{"url_path":"/sec/eltk/10-k/2026/item-8","section_key":"item-8","section_title":"Item 8 FINANCIAL INFORMATION","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":1033,"has_tables":true,"body_markdown":"ITEM 8.\n\nFINANCIAL INFORMATION\n\n \n\nA.          Consolidated Statements and Other Financial\nInformation\n\n \n\nSee the consolidated financial statements, including the notes\nthereto, and the exhibits listed in Item 18 hereof.\n\n \n\nLegal Proceedings\n\n \n\nFrom time to time, we are involved in legal proceedings arising\nfrom the operation of our business.  Based on the advice of our legal counsel, management believes that except for the proceedings\ndiscussed below, such current proceedings, if any, will not have a material adverse effect on our financial position or results of operations.\n\n \n\nEmployee Related Matters\n\n \n\nThree of our employees filed lawsuits between May 2008 and November\n2019, alleging that they had suffered personal injuries during their employment and they are seeking aggregate financial compensation\nof approximately $121,000 for past damages and additional amounts for future lost income, pain and suffering as the court may determine.\nFive other employees notified us between January 2011 and December 2019, that they allegedly suffered personal injuries during their employment\nwith the company, but have not filed a lawsuit. Of these five employees, two are seeking compensation of approximately $1.7 million and\nthe others did not state their claim amount. We submitted all of these claims to our insurance company, which informed us that it is reviewing\nthe statements of claim without prejudicing its rights to deny coverage.\n\n \n\nDuring the period February 2019 through March 2023, three former\nemployees filed lawsuits seeking additional payments in connection with their employment and subsequent termination which were all settled.\nAs of December 31, 2025 we had no open lawsuits.\n\n \n\nSoftware License\n\n \n\nA supplier of one of our software packages asked to conduct an\naudit of our operation to verify that we are not in breach of any intellectual property rights he allegedly owns. We believe that we have\nfully, diligently and timely complied with our obligation toward the supplier. We also believe that the supplier has no right to conduct\nany audit of our products or services and such audit may cause us to breach confidentiality obligations to other entities. If a claim\nis made and we are found to be in violation of such supplier’s intellectual property rights, we could be liable for compensation\nand costs of an unknown amount. Such liability could have a material adverse effect on our business, financial condition and results of\noperations.\n\n \n\nDividend Distribution Policy\n\n \n\nIn November 2022, our board of directors declared the Company’s\nfirst cash dividend, in the amount of $0.17 per share and approximately $1 million in the aggregate. The dividend was paid in dollars\non December 19, 2022, to all of the Company’s shareholders of record as of December 12, 2022. Prior to such distribution, we had\nnever declared or paid any cash dividends to our shareholders. In November 2023, our board of directors declared another cash dividend\nin the amount of $0.22 per share and in the aggregate an amount of approximately $1.3 million. The dividend was paid on December 21, 2023,\nin dollars, to all of the Company’s shareholders of record as of December 13, 2023.\n\n53\n\n \n\nOn November 18, 2024, our board of directors approved a dividend\ndistribution policy for the Company. According to the policy, each year the Company shall distribute a dividend to its shareholders of\nup to 25% of the Company’s annual net income, as reflected in the Company’s applicable annual consolidated financial statements.\nAny such distribution shall be subject to (a) applicable law, including the available profits and solvency criteria, and any other regulatory\nrestrictions or requirements; (b) financial covenants or other contractual undertakings of the Company, including towards lenders; and\n(c) applicable provisions of the Company’s amended and restated articles of association. The board of directors may, at its sole\ndiscretion and at any time, change, whether as a result of a one-time decision or a change in policy, the rate and/or frequency of dividend\ndistributions, or decide not to distribute a dividend. Nothing in the dividend policy shall be construed to guarantee the distribution\nof any dividends, or as an undertaking by the Company towards any of its shareholders in this regard.\n\n \n\nIn April 2025, our board of directors declared another cash dividend\nin the amount of $0.19 per share, and in the aggregate amount of approximately $1.3 million. The dividend was paid on April 29, 2025,\nin dollars, to all of the Company’s shareholders of record as of April 22, 2025.\n\n \n\nAs mentioned above, the distribution of dividends is limited by\nthe Israeli Companies Law, according to which, a company may distribute dividends out of its Profits (the “Profitability Threshold”),\nprovided that there is no reasonable concern that such dividend distribution will prevent the company from paying all its current and\nforeseeable obligations, as they become due (the “Solvency Threshold”). The distribution amount is limited to the Profits;\n“Profits”, for purposes of the Israeli Companies Law, means the greater of retained earnings or earnings accumulated during\nthe preceding two years, after deducting previous distributions that were not deducted from the surpluses. The Profitability Threshold\nand the Solvency Threshold are cumulative and our company is required to meet both thresholds in order to be able to distribute dividends.\nNotwithstanding the foregoing, dividends may be paid even if not out of Profits, with the approval of a court, provided that the company\ncan demonstrate that the Solvency Threshold is met. An equity repurchase is generally treated as a deemed dividend for purposes of the\naforementioned limitations on dividend distributions. However, since our company is listed on an exchange outside of Israel, even if we\nlack the requisite Profit, we do not need to seek court approval for an equity repurchase, provided that we notify our creditors of the\nproposed equity repurchase and allow such creditors an opportunity to initiate court proceedings to review the terms of repurchase. If\nwithin 30 days of such notification creditors do not file an objection, we may proceed with the repurchase without obtaining court approval.\nIn the event cash dividends are declared, such dividends will be paid in NIS, and will be subject to applicable Israeli withholding taxes.\nFor additional information, see Item 10E. “Additional Information – Taxation – Taxation of Gains Upon Disposition of,\nand Dividends Paid on, our Ordinary Shares.”\n\n \n\nB.          Significant Changes\n\n \n\nNone."}