated other comprehensive income.\n\n \n\n \nC.\n\nExchange rates and linkage bases:\n\n \n\n \n1.\n\nBalances linked to the Israeli Consumer Price Index (\"CPI\"), are recorded pursuant to contractual linkage terms of the specific assets and liabilities.\n\n \n\n \n2.\n\nDetails of the CPI (2024 base) and the representative exchange rates are as follows:\n\n \n\n \n \n \n \n \n\nExchange rate\n\n \n\n \n \n\nIsraeli CPI\n\n \n \n\nof one US dollar\n\n \n\n \n \n\nPoints\n\n \n \n\nNIS\n\n \n\n \n \n \n \n \n \n \n\nDecember 31, 2025\n\n \n \n\n103.6\n\n \n \n \n\n3.190\n\n \n\nDecember 31, 2024\n\n \n \n\n100.9\n\n \n \n \n\n3.647\n\n \n\nDecember 31, 2023\n\n \n \n\n97.8\n\n \n \n \n\n3.627\n\n \n\n \n\n \n \n\n%\n\n \n\n \n \n \n \n \n \n \n \n \n\nDecember 31, 2025\n\n \n \n\n2.7\n\n \n \n \n\n(12.5\n\n)\n\nDecember 31, 2024\n\n \n \n\n3.3\n\n \n \n \n\n0.6\n\n \n\nDecember 31, 2023\n\n \n \n\n3.0\n\n \n \n \n\n3.1\n\n \n\n \n\n \nD.\n\nUse of estimates:\n\n \n\nThe preparation of the consolidated financial statements in accordance with U.S. GAAP requires the management of the Company to make estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Significant items subject to such estimates and assumptions include the useful lives of property and equipment, allowance for credit losses, deferred tax assets, inventory write-offs, other contingencies and share-based compensation costs. Actual results could differ from these estimates.\n\n \n\n \nE.\n\nCash and cash equivalents:\n\n \n\nCash and cash equivalents are highly liquid investments which include short-term bank deposits with an original maturity of three months or less from deposit date and which are not restricted by a lien.\n\n \n\nF - 13\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2:-\n\nSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)\n\n \n\n \nF.\n\nTrade accounts receivable:\n\n \n\nTrade accounts receivables are recorded when the Company's right to consideration becomes unconditional. Trade accounts receivables are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for expected credit losses for estimated losses inherent in its accounts receivable portfolio.\n\n \n\nThe expected credit loss allowance is determined based on management's estimate of the aged receivable balance considered uncollectible, based on historical experience, aging of the receivable and information available about specific customers, including their financial condition and volume of their operations.\n\n \n\nThe activity in the expected credit loss allowance is as follows:\n\n \n\n \n \n\nYear ended\n\nDecember 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n \n\n2023\n\n \n\n \n \n \n \n \n \n \n \n \n \n\nOpening balance\n\n \n \n\n301\n\n \n \n \n\n264\n\n \n \n \n\n162\n\n \n\nProvision for credit losses\n\n \n \n\n105\n\n \n \n \n\n38\n\n \n \n \n\n100\n\n \n\nForeign currency translation adjustments\n\n \n \n\n58\n\n \n \n \n\n(1\n\n)\n\n \n \n\n2\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nClosing balance\n\n \n \n\n464\n\n \n \n \n\n301\n\n \n \n \n\n264\n\n \n\n \n\nG.\nInventories:\n\n \n\nInventories are recorded at the lower of cost or net-realizable value. Cost is determined on the weighted average basis for raw materials. For work in progress and finished goods, the cost is determined based on accumulated actual costs and indirect costs, applying the lower of cost or net realizable value principle. The main components included in the cost of work-in-progress and finished goods inventory are cost of raw materials, labor costs, and manufacturing overhead, which includes energy, maintenance, leasing expenses, and other expenses calculation of accumulated actual direct and indirect costs.\n\n \n\nThe Company periodically evaluates the inventory quantities on hand relative to historical and projected sales volumes, current and historical selling prices and contractual obligations to maintain certain levels of parts. Based on these evaluations, inventory write-offs are provided to cover risks arising from slow-moving items, discontinued products, excess inventories, market prices lower than cost and adjusted revenue forecasts.\n\n \n\nF - 14\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2:-\n\nSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)\n\n \n\n \nH.\n\nSeverance pay:\n\n \n\nThe Company's liability for its Israeli employees severance pay is calculated pursuant to Israel's Severance Pay Law based on the most recent salary of the employees multiplied by the number of years of employment, as of the balance sheet date (the \"Shut Down Method\"). Employees are entitled to one month's salary for each year of employment or a portion thereof.\n\n \n\nThe Company has an approval from the Israeli Ministry of Labor and Social Welfare, pursuant to the terms of Section 14 of the Israeli Severance Pay Law, 1963, according to which the Company's current deposits in the pension fund and/or with the insurance company exempt it from any additional severance obligations to the employees for whom such depository payments were made.\n\n \n\nFor certain non-management employees, the Company deposits 72% of its liability for severance obligations with a pension fund for such employees. Assets held for employees' severance payments represent contributions to insurance policies and deposits to a central severance pay fund and are recorded at their current redemption value.\n\n \n\n \nI.\n\nProperty and equipment:\n\n \n\nProperty and equipment are stated at cost, net of accumulated depreciation and impairment losses. Depreciation is computed by the straight-line method over the estimated useful lives of the assets at the following annual rates:\n\n \n\n \n\n%\n\n \n \n\nMachinery and equipment\n\n5-33\n\nLeasehold improvements\n\nOver the shorter of the term of the lease or its useful life\n\nOffice furniture and equipment\n\n6-15\n\n \n\n \nJ.\n\nImpairment of long-lived assets:\n\n \n\nThe Company's long-lived assets (assets group) to be held or used, including right of use assets and intangible assets that are subject to amortization are reviewed for impairment in accordance with ASC 360, \"Property, Plant, and Equipment\" whenever events or changes in circumstances indicate that the carrying amount of a group of assets may not be recoverable. Recoverability of a group of assets to be held and used is measured by a comparison of the carrying amount of the group to the future undiscounted cash flows expected to be generated by the group. If such group of assets is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. During the years ended December 31, 2025, 2024 and 2023, the Company did not record any impairment charges attributable to long-lived assets.\n\n \n\nF - 15\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2:-\n\nSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)\n\n \n\n \nK.\n\nIncome taxes:\n\n \n\nThe Company accounts for income taxes in accordance with ASC 740, \"Income Taxes.\" This ASC prescribes the use of the liability method whereby deferred tax assets and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value.\n\n \n\nThe Company establishes reserves for uncertain tax positions based on an evaluation of whether the tax position is “more likely than not” to be sustained upon examination.\n\n \n\nL.\n\nAccounting for share-based compensation:\n\n        \n\nThe Company accounts for share-based compensation in accordance with ASC 718, \"Compensation-Stock Compensation\".\n\n \n\nASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the share-based payment award that ultimately vests is recognized as an expense over the requisite service periods in the Company's consolidated income statement.\n\n \n\nThe Company recognize share-based compensation expense for graded-vesting awards with service conditions only, using the straight-line attribution method.\n\n \n\nDuring the years ended December 31, 2025, 2024 and 2023, the Company recognized share-based compensation expenses related to employee share options as follows:\n\n \n\n \n \n\nYear ended\n\nDecember 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n \n\n2023\n\n \n\n \n \n \n \n \n \n \n \n \n \n\nCost of revenues\n\n \n \n\n118\n\n \n \n \n\n115\n\n \n \n \n\n67\n\n \n\nSales and marketing expenses\n\n \n \n\n53\n\n \n \n \n\n33\n\n \n \n \n\n17\n\n \n\nGeneral and administrative expenses\n\n \n \n\n341\n\n \n \n \n\n459\n\n \n \n \n\n279\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nTotal share-based compensation expenses\n\n \n \n\n512\n\n \n \n \n\n607\n\n \n \n \n\n363\n\n \n\n \n\nF - 16\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2:-\n\nSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)\n\n \n\nThe Company calculates the fair value of share options on the date of grant using the Black-Scholes option-pricing model, whereas the fair value of restricted share units is based on the closing market value of the underlying shares at the date of grant, and the expense is recognized over the requisite service period of each individual grant using the straight-line attribution method. Forfeitures are accounted for as they occur.\n\n \n\nThe Black-Scholes option-pricing model requires the Company to make several assumptions, including the value of the Company's ordinary shares, expected volatility, expected term, risk-free interest rate and expected dividends. The Company evaluates the assumptions used to value option awards upon each grant of share options.\n\n \n\nExpected volatility was calculated based on historical stock price volatility. The expected option term was calculated based on the simplified method, which uses the midpoint between the vesting date and the contractual term, as the Company does not have sufficient historical data to develop an estimate based on participant behavior.. The risk-free interest rate was based on the U.S. treasury bonds yield with an equivalent term. As the Company's awards are dividend protected by reducing the exercise price, an expected dividend assumption of zero was used. The assumptions used to determine the fair value of the share-based awards are management’s best estimates and involve inherent uncertainties and the application of judgment.\n\n \n\nThe following assumptions were used in the Black-Scholes option pricing model for the three-year period ended December 31, 2024:\n\n \n\n \n \n\n2025\n\n \n\n2024\n\n \n\n2023\n\n \n \n \n \n \n \n \n\nDividend yield\n\n \n\n0%\n\n \n\n0%\n\n \n\n0%\n\nExpected volatility\n\n \n\n78%-79%\n\n \n\n78%-80%\n\n \n\n79%-80%\n\nRisk-free interest\n\n \n\n3.9%-4.2%\n\n \n\n3.7%-4.4%\n\n \n\n4.2%-4.8%\n\nExpected term\n\n \n\n6.25 years\n\n \n\n6.25 years\n\n \n\n6.25 years\n\nForfeiture rate\n\n \n\n0%\n\n \n\n0%\n\n \n\n0%\n\n \n\nM.\nRevenue recognition:\n\n \nThe Company generates its revenues mainly from sales of distinct custom-made PCBs.\n\n \n\nRevenues from the Company's contracts with customers are recognized using the five-step model in ASC 606 - \"Revenue from Contracts with Customers\" (\"ASC 606\"). At first, the Company determines if an agreement with a customer is considered to be a contract to the extent it has a commercial substance, it is approved in writing by both parties, all rights and obligations including payment terms are identifiable, the agreement between the parties creates enforceable rights and obligations, and collectability in exchange for goods that will be transferred to the customer is considered as probable. The Company then assesses the performance obligations in the contract and allocates the transaction price in the contract to the distinct performance obligation. Revenue is recognized when control is transferred to the customer.\n\n \n\nF - 17\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2:-\n\nSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)\n\n \n\nThe Company uses the practical expedient and does not assess the existence of a significant financing component when the difference between payment and revenue recognition is a year or less. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to the tax authorities.\n\n \n\nRevenues from the sale of PCBs are recognized at a point in time, when control is transferred to the customer (which is generally upon shipment). The Company generally does not provide a right of return to its customers. Shipping and handling costs are not considered performance obligations and are included in cost of revenues. The Company does not disclose information about the remaining performance obligations that have original expected durations of one year or less. Customer balance is typically due within 0 to 75 calendar days of the invoice date.\n \n\nUnbilled accounts receivables\n\n \n\nIn certain Company contracts, contractual billings do not coincide with revenue recognized on the contract. Unbilled accounts receivables are recorded when revenue recognized on the contract exceeds billings, pursuant to contract provisions, and become billable upon certain criteria being met. Unbilled accounts receivables, for which the Company has the unconditional right to consideration, totaled $0 and $0 as of December 31, 2025 and 2024, respectively, and are included in the accounts receivable balance.\n\n \n\nDeferred revenue consists of unrecognized amounts which have not yet been performed as of the balance sheet date, for which the Company has an unconditional right for a consideration or has collected the amounts. Deferred revenues are recognized as (or when) the Company performs under the contract. During the year ended December 31, 2025, the Company did not recognize revenue that were included in the deferred revenues balance as of December 31, 2024. Deferred revenues are presented as part of Other accounts payable and accrued expenses and amounted to $135 and $52 as of December 31, 2025 and 2024, respectively.\n\n \n\n \nN.\n\nEarnings per ordinary share:\n\n \n\nBasic net earnings per share are computed based on the weighted average number of ordinary shares outstanding during each year. Diluted net earnings per share is computed based on the weighted average number of ordinary shares outstanding during each year, plus dilutive potential ordinary shares considered outstanding during the year, in accordance with ASC 260, \"Earnings Per Share.\" Options to purchase 223,000, 212,000 and 151,000 ordinary shares were not included in the computation of diluted EPS for the years 2025, 2024 and 2023 respectively, since the effect would be anti-dilutive.\n\n \n\n \nO.\n\nConcentration of credit risk:\n\n \n\nFinancial instruments that may subject the Company to significant concentrations of credit risk consist principally of cash and trade accounts receivable. Cash is deposited with major financial institutions in Israel and the United States.\n\n \n\nF - 18\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2:-\n\nSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)\n\n \n\nThe Company performs ongoing credit evaluations of the financial condition of its customers. The risk of collection associated with trade receivables is reduced by the large number and geographical dispersion of the Company's customer base, and the Company's policy of obtaining credit evaluations of the financial condition of certain customers, requiring collateral or security with respect to certain receivables, or purchase of insurance for certain other receivables.\n\n \n\n \nP.\n\nResearch and development costs:\n\n \n\nResearch and development costs incurred in the process of developing product improvements or new products, are charged to expenses as incurred.\n\n \n\n \nQ.\n\nCommitments and contingencies:\n\n \n\nLiabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.\n\n \n\n \nR.\n\nFair value measurements:\n\n \n\nASC 820, \"Fair Value Measurement and Disclosure\" clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:\n\n \n\n \nLevel 1\n-\nObservable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.\n\n \n \n \n \n\n \n\n \nLevel 2\n-\nSignificant other observable inputs based on market data obtained from sources independent of the reporting entity.\n\n \n \n \n \n\n \n\n \nLevel 3\n-\nUnobservable inputs which are supported by little or no market activity.\n\n \n \n \n \n\n \n\nAs of December 31, 2025, 2024 and 2023, the Company did not have any derivative instruments, measured at fair value on a recurring or nonrecurring basis.  The Company's financial instruments on December 31, 2025 and 2024, consisted of cash and cash equivalents, short-term bank deposits, trade and other accounts receivable, other current assets and trade and other payables. The carrying amounts of the financial instruments, approximate fair value due to their short maturity.\n\n \n\n \nS.\n\nComprehensive income (loss):\n\n \n\nThe Company accounts for comprehensive income (loss) in accordance with ASC 220, \"Comprehensive Income\". ASC 220 establishes standards for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements. Comprehensive income generally represents all changes in shareholders' equity (deficiency) during the period except those resulting from investments by, or distributions to, shareholders.\n\nThe Company has determined that its items of comprehensive income (loss) relate to unrealized gain (loss) from foreign currency translation adjustments.\n\n \n\nF - 19\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2:-\n\nSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)\n\n \n\n \nT.\n\nLeases:\n\n \n\nIn accordance with ASC 842, the Company determines if an arrangement is a lease and the classification of that lease at inception is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefits from the use of the asset throughout the period, and (3) whether the Company has a right to direct the use of the asset.\n\n \n\nROU assets and lease liabilities are recognized at commencement date based on the present value of the remaining lease payments over the lease term. ROU assets are initially measured at amounts, which represent the discounted present value of the lease payments over the lease, plus any initial direct costs incurred. The lease liability is initially measured based on the discounted present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. The implicit rate within the operating leases is generally not reasonably determinable, therefore, the Company uses the Incremental Borrowing Rate (“IBR”) based on the information available at commencement date in determining the present value of lease payments. The Company’s IBR is estimated to approximate the interest rate for collateralized borrowing with similar terms and payments and in economic environments where the leased asset is located.\n\n \n\nCertain leases include options to extend or terminate the lease. An option to extend the lease is considered in connection with determining the ROU asset and lease liability when it is reasonably certain that the Company will exercise that option. An option to terminate is considered unless it is reasonably certain that the Company will not exercise the option. The Company does not record an asset or liability for operating leases with a term of 12 months or less.\n\n \n\n \nU.\n\nImpact of recently issued and adopted accounting standards:\n\n \n\nIn December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topics 740): Improvements to Income Tax Disclosures”, which expands the disclosure requirements for income taxes, primarily related to the rate reconciliation and income taxes paid. This ASU is effective for the fiscal years beginning after December 15, 2024. The Company adopted this guidance on a prospective basis as reflected in the Notes to the Consolidated Financial Statements. There was no impact to the Company’s consolidated balance sheets, consolidated statements of income (loss), consolidated statements of shareholders’ equity or consolidated statements of cash flows (see Note 16).\n\n \n\nF - 20\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2:-\n\nSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)\n\n \n\n \nV.\n\nNew accounting pronouncements not yet effective:\n\n \n\nIn November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Topic 220): Disaggregation of Income Statement Expenses, which requires disaggregated disclosure in the notes to the financial statements of prescribed categories of expenses within relevant income statement captions. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact on its financial statement disclosures.\n\n \n\nIn July 2025, the FASB issued ASU 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”. The amendments in this update provide a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current classified accounts receivable and contract assets. This update is effective for annual periods beginning after December 15, 2025, including interim periods within those fiscal years. Adoption of this ASU can be applied prospectively for reporting periods after its effective date. Early adoption is permitted. The Company is currently evaluating the provisions of this ASU.\n\n \n\nIn September 2025, the FASB issued ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software”. The ASU simplifies the capitalization guidance by removing all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout ASC 350-40. The ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years. Adoption of this ASU can be applied prospectively for reporting periods after its effective date; or follow a modified transition approach that is based on the status of the respective projects and whether software costs were capitalized before the date of adoption; or retrospectively to any or all prior periods presented in the consolidated financial statements. The Company is currently evaluating the provisions of this ASU.\n\n \n\nIn December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which establishes authoritative guidance on the recognition, measurement, presentation, and disclosure of government grants. Under ASU 2025-10, government grants are recognized when it is probable that the entity will both comply with the conditions of the grant and the grant will be received. The ASU provides specific accounting models for grants related to assets and grants related to income, including options to recognize government grants as deferred income or as a reduction of the asset’s cost basis. The ASU also requires enhanced disclosures regarding the nature of government grants, significant terms and conditions, accounting policies applied, and amounts recognized in the financial statements. ASU 2025-10 is effective for fiscal years beginning after December 15, 2028, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-10.\n\n \n\nF - 21\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 3:-\n\nCASH AND CASH EQUIVALENTS\n\n \n\n \n \n\nDecember 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\n \n \n \n \n \n \n \n\nDenominated in U.S. dollars\n\n \n \n\n852\n\n \n \n \n\n3,469\n\n \n\nDenominated in NIS\n\n \n \n\n1,022\n\n \n \n \n\n2,230\n\n \n\nDenominated in Euro\n\n \n \n\n607\n\n \n \n \n\n1,876\n\n \n\n \n \n \n \n \n \n \n \n \n\n \n \n \n\n2,481\n\n \n \n \n\n7,575\n\n \n\n \n\nNOTE 4:-\n\nSHORT-TERM BANK DEPOSITS\n\n \n\nShort-term bank deposits are deposited in NIS or U.S. Dollars. During the year ended December 31, 2025 and 2024, the Company recognized interest in the amount of $514 and $517, respectively.\n\n \n\nNOTE 5:-\n\nINVENTORIES\n\n \n\n \n \n\nDecember 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\n \n \n \n \n \n \n \n\nRaw materials\n\n \n \n\n4,798\n\n \n \n \n\n4,141\n\n \n\nWork-in-progress\n\n \n \n\n5,569\n\n \n \n \n\n4,467\n\n \n\nFinished goods\n\n \n \n\n787\n\n \n \n \n\n880\n\n \n\n \n \n \n \n \n \n \n \n \n\n \n \n \n\n11,154\n\n \n \n \n\n9,488\n\n \n\n \n\nDuring the years ended December 31, 2025, 2024 and 2023, the Company recorded inventory write-offs in the amounts of $78, $80 and $80, respectively. Such write-offs were included in cost of revenues.\n\n \n\nNOTE 6:-\n\nOTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES\n\n \n\n \n \n\nDecember 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\n \n \n \n \n \n \n \n\nPrepaid expenses\n\n \n \n\n346\n\n \n \n \n\n352\n\n \n\nReceivables from government authorities\n\n \n \n\n2\n\n \n \n \n\n194\n\n \n\nOthers\n\n \n \n\n259\n\n \n \n \n\n56\n\n \n\n \n \n \n \n \n \n \n \n \n\n \n \n \n\n607\n\n \n \n \n\n602\n\n \n\n \n\nF - 22\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 7:-\n\nPROPERTY AND EQUIPMENT, NET\n\n \n\n \n \n\nDecember 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\nCost:\n\n \n \n \n \n \n \n\nMachinery and equipment\n\n \n \n\n40,920\n\n \n \n \n\n32,865\n\n \n\nEquipment advanced payments\n\n \n \n\n1,518\n\n \n \n \n\n903\n\n \n\nLeasehold improvements\n\n \n \n\n14,081\n\n \n \n \n\n10,985\n\n \n\nOffice furniture and equipment\n\n \n \n\n1,149\n\n \n \n \n\n882\n\n \n\n \n \n \n\n371\n\n \n \n \n\n-\n\n \n\n \n \n \n \n \n \n \n \n \n\n \n \n \n\n58,039\n\n \n \n \n\n45,635\n\n \n\nAccumulated depreciation:\n\n \n \n \n \n \n \n \n \n\nMachinery and equipment\n\n \n \n\n(25,937\n\n)\n\n \n \n\n(21,696\n\n)\n\nLeasehold improvements\n\n \n \n\n(10,417\n\n)\n\n \n \n\n(8,732\n\n)\n\nOffice furniture and equipment\n\n \n \n\n(823\n\n)\n\n \n \n\n(629\n\n)\n\n \n \n \n \n \n \n \n \n \n\n \n \n \n\n(37,177\n\n)\n\n \n \n\n(31,057\n\n)\n\n \n \n \n \n \n \n \n \n \n\nDepreciated cost\n\n \n \n\n20,862\n\n \n \n \n\n14,578\n\n \n\n \n\nDepreciation expense for the years ended December 31, 2025, 2024 and 2023 were $2,104, $1,546 and $1,317, respectively.\n\n \n\nNOTE 8:-\n\nOTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES\n\n \n\n \n \n\nDecember 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\n \n \n \n \n \n \n \n\nAccrued payroll including amounts due to government authorities\n\n \n \n\n2,240\n\n \n \n \n\n1,340\n\n \n\nProvision for vacation and other employee benefits\n\n \n \n\n2,092\n\n \n \n \n\n2,088\n\n \n\nAccrued expenses\n\n \n \n\n1,042\n\n \n \n \n\n694\n\n \n\nOther liabilities\n\n \n \n\n1,191\n\n \n \n \n\n1,014\n\n \n\n \n \n \n \n \n \n \n \n \n\n \n \n \n\n6,565\n\n \n \n \n\n5,136\n\n \n\n \n\nNOTE 9:-\n\nEMPLOYEE SEVERANCE BENEFITS\n\n \n\nUnder Israeli law and labor agreements, the Company is required to make severance and pension payments to retired, dismissed or resigned employees.\n\n \n\n \na.\n\nThe Company has an approval from the Israeli Ministry of Labor and Social Welfare, pursuant to the terms of Section 14 of the Israeli Severance Pay Law, 1963, according to which the Company's current deposits in the pension fund and/or with the insurance company exempt it from any additional severance obligations to the employees for whom such depository payments were made.\n\n \n\nF - 23\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 9:-\n\nEMPLOYEE SEVERANCE BENEFITS (CONT.)\n\n \n\n \nb.\n\nThe Company's employees participate in a pension plan or individual insurance policies that are purchased by them. The Company's liability for severance obligations for the employees employed for one year or more is discharged by making regular deposits with a pension fund or the insurance policies. Under Israeli law, there is no liability for severance pay in respect of employees who have not completed one year of employment. The amount deposited with the pension fund or the insurance policies is based on salary components as prescribed in the employment agreement. The custody and management of the amounts deposited are independent of the Company and accordingly, such amounts funded and related liabilities are not reflected in the balance sheet. For non-management employees, the Company deposits 72% of its liability for severance obligations with a pension fund for such employees, and upon end of employment with the Company, it makes a one-time deposit with the pension fund for the remaining balance. The Company deposited to the individual pension fund according to Section 14 of the Israeli Severance Pay Law $965 and $793 in 2025 and 2024, respectively.\n\n \n\nNOTE 10:-\n\nLEASES\n\n \n\nThe Company entered into operating leases primarily for offices and motor vehicles. The leases have remaining lease terms of up to 3.2 years, some of which may include options to extend the leases for up to an additional 5 years. On June 30, 2020, the Company signed a new agreement for its current office and manufacturing facilities lease which originally was to end in 2022. The new agreement is for five years starting in 2022 with an option to extend the lease by another five years until 2032. The Company treated the new agreement as an extension and a modification of its current operating lease as it does not grant the Company any additional right of use. In addition, the Company concluded that it is reasonably certain that it will exercise the additional five years option starting in 2027. Accordingly, the Company re-measured the lease liability based on the remaining lease term as of the modification date using the incremental borrowing rate at the effective date of the modification. See also Note 18 – Subsequent Events.\n\n \n\nThe Company also elected the practical expedient (by class of underlying asset) to not separate lease and non-lease components and instead to account for each separate lease component and the non-lease components associated with that lease component as a single lease component for its leased motor vehicles.\n\n \n\n \na.\n\nThe components of operating lease costs were as follows:\n\n \n\n \n \n\nYear ended\n\nDecember 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n \n\n2023\n\n \n\n \n \n \n \n \n \n \n \n \n \n\nOperating lease cost\n\n \n \n\n1,351\n\n \n \n \n\n1,142\n\n \n \n \n\n1,188\n\n \n\nTotal lease costs\n\n \n \n\n1,351\n\n \n \n \n\n1,142\n\n \n \n \n\n1,188\n\n \n\n \n\nF - 24\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 10:-\n\nLEASES (CONT.)\n\n \n \n\n \nb.\n\nSupplemental balance sheet information related to operating leases is as follows:\n\n \n\n \n \n\nAs of December 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\n \n \n \n \n \n \n \n\nOperating lease ROU assets\n\n \n \n\n6,272\n\n \n \n \n\n5,911\n\n \n\nOperating lease liabilities, current\n\n \n \n\n1,100\n\n \n \n \n\n827\n\n \n\nOperating lease liabilities, long-term\n\n \n \n\n5,296\n\n \n \n \n\n5,190\n\n \n\nWeighted average remaining lease term (in years)\n\n \n \n\n5.81\n\n \n \n \n\n6.94\n\n \n\nWeighted average discount rate\n\n \n \n\n6.15\n\n%\n\n \n \n\n6.17\n\n%\n\n \n\n \nc.\n\nFuture lease payments under operating leases as of December 31, 2025, are as follows:\n\n \n\n \n \n\nAs of December 31, 2025\n\n \n\n \n\n \n \n \n\n2026\n\n \n \n\n1,418\n\n \n\n2027\n\n \n \n\n1,375\n\n \n\n2028\n\n \n \n\n1,169\n\n \n\n2029\n\n \n \n\n1,124\n\n \n\n2030\n\n \n \n\n1,124\n\n \n\n2031-2032\n\n \n \n\n1,345\n\n \n\n \n\n \n \n \n \n\nTotal undiscounted lease payments\n\n \n \n\n7,555\n\n \n\nLess: imputed interest\n\n \n \n\n(1,159\n\n)\n\n \n\n \n \n \n \n\nPresent value of lease liabilities\n\n \n \n\n6,396\n\n \n\n \n\nNOTE 11:-\n\nCOMMITMENTS AND CONTINGENT LIABILITIES\n\n \n\n \na.\n\nPledges:\n\n \n\nThe Company has pledged certain items of its equipment and the rights to any insurance claims on such items to secure its debts to banks, as well as placed floating liens on all of its remaining assets in favor of the banks. As of December 31, 2025 the Company has no debt to banks; however such pledges has not yet been cancelled.\n\n \n\n \nb.\n\nIndemnification agreement:\n\n \n\nThe 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.\n\n \n\nF - 25\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 11:-\n\nCOMMITMENTS AND CONTINGENT LIABILITIES (CONT.)\n\n \n \n\nThe Israeli Companies Law provides that an Israeli company cannot exculpate an office holder from liability with respect to a breach of his or her duty of loyalty. If permitted by its articles of association, a company may exculpate in advance an officer from his or her liability to the company, in whole or in part, with respect to a breach of his or her duty of care. However, a company may not exculpate in advance a director from his or her liability to the company with respect to a breach of his duty of care with respect to distributions.\n\n \n\nThe Company's articles of association allow it to exculpate any office holder from his or her liability for breach of duty of care, to the maximum extent permitted by law, before or after the occurrence giving rise to such liability. As of December 31, 2025, no liability was recorded with respect to the indemnification agreement.\n\n \n\n \nc.\n\nContingent Liabilities:\n\n \n\nEnvironmental Related Matters\n\n \n\nThe Company has business permit in order to continue operating its business until December 31, 2028. The permit is subject to certain conditions, especially certain conditions imposed by the Israeli Ministry of Environmental Protection. Compliance with these conditions may be costly.\n\n \n\nIn January 2023, the Company received a notification from the Ministry that it intends to impose a penalty of approximately $0.6 million for an alleged breach of the Clean Air Law during the years 2019-2020. The Company paid this penalty.\n\n \n\nIn October 2023, the Company received a notice from the Ministry regarding some suspicion of contamination of the soil from a drilling survey that was done in May 2021 at the factory. On January 24, 2024, representatives of the Ministry visited the Company's facility and informed the Company that an additional survey of the soil and groundwater in the facility area would be required. In June 2025, the Company received a request from the Water Authority to carry out a preliminary investigation of the groundwater at the facility. The Company submitted its proposed investigation plan, which has been approved, and is expected to carried During 2026. As of December 31, 2025, the Company is still in discussions with the Ministry regarding the need and scope a soil survey and the revisions made to the Company's poison permit to include instructions on this subject and applicable deadlines.\n\n \n\nIn February 2026, the Company received a summons for a hearing from representatives of the Ministry of Environmental Protection in connection with two hazardous materials incidents that occurred during 2025. The hearing is scheduled to take place in April 2026. As of the balance sheet date, the Company is unable to assess the outcome of this hearing.\n\n \n\nF - 26\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 12:-\n\nSHAREHOLDERS' EQUITY\n\n \n\nShare Option Plan:\n\n \n\nThe 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.\n\n \n\nEach 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.\n\n \n\nDuring 2023, 151,000 options were granted under the Plan and 171,015 options were exercised. During 2024, 87,000 options were granted under the Plan and 68,347 options were exercised. During 2025, 26,000 options were granted under the Plan and 5,787 options were exercised. The total fair value of the options granted is being recognized over a four-year vesting period.\n\n \n\nAs of December 31, 2025, options to purchase 414,772 ordinary shares were outstanding under the Plan, exercisable at an average exercise price of $8.46 per share. The share-based compensation expense related to employees' equity-based awards, recognized during 2025, 2024 and 2023 was $512, $607 and $363, respectively.\n\n \n\nA summary of employee option activity under the Plan as of December 31, 2025 and changes during the year ended December 31, 2025 are as follows:\n\n \n\n \n \n\nNumber of options\n\n \n \n\nWeighted-average exercise\n\nprice\n\n \n \n\nWeighted- average remaining contractual life\n\n(in years)\n\n \n \n\nAggregate intrinsic\n\nvalue\n\n(in thousands)\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nOutstanding at January 1, 2025\n\n \n \n\n369,809\n\n \n \n \n\n8.30\n\n \n \n \n\n7.8\n\n \n \n \n\n992\n\n \n\nGranted\n\n \n \n\n26,000\n\n \n \n \n\n10.12\n\n \n \n \n\n9.3\n\n \n \n \n\n-\n\n \n\nExercised\n\n \n \n\n5,787\n\n \n \n \n\n6.26\n\n \n \n \n\n4.4\n\n \n \n \n\n-\n\n \n\nForfeited\n\n \n \n\n13,750\n\n \n \n \n\n8.53\n\n \n \n \n\n7.5\n\n \n \n \n\n-\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nOutstanding at December 31, 2025\n\n \n \n\n376,272\n\n \n \n \n\n8.26\n\n \n \n \n\n7.0\n\n \n \n \n\n145\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nExercisable at December 31, 2025\n\n \n \n\n239,895\n\n \n \n \n\n7.05\n\n \n \n \n\n6.3\n\n \n \n \n\n383\n\n \n\n \n\nThe weighted-average fair value of options granted during the years ended December 31, 2025, 2024 and 2023 were $8.30, $9.20 and $5.90, respectively. The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company's closing share price on the last trading day of the fourth quarter of fiscal 2025 and 2024 and the exercise price, multiplied by the number of in-the-money options). This amount changes based on the fair market value of the Company's share. As of December 31, 2025, there was approximately $934 of unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Company's share option plans. This cost is expected to be recognized over a weighted average period of 2.3 years. The total intrinsic value of options exercised during the years ended December 31, 2025 and 2024 was $0.01 million and $0.88 million, respectively. The Company satisfies stock option exercises through the issuance of new shares and does not maintain or utilize treasury shares for this purpose.\n\n \n\nF - 27\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 13:-\n\nBASIC AND DILUTED NET EARNINGS PER SHARE\n\n \n\n \n \n\nYear ended\n\nDecember 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n \n\n2023\n\n \n\nNumerator:\n\n \n \n \n \n \n \n \n \n \n\nProfit attributable to Eltek Ltd. shareholders\n\n \n \n\n826\n\n \n \n \n\n4,224\n\n \n \n \n\n6,353\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nDenominator:\n\n \n \n \n \n \n \n \n \n \n \n \n \n\nDenominator for basic profit per share weighted-average number of shares outstanding\n\n \n \n\n6,716,236\n\n \n \n \n\n6,626,391\n\n \n \n \n\n5,902,447\n\n \n\nEffect of diluting securities:\n\n \n \n \n \n \n \n \n \n \n \n \n \n\nEmployee share options\n\n \n \n\n72,286\n\n \n \n \n\n75,018\n\n \n \n \n\n54,041\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nDenominator for diluted profit per share - adjusted weighted average shares and assumed exercises\n\n \n \n\n6,788,522\n\n \n \n \n\n6,701,409\n\n \n \n \n\n5,956,488\n\n \n\n \n\nNOTE 14:-\n\nOPERATING SEGMENTS AND ENTITY WIDE DISCLOSURES\n\n \n\n \na.\n\nThe Company operates as a single operating segment - manufacturing, marketing and sale of custom made printed circuit boards.\n\n \n\nThe CODM of Eltek Ltd. is the Chief Executive Officer (CEO). The CEO evaluates the company's performance and allocates resources based on financial information presented on a consolidated basis. The Company’s CODM uses consolidated net income to review actual results to allocate resources within the business to continue growth. The CEO does not use asset-based measures in assessing segment performance or allocating resources.\n\n \n\nSignificant expenses that the CEO monitors include cost of raw materials and inventory change, manufacturing cost, salaries and depreciation cost. These expenses are evaluated on a consolidated basis to understand their impact on the company's profitability.​ Other items considered in the assessment of segment performance include general and administrative, tax expenses and finance income. These items are reviewed collectively to gain a comprehensive understanding of the company's financial position.​\n\n \n\nF - 28\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 14:-\n\nOPERATING SEGMENTS AND ENTITY WIDE DISCLOSURES (CONT.)\n\n \n\nThe following table presents information on reportable segment profit for the periods presented:\n\n \n\n \n \n\nYear ended\n\nDecember 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n \n\n2023\n\n \n\nRevenues\n\n \n \n\n51,790\n\n \n \n \n\n46,527\n\n \n \n \n\n46,695\n\n \n\nLess:\n\n \n \n \n \n \n \n \n \n \n \n \n \n\nRaw materials\n\n \n \n\n13,404\n\n \n \n \n\n12,209\n\n \n \n \n\n11,661\n\n \n\nManufacturing\n\n \n \n\n9,610\n\n \n \n \n\n7,904\n\n \n \n \n\n7,467\n\n \n\nSalaries\n\n \n \n\n22,215\n\n \n \n \n\n18,828\n\n \n \n \n\n16,787\n\n \n\nDepreciation\n\n \n \n\n2,104\n\n \n \n \n\n1,546\n\n \n \n \n\n1,317\n\n \n\nOther segment items*\n\n \n \n\n3,636\n\n \n \n \n\n1,816\n\n \n \n \n\n3,110\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nNet profit\n\n \n \n\n826\n\n \n \n \n\n4,224\n\n \n \n \n\n6,353\n\n \n\n \n\n \n*\n\nOther segment items comprised of other cost items included with cost of sales, research and development, selling, general and administrative, tax expenses and finance income.\n\n \n\n \nb.\n\nCustomers who accounted for over 10% of the total consolidated revenues:\n\n \n\n \n \n\nYear ended\n\nDecember 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n \n\n2023\n\n \n\n \n \n \n \n \n \n \n \n \n \n\nCustomer A - Sales of manufactured products\n\n \n \n\n18.3\n\n%\n\n \n \n\n8.3\n\n%\n\n \n \n\n13.7\n\n%\n\nCustomer B - Sales of manufactured products\n\n \n \n\n6.0\n\n%\n\n \n \n\n15.5\n\n%\n\n \n \n\n14.0\n\n%\n\n \n\n \nc.\n\nRevenues by geographic areas:\n\n \n\nIsrael\n\n \n \n\n35,305\n\n \n \n \n\n30,709\n\n \n \n \n\n26,735\n\n \n\nNorth America\n\n \n \n\n4,666\n\n \n \n \n\n4,019\n\n \n \n \n\n5,198\n\n \n\nNetherlands\n\n \n \n\n4,425\n\n \n \n \n\n4,976\n\n \n \n \n\n5,673\n\n \n\nIndia\n\n \n \n\n3,501\n\n \n \n \n\n4,691\n\n \n \n \n\n6,480\n\n \n\nOthers\n\n \n \n\n3,893\n\n \n \n \n\n2,132\n\n \n \n \n\n2,609\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n \n \n \n\n51,790\n\n \n \n \n\n46,527\n\n \n \n \n\n46,695\n\n \n\n \n\nF - 29\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 14:-\n\nOPERATING SEGMENTS AND ENTITY WIDE DISCLOSURES (CONT.)\n\n \n\n \nd.\n\nPrimary industries for which the Company produced PCBs:\n\n \n\nDefense and aerospace equipment\n\n \n \n\n73\n\n%\n\n \n \n\n65\n\n%\n\n \n \n\n51\n\n%\n\nMedical equipment\n\n \n \n\n7\n\n%\n\n \n \n\n6\n\n%\n\n \n \n\n7\n\n%\n\nIndustrial equipment\n\n \n \n\n9\n\n%\n\n \n \n\n13\n\n%\n\n \n \n\n14\n\n%\n\nDistributors, contract electronic manufacturers and others\n\n \n \n\n11\n\n%\n\n \n \n\n16\n\n%\n\n \n \n\n28\n\n%\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n \n \n \n\n100\n\n%\n\n \n \n\n100\n\n%\n\n \n \n\n100\n\n%\n\n \n\nNOTE 15:-\n\nFINANCIAL EXPENSES (INCOME), NET\n\n \n\n \n \n\nYear ended\n\nDecember 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n \n\n2023\n\n \n\n \n \n \n \n \n \n \n \n \n \n\nInterest on long-term bank loans\n\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n84\n\n \n\nInterest on bank deposits\n\n \n \n\n(573\n\n)\n\n \n \n\n(730\n\n)\n\n \n \n\n(169\n\n)\n\nBank charges\n\n \n \n\n54\n\n \n \n \n\n38\n\n \n \n \n\n38\n\n \n\nForeign exchange loss (gain), net\n\n \n \n\n1,793\n\n \n \n \n\n(13\n\n)\n\n \n \n\n(375\n\n)\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n \n \n \n\n1,274\n\n \n \n \n\n(705\n\n)\n\n \n \n\n(422\n\n)\n\n \n\nNOTE 16:-\n\nTAXES ON INCOME\n\n \n\n \na.\n\nTax laws applicable to the Company:\n\n \n\nThe Law for the Encouragement of Capital Investments, 1959:\n\n \n\nAccording to the Law, companies are entitled to various tax benefits by virtue of the \"preferred enterprise\" status granted to part of their enterprises, as implied by this Law. The principal benefits by virtue of the Law are:\n\n \n\nTax benefits and reduced tax rates:\n\n \n\nAmendment to the Law for the Encouragement of Capital Investments, 1959 (Amendment 71):\n\n \n\nOn August 5, 2013, the Knesset issued the Law for Changing National Priorities (Legislative Amendments for Achieving Budget Targets for 2013 and 2014), 2013 which consists of Amendment 71 to the Law for the Encouragement of Capital Investments (\"the Amendment\"). According to the Amendment, the tax rate on preferred income form a preferred enterprise in 2014 and thereafter will be 16% (in development area A - 9%).\n\n \n\nF - 30\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 16:-\n\nTAXES ON INCOME (CONT.)\n\n \n \n\nThe Amendment also prescribes that any dividends distributed to individuals or foreign residents from the preferred enterprise's earnings as above will be subject to tax at a rate of 20%.\n\n \n\nAmendment to the Law for the Encouragement of Capital Investments, 1959 (Amendment 73):\n\n \n\nIn December 2016, the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years), 2016 which includes Amendment 73 to the Law for the Encouragement of Capital Investments (\"the  Amendment\") was published. According to the Amendment, a preferred enterprise located in development area A will be subject to a tax rate of 7.5% instead of 9% effective from January 1, 2017 and thereafter (the tax rate applicable to preferred enterprises located in other areas remains at 16%).\n\n \n\nConditions for the entitlement to the benefits:\n\n \n\nThe above benefits are conditional upon the fulfillment of the conditions stipulated by the Law, regulations published thereunder and the letters of approval for the investments in the approved enterprises, as above. Non-compliance with the conditions may cancel all or part of the benefits and refund of the amount of the benefits, including interest. Management believes that the Company is meeting the aforementioned conditions.\n\n \n\nThe Law for the Encouragement of Industry (Taxation), 1969:\n\n \n\nThe Company has the status of an \"industrial company\", as defined by this law. According to this status and by virtue of regulations published thereunder, the Company was entitled to claim a deduction of accelerated depreciation on equipment used in industrial activities, as determined in the regulations issued under the Inflationary Law. The Company is also entitled to amortize a patent or rights to use a patent or intellectual property that are used in the enterprise's development or advancement, to deduct issuance expenses for shares listed for trading, and to file consolidated financial statements under certain conditions.\n\n \n\n \nb.\n\nTax rates applicable to the Company:\n\n \n\n \n1.\n\nThe Israeli corporate income tax rate is 23%.\n\n \n\nAs the Company has the status of a preferred enterprise, the income tax rate applied is 16%. A company is taxable on its real capital gains at the corporate income tax rate in the year of sale.\n\n \n\n \n2.\n\nThe tax rates of the Company's active non-Israeli subsidiary is 21%.\n\n \n\n \nc.\n\nCarryforward losses for tax purposes:\n\n \n\nAs of December 31, 2025 the Company's carryforward operating losses for tax purposes were approximately $0.0 million. Carryforward capital losses for tax purposes were approximately $9.5 million. The Company's carryforward losses for tax purposes and tax credits carryforward do not have expiration dates.\n\n \n\nF - 31\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 16:-\n\nTAXES ON INCOME (CONT.)\n\n \n \n\n \nd.\n\nIncome tax assessments:\n\n \n\nThe Company files its income tax return in Israel. Eltek USA files its income tax return in the United States.\n\n \n\nIn Israel, the Company has received final tax assessments through the 1995 tax year. Assessments through the 2020 tax year are considered final due to statute of limitations. The Israeli tax returns of the Company may be audited by the Israeli Tax Authorities for the tax years beginning in 2021.\n\n \n\nEltek Europe's tax returns remain subject to audit for the tax years beginning in 2015. The tax returns of Eltek USA remain subject to audit for the tax years beginning in 2021.\n\n \n\n \ne.\n\nIncome before taxes on income (tax benefit) is comprised as follows:\n\n \n\n \n \n\nYear ended December 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n \n\n2023\n\n \n\n \n \n \n \n \n \n \n \n \n \n\nIncome before income tax expense:\n\n \n \n \n \n \n \n \n \n \n\nIsrael\n\n \n \n\n897\n\n \n \n \n\n4,976\n\n \n \n \n\n7,557\n\n \n\nForeign jurisdictions\n\n \n \n\n176\n\n \n \n \n\n121\n\n \n \n \n\n160\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n \n \n \n\n1,073\n\n \n \n \n\n5,097\n\n \n \n \n\n7,717\n\n \n\n \n\n \nf.\n\nTaxes on income (tax benefit) are comprised of the following:\n\n \n\n \n \n\nYear ended December 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n \n\n2023\n\n \n\n \n \n \n \n \n \n \n \n \n \n\nDomestic taxes:\n\n \n \n \n \n \n \n \n \n \n\nCurrent\n\n \n \n\n162\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n\nDeferred\n\n \n \n\n39\n\n \n \n \n\n834\n\n \n \n \n\n1,323\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n \n \n \n\n201\n\n \n \n \n\n834\n\n \n \n \n\n1,323\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nForeign taxes:\n\n \n \n \n \n \n \n \n \n \n \n \n \n\nCurrent\n\n \n \n\n46\n\n \n \n \n\n39\n\n \n \n \n\n41\n\n \n\nDeferred\n\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nTaxes on income (tax benefit), net\n\n \n \n\n247\n\n \n \n \n\n873\n\n \n \n \n\n1,364\n\n \n\n \n\nF - 32\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 16:-\n\nTAXES ON INCOME (CONT.)\n\n \n \n\n \ng.\n\nReconciliation of the theoretical income tax benefit to the actual income tax expense:\n\n \n\nThe following table presents the reconciliation between the Company’s theoretical income tax and effective income tax for the year ended December 31, 2025 after the adoption of ASU 2023-09\n\n \n\n \n \n\nYear ended December 31,\n\n \n\n \n \n\n2025\n\n \n\n \n \n \n \n \n \n \n\nIsraeli Statutory Corporate Tax Rate\n\n \n \n\n247\n\n \n \n \n\n23\n\n%\n\n \n \n \n \n \n \n \n \n \n\nTax benefit arising from \"Preferred enterprises\"\n\n \n \n\n(75\n\n)\n\n \n \n\n(7\n\n)%\n\nForeign tax rate differential in subsidiaries\n\n \n \n\n6\n\n \n \n \n\n-\n\n \n\nNontaxable and Nondeductible items:\n\n \n \n \n \n \n \n \n \n\nShare based compensation\n\n \n \n\n81\n\n \n \n \n\n8\n\n%\n\nOther adjustments\n\n \n \n\n(12\n\n)\n\n \n \n\n(1\n\n)%\n\nTotal Effective Tax Rate\n\n \n \n\n247\n\n \n \n \n\n23\n\n%\n\n \n\nThe following table presents the reconciliation between the Company’s theoretical income taxes and effective income taxes for the years ended December 31, 2024 and 2023 prior the adoption of ASU 2023-09:\n\n \n\n \n \n\nYear ended December 31,\n\n \n\n \n \n\n2024\n\n \n \n\n2023\n\n \n\n \n \n \n \n \n \n \n\nIncome before income tax expense as reported in the consolidated statements of comprehensive income\n\n \n \n\n5,097\n\n \n \n \n\n7,717\n\n \n\n \n \n \n \n \n \n \n \n \n\nIsrael Statutory tax rate\n\n \n \n\n23\n\n%\n\n \n \n\n23\n\n%\n\n \n \n \n \n \n \n \n \n \n\nTheoretical tax expense calculated\n\n \n \n\n1,172\n\n \n \n \n\n1,775\n\n \n\n \n \n \n \n \n \n \n \n \n\nTax benefit arising from \"Preferred enterprises\"\n\n \n \n\n(357\n\n)\n\n \n \n\n(532\n\n)\n\nForeign tax rate differential in subsidiaries\n\n \n \n\n11\n\n \n \n \n\n(3\n\n)\n\nNon-deductible items and others\n\n \n \n\n47\n\n \n \n \n\n124\n\n \n\n \n \n \n \n \n \n \n \n \n\nTotal\n\n \n \n\n(299\n\n)\n\n \n \n\n(411\n\n)\n\n \n \n \n \n \n \n \n \n \n\nIncome tax (benefit) expense\n\n \n \n\n873\n\n \n \n \n\n1,364\n\n \n\n \n\nF - 33\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 16:-\n\nTAXES ON INCOME (CONT.)\n\n \n \n\n \nh.\n\nDeferred tax assets and liabilities:\n\n \n\nDeferred taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and such amounts for income tax purposes. Significant components of the Company's deferred tax liabilities and assets are as follows:\n\n \n\n \n \n\nDecember 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\n \n \n \n \n \n \n \n\nDeferred tax assets:\n\n \n \n \n \n \n \n\n \n \n \n \n \n \n \n\nNet operating loss carryforwards (in Israel)\n\n \n \n\n-\n\n \n \n \n\n132\n\n \n\nCapital loss carryforwards (in Israel)\n\n \n \n\n2,491\n\n \n \n \n\n2,179\n\n \n\nPrepayment for non-deductible expenses\n\n \n \n\n884\n\n \n \n \n\n886\n\n \n\nReserves and other\n\n \n \n\n457\n\n \n \n \n\n443\n\n \n\n \n \n \n \n \n \n \n \n \n\nTotal gross deferred taxes\n\n \n \n\n3,832\n\n \n \n \n\n3,640\n\n \n\n \n \n \n \n \n \n \n\nLess valuation allowance\n\n \n \n\n(2,492\n\n)\n\n \n \n\n(2,179\n\n)\n\n \n \n \n \n \n \n \n \n \n\nDeferred tax assets, net\n\n \n \n\n1,340\n\n \n \n \n\n1,461\n\n \n\n \n \n \n \n \n \n \n \n \n\nDeferred tax liabilities:\n\n \n \n \n \n \n \n \n \n\nUndistributed income of subsidiaries\n\n \n \n\n(216\n\n)\n\n \n \n\n(200\n\n)\n\nProperty and equipment\n\n \n \n\n(737\n\n)\n\n \n \n\n(765\n\n)\n\n \n \n \n \n \n \n \n \n \n\nTotal deferred tax liabilities\n\n \n \n\n(953\n\n)\n\n \n \n\n(965\n\n)\n\n \n \n \n \n \n \n \n \n \n\nNet deferred tax assets\n\n \n \n\n387\n\n \n \n \n\n496\n\n \n\n \n\nIn assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. During the year ended December 31, 2025, the Company concluded that, based on its evaluation of available evidence, it was not more likely than not that deferred tax assets related to capital losses carryforwards in Israel were realizable.\n\n \n\n \ni.\n\nAccounting for uncertainty in income taxes:\n\n \n\nFor the twelve-month periods ended December 31, 2025, 2024 and 2023, the Company did not have any material unrecognized tax positions and thus, no interest and penalties related to unrecognized tax positions were recorded. In addition, the Company does not expect that the amount of unrecognized tax benefits will change significantly within the next twelve-month months.\n\n \n\nF - 34\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 17:-\n\nRELATED PARTY BALANCES AND TRANSACTIONS\n\n \n\nNistec, the controlling shareholder of the Company, is also a customer of the Company. The Company sells products to Nistec, pays management fees to Nistec and purchases certain services from Nistec. The Company's transactions with Nistec were carried out on an arm's-length basis.\n\n \n\n \na.\n\nBalances with related parties:\n\n \n\n \n \n\nDecember 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n\n \n \n \n \n \n \n \n\nTrade accounts receivable\n\n \n \n\n320\n\n \n \n \n\n246\n\n \n\nTrade accounts payable\n\n \n \n\n89\n\n \n \n \n\n38\n\n \n\n \n\n \nb.\n\nTransactions with related parties:\n\n \n\n \n \n\nYear ended\n\nDecember 31,\n\n \n\n \n \n\n2025\n\n \n \n\n2024\n\n \n \n\n2023\n\n \n\n \n \n \n \n \n \n \n \n \n \n\nRevenues\n\n \n \n\n1,664\n\n \n \n \n\n1,240\n\n \n \n \n\n769\n\n \n\nPurchases, general and administrative expenses\n\n \n \n\n684\n\n \n \n \n\n489\n\n \n \n \n\n550\n\n \n\n \n\nPCB purchases by Nistec - Nistec purchases PCBs from the Company solely to provide assembled boards to its customers. The Company sells PCBs to Nistec based on its standard pricing, each PCB may be subject to a discount at such rate as offered by the Company from time to time to its other customer, provided that in no event shall the quoted price fall below 1.6 times the variable cost of such PCB, as determined by the Company's dynamic pricing system. 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).\n\n \n\nSoldering and assembly services - The Company may acquire soldering services and/or purchasing 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. The Company’s purchases of services under the Soldering, Assembly and Design Services Procedure may not exceed NIS 3,000,000 per annum.\n\n \n\nF - 35\n\nELTEK LTD. AND ITS SUBSIDIARIES\n\n \n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 17:-\n\nRELATED PARTY BALANCES AND TRANSACTIONS (CONT.)\n\n \n \n\nManagements fees - In July 2024, the Company's Audit Committee, Compensation Committee and Board of Directors, as applicable, approved the terms of the amended Management Agreement. Nistec is entitled to a monthly management fee of NIS 120,000 ($33,000). In the event that the Company’s audited consolidated financial statements reflect that the Company’s net income equals 4% or more of the Company’s revenues, Nistec shall be entitled to receive an annual performance-based bonus in an amount equal to three (3) times the monthly management fee.\n\n \n\nSubject 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.\n\n \n\nMr. 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.\n\n \n\nIn addition, the Company's shareholders in the annual general meetings held on December 5, 2019, October 29, 2020 and August 31, 2022 approved the following:\n\n \n\n \na.\n\nThe extension of the Directors and Officers' Indemnity Agreement with Mr. Nissan.\n\n \nb.\n\nThe extension of the Exculpation Letter with respect to Mr. Nissan .\n\n \nc.\n\nThe application of the Company’s directors and officers' liability insurance policy with respect to Mr. Nissan\n\n \n\nNOTE 18:-\n\nSUBSEQUENT EVENTS\n\n \n\na.\n\nIn January 2026 the Company signed an additional amendment to the leased facility agreement extending it until the end of 2039, without a change in rent increase mechanism, and with a 50% discount on several rent months to compensate the Company for improvements made by it to the leased facility.\n\n \n\nb.\n\nSubsequent to the balance sheet date, the Company granted 40,000 options to its officers, exercisable into the Company’s shares at an exercise price of $8.82 per share, in accordance with the terms of the Company’s equity incentive plan.\n\n \n\n- - - - - - - - - - - - - - - - - - -\n\n \n\nF - 36\n\nS I G N A T U R E S\n\n \n\nThe registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.\n\n \n\n \nELTEK LTD.\n \n\n    \n\n \nBy:\n\n/s/ Eli Yaffe\n \n\n \nName:\n\nEli Yaffe\n \n\n \nTitle:\n\nChief Executive Officer\n \n\n    \n\n \nBy:\n\n/s/ Ron Freund\n \n\n \nName:\n\nRon Freund\n \n\n \nTitle:\n\nChief Financial Officer\n \n\n \n\nDated: March 26, 2026"}