AI reliance and China exposure outlined in Camtek (NASDAQ: CAMT) 20-F
Filing Impact
Filing Sentiment
Form Type
20-F
Camtek Ltd. files its annual Form 20-F, describing a semiconductor inspection and metrology business focused on advanced packaging, chiplets, HBM, compound semiconductors and CIS for leading IDMs, OSATs and foundries worldwide.
The company highlights rising exposure to AI-related spending, noting that approximately 50% of revenues come from products supporting AI applications. It reports heavy geographic concentration, with about 91% of 2025 sales from Asia-Pacific and 49% from China, increasing sensitivity to trade barriers, export controls and regional instability.
Camtek details extensive risk factors, including global semiconductor cycles, supply-chain constraints, tariffs, currency swings, cyber threats and fast technology shifts. It also describes concentrated ownership by Priortech and Chroma, significant convertible note financings, and multiple Middle East conflicts that could disrupt Israeli operations, logistics and staffing.
Positive
- None.
Negative
- None.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 20-F
(Mark One)
OR
For the fiscal year ended December 31 , 2025
OR
For the transition period from ________ to ________
OR
Date of event requiring this shell company report ___________
Commission file number 000-30664
(Exact name of Registrant as specified in its charter)
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
(Name, Telephone, E-Mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐ Yes ☒
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If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
☐ Yes ☒
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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☐ Accelerated Filer | ☐ Non-Accelerated Filer |
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If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
International Financial Reporting Standards as issued by the International Accounting Standards Board ☐
Other ☐ If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
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Item 17 ☐ Item 18 ☐
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If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes
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TABLE OF CONTENTS
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PAGE
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PART I |
5 |
| Item 1. |
Identity
of Directors, Senior Management and Advisers. |
5 | |
| Item 2. |
Offer
Statistics and Expected Timetable. |
5 | |
| Item 3. |
Key
Information. |
5 | |
| Item 4. |
Information
on the Company. |
22 | |
| Item 4A. |
Unresolved
Staff Comments |
30 | |
| Item 5. |
Operating
and Financial Review and Prospects. |
30 | |
| Item 6. |
Directors,
Senior Management and Employees |
37 | |
| Item 7. |
Major
Shareholders and Related Party Transactions. |
60 | |
| Item 8. |
Financial
Information. |
62 | |
| Item 9. |
The
Offer and Listing. |
62 | |
| Item 10. |
Additional
Information. |
63 | |
| Item 11. |
Quantitative
and Qualitative Disclosures about Market Risk |
75 | |
| Item 12. |
Description
of Securities Other than Equity Securities. |
76 |
|
PART II |
76 |
| Item 13. |
Defaults,
Dividend Arrearages and Delinquencies. |
76 | |
| Item 14. |
Material
Modifications to the Rights of Security Holders and Use of Proceeds. |
76 | |
| Item 15. |
Controls
and Procedures. |
76 | |
| Item 16. |
[Reserved]. | 77 | |
| Item 16A. |
Audit
Committee Financial Expert. |
77 | |
| Item 16B. |
Code
of Ethics. |
77 | |
| Item 16C. |
Principal
Accountant Fees and Services. |
77 | |
| Item 16D. | Exemptions From the Listing Standards for Audit Committees | 78 | |
| Item 16E. |
Purchases of Equity Securities By the Issuer and Affiliated Purchasers | 78 | |
| Item 16F. |
Change in Registrant’s Certifying Accountant | 78 | |
| Item 16G. |
Corporate
Governance |
78 | |
| Item 16H. | Mine Safety Disclosure | 79 | |
| Item 16I. |
Disclosure
Regarding Foreign Jurisdictions that Prevent Inspections |
79 | |
| Item 16J. | Insider Trading Policies | 80 | |
| Item 16K. |
Cybersecurity
|
80 |
|
PART III |
81 |
| Item 17. |
Financial Statements. |
81 | |
| Item 18. | Financial Statements. | 81 | |
| Item 19. |
Exhibits. |
82 |
3
INTRODUCTION
Definitions
In this Annual Report, unless the context otherwise requires:
| • |
references to “Camtek,” the “Company,”
“us,” “we”, “our”
and the “Registrant” refer to Camtek Ltd., an Israeli company, and its consolidated
subsidiaries (unless otherwise indicated); |
| • |
references to “ordinary shares,” “our shares”
and similar expressions refer to the Registrant’s ordinary shares, NIS 0.01 nominal (par) value per share; |
| • |
references to “dollars,” “U.S. Dollars”,
“USD” and “$” are to United States
Dollars; |
| • |
references to “shekels” and “NIS”
are to New Israeli Shekels, the Israeli currency; |
| • |
references to the “Companies Law” are to Israel’s Companies Law, 5759-1999;
|
| • |
references to the “Israeli Securities Law” are to Israel’s Securities Law,
5728-1968; |
| • |
references to the “SEC” are to the United States Securities and Exchange Commission;
and |
| • |
references to the “Nasdaq Rules” are to rules of the Nasdaq Global Market.
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Cautionary Language Regarding Forward-Looking Statements
This Annual Report on Form 20-F includes certain statements that
are intended to be, and are hereby identified as, “forward-looking statements” within the meaning of the Securities Act of
1933, as amended (the “Securities Act”) and the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations and projections about future
events.
Forward-looking statements can be identified by the use of forward-looking
terminology words such as “may,” “will,” “should,” “could,” “expects,” “plans,”
“intends,” “anticipates,” “believes,” “estimates,” “predicts,” “seeks,”
“strategy,” “potential” or “continue” or the negative or other variations of these words, or other
comparable words or phrases, but are not the only way these statements are identified. These statements discuss future expectations, plans
and events, contain projections of results of operations or of financial condition or state other “forward-looking” information.
When a forward-looking statement includes an underlying assumption, we caution that, while we believe the assumption to be reasonable
and make it in good faith, assumed facts almost always vary from actual results, and the difference between a forward-looking statement
and actual results can be material. Forward-looking statements may be found in Item 4. “Information on the Company” and Item
5. “Operating and Financial Review and Prospects” and in this Annual Report generally. Our actual results could differ materially
from those anticipated in these statements as a result of various factors, including all the risks discussed in “Risk Factors”
and other cautionary statements in this Annual Report.
All of our forward-looking statements are qualified by and should be read in conjunction
with those disclosures. These statements are only predictions that represent our views only as of the date they are made and may change
as time passes. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Annual Report might
not occur. Except as may be required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
4
PART
I
| Item 1. |
Identity of Directors, Senior Management and Advisers. |
Not applicable.
| Item 2. |
Offer Statistics and Expected Timetable. |
Not applicable.
| Item 3. |
Key Information. |
A. [Reserved.]
B. Capitalization
and Indebtedness.
Not applicable.
C. Reasons
for the Offer and Use of Proceeds.
Not applicable.
D. Risk
Factors.
Summary of Risk Factors
Investing in our ordinary shares involves a degree of risk. These
risks are discussed more fully below and include, but are not limited to, the following, any of which could have a material adverse effect
on our financial condition, results of operations and cash flows:
Risk Factors Related to Our Business, Markets, and Industry
| • |
A slowdown or contraction in AI-related semiconductor investment that may affect our business, results of operations and financial
condition; |
| • |
Disruption to our business by negative effects on the semiconductor industry, including as a result of economic, geopolitical, legal
and other changes, in the global or local markets in which we operate; |
| • |
The adverse effects of the competition in the markets we serve, that have significant market participants, some with greater resources
than us; |
| • |
The impact of changes in global trade policies beyond our control; |
| • |
The concentration of substantial majority of our sales in the Asia Pacific region, with China being our largest territory;
|
| • |
The effects of global economic trends such as changing inflation, rising interest rates and economic slowdown; |
| • |
The impact of regional instabilities and continued hostilities; |
| • |
Supply chain constrains due to sharp increase in demand for electronic components, or disruptions to supply
of components due to geopolitical or other reasons; |
| • |
Introducing new products may adversely affect our revenue, profitability and competitive position; |
| • |
The expansion of our business within and/or beyond our current served markets, through acquisition activity; |
| • |
We are be exposed to fluctuations in currency exchange rates which may result in additional expenses being recorded or in the prices
of our products becoming less competitive; |
| • |
The impact of cybersecurity risks and events, and compliance with the related regulatory framework; |
5
| • |
The use or anticipated use of new and evolving technologies, such as AI, by us or third parties; |
| • |
The effects of the sharp increase in demand for electronic components, while production capacity remains limited; |
| • |
Risks associated with the levels of cash we maintain, which are higher than in the past; and |
| • |
The effects of climate change or related legal or regulatory measures, and compliance with additional environmental, social, governance,
health, export controls, and other laws, regulations, and disclosure rules. |
Risk Factors Related to Our Ordinary Shares
| • |
The risks associated with volatility of our share price, trading volumes, and price
depressions; |
| • |
The effects of the controlling interest of our principal shareholders, Priortech and Chroma, that may exercise their control in ways
that may be adverse to the interests of our other shareholders; and |
| • |
The impact of our ordinary shares being traded on more than one market. |
Risk Factors Related to Our Operations in Israel
| • |
Conditions in the Middle East and Israel, including the impact of the Israel-Iran conflict and
continued hostilities along Israel’s borders; |
| • |
The effects of Israeli governmental programs and tax benefits, as well as of governmental grants; and |
| • |
Shareholders rights and responsibilities and the general corporate law framework in Israel, applicable to our shares and shareholders.
|
Risk Factors
There is a high degree of risk associated with our Company and
business. If any of the following risks occur, our business, revenues, operating results and financial condition could be materially adversely
affected and the trading price of our ordinary shares could decline. Below are some of the main risks factors and challenges that we have
been facing and may further face, which could have an adverse effect on our business, results of operations and financial condition:
Risk Factors Related to Our Business, Markets, and Industry
A slowdown or contraction in AI-related semiconductor investment
could materially and adversely affect our business, results of operations and financial condition.
Approximately 50% of our revenues are generated from products supporting
the production of artificial intelligence (“AI”) applications, and significant portion
of our growth expected in the coming few years is derived from such products. We have experienced increased demand for inspection and
metrology systems as customers invest in equipment supporting the production of AI related products, including high-bandwidth memory (HBM)
and advanced packaging. As we continue to serve leading integrated device manufacturers, outsourced semiconductor assembly and test providers
(OSATs), and foundries, our revenue profile has become meaningfully exposed to the pace and durability of AI-related capital spending
patterns. Slower AI-driven investments would therefore have an adverse effect on our sales and operating results.
To meet current volume of sales and expected demand, we maintain appropriate inventories
and production capacity, and have expanded our workforce and made capital expenditures to support operations, engineering and information
technology. In addition, to satisfy short customer lead-time expectations, we frequently pre-order components and subsystems based on
internal forecasts rather than on firm purchase orders. If AI-related demand does not continue at anticipated levels, we may incur higher
carrying costs, experience factory underutilization, and be unable to adjust our cost structure quickly. These conditions could require
us to curtail production, restructure operations and record charges that negatively affect our operating results.
6
Forecasting the timing, duration and depth of any AI-related downcycle
is inherently challenging. We typically operate with limited visibility and do not have long-term purchase commitments with many customers.
While we rely on internal and customer-provided forecasts to plan inventory and capacity, abrupt changes in customer roadmaps, qualification
timing, or funding priorities can render such forecasts unreliable.
Any combination of these factors could materially and adversely
affect our business, results of operations and financial condition.
Our business could be materially disrupted by negative effects
on the semiconductor industry, including as a result of economic, political, legal, and other changes, in the global or local markets
in which we operate.
The semiconductor industry, including the semiconductor equipment
industry, relies on global end markets. Political, geopolitical, economic and financial crises and instabilities have in the past negatively
affected the semiconductor industry and its end markets and could do so again in the future. Prolonged or increased use of trade barriers
may result in a decrease in the growth of the global economy and semiconductor industry and could cause turmoil in global markets, which
in turn often results in declines in our customers’ electronic products’ sales and could decrease demand for our products
and services. Such circumstances could have a negative effect on our ability to sell to, ship products to, collect payments from, and
support customers in certain regions.
In addition, the semiconductor industry has been subject to significant
downturns from time to time as a result of global economic conditions, as well as industry-specific factors such as over-ordering in recent
years which in turn results in excess inventory within our customers, built-in excess capacity, fluctuations in product supply, product
obsolescence and changes in end-customer preferences. Downturns, as those we have experienced in the past, may cause material reductions
in the demand for the products and services that we offer, and may result in a decline in our revenues. In addition, our ability to significantly
reduce expenses during such downturn may be limited because of our continuing need to invest in research and development; our continuing
need to market our products, and our extensive ongoing customer service and support requirements worldwide.
The above listed factors could adversely affect our global sales,
and as a result our inventory and supply chain, which could have a material adverse impact on our results of operations and financial
condition.
The markets we serve are highly competitive and have significant
global market participants, some with greater resources than us. Such competition could adversely affect the terms on which we sell our
products and may negatively affect our financial results.
The markets that we serve are highly competitive and have significant
global market participants, some with greater resources than us. The continued growth of the markets in which we operate may attract and
result in new market entrants and may also encourage existing competitors to expand their efforts and presence in these markets. Such
competitors may be able to respond more quickly to new or emerging technologies or changes in customer requirements, develop additional
or superior products, benefit from greater economies of scale, offer more aggressive pricing or devote greater resources to the promotion
of their products. Other competitors are local smaller competitors in the markets we operate, which target the low-end market and may
offer products at lower prices. Competition could result in lower prices for our products and a corresponding reduction in our gross margin,
as well as more favorable payment terms to our customers and a corresponding decline in our cash flow. If we are unsuccessful in
effectively responding to our competition, our financial results will be adversely affected by reduced revenues as well as lower margins,
which may lead to financial losses.
Changes in global trade policies beyond our control may adversely
impact our business, financial condition and results of operations.
Geopolitical tensions may result in export control restrictions,
trade sanctions, and more generally international trade regulations which may impact our ability to sell and deliver our systems, technology,
and services. Changes in applicable social, political, regulatory and economic conditions or in laws and policies governing foreign trade,
manufacturing, development and investment in the territories and countries, where our customers are located, could adversely affect our
business, financial condition, operating results and cash flows. Among other things, such factors may affect our ability to sell our products
and services in certain countries, such as China. Our business involves the sale of systems and services to customers in a number of countries,
including U.S., Europe, Korea, Taiwan and China, and includes technologies that may be the subject of increased export regulations or
policies.
7
For example, the U.S. government has enacted trade restrictions,
reflecting national security concerns on conducting business with certain Chinese entities, active in the semiconductor industry. For
example, over the course of 2025, the U.S. Department of Commerce has continued to add Chinese semiconductor manufacturers to list of
entities that the sales thereto are forbidden or restricted.
The abovementioned measures can create legal and/or contractual
exposure not only for U.S. companies or U.S. people, but also for non-U.S. companies like us. In some cases, the abovementioned export
restrictions might also be applicable to the products or services which we export from countries other than the United States, should
there be a U.S. nexus to our activities, should the products contain certain U.S. origin items above the applicable threshold, or should
they be produced using certain U.S.-controlled technology, software, or production equipment.
Even where U.S. and other global export controls do not apply to
our products, they may impact the demand for our products. For example, certain additional export administration regulations issued by
the U.S. Department of Commerce since October 2022, and which have increased in 2025, may have an adverse effect on the entire semiconductor
manufacturing sector in China and reduce the demand for semiconductors equipment and therefore indirectly affect our sales in China.
Furthermore, the above regulatory requirements are subject to rapid
change and governments around the world are adopting a growing number of compliance and enforcement initiatives.
It has been and may continue to be increasingly difficult to keep
up with the pace, complexity and scope of these changes. While we continue to carefully monitor new sanctions and trade restrictions that
could arise and conduct ongoing detailed assessments of applicable law, any alleged or actual violations of such laws whether U.S. or
other jurisdictions, whether or not directly applicable to us, could have an adverse impact on our reputation, business, results
of operations and financials.
A substantial majority of our sales have been to manufacturers
in the Asia Pacific region. The concentration of our sales and other resources within a particular geographical region, subjects us to
additional material risks.
In 2025, our sales in the Asia Pacific region (mainly China, Taiwan
and South Korea) accounted for approximately 91% of our total revenues with sales to China being 49% of our total revenues. A number of
Asian countries have experienced or could experience political and economic instability. For instance, Taiwan and China encountered a
number of continuous disputes, as have North and South Korea. Additionally, the Asia-Pacific region is susceptible to the occurrence of
natural disasters, such as earthquakes, cyclones, tsunamis and flooding. Changes in local legislation, changes in governmental policies,
controls and regulations, trade restrictions, a downturn in economic or financial conditions, an outbreak of hostilities or other political
upheaval, as well as any further extraordinary events having an adverse effect on the economy or business environment in this region,
would likely harm the operations of our customers in these countries, may cause a significant decline in our future revenues and may have
an adverse effect on our results of operations and cash flow. These general risks are heightened in China, which is our largest territory,
where the nature of the economy, local legislation, governmental policies and regulatory environment are rapidly evolving and where foreign
companies may face the negative effects of changed governmental policies, regulatory, business and cultural obstacles. Additionally, Chinese
policies with respect to trade, may present obstacles, such as regulatory restraints or significant increases in tariffs on goods imported
into these markets. China’s economy differs from the economies of most developed countries in many respects, including with respect
to the amount of government involvement, level of development, growth rate and control of foreign exchange, and allocation of resources
and local preference of emerging local competitors. Our business is subject to the risks associated with doing business in China, including:
trade protection measures, and import and export licensing and control requirements; potentially negative consequences from changes in
tax laws; difficulties associated with the Chinese legal system, including increased costs and uncertainties associated with enforcing
contractual obligations in China; historically, lower protection of intellectual property rights; changes and volatility in currency exchange
rates; and unexpected or unfavorable changes in regulatory requirements. In addition, we could face increased competition as a result
of China’s policies to promote a domestic semiconductor industry and supply chains.
8
We may be affected by global economic trends such as inflation,
interest rates, and economic slowdown.
Recent inflation, geopolitical issues, increase in energy costs,
increases in interest rates, unstable global conditions and changes in currency exchange rates have led to global economic instability.
In response to rising inflation in recent years, central banks in the markets in which we operate, including the United States Federal
Reserve, have tightened their monetary policies and raised interest rates, and such measures may continue. While interest rates have begun
to decline and inflation is lower than in past quarters in the U.S., costs of labor, capital, employee compensation, and other similar
effects have increased in the recent past This has had, and may continue to have, an adverse effect on our business, financial condition
and results of operations, as well as on our customers’ spending behavior. We manage our available cash through various bank institutions
and invest large portions of our cash reserves in bank deposits in Israel and abroad. Our ability to access deposits at individual
banking institutions can also be negatively affected by the bankruptcy of one or more of the banks in which or through which we hold or
invest our cash reserves, liquidity, credit deterioration, financial results, economic risk, political risk, regulatory changes, sovereign
risk, exchange control, or other factors.
The impact of regional instabilities and continued hostilities
could impede our ability to operate and develop, manufacture and deliver products and components and harm our business and financial results.
As of the date hereof, the regional security environment in the
Middle East remains unstable. In late February 2026, Israel and the United States preemptively attacked Iran, in order to eliminate Iran's
nuclear and ballistic missile capabilities, and to target the Islamic fundamentalist regime governing Iran, which has threatened Israel's
existence. As part of this conflict, Iran launched missile attacks throughout Israel. This war followed upon similar conflicts in June
2025, and April 2024 and October 2024, during which Iran launched ballistic missile attacks against Israel, and Israel conducted strikes
against Iranian military and nuclear infrastructure. The direct conflicts with Iran ran parallel to, and followed upon, a two-year war
(from October 2023 until October 2025) during which Israel was attacked by Hamas and Hezbollah, terrorist groups sponsored by Iran operating
out of the Gaza Strip and Lebanon, respectively. and declared war in response, which included ground operations in the Gaza Strip and
southern Lebanon. Other Iranian-sponsored terrorist organizations in the Middle East, including the Houthi terrorist group in Yemen, have
also attacked Israel with various types of missiles and drones as part of these conflicts, and Israel has responded with air force attacks.
Nearby in the region, the fall of the Assad regime in Syria led Israel to conduct limited military operations targeting Iranian military
assets and infrastructure linked to Hezbollah and other Iran-supported groups.
We may lose business due to the ongoing and revived hostilities,
which could also prevent or delay shipments of our products, winning competitive procurement procedures, damage our facilities, harm our
operations and product development and cause our sales to decrease. In the event that the hostilities and instabilities in our neighbor
countries and/or territories disrupt the ongoing operation of our or our Israeli subcontractors' facilities or the airports and seaports
on which we depend to import and export our supplies and products, our operations may be materially adversely affected. An inability to
receive supplies and materials, shortages of materials or difficulties in procuring our materials, among others, may adversely impact
our ability to commercialize and manufacture our product candidates and products in a timely manner. This could cause a number of delays
and/or issues for our operations, including delay of the review of our product candidates by regulatory agencies, which in turn would
have a material adverse impact on our ability to commercialize our product candidates. Although the related market disruptions are impossible
to predict, they could be substantial, particularly if the current situation continues for an extended period of time or if geopolitical
tensions result in expanded military operations on a global scale. See also “Risk Factors Related to Our Operations in Israel”
below for more information.
9
We have expanded, and may further attempt to expand our activity
within and/or beyond our current served markets, through acquisition activity. Such activity and the integration of acquired businesses
may adversely affect our results of operations, financial condition and trading price of our shares.
We continue to explore potential acquisition opportunities within
our market or as a diversification effort in order to create a growth engine and implement a growth strategy. In addition, we also explore
acquisition opportunities aimed at obtaining technological improvement of our products, adding new technologies to our products and to
diversify our business. These strategic transactions involve numerous risks, which can jeopardize or even eliminate the benefits entailed
in such transactions, such as: (i) we may not be able to discover, or the target company may fail to provide us with, all relevant information
and documents in relation to the transaction, which could lead to a failure to achieve the objectives of acquisition and to a substantial
loss; (ii) we may fail to reveal that the due diligence materials and documents provided contain untrue statements of material facts or
omit to state a material fact necessary to make the statements therein not misleading, hence fail to achieve the objectives of acquisition
and suffer a substantial loss; (iii) we may fail to correctly assess the due diligence investigation findings, establish a correct investment
thesis or establish a correct post-acquisition integration plan; (iv) the process of integrating an acquired business including, for example,
the operations, systems, technologies, products, and personnel of the combined companies, particularly companies with large and widespread
operations and/or complex products, may be prolonged due to unforeseen difficulties; (v) the implementation of the transaction may distract
and divert management’s attention from the normal daily operations of our business; (vi) we may sustain and record significant expenditure
and costs associated with outstanding transactions that either did not or will not materialize or would fail to achieve its objectives;
(vii) there will be increased expenses associated with the transaction, and we may need to use a substantial portion of our cash resources
or incur debt in order to cover such expenses, which the combined companies may not be able to offset; (viii) we may incur unexpected
accounting and other expenses associated with the transaction, such as tax expenses, write offs, amortization expenses related to intangible
assets, restructuring costs, litigation costs or such other costs derived from the acquisition; (ix) the transaction may harm our business
as currently conducted (for example, there may be a temporary loss of revenues, we may experience loss of current key employees, customers,
resellers, vendors and other business partners or companies with whom we engage today or which relate to any acquired company); (x) we
may be required to issue ordinary shares as part of the transaction, which would dilute our current shareholders; (xi) we may need to
assume material liabilities of the acquired entity; (xii) in certain cases, acquisitions require special approvals, or are subject to
scrutiny by the local authorities, and failing to comply with such requirements or to receive such approvals, may prevent or limit our
ability to complete the acquisitions as well as expose us to legal proceedings prior or following the consummation of such acquisitions.
In some cases, such proceedings, if initiated, may conclude in a requirement to divest portions of the acquired business; (xiii) the failure
to successfully complete the integration associated with the transaction (including integrating any acquired technology into our products),
which may cause new markets we were aiming for not to materialize or in which competitors may have a stronger market position; or (xiv)
we may fail to effectively obtain the desired technological improvement.
Furthermore, we compete for acquisition and investment opportunities
with other well-established and well-capitalized entities. There can be no assurance that we will be able to identify acquisition or investment
opportunities upon favorable terms. As a result, the anticipated benefits or cost savings of such acquisitions or other restructuring
activities may not be fully realized, or at all, or may take longer to realize than expected. Acquisitions involve numerous risks,
any of which could harm our business, results of operations cash flow and financial condition as well as the price of our ordinary shares.
Technology in the markets in which we operate is rapidly evolving,
and we may not be able to adequately predict these changes or keep pace with emerging industry standards, which could lead to a loss of
revenues or adversely affect our profits.
The markets for our products are characterized by changing technology,
evolving industry standards, changes in end-user requirements and new product introductions. Our future success will depend on our ability
to accurately predict new market needs and requirements and to enhance accordingly our existing products and develop and introduce new
technologies for the markets in which we operate. These products must keep pace with technological developments and address the increasingly
sophisticated needs of our customers. If we fail to anticipate correctly, or if we are unable to keep pace with, technological changes,
products offered by our competitors or emerging industry standards, our ability to generate revenues may be negatively affected. Adopting
new technologies may also result in material inventory write-offs which would adversely affect our results of operations. We cannot assure
you that we will successfully forecast technology trends or that we will anticipate innovations made by other companies and respond with
our own innovation in a timely manner, which could affect our competitiveness in the market.
10
Fluctuations in currency exchange rates may result in additional
expenses being recorded or in the prices of our products becoming less competitive and thus may have negative impact on our profitability.
We are a global company operating in a multi-currency environment.
A substantial portion of our revenues is denominated in U.S. dollars, while a significant portion of our expenses, particularly the costs
of our Israeli operations, such as personnel, subcontractors, materials and facility‑related costs, are incurred in NIS. Consequently,
a decrease in the value of the U.S. dollar relative to the NIS, as has been recently experienced, directly increases our costs when expressed
in U.S. dollars. This currency mismatch negatively affects our operating margins, profitability, and overall financial results. We may,
from time to time, take various measures designed to reduce our exposure to these effects, but any such steps may be inadequate to protect
us from currency rate fluctuations. In addition, although our sales are denominated in U.S. Dollars, in certain territories (currently,
China, Europe and Japan) our products’ prices may be denominated in local currencies, and much of our service income in these territories
is denominated in local currencies. If there is a significant devaluation in the relevant local currencies in which we operate compared
to the U.S. Dollar, we may be required to increase those prices and as a result our products and services may become less competitive.
Tariffs could have an adverse effect on economic conditions and
financial markets.
The international environment in which we operate is affected by
inter-country trade agreements and tariffs. As a result of recent revisions in the U.S. administrative policy there are, and may be additional,
changes to existing trade agreements, greater restrictions on free trade and significant increases in tariffs on goods imported into the
United States. Over the course of 2025, the U.S. has continued to impose tariffs on imports from foreign countries, including China. These
additional tariffs or any future tariffs or retaliation by another government against such tariffs or policies affects may affect global
trade in our markets and have introduced significant uncertainty into our markets.
The application of increased tariffs or continuing uncertainty
also may result in an increase to our costs of operation or otherwise limit our commercial opportunities. Any of these events could adversely
affect our business, results of operations and financial condition.
Increased cyber-attacks, data breaches, risks and threats, along
with changes in privacy and data protection laws could have an adverse effect on our business.
Threats to network and data security are constantly evolving and
becoming increasingly diverse and sophisticated. Cyber-attacks, malicious internet-based activity, online and offline fraud, and
other similar activities threaten the confidentiality, integrity, and availability of our sensitive information and information technology
systems, and those of the third parties upon which we rely. During times of war and other major conflicts, we or the third parties
upon which we rely may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially
disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services. Given the
substantial increase of cyber-attacks in recent years, we have implemented network security technological, operational and organizational
measures and drafted an internal global information technology security policy. This policy, which follows industry best practices and
focuses on Camtek’s network and information security, was reviewed by our audit committee and board of directors. It is also possible
that our digital assets and business processes could be jeopardized, compromised or halted via cyber-attacks, without being noticed for
some time. Although we have not yet experienced any cyber-attacks that have materially affected our operations, we have experienced several
failed attempts to penetrate our systems and cannot fully provide assurance that any potential cyber incidents will not have a material
impact on our company in the future. Even though we have invested in implementing various cyber security solutions in our networks and
systems, in order to mitigate and reduce our exposure to these cyber risks, we can provide no assurance that our current digital assets
are fully protected against all sorts of cyber-attacks by malicious third parties. We have purchased a cyber-liability insurance policy
to cover certain security and privacy damages. However, we cannot be certain that our coverage will be adequate for liabilities actually
incurred.
As detailed above, due to the direct hostilities between Israel,
Iran and other Iranian proxies, Israeli and Israeli associated companies have become more frequently the target of cyberattacks. Since
the escalation of the heated relationship with Iran, attackers associated with Iran have led a wave of cyberattacks against Isareli public
institutions as well as private companies. As such, the risk of a cyberattack against our information technology systems and data
security has become heightened.
11
We are subject to various regulations and standards relating to
data privacy and security. Failure to comply with any applicable privacy, security or data protection laws, regulations, standards or
other requirements could have an adverse effect on our business prospects, results of operations, and financial condition.
The regulatory framework for data and privacy protection
issues is rapidly evolving worldwide. Comprehensive data protection laws, including the General Data Protection Regulation (“GDPR”),
which imposes stricter obligations and provides for greater penalties for noncompliance. Additionally, laws in all 50 U.S. states require
businesses to provide notice to parties whose personally identifiable information has been disclosed as a result of a data breach. The
laws are not consistent, and compliance in the event of a widespread data breach is costly. Furthermore, California enacted the California
Consumer Privacy Act, or the CCPA, which provides for civil penalties for violations, as well as a private right of action for data breaches.
The California Privacy Rights Act, or the CPRA, significantly modifies the CCPA, potentially resulting in further uncertainty as
the California Privacy Protection Agency is still working to promulgate final rules. In addition, failure to comply with the Israeli Privacy
Protection Law 1981 (the “PPL”) and its regulations, as well as the guidelines of the
Israeli Privacy Protection Authority, may expose us to administrative fines, civil claims (including class actions) and, in certain cases,
criminal liability. In August 2025, a comprehensive amendment to the PPL became effective. This amendment enhanced the enforcement
powers of the Israeli Privacy Protection Authority, granting it significant authority to impose administrative fines for non-compliance.
The amendment also introduced broader oversight capabilities and mechanisms for monitoring adherence to privacy guidelines, thereby increasing
compliance requirements for organizations handling personal data in Israel. As a result, there has been a noticeable increase in enforcement
activity by the Privacy Protection Authority in this area. Other pending legislation may result in a change to the current enforcement
measures and sanctions. New privacy laws add additional complexity, requirements, restrictions and potential legal risk, require additional
investment in resources to compliance programs, and could result in increased compliance costs and/or changes in business practices and
policies. Any inability to adequately address privacy and security concerns or comply with applicable privacy and data security laws,
rules and regulations could have an adverse effect on our business prospects, results of operations and/or financial position.
The use or anticipated use of new and evolving technologies, such as AI, by us or third
parties may increase or create new operational risks.
We integrate, and expect to continue integrating, AI and other
evolving technologies into our business operations to achieve potential benefits such as increased operational efficiencies. However,
these technologies pose significant risks, including flawed or biased algorithms, insufficient or poor-quality data sets, and inappropriate
data practices that could impair results. If AI-based analyses are or are perceived to be deficient, inaccurate, or biased, we could face
competitive harm, legal liability, and reputational damage. The introduction and rapid evolution of AI may also result in enhanced compliance
requirements, governmental or regulatory scrutiny, litigation, and confidentiality or security risks, requiring significant resources
to ensure proper implementation in accordance with applicable laws and regulations. If improperly managed, increased reliance on AI could
damage our reputation, result in the loss of valuable property and information, cause us to breach applicable laws and regulations, and
adversely impact our business.
Semiconductors and semiconductors equipment manufacturing is dependent on global supply
chain of materials and components. Shortage in capacity of suppliers in face of growing demand or disruption to the global supply of electronic
components, including integrated circuits, may have, an adverse effect on the lead-time for our components and increase in their prices.
The global demand for electronic components has experienced a sharp
increase, with a growing number of industries dramatically increasing their demand and consumption. If we are unable to obtain components
in a timely manner to fulfill our customers’ demand on technology and production capacity, or at a reasonable cost, we may be unable
to meet commitments under our contracts with customers, which could expose us to substantial liquidated damages and other claims and could
materially and adversely affect our results of operations, financial condition, business and prospects. In the current highly competitive
business environment, our customers require us to fill orders within a very short period of time. Our products are complex and require
essential components and subsystems that are produced by a number of suppliers and subcontractors. In order to meet our customers’
needs in the timeframe they require, we usually need to pre-order components and subsystems based on our forecasts of future orders, rather
than on actual orders. While we believe that we have sufficient inventory to fill our customers’ orders, our predictions may not
correspond to our actual future needs and our suppliers and subcontractors cannot always supply such components and subsystems within
a shorter than anticipated time frame; this concern is heightened due to the supply chain obstacles detailed above. Our inability to anticipate
rapid market changes or the implications of the global components shortage may cause an increase of inventory which could result in material
inventory write-offs, which we have incurred in the past, or may alternately limit our ability to satisfy customer orders, which could
result in the loss of sales and could cause customers to seek products from our competitors. Additionally, since February 28, 2026, the
war situation between Iran and Israel, the U.S., and other countries in the region has contributed to disruptions to regional air travel
and to maritime traffic through critical routes, including increased risk and disruption around the Strait of Hormuz, and broader impacts
on energy and freight markets. In addition, following the February 28, 2026 strikes, Houthi officials indicated an intent to resume missile
and drone attacks against commercial shipping in and around the Red Sea and Gulf of Aden, which could lead to diversions, longer transit
times, and higher shipping and insurance costs. To date, we have successfully managed our supply chain, but if these factors continue
or become more severe, they may have an adverse effect on our supply chain and on our ability to fulfill customer orders in a timely manner,
which could in turn have an adverse effect on our position in the market and on our business and operations.
12
We maintain high levels of cash, which subjects us to additional
material risks.
Our company maintains a significant amount of our assets in cash
or cash equivalent instruments. Such assets are managed in accordance with the provisions our investment policy, which was adopted by
our management and our Board’s Investment Committee (the “Investment Committee”)
and approved by our Board. Maintaining a significant amount of our assets in cash exposes us to several risks, including the following:
(i) The value of our cash holdings can be eroded by inflation. Over time, high inflation rates can significantly decrease the purchasing
power of cash, potentially reducing the real value of our liquid assets. While our cash reserves are managed and invested by our finance
team, with the assistance of external professional counsels, and under the supervision of our Investment Committee, we may not efficiently
and effectively manage our funds to yield sufficient interest levels, and as a result may fail to protect our cash reserves against inflation
influences; (ii) Concentration of our cash in few financial institutions or instruments may pose a risk if a banking counterparty faces
liquidity or solvency issues; (iii) If our cash is held in different currencies, we face the risk of currency fluctuations, which can
adversely affect the value of our cash holdings and our financial results when these amounts are repatriated or converted into our reporting
currency; and (iv) The interest income generated from our high levels of cash may be subject to taxation at rates that may vary from our
expectations. While we base our tax positions upon professional accountants’ opinions interpreting tax laws and guidance, tax authorities
may challenge such interpretations and levy taxes greater than we anticipate. We continuously evaluate the most effective use of our cash,
but there can be no assurance that our strategies will yield the best possible returns for our shareholders or safeguard the value of
our cash reserves.
We may face significant risks and uncertainties in developing and introducing new products
that may adversely affect our revenue, profitability and competitive position.
We operate in a highly competitive and rapidly evolving industry
that requires us to continuously develop and introduce new products that meet the changing needs and expectations of our customers and
the semiconductor device manufacturing technology. Developing and introducing new products involves significant technical, operational,
regulatory and financial challenges and uncertainties, such as:
| - |
the ability to anticipate and respond to customer requirements and preferences; |
| - |
the ability to obtain and maintain necessary intellectual property rights and licenses; |
| - |
the ability to obtain and maintain necessary certifications and approvals from relevant authorities and standards bodies; |
13
| - |
the ability to source, manufacture and deliver high-quality components and systems in a timely and cost-effective manner; |
| - |
the ability to achieve and maintain adequate levels of performance, reliability, functionality and compatibility of our products;
|
| - |
the ability to price our products competitively and profitably; |
| - |
the ability to market and sell our products effectively and efficiently; |
| - |
the ability to manage inventory levels and avoid obsolescence or excess inventory; |
| - |
the ability to withstand and mitigate potential product liability claims, warranty claims, recalls, defects, errors, failures, breaches,
cyberattacks or other disruptions; |
| - |
the ability to cope with potential changes in trade policies, tariffs, sanctions, export controls or other regulatory or geopolitical
factors that may affect our global operations and supply chain; and |
| - |
the ability to protect our products and systems from unauthorized use, copying, modification or reverse engineering. |
If we fail to successfully develop and introduce new products that gain general market
acceptance, or if we experience delays, difficulties, defects or disruptions in doing so, we may not be able to generate sufficient revenue
and cash flow to recover our investments, which may result in a write down of inventory. We may also lose market share, customer loyalty,
competitive advantage and reputation, and face pricing pressure and litigation risk. Any of these consequences could adversely affect
our revenue, profitability and competitive position.
We occasionally use Open Source codes during our development process
and in our software products. An unintentional breach of Open Source licenses might compel us to publish certain confidential and proprietary
codes, incur damages, and result with intellectual property infringement claims that could be expensive and could disrupt our business.
We occasionally use open source software components under open
source licenses. As certain open source copyright licenses may be categorized as “copyleft licenses” that place certain requirements
and restrictions on users, we maintain a process to assure the use of permissive licenses that guarantee the freedom to use, modify and
redistribute, and creating proprietary derivative works, in order to avoid any limitations on our IP and exposure of confidential proprietary
software. Nonetheless, if we do not correctly monitor and manage those licenses, fail to maintain their terms (for example, to provide
adequate copyright notices, or avoid modifications) or otherwise fail in identifying limited open source codes, we might be subject to
third party copyright and to reciprocity obligation requiring us to make our code open for use by others as well. Such claims may harm
our development efforts and competitive advantage and expose us to copyright infringement claims that could be expensive and could
disrupt our business.
Our operating results have varied and will likely continue to vary
significantly from quarter to quarter and from our expectations for any specific period, making it difficult to predict future results.
Our quarterly operating results have varied in the past and could
continue to vary from quarter to quarter or from our expectations for any specific period in the future, as we cannot assure you that
we will be able to maintain improving trends and convert our backlog into sales, profitability and positive operating cash flows. This
complicates our planning processes, reduces the predictability of our earnings and subjects our stock to price and volume fluctuations.
Period-to-period comparisons of our results of operations may not always provide indications of our future performance. Some of the factors
that may influence our operating results include: global economic conditions and worldwide demand for electronic equipment; instability
in the global markets and in the geopolitical environment that may lead to delays in shipments due to supply chain disruptions caused
by geopolitical conflicts such as the changing security situation in the Middle East and past hostilities impacting maritime shipment
in the Red Sea, and the ongoing conflict between Russia and Ukraine; changes in demand for our systems; changes made by customers to orders
for our systems and/or installation schedules; product introductions and the market penetration period of new products; rapid shifts in
industry capacity; the size, timing and shipment of substantial orders; timing of evaluation and qualification of our products by new
customers; lack of visibility/low levels of backlog from the preceding quarter; product mixes; pricing of our products; timing of new
product, upgrades or enhancements; level of operating expenses such as R&D expenses, agent commissions; fluctuations in interest rates;
an outbreak of a contagious disease, which may cause us or our suppliers and/or customers to temporarily suspend our operations in the
affected city or country; and our profitability may be seriously harmed by currency fluctuations because most of our revenues are generated
in U.S. Dollars, but a significant portion of our expenses is incurred in currencies other than U.S. Dollars (mainly New Israeli Shekels).
In light of these factors and the cyclical nature of the markets we target, we expect to continue to experience significant fluctuations
in our quarterly operating results.
14
A longer sales process for new products may increase our costs
and delay time to market of our products, both of which may negatively impact our revenues, results of operations, cash flow and may result
in inventory write-offs.
Our sales process to new and existing customers usually involves:
demonstrations and testing against industry benchmarks in our sales centers; sales and technical presentations and presentations regarding
our products’ competitive advantages; and installation of the systems at the customer’s site for side-by-side competitive
evaluations for a period of approximately six months. More evaluation time is devoted during the initial market penetration period for
new products such as new products under our Eagle product line, and for new customers in new markets, since these circumstances usually
require qualification of the systems by the customers and engineering efforts to fix errors, customize tasks and add new features. This
evaluation time may be further extended in sales involving multiple new products. Considering the above factors, the length of time until
we recognize revenue can vary and affect our revenues, and results of operations. The long sales process may cause an increase in inventory
levels and a risk for inventory write downs and write-offs; for more details regarding recent inventory write downs and write-offs see
Item 5.A – “Operating Results – Critical Accounting Policies –
Valuation of Inventory”.
We depend on our intellectual property and litigation to enforce
or defend our intellectual property rights may be costly and expose us to risks. If we are unable to protect our proprietary technologies,
we may not be able to compete effectively as well as incur significant expenses.
Our intellectual property, including our patents, is material to
the conduct of our business. Our success depends on our continued ability to use our intellectual property and on the adequate protection
and enforcement of such intellectual property. There can be no assurance that the steps we take to protect and maintain our rights in
our intellectual property will be adequate, or that third parties will not infringe, misappropriate or violate our intellectual property.
If any of our efforts to protect our intellectual property is not adequate, or if any third party infringes, misappropriates or violates
our intellectual property, the value of our products may be harmed. As a result, if we are unable to successfully protect, maintain, or
enforce our rights in our intellectual property, there could be a material adverse effect on our business and results of operations. In
addition, to the extent that we do, from time to time, institute litigation to enforce our intellectual property rights, such litigation
could result in substantial costs and diversion of resources and could negatively affect profits, regardless of whether we are able to
successfully enforce such rights. Third parties, including one of our competitors in the field of semiconductor wafer inspection equipment,
previously asserted claims, and may assert additional claims in the future, that we have infringed their patents or intellectual property
rights. We may in the future face such intellectual property claims against us, which, even if without merit, could lead to protracted
litigation, could cause delays in introducing new products, could be costly to defend and could divert management’s attention from
our business. As a result, any such claim could harm our business and cause a decline in our results of operations and financial condition,
which in turn may materially and adversely affect our business and results of operations. Successful claims against us could impose on
us monetary awards for damages, as well as for plaintiff’s attorney’s fees and other costs, and could limit our ability to
sell products in certain jurisdictions. Additional costs and expenses may also be incurred in the event of out of court settlement of
claims against us, which could result in monetary consequences and affect our profitability. We differentiate our products and technologies
from those of our competitors by using our intellectual property for the development of our products. We rely on a combination of patents,
copyrights, trade secrets, trademarks, confidentiality and non-disclosure agreements to protect our intellectual property. These measures
may not be adequate to protect our proprietary technologies and it may be possible for a third party, including a competitor, to copy
or otherwise obtain and use our products or technologies without authorization or to develop similar technologies independently. The inability
to protect our intellectual property may affect our competitive advantage and we may incur significant expenses.
15
We depend on a number of key personnel who would be difficult to
replace.
Our continued growth and success significantly depend on the managerial
and technical skills of the members of our senior management and key employees. If our operations rapidly expand, we believe that we will
need to promote and hire qualified engineering, administrative, operational, financial and marketing personnel. In particular, we may
find it difficult to hire key personnel with the requisite knowledge of our business, products and technologies. The process of locating,
training and successfully integrating qualified personnel into our operations can be lengthy and expensive. During periods of economic
growth, competition for qualified engineering and technical personnel is intense.
Compliance with environmental, social, governance, health, and
other laws, regulations, and disclosure rules and potential liabilities could materially impact our business, results of operations and
financial condition.
Due to our global operations, we must comply with certain international
and domestic laws, disclosure requirements, export control regulations and restrictions which may expose our business to risks. In addition,
our business is subject to numerous domestic laws and regulations designed to protect the environment, including with respect to discharges
and management of hazardous substances, wastes and emissions and soil and ground water contamination. The failure to comply with current
or future environmental requirements could expose us to criminal, civil and administrative charges and monetary liability. We believe
that we have complied with these requirements and that such compliance has not had a material adverse effect on our results of operations,
financial condition or cash flows. Although we are not presently aware of any liability that could be material to our business, financial
condition or operating results, due to the nature of our business and environmental risks, we cannot provide assurance that any such material
liability will not arise in the future. A number of our customers have adopted, or may adopt, procurement policies that include environmental,
social and governance responsibility provisions or requirements that their suppliers should comply with, or they may seek to include such
provisions or requirements in their procurement terms and conditions. If we are unable to comply or are unable to cause our suppliers
or contract manufacturers to comply, with such policies or provisions or meet the requirements of our customers and our investors, a customer
may stop purchasing products from us, which could harm our reputation, revenue, and results of operations.
Climate change, or legal or regulatory
measures to address climate change, may negatively affect us.
Climate change resulting from increased concentrations of
carbon dioxide and other greenhouse gases in the atmosphere could present risks to our operations. Changes in climate patterns
leading to extreme heat waves or unusual cold weather at some of our locations can lead to increased energy usage and costs, or otherwise
adversely impact our facilities and operations and disrupt our supply chains and distribution systems. Concern over climate change
can also result in new or additional legal or regulatory requirements designed to reduce greenhouse gas emissions or mitigate the effects
of climate change on the environment. Any such new or additional legal or regulatory requirements may increase the costs associated
with, or disrupt, sourcing, manufacturing and distribution of our products, which may adversely affect our business and financial results.
In addition, our adoption of certain standards or mandated compliance to certain requirements could necessitate additional investments
that could impact our cash position and expected cash runway.
16
We may fail to maintain effective internal control over financial
reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002.
The Sarbanes-Oxley Act of 2002 (the “Sarbanes
Oxley Act”) imposes certain duties on us and our executives and directors, including the requirements of Section 404 (Assessment
of Internal Control), which requires (i) management’s annual review and evaluation of our internal control over financial reporting
and (ii) an attestation report issued by an independent registered public accounting firm on our internal control over financial reporting,
in connection with the filing of our Annual Report on Form 20-F for each fiscal year. We have documented and tested our internal control
systems and procedures in order for us to comply with the requirements of Section 404. Our efforts to comply with such requirements have
resulted in increased general and administrative expenses and a diversion of management time and attention, and we expect these efforts
to require the continued commitment of resources. In addition, while our assessment of our internal control over financial reporting resulted
in our conclusion that as of December 31, 2025, our internal control over financial reporting was effective, we cannot predict the outcome
of our testing in future periods. If we fail to maintain the adequacy of our internal controls, we may not be able to ensure that we can
conclude on an ongoing basis that we have effective internal controls over financial reporting. Failure to maintain effective internal
control over financial reporting could result in investigation or sanctions by regulatory authorities and could have a material adverse
effect on our operating results, investor confidence in our reported financial information, and the market price of our ordinary shares.
Risk Factors Related to
Our Ordinary Shares
Our share price and trading volumes have demonstrated significant
volatility in the past and may continue to fluctuate in the future. Such share price volatility could limit investors’ ability to
sell our shares at a profit, could limit our ability to raise funds successfully and may cause additional exposure for securities class
action litigation.
The stock market in general and the market price of our ordinary
shares, in particular, are subject to fluctuation. As a result, changes in our share price may be unrelated to our operating performance.
The price of our ordinary shares has experienced significant volatility in the past and may continue to do so in the future. During
the period from January 1, 2025 through March 4, 2026, the closing price of our ordinary shares ranged from $47.41 to $174.61 per share.
The price volatility of our shares and periodic volatile trading volume may make it difficult for investors to predict the value of their
investment, to sell shares at a profit at any given time or to plan purchases and sales in advance. A variety of factors may affect the
market price and the trading volume of our ordinary shares, including: global economic conditions, which generally influence stock market
prices and volume fluctuations, including as a result of the effects of inflation, interest rates and the current war between Russia and
Ukraine; investors’ views of the attractiveness of our new products; changes in expectations as to our future financial performance
and/or announcements of actual results that vary significantly from such expectations; the announcement by us or our competitors of corporate
transactions, merger and acquisition activities or other similar events impacting our financial performance; changes in financial estimates
by securities analysts; our earnings releases and the earnings releases of our competitors; market conditions relating to our customers’
industries; announcements of technological innovations or new products by us or our competitors; other announcements, whether by us or
others, referring to our financial condition, results of operations and changes in strategy; large block transactions in our ordinary
shares; additions or departures of our key personnel; future offerings or sales of our ordinary shares; and announcements of significant
claims or proceedings against us. Many of these factors are out of our control, and we believe that period-to-period comparisons of our
financial results will not necessarily be indicative of our future performance.
Moreover, the market prices of equity securities of companies that
have a significant presence in Israel may also be affected by the changing security situation in the Middle East and particularly in Israel.
As a result, these companies may experience volatility in their share prices and/or difficulties in raising additional funds required
to effectively operate and grow their businesses. Thus, market and industry-wide fluctuations and political, economic and military conditions
in the Middle East may adversely affect the trading price of our ordinary shares, regardless of our actual operating performance. Further,
as a result of the volatility of our stock price, we could be subject, and were subject in the past, to securities litigation, which could
result in substantial costs and could divert management’s attention and Company resources from business. Securities class action
litigations are being brought from time to time against companies following periods of volatility in the market price of their securities,
and in the past, one was brought against us. Although this claim was dismissed, we cannot guarantee that similar litigation would not
be brought against us in the future.
17
Sales of our ordinary shares may depress our share price.
Offerings of ordinary shares by us and any issuances or sales of
a substantial number of ordinary shares in the public market or otherwise, or the perception that such sales may occur, could cause the
market price of our ordinary shares to decline or could impair our ability to raise capital through a future sale of our ordinary shares.
In addition, we have issued a substantial number of ordinary shares in connection with the settlement of restricted stock units (“RSUs”)
and exercise of options to purchase our ordinary shares, and in the future we may issue additional shares in connection with the exercise
of existing options, which are eligible for, or may become eligible for, unrestricted resale. Any sales of such shares in the public market
or otherwise could reduce the prevailing market price of our ordinary shares, as well as make future sales of ordinary shares by us less
attractive or not feasible, thus limiting our capital resources.
Our principal shareholders, Priortech and Chroma, hold a controlling
interest in us and have the ability to exercise their control in ways that may be adverse to the interests of our other shareholders.
Our relationship with Priortech and Chroma may give rise to a conflict of interests.
As of March 5, 2026, Priortech Ltd. (“Priortech”)
and Chroma ATE Inc. (“Chroma”), beneficially hold in the aggregate 38.04% of our issued
and outstanding ordinary shares. As a result of the voting agreement between Priortech and Chroma, according to which they vote together
in Camtek’s shareholders meetings and therefore are deemed to be joint controlling shareholders of Camtek, they have the ability
to influence the outcome of certain matters submitted to a vote of Camtek’s shareholders, including the election of members of its
board of directors and the approval of significant corporate transactions. This concentration of ownership may also have the effect of
making it more difficult to obtain approval for a change in control of Camtek. Mr. Rafi Amit, our Chief Executive Officer, and Mr. Yotam
Stern, a member of our Board, hold, as of March 5, 2026, an aggregate of approximately 29.26% of the voting power at Priortech’s
general meeting of shareholders, through a voting agreement with David Kishon, Itzhak Krell (deceased) (through Eyal Krell, Israel Shai
Krell and Galit Drori Krell)¸ Haim Langmas (deceased), Zehava Wineberg (deceased) and Hanoch Feldstien (including the estates of
the foregoing deceased founders, the “Priortech Founding Members”), governing inter-alia joint
voting at Priortech’s general meetings of shareholders and the right of first refusal among themselves (the “Priortech
Voting Agreement”), and as such may be deemed to control Priortech, together with the Priortech Founding Members. Messrs.
Amit and Stern also hold various positions in Priortech and its affiliated companies, which may give rise to conflicts of interest. Mr.
Amit, who serves as our Chief Executive Officer on a 90% position, acts as a member of Priortech’s board of directors and provides
management services to Priortech on a 10% basis. Mr. Stern holds several other positions in the Priortech group including the position
of Chief Executive Officer at Priortech. In addition, in the framework of the series of definitive agreements signed in February 2019,
in which Chroma acquired ordinary shares from Priortech and additional new shares were issued to Chroma by Camtek, Leo Huang, the chairman
of the board of directors and a controlling shareholder of Chroma, and I-Shih Tseng, a director and Business Unit President of Chroma,
were appointed to serve as members of our board of directors, which may give rise to conflicts of interest. Despite our efforts to conduct
ourselves by Israeli law procedural requirements concerning interested party transactions, including with respect to audit committee,
board of directors and shareholder approvals (including the special majority requirement in appropriate cases), we cannot be certain that
the possible conflicts of interest in any of these transactions and activities is fully eliminated. For more details regarding our senior
management arrangements, see Item 6.B - “Compensation – Employment Agreements”
below.
18
If we are classified as a passive foreign investment company, our
U.S. shareholders may suffer adverse tax consequences.
There is a risk that we may be classified as a passive foreign
investment company (“PFIC”). Our treatment as a PFIC could result in a reduction in
the after-tax return of U.S. holders of our ordinary shares and may generally cause a reduction in the value of our shares. For U.S. federal
income tax purposes, we will generally be classified as a PFIC for any taxable year in which either: (i) 75% or more of our gross income
is passive income, or (ii) at least 50% of the average value of our total assets (generally determined on a quarterly basis) for the taxable
year consist of assets that produce or are held for the production of passive income. Based on an analysis of our current income, assets,
activities and market capitalization and expectations about our future, income, assets, activities and market capitalization, we do not
believe that we were a PFIC for the taxable year ended December 31, 2025, and do not expect to be a PFIC for the current year or in the
foreseeable future. However, there can be no assurance that the U.S. Internal Revenue Service (“IRS”)
will not challenge our analysis or our conclusion regarding our PFIC status. This is a factual determination that must be made annually
after the close of each taxable year. The value of our assets for purposes of the PFIC determination may be determined by reference to
the public price of ordinary shares, which could fluctuate significantly. Therefore, there can be no assurance that we will not be classified
as a PFIC for the current taxable year or in the foreseeable future. If we were a PFIC at any time when a U.S. holder acquired or held
our ordinary shares, such U.S. holder generally will be subject to the PFIC rules with respect to such ordinary shares. If we were determined
to be a PFIC for U.S. federal income tax purposes, highly complex rules would apply to U.S. holders owning our ordinary shares and such
U.S. holders could suffer adverse U.S. tax consequences. For more information, please see Item 10.E below - “U.S.
Federal Income Tax Considerations– Tax Consequences if We Are a Passive Foreign Investment Company”.
Our ordinary shares are traded on more than one market and this
may result in price variations.
In addition to being traded on the Nasdaq Global Market, our ordinary
shares are traded on the Tel Aviv Stock Exchange (“TASE”). Trading in our ordinary
shares on these markets take place in different currencies (U.S. Dollars on Nasdaq and NIS on TASE) and at different times (resulting
from different time zones and public holidays in the United States and Israel). The trading prices of our ordinary shares on these two
markets may differ due to these and other factors. Any decrease in the price of our ordinary shares on one market could cause a decrease
in the trading price of our ordinary shares on the other market.
Risk Factors Related to
Our Operations in Israel
Conditions in the Middle East and Israel may adversely affect our
operations.
Our headquarters and main facility (the sole manufacturing and
integration facility of the majority of our product lines are located in the North of the State of Israel. Accordingly, political, economic
and military conditions in Israel and the surrounding region may directly influence our operations. Specifically, we could be adversely
affected by hostilities involving Israel; the interruption or curtailment of trade between Israel and its present trading partners; a
downturn in the economic or financial condition of Israel; and a full or partial mobilization of the reserve forces of the Israeli army.
As of the date hereof, the broader regional security environment
remains unstable, as more fully elaborated in “The impact of regional instabilities and continued hostilities could impede our ability
to operate and develop, manufacture and deliver products and components and harm our business and financial results” above.
In addition, there are concerns that companies and businesses will
terminate, and may have already terminated, certain commercial relationships with Israeli companies following ongoing efforts by countries,
activists and organizations to boycott the State of Israel and related entities and companies. The foregoing efforts, particularly if
they become more widespread, as well as rulings by the ICJ, ICC and other international tribunals, may adversely impact our ability to
cooperate with research institutions and collaborate with other third parties. Further deterioration of Israel’s relationship
with the Palestinians or countries in the Middle East could expand the disruption of international trading activities in Israel, may materially
and negatively affect our business conditions, could harm our results of operation and adversely affect the Company’s share price.
19
Our business may also be disturbed by the obligation of personnel
to perform military service. Our employees who are Israeli citizens are generally subject to a periodic obligation to perform reserve
military service, generally until they reach the age of 45 (or older, for reservists with certain occupations), but during military conflicts,
these employees may be called to active duty for longer periods of time, In case of further regional instability such employees, who may
include one or more of our key employees, may be absent for extended periods of time which may materially adversely affect our business. Furthermore,
our Company’s insurance does not cover loss arising out of events related to the security situation in the Middle East. While the
Israeli government generally covers the reinstatement value of direct damages caused by acts of war or terror attacks, we cannot be certain
that such coverage will be maintained.
Another risk for political, social and economic instability in
Israel is associated with the extensive changes that began in early 2023 by the current Israeli government with respect to Israel’s
judicial system. In response to such developments, individuals, organizations and financial institutions, both within and outside of Israel,
have voiced concerns that the proposed changes may negatively impact the business environment in Israel. Such proposed changes may also
adversely affect the labor market in Israel or lead to political instability or civil unrest. To the extent that any of these negative
developments do occur, they may have an adverse effect on our business, our results of operations and our ability to raise additional
funds, if deemed necessary by our management and board of directors, and to attract or retain qualified and skilled “talents”
and personnel. We can give no assurance that the political, economic and security situation in Israel will not have a material adverse
impact on our business in the future.
Moreover, after several credit rating downgrades in recent years,
on November 7, 2025, S&P Global Ratings revised its outlook on Israel to “stable” from “negative”, while affirming
the “A” rating. Despite this stabilization in outlook by S&P, other agencies, including Moody’s, continued to maintain
a negative outlook as of late 2025, citing persistent exposure to geopolitical risks and a polarized political system.
Our ability to take advantage of Israeli government programs and
tax benefits may change, which could increase our tax expenses.
We have previously participated in certain Israeli government programs
and enjoyed certain tax benefits, particularly tax exemptions, resulting from our “Approved Enterprise” status, provided to
us due to our manufacturing facilities in Israel. In order to continue to be eligible for these programs, or similar programs, and tax
benefits, we must continue to meet certain conditions, including making specified investments in fixed assets and equipment. If we fail
to meet such conditions in the future, these tax benefits could be cancelled, and we could be required to refund any tax benefits already
received. Further, these programs and tax benefits may not continue in the future at their current levels or at any level. The termination
or reduction of these tax benefits would likely increase our tax liability. For information regarding the above-mentioned tax benefits,
see Item 10.E– “Taxation – Israeli Taxation - Tax Benefits under
the Law for the Encouragement of Capital Investments, 1959” Below.
The government grants we received for know-how research and development
expenditures impose certain restrictions on utilization of the funded grants and may expose us to payment of royalties in connection with
the commercialization thereof.
We have received government grants from the Israel Innovation Authority
(the “IIA”) for the financing of a portion of our research and development expenditures
over the years. Although we repaid 100% of the amount of the grant (as adjusted for fluctuation in the USD/NIS exchange rate) and currently
are not utilizing any Financed Know-How (as defined below), even following full repayment of any IIA grants (together with the applicable
interest), and unless otherwise agreed by the applicable authority of the IIA, we must nevertheless continue to comply with the requirements
of the Encouragement of Industrial Research and Development Law, 1984 and the regulations promulgated there under (together, the “R&D
Law”), with respect to technologies the development of which was financed by approved R&D program using financing
from such grants (“Financed Know-How”). In addition to the obligation to pay royalties
to the IIA, the R&D Law requires that products which incorporate Financed Know-How be manufactured in Israel and prohibits the transfer
of the Financed Know-How and any right derived therefrom to third parties, unless otherwise approved in advance by the IIA. Such prior
consent may be given by the IIA subject to payment of increased royalties. Although as of the date of this Annual Report, no Financed
Know-How is used or incorporated in our current or currently anticipated product lines, these restrictions and requirements for payment
could in the future – if and as applicable – impair our ability to sell such Financed Know-How, or to outsource or transfer
manufacturing activities with respect to any product or technology based on Financed Know-How, outside of Israel. Furthermore, the consideration
available to our shareholders in a transaction involving the transfer outside of Israel of Financed Know-How (such as a merger or similar
transaction) may be reduced by any amounts that we are required to pay to the IIA. For more information regarding the above-mentioned
and other restrictions imposed by the R&D Law and regarding grants received by us from the IIA (and the repayment thereof), see Item
4.B - “Business Overview – The Israel Innovation Authority”
below.
20
It may be difficult to enforce a U.S. judgment against
us or our officers and directors, or to assert U.S. securities law claims in Israel.
We are incorporated under the laws of the State of Israel. Service of process upon our
directors and officers, all of whom reside outside the United States, may be difficult to obtain within the United States. Furthermore,
because the majority of our assets and all of our directors and officers are located outside the United States, any judgment obtained
in the United States against us or any of them may not be collectible within the United States. Further, it may be difficult for an investor
to assert U.S. securities law claims in original actions instituted in Israel or obtain a judgment based on the civil liability provisions
of U.S. federal securities laws. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws
against us or our officers and directors reasoning that Israel is not the most appropriate forum to bring such a claim. In addition, even
if an Israeli court agrees to hear such a claim, it is not certain whether Israeli law or U.S. law will be applicable to the claim. If
U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly
process. Certain matters of procedure will also be governed by Israeli law. A judgement granted by US Courts may be enforced in Israel
subject to various statutory requirements which are procedural in essence.
Being a foreign private issuer exempts us from certain SEC requirements and Nasdaq Rules,
which may result in less protection than is afforded to investors under rules applicable to domestic issuers.
We are a “foreign private issuer” within the meaning
of rules promulgated by the SEC. As such, we are exempt from certain provisions under the Exchange Act applicable to U.S. public companies,
including: the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q and current reports on
Form 8-K; the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of securities
registered under the Exchange Act, including extensive disclosure of compensation paid or payable to certain of our highly compensated
executives as well as disclosure of the compensation determination process; the provisions of Regulation FD aimed at preventing issuers
from making selective disclosures of material information; and the sections of the Exchange Act establishing insider liability for profit
realized from any “short-swing” trading transaction (a purchase and sale, or sale and purchase, of the issuer’s equity
securities within less than six months). On June 4, 2025, the SEC published a concept release inviting public comment on whether, and
how, it should revise the definition of foreign private issuer in light of changes in the demographics of foreign private issuers in the
years since the definition was originally adopted. As of the date of this Annual Report, changes to the foreign private issuer definition
have not been enacted, however any such change, if applicable to us, could have significant implications on our ability to maintain our
foreign private issuer status.
In addition, we are permitted to follow certain home country corporate
governance practices and law instead of those rules and practices otherwise required by Nasdaq for domestic issuers. For instance, we
have relied on the foreign private issuer exemption with respect to shareholder approval requirements for equity-based compensation plans,
with respect to the Nasdaq requirement to have a separate compensation committee and a formal charter for such committee, and with respect
to the quorum requirement for the convening of general meetings of shareholders; See in Item 16G. “Corporate
Governance” below. Following our home country corporate governance practices, as opposed to the requirements that would otherwise
apply to a U.S. company listed on Nasdaq, may provide less protection to investors than is afforded under the Nasdaq Rules applicable
to domestic issuers.
21
Provisions of Israeli law may delay, prevent or make undesirable
an acquisition of all or a significant portion of our shares or assets.
Israeli corporate law regulates mergers and acquisitions and requires
that a tender offer be effected when certain thresholds of percentage ownership of voting power in a company are exceeded (subject to
certain conditions), which may have the effect of delaying, preventing or making more difficult a merger with, or acquisition of, us.
See Item 10.B - “Memorandum and Articles - Anti-Takeover Effects of Israeli
Laws; Mergers and Acquisitions Under Israeli Law” below. Further, Israeli tax considerations may make potential transactions
undesirable to us, or to some of our shareholders whose country of residence does not have a tax treaty with Israel, granting tax relief
to such shareholders from Israeli tax. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes
the deferral contingent on the fulfillment of numerous conditions, including a holding period of two years from the date of the transaction
during which certain sales and dispositions of shares of the participating companies are restricted. Moreover, with respect to certain
share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no actual disposition
of the shares has occurred. See Item 10.E - “Taxation - Israeli Taxation”
below. In addition, in accordance with the Restrictive Trade Practices Law, 1988 and under the R&D Law, approvals regarding a change
in control (such as a merger or similar transaction) may be required in certain circumstances. For more information regarding such required
approvals please see in Item 4.B - “Business
Overview - The Israel Innovation Authority” below. In addition, as a corporation incorporated under the laws of the State
of Israel, we are subject to the Israeli Economic Competition Law, 1988 and the regulations promulgated thereunder (formerly known as
the Israeli Antitrust Law, 1988), under which we may be required in certain circumstances to obtain the approval of the Israel Competition
Authority (formerly known as the Israel Antitrust Authority) in order to consummate a merger or a sale of all or substantially all of
our assets. These provisions of Israeli law could have the effect of delaying or preventing a change in control and may make it more difficult
for a third-party to acquire us, even if doing so would be beneficial to our shareholders and may limit the price that investors may be
willing to pay in the future for our ordinary shares.
Shareholder rights and responsibilities are governed by Israeli
law which differs in some respects from the rights and responsibilities of shareholders of U.S. companies.
Since we are incorporated under Israeli law, the rights and responsibilities
of our shareholders are governed by our articles of association, as amended from time to time (our “Articles”)
and Israeli law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in United
States-based corporations. In particular, a shareholder of an Israeli company has a duty to act in good faith and in a customary manner
in exercising its rights and performing its obligations towards the company and other shareholders and to refrain from abusing its power
in the company, including, among other things, in voting at the general meeting of shareholders on certain matters, such as an amendment
to a company’s articles of association, an increase of a company’s authorized share capital, a merger of a company and approval
of related party transactions that require shareholder approval. A shareholder also has a general duty to refrain from discriminating
against other shareholders. In addition, a controlling shareholder or a shareholder who knows that it possesses the power to determine
the outcome of a shareholder vote or to appoint or prevent the appointment of an Office Holder in a company, or who otherwise has the
power to direct a company’s operations, has a duty to act in fairness towards such company. Israeli law does not define the substance
of this duty of fairness and there is limited case law available to assist us in understanding the nature of this duty or the implications
of these provisions. These provisions may be interpreted to impose additional obligations and liabilities on our shareholders that are
not typically imposed on shareholders of U.S. corporations.
| Item 4. |
Information on the Company. |
A. History
and Development of the Company
Our legal and commercial name is Camtek Ltd. We were incorporated
under the laws of the State of Israel in 1987 and operate under the Companies Law. Our headquarters are located in Ramat Gavriel Industrial
Zone, P.O. Box 544, Migdal Ha’Emek 23150, Israel, and our telephone number is +972-4-604-8100. Other than Israel, we currently have
operations in the Asia Pacific region, North America and Europe. Our agent for service of process in the United States is Camtek USA,
Inc., located at 1815 NW 169TH PL Ste 1080, Beaverton, Oregon 97006-7365, Tel: 510-624-9905. We have been a public company since July 2000.
Our ordinary shares are listed on the Nasdaq Global Market and on the TASE.
22
In February 2019, we signed a series of definitive agreements,
referred to as the “Chroma Transaction”, in the framework of which Chroma acquired
a total of 6,117,440 ordinary shares from Priortech at a price of $9.50 per share, and an additional 1,700,000 new shares were issued
to Chroma by us, at the same price of $9.50 per share; as of March 5,2026, Chroma holds 16.79% of our ordinary shares, while Priortech
holds 20.66% of our ordinary shares. The Chroma Transaction was closed in June, 19, 2019 (the “Chroma
Closing Date”), following the occurrence of closing conditions defined therein, including the approval of the Chroma Transaction
by our shareholders in our 2019 annual general meeting of shareholders, dated June 3, 2019 (the “2019
AGM”) as well as the grant of approvals by certain regulatory bodies, including the Committee on Foreign Investment in the
United States (CFIUS) and the Taiwan Overseas Foreign Investment Commission (MOEAIC).
In addition, we entered into a Technological Cooperation Agreement
with Chroma under which we granted Chroma a license for an application under our triangulation technology platform. In addition, Priortech
and Chroma entered into a voting agreement according to which they vote together in our shareholders meetings and have joint control over
us (the “Chroma Voting Agreement”). Under the Chroma Voting Agreement, Chroma is entitled
to nominate individuals for two seats on our Board and Priortech is entitled to nominate three members. The remaining seats are held by
two external directors. We also entered into a Second Amended and Restated Registration Rights Agreement with Priortech and Chroma, according
to which Chroma is entitled to the same rights Priortech has with respect to registration of our shares (see Item 7.B. - “Related
Party Transactions”).
In November 2020, we issued 4,025,000 ordinary shares in a public
offering, which included the full exercise of the underwriters’ option to purchase 525,000 ordinary shares, at a price of $17.00
per share, raising $64.3 million net of underwriting discounts and commissions and other offering expenses. In November 2021, we closed
an offering of $200 million aggregate principal amount of 0% Convertible Senior Notes due 2026 (“2026
Convertible Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act,
which included the full exercise of underwriters’ option to purchase an additional $25 million of the 2026 Convertible Notes, raising
$194.5 million net of underwriting discounts and commissions and other offering expenses. Following the repurchase of a certain portion
of the 2026 Convertible Notes, as described below, and the conversion of an additional portion of outstanding 2026 Convertible Notes,
an aggregate amount of $63,000 of the 2026 Convertible Notes is outstanding as of March 4, 2026.
On November 1, 2023, we announced the closing of the acquisition
of FRT for $100 million in cash. FRT, headquartered in Bergisch Gladbach, Germany, is a leading supplier of high-precision metrology solutions
for the Advanced Packaging and Silicon Carbide markets. This acquisition is intended to leverage Camtek’s and FRT’s advanced
technologies of Advanced Packaging and Silicon Carbide that require new inspection and metrology steps in the semiconductor manufacturing
processes.
On September 11, 2025, we closed an offering of $500 million aggregate
principal amount of 0.00% Convertible Senior Notes due 2030 (the “2030 Convertible Notes”)
in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act, which included the full exercise
of underwriters’ option to purchase an additional $75 million of the 2030 Convertible Notes, raising $486.5 million net of underwriting
discounts and commissions and other offering expenses, of which we used about $267.0 million to repurchase approximately $167.1 million
principal amount of our existing 2026 Convertible Notes, with the remainder intended for general corporate purposes.
For a discussion of material cash requirements, including capital
expenditures, see Item 5.B - “Liquidity and Capital Resources”
below.
The SEC maintains an Internet web site at http://www.sec.gov that
contains reports and other material that are filed through the SEC’s Electronic Data Gathering, Analysis and Retrieval, or EDGAR,
system. Our website is located at www.camtek.com. The information on our website is not incorporated by reference into this Annual Report.
23
B. Business
Overview.
Our Business
Camtek is a developer and manufacturer of high-end inspection and
metrology equipment for the semiconductor industry. Camtek’s systems inspect IC and measure IC features on wafers throughout the
production process of semiconductor devices, covering the back-end-of-line (BEOL) of the front-end and mid-end and up to the beginning
of assembly (Post Dicing). Camtek’s systems inspect wafers for the most demanding semiconductor market segments, including Advanced
Packaging, Chiplets, HBM, Compound Semiconductors, Memory, CMOS Image Sensors, Power, RF and MEMS, serving the industry’s leading
global IDMs, OSATs, and foundries.
Semiconductors wafers are scanned under the advanced optic heads (2D Inspection and
metrology and 3D metrology) in our systems, and advanced software and algorithms are implemented on the scanned and measured wafers data.
As a result, our systems automatically detect and measure good dice and defected dice. Hence, the total end product quality is enhanced
by ensuring that that quality of the products to be shipped to end-users. The systems are easy to operate and offer high accuracy and
productivity in high volume manufacturing environments. These systems incorporate proprietary advanced image processing software and algorithms,
as well as advanced electro‑optics and precision mechanics and are designed for easy operation and maintenance. Our global, direct
customer support organization provides responsive, local pre- and post- sales support for our customers through our wholly owned subsidiaries
located in 8 offices around the world.
On November 2023, Camtek completed the acquisition of FRT. FRT,
headquartered in Bergisch Gladbach, Germany, is a leading supplier of high-precision metrology solutions for the Advanced Packaging and
Silicon Carbide markets.
Inspection and Metrology are implemented at various stages along
the semiconductor manufacturing process. Camtek’s systems serve various manufacturing stages starting from the Back-end-of-line
(BEOL) of the front-end, through Inspection and Metrology of bumps in the mid-end, inspection of wafers and the inspection of post-diced
wafers in the back end (Assembly).
Our Markets
The semiconductor manufacturing industry produces integrated circuits
mainly on silicon wafers but also on other materials and on compound semiconductors (for example, Silicon Carbide – SiC, Gallium
Nitride – GaN, and Gallium Arsenide - GaAS). Each wafer contains numerous integrated dice containing microelectronic devices. The
growth of the semiconductor manufacturing industry in the past few years has been driven largely by demand from electronics such as smartphones
and the proliferation of applications including the Internet of Things and cloud computing. Continued growth is expected with the enhancements
of existing products, and the inclusion of emerging technologies such as AI, as well as rapid growth in automotive, electrical and autonomous
vehicles and industrial electronics. The effect of such market growth trends on the demand for Inspection and Metrology systems is driven
by three main factors: (i) growing electronic devices manufacturing volume requires more equipment, (ii) applications such as automotive
and mobile phones require a higher level of reliability and hence more Inspection and Metrology and (iii) new packaging technologies,
such as Chiplets and HBM, require more inspection and metrology steps (as described in more detail below).
In the fast-growing advanced packaging market segment, which includes
a wide variety of devices and technologies, new inspection and measurement steps become crucial to ensure a known-good-package. The bumps
and hybrid bonding are becoming the main interface instead of the conventional wire bonding. There is a wide variety of bump types and
sizes which are used for different packaging technologies. Camtek’s systems are equipped with state-of-the-art metrology and inspection
capabilities designed to address many of those inspection and metrology steps, including bump height, die stack planarity, RDL dimensions
and surface defects. These are examples of typical process steps where inspection and metrology are critical to ensure high quality products.
Wafers with hundreds of millions of bumps in very dense architecture
are becoming more common and require 100% inspection and metrology due to the packaging reliability requirements. The high cost of packages
which combine multiple dice requires Known Good Dice in order to ensure that each die in the package is fully functional. Camtek’s
systems are designed to deliver 100% Inspection and Metrology in high volume manufacturing environment, without compromising on throughput
and performance. We expect that the two fastest growing segments in advanced packaging will be the Chiplets, which are becoming the standard
for high performance computing, and Fan Out Wafer Level Packaging (FOWLP). Camtek’s flexible inspection and metrology systems utilize
a wide variety of technologies to address the complex requirements of these growing segments.
24
The shift of memory devices to advanced packaging is growing to
support high-end systems. A good example is High Bandwidth Memory (HBM) of DRAM dice stacked on top of each other enabling higher bandwidth
at less power consumption. Camtek provides 100% inspection and metrology of all the components in the stack ensuring known-good-package.
Another segment is the CMOS image sensors (“CIS”)
used for cameras. With the growing number of cameras in each mobile phone and the increase in the number of pixels per each sensor and
reduction in the size of each pixel, a high-resolution inspection is mandatory. Camtek has developed unique capabilities to address these
requirements, and its systems are being used by the largest CIS manufacturers.
Compound semiconductors are undergoing a major expansion addressing
many new applications and using various materials such SiC, GaN, GaAs and others, to improve the performance of new devices such as Power
and Face Recognition applications. Compound semiconductors are also considered a key component in the manufacturing of Silicon Photonics.
The compound semiconductors manufacturing process is unique and requires dedicated solutions for Inspection and Metrology. Compound Semiconductors
have unique properties, including high temperature and heat resistance, enhanced frequency and faster operation, which are some of the
key demands in various advanced applications such as the automotive, AI and mobile devices. Camtek’s offering includes the inspection
of epitaxial layers, inner cracks within the epitaxial layer, surface topography, bow measurement, data analysis and more.
During the last couple of years, Camtek has widened its presence
in the Back-end-of-Line (BEOL) of the Front End manufacturing process. Camtek’s tools and specifically the Hawk, provide a competitive
product that can address the challenges of this market. This includes high-end inspection capabilities with defect size down to 150nm.
Camtek has developed capabilities and technologies that are required in this market, such as, high resolution backside inspection, 360Scan
and many others.
Product Lines
Inspection and Metrology Systems
Our systems consist of:
| • |
an electro-optical assembly unit which captures the image of the inspected product and which consists of a video camera, precision
optics and illumination sources; |
| • |
a precise, movable table, that holds the inspected product; and |
| • |
an electronic hardware unit, which operates the entire system and includes embedded components that process and analyze the captured
image by using our proprietary algorithms. |
The inspected and measured product is placed on a designated platform
and is scanned under the optical assembly unit. The optical assembly unit then captures images of the product, while the electronic hardware
unit processes the image using the analysis algorithms. Detected discrepancies are logged and reported as defects per the user definitions.
The image of the defect is immediately available for verification by the system operator. Our systems can also compile and communicate
statistical reports of inspection findings via the customer’s factory information system.
We offer a broad range of systems for automated optical Inspection
and Metrology of semiconductor wafers. We invest significant resources in R&D to provide our customers with advantageous performance,
low cost of ownership, high reliability and ease of operation. We believe that a significant part of our competitive advantage derives
from our R&D innovative capabilities which enable us to adapt our technologies to evolving market needs and customers’
requirements.
25
Over the years, our Inspection and Metrology products for the semiconductor
industry included the Falcon, Condor, Gannet and Eagle products lines. As of today, we produce and sell the Eagle platform, the Hawk platform
and the MicroProf platform, and have phased out all other models.
|
Product
|
Function |
|
Hawk |
Launched on February 2025, this brand-new product family – the Hawk –
a new cutting-edge platform is engineered for cutting edge advanced packaging: Chiplets, HBM and Hybrid Bonding. Designed for high-end
applications such as, the Hawk supports detection of 150 nanometer defects size and measurement of 500 million micro bumps at pitches
less than 12 micron |
|
Eagle G5 |
Launched in September 2024, the Eagle G5 was developed on the well-known Eagle product
family and is engineered to deliver unmatched speed and efficiency. Featuring significantly higher throughput and new optimized
optics, the Eagle G5 offers higher resolution for enhanced detection and metrology. The system provides innovative solutions for Multi-RDL,
FOWLP, 2.5D, and CMOS Image Sensors. With the introduction of Clear-Sight Technology (CSI) for Multi-Layer RDL, the Eagle G5 achieves
enhanced detection capabilities, down to 1.4μm L/S at twice the throughput. |
|
EagleT-i
/Plus |
The Eagle-i system family is designed for high volume 2D inspection, delivering superior
2D inspection and 2D metrology capabilities. The system utilizes the most advanced algorithms enabling detection of down to sub-micron
defects and measuring two-micron line and space redistribution layer (“RDL”). The Eagle-i
system family includes the EagleT-I and EagleT-I
Plus models, which were designed for better accuracy and optical resolutions and higher throughput.
|
|
EagleT-AP
/ Plus |
The Eagle-AP system family addresses the fast-growing advanced packaging market using
state of the art technologies, both software and hardware, that deliver superior 2D and 3D inspection and metrology capabilities on the
same platform. The EagleT-AP metrology capabilities support
the wide spectrum of bump sizes and all bump types, including copper pillars, micro-bumps, solder and gold bumps, meeting the advanced
packaging market requirements, including measurement of bumps down to 2µm (microns) and providing high throughput. The Eagle-AP system
family includes the EagleT-AP and EagleT-AP
Plus models, equipped with higher throughput and improved metrology capabilities. |
|
MicroProf® AP
|
The FRT MicroProf® AP is a fully automated wafer metrology tool for a wide range
of applications at different 3D packaging process steps, e.g. for the measurement of photoresist (PR) coatings and structuring, through
silicon vias (TSVs) or trenches after etching, μ-bumps and Cu pillars, as well as for the measurement in thinning, bonding and stacking
processes. With its modular multi-sensor concept, the flexible MicroProf AP measuring tool is designed to perform a variety of measuring
tasks in advanced packaging. We also offer a variety of semi-automated metrology equipment. |
|
Golden Eagle |
Designed mainly for Fanout Panel-Level-Package (FO-PLP) applications, Camtek’s
Golden Eagle is used for the inspection and metrology of standard panel sizes. The Golden Eagle addresses the challenges of Fanout Wafer
Level Packaging (FOWLP), while providing a robust system that addresses high-volume manufacturing requirements. |
During 2026 we will offer our AI technology that includes inspection and automatic
defects classification.
Customers
We target wafer manufacturers and companies involved in the testing,
assembly and packaging of semiconductor devices.
Our customers are semiconductor manufacturers, among them outsourced
semiconductor assembly and test (OSAT), integrated device manufacturers (IDMs) and wafer level packaging subcontractors. Our customers,
many of whom have multiple facilities, are located throughout Asia, Europe and North America. In 2025, one customer accounted for 11%
of total revenues. In 2024, three customers accounted for 15%, 10% and 10% of total revenues, respectively. In 2023, one customer accounted
for 15% of total revenues. As of December 31, 2025, our installed base was over 3,000 systems.
26
The following table shows our revenues classified by geographical
region for each of the last three years:
|
Year Ended December 31,
|
||||||||||||
|
2025 |
2024 |
2023 |
||||||||||
|
U.S. Dollars (In thousands) |
||||||||||||
|
China |
243,935 |
132,556 |
149,510 |
|||||||||
|
Asia Pacific |
168,965 |
133,772 |
67,773 |
|||||||||
|
Korea |
36,888 |
117,135 |
47,425 |
|||||||||
|
United States |
28,836 |
29,282 |
41,118 |
|||||||||
|
Europe |
17,448 |
16,489 |
9,549 |
|||||||||
|
Total |
496,072 |
429,234 |
315,375 |
|||||||||
Marketing and Customer Support
We have established a global distribution and support network throughout
the territories in which we sell, install and support our products, including the Asia Pacific region, North America and Europe. We believe
that this is an essential factor in our customers’ decision to purchase our products. We primarily utilize our own employees to
provide these customer support services. We may expand our network into additional territories as market conditions warrant.
We have a distribution rights agreement with a Japanese company,
under which this company sells, installs and supports our products in Japan.
As of December 31, 2025, 315 of our employees were engaged in our
worldwide marketing and support efforts, including support and marketing administration staff. Due to the concentration of customers in
the Asia Pacific region, we have significantly expanded our marketing and support teams in this region.
Our marketing efforts include participation in various trade shows
and conventions, publications and trade press, product demonstrations performed at our facilities and regular contact with customers by
marketing personnel. We generally provide a 12‑month warranty to our customers. In addition, for a fee, we offer service and maintenance
contracts commencing after the expiration of the warranty period. Under our service and maintenance contracts, we provide prompt local,
on-site customer support. Our experienced local teams have been able to install and support our customers throughout the pandemic with
virtual support, as needed, from our experts in the headquarters.
We take various measures to secure customers’ payment on
a case-by-case basis by means of letters of credit. Also, we receive advanced payments before shipment from most customers.
Manufacturing
Our manufacturing activities at our facilities (Israel and Germany)
consist primarily of final integration of our products and testing of customer applications. The tools assembly and power-up is done by
our sub-contractors. The final integration process at our facilities generally lasts six to twelve weeks.
We rely on single source and limited source suppliers and subcontractors
for a number of essential components and subsystems of our products. We have increased our inventories and production capacity to meet
our needs. During times of rapid increase in demand in the semiconductor fabrication industry, the delivery time of suppliers in this
industry is extended. However, to date, we have been able to obtain sufficient components to meet our needs in a timely manner.
Our manufacturing facilities are located in Migdal Ha’Emek,
Israel, and in Bergisch Gladbach, Germany.
27
The Israel Innovation Authority
We received grants from the IIA for several projects and may receive
additional grants in the future. Although we repaid 100% of the amount of the grants (as adjusted for fluctuation in the USD/NIS exchange
rate) and currently are not utilizing any Financed Know-How, even following full repayment of any IIA grants (together with the applicable
interest), and unless otherwise agreed by the applicable authority of the IIA, we must nevertheless continue to comply with the requirements
of the R&D Law with respect to Financed Know-How. In addition to the obligation to pay royalties to the IIA, the R&D Law requires
that products which incorporate Financed Know-How be manufactured in Israel and prohibits the transfer of the Financed Know-How and any
right derived therefrom to third parties, unless otherwise approved in advance by the IIA. Such prior consent may be given by the IIA
subject to payment of increased royalties.
Under the terms of certain IIA plans, to
the abovementioned royalties range between 3% to 6% (depending on the terms and conditions of the specific plan and the classification
of the company), of the revenues generated from Financed Know-How (“IIA Products”), until 100% of the dollar value of the
grant is repaid (plus LIBOR interest applicable to grants received on or after January 1, 1999 and until July 1, 2017; the interest applicable
to grants received on or after July 1, 2017, and until January 1, 2024 is: (i) LIBOR interest until December 31, 2023, and (ii) thereafter,
12 months Term SOFR as published in the first trading day of each year by CME Group, or by any other party authorized by the Federal Reserve,
or in alternative publication by the Bank of Israel, with the addition of 0.71513%; the interest applicable to grants received on or after
January 1, 2024 is 12 months Term SOFR as published in the first trading day of each year by CME Group, or by any other party authorized
by the Federal Reserve, or in alternative publication by the Bank of Israel).
Further, the R&D Law imposes reporting
requirements on certain companies with respect to changes in the ownership of a grant recipient. The grant recipient, its controlling
shareholders, and foreign interested parties of such companies must notify the IIA of any change in control of the grant’s recipient
or the holdings of the “means of control” of the recipient that result in an Israeli or a non-Israeli becoming an interested
party directly in the recipient. The R&D Law also requires the new interested party to undertake to comply with the R&D Law. For
this purpose, “control” means the ability to direct the activities of a company (other than any ability arising solely from
serving as an officer or director of the company), including the holding of 25% or more of the “means of control”, if no other
shareholder holds 50% or more of such “means of control.” “Means of control” refers to voting rights or the right
to appoint directors or the chief executive officer. An “interested party” of a company includes a holder of 5% or more of
its outstanding share capital or voting rights, its chief executive officer and directors, someone who has the right to appoint its chief
executive officer or at least one director, and a company with respect to which any of the foregoing interested parties owns 25% or more
of the outstanding share capital or voting rights or has the right to appoint 25% or more of the directors. Accordingly, in certain cases,
any non-Israeli who acquires 5% or more of our ordinary shares may be required to notify the IIA that it has become an interested party
and to sign an undertaking to comply with the R&D Law. In addition, the rules of the IIA may require additional information or representations
with respect to such events.
As noted above, as of December 31, 2025, we have repaid (including
interest accrued by Camtek) all outstanding grant amounts to the IIA. As of the date of this Annual Report, no Financed Know-How is utilized
in our current or currently anticipated activities.
Capital Expenditures
The following table shows our capital expenditures in fixed assets
for the last three years:
|
December 31, |
||||||||||||
|
2025 |
2024 |
2023 |
||||||||||
|
(U.S. Dollars in thousands) |
||||||||||||
|
Machinery and equipment*
|
8,511 |
8,719 |
8,155 |
|||||||||
|
Right of use (ROU) assets
|
3,042 |
7,035 |
2,573 |
|||||||||
|
Computer equipment and
software |
1,462 |
1,651 |
1,061 |
|||||||||
|
Building and leasehold improvements
|
9,326 |
4,149 |
2,974 |
|||||||||
|
Vehicles
|
- |
37 |
34 |
|||||||||
|
Office furniture and
equipment |
111 |
247 |
111 |
|||||||||
|
Total
|
22,452 |
21,838 |
14,908 |
|||||||||
* including transfer of inventory to fixed assets in the aggregate
of $4,783, $4,533, and $4,541 in 2025, 2024 and 2023, respectively.
28
Material Effects of Governmental Regulations
The following EU directives, which represent the European
standards required for placing products on the EU market, apply to our systems: Machinery Directive 2006/42/EC, Low Voltage Directive
(LVD) 2014/35/EU, EMC Directive (EMC) 2014/30/EU, and RoHS2 Directive (RoHS2) 2011/65/EU. In addition, the following SEMI Standards, which
define uniform safety and ergonomic requirements for semiconductor fabrication equipment manufacturers, apply to our systems: SEMI S2
(Environmental, Health and Safety Guidelines for Semiconductor Manufacturing Equipment) and SEMI S8 (Ergonomic Guidelines for Semiconductor
Manufacturing Equipment). We ensure compliance with the above-mentioned regulatory requirements during the system design and development
process, which is carried out in accordance with the Company’s certified management systems: ISO 9001:2015 (Quality Management),
ISO 45001 (Occupational Health and Safety Management), and ISO 14001 (Environmental Management). Furthermore, all system modules undergo
testing by accredited independent laboratories that verify and certify compliance with the applicable regulatory and safety requirements.
C. Organizational
Structure
Through its affiliated companies, one of our principal shareholders,
Priortech, engages in various aspects of the electronic production, including, advance packaging designs for the semiconductor industry
and advanced organic coreless substrate technology. As of March 5, 2026, Priortech holds 9,617,787 of our outstanding ordinary shares
and is a party to the Chroma Voting Agreement. Under the Chroma Voting Agreement, Priortech is entitled to nominate three Board members.
We have no revenues from sales to affiliates and subsidiaries of Priortech.
The following table shows the Company’s subsidiaries, all
of which are wholly owned by us or by our subsidiaries (except for Camtek HK Ltd., in which Priortech holds no more than one percent of
the voting rights), together with each subsidiary’s jurisdiction of incorporation, as of the date of this Annual Report:
|
Name of Subsidiary |
Jurisdiction of Incorporation |
|
Camtek H.K. Ltd. |
Hong Kong |
|
Camtek USA Inc. |
New Jersey, USA |
|
Camtek (Europe) NV |
Belgium |
|
Camtek Germany GmbH |
Germany |
|
Camtek Inspection Technology (Suzhou) Ltd. |
China |
|
Camtek Japan Ltd. |
Japan |
|
Camtek Inspection Technology Limited |
Taiwan |
|
Camtek South East Asia Pte Ltd. |
Singapore |
|
Camtek Korea Ltd. |
South Korea |
|
Camtek Germany Holding GmbH |
Germany |
|
FRT GmbH |
Germany |
29
| D. |
Property, Plants and Equipment |
Our main office, manufacturing and research
and development facilities are located in the Ramat Gavriel Industrial Zone of Migdal Ha’Emek in northern Israel. These facilities
occupy 164,000 square feet of which 90,800 square feet are devoted to the manufacturing of our products. Our facilities in Germany occupy
15,200 square feet of which 7,000 square feet are devoted to the manufacturing of our products.
Our sales offices and demonstration centers, which we lease in
various locations around the world, occupy an aggregate of approximately 68,500 square feet.
Item 4A.
Unresolved Staff Comments.
None.
Item 5 Operating
and Financial Review and Prospects.
| A. |
Operating Results |
General
The following discussion of our financial condition and results
of operations should be read in conjunction with the consolidated financial statements and the notes to those statements included therein,
which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.
GAAP”). The following discussion does not address certain items in respect of our fiscal year ended December 31,
2024, in reliance on amendments to disclosure requirements adopted by the SEC. A discussion of our fiscal year ended December 31,
2024 may be found in “Item 5 – “Operating and Financial Review and
Prospects” of our Annual Report on Form 20-F for the fiscal year ended December 31, 2024, filed with
the SEC on March 19, 2025.
Overview
We design, develop, manufacture and market automated solutions
dedicated for enhancing production processes and yield for the semiconductor fabrication industry, principally based on our Inspection
and Metrology core technology; see in Item 4.B “Business Overview - Our Business”
above.
We sell our systems internationally. The majority of sales of our
systems in 2025 were to manufacturers in the Asia Pacific region, including South Korea, China, Taiwan and South East Asia, due to, among
other factors, the migration of the electronic manufacturers into this region following the development and growth of electronics industry
centers.
In the year ended December 31, 2025, our sales in the Asia
Pacific region (mostly China, Taiwan and South Korea) accounted for approximately 91% of our total revenues.
In addition to revenues derived from the sale of systems and related
products, we generate revenues from providing maintenance and support services for our products. We generally provide a one-year warranty
with our systems. Accordingly, service revenues are not earned during the warranty period.
In regular market conditions, the demand for our systems is characterized
by short notice. To meet customers’ needs for quick delivery and to realize the competitive advantage of the ability to do so, we
have to pre-order components and subsystems based on our forecast of future orders, rather than on actual orders. This need is compounded
by the fact that, in times of increasing demand in our markets, our suppliers and subcontractors tend to extend their delivery schedules
or fail to meet their delivery deadlines. To compensate for these unscheduled delays, we build inventories further into the future, which
increases the risk that our forecast may not correspond to our actual future needs. The uncertainties involved in these longer-term estimates
during regular times of business expansion tend to increase the level of component and subsystem inventories (See also in Item 3.D.
- “Risk Factors - A longer sales process for new products may increase
our costs and delay time to market of our products, both of which may negatively impact our revenues, results of operations, cash flow
and may result in inventory write-offs” above and under Item 5.A -
“Operating Results - Critical Accounting Policies - Valuation of Inventory” below). Compared to our sales cycles for
repeat orders from existing customers, we have longer sales cycles for new customers in our markets as well as for new customers in new
markets. In addition, the selling cycle in our markets typically takes several quarters from first contact to revenue recognition, including
on-site evaluation. Naturally, repeat orders take less time.
30
Critical Accounting Policies and Estimates
The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosure of contingent
assets and liabilities. On an ongoing basis, we evaluate our estimates , including those related to stand alone pricing, allowance for
doubtful debts, slow moving inventories, and valuation allowance on deferred tax assets. We base our estimates on historical experience
and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making
judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Results may differ from
these estimates due to actual outcomes being different from those on which we based our assumptions. These estimates and judgments are
regularly reviewed by management on an ongoing basis at the end of each quarter prior to the public release of our financial results.
Critical accounting policies are those that, in management’s
view, are most important to the portrayal of a company’s financial condition and results of operations and most demanding on their
calls on judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change
in subsequent periods. We believe our most critical accounting policies and estimates relate to:
Stand alone pricing.
The Company’s contracts with its customers include performance obligations to provide its products or to service the installed products.
A product sale contract may include an extended warranty (that is, for longer than the twelve-month standard warranty) as well as installation,
both of which are considered separate performance obligations.
The Company recognizes revenue from contracts for sales of products
when the Company transfers control of the product to the customer. Revenues from the contract are recognized in an amount that reflects
the consideration the Company expects to be entitled to receive once the product is operating in accordance with its specifications and
signed documentation of the arrangement, such as a signed contract or purchase order, has been received. Payment terms with customers
may vary, but are generally based on milestones within the delivery process such as shipping and installation. Payment terms do not include
significant financing components.
The Company does not incur costs in obtaining a contract except
for agents’ commissions, which are incurred upon the recognition of revenues. Service revenues from maintenance contracts are recognized
ratably over the contract period.
Service revenues consist mainly of contracts charged under time
and material arrangements. Service revenues from maintenance contracts are recognized ratably over the contract period.
Contracts with customers may include multiple performance obligations.
For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The
Company generally determines standalone selling prices based on the prices charged to customers.
The Company’s multiple performance obligations consist of
product sales, installation services and non-standard warranties. For cases in which product revenue has been recognized but installation
has not occurred as of the balance sheet date, a fixed amount is deferred from revenue in respect of the installation services yet to
be performed. A non-standard warranty is one that is for a period longer than 12 months. Accordingly, income from a non-standard warranty
is deferred as unearned revenue and is recognized ratably as revenue commencing with and over the applicable warranty term.
The Company records contract liabilities when the customer has
been billed in advance of the Company completing its performance obligations. These amounts are recorded as deferred revenue in the Consolidated
Balance Sheets.
31
Valuation of Inventory.
Inventories consist of completed systems, partially completed systems and components, and are recorded at the lower of cost, determined
by the moving – average basis, or net realizable value. We review inventory for obsolescence and excess quantities to determine
that items deemed obsolete or excess inventory are appropriately reserved. In making the determination, we consider forecasted future
sales or service/maintenance of related products and the quantity of inventory at the balance sheet date, assessed against each inventory
item’s past usage rates and future expected usage rates. Changes in factors such as technology, customer demand, competing products
and other matters could affect the level of our obsolete and excess inventory in the future.
In the years 2025 and 2024 we wrote-off inventory in the amount
of approximately $3.7 million and $4.3 million, respectively which were related to damaged, obsolete, excess and slow-moving inventory.
These amounts are included in the item line called “Cost of revenues” in the consolidated statements of operations. The write-offs
create a new cost basis and are a permanent reduction of inventory cost. Inventory that is not expected to be converted or consumed in
2025 is classified as non-current. As of December 31, 2025, a $15.6 million portion of our inventory was classified as non-current. Management
periodically evaluates our inventory composition, giving consideration to factors such as the probability and timing of anticipated usage
and the physical condition of the items, and then estimates a charge (reducing the inventory) to be provided for slow moving, technologically
obsolete or damaged inventory. These estimates could vary significantly from actual requirements based upon future economic conditions,
customer inventory levels or competitive factors that were not foreseen or did not exist when the inventory write-offs were established.
Income Taxes. We account
for income taxes under ASC Subtopic 740-10 Income Taxes – Overall. Deferred tax assets or liabilities are recognized in respect
of temporary differences between the tax bases of assets and liabilities and their financial reporting amounts as well as in respect of
tax losses and other deductions which may be deductible for tax purposes in future years, based on tax rates applicable to the periods
in which such deferred taxes will be realized. The rates applied are those enacted in law as of December 31, 2025. In assessing the realizability
of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods
in which those temporary differences become deductible and during which the carry-forwards are available. Valuation allowances are established
when necessary to reduce deferred tax assets to the amount considered more likely than not to be realized.
Our financial statements include deferred tax assets, net, which
are calculated according to the above methodology. If there is an unexpected critical deterioration in our operating results and forecasts,
we would have to increase the valuation allowance with respect to those assets. We believe that it is more likely than not that those
net deferred tax assets included in our financial statements will be realized in subsequent years.
32
Comparison of Period-to-Period Results of Operations
The following table presents consolidated statement of operations
data for the periods indicated as a percentage of total revenues:
|
Year Ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
Total Revenues |
100.00 |
% |
100.00 |
% | ||||
|
Total cost of revenues |
49.54 |
% |
51.09 |
% | ||||
|
Gross profit |
50.46 |
% |
48.91 |
% | ||||
|
Operating expenses: |
||||||||
|
Research and development expenses |
9.75 |
% |
8.92 |
% | ||||
|
Selling, general and administrative expenses.. |
14.87 |
% |
14.82 |
% | ||||
|
Total operating expenses |
24.62 |
% |
23.74 |
% | ||||
|
Operating profit |
25.84 |
% |
25.18 |
% | ||||
|
Financial income , net |
5.05 |
% |
5.40 |
% | ||||
|
Other expenses |
20.35 |
% |
- |
|||||
|
Income tax expenses |
(0.33 |
)% |
(2.96 |
)% | ||||
|
Net income |
10.22 |
27.61 |
% | |||||
Year Ended December 31, 2025 compared to Year Ended December 31,
2024
Revenues. Revenues
increased by 16% to $496.1 million in 2025 from $429.2 million in 2024, due primarily to an increase in the average selling price of the
product units sold. This is the result of the impact of the Hawk and Eagle G5 systems which were launched in February 2025 and September
2024, respectively.
The strengthening of the Israeli shekel against the US dollar led
to higher shekel-denominated expenses, which negatively impacted profitability.
Gross Profit. Gross profit
consists of revenues less cost of revenues, which includes the cost of components, production materials, labor, depreciation, factory
and service center overheads and provisions for warranties. These expenditures are only partially affected by sales volume. Our total
gross profit increased to $250.3 million in 2025 from $210.0 million in 2024, an increase of 40.4 million, or 19%. Our gross margin
increased to 50.5% in 2025, compared to a gross margin of 48.9% in 2024, mainly as a result of economies of scale from increased sales
and mix of products sold, partially offset by negative impact of shekel dominated costs.
33
Research and Development Costs.
Research and development expenses consist primarily of salaries, materials consumption and costs associated with subcontracting certain
development efforts. Total research and development expenses for 2025 increased by $10.1 to $48.3 million from $38.3 million in 2024 due
to higher investment in new products and technologies, as well as an increase in headcount, and higher shekel-denominated expenses.
Selling, General and Administrative
Expenses. Selling, general and administrative expenses consist primarily of expenses associated with salaries, commissions, promotion
and travel, professional services and rent costs. Our selling, general and administrative expenses increased by $10.2 to $73.8 million
in 2025 from $63.6 million in 2024, mainly due to increased salary expenses and professional services. Our sales commissions increased
due to increased sales volume, and our shipping expenses were impacted by the war between Israel and Iran in June 2025.
Financial Income, Net.
We had net financial income of $25.1 million in 2025 compared to $23.2 million in 2024. The increase is from interest on higher balances
of cash and cash equivalents, deposits and marketable securities (see B. Liquidity and Capital Resources,
below). This is offset by foreign currency expense, net, resulting from revaluation of balance sheet items not denominated in U.S. Dollars
amounted to $1.1 million in 2025 compared to income of $0 million in 2024.
Other Expenses. We recorded
other expenses of $100.9 million in 2025 resulting from the repurchase of the 2026 Convertible Notes.
Provision for Income Taxes. Income
tax expense was $1.6 million in 2025, a decrease of $11.1 million from the $12.7 million expense in 2024, mainly resulting from tax benefits
that recorded with respect to the repurchase of the Convertible notes capital loss.
Net Income. We realized
net income of $50.7 million in 2025 compared to net income of $118.5 million in 2024, due to the other expenses, offset by the increase
in operating income.
B. Liquidity
and Capital Resources
At December 31, 2025, our cash and cash equivalent deposit and
marketable securities balances totaled approximately $851.1 million compared to approximately
$501.2 million at December 31, 2024. The year-to-year increase in cash and cash equivalents and deposits results from the issue of the
2030 Convertible Note and positive operating cash flow, offset by the repurchase of the 2026 Convertible Notes. Our cash is invested in
bank deposits spread among several banks, primarily in Israel and in international bonds.
Our working capital was approximately $789.6 million
in 2025 and $496.1 million in 2024. The increase is mainly attributed to increased cash and cash equivalents, deposits and marketable
securities.
Our capital expenditures during 2025 were approximately $22.5 million,
mainly to increase our production capacity and to support our R&D, operations and IT activities.
Cash flow from operating activities
Net cash and cash equivalents provided by operating activities
for the years ended December 31, 2025 and 2024 totaled $141.9 million and $122.2 million, respectively.
During 2025 and 2024, cash provided by operating activities was
primarily attributed to net income.
34
Cash flow from investing activities
Cash flow used in investing activities in 2025 was $310.3 million,
due to investment in marketable securities, short- and long-term deposits and fixed and intangible assets. Cash flow used in investing
activities in 2024 was $55.9 million, due to investment in short-term deposits and fixed and intangible assets.
Cash flow from financing activities
Cash flow provided by financing activities in 2025 was $219.0 million,
due to the issuance of the 2030 Convertible Notes, offset by the repurchase of the 2026 Convertible Notes. Cash flow used in financing
activities in 2024 was $60.0 million due to a dividend payment.
Our principal liquidity requirement is expected to be for working
capital and capital expenditures, as well as acquisitions. We anticipate funding these cash requirements and capital expenditures through
a combination of cash flow from operations and existing balances of cash and cash equivalents and short-term deposits.We anticipate that
our existing capital resources and cash flows from operations will be adequate to satisfy our liquidity requirements for at least the
next 12 months. If available liquidity is not sufficient to meet our operating obligations as they come due, our plans include pursuing
alternative financing arrangements or reducing expenditures as necessary to meet our cash requirements.
Effective Corporate Tax Rate
Camtek’s production facility in Israel has been granted “Approved
Enterprise” status under the Investment Law (as defined in Item 10.E – “Taxation
– Israeli Taxation - Tax Benefits Under the Law for the Encouragement of Capital Investments, 1959” below). We participate
in the Alternative Benefits Program and, accordingly, income from our Approved Enterprise will be tax exempt for a period of 10 years,
commencing on the first year in which the Approved Enterprise first generates taxable income, due to the fact that we operate in Zone ”A”
in Israel.
On April 1, 2005, an amendment to the Investment Law came into
effect (the “Amendment”) and significantly changed the provisions of the Investment
Law. The Amendment limits the scope of an enterprise which may be approved by the Investment Center by setting criteria for the approval
of a facility as a “Beneficiary Enterprise”; such criteria generally require that at least 25% of the Beneficiary Enterprise’s
income will be derived from export. Additionally, the Amendment enacted major changes in the manner in which tax benefits are awarded
under the Investment Law so that companies no longer require Investment Center approval in order to qualify for tax benefits.
In addition, the Amendment provides that terms and benefits included
in any certificate of approval issued prior to December 31, 2004, will remain subject to the provisions of the Investment Law as they
were on the date of such prior approval. Therefore, our existing Approved Enterprise will generally not be subject to the provisions of
the Amendment. As a result of the Amendment, tax-exempt income generated under the provisions of the new law, as part of a new Beneficiary
Enterprise, will subject us to taxes upon distribution or liquidation.
Camtek has been granted the status of Approved Enterprise, under
the Investment Law, for investment programs for the periods which ended in 2007 and 2010, and the status of Beneficiary Enterprise according
to the Amendment, for a period which ended in 2014. In addition, Camtek elected 2010 as the year of election for a period which ended
in 2021.
On December 29, 2010, the Investment Law was amended to significantly
revise the tax incentive regime in Israel commencing on January 1, 2011. For more information, see Item 10.E – “Taxation
– Israeli Taxation – Tax Benefits Under the Law for the Encouragement of Capital Investments, 1959” below.
35
Foreign Currency Fluctuation
See Item 3.D – “Risk
Factors – Risk Factors Related to Our Business and Our Markets – Fluctuations in currency exchange rates may result in additional
expenses being recorded or in the prices of our products becoming less competitive and thus may have negative impact on our profitability”
above.
C. Research
and Development, Patents and Licenses.
We believe that intensive R&D is essential to our business.
We devote substantial R&D resources to developing new products and to improving our existing products to meet our customers’
evolving needs. We have dedicated teams with expertise in image processing software and algorithms, electronic hardware, electro‑optics,
physics, mechanics and systems design.
Our R&D efforts are primarily focused on:
| • |
improving our defect detection capabilities while reducing the number of false alarms, simplifying operation and reducing the level
of user expertise required to realize the benefits of our systems; |
| • |
increasing the throughput of our Inspection and Metrology systems; |
| • |
providing unique technological solutions to our customers; and |
| • |
adding capabilities to expand our market segments. |
In addition, we are focusing our efforts on leveraging our core
technologies, expertise and experience into continually enhancing the value to the user and the return on investment from our products.
We believe that our internal multi‑disciplinary expertise will enable us to maintain and enhance our technological edge.
As of December 31, 2025, we had 193 employees engaged in R&D,
163 of whom are based in our headquarters in Israel and 30 in our facilities in Germany. We also use subcontractors for the development
of some of the hardware components of our systems. Our R&D expenses were $48.3 million and $38.3 million for the years ended December 31,
2025 and 2024, respectively, representing 9.7% and 8.9% of the total revenues for the years then ended.
We will continue to devote our R&D resources to maintaining
and extending our technology leadership position.
Our R&D costs are expensed as incurred.
In general, we rely on a combination of our copyrights, trade secrets,
patents, trademarks and non-disclosure agreements to protect our proprietary know-how and intellectual property. We also enter into confidentiality
agreements with our employees and with all of the subcontractors who develop and manufacture components for use in our products. We also
employ specialists whose main role is to maintain and protect our intellectual property from both professional and legal perspectives.
We cannot be certain that actions we take to protect our proprietary rights will be adequate nor can we be certain that we will be able
to deter reverse engineering or that there will not be independent third-party development of our technology.
We have 140 issued and applied-for patents worldwide, of which
98 are registered patents and 6 U.S. provisional applications. These patents relate to our proprietary technology and know-how developed
for Inspection and Metrology and Functional Inkjet Technology tools. We also have one registered trademark in each of the U.S., Israel,
Singapore and Japan.
D. Trend
Information
The OECD has forecasted the world GDP global growth slowing
from 3.2% in 2025 to 2.9% in 2026. See "Item 3D. Risk Factors" above. The semiconductor industry will probably be influenced by weakness
or uncertainties in global economic conditions. According to SEMI organization, the global total semiconductor equipment sales forecast
to reach a record of $145 billion in 2026. Wafer Fab Equipment segment sales are projected reach $135.2 billion, a 9.0% increase from
2025. See "Item 3D. Risk Factors - Risk Factors Related to Our Business and Our Markets
– Our business could be materially disrupted by negative effects on the semiconductor industry, including as a result of economic,
political, legal, regulatory and other changes, in the global or local markets in which we operate.”
For specific trend information regarding the markets in which we operate see Item 4.B - “Business
Overview - Our Markets” above.
36
E. Critical
Accounting Estimates
See Item 5.A “Operating Results –
Critical Accounting Policies and Estimates.”
| Item 6. |
Directors, Senior Management and Employees |
A. Directors
and Senior Management
The following table lists the name, age and position of each of our current directors
and senior management:
|
Name
|
Age |
Title |
|
Rafi Amit |
77 |
Director and Chief Executive Officer |
|
Lior Aviram |
63 |
Director, Executive Chairman of the Board of Directors |
|
Moty Ben-Arie
|
71 |
Director, Lead Independent Director |
|
Orit Stav |
55 |
Director |
|
Yotam Stern |
73 |
Director |
|
Leo Huang |
72 |
Director |
|
I-Shih Tseng |
64 |
Director |
|
Yael Andorn |
55 |
Director* |
|
Yosi Shacham-Diamand
|
72 |
Director* |
|
Moshe Eisenberg
|
59 |
Chief Financial Officer |
|
Ramy Langer |
72 |
Chief Operating Officer |
|
Orit Geva Dvash
|
54 |
Vice President - Human Resources |
* Ms. Yael Andorn and Prof. Yosi Shacham-Diamand serve as our external directors (as
such term is defined under the Companies Law) since October 2018.
Set forth below is a biographical summary of each of the above-named directors and senior management.
Rafi Amit, a founder of
Camtek, has served as our Chief Executive Officer since January 2014, and previously as our Chairman of the Board of Directors from the
2019 AGM until December 31, 2022. Between 2010 and March 2017, Mr. Amit also served as our Active Chairman of the Board of Directors.
Previously, Mr. Amit served as our Chief Executive Officer from January 1998 until August 2010 and as Chairman of the Board of Directors
from 1987 until April 2009. Since 1981, Mr. Amit has also served as the President and director of Priortech and has been the Chairman
of the Board of Directors of Priortech since 1988 until February 2025. From 1981 until 2004, Mr. Amit served as Priortech’s Chief
Executive Officer. Mr. Amit also served as a director in P.C.B. Technologies Ltd. between 2004 and 2019. Mr. Amit holds a B.Sc. in
Industrial Engineering and Management from Technion - Israel Institute of Technology.
Lior Aviram has served as our Executive Chairman
of the Board since June 1, 2025, bringing extensive experience across the Israeli and global M&A in technology sectors, deep familiarity
with semiconductor markets, international capital markets, and governance best practices, risk management, and long‑term value creation
for shareholders. Previously, Mr. Aviram was the managing partner of Shibolet & Co. Law Firm, one of Israel’s most reputable
law firms. Mr. Aviram served as a partner from 1994, as the Head of the High-Tech Practice from 1999 until 2021 focused his legal career
on securities laws, corporate and M&A of Israeli and global technology companies, and as the firm’s managing partner beginning
in 2016, stepping down from such position to commence his role as our Executive Chairman. Mr. Aviram served as a board member of
Hanita Lenses Ltd. (private company) since 2022 until 2025, and as a member of the board of directors of TerraLex international legal
network from 2021 to 2025, and of Partners & Co from 2022 to 2024. Mr. Aviram holds an LL.B. degree cum laude from Tel Aviv University.
Moty Ben-Arie served
as our Chairman of the Board from January 1, 2023 to June 1, 2025 and since then is serving a Lead independent Director of the Board.
From March 2017 until the 2019 AGM, Mr. Ben-Arie also served as our Chairman of the Board of Directors. Mr. Ben-Arie is the co-founder
and served as the Chairman of the board of directors of Invisicare Ltd. Mr. Ben-Arie has served as a consultant to entrepreneurs and investors
since 2014. Previously, Mr. Ben-Arie served as the CEO of Sital Technology from 2012 until 2014. From 2006 until 2011, Mr. Ben-Arie also
served as a managing partner of Vertex Ventures, where he focused on investments in Israeli-related hi-tech companies and evaluation of
companies in the field of telecommunication, IT, test equipment, medical equipment and multidisciplinary systems. During these years,
Mr. Ben-Arie served as a member of the fund investment committee, managed investments in several companies and served as a board member
in companies in their early stages, including Color Chip Inc., Multiphi, Expand Networks, Comability and Ethos Networks. From 2000 until
2006, Mr. Ben-Arie also served as a partner of Walden Israel Ventures, where he focused on investments in Israeli-related hi-tech companies.
During these years, Mr. Ben-Arie managed investments in several companies and served as a board member in companies from early stage,
including Color Chip Inc. and Passave. From 1998 until 2000, Mr. Ben-Arie served as a director in Radcom Ltd., as a consultant in Walden
Israel, and financed seed phases for new startups. From 1991 until 1998, Mr. Ben-Arie served as the co-founder and CEO of Radcom Ltd.,
Israel. From 1978 until 1982, Mr. Ben-Arie served as an electronic engineer and a project manager in Elisra Ltd. Mr. Ben-Arie holds an
MBA from Tel Aviv University, and a B.Sc. in Electrical Engineering from the Technion - Israel Institute of Technology.
37
Orit Stav has served on
our Board of Directors since September 24, 2020. Ms. Stav is an experienced investment manager with 20 years of experience in the field
of Venture Capital & Private Equity, as well as in the technology sector. Ms. Stav is a co-founder and serves as a managing partner
at Israel Innovation Partners, a business advisory firm that specializes in building business relationship between global companies and
Israeli technology start-ups. Currently, Ms. Stav serves as a board member in Menora Mivtachim Holdings Ltd., Doral Group Renewable Energy
Resources Ltd., Innoviz Technologies Ltd., IBI – Underwriting & Issuing Ltd., EFI Capital Real Estate Ltd. From 2014 until 2015,
Ms. Stav served as a managing partner of EVA Ventures venture capital. From 2010 until 2012, Ms. Stav served as a country manager in Wimdu
GmbH, an international internet company. From 2006 until 2009 she served as an investment manager in Siemens Venture Capital, and from
1998 until 2005 served as an investment partner in Platinum Neurone Ventures, PNV, an Israeli venture capital fund. Ms. Stav holds an
MBA from the University of Hertsfordshire, U.K., and a B.A. in Economies and Management from Tel Aviv University.
Yotam Stern has served on
our Board of Directors since 1987. From May 2009 until August 2010, Mr. Stern served as the Chairman of the Board of Directors and from
2001 until 2012, Mr. Stern served as our Executive Vice President, Business & Strategy. From 1998 until 2001,
Mr. Stern served as our Chief Financial Officer. Mr. Stern served in the past as the Chief Financial Officer of Priortech and
has been serving as a director of Priortech since 1985 and as its Chief Executive Officer since 2004. Mr. Stern also served as a director
in P.C.B. Technologies Ltd. between 1993 and 2019, and as its CEO between 2012 and 2018. Mr. Stern has been serving as a director in Access
Semiconductor Co., Ltd. since 2025. He holds a B.A. in Economics from Hebrew University of Jerusalem.
Leo Huang has served
on our Board of Directors as a representative of Chroma since June 3, 2019. Mr. Huang co-founded Chroma in 1984 and has been serving as
chairman of the board of directors of Chroma since October 23, 1984. Mr. Huang was the QA Engineer of TIMEX Corp. from 1975 to 1977 and
served as the Sales Manager of Philips Electronics Industries (Taiwan) Ltd. from 1978 to 1984. Mr. Huang holds a bachelor’s degree
in Electronics Engineering from National Chiao Tung University in 1973.
I-Shih Tseng has
served on our Board of Directors as a representative of Chroma since June 3, 2019. Mr. Tseng joined Chroma in 1998, serving as a director
since June 6, 2012, and as Business Unit President of Chroma since July 1, 2007. Mr. Tseng was a Research Assistant at Pennsylvania State
University from 1986 to 1992 and served as the Project Manager of Institute for Information Industry from 1992 to 1998. Mr. Tseng received
his PhD degree in Mechanical Engineering from Pennsylvania State University in 1992.
Yael Andorn has served
on our Board of Directors since October 3, 2018, and she is currently the Chairperson of our Audit Committee. Ms. Andorn is the founder
and CEO of CapitalA, and serves on the Boards of Directors of Israeli public companies such as El-Al Airlines and Castro. Ms. Andorn previously
served on private and public boards, including Midroog-Moody’s Rating, Oil Refineries (Bazan), Retalix, The National Lottery,
Clal Health Insurance and Clal Credit Insurance, and as head of the Investment Committee of the Teacher’s Saving Fund. Ms. Andorn
served as director general of Israel’s Ministry of Finance between 2013 and 2015 and as Partner at Viola Credit between 2012 and
2013. Between 2005 and 2011, Ms. Andorn served as CEO at Amitim and also served on its investment committee. Ms. Andorn held several positions
at Israel’s Ministry of Finance Budget Department, Bank of Israel and IDF 8200 Intelligence Unit. Ms. Andorn holds a Bachelor of
Economics and a Master in Business Administration from the Hebrew University of Jerusalem.
38
Yosi Shacham-Diamand has
served on our Board of Directors since October 3, 2018. Since 2001, Prof. Shacham-Diamand serves as The Bernard L. Schwartz Academic Chair
for nano scale information technologies in the Department of Electrical Engineering - Physical Electronics, and in the Department of Material
Science and Technology, Faculty of Engineering, Tel Aviv University. Prof. Shacham-Diamand currently serves on the advisory board of CartaSense
Ltd. and SolChip Ltd., and previously served as consultant to numerous manufacturing companies such as: Zoran Inc., Intel Inc., Applied
Materials Inc., Nova Instruments Inc., as well as to numerous investment and holding companies in Israel and abroad. Prof. Shacham-Diamand
previously served on the board of directors of PCB Ltd. (today, Priortech Ltd.) and “RAMOT” by Tel Aviv University. He is
a visiting professor at Waseda University, Tokyo, Japan (Since 2004) and a visiting professor at the Department of Electronics and Telecommunication,
The Politecnico di Torino, Torino, Italy (Since 2018), and serves as a distinguished international Chair Professor in Feng Chia University,
Taichung, Taiwan (since 2012). Since 2014, Prof Shacham-Diamand serves as a member of the MAGNET committee, Ministry of Trade
and Industry. Prof. Shacham-Diamand holds a D.Sc. EE, M.Sc. EE, and B.Sc. EE (Summa-cum Laude), all from the Technion- Israel Institute
of Technology, Haifa, Israel, and also completed postdoctoral research at U.C. Berkeley, CA, USA.
Moshe Eisenberg has served
as our Chief Financial Officer since November 2011. From 2010 to 2011, Mr. Eisenberg served as the Chief Financial Officer of Exlibris,
a global provider of library automation solution for the academic market. Prior to that, from 2005 to 2009, Mr. Eisenberg served as the
Chief Financial Officer of Scopus Video Networks Ltd., a leading provider of digital compression, decoding & video processing
equipment. Prior to that, Mr. Eisenberg held various professional and managerial positions at Gilat Satellite Networks Ltd. and its wholly
owned U.S. subsidiary, Spacenet Inc. Mr. Eisenberg holds an MBA from Tel Aviv University and a B.Sc. in Agricultural Economics from the
Hebrew University of Jerusalem.
Ramy Langer has served
as our Chief Operating Officer since November 2017, following the consummation of the PCB Sale Transaction. Prior to his appointment as
Chief Operating Officer he served as Vice President - Semiconductors Division from February 2014. From 2007 until 2012, Mr. Langer served
as the Chief Executive Officer (and co-founder) of Infinite Memory Ltd., a fab-less developer of products based on Saifun Semiconductors
Ltd.’s technology. From 2005 until 2007, Mr. Langer served as Vice President- Business Development of Saifun, where he marketed
non-volatile memory IP. From 2002 until 2005, Mr. Langer served as Managing Director of Infineon Flash, a fab-less developer of products
based on Saifun’s technology using Infineon DRAM process. From 1999 until 2002, Mr. Langer served as Vice President- Marketing &
Sales of Tower Semiconductors Ltd., manufacturer of integrated circuits. Prior to that, Mr. Langer held various executive positions at
Kulicke and Soffa Industries, Inc., a leading global semiconductor assembly equipment manufacturer. Mr. Langer holds a B.Sc. in Electronic
Engineering from the Technion – Israel Institute of Technology and a M.Sc. in Electronic Engineering from Drexel University, Philadelphia.
Orit Geva Dvash has served
as our VP Human Resources (“HR”) since November 2017. Previously, since 2014, Ms. Geva
Dvash served as our HR Director. From 2008 to 2014, Ms. Geva Dvash served as our HR manager. From 2002 to 2008, Ms. Geva Dvash served
at various HR positions at IBM research lab. Ms. Geva Dvash holds a Masters in political science from Haifa University and B.A. in political
science and English literature from Haifa University.
Arrangements Involving Directors and Senior Management
In accordance with the terms of the Chroma Voting Agreement, at
the 2019 AGM Mr. Leo Huang and Mr. I-Shih Tseng were first appointed for service as our directors (see Item 4.A. – “History
and Development of the Company”).
Except for the Chroma Voting Agreement, there are no arrangements
or understandings of which we are aware relating to the election of our directors or the appointment of executive officers in our Company.
In addition, there are no family relationships among any of the individuals listed in this Section A (Directors and Senior Management).
39
B. Compensation
Aggregate Executive Compensation
The aggregate remuneration paid by us for the year ended December 31,
2025, to all persons listed in Section A (Directors and Senior Management) above, was approximately 6.4 million. This sum includes 0.2
million paid to provide pension, retirement or similar benefits, amounts expended by us for automobiles made available to all our executive
officers, and other fringe benefits commonly reimbursed or paid by companies in Israel.
We have a performance-based bonus plan which includes our executive
officers. The plan is based on our overall performance, and individual performance. Up to 50% of the performance objectives of our executive
officers may be qualitative, provided that with respect to our Chief Executive Officer and the Executive Chairman such portion shall not
exceed three monthly base salaries. The measurable performance objectives can change year over year, and are a combination of financial
parameters, such as revenues, booking, operating or net income and collection. The plan for our executive officers is reviewed and approved
annually by our Audit Committee (in its capacity as our Compensation Committee) and Board of Directors, as is any bonus payment to an
executive officer made under such plan (provided that with respect to the bonus plan for our CEO we also obtain shareholder approval –
see in Item 6.B - “Compensation – Employment Agreements” below).
We compensate our independent directors for serving on our Board
of Directors by payment of cash fees in accordance with regulations promulgated under the Companies Law concerning the remuneration of
external directors (the “Remuneration Regulations”), reimbursement for expenses and
the award of share options or RSUs. Priortech’s and Chroma’s representatives on our Board do not receive compensation for
their service as our directors. See Item 6.C “Board Practices - Remuneration
of Directors” below.
Individual Compensation of Covered Office Holders
The table below presents the compensation granted to our five most
highly compensated Office Holders (as such term is defined in the Companies Law; see Item 6.C - “Board
Practices – External Directors – Qualification”
below) during or with respect to the year ended December 31, 2025. We refer to the five individuals for whom disclosure is provided herein
as our “Covered Office Holders”. All amounts specified below are in terms of cost to the Company, as recorded in our financial
statements.
|
Name and Principal
Position (1) |
Salary Cost
(USD) (2) |
Bonus
(USD) (3) |
Equity-Based Compensation
(USD) (4) |
Other
(USD) (5) |
Total (USD) |
|
Rafi Amit – Chief Executive Officer |
375,760 |
546,092 |
1,111,503 |
170,838 |
2,204,192 |
|
Ramy Langer - Chief Operating Officer |
383,392 |
268,121 |
645,721 |
1,297,235 | |
|
Moshe Eisenberg - Chief Financial Officer |
342,080 |
225,638 |
507,040 |
1,074,758 | |
|
Orit Geva-Dvash - Vice President, Human Resources |
257,755 |
86,743 |
235,940 |
580,438 | |
|
Lior Aviram - Executive Chairman of the Board of Directors |
243,465 |
0 |
261,150 |
504,615 | |
|
Total |
1,602,452 |
1,126,594 |
2,761,354 |
170,838 |
5,661,237 |
| (1) |
All Covered Office Holders are employed on a full-time (100%) basis, except for: (i) Mr. Amit who dedicates 90% of his time to his
role as our Chief Executive Officer; and (ii) Mr. Aviram who dedicates the majority of his business time to his role as Executive Chairman
of the Board of Directors. |
40
| (2) |
Salary cost includes the Covered Office Holder’s gross salary plus payment of social benefits made by the Company on behalf
of such Covered Office Holder. Such benefits may include, to the extent applicable to the Covered Office Holder, payment, contributions
and/or allocations for saving funds (e.g. Managers’ Life Insurance Policy), education funds (referred to in Hebrew as “Keren
Hishtalmut”), pension, severance, risk insurances (e.g. life, or work disability insurance), payments for social security
and tax gross-up payments, vacation, car, medical insurance and benefits, phone, convalescence or recreation pay, and other benefits and
perquisites consistent with the Company’s policies. |
| (3) |
Represents annual bonuses paid in accordance with the Covered Office Holder’s performance of targets as set forth in his or
her bonus plan and approved by the Company’s Audit Committee and Board of Directors and/ or any special one-time bonuses as approved
by the Company’s Audit Committee and Board of Directors in accordance with the Company’s Compensation Policy. |
| (4) |
Represents the equity-based compensation expenses recorded in the Company’s consolidated financial statements for the year
ended December 31, 2025, for each Covered Office Holder, based on the options’ fair value on the grant date, calculated in accordance
with accounting guidance for equity-based compensation. |
| (5) |
Includes relocation expenses which may consist of, to the extent applicable to the Covered Office Holder: housing, schooling, car,
medical insurance and travel expenses for the Covered Office Holder and family members residing with him abroad. |
Employment Agreements
We maintain written employment agreements with our employees, including
all of our executive officers, that contain customary provisions, including non-compete and confidentiality agreements.
With respect to our Chief Executive Officer, Mr. Amit spends 90%
of his time in service as our CEO, and under his employment agreement his compensation includes: (i) an annual base salary; (ii) an annual
performance-based bonus; and (iii) an annual grant of equity. At our 2024 annual general meeting of shareholders, held on September 25,
2024 (the “2024 AGM”), our shareholders approved an increase in Mr. Amit’s annual
base salary, effective as of January 2024 to US$375,760 (the “CEO Base Salary”). In
addition, our shareholders approved a three-year cash bonus plan for Mr. Amit, for the years 2024-2026 (inclusive) pursuant to which Mr.
Amit’s annual on target cash bonus for each of these years shall be equal to not more than the CEO Base Salary, conditioned upon
his performance in each of these years measured against criteria pre-determined by our Compensation Committee and Board of Directors,
with respect to the applicable year (the “CEO Cash Bonus Plan”).
According to the annual equity plan, Mr. Amit’s annual grant
of equity for each of these three years shall not exceed 400% of the CEO Base Salary, and at least 50% of Mr. Amit’s annual grant
of equity shall be subject to performance-based vesting (and with respect to the 2024 annual equity grant, 40%).
Further, Mr. Amit’s employment agreement contains confidentiality
provisions for the term of Mr. Amit’s service and thereafter, and non-compete provisions for the term of Mr. Amit’s service
and for a six-month period after the termination of his service. It provides that all intellectual property developed by Mr. Amit,
or in which he took part, during or in connection with his services, is our sole property. The employment agreement may be terminated
by the Company at any time, by written notice of termination delivered to Mr. Amit six months in advance. We may, however, immediately
terminate the employment of Mr. Amit in various circumstances, including in the case of a breach of fiduciary duty.
As Mr. Amit may be deemed, together with the Priortech Founding
Members and Chroma, to control the Company (see Item 3.D - “Risk Factors- Our
principal shareholders, Priortech and Chroma, hold a controlling interest in us and will be able to exercise their control in ways that
may be adverse to your interests. Our relationship with Priortech and Chroma may give rise to a conflict of interests” above),
in accordance with the Companies Law, his terms of employment must be approved by the Company’s shareholders at least once every
three years, and, accordingly, were last re-approved at the 2024 AGM. Mr. Amit does not receive any compensation in consideration for
his service as a member of our Board of Directors.
41
With respect to our Executive Chairman of the Board of Directors,
who was appointed effective June 1, 2025, Mr. Aviram devotes the majority of his business time to the Company and its ongoing strategic
initiatives. In connection with his appointment and in accordance with the Companies Law and our Compensation Policy (as amended
and approved by our shareholders at our 2025 annual general meeting of shareholders, held on April 29, 2025, the “2025
AGM”), our Compensation Committee, Board of Directors and shareholders approved Mr. Aviram’s compensation terms. Under
his employment terms, Mr. Aviram’s compensation includes: (i) an annual base salary; (ii) an annual performance-based cash bonus;
and (iii) annual equity-based compensation. Mr. Aviram is not entitled to any additional annual or participation fees in connection with
his tenure as an executive member of our Board, other than as specifically approved in connection with his Executive Chairman role. Mr.
Aviram is entitled to a gross annual base salary of NIS 967,000 (approximately US$314,983, based on the Exchange Ratio (as defined below)),
excluding social benefits and customary fringe benefits.
Pursuant to our Compensation Policy, Mr. Aviram’s annual
on-target cash bonus is capped at 100% of his annual base salary and is conditioned upon his performance measured against criteria pre-determined
by our Compensation Committee and Board of Directors with respect to the applicable year.
In addition, pursuant to our Compensation Policy, the annual equity
value granted to Mr. Aviram is subject to a cap equal to 400% of his annual base salary and at least 50% of such equity award shall be
subject to performance-based vesting.
C. Board
Practices
Corporate Governance Practices
We are incorporated in Israel and therefore are subject to various
corporate governance practices under the Companies Law, relating to matters such as external directors, audit and compensation committees,
internal auditor and approvals of interested parties transactions. These matters are in addition to the Nasdaq Rules and other relevant
provisions of U.S. securities laws. Under applicable Nasdaq Rules, a foreign private issuer such as us may generally follow its home country
rules of corporate governance in lieu of comparable Nasdaq Rules, except for certain matters such as composition and responsibilities
of the audit committee and the independence of its members. See Item 3.D – “Risk Factors
- Being a foreign private issuer exempts us from certain SEC Requirements
and Nasdaq Rules, which may result in less protection that is afforded to investors under rules applicable to domestic issuers”
above. For information regarding home country rules followed by us see Item 16G –”Corporate
Governance” below.
General Board Practices
Our Articles provide that our Board of Directors shall consist
of not less than five and not more than ten directors, including the external directors. Currently, our Board consists of nine members.
According to the Chroma Voting Agreement (see Item 4.A. – “History and
Development of the Company”), Chroma is entitled to nominate two members, and Priortech
is entitled to nominate three members, to the Company’s Board. Chroma’s current nominees are Leo Huang and I-Shih Tseng, and
Priortech’s nominees are Rafi Amit and Yotam Stern. At the 2025 AGM, following the recommendation of our Nomination Committee and
Board of Directors, Mr. Lior Aviram was elected as a director of the Company and was appointed as the Executive Chairman of the Board
of Directors, and each of Messrs. Rafi Amit, Yotam Stern, Moty Ben-Arie, Leo Huang, I-Shih Tseng and Orit Stav were re-appointed
for service as our directors. All directors were appointed following the recommendation by the Company’s Nomination Committee, and
each of our directors (other than the external directors) is serving an approximately one-year term, which is due to expire at our 2026
annual general meeting of shareholders (the “2026 AGM”).
In accordance with the Companies Law, our Board of Directors retains
all the powers in managing our Company that are not specifically granted to the shareholders. For example, the Board may make decisions
to borrow money for the Company, and may set aside reserves out of our profits, for whatever purposes it sees fit.
42
The Board of Directors may pass a resolution when a quorum is present
(in person or via telecommunication), and by a vote of at least a majority of the directors present when the resolution is put to vote.
A quorum is defined as at least a majority of the directors then in office who are lawfully entitled to participate in the meeting but
not less than two directors. The Chairman of the Board is elected and removed by the Board members. Minutes of the meetings of the Board
of Directors are recorded and kept at our offices. In addition, the Board of Directors may pass a resolution by way of a written resolution
signed by all members of our Board of Directors.
The Board of Directors may, subject to the provisions of the Companies
Law, appoint a committee of the Board and delegate to such committee all or any of the powers of the Board, as it deems appropriate. Notwithstanding
the foregoing and subject to the provisions of the Companies Law, the Board may, at any time, amend, restate or cancel the delegation
of any of its powers to any of its committees. Our Board of Directors has appointed an Audit Committee, also serving as a Compensation
Committee, and a Nomination Committee. For information regarding the duties, responsibilities and composition of each of our committees,
see Item 6.C – “Board Practices - Committees of the Board of Directors”
below.
Our Articles provide that any director may appoint as an alternate
director, by written notice to us or to the Chairman of the Board, any individual who is qualified to serve as director and who is not
then serving as a director or alternate director for any other director. An alternate director has all of the rights and obligations of
a director, excluding the right to appoint an alternate for himself. Currently no alternate directors serve on our Board.
Election, Terms and Skills of Directors
Directors, other than external directors, are elected by a resolution
of the shareholders at the annual general meeting and serve until the conclusion of the next annual general meeting of the shareholders,
unless earlier terminated in the event of such director’s death, resignation, bankruptcy, incapacity or removal by a resolution
of the shareholders.
According to the Companies Law, a person who does not possess the
skills required and the ability to devote the appropriate time to the performance of the office of director in a company, taking into
consideration, among other things, the special requirements and size of that company, shall neither be appointed as a director nor serve
as a director in a public company. A public company shall not convene a general meeting the agenda of which includes the appointment of
a director, and a director shall not be appointed, unless the candidate has submitted a declaration that he or she possesses the skills
required and the ability to devote the appropriate time to the performance of the office of director in the company, that sets forth the
aforementioned skills and further states that the limitations set forth in the Companies Law regarding the appointment of a director do
not apply in respect of such candidate.
A director who ceases to possess any qualification required under
the Companies Law for holding the office of director or who becomes subject to any ground for termination of his/her office must inform
the company immediately and his/her office shall terminate upon such notice.
Independent Directors
Under the Nasdaq Rules, a majority of our directors is required
to be independent. The independence criteria under the Nasdaq Rules excludes, among others, any person who is: (i) a current or former
(at any time during the past three years) employee of a company or its affiliates; or (ii) an immediate family member of an executive
officer (at any time during the past three years) of a company or its affiliates.
In addition, under the Companies Law, an “independent director”
is either an external director or a director appointed or classified as such who meets the same non-affiliation criteria as an external
director, as determined by the company’s audit committee, and who has not served as a director of the company for more than nine
consecutive years. For these purposes, ceasing to serve as a director for a period of two years or less would not be deemed to sever the
consecutive nature of such director’s service. However, as our shares are listed on the Nasdaq Global Select Market, we may also,
in accordance with the Companies Regulations (Alleviation for Public Companies whose shares are Traded on the Stock Exchange Outside of
Israel), 2000 (the “Alleviation Regulations”), classify directors who qualify as independent
directors under the relevant non-Israeli rules, as “independent directors” under the Companies Law. In addition, the Alleviation
Regulations provide that “independent directors” may be elected for additional terms that do not exceed three years each,
beyond the nine consecutive years permitted under the Companies Law, provided that, if the director is being re-elected for an additional
term or terms beyond the nine consecutive years, the company’s audit committee, followed by the board of directors, have approved
that considering the expertise and special contribution of the director to the work of the board of directors and its committees, the
appointment for an additional term of service is beneficial to the company.
43
Seven of our nine members of the Board - Mses. Yael Andorn and
Orit Stav and Messrs. Yotam Stern, I -Shih Tseng, Leo Huang, Yosi Shacham-Diamand and Moty Ben Arie - qualify as independent directors
under the Nasdaq Rules. Four of our nine members of the Board - Mses. Yael Andorn and Orit Stav and Messrs. Yosi Shacham-Diamand and Moty
Ben Arie - qualify as independent directors under the Companies Law.
External Directors
Under the Companies Law, we are required to appoint at least two
external directors. Each committee of a company’s board of directors which is authorized to exercise the board of directors’
authorities is required to include at least one external director, except for the audit committee and the compensation committee, which
are required to include all of the external directors. The Alleviation Regulations allow companies whose shares are traded on Nasdaq and
which do not have a controlling shareholder (within the meaning of the Companies Law) to exempt themselves from the requirement to have
external directors on their board of directors and from related requirements imposed by the Companies Law concerning the composition of
the audit and compensation committees, provided that they continue to comply with the relevant U.S. securities laws and the Nasdaq
Rules applicable to U.S. domestic issuers, regarding the independence of the board of directors and the composition of the audit and compensation
committees. Currently, the relief provided in the Alleviation Regulations does not apply to us.
Qualification. To
qualify as an external director, an individual or his or her relative, partner, employer, any person to whom such person is directly or
indirectly subject to, or any entity under his or her control may not have, as of the date of appointment, or may not have had during
the previous two years, any affiliation with the company, any entity controlling the company on the date of the appointment or with any
entity controlled, at the date of the appointment or during the previous two years, by the company or by its controlling shareholder (and
in a company that does not have a shareholder or an affiliated group of shareholders holding 25% or more of the company’s voting
rights, such person may not have any affiliation with any person who, at the time of appointment, is the chairman, the chief executive
officer, the chief financial officer or a 5% shareholder of the company). In general, the term “affiliation” includes: an
employment relationship, a business or professional relationship maintained on a regular basis, control and service as an Office Holder; “Control”
is defined in the Israeli Securities Law as the ability to direct the actions of a company but excluding a power that is solely derived
from a position as a director of the company or any other position with the company; a person who is holding 50% or more of the “controlling
power” in the company – voting rights or the right to appoint a director or a general manager – is automatically considered
to possess control. The Companies Law defines the term “Office Holder” of a company
to include a director, the chief executive officer, an executive vice president, a vice president, any other person fulfilling or assuming
any of the foregoing positions without regard to such person’s title, and any manager who is directly subordinated to the chief
executive officer.
In addition, no person can serve as an external director if the
person’s position or other business creates, or may create conflicts of interest with the person’s responsibilities as an
external director or may otherwise interfere with the person’s ability to serve as an external director. Until the lapse of two
years from termination of office, a company or its controlling shareholder may not give any direct or indirect benefit to a former external
director.
Election
and Term of External Directors. External directors are elected by a majority vote at a shareholders’ general
meeting, provided that either:
| • |
a majority of the shares voted at the meeting, which are not held by controlling shareholders or shareholders with personal interest
in approving the appointment (excluding personal interest not resulting from contacts with the controlling shareholder), not taking into
account any abstentions, vote in favor of the election; or |
| • |
a vote in which the total number of shares voting against the election of the external director, does not exceed two percent
of the aggregate voting rights in the company. |
44
In a company in which, at the date of appointment of an external
director, all the directors are of the same gender, the external director to be appointed shall be of the other gender.
An external director can be removed from office only by: (i) the
same majority of shareholders that is required to elect an external director; or (b) a court, and provided that either (a) the external
director ceases to meet the statutory qualifications with respect to his or her appointment, or (b) the external director violates his
or her duty of loyalty to the company. The court may also remove an external director from office if he or she is unable to perform his
or her duties on a regular basis.
An external director who ceases to possess any qualification required
under the Companies Law for holding the office of an external director must inform the company immediately and his/her office shall terminate
upon such notice.
In general, external directors serve a three-year term, which may
then be extended for two additional three-year periods. Thereafter, in accordance with regulations promulgated under the Companies Law,
an external director may be appointed for additional terms of service of not more than three years each provided that: (a) a company’s
audit committee, followed by the board of directors, have approved that considering the expertise and special contribution of the external
director to the work of the board of directors and its committees, the appointment for an additional term of service is beneficial to
the company; (b) the appointment for an additional term of service is approved in accordance with the requirements of the Companies Law;
and (c) the prior periods of service of such external director, as well as the reasoning of the audit committee and board of directors
for the approval of the extension of the term of service, were presented to the shareholders prior to their approval.
Re-election of an external director may be effected through one
of the following mechanisms:
| 1. |
a shareholder holding one percent or more of a company’s voting rights proposed the re-election of the nominee; |
| 2. |
the board of directors proposed the re-election of the nominee and the election was approved by the shareholders by the majority
required to appoint external directors for their initial term; or |
| 3. |
the external director who is up for renewal has proposed himself or herself for re-election. |
With respect to mechanisms 1 and 3 above, the re-election is required
to fulfill all of the following terms: (i) to be approved by a majority of the votes cast by the shareholders of the Company, excluding
the votes of controlling shareholders and shareholders who have a personal interest in approving such nomination resulting from their
relations with the controlling shareholders; (ii) to include votes cast in favor of the re-election by such non-excluded shareholders
constituting more than two percent of the voting rights in the Company; and (iii) the external director is not a related or competing
shareholder or a relative of such a related or competing shareholder, at the time of the appointment, and does not and did not have any
affiliation with a related or competing shareholder, at the time of the appointment or within the two years preceding the appointment.
A “related or competing shareholder” is a shareholder proposing the re-appointment or a shareholder holding 5% or more of
the outstanding shares or voting rights of the company, provided that at the time of the re-appointment, such shareholder, a controlling
shareholder thereof or a company controlled by such shareholder or by a controlling shareholder thereof, have business relationships with
the Company or are competitors of the Company.
Financial
and Accounting Expertise. Pursuant to the Companies Law and regulations promulgated there under, (1) each external
director must have either “accounting and financial expertise” or “professional qualifications” and (2) at least
one of the external directors must have “accounting and financial expertise”. A director with “accounting and financial
expertise” is a director whose education, experience and skills qualifies him or her to be highly proficient in understanding business
and accounting matters and to thoroughly understand the company’s financial statements and to stimulate discussion regarding the
manner in which financial data is presented. A director with “professional qualifications” is a person who meets any of the
following criteria: (i) has an academic degree in economics, business management, accounting, law, public administration; (ii) has a different
academic degree or has completed higher education in an area relevant to the company’s business or which is relevant to his or her
position; or (iii) has at least five years’ experience in any of the following, or has a total of five years’ experience in
at least two of the following: (A) a senior position in the business management of a corporation with substantial business activities,
(B) a senior public position or a senior position in the public service, or (C) a senior position in the company’s main fields of
business.
45
Compensation.
An external director is entitled to compensation as provided in the Remuneration Regulations and is otherwise prohibited from receiving
any other compensation, directly or indirectly, from the Company. For more information, please see “Remuneration
of Directors” below.
Our
External Directors. Ms. Yael Andorn and Prof. Yosi Shacham-Diamand were re-appointed as our external directors at the 2024
AGM, for a third three-year-term which will expire on September 19, 2027. Our Board of Directors has determined that Ms. Andorn has the
“accounting and financial expertise” and that Mr. Shacham-Diamand has the “professional qualifications” required
by the Companies Law.
Remuneration of Directors
Generally, directors’ remuneration should be consistent
with a company’s compensation policy for Office Holders (see “Compensation
Policy” below) and requires the approval of the compensation committee, the board of directors and the shareholders (in that
order). Notwithstanding the above, in certain circumstances shareholder approval may be waived (see below) and, under different circumstances,
the compensation committee and the board of directors may approve an arrangement that deviates from the compensation policy, provided
that such arrangement is approved by a special majority of the company’s shareholders, including (i) at least a majority of the
shareholders, present and voting (abstentions are disregarded), who are not controlling shareholders and who do not have a personal interest
in the matter, or (ii) the non-controlling shareholders and shareholders who do not have a personal interest in the matter who were present
and voted against the matter hold two percent or less of the voting power of the Company.
According to the Remuneration Regulations, external directors are
generally entitled to an annual fee, a participation fee for each meeting of the board of directors or any committee of the board on which
he or she serves as a member, and reimbursement of travel expenses for participation in a meeting which is held outside of the external
director’s place of residence. The minimum, fixed and maximum amounts of the annual and participation fees are set forth in the
Remuneration Regulations, as supplemented by the Alleviation Regulations, based on the classification of the company according to the
amount of its capital. The candidate for service as external director must be notified by the company of his or her remuneration terms
prior to his or her appointment and, subject to certain exceptions, such remuneration will not be amended throughout the three-year period
during which he or she is in office. A company may also compensate an external director in shares or rights to purchase shares, other
than convertible debentures which may be converted into shares, in addition to the annual and participation remuneration and the reimbursement
of expenses, subject to certain limitations set forth in the Remuneration Regulations.
According to regulations promulgated under the Companies Law with
respect to relief in approval of certain related party transactions (the “Relief Regulations”),
shareholders’ approval for directors’ compensation and employment arrangements is not required if both the Compensation Committee
and the board of directors resolve that either (i) the directors’ compensation and employment arrangements are solely for the benefit
of the company or (ii) the remuneration to be paid to any such director does not exceed the maximum amounts set forth in the Remuneration
Regulations. Further, according to the Relief Regulations, shareholders’ approval for directors’ compensation and employment
arrangements is not required if (i) both the Compensation Committee and the board of directors resolve that such terms (a) are not more
beneficial than the former terms, or are essentially the same in their effect; and (b) are in line with the company’s compensation
policy; and (ii) such terms are brought for shareholder approval at the next general meeting of shareholders. Also, according to the Remuneration
Regulations, shareholder approval may be waived if the remuneration to be paid to the external directors is between the fixed and maximum
amounts set forth in such regulations.
As consideration for their service as directors and their participation
in each meeting of the Board or Board’s committees, we pay each of our external and independent directors (all Board members except
for Messrs. Amit, Aviram, Stern, Huang and Tseng) a fixed annual fee, a fixed participation fee and reimbursement of expenses in the following
amounts: NIS 145,770 (approximately $47,426)) (based on the NIS/USD exchange ratio as published by the Bank of Israel on March 2, 2026
(the “Exchange Ratio”) as annual fee, NIS 4,380 (approximately $1,425 based
on the Exchange Ratio) as in-person participation fee, NIS 2,628 (approximately $855 based on the Exchange Ratio) for conference call
participation and NIS 2,190 (approximately $712 based on the Exchange Ratio ) for each written resolutions. As these amounts are
in the range between the fixed amounts of the annual and participation fees, as set forth in the Remuneration Regulations, and the maximum
amounts of such fees as set forth in the Alleviation Regulations, they are exempt from shareholder approval, in accordance with the Relief
Regulations. The above-mentioned cash remuneration is in line with the Company’s Executives & Directors Compensation Policy
(the “Compensation Policy”), according to which each of the Company’s non-executive
(and non-controlling) directors is entitled to receive cash fees which include annual and participation fees. Messrs. Amit, Stern,
Huang and Tseng do not receive any payment with respect to their service as our directors.
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At the 2024 AGM, our shareholders approved an annual equity award
mechanism for our directors, pursuant to which, each of our directors who are not classified as controlling shareholders, either
currently serving or as shall be appointed from time to time (“ Eligible Directors”),
will be entitled to a fixed annual equity award, comprised of an equal mix between options to purchase Shares at an exercise price equal
to the average closing price per Share as quoted on the Nasdaq Stock Market during the 30 consecutive calendar days preceding the date
of grant, and RSUs, bearing an annual value of $75,000 for our Eligible Directors (the “Annual Equity
Award”).
See Item 6.B - “Compensation
– Employment Agreements” above with respect to the Compensation of Lior Aviram, our Executive Chairman of the Board.
Audit Committee
SEC and Nasdaq Requirements.
In accordance with the Exchange Act, rules of the SEC under the Exchange Act and Nasdaq Rules, we are required to have an audit committee
consisting of at least three directors, each of whom is (i) independent; (ii) does not receive any compensation from the Company (other
than directors’ fees); (iii) is not an affiliated person of the Company or any of its subsidiaries; (iv) has not participated in
the preparation of the Company’s (or subsidiary’s) financial statements during the past three years; and (v) financially literate
and one of whom has been determined by the board to be the audit committee financial expert. The duties and responsibilities of the audit
committee under the Nasdaq Rules include: (i) recommending the appointment of the Company’s independent auditor to the board of
directors, determining its compensation and overseeing the work performed by it; (ii) pre-approving all services of the independent auditor;
(iii) overseeing our accounting and financial reporting processes and the audits of our financial statements; and (iv) handling complaints
relating to accounting, internal controls and auditing matters.
We have adopted an audit committee charter as required by the Nasdaq
Rules.
Companies Law Requirements.
Under the Companies Law, the board of directors of any Israeli company whose shares are publicly traded must appoint an audit committee,
comprised of at least three directors including all of the external directors. In addition, the majority of the members must meet certain
independence criteria and may not include: (i) the chairman of the board; (ii) any controlling shareholder or a relative thereof; (iii)
any director employed by or providing services or a regular basis to the Company, a controlling shareholder or a company owned by a controlling
shareholder; or (iv) any director whose main income is provided by a controlling shareholder (the “Non-Permitted
Members”). The chairman of such audit committee must be an external director.
The duties and responsibilities of our audit committee under the
Companies Law include (1) identification of irregularities and deficiencies in the management of our business, in consultation with the
internal auditor and our independent auditors, and suggesting appropriate courses of action to amend such irregularities; (2) reviewing
and approval of certain transactions and actions of the Company, including the approval of related party transactions, that require approval
by the audit committee under the Companies Law; defining whether certain acts and transactions that involve conflicts of interest are
material or not and whether transactions that involve conflict of interests are material or not and whether transactions that involve
interested parties are extraordinary or not, and to approve such transactions; (3) determining with respect to transactions with controlling
shareholders, even if such are not extraordinary transactions, a duty to conduct a competitive process, under the supervision of the committee
or under the supervision of whomever designated by the committee and according to standards determined by the committee, or determining
other proceedings, prior to entering into such transactions, all in accordance with the type of transaction; (4) determining the method
of approval of transactions which are not insignificant, including the types of transactions which shall require approval of the committee;
(5) recommending the appointment of the internal auditor and its compensation to the board of directors; (6) examining the performance
of our internal auditor and whether he is provided with the required resources and tools necessary for him to fulfill his role, considering,
among others, the Company’s size and special needs; and (7) setting procedures for handling complaints made by Company’s employees
in connection with management deficiencies and the protection to be provided to such employees.
47
Non-Permitted Members shall not attend audit committee’s
meetings or take part in its decisions, unless the chairman of the audit committee has determined that such person is required for the
presentation of a certain matter. Nevertheless, an employee who is not a controlling shareholder or a relative thereof may be present
at the discussion part only, pursuant to the Committee’s request, and the Company’s legal counsel and secretary, who are not
controlling shareholders or relatives thereof, may be present during both discussion and decision making parts - pursuant to the Committee’s
request.
The quorum for discussions and decisions shall be the majority
of the members, provided that the majority of the members present meet the independence criteria set forth in the Companies Law and at
least one of them is an external director.
Our Audit Committee. The
members of our Audit Committee are Mses. Yael Andorn, Orit Stav, Mr. Yosi Shacham-Diamand and Moty Ben-Arie, all of whom are independent
directors in accordance with Nasdaq Rules and meet the independence criteria set forth in the Companies Law. Ms. Andorn is the Chairperson
of our Audit Committee and qualifies as its audit committee financial expert.
Compensation Committee
Nasdaq Requirements. Under
Nasdaq Rules, the compensation payable to our executive officers must be determined or recommended to the board for determination either
by a majority of the independent directors on the board, in a vote in which only independent directors participate, or by a compensation
committee comprised solely of independent directors, subject to certain exceptions.
Companies Law Requirements.
According to the Companies Law, the board of directors of any Israeli company whose shares are publicly traded, must appoint a compensation
committee, comprised of at least three directors, including all of the external directors which shall be the majority of its members and
one thereof must serve as the chairman of the committee. The remaining members of the committee must satisfy the criteria for remuneration
applicable to the external directors and qualified to serve as members of the audit committee pursuant to Companies Law requirements,
as described above. However, an audit committee that satisfies the requirements of the Companies Law regarding the composition of a compensation
committee may be authorized to carry out all duties and responsibilities of the compensation committee.
Further, under the Companies Law, a compensation committee is responsible
for: (i) providing the board of directors its recommendations with respect to the approval of the compensation policy (see below - “Compensation
Policy”) and any amendments and/or extensions thereto; (ii) periodically reviewing the implementation of the compensation
policy and providing the board of directors with recommendations with respect to any amendments or updates thereto; (iii) reviewing and
resolving whether or not to approve arrangements with respect to the terms of office and employment of Office Holders; and (iv) determining
whether or not to exempt a transaction with a candidate for chief executive officer, who is not affiliated with the Company or its controlling
shareholder, from shareholder approval if subjection of such transaction to shareholder approval may prevent its conclusion, and provided
that the terms approved are consistent with the compensation policy.
The attendance and participation in meetings of the compensation
committee are subject to the same limitations that apply to the Audit Committee. The quorum for discussions and decisions shall be the
majority of the members, provided that those members present are independent directors and at least one of them is an external director.
Our Compensation Committee. We
follow the provisions of the Companies Law with respect to the composition and responsibilities of our Compensation Committee. As all
of the members of our Audit Committee meet the independence requirements for compensation committee members set forth in the Nasdaq Rule
5605(d)(2), as a foreign private issuer, we have elected, pursuant to Nasdaq Rule 5615(a)(3), to follow Israeli practice, in lieu of compliance
with the certain provisions of Nasdaq Rule 5605(d), which would require us to have a separate compensation committee. Pursuant to the
Companies Law, allowing an audit committee that satisfies the requirements of the Companies Law regarding the composition of a compensation
committee, to carry out all duties and responsibilities of the compensation committee, our Board of Directors has authorized our Audit
Committee to carry out the duties and responsibilities of the compensation committee.
48
Nomination Committee
Nasdaq Requirements. The
Nasdaq Rules require that director nominees be selected or recommended for the board’s selection either by a nomination committee
composed solely of independent directors or by a majority of independent directors, in a vote in which only independent directors participate,
subject to certain exceptions.
Our Nomination Committee.
In 2018, our Board of Directors appointed a Nomination Committee,
comprised of our two external directors, Ms. Andorn and Mr. Shacham-Diamand, both of whom qualify as independent under the Nasdaq rules.
Consistent with the requirements of the Nasdaq Rules, our Nomination Committee is responsible for: (i) identifying potential new candidates
for service on the Company’s Board of Directors, taking into account, inter alia, the candidate’s
applicable experience, expertise and/or familiarity with the Company’s field of business, as well as the candidate’s ethical
character, independent judgment and industry reputation; (ii) conducting appropriate inquiries into the backgrounds and qualifications
of potential candidates for service as directors; (iii) reviewing and resolving whether or not to approve arrangements with respect to
such candidates; and (iv) recommending to the Board nominees for election (including re-election) to the Company’s Board of Directors.
Approval of Office Holders Terms of Employment
The terms of office and employment of Office Holders (other than
directors and the chief executive officer) require the approval of the compensation committee and the board of directors, provided such
terms are in accordance with the company’s compensation policy. Shareholder approval is also required if the compensation of such
officer is not in accordance with such policy. However, in special circumstances the compensation committee and then the board of directors
may nonetheless approve such compensation even if such compensation was not approved by the shareholders, following a further discussion
and for detailed reasoning.
The terms of office and employment of directors, the chief executive
officer or controlling shareholders (or a relative thereof), regardless of whether or not such terms conform to the company’s compensation
policy, should be approved by the compensation committee, the board of directors and the shareholders, by a special majority, except for:
(a) approval of terms of office and employment of directors, which are consistent with the company’s compensation policy, and require
shareholder approval by a regular majority; or (b) approval of terms of office and employment of directors pursuant to certain reliefs
provided for under the Remuneration Regulations and/or the Relief Regulations, with respect to which shareholder approval is waived. Shareholder
special majority should include (i) at least a majority of the shareholders who are not controlling shareholders and who do not have a
personal interest in the matter, present and voting (abstentions are disregarded), or (ii) the non-controlling shareholders and shareholders
who do not have a personal interest in the matter who were present and voted against the matter hold two percent or less of the voting
power of the company (“Special Majority”). Notwithstanding the above, in special circumstances
the compensation committee and then the board of directors may nonetheless approve compensation for the chief executive officer, even
if such compensation was not approved by the shareholders, following a further discussion and for detailed reasoning. In addition, under
certain circumstances, a company’s compensation committee may exempt the terms of office and employment of a candidate for service
as the CEO from shareholders’ approval, provided that the candidate is not a director and that the terms of office are compliant
with the company’s compensation policy.
In addition, amendment of existing terms of office and employment
of Office Holders who are not directors requires the approval of the compensation committee only, if the compensation committee determines
that the amendment is not material.
Compensation Policy
Under the Companies Law we are required to adopt a compensation
policy, which sets forth company policy regarding the terms of office and employment of Office Holders, including compensation, equity
awards, severance and other benefits, exemption from liability and indemnification. Such compensation policy should take into account,
among other things, providing proper incentives to directors and officers, management of risks by the company, the officer’s contribution
to achieving corporate objectives and increasing profits, and the function of the officer or director.
49
Our Compensation Policy is designed to balance between the importance
of incentivizing Office Holders to reach personal targets and the need to assure that the overall compensation meets our Company’s
long-term strategic performance and financial objectives. The Compensation Policy provides our Compensation Committee and our Board of
Directors with adequate measures and flexibility to tailor each of our Office Holder’s compensation package based, among other matters,
on geography, tasks, role, seniority and capability. Moreover, the Compensation Policy is intended to motivate our Office Holders to achieve
ongoing targeted results in addition to a high level business performance in the long term, without encouraging excessive risk taking.
The Compensation Policy and any amendments thereto must be approved
by the board of directors, after considering the recommendations of the compensation committee, and by a Special Majority of our shareholders.
The Compensation Policy must be reviewed from time to time by the board, and must be re-approved or amended by the board of directors
and the shareholders no less than every three years. If the Compensation Policy is not approved by the shareholders, the compensation
committee and the board of directors may nonetheless approve the policy, following further discussion of the matter and for detailed reasons.
We maintain a compensation policy for our office holders, which
was most recently approved by our shareholders at the 2024 AGM and was amended at the 2025 AGM. The following is a brief overview of the
main terms included in the Compensation Policy:
Base Salaries
Executives’ Base Salaries is determined
by the Compensation Committee and Board based on comparative benchmark information regarding salaries of applicable executives in peer
group companies, rather than on fixed caps as provided for under the current compensation policy. Executives’ Base Salaries shall
not exceed the 50th percentile of the relevant benchmark, unless the Compensation Committee and the Board deem that unique and special
circumstances warrant a deviation from such cap with respect to a specific Executive.
Annual Cash Bonus
On Target Cash Plan:
Under the Compensation Policy, Executives’ On Target Cash Plan shall be calculated based on each Executive’s annual Base Salary,
so that the On Target Cash Plan of Executives other than the CEO and the Executive Chairman of the Board shall be capped at 75% of
such Executives’ annual Base Salary, and the CEO’s and the Executive Chairman of the Board On Target Cash Plan shall
be capped at 100% of his or her annual Base Salary.
On Target Bonus Cap:
Under the Compensation Policy, the actual Cash Plan payment to all Executives (including the CEO and the Executive Chairman of the Board)
shall be capped at 200% of the Executive’s On Target Cash Plan.
On Target Bonus Threshold:
The Compensation Policy provides for an increased threshold for payment of any amounts under an Executive’s Cash Plan, such that
payment of any bonus under the Company’s Cash Plan will only be made upon the achievement of a minimum Non GAAP Net Profit of $6,000,000.
Change of Control Bonus
The Compensation Policy provides for a “change
of control” cash payment of up to six monthly Base Salaries, and further provides that in the event of a change of control that
creates a significant value to the Company’s shareholders, by presenting a premium of at least 40% over the average of the closing
prices per share of the Company’s ordinary shares as quoted on the Nasdaq Global Market for the 20 trading days ending one day prior
to the execution of the term sheet (or similar instrument) for such change of control event, the Compensation Committee and Board may
approve an increased “change in control” cash payment, of up to 12 monthly Base Salaries.
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Equity Based Compensation
Under the Compensation Policy, the total yearly
Equity Value granted to an Executive shall not exceed (i) with respect to the CEO and the Executive Chairman of the Board - 400%
of his annual Base Salary; and (ii) with respect to all other Executives, 300% of such Executive’s annual Base Salary, provided
that at least 50% of the equity based components granted to each Executive (including the CEO) shall be subject to performance-based vesting.
Directors Compensation
The Compensation Policy provides for general
guidelines with respect to the Company’s non-executive and non-controlling directors’ remuneration, pursuant to which, in
line with the current compensation policy, directors’ remuneration shall be comprised of cash compensation which includes annual
fee and meeting participation fee as shall be determined in accordance with the provisions of the Companies Law, as well as equity based
compensation, the annual value of which shall be capped at $100,000 for all non-executive directors.
Insurance Framework
The Compensation Policy provides for caps
on the premium which may be paid and coverage which may be purchased under the Company’s Directors & Officers (D&O) insurance
policies, pursuant to which the coverage which may be purchased shall be limited to the higher of: (i) $30,000,000; or (ii) 10% of the
Company’s market cap (based on the average closing price of the Company’s share on the Nasdaq Global Market during the preceding
30 days), plus 20% additional coverage for claims-related costs, and the cap on the premium which may be paid for each policy shall be
increased to one million $1,000,000. Further, the Compensation Committee shall be authorized, to (i) increase the coverage purchased,
and/or the premium paid for such policies, by up to 20% per year, without an additional shareholders’ approval, if and to the extent
permitted under the Law, and (ii) to the extent an additional insurance coverage is required in its opinion with respect to a specific
material transaction or a series of related transactions, to purchase coverage in amounts of up to 3 times the then existing limit of
coverage under the Compensation Policy, with costs of up to 3 times the then existing limit of premium amounts under the Compensation
Policy, without additional shareholders' approval, if and to the extent permitted under the Companies Law.
Clawback Policy
At our 2023 annual general meeting of shareholders (the “2023
AGM”), following the approvals of the Compensation Committee and Board of Directors, we amended Part II (Executive Compensation,
Section 12 (Clawback Policy)) of the Compensation Policy, to provide that the Company has adopted a clawback policy as contemplated pursuant
to Rule 10D-1 under the Exchange Act (the “Clawback Policy”), to recover any excess
incentive-based compensation from current and former officers after an accounting restatement, effective as of October 2, 2023. In addition,
the Compensation Committee and the Board of Directors may apply this Clawback Policy to persons who are not officers. Under the Clawback
Policy, in the event that the Company is required to prepare an accounting restatement due to its material noncompliance with any financial
reporting requirement under U.S. federal securities law, the policy provides that the Company will recoup compensation from each current
or former executive officer who, during the three-year period preceding the date on which an accounting restatement is required, received
incentive compensation based on the erroneous financial data that exceeds the amount of incentive-based compensation the executive would
have received based on the restatement. The Compensation Committee and the Board of Directors administer the Company’s Clawback
Policy and have sole discretion to determine how to seek recovery under the policy and may forgo recovery if both determine that recovery
would be impracticable. The Clawback Policy is filed as an exhibit to this Annual Report.
Additional Provisions
The Compensation Policy includes additional provisions, including
with respect to the following: separation package; relocation compensation; special circumstances cash incentive; indemnification and
exemption; and deviation from policy caps.
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Approval of Certain Transactions with Related Parties
The Companies Law requires the approval of the audit committee
or the compensation committee, thereafter the approval of the board of directors and in certain cases — the approval of the shareholders,
in order to effect specified actions and extraordinary transactions, such as the following:
| • |
transactions with Office Holders and third parties - where an Office Holder has a personal interest in the transaction; |
| • |
employment terms of Office Holders; and |
| • |
extraordinary transactions with controlling parties or with a third party where a controlling party has a personal interest in the
transaction; or any transaction with the controlling shareholder or his relative regarding terms of service (provided directly or indirectly,
including through a company controlled by the controlling shareholder) and terms of employment (for a controlling shareholder who is not
an Office Holder). A “relative” is defined in the Companies Law as spouse, sibling, parent, grandparent, descendant, spouse’s
descendant, sibling or parent and the spouse of any of the foregoing. |
Such extraordinary transactions with controlling shareholders require
the approval of the audit committee, or the compensation committee, the board of directors and the majority of the voting power of the
shareholders present and voting at the general meeting of the company (not including abstentions), provided that either:
| • |
the majority of the shares of shareholders who have no personal interest in the transaction and who are present and voting, vote
in favor; or |
| • |
shareholders who have no personal interest in the transaction who vote against the transaction do not represent more than two percent
of the aggregate voting rights in the company. |
Any shareholder participating in the vote on approval of an extraordinary
transaction with a controlling shareholder must inform the company prior to the voting whether or not he or she has a personal interest
in the approval of the transaction, and if he or she fails to do so, his or her vote will be disregarded.
Further, such extraordinary transactions, as well as any transactions
with a controlling shareholder or his relative concerning terms of service or employment, need to be re-approved no less than every three
years provided however that with respect to certain such extraordinary transactions the audit committee may determine that a longer duration
is reasonable given the circumstances related thereto and such extended period has been approved by the shareholders.
In accordance with regulations promulgated under the Companies
Law, certain defined types of extraordinary transactions between a public company and its controlling shareholder(s) are exempt from the
shareholder approval requirements.
In addition, the approval of the audit committee, followed by the
approval of the board of directors and the shareholders, is required to effect a private placement of securities, in which either: (i)
20% or more of the company’s outstanding share capital prior to the placement is offered, and the payment for which (in whole or
in part) is not in cash, in tradable securities registered in a stock exchange or not under market terms, and which will result in an
increase of the holdings of a shareholder that holds 5% or more of the company’s outstanding share capital or voting rights or will
cause any person to become, as a result of the issuance, a holder of more than 5% of the company’s outstanding share capital or
voting rights; or (ii) a person will become a controlling shareholder of the company. Pursuant to the 10th Amendment to the Alleviation
Regulations, which became effective in March 2024, we are permitted to adhere to the pertinent U.S. securities laws and Nasdaq Regulations
that apply to U.S. domestic issuers in relation to such private offerings, insofar as they encompass rules and guidelines pertaining to
private offerings.
52
A “controlling shareholder” is defined in the Israeli
Securities Law and in the provisions governing related party transactions under the Companies Law as a person with the ability to direct
the actions of a company but excluding a person whose power derives solely from his or her position as a director of the company or any
other position with the company, and with respect to approval of transactions with related parties also as a person who holds 25% or more
of the voting power in a public company, if no other shareholder owns more than 50% of the voting power in the company, and provided that
two or more persons holding voting rights in the company, who each have a personal interest in the approval of the same transaction, shall
be deemed to be one holder for the evaluation of their holdings with respect to approval of transactions with related parties.
Compensation committee approval is required and thereafter, in
most cases, the approval of the board of directors and in certain cases – the additional approval of the shareholders, in order
to approve the grant of an exemption from the responsibility for a breach of the duty of care towards the company, for the provision of
insurance and for an undertaking to indemnify any Office Holder of the company; see below under
“Insurance, Indemnification and Exemption”.
Duties of Office Holders and Shareholders
Duties of Office Holders
Fiduciary Duties
The Companies Law imposes a duty of care and a duty of loyalty
on all Office Holders of a company, including directors and officers. The duty of care requires an Office Holder to act with the level
of care with which a reasonable Office Holder in the same position would have acted under the same circumstances. The duty of loyalty
includes avoiding any conflict of interest between the Office Holder’s position in the company and his personal affairs, any competition
with the company, or exploiting any business opportunity of the company in order to receive personal advantage for himself or others.
It also requires an Office Holder to reveal to the company any information or documents relating to the company’s affairs which
the Office Holder has received due to his position as an Office Holder.
The company may approve an action by an Office Holder from which
the Office Holder would otherwise have to refrain due to its violation of the Office Holder’s duty of loyalty if: (i) the Office
Holder acts in good faith and the act or its approval does not cause harm to the company, and (ii) the Office Holder discloses the nature
of his or her interest in the transaction to the company a reasonable time before the company’s approval.
Each person listed in the table under “Directors and Senior
Management” above is considered an Office Holder under the Companies Law (for definition of “Office Holder” under the
Companies Law see above under “External directors” – “Qualification”).
Disclosure of Personal Interests of an Office
Holder
The Companies Law requires that an Office Holder of a company promptly
disclose any personal interest that he or she may possess and all related material information and documents known to him or her relating
to any existing or proposed transaction by the company. If the transaction is an extraordinary transaction, the Office Holder must also
disclose any personal interest held by the Office Holder’s spouse, siblings, parents, grandparents, descendants, spouse’s
siblings, parents and descendants and the spouses of any of these people, or any corporation in which the Office Holder: (i) holds at
least 5% of the company’s outstanding share capital or voting rights; (ii) is a director or general manager; or (iii) has the right
to appoint at least one director or the general manager. An extraordinary transaction is defined as a transaction that is either (i) not
in the ordinary course of business; (ii) not on market terms; or (iii) likely to have a material impact on the company’s profitability,
assets or liabilities.
In the case of a transaction which is not an extraordinary transaction,
after the Office Holder complies with the above disclosure requirements, only board approval is required unless the articles of association
of the company provide otherwise. The transaction must be for the benefit of the company. If a transaction is an extraordinary transaction,
or with respect to terms of office and employment, then in addition to any approval stipulated by the articles of association, it also
must be approved by the company’s audit committee (or with respect to terms of office and employment, the compensation committee)
and then by the board of directors, and, under certain circumstances, by the shareholders of the company. A director who has a personal
interest in a transaction, may be present if a majority of the members of the board of directors or the audit committee (or with respect
to terms of office and employment, the compensation committee), as the case may be, has a personal interest. If a majority of the board
of directors has a personal interest, then shareholders’ approval is also required.
53
Duties of Shareholders
Under the Companies Law, a shareholder has a duty to act in good
faith toward the company and other shareholders and to refrain from abusing his or her power in the company, including, among other things,
by voting in a general meeting of shareholders with respect to the following matters: (a) any amendment to the articles of association;
(b) an increase of the company’s authorized share capital; (c) a merger; or (d) approval of interested party transactions which
require shareholders’ approval.
In addition, any controlling shareholder, any shareholder who knows
that he or she possess power to determine the outcome of a shareholder vote and any shareholder who, pursuant to the provisions of a company’s
articles of association, has the power to appoint or prevent the appointment of an Office Holder in the company, is under a duty to act
with fairness towards the company. The Companies Law does not describe the substance of this duty but states that the remedies generally
available upon a breach of contract will also apply in the event of a breach of the duty of fairness, taking into account such shareholder’s
position.
Insurance, Indemnification and Exemption
Pursuant to the Companies Law and the Israeli Securities Law, the
Israeli Securities Authority is authorized to impose administrative sanctions, including monetary fines, against companies like ours and
their officers and directors, for certain violations of the Israeli Securities Law (see in “Administrative
Enforcement” below) or the Companies Law. The Companies Law further provides that companies like ours may indemnify their
officers and directors and purchase an insurance policy to cover certain liabilities, if provisions for that purpose are included in their
articles of association.
Our Articles allow us to indemnify and insure our Office Holders
to the fullest extent permitted by law.
Office Holders’ Exemption
Under the Companies Law, and provided that the company’s
articles of association allow it to do so, an Israeli company may exempt in advance an Office Holder from his or her liability to the
company, in whole or in part, for a breach of his or her duty of care (except in connection with distributions). Exemption from liability
for a breach of duty of loyalty is not allowed. Our Articles allow us to exempt our Office Holders to the fullest extent permitted by
law.
Office Holders’ Insurance
Our Articles provide that, subject to the provisions of the Companies
Law, we may enter into a contract for the insurance of all or part of the liability imposed on our Office Holders in respect of an act
performed by him or her in his or her capacity as an Office Holder, concerning the following:
| • |
a breach of his or her duty of care to us or to another person; |
| • |
a breach of his or her duty of loyalty to us, provided that the Office Holder acted in good faith and had reasonable cause to assume
that his or her act would not prejudice our interests; and |
| • |
a financial liability imposed upon him or her in favor of another person. |
Without derogating from the aforementioned, subject to the provisions
of the Companies Law and the Israeli Securities Law, we may also enter into a contract to insure an Office Holder for expenses, including
reasonable litigation expenses and legal fees, incurred by him or her in relation to an administrative proceeding instituted against such
Office Holder or payment required to be made to an injured party pursuant to certain provisions of the Israeli Securities Law.
54
Office Holder’s Indemnification
Our Articles provide that, subject to the provisions of the Companies
Law and the Israeli Securities Law, we may indemnify any of our Office Holders in respect of an obligation or expense specified below,
imposed on or incurred by the Office Holder in respect of an act performed in his capacity as an Office Holder, as follows:
| • |
a financial liability imposed on him or her in favor of another person by any judgment, including a settlement or an arbitration
award approved by a court; |
| • |
reasonable litigation expenses, including attorney’s fees, incurred by the Office Holder as a result of an investigation or
proceeding instituted against him by a competent authority which concluded without the filing of an indictment against him and without
the imposition of any financial liability in lieu of criminal proceedings, or which concluded without the filing of an indictment against
him but with the imposition of a financial liability in lieu of criminal proceedings concerning a criminal offense that does not require
proof of criminal intent or in connection with a financial sanction (the phrases “proceeding concluded without the filing of an
indictment” and “financial liability in lieu of criminal proceeding” shall have the meaning ascribed to such phrases
in section 260(a)(1a) of the Companies Law); |
| • |
reasonable litigation expenses, including attorneys’ fees, expended by an Office Holder or charged to the Office Holder by
a court, in a proceeding instituted against the Office Holder by the Company or on its behalf or by another person, or in a criminal charge
from which the Office Holder was acquitted, or in a criminal proceeding in which the Office Holder was convicted of an offense that does
not require proof of criminal intent; and |
| • |
expenses, including reasonable litigation expenses and legal fees, incurred by an Office Holder in relation to an administrative
proceeding instituted against such Office Holder, or payment required to be made to an injured party, pursuant to certain provisions of
the Israeli Securities Law. |
The Company may undertake to indemnify an Office Holder as aforesaid,
(a) prospectively, provided that, in respect of the first act (financial liability) the undertaking is limited to events which in the
opinion of the board of directors are foreseeable in light of the Company’s actual operations when the undertaking to indemnify
is given, and to an amount or criteria set by the board of directors as reasonable under the circumstances, and further provided that
such events and amount or criteria are set forth in the undertaking to indemnify, and (b) retroactively; provided, however, that the total
aggregate indemnification amount that the Company shall be obligated to pay to all of its Office Holders, for all matters and circumstances
described above, shall not exceed an amount equal to twenty five percent (25%) of the shareholders’ equity at the time of the indemnification.
Limitations on Insurance and Indemnification
The Companies Law provides that a company may not insure, exempt
or indemnify an Office Holder for any breach of his or her liability arising from any of the following:
| • |
a breach by the Office Holder of his or her duty of loyalty, except that the company may enter into an insurance contract or indemnify
an Office Holder if the Office Holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;
|
| • |
a breach by the Office Holder of his or her duty of care if such breach was intentional or reckless, but unless such breach was solely
negligent; |
| • |
any act or omission done with the intent to derive an illegal personal benefit; or |
| • |
any fine, civil fine, financial sanction or monetary settlement in lieu of criminal proceedings imposed on such Office Holder.
|
55
Under the Companies Law, exemption and indemnification of, and
procurement of insurance coverage for, our Office Holders, must be approved by our compensation committee and our board of directors and,
with respect to the CEO and to an Office Holder who is a director also by our shareholders. However, according to the Relief Regulations,
shareholders’ approval for the procurement of directors’ insurance is not required if the insurance policy is approved by
our compensation committee and (i) the terms of such policy are within the framework for insurance coverage as approved by our shareholders
and set forth in our compensation policy; (ii) the premium paid under the insurance policy is at fair market value; and (iii) the insurance
policy does not and may not have a substantial effect on the Company’s profitability, assets or obligations. Further, as our insurance
coverage includes Office Holders who are controlling shareholders, in accordance with the Relief Regulations, shareholders’
approval may be waived, if, in addition to the approval of the compensation committee as set forth above, our board of directors approves
all such matters approved by the compensation committee, and both organs approve that the terms of the insurance policy are identical
with respect to all Office Holders, including the controlling shareholders.
Indemnification letters, covering exemption from, indemnification
and insurance of those liabilities imposed under the Companies Law and the Israeli Securities Law discussed above, were granted to each
of our present Office Holders and were approved for future Office Holders. Hence, we indemnify our Office Holders to the fullest extent
permitted under the Companies Law.
We currently hold directors’ and officers’ liability
insurance policy for the benefit of our Office Holders, including our directors. This policy was approved by our Compensation Committee
on November 9, 2025, and is effective until April 30, 2027.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons, we have been advised that, in the opinion of the SEC, such indemnification
is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
Indemnification to Office
Holders who may be deemed to hold a controlling interest in the Company
Under the Companies Law, the grant of the indemnification and exemption
letters to each of our Office Holders must be approved by our Compensation Committee and our Board of Directors, and – with respect
to Office Holders who serve as directors or as the CEO – also by our shareholders. In addition, under the Companies Law, the grant
of the indemnification and exemption letters to those Office Holders who hold a controlling interest in the Company requires re-approval
by the Compensation Committee, Board of Directors and Company’s shareholders, at least once every three (3) years.
At the 2023 AGM, following the approvals of the Compensation Committee
and the Board of Directors held on October 12, 2023, we have approved the grant of the indemnification and exemption letter to each of
Messrs. Amit, Stern and Huang for an additional period of three (3) years.
Administrative Enforcement
The Israeli Securities Law includes an administrative enforcement
procedure to be used by the Israeli Securities Authority, or ISA, to enhance the efficacy of enforcement in the securities market in Israel.
This administrative enforcement procedure may be applied to any company or person (including director, officer or shareholder of a company)
performing any of the actions specifically designated as breaches of law under the Securities Law. Furthermore, the Israeli Securities
Law requires that the Chief Executive Officer of a company supervise and take all reasonable measures to prevent the company or any of
its employees from breaching such law. The Chief Executive Officer is presumed to have fulfilled such supervisory duty if the company
adopts internal enforcement procedures designed to prevent such breaches, appoints a representative to supervise the implementation of
such procedures and takes measures to correct the breach and prevent its reoccurrence.
As detailed above, under the Israeli Securities Law, a company
cannot obtain insurance against or indemnify a third party (including its officers and/or employees) for any administrative procedure
and/or monetary fine (other than for payment of damages to an injured party). The Israeli Securities Law permits insurance and/or indemnification
for expenses related to an administrative procedure, such as reasonable legal fees, provided that it is permitted under the company’s
articles of association.
We have adopted and implemented an internal enforcement plan to
reduce our exposure to potential breaches of the Companies Law and sections in the Israeli Securities Law, which are applicable to us.
Our Articles and letters of indemnification permit, among others, insurance and/or indemnification as contemplated under the Israeli Securities
Law (see “Insurance, Indemnification and Exemption” above).
56
| D. |
Employees |
Employees
The following table sets forth the number of our employees engaged
in the specified activities at the end of each of the years 2025, 2024 and 2023:
|
As of December 31, |
||||||||||||
|
2025 |
2024 |
2023 |
||||||||||
|
Executive management
|
5 |
4 |
4 |
|||||||||
|
Research and development
|
193 |
174 |
151 |
|||||||||
|
Sales support
|
216 |
191 |
156 |
|||||||||
|
Sales and marketing
|
99 |
92 |
91 |
|||||||||
|
Administration
|
69 |
67 |
57 |
|||||||||
|
Operations
|
127 |
128 |
106 |
|||||||||
|
Total
|
709 |
656 |
565 |
|||||||||
The following table sets forth the number of our employees located
in the following geographic regions at the end of each of the years 2025, 2024 and 2023:
|
As of December 31, |
||||||||||||
|
2025 |
2024 |
2023 |
||||||||||
|
Israel
|
348 |
331 |
287 |
|||||||||
|
Abroad
|
361 |
325 |
278 |
|||||||||
|
Total
|
709 |
656 |
565 |
|||||||||
With respect to our Israeli
employees, no collective bargaining agreements apply to our employees. However, by virtue of extension orders, certain provisions of the
collective bargaining agreements between the Histadrut (General Federation of Labor in Israel) and the Coordination Bureau of Economic
Organizations, relating primarily to the length of the work day, minimum wages, pension contributions, insurance for work-related accidents,
procedures for dismissing employees, determination of severance pay and other conditions of employment - are applicable to our employees.
With respect to our (or
any of our subsidiaries) Chinese employees, certain provisions of Chinese Labor Contract Law and Social Insurance Law primarily govern
the formation of employer-employee relations, termination of employment, severance pay, worker dispatch, part-time employment and
social insurance.
We consider our relationship
with our employees to be good, and we have never experienced a labor dispute, strike or work stoppage.
E. Share
Ownership. To be updated by Camtek finance
The following table sets forth certain information with respect
to the beneficial ownership of our outstanding ordinary shares by our directors and senior management.
57
Beneficial ownership is determined in accordance with the rules
of the SEC and generally means sole or shared power to vote or direct the voting or to dispose or direct the disposition of any ordinary
shares. Except as indicated by footnote, the persons named in the table below have sole voting and investment power with respect to all
ordinary shares shown as beneficially owned by them. All ordinary shares subject to options exercisable into ordinary shares and RSUs
that will vest, as applicable, within 60 days of the date of the table are deemed to be outstanding and beneficially owned by the person
holding such options and RSUs for the purpose of computing the number of shares beneficially owned by such person. They are not, however,
deemed to be outstanding and beneficially owned for the purpose of computing the percentage ownership of any other shareholder. The percentage
of beneficial ownership is based upon 46,548,607ordinary shares outstanding as of March 5, 2026.
|
Name |
Total Beneficial Ownership |
Percentage |
||||||
|
Rafi Amit(1)
|
34,128 |
* |
||||||
|
Lior Aviram(2)
|
- |
* |
||||||
|
Moty Ben- Arie(3)
|
3,398 |
* |
||||||
|
Orit Stav(6)
|
7,125 |
* |
||||||
|
Yotam Stern(4)
|
- |
* |
||||||
|
Leo Huang (5)
|
- |
* |
||||||
|
I-Shih Tseng |
- |
* |
||||||
|
Yael Andorn(6)
|
7,125 |
* |
||||||
|
Yosi Shacham-Diamand(7)
|
12,466 |
* |
||||||
|
Moshe Eisenberg(8)
|
7,932 |
* |
||||||
|
Ramy Langer(9)
|
7,921 |
* |
||||||
|
Orit Geva Dvash(10)
|
4,565 |
* |
||||||
|
*Beneficially owns less than 1% |
||||||||
*Beneficially owns less than 1%
|
(1)
|
Includes (i) 25,282 ordinary shares; and (ii) 8,546 RSUs that
vest within 60 days of the date of the table. Does not include 30,640 RSUs that do not vest within 60 days of the date of the table. As
a result of this agreement, and due to the fact that there are no other shareholders holding more than 50% of the voting equity in Priortech
Ltd., Messrs. Rafi Amit, Yotam Stern, David Kishon, and Hanoch Feldstien and the estates of Itzhak Krell (deceased) (through Eyal Krell,
Israel Shai Krell and Galit Drori Krell), Zehava Wineberg (deceased) and Haim Langmas (deceased), may be deemed to control Priortech.
Mr. Amit disclaims beneficial ownership of the shares held by Priortech. See Item 7. Major Shareholders and Related Party Transactions.
A. Major Shareholders – Beneficial Ownership” below. | |
|
(2)
|
Does not include 26,774 RSUs that do not vest within 60 days of
the date of the table. | |
|
(3)
|
Includes (i) 1,009 ordinary shares; and (ii) fully vested options
to purchase 4,056 ordinary shares, at an exercise price of $63.51– 81.28 per share, which expire by September 2031.
Does not include (i) options to purchase 1,095 ordinary shares which fully vest at the 2026 AGM, at an exercise price of $59.76 per share,
which expire in April 2032 and (ii) 628 RSUs that do not vest within 60 days of the date of the table. |
58
|
(4)
|
Mr. Stern does not directly own any of our ordinary shares. As
a result of this agreement, and due to the fact that there are no other shareholders holding more than 50% of the voting equity in Priortech
Ltd., Messrs. Rafi Amit, Yotam Stern, David Kishon, and Hanoch Feldstien and the estates of Itzhak Krell (deceased) (through Eyal Krell,
Israel Shai Krell and Galit Drori Krell), Zehava Wineberg (deceased) and Haim Langmas (deceased), may be deemed to control Priortech.
Mr. Stern disclaims beneficial ownership of the shares held by Priortech. See Item 7. Major Shareholders and Related Party Transactions.
A. Major Shareholders – Beneficial Ownership” below. | |
|
(5)
|
Mr. Huang does not directly own any of our ordinary shares. Based
on information we received from Chroma, Mr. Huang is considered a controlling person with regard to Chroma, accordingly Mr. Huang may
be deemed to beneficially own the 7,817,440 shares of the Company held by Chroma. Mr. Huang disclaims beneficial ownership of such shares.
See Item 7. Major Shareholders and Related Party Transactions. A. Major Shareholders – Beneficial Ownership” below.
| |
|
(6)
|
Includes (i) 1,437 ordinary shares; and (ii) fully vested options
to purchase 5,188 ordinary shares, at an exercise price of $22.63-81.28 per share, which expire by September 2031. Does not include (i)
options to purchase 1,095 ordinary shares which fully vest at the 2026 AGM, at an exercise price of $59.76 per share, which expire in
April, 2032; and (ii) 628 RSUs that do not vest within 60 days of the date of the table. | |
|
(7)
|
Includes (i) 5,852 ordinary shares; and (ii) fully vested options
to purchase 6,614 ordinary shares, at an exercise price of $22.63-81.28 per share, which expire by September, 2031 . Does not include
(i) options to purchase 1,095 ordinary shares which fully vest at the 2026 AGM, at an exercise price of $59.76 per share, which expire
in April, 2032; and (ii) 628 RSUs that do not vest within 60 days of the date of the table. | |
|
(8)
|
Includes (i) 4,038 ordinary shares; and (ii) 3,894 RSUs that vest
within 60 days of the date of the table. Does not include 14,108 RSUs that do not vest within 60 days of the date of the table.
| |
|
(9)
|
Includes (i) 3,085 ordinary shares; and (ii) 4,836 RSUs
that vest within 60 days of the date of the table. Does not include 17,674 RSUs that do not vest within 60 days of the date of the table.
| |
|
(10)
|
Includes (i) 3,365 ordinary shares; and (ii) 1,200 RSUs that vest
within 60 days of the date of the table. Does not include 5,081 RSUs that do not vest within 60 days of the date of the table. |
The options were granted pursuant to our then in effect equity
plan and in accordance with the grant terms included therein. The RSUs were granted pursuant to our Share Incentive Plan (and Sub-Plan
for Grantees Subject to Israeli Taxation) (the “2018 Plan”).
Share Incentive Plans
General
We currently maintain one active share incentive plan which is
the 2018 Plan.
The 2018 Plan was adopted by the Company in April 2018 and replaced
the Company’s previous equity plans - the 2014 Share Option Plan and the 2007 Restricted Share Unit Plan.
The purpose and intent of the 2018 Plan is to advance, pursuant
to the Compensation Plan, the interests of the Company by affording to selected employees, officers, directors, consultants and other
services providers of the Company and its affiliates an opportunity to acquire or increase its proprietary interest in the Company by
the grant in their favor of options, restricted shares and RSUs (the “Awards”)
thus providing them with an additional incentive to become, and to remain, employed and/or engaged by the Company, encouraging their sense
of proprietorship and stimulating their active interest in the success of the Company.
59
2018 Plan
General. As of December 31,
2025, 671,306 Awards were outstanding under the 2018 Plan.
Administration of the 2018 Plan.
Our 2018 Plan is administered by our Board. Under the 2018 Plan, Awards may be granted to our officers, directors, employees or consultants
and those of our subsidiaries. The exercise price of options under the 2018 Plan is determined by our Board, and is generally set as the
fair market value on the date of grant. The purchase price for each RSU and restricted share is not more than the underlying share’s
nominal value, unless otherwise determined by the Board. The vesting schedule of the Awards is also determined by the Board of Directors;
generally the options vest over a four-year period, with 25% of the options vest on each anniversary of the vesting start date. The vesting
of Awards may also be subject to performance conditions, which shall be either in addition to or instead of the aforementioned time-based
vesting. Each Award granted under the 2018 Plan is usually exercisable between its vesting time and up to seven years from the date of
grant, subject to certain early expiration provisions, such as in the event of termination of employment or engagement with the Company.
Future Awards to be granted by us to our employees, officers, directors
and consultants, or those of our affiliates, will only be made pursuant to the 2018 Plan.
E. Disclosure
of a Registrant’s Action to Recover Erroneously Awarded Compensation.
Not applicable.
Item 7.
Major Shareholders and Related Party Transactions.
A. Major
Shareholders.
The following table provides information regarding the beneficial ownership of our
ordinary shares as of March 4, 2026, held by each person or entity who beneficially owns more than 5% of our outstanding ordinary shares.
None of these shareholders has different voting rights than any of the Company’s other shareholders.
Beneficial ownership is determined in accordance with the rules of the SEC and generally
means sole or shared power to vote or direct the voting or to dispose or direct the disposition of any ordinary shares. Except as indicated
by footnote, the person named in the table below has sole voting and investment power with respect to all ordinary shares shown as beneficially
owned by it. The percentage of beneficial ownership is based upon 46,548,607ordinary shares outstanding as of March 5, 2026.
|
Number of Ordinary Shares* |
Percentage |
|||||||
|
Priortech Ltd. (1)
|
9,617,787 |
20.66 |
% | |||||
|
Chroma ATE Inc.
(2) |
7,817,440 |
16.79 |
% | |||||
|
Wastach Advisors LP (3)
|
3,167,997 |
6.80 |
% | |||||
|
Harel Insurance Investments & Financial Services Ltd. (4)
|
2,410,045 |
5.3 |
% | |||||
|
Migdal Insurance & Financial Holdings Ltd (5)
|
2,332,037 |
5.09 |
% | |||||
60
|
(1)
|
29.26% of the voting equity in Priortech Ltd. is subject to a
voting agreement. As a result of this agreement, and due to the fact that there are no other shareholders holding more than 50% of the
voting equity in Priortech Ltd., Messrs. Rafi Amit, Yotam Stern, David Kishon, and Hanoch Feldstien and the estates of Itzhak Krell (deceased)
(through Eyal Krell, Israel Shai Krell and Galit Drori Krell), Zehava Wineberg (deceased) and Haim Langmas (deceased), may be deemed to
control Priortech Ltd. The voting agreement does not provide for different voting rights for Priortech than the voting rights of other
holders of our ordinary shares. Priortech’s principal executive offices are located at South Industrial Zone, Migdal Ha’Emek
23150, Israel.
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(2)
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Based on the Schedule 13G filed by Chroma ATE Inc. on August 6,
2019, which presented ownership as of June 19, 2019. The 7,817,440 Ordinary Shares reported under such Schedule 13G by Chroma are beneficially
owned by Chroma. Chroma’s principal address is No. 66, Hwa Ya 1 Rd., Guishan District, Taoyuan City 333, Taiwan.
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(3)
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Based on the Schedule 13G/A filed by Wasatch Advisors LP (“Wasatch”)
on February 10, 2026, which presented ownership as of December 31, 2025. The 3,167,997 Ordinary Shares reported under such Schedule 13G/A
by Wasatch are beneficially owned by Wasatch. The address of Wasatch provided in its Schedule 13G/A is 505 Wakara Way, 3rd Floor,
Salt Lake City, 84108, United States.
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(4)
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Based on the Schedule 13G filed by Harel Insurance Investments
& Financial Services Ltd. (“Harel”) on December 23, 2025, which presented ownership as of December 19, 2025. Of the 2,410,045
Ordinary Shares reported as beneficially owned, (i) 2,350,934 Ordinary Shares are held for members of the public through, among others,
provident funds and/or mutual funds and/or pension funds and/or insurance policies and/or exchange traded funds, which are managed by
subsidiaries of Harel, each of which subsidiaries operates under independent management and makes independent voting and investment decisions,
(ii) 40,184 Ordinary Shares are held by third-party client accounts managed by a subsidiary of Harel as portfolio managers, which subsidiary
operates under independent management and makes independent investment decisions and has no voting power in the securities held in such
client accounts, and (iii) 18,927 Ordinary Shares are beneficially held for Harel’s own account. The Schedule 13G provides that
Harel shall not be construed as admitting that it is the beneficial owner of more than 18,927 Ordinary Shares. The address of Harel
provided in its Schedule 13G is 3 Aba Hillel Street, Ramat Gan 52118, Israel.
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(5)
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Based on the Schedule 13G filed by Migdal Insurance & Financial
Holdings Ltd. (“Migdal”) on February 17, 2026, which presented ownership as of December 31, 2025. Of the 2,332,037 Ordinary
Shares reported as beneficially owned, (i) 1,891,465 ordinary shares beneficially owned by Migdal Sal Domestic Equities; and (ii) 440,572
ordinary shares beneficially owned by Migdal Mutual Funds Ltd. The Schedule 13G provides that Harel shall not be construed as admitting
that it is the beneficial owner of any of the Ordinary Shares covered by the Schedule 13G. The address of Migdal provided in its
Schedule 13G is 4 Efal Street; P.O. Box 3063; Petach Tikva 49512, Israel.
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B. Related
Party Transactions.
Agreements with Priortech and Chroma
For a description of definitive agreements signed between the Company,
Priortech and Chroma, see Item 4.A. – “History and Development of the
Company”.
Registration Rights Agreement with Priortech and Chroma
On March 1, 2004, we entered into a registration rights agreement
providing for us to register with the SEC certain of our ordinary shares held by Priortech. This registration rights agreement may be
used in connection with future offerings of our ordinary shares, and includes, among others, the following terms: (a) Priortech is
entitled to make up to three demands that we register our ordinary shares held by Priortech, subject to delay due to market conditions;
(b) Priortech will be entitled to participate and sell our ordinary shares in any future registration statements initiated by us,
subject to delay due to market conditions; (c) we will indemnify Priortech in connection with any liabilities incurred in connection
with such registration statements due to any misstatements or omissions other than information provided by Priortech, and Priortech will
indemnify us in connection with any liabilities incurred in connection with such registration statements due to any misstatements or omissions
in written statements by Priortech made for the purpose of their inclusion in such registration statements; and (d) we will pay all
expenses related to registrations which we have initiated, except for certain underwriting discounts or commissions or legal fees, and
Priortech will pay all expenses related to a registration initiated at its demand in which we are not participating.
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On December 30, 2004, the Registration Rights Agreement with Priortech
was amended. The amendment concerns primarily the grant of unlimited shelf registration rights there under to Priortech with respect to
its holdings in us, and the assignability of those shelf registration rights to its transferees.
In the framework of the Chroma Transaction, the Company, Chroma
and Priortech entered into a Second Amended and Restated Registration Rights Agreement which, following the Chroma Closing Date, replaced
the previous Registration Rights Agreement and grants Chroma registration rights with respect to our Ordinary Shares held by it, which
are similar to those of Priortech. For a description of the definitive agreements signed under the Chroma Transaction, see Item 4.A. –
“History and Development of the Company”.
Employment Agreement with Mr. Rafi Amit
For a description of the employment agreement with our Chief Executive
Officer, Mr. Rafi Amit, see Item 6.B - “Compensation – Employment Agreements”
above.
Employment Agreement with Mr. Lior Aviram
For a description
of the employment agreement with our Executive Chairman of the Board, Mr. Lior Aviram, see Item 6.B - “Compensation
– Employment Agreements” above.
C. Interests
of Experts and Counsel.
Not applicable.
Item 8.
Financial Information.
A. Consolidated
Statements and Other Financial Information.
Please see the consolidated financial statements listed in Item 18 for audited
consolidated financial statements prepared in accordance with this Item.
Legal Proceedings
We are not a party to any material legal proceedings, and there
are no material proceeding in which any director, any member of senior management, or any of our affiliates is either a party adverse
to us or our subsidiaries or has a material interest adverse to us or our subsidiaries.
Dividends
See Item 10.B - “Memorandum
and Articles - Dividend and Liquidation Rights” below for more information regarding our dividend policy.
B. Significant
Changes.
None.
Item 9. The
Offer and Listing.
A. Offer
and Listing Details.
The Company’s ordinary shares are traded on the Nasdaq Global
Market and on TASE under the symbol “CAMT”. We are subject to Israeli securities legislation which applies to companies
that are traded in dual listing.
B. Plan
of distribution.
Not applicable.
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C. Markets.
See Item 9.A above.
D. Selling
Shareholders.
Not applicable.
E. Dilution.
Not applicable.
F. Expenses
of the Issue.
Not applicable.
Item 10.
Additional Information.
A. Share
Capital
Not applicable.
B. Memorandum
and Articles
Copies of our Amended and Restated Articles and our Amended and
Restated Memorandum of Association, as in effect as of the date of this Annual Report, are attached as Exhibits 1.1 and 1.2, respectively,
to this Annual Report. The information called for by this Item is set forth in Exhibit 2.1 to this Annual Report and is incorporated by
reference into this Annual Report.
C. Material
Contracts.
On September 11, 2025, the Company entered into a purchase agreement
(the “Purchase Agreement”) with the representatives of the initial purchasers named therein (collectively, the “Initial
Purchasers”), pursuant to which the Company agreed to sell $425,000,000 aggregate principal amount of its 0.00% convertible senior
notes due 2030 (the “Initial Convertible Notes”) in a private placement pursuant to Rule 144A under the Securities
Act. The Company also agreed to grant a 13-day option to the Initial Purchasers to purchase all or part of an additional $75,000,000 aggregate
principal amount of its 0.00% convertible senior notes due 2030 (the “Additional Notes”), which has been exercised in full.
The Purchase Agreement includes customary representations, warranties and covenants. Under the terms of the Purchase Agreement, the Company
has agreed to indemnify the Initial Purchasers against certain liabilities and contribute to payments which the Initial Purchasers may
be required to make in respect of any such liabilities.
On September 16, 2025, the Company closed its offering of $425,000,000
aggregate principal amount of 0.00% Convertible Senior Notes due 2030 in a private offering to qualified institutional buyers pursuant
to Rule 144A under the Securities Act, including $75,000,000 of Additional Notes pursuant to the Initial Purchasers’
exercise in full of their option to purchase Additional Notes, resulting in a total aggregate principal amount of $500,000,000 (“2030
Convertible Notes”).
The sale of the 2030 Convertible Notes closed on September 16,
2025. The 2030 Convertible Notes were issued pursuant to an indenture, dated September 16, 2025 (the “Indenture”), between
the Company and U.S. Bank Trust Company, National Association, as trustee. The Notes will not bear regular interest, and the principal
amount of the Notes will not accrete.
The 2030 Convertible Notes are convertible based upon an initial
conversion rate of 9.1455 of the Company’s ordinary shares, nominal (par) value of NIS 0.01 per share, per $1,000 principal amount
of the Notes (equivalent to a conversion price of approximately $109.34 per ordinary share). The conversion rate will be subject to adjustment
upon the occurrence of certain specified events. In addition, in connection with a make-whole fundamental change (as defined in the Indenture),
or following the Company’s delivery of a notice of redemption, the Company will, in certain circumstances, increase the conversion
rate for a holder who elects to convert its Notes in connection with such a corporate event or redemption, as the case may be.
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The 2030 Convertible Notes will mature on September 15, 2030, unless
earlier repurchased, redeemed or converted. Prior to the close of business on the business day immediately preceding June 15, 2030, a
holder may convert its Notes only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter
ending on December 31, 2025 (and only during such calendar quarter), if the last reported sale price of the Company’s ordinary shares
for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the
last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable
trading day; (2) during the five business day period after any 10 consecutive trading day period (the “measurement
period”) in which the trading price per $1,000 principal amount of 2030 Convertible Notes for each trading day of the measurement
period was less than 98% of the product of the last reported sale price of the ordinary shares and the conversion rate on each such trading
day; (3) if the Company calls the 2030 Convertible Notes for redemption in certain circumstances, at any time prior to the close of business
on the second scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events.
On or after June 15, 2030, until the close of business on the second scheduled trading day immediately preceding the maturity date, a
holder may convert its 2030 Convertible Notes at any time, regardless of the foregoing circumstances. Upon conversion, the Company will
pay or deliver, as the case may be, cash, ordinary shares or a combination of cash and ordinary shares, at the Company’s election.
The Company may redeem for cash (1) all of the 2030 Convertible
Notes at any time on or prior to the 40th scheduled trading day immediately preceding the maturity date if certain tax-related events
occur and (2) all or any portion (subject to certain limitations) of the 2030 Convertible Notes, at any time, and from time to time, on
or after September 20, 2028, and on or before the 40th scheduled trading day immediately before the maturity date, at its option at any
time and from time to time, if the last reported sale price per ordinary share has been at least 130% of the conversion price for a specified
period of time and certain other conditions are satisfied. For any 2030 Convertible Notes the Company redeems, the Company will pay a
redemption price equal to the principal amount of the 2030 Convertible Notes redeemed (plus accrued and unpaid special interest, if any
is payable at the time). Upon the occurrence of a fundamental change (as defined in the Indenture), holders may require the Company to
repurchase for cash all or any portion of their 2030 Convertible Notes at a fundamental change repurchase price equal to 100% of the principal
amount of the 2030 Convertible Notes to be repurchased, plus accrued and unpaid special interest, if any is payable at that time.
The Indenture contains customary terms and covenants, including
that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25% in aggregate principal
amount of the 2030 Convertible Notes then outstanding may declare the entire principal amount of all the 2030 Convertible Notes plus accrued
and unpaid special interest, if any, to be immediately due and payable.
The 2030 Convertible Notes are the Company’s senior unsecured
obligations and rank senior in right of payment to any of the Company’s unsecured indebtedness that is expressly subordinated in
right of payment to the 2030 Convertible Notes; equal in right of payment to any of the Company’s unsecured indebtedness that is
not so subordinated, including the Company’s 0% 2026 Convertible Notes (the “Existing Notes”);
effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing
such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s
subsidiaries. A copy of the Indenture and the form of the 2030 Convertible Notes are attached hereto as Exhibits 4.1 and 4.2, respectively,
and are incorporated by reference herein. The foregoing summary does not purport to be complete and is qualified in its entirety by reference
to the Indenture and the form of the 2030 Convertible Notes.
The net proceeds from the sale of the Notes were approximately
$486.5 million, after deducting the Initial Purchasers’ discounts and the estimated offering expenses payable by the Company. The
Company used approximately $267.0 million of the net proceeds to repurchase approximately $167.1 million aggregate principal amount of
the 2026 Convertible Notes on terms negotiated with each holder contemporaneously with the pricing of the Notes pursuant to one or more
separate and individually negotiated transactions entered with one or more holders of the 2026 Convertible Notes. The Company intends
to use the remainder of the net proceeds for general corporate purposes, including, but not limited to potential acquisitions, working
capital, capital expenditures, investments, and research and development.
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D. Exchange
Controls
There are currently no Israeli currency control
restrictions on payments of dividends or other distributions with respect to our ordinary shares or the proceeds from the sale of the
shares, except for the obligation of Israeli residents to file reports with the Bank of Israel regarding certain transactions. However,
legislation remains in effect pursuant to which currency controls can be imposed by administrative action at any time.
The ownership or voting of our ordinary shares
by non-residents of Israel, except with respect to citizens of countries which are in a state of war with Israel, is not restricted in
any way by our memorandum of association or articles of association or by the laws of the State of Israel.
E. Taxation
U.S. FEDERAL INCOME TAX CONSIDERATIONS
Subject to the limitations described herein, this discussion summarizes
certain U.S. federal income tax consequences of the purchase, ownership and disposition of our ordinary shares to a U.S. holder. A U.S.
holder is a holder of our ordinary shares who is:
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an individual citizen or resident of the United States for U.S. federal income tax purposes; |
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a corporation (or another entity taxable as a corporation for U.S. federal income tax purposes) created or organized under the laws
of the United States, any political subdivision thereof, or the District of Columbia; |
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an estate, the income of which may be included in gross income for U.S. federal income tax purposes regardless of its source; or
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a trust (i) if, in general, a U.S. court is able to exercise primary supervision over its administration and one or more U.S.
persons have the authority to control all of its substantial decisions, or (ii) that has in effect a valid election under applicable
U.S. Treasury Regulations to be treated as a U.S. person. |
Unless otherwise specifically indicated, this discussion does not
consider the U.S. tax consequences to a person that is not a U.S. holder (a “non-U.S. holder”)
or is a partnership and considers only U.S. holders that will own ordinary shares as capital assets (generally, for investment).
This discussion is based on current provisions of the Internal
Revenue Code of 1986, as amended (the “Code”), current and proposed Treasury Regulations
promulgated under the Code and administrative and judicial interpretations of the Code, all as currently in effect and all of which are
subject to change, possibly with retroactive effect. This discussion does not address all aspects of U.S. federal income taxation that
may be relevant to any particular U.S. holder based on the U.S. holder’s particular circumstances. In particular, this discussion
does not address the U.S. federal income tax consequences to U.S. holders who are broker‑dealers, banks, insurance companies, tax-exempt
organizations, or governmental organizations, tax-qualified retirement plans, individual retirement accounts and other tax-deferred accounts,
financial institutions, grantor trusts, S corporations, partnerships or entities or arrangements treated as partnerships for U.S. federal
income tax purposes (and investors therein), real estate investment trusts, regulated investment companies, certain former citizens, U.S.
expatriates or former long-term residents of the United States, or U.S. holders who own, directly, indirectly or constructively, 10% or
more of our shares (by vote or value), U.S. holders who have elected mark-to-market accounting, U.S. holders holding the ordinary shares
as part of a hedging, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated transaction.
U.S. holders that received ordinary shares as a result of exercising employee stock options or otherwise as compensation, U.S. holders
whose functional currency is not the U.S. Dollar, persons deemed to sell our common stock under the constructive sale provisions of the
Code, persons holding our common shares in connection with a trade or business conducted outside of the United States and U.S. holders
who are subject to the alternative minimum tax. This discussion does not address the U.S. federal income tax consequences of holding
or converting the Convertible Notes.
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If a partnership (or any other entity or arrangement treated as
a partnership for U.S. federal income tax purposes) holds our ordinary shares, the tax treatment of the partnership and a partner in such
partnership will generally depend on the status of the partner the activities of the partnership and certain determinations made at the
partner level. Such a partner or partnership should consult its tax advisor as to its tax consequences.
You are advised to consult your tax advisor
with respect to the specific U.S. federal, state, local and foreign income tax consequences of purchasing, holding or disposing of our
ordinary shares.
Taxation of Distributions on the Ordinary Shares
The discussion below is subject to the discussion entitled “Tax
Consequences if We Are a Passive Foreign Investment Company”.
The amount of a distribution with respect to the ordinary shares
will equal the amount of cash and the fair market value of any property distributed and will also include the amount of any taxes withheld
from such distribution. A distribution paid by us with respect to the ordinary shares to a U.S. holder will generally be treated as dividend
income to the extent that the distribution does not exceed our current and accumulated earnings and profits, as determined for U.S. federal
income tax purposes. Dividends that are received by U.S. holders that are individuals, estates or trusts will be taxed at the rate applicable
to long-term capital gains, provided that such dividends meet the requirements of “qualified dividend income.” For this purpose,
qualified dividend income generally includes dividends paid by a non-U.S. corporation if certain holding period and other requirements
are met and either (a) the stock of the non-U.S. corporation with respect to which the dividends are paid is “readily tradable”
on an established securities market in the U.S. (e.g., the Nasdaq Global Market) or (b) the non-U.S. corporation is eligible for benefits
of a comprehensive income tax treaty with the U.S. which includes an information exchange program and is determined to be satisfactory
by the U.S. Secretary of the Treasury. The IRS has determined that the U.S.-Israel income tax treaty is satisfactory for this purpose.
Dividends that fail to meet such requirements are taxed at the applicable ordinary income rates. No dividend received by a U.S. holder
will be a qualified dividend (1) if the U.S. holder held the ordinary share with respect to which the dividend was paid for less
than 61 days during the 121-day period beginning on the date that is 60 days before the ex-dividend date with respect to such
dividend, excluding for this purpose, under the rules of Code Section 246(c), any period during which the U.S. holder has an option
to sell, is under a contractual obligation to sell, has made and not closed a short sale of, is the grantor of a deep-in-the-money or
otherwise nonqualified option to buy, or has otherwise diminished its risk of loss by holding other positions with respect to, such ordinary
share (or substantially identical securities); or (2) to the extent that the U.S. holder is under an obligation (pursuant to a short
sale or otherwise) to make related payments with respect to positions in property substantially similar or related to the ordinary share
with respect to which the dividend is paid. If we were to be a “passive foreign investment company” (as such term is defined
in the Code), or PFIC, for any taxable year, dividends paid on our ordinary shares in such year or in the following taxable year would
not be qualified dividends. See discussion below regarding our PFIC status at “Tax
Consequences if We Are a Passive Foreign Investment Company”. In addition, a non-corporate U.S. holder will be able to take
a qualified dividend into account in determining its deductible investment interest (which is generally limited to its net investment
income) only if it elects to do so; in such case the dividend will be taxed at the applicable ordinary income rates.
The amount of any distribution which exceeds the amount treated
as a dividend will be treated first as a non-taxable return of capital, reducing the U.S. holder’s tax basis in its ordinary shares
to the extent thereof, and then, to the extent such excess amount exceeds such holder’s tax basis in such ordinary shares, as capital
gain from the deemed disposition of the ordinary shares. Corporate holders will not be allowed a deduction for dividends received in respect
of the ordinary shares.
Distributions paid by us in NIS generally will be included in the
income of U.S. holders at the dollar amount of the distribution (including any taxes withheld therefrom), based upon the exchange rate
in effect on the date the distribution is included in income, regardless of whether the payment is, in fact, converted into U.S. dollars.
U.S. holders will have a tax basis in the NIS for U.S. federal income tax purposes equal to that dollar value. Any subsequent gain or
loss in respect of the NIS arising from exchange rate fluctuations will generally be taxable as U.S. source ordinary income or loss.
66
Subject to the limitations set forth in the Code and the Treasury
Regulations thereunder, U.S. holders may elect to claim a foreign tax credit against their U.S. federal income tax liability for non-U.S.
income taxes withheld from dividends received in respect of the ordinary shares. The conditions and limitations on claiming a foreign
tax credit include, among others, computation rules under which foreign tax credits allowable with respect to specific classes of income
cannot exceed the U.S. federal income taxes otherwise payable with respect to each such class of income. In this regard, dividends paid
by us generally will be foreign source “passive income” for U.S. foreign tax credit purposes. U.S. holders that do not elect
to claim a foreign tax credit may instead claim a deduction for the non-U.S. income taxes withheld. The rules relating to foreign tax
credits are complex, and you should consult your tax advisor to determine whether and to what extent you would be entitled to this credit
or deduction. A U.S. holder will be denied a foreign tax credit for non-U.S. income taxes withheld from a dividend received on the ordinary
shares (i) if the U.S. holder has not held the ordinary shares for at least 16 days of the 31-day period beginning on the date
which is 15 days before the ex-dividend date with respect to such dividend or (ii) to the extent the U.S. holder is under an
obligation to make related payments with respect to positions in substantially similar or related property. Any days during which a U.S.
holder has substantially diminished its risk of loss on the ordinary shares are not counted toward meeting the required 16-day holding
period.
Taxation of the Disposition of Ordinary Shares
Subject to the discussion below under “Tax
Consequences if We Are a Passive Foreign Investment Company” upon the sale, exchange or other disposition of our ordinary
shares (other than in certain non-recognition transactions), a U.S. holder will recognize capital gain or loss in an amount equal to the
difference between the amount realized on the disposition and the U.S. holder’s tax basis in such ordinary shares. The gain or loss
recognized on the disposition of such ordinary shares will be long-term capital gain or loss if the U.S. holder held the ordinary shares
for more than one year at the time of the disposition. Gain or loss recognized by a U.S. holder on a sale, exchange or other disposition
of ordinary shares generally will be treated as U.S. source income or loss for U.S. foreign tax credit purposes.
A U.S. holder that uses the cash method of accounting calculates
the dollar value of the proceeds received on the sale as of the date that the sale settles. However, a U.S. holder that uses the accrual
method of accounting is required to calculate the value of the proceeds of the sale as of the trade date and may therefore realize foreign
currency gain or loss. A U.S. holder may avoid realizing foreign currency gain or loss by electing to use the settlement date to determine
the proceeds of sale for purposes of calculating the foreign currency gain or loss. In addition, a U.S. holder that receives foreign currency
upon disposition of ordinary shares and converts the foreign currency into U.S. Dollars after the settlement date or trade date (whichever
date the U.S. holder is required to use to calculate the value of the proceeds of sale) may have foreign exchange gain or loss based on
any appreciation or depreciation in the value of the foreign currency against the dollar, which will generally be U.S. source ordinary
income or loss.
Net Investment Income Tax
Non-corporate U.S. holders may be subject to an additional 3.8%
surtax on all or a portion of their “net investment income”, which may include dividends on, or capital gains recognized from
the disposition of, our ordinary shares. U.S. holders are urged to consult their own tax advisors regarding the implications of the additional
net investment income tax on their investment in our ordinary shares.
Tax Consequences if We Are a Passive Foreign Investment Company
For U.S. federal income tax purposes, we will be a passive foreign
investment company, or PFIC, if, after applying certain look through rules, either (1) 75% or more of our gross income in a taxable
year is passive income, or (2) 50% or more of the value (generally determined on the basis of a quarterly average) of our assets
in a taxable year consist of assets that produce or are held for the production of passive income. If we own (directly or indirectly)
at least 25% by value of the stock of another corporation, we will be treated for purposes of the foregoing tests as owning our proportionate
share of that other corporation’s assets and as directly earning our proportionate share of that other corporation’s income.
Based on an analysis of our current assets, activities, market capitalization and income and expectations about our future assets, activities,
market capitalization and income, we believe that we were not a PFIC for our taxable year ended December 31, 2025. We currently expect
that we will not be a PFIC in 2025 or in the foreseeable future. However, PFIC status is determined as of the end of the taxable year
and is dependent on a number of factors, including the relative value of our passive assets and our non‑passive assets, our market
capitalization and the amount and type of our gross income. There can be no assurance that we will not become a PFIC for the current taxable
year ending December 31, 2026 or in a future taxable year. No assurance can be given that the IRS or a court of law will accept our
position that we are not a PFIC, and there is a risk that the IRS or a court of law could determine that we are a PFIC.
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Under attribution rules, if we were a PFIC for any taxable year
and had any subsidiaries or other entities in which we held a direct or indirect equity interest that were also PFICs (“Lower-tier
PFICs”), U.S. Holders would be deemed to own their proportionate share of any such Lower-tier PFIC and would be subject to
U.S. federal income tax according to the rules described below generally as if the U.S. Holders held such shares or equity interests directly.
If we are a PFIC, a U.S. holder may be subject to one of the following
three alternative taxing regimes, assuming the applicable requirements are satisfied:
(a) The
“QEF” regime applies if the U.S. holder elects to treat us as a “qualified electing fund” (“QEF”)
for the first taxable year in which the U.S. holder owns our ordinary shares or in which we are a PFIC, whichever is later, and if we
comply with certain reporting requirements. A U.S. Holder must make the QEF election by attaching a properly completed IRS Form
8621 (for us and any Lower-tier PFIC) to the U.S. Holder’s timely filed U.S. federal income tax return.
If the QEF regime applies, then, for each taxable year that we
are a PFIC, such U.S. holder will include in its gross income a proportionate share of our ordinary earnings (which is taxed as ordinary
income) and net capital gain (which is taxed as long-term capital gain), subject to a separate election to defer payment of taxes, which
deferral is subject to an interest charge. These amounts would be included in income by an electing U.S. holder, whether or not such amounts
are actually distributed to the U.S. holder. A U.S. holder’s basis in our ordinary shares for which a QEF election has been made
would be increased to reflect the amount of any taxed but undistributed income. Generally, a QEF election allows an electing U.S. holder
to treat any gain realized on the disposition of its ordinary shares as capital gain. Once made, the QEF election applies to all subsequent
taxable years of the U.S. holder in which it holds our ordinary shares and for which we are a PFIC and can be revoked only with the consent
of the IRS.
Special rules apply if a QEF election is made after the first taxable
year in which a U.S. holder holds our ordinary shares and we are a PFIC. In such an event, the U.S. holder would be treated as if it had
sold our ordinary shares for their fair market value on the last day of the taxable year immediately preceding the taxable year for which
the QEF election is made and will recognize gain (but not loss) on such deemed sale in accordance with the excess distribution regime
described below. Under certain circumstances, a U.S. holder may be eligible to make a retroactive QEF election with respect to a taxable
year in the U.S. holder’s holding period if such U.S. holder (1)(a) reasonably believed that we were not a PFIC as of the QEF election
due date for the prior taxable year, and (b) filed a protective statement in which the U.S. holder described the basis for its reasonable
belief and extended the statute of limitation on the assessment of PFIC related taxes for all taxable years to which the protective statement
applies; (2) obtains IRS consent; or (3) is a “qualified shareholder” within the meaning of the Treasury Regulations.
(b)
A second regime, the “mark-to-market” regime, may be elected as an alternative to making a QEF election so long as our ordinary
shares are “marketable stock” (e.g., “regularly traded” on a “qualified exchange” such as the Nasdaq
Global Market). Pursuant to this regime, in any taxable year that we are a PFIC, an electing U.S. holder’s ordinary shares are marked-to-market
each taxable year and the U.S. holder recognizes as ordinary income or loss an amount equal to the difference as of the close of the taxable
year between the fair market value of our ordinary shares and the U.S. holder’s adjusted tax basis in our ordinary shares. Losses
are allowed only to the extent of net mark-to-market gain previously included by the U.S. holder under the election for prior taxable
years. An electing U.S. holder’s adjusted basis in our ordinary shares is increased by income recognized under the mark-to-market
election and decreased by the deductions allowed under the election. Under the mark-to-market election, in a taxable year that we are
a PFIC, gain on the sale of our ordinary shares is treated as ordinary income, and loss on the sale of our ordinary shares, to the extent
the amount of loss does not exceed the net mark-to-market gain previously included, is treated as ordinary loss and any remaining loss
from an actual disposition of ordinary shares generally would be capital loss. The mark-to-market election applies to the taxable year
for which the election is made and all later taxable years, unless the ordinary shares cease to be marketable stock or the IRS consents
to the revocation of the election. There can be no assurances that there will be sufficient trading volume with respect to the ordinary
shares in order for the ordinary shares to be considered “regularly traded” or that our ordinary shares will continue to trade
on the Nasdaq Global Select Market. Accordingly, there are no assurances that the ordinary shares will be marketable stock for these purposes
A mark-to-market election generally is unlikely to be available with respect to any Lower-tier PFIC.
68
If the mark-to-market election is made after the first taxable
year in which a U.S. holder holds our ordinary shares and we are a PFIC, then special rules would apply.
(c) A
U.S. holder making neither the QEF election nor the mark-to-market election is subject to the “excess distribution” regime.
Under this regime, “excess distributions” are subject to special tax rules. An excess distribution includes (1) a distribution
with respect to our ordinary shares that is greater than 125% of the average distributions received by the U.S. holder from us over the
shorter of either the preceding three taxable years or such U.S. holder’s holding period for our ordinary shares prior to the distribution
year and (2) gain from the disposition of our ordinary shares.
Excess distributions must be allocated ratably to each day that
a U.S. holder has held our ordinary shares. A U.S. holder must include amounts allocated to the current taxable year and any taxable year
prior to the first taxable year in which we were a PFIC, in its gross income as ordinary income for that year. All amounts allocated to
other taxable years of the U.S. holder would be taxed at the highest tax rate for each such year applicable to ordinary income and the
U.S. holder also would be liable for interest on the deferred tax liability for each such year calculated as if such liability had been
due with respect to each such year. The portions of gains and distributions that are not characterized as “excess distributions”
are subject to tax in the current taxable year as ordinary income under the normal tax rules of the Code. Similar treatment would apply
to shares of any Lower-tier PFICs that are generally treated for this purpose as if held by the U.S. holder.
In addition, special reporting requirements may apply to U.S. holders
with respect to our ordinary shares, if we were to be treated as a PFIC, and a failure to comply with such requirements may subject a
U.S. holder to substantial penalties or other adverse tax consequences. We will notify U.S. holders in the event we conclude that we will
be treated as a PFIC for any taxable year to enable U.S. holders to consider whether or not to elect to treat us as a QEF for U.S. federal
income tax purposes, to “mark-to-market” the ordinary shares, or to become subject to the “excess distribution”
regime, and we expect that in such event we will provide U.S. holders with the information needed to make a QEF election with respect
to us or any Lower-tier PFIC.
U.S. holders are urged to consult their tax
advisors regarding the application of the PFIC rules, including eligibility for and the manner and advisability of making, the QEF election
or the mark-to-market election.
Non-U.S. Holders of Ordinary Shares
Except as described below, a non-U.S. holder of ordinary shares
will not be subject to U.S. federal income or withholding tax on the receipt of dividends on, and the proceeds from the disposition of,
an ordinary share, unless, in the case of U.S. federal income taxes, that item is effectively connected with the conduct by the non-U.S.
holder of a trade or business in the United States and, in the case of a resident of a country which has an income tax treaty with the
United States, that item is attributable to a permanent establishment in the United States or, in the case of an individual, a fixed place
of business in the United States. In addition, gain recognized by an individual non-U.S. holder on the disposition of ordinary shares
will be subject to income tax in the United States if the non-U.S. holder is present in the United States for 183 days or more in
the taxable year of the sale and certain other conditions are met.
Information Reporting and Backup Withholding
A U.S. holder (except for certain exempt recipients, such as corporations)
generally is subject to information reporting and may be subject to backup withholding with respect to dividends paid on, and the receipt
of the proceeds from the disposition of, our ordinary shares. A U.S. holder of our ordinary shares who does not provide a correct taxpayer
identification number may be subject to penalties imposed by the IRS. Backup withholding will generally not apply if a U.S. holder provides
a correct taxpayer identification number, certifies that such holder is not subject to backup withholding or otherwise establishes an
exemption from backup withholding applies.
Non-U.S. holders generally will not be subject to information reporting
or backup withholding with respect to the payment of dividends on, or proceeds from the disposition of, our ordinary shares provided the
non-U.S. holder provides its taxpayer identification number, certifies to its foreign status or otherwise establishes an exemption from
backup withholding applies.
69
Backup withholding is not an additional tax and may be claimed
as a credit against the U.S. federal income tax liability of a holder, or alternatively, the holder may be eligible for a refund of any
excess amounts withheld under the backup withholding rules, in either case, provided that the required information is timely furnished
to the IRS.
Certain U.S. holders who hold interests in “specified foreign
financial assets” (as defined in Section 6038D of the Code) are generally required to file an IRS Form 8938 as part of their U.S.
federal income tax returns to report their ownership of such specified foreign financial assets, which may include our ordinary
shares, if the total value of those assets exceed certain thresholds. Substantial penalties may apply to any failure to timely file IRS
Form 8938. In addition, in the event a holder that is required to file IRS Form 8938 does not file such form, the statute of limitations
on the assessment and collection of U.S. federal income taxes of such holder for the related tax year may not close until three years
after the date that the required information is filed. Holders should consult their own tax advisors regarding their tax reporting obligations.
ISRAELI TAXATION
The following summary describes the current tax structure applicable
to companies in Israel, with special reference to its effect on us. It also discusses Israeli tax consequences material to persons purchasing
our ordinary shares. We recommend that you consult your tax advisor as to the particular tax consequences of an investment in our ordinary
shares.
General
Corporate Tax Structure
The regular corporate tax rate applicable in 2025 and 2024 is
[23%]
However, the effective tax rate payable by a company that derives
income from a preferred enterprise, discussed further below, may be considerably less. See below in Item 10.E - “Taxation
- Tax Benefits under the Law for the Encouragement of Capital Investments, 1959”.
Tax benefits under the Law for the Encouragement of Capital Investments,
1959 (the “Investment Law”)
The Company’s production facility has been granted “Approved
Enterprise” status under the Investment Law. The Company participates in the Alternative Benefits Program and, accordingly, income
from its approved enterprises will be tax exempt for a period of 10 years (or up to 14 years commencing in the year in which the company
was granted “Approved Enterprise” status), commencing in the first year in which the Approved Enterprise first generates taxable
income; this is due to the fact that the Company operates in Zone ”A” in Israel.
On April 1, 2005, an amendment to the Investment Law came into
effect (the “Amendment”) and has significantly changed the provisions of the Investment
Law. The Amendment limits the scope of enterprises which may be approved by the Investment Center by setting criteria for the approval
of a facility as a “Beneficiary Enterprise”, such as provisions generally requiring that at least 25% of the Beneficiary Enterprise’s
income will be derived from export. Additionally, the Amendment enacted major changes in the manner in which tax benefits are awarded
under the Investment Law so that companies no longer require Investment Center approval in order to qualify for tax benefits.
In addition, the Amendment provides that terms and benefits included
in any certificate of approval already granted will remain subject to the provisions of the law as they were on the date of such approval.
Therefore, the Company’s existing Approved Enterprise will generally not be subject to the provisions of the Amendment. As a result
of the Amendment, tax-exempt income generated under the provisions of the Amendment, as part of a new Beneficiary Enterprise, will subject
the Company to taxes upon distribution or liquidation.
The Company has been granted the status of Approved Enterprises,
under the Investment Law, for investment programs for the periods which ended in 2007 and 2010, and the status of Beneficiary Enterprise
according to the Amendment, for a period ending in 2014. In addition, Camtek has elected 2010 as the year of election for a period ending
2021.
70
The Investment Law and the criteria for receiving an “Approved
Enterprise” or “Beneficiary Enterprise” status may be amended from time to time and there is no assurance that we will
be able to obtain additional benefits under the Investment Law.
On December 29, 2010, the Investment Law was amended to significantly
revise the tax incentive regime in Israel commencing on January 1, 2011 (the “December 2010 Amendment”).
The December 2010 Amendment introduced a new status of “Preferred Enterprise,” replacing the existing status of “Beneficiary
Enterprise.” Similar to “Beneficiary Enterprise,” a Preferred Enterprise is an industrial company meeting certain conditions,
including deriving a minimum of 25% of its income from export activities. However, under the December 2010 Amendment, the requirement
for a minimum investment in production assets in order to be eligible for the benefits granted under the Investments Law was cancelled.
A Preferred Enterprise is entitled to a reduced flat tax rate with respect to preferred enterprise income at the following rates:
|
Tax Year |
Development “Zone A” |
Other Areas within Israel |
Regular Corporate Tax Rate |
|
2017 |
7.5% |
16% |
24% |
|
2018 |
7.5% |
16% |
23% |
|
2019 |
7.5% |
16% |
23% |
|
2020 |
7.5% |
16% |
23% |
|
2021 |
7.5% |
16% |
23% |
|
2022 |
7.5% |
16% |
23% |
|
2023 |
7.5% |
16% |
23% |
|
2024 |
7.5% |
16% |
23% |
|
2025 |
7.5% |
16% |
23% |
|
2026 |
7.5% |
16% |
23% |
Dividends distributed from income which is attributed to “Preferred
Enterprise” will be subject to withholding tax at source at the following rates: (i) Israeli resident corporation at 0%; (ii) Israeli
resident individual at 20%; and (iii) non-Israeli resident at 20%, such withholding tax rate can be reduced subject to a reduced tax rate
under the provisions of an applicable double tax treaty.
The December 2010 Amendment was also revised to allow financial
assistance to companies located in development Zone A to be granted not only as a cash grant but also as a loan. The rates for grants
and loans could be up to 20% of the amount of the approved investment.
In 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 Investment Law (the “December
2016 Amendment”) was published. The investment law was amended to introduce a new tax incentive regime for intellectual property
(IP) based companies. Effective January 1, 2017, the December 2016 Amendment enhanced tax incentives for certain industrial companies
by reducing the corporate tax rate and tax withholding obligation.
According to the December 2016 Amendment, a Preferred Enterprise
located in development Zone 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%). The December 2016 Amendment also prescribes special tax
tracks for Technological Enterprises, which are subject to regulation issued by the Minister of Finance on May 28, 2017.
In 2019 the Company filed a notice to the Israeli Tax Authorities
regarding the implementation of the Preferred Enterprise for its 2019 preferred income (instead of a Beneficiary Enterprise). As the Company
is located in Development Area A, the applied corporate tax rate is 7.5%.
71
The new tax tracks under the December 2016 Amendment are as follows:
Preferred Technological Enterprise - an enterprise for which total
consolidated revenues of its parent company and all subsidiaries are less than NIS 10 billion. A Preferred Technological Enterprise, as
defined in the Law, which is located in the center of Israel will be subject to tax at a rate of 12% on profits deriving from intellectual
property (in development zone A - a tax rate of 7.5%).
Special Preferred Technological Enterprise - an enterprise for
which total consolidated revenues of its parent company and all subsidiaries exceed NIS 10 billion. Such enterprise will be subject to
tax at a rate of 6% on profits deriving from intellectual property, regardless of the enterprise’s geographical location.
In summary, as of 2026, the applicable tax rates are as follows:
|
Enterprise type |
Development “Zone A” |
Other Areas within Israel |
Regular Corporate Tax Rate |
|
Preferred Enterprise |
7.5% |
16% |
23% |
|
Special Preferred Enterprise |
5% |
8% |
23% |
|
Preferred Technological Enterprise |
7.5% |
12% |
23% |
|
Special Preferred Technological Enterprise |
6% |
6% |
23% |
In addition, any dividend distributed from a Preferred Technological
Enterprise to foreign companies holding at least 90% of the share capital will be subject to a reduced tax rate of 4%.
Neither the provisions of the December 2010 Amendment nor the December
2016 Amendment apply to companies currently having an “Approved Enterprise” or “Beneficiary Enterprise” status,
which will continue to be entitled to the tax benefits according to the provisions of the Investment Law prior to the aforementioned amendments,
unless the company having the benefits of such status has elected by filing with the Israeli Tax Authority not later than the date prescribed
for the filing of the company’s annual tax return for the respective year, to adopt the provisions of the December 2010 Amendment.
Such election cannot be later rescinded. A company having the status of “Beneficiary Enterprise” or “Approved Enterprise”
making such election by June 30, 2015 will be entitled to distribute income generated by the Beneficiary Enterprise” or “Approved
Enterprise,” subject to withholding tax at source at the following rates: (i) Israeli resident corporations at 0%; (ii) Israeli
resident individuals at 20%; and (iii) non-Israeli residents at 20%, such withholding tax rate can be reduced subject to a reduced tax
rate under the provisions of an applicable double tax treaty.
During the years 1998-2006 Camtek was subject to tax in accordance
with the Approved and Beneficiary Enterprise provisions under the Law for the Encouragement of Capital Investments. As such, Camtek has
income that was exempt from tax. Distribution of dividends from the exempt income requires to pay income tax on the amount of the dividend
distributed at the tax rate that would have been applicable to it in the year the income was produced if it had not been exempt from tax.
In February 2022, the Company, in a settlement with the Israeli Tax Authorities, elected to take advantage of the temporary rule of 2022
in Israel and pay a reduced tax rate on its historical exempt earnings to allow the Company to distribute dividends from these earnings
in the future with no additional corporate tax liability (See Note 18B(b) to the Consolidated Financial Statements). The Company’s
Statement of Income for the year ended December 31, 2021, included a one-time tax expense of $5,315, in respect of this settlement.
Law for the Encouragement of Industrial Research
and Development, 1984
For information regarding the R&D Law, see above in Item 4.B
- “Business Overview - The
Israel Innovation Authority, formerly – the Israeli Office of Chief Scientist”.
Net Operating Loss Carry forwards
As of December 31, 2025, the Company did not have a net operating
loss carry forward, or NOL, for Israeli tax purposes.
Law
for the Encouragement of Industry (Taxes), 1969
We believe that we currently
qualify as an “Industrial Company” within the meaning of the Law for the Encouragement of Industry (Taxes), 1969 (the “Industry
Encouragement Law”). According to the Industry Encouragement Law, an “Industrial Company” is a company incorporated
in, and resident of Israel, at least 90% of the income of which, in a given tax year, exclusive of income from specified government loans,
capital gains, interest and dividends which are not classified for such company as business income, is derived from an industrial enterprise
owned by it. In general, an “Industrial enterprise” is defined as an enterprise whose major activity in a given tax year is
industrial production.
72
The following corporate tax benefits are available to Industrial
Companies:
| • |
amortization of the cost of purchased know-how and patents over an eight-year period for tax purposes, from the tax year it began
to use them; |
| • |
amortization of expenses incurred in some cases in connection with a public issuance of publicly traded securities over a three-year
period; and |
| • |
accelerated depreciation rates on equipment and buildings. |
Eligibility for the
benefits under the Industry Encouragement Law is not subject to receipt of prior approval from any governmental authority. No assurance
can be given that we qualify or will continue to qualify as an “Industrial Company” or that the benefits described above will
be available in the future.
Taxation of Capital Gains Applicable to Non-Israeli Shareholders
Israeli law generally imposes a capital gains tax on the sale of
capital assets including securities of an Israeli company (whether or not traded). The Income Tax Ordinance [New Version], 1961 (the “Ordinance”)
distinguishes between “Real Capital Gain” and the “Inflationary Surplus.” The Real Capital Gain is the excess
of the total capital gain over Inflationary Surplus. The Inflationary Surplus is computed generally on the basis of the cost multiplied
by the difference between the Israeli consumer monthly price index as known at the date of sale and the date of purchase and, with respect
to an individual, when the shares are nominated or linked to a foreign currency the Inflationary Surplus would be calculated according
to the difference in changes in the foreign currency. The Inflationary Surplus accumulated after January 1, 1994 is exempt from capital
gains tax.
Pursuant to the Ordinance, the Real Capital Gains tax rate applicable
to individuals upon the sale of such securities is such individual’s marginal tax rate but not more than 25%, or 30% with respect
to an individual who meets the definition of a ‘Substantial Shareholder’ on the date of the sale of the securities or at any
time during the 12 months preceding such date. A ‘Substantial Shareholder’ is defined as a person who, either alone or together
with any other person, holds, directly or indirectly, at least 10% of any of the means of control of a company (including, among other
things, the right to receive profits of the Company, voting rights, the right to receive the Company’s liquidation proceeds and
the right to appoint a director). Notwithstanding the foregoing, dealers in securities (Individual and corporate shareholders) in Israel
are taxed at regular tax rates applicable to business income a corporate tax rate for a corporation and a marginal tax rate of up to 47%
for an individual in 2024 onward.
With respect to corporate investors, capital gain tax equal to
the ordinary corporate tax rate (23% in 2024 and thereafter) will be imposed on the sale of our traded shares.
However, Under Israeli law, the capital gain from the sale of shares
by non-Israeli residents is tax exempt in Israel as long as our shares are listed on the Nasdaq Global Market or any other stock exchange
recognized by the Israeli Ministry of Finance, and provided certain other conditions are met, the most relevant of which are: (A) the
capital gain is not attributed to the foreign resident’s permanent establishment in Israel, (B) the shares were acquired by the
foreign resident after the company’s shares had been listed for trading, and (C) if the seller is a non-Israeli corporation, less
than 25% of its means of control are held by Israeli residents.
As our ordinary shares are traded on the NASDAQ Global Market,
which qualifies as a Recognized Exchange, Real Capital Gains on the sale of our ordinary shares held by non-Israeli tax resident investors
(individuals and corporations) will generally be exempt from Israeli capital gains tax so long as certain conditions are met, including
that the shares were not held through a permanent establishment that the non-Israeli tax resident investor maintains in Israel.
73
In any event, non-Israeli corporations will not be entitled to
the foregoing exemptions if an Israeli resident (a) has a controlling interest of more than 25% in such non-Israeli corporation, or (b)
is the beneficiary of or is entitled to 25% or more of the revenues or profits of such non-Israeli corporation, whether directly or indirectly.
Furthermore, the sale of shares may be exempt from Israeli capital
gain tax under the provisions of an applicable tax treaty, as discussed below, subject to the receipt in advance of a valid certificate
from the Israel Tax Authority (the “ITA”) allowing for such exemption.
Withholding Taxes
Persons paying consideration for shares, including purchasers of
shares, Israeli securities dealers effecting a transaction, or a financial institution through which securities being sold are held, are
required, subject to any applicable exemptions and the demonstration by the selling shareholder of its non-Israeli residency and other
requirements, to withhold tax upon the sale of publicly traded securities at a rate of 25% for individuals and at the corporate tax rate
([23%] in 2025 and thereafter) for corporations.
Income Taxes on Dividend Distributions to Non-Israeli Shareholders
Non-Israeli residents (whether individuals or corporations) are
generally subject to Israeli withholding tax on the receipt of dividends paid by Israeli publicly traded companies at the rate of 25%,
if the shares are registered with a nominee company (as such term is used in the Israeli Securities Law, 5728-1968). If the shares
are not registered with a nominee company, the rate of 25% will apply to non-Israeli residents shareholders who are not considered Substantial
Shareholders, as defined above, and who were not Substantial Shareholders at any time during the 12 months preceding the date of the distribution,
and the rate of 30% will apply to dividends paid to Substantial Shareholders and to persons who were Substantial Shareholders at any time
during the 12 months preceding the date of the distribution. Notwithstanding the above, a lower tax rate may be provided under an applicable
tax treaty between Israel and the shareholder’s country of residence (subject to the receipt in advance of a valid tax certificate
from the ITA allowing for a reduced tax rate). The distribution of dividends to non-Israeli residents (either individuals or corporations)
from income derived from a company’s Approved Enterprises or Benefited Enterprises or a Preferred Enterprise, in each case during
the applicable benefits period is subject to withholding tax at a rate of 20%, unless a lower tax rate is provided under an applicable
tax treaty.
A non-Israeli resident who has received dividend income derived
from or accrued in Israel, from which the full amount of tax was duly withheld, is generally exempt from the duty to file tax returns
in Israel in respect of such income, provided that: (i) such income was not derived from a business conducted in Israel by the taxpayer;
(ii) the taxpayer has no other taxable sources of income in Israel with respect to which a tax return is required to be filed; and (iii)
the taxpayer is not liable for excess tax.
U.S. Israel Tax Treaty
The sale of shares may also be exempt from Israeli capital gain
tax under the provisions of an applicable tax treaty. For example, the Convention Between the Government of the United States and the
Government of the State of Israel With Respect to Taxes of Income, as amended, or the U.S.-Israel Tax Treaty. The U.S.-Israel Tax Treaty
exempts U.S. residents for the purposes of the treaty from Israeli capital gain tax in connection with such sale, provided (i) the U.S.
resident owned, directly or indirectly, less than 10% of the Israeli resident company’s voting power at any time within the 12-month
period preceding such sale; (ii) the seller, being an individual, is present in Israel for a period or periods of less than 183 days during
the taxable year; (iii) the capital gain from the sale was not derived through a permanent establishment of the U.S. resident in Israel
and (iv) the capital gains is not arising from such sale, exchange or disposition which is attributed to real estate located in Israel.
Otherwise, the sale, exchange or disposition of shares would be subject to Israeli tax, to the extent applicable
However, under the U.S.-Israel Tax Treaty, U.S. residents
for the purposes of the treaty may be permitted to claim a credit for such taxes against U.S. federal income tax imposed on the sale,
under the circumstances and subject to the limitations specified in the U.S.-Israel Tax Treaty and U.S. tax legislation, as discussed
below under “Certain Material U.S. Federal Income Tax Considerations – Distributions.
Under the U.S.-Israel Tax Treaty, the maximum Israeli withholding
tax on dividends paid to a holder of our ordinary shares who is a U.S. resident for the purposes of the U.S.-Israel Tax Treaty, is generally
25%. The U.S.-Israel Tax Treaty provides that a 15% or a 12.5% Israeli dividend withholding tax will apply to dividends paid to a U.S.
corporation owning 10% or more of an Israeli company’s voting shares during, in general, the current tax year in which the dividend
is distributed and preceding tax year of the Israeli company. The 15% rate applies to dividends distributed from income derived from an
Approved Enterprise, or a Benefited Enterprise, or a Preferred Enterprise, in each case within the applicable period, and the lower 12.5%
rate applies to dividends distributed from income derived from other sources. However, these provisions do not apply if the company has
certain amounts of passive income. The aforementioned rates under the U.S.-Israel Treaty will not apply if the dividend income was derived
through a permanent establishment of the U.S. resident in Israel.
74
Excess Tax
Furthermore, an additional tax liability at the rate of 3% is applicable
on the annual taxable income, including, but not limited to, income derived from dividends, interest and capital gains, of individuals
who are subject to tax in Israel (whether such individual is an Israeli resident or non-Israeli resident) exceeding a certain threshold
(NIS 721,560 in 2025), which amount is linked to the Israeli consumer price index (according to the latest legislative acts, such linkage
will be freeze for the years 2025-2027).
In addition to the above, as of January 1, 2025, individuals whose
taxable income from capital sources (income from capital gains, dividends and interests) in the tax year exceeds the amount specified
above (NIS 721,560 also in 2025), will be subject to an additional tax at a rate of 2% (5% in total), on the portion of their taxable
income from capital sources that exceeds the amount above
F. Dividends
and Paying Agents.
Not applicable.
G. Statement
by Experts.
Not applicable.
H. Documents
on Display.
We file annual reports and other information with the SEC. The
SEC maintains an Internet web site at http://www.sec.gov that contains reports and other material that are filed through the SEC’s
Electronic Data Gathering, Analysis and Retrieval, or EDGAR, system. Information about us is also available on our site at http://www.camtek.com.
Such information on our site is not part of this Annual Report.
I. Subsidiary
Information.
Not applicable.
J. Annual
Report to Security Holders.
Not applicable.
Item 11.
Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
Our exposure to market risk for changes in interest rates is not significant as we
have no outstanding loans; see Item 5.B – “Liquidity and Capital Resources”
above.
Foreign Currency Rate Fluctuations Camtek finance
to review
We are a global company that operates in a multi-currency environment.
In recent months, foreign currency exchange rates have been subject to considerable fluctuations. As a major portion of the costs of our
Israeli operations, such as personnel, subcontractors, materials and facility‑related costs, are incurred in NIS, an increase in
the NIS value relative to the U.S. Dollar will increase our costs expressed in U.S. Dollars, and a decrease in the NIS value relative
to the U.S. Dollar will decrease our costs expressed in U.S. Dollars. During 2025, the value of the U.S. Dollar weakened against the NIS
by 13%. We may, from time to time, take various measures designed to reduce our exposure to these effects, but any such steps may be inadequate
to protect us from currency rate fluctuations. We had no open hedging transactions as of December 31, 2025.
75
In our consolidated financial statements, transactions and balances
originally denominated in U.S. Dollars are presented at their original amounts. Gains and losses arising from non-dollar transactions
and balances are included in net income as part of financial expenses, net.
Our balance sheet exposures to fluctuations in the exchange rate between the U.S.
Dollar and other currencies are primarily from NIS denominated balances. As of December 31, 2025, we had net liabilities of approximately
$14.7 million, denominated in NIS. Any fluctuation in the exchange rate between the NIS and the U.S. dollar of 1% will cause us expenses
or income of $147 thousand, in case of increase or decrease in rates, respectively.
In addition, although our products’ prices in most countries
are denominated in U.S. Dollars, in certain territories (currently, Europe and Japan) our products’ prices are denominated in local
currencies, and much of our service income in additional territories is denominated in local currencies. If there is a significant devaluation
in the relevant local currencies in which we operate compared to the U.S. Dollar, those prices of our products or services that are denominated
in local currency in the relevant territories will increase relative to that local currency and may be less competitive.
Item 12.
Description of Securities Other than Equity Securities.
Not applicable.
PART II
Item 13.
Defaults, Dividend Arrearages and Delinquencies.
Not applicable.
Item 14.
Material Modifications to the Rights of Security Holders and Use of Proceeds.
Not applicable.
Item 15.
Controls and Procedures.
|
(a)
Disclosure Controls and Procedures. |
The Company maintains disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) designed to provide assurance that information required to be disclosed by us in
reports that we file or submit under the Exchange Act is accumulated and communicated to our management, with the participation of our
Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure and is recorded, processed,
summarized and reported within the time periods specified by the SEC’s rules and forms. Management recognizes that any controls
and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Our
management, including our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls
and procedures as of December 31, 2025, and based on this evaluation concluded that, as of such date, the Company’s disclosure controls
and procedures were effective.
|
(b)
Management’s Annual Report on Internal Control Over Financial Reporting. |
Our management, under the supervision of our Chief Executive Officer
and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over our financial reporting as
defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Internal control over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles.
76
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable
assurances with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may decline.
Our management evaluated the effectiveness of our internal control
over financial reporting based on the framework established in Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this evaluation, management has assessed the effectiveness
of our internal control over financial reporting, as of December 31, 2025, and concluded that such internal control over financial reporting
(as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) is effective.
|
(c)
Attestation Report of the Registered Public Accounting Firm. |
The effectiveness of our internal control over financial reporting
as of December 31, 2025 has been audited by our principal accountant Somekh Chaikin, a member firm of KPMG International, an independent
registered public accounting firm. The related report to our shareholders and the Board of Directors appears on page F-2 of this Annual
Report.
|
(d)
Changes in Internal Control over Financial Reporting. |
There were no changes to our internal control over financial reporting
that occurred during the period covered by this Annual Report that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
Item 16.
[Reserved]
Item 16A. Audit
Committee Financial Expert.
Our Board of Directors has determined that Ms. Andorn qualifies
as an “audit committee financial expert” and an independent director in accordance with Nasdaq Rules.
Item 16B. Code
of Ethics.
We adopted a Code of Ethics, which is applicable to all of our
directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer
or controller, or persons performing similar functions. A copy of the Code of Ethics, in its current version, is available on our website,
www.camtek.com.
Item 16C. Principal
Accountant Fees and Services.
Our Audit Committee maintains a policy of approving and recommending
only those services to be performed by our independent auditors which are permitted under the Sarbanes-Oxley Act of 2002 and the applicable
rules of the SEC relating to auditor’s independence, and our independent auditors are remunerated at levels that accord with such
basic principles of auditor independence.
The following table presents the aggregate amount of fees for professional
services rendered to the Company by our principal accountant Somekh Chaikin, a member firm of KPMG International, located in Tel Aviv,
Israel, PCAOB ID 1057, and their KPMG affiliate firms, in U.S.$, for the years ended December 31, 2025, and 2024:
|
Fee Category
|
For 2025 Services
Rendered |
For 2024
Services Rendered |
|
Audit Fees (1) |
423,500 |
360,432 |
|
Tax Fees (2) |
68,026 |
34,975 |
(1) Audit Fees: the audit fees for the year
ended December 31, 2025 and 2024 were for professional services rendered for the integrated audit of Camtek’s annual consolidated
financial statements and its internal controls over financial reporting and services that are normally provided by independent registered
public accounting firm in connection with statutory and regulatory filings or engagements.
(2) Tax Fees rendered during 2025 and 2024
by our auditor were for tax compliance and tax advice.
77
Pre-Approval Policies and Procedures
Our Audit Committee has adopted a policy for pre-approval of audit
and permitted non-audit services. Under the policy, the Audit Committee will pre-approve all auditing services and permitted non-audit
services (including fees and other terms) to be performed for the Company by its independent auditor. All of the fees listed in the table
above were approved by the Audit Committee. In addition, the Audit Committee may adopt policies and procedures to permit delegation of
authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit
and permitted non-audit services. Decisions of the subcommittee to grant pre-approvals will be presented to the full Audit Committee at
its next scheduled meeting.
Item 16D.
Exemptions from the Listing Standards for Audit Committees.
Not applicable.
Item 16E. Purchases
of Equity Securities by the Issuer and Affiliated Purchasers.
Not applicable.
Item 16F. Change
in Registrant’s Certifying Accountant.
Not applicable.
Item 16G. Corporate
Governance.
Pursuant to Rules 5255(a) and 5615(a)(3) of the Nasdaq Rules, we
are relying on our home country practice with respect to the following matters: the eligibly of our securities for a direct registration
program; the composition and responsibilities of our Compensation Committee; the approval of stock option plans; certain annual meeting
requirements – all as set forth below:
| - |
We have opted out of the requirement that all securities listed on Nasdaq be eligible for a direct registration program operated
by a registered clearing agency as set forth in Rule 5255(a). Our procedures regarding the issuance of stock certificates comply with
Israeli law and practice. According to the Companies Law, a share certificate is defined as a certificate which states the name of
the owner registered in the company’s shareholders register, as well as the number of shares he or she owns. In the event that
what is registered in the company’s shareholders register conflicts with a share certificate, then the evidentiary value of the
shareholder register outweighs the evidentiary value of the share certificate. A shareholder registered in the company’s shareholders
register is entitled to receive from the company a certificate evidencing his ownership of the share. |
| - |
As all members of our Audit Committee meet the independence requirements for compensation committee members set forth in Nasdaq Rule
5605(d)(2), as a foreign private issuer, we have elected, pursuant to Nasdaq Rule 5615(a)(3), to follow Israeli practice, in lieu of compliance
with the certain provisions of Nasdaq Rule 5605(d), requiring us to have a separate compensation committee. Accordingly, and consistent
with Israeli law allowing an audit committee that satisfies the requirements of the Companies Law regarding the composition of a
compensation committee, to carry out all duties and responsibilities of the compensation committee, our Audit Committee has been authorized
to assume the functions and responsibilities of a compensation committee. In this respect, we have also opted out the requirement to adopt
and file a compensation committee charter as set forth in Rule 5605(d)(1).We have opted out of the requirement for shareholder approval
of stock option plans and other equity-based compensation arrangements as set forth in Nasdaq Rule 5635 and Nasdaq Rule 5605(d), respectively.
Nevertheless, as required under the Companies Law, special shareholder voting procedures are followed for the approval of equity-based
compensation of certain Office Holders or employees who are controlling shareholders or any relative thereof, as well as of our Chief
Executive Officer and members of our Board of Directors. Equity-based compensation arrangements with Office Holders (chief executive officer
and directors excluded) or employees who are not controlling shareholders or any relative thereof, are approved by our Compensation Committee
and our Board of Directors, provided they are consistent with our Compensation Policy, and in special circumstances in deviation therefrom,
taking into account certain considerations as set forth in the Companies Law. |
78
| - |
We have opted out of the requirement for conducting annual meetings as set forth in Nasdaq Rule 5620(a), which requires Camtek to
hold its annual meetings of shareholders within twelve months of the end of a company’s fiscal year end. Instead, Camtek is following
home country practice and law in this respect. The Companies Law requires that an annual meeting of shareholders be held every year, and
not later than 15 months following the last annual meeting (see in Item 10.B –
“Memorandum and Articles - Voting, Shareholders’ Meetings and Resolutions” above). Our 2025 AGM was held on April
29, 2025, therefore our 2026 AGM must be held by July 29, 2026. As a result of the amendment of our Articles of Association in the 2024
AGM, we follow the requirement set under Rule 5620(c) of the Nasdaq Rules which requires the presence of two or more shareholders holding
at least 33 1/3% to establish a quorum for any shareholders meeting. |
| - |
We have chosen to follow our home country practice in lieu of the requirements of Nasdaq Rule 5250(d)(1), relating to an issuer’s
furnishing of its annual report to shareholders. Specifically, we file annual reports on Form 20-F, which contain financial statements
audited by an independent accounting firm, electronically with the SEC and post a copy on our website. |
Item 16H.
Mine Safety Disclosure.
Not applicable.
Item 16I.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
79
Item 16J. Insider Trading Policies.
The Company has adopted an Insider Trading Policy which contains insider trading policies and procedures governing the purchase, sale and other dispositions of the Company’s securities by directors, senior management, and employees that are reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and any listing standards applicable to the Company. The Company’s Insider Trading Policy is attached as Exhibit 11.1 to this Annual Report.
Item 16K. Cybersecurity.
Risk Management and Strategy
Our cybersecurity risk management program includes:
• risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment;
• a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents;
• the use of external service providers , where appropriate, to assess, test or otherwise assist with aspects of our security controls ; and
• a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents.
Governance
We conduct an annual, comprehensive company-wide penetration test to assess our cybersecurity defenses. Following the completion of this test, we engage in a detailed discussion with the Company’s executive team to review the findings. This discussion includes a thorough analysis of the test results, identification of vulnerabilities, and the formulation of strategic conclusions to enhance our cybersecurity posture. The insights gained from these discussions are integral to our continuous improvement efforts, ensuring that our cybersecurity measures remain robust and effective in the face of evolving threats.
This cybersecurity leadership group directs initiatives to prevent, identify, reduce, and rectify cybersecurity risks and incidents via multiple channels, including briefings from in-house security staff; threat intelligence and data from government, public or private entities, inclusive of third-party consultants; and the notifications and analyses generated by security solutions we have implemented.
80
PART III
Item 17. Consolidated Financial Statements.
The Company has furnished financial statements and related information specified in Item 18.
Item 18. Consolidated Financial Statements.
Our consolidated financial statements and report of independent registered public accounting firm in connection therewith, as appear below, are hereby incorporated into this Annual Report.
81
|
Camtek Ltd.
and its subsidiaries
Consolidated Financial Statements
As of December 31, 2025
|
Camtek Ltd. and its subsidiaries
Financial Statements as at December 31, 2025
Contents
Page
|
Report of Independent Registered Public Accounting Firm
(Firm Name: Somekh Chaikin / PCAOB ID No.
|
F-2 to F-5 |
|
Consolidated Balance Sheets
|
F-6 to F-7
|
|
Consolidated Statements of Income
|
F-8 to F-9
|
|
Consolidated Statements of Comprehensive Income
|
F-10
|
|
Consolidated Statements of Shareholders’ Equity
|
F-11
|
|
Consolidated Statements of Cash Flows
|
F-12 to F-13
|
|
Notes to Consolidated Financial Statements
|
F-14 to F- 56
|
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Camtek Ltd.
Opinions on the Consolidated Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Camtek Ltd. and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows, for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the "consolidated financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting 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.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
F - 2
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated 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 consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a 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.
F - 3
Inventory Provision Estimate
As discussed in Notes 2I and 5 to the consolidated financial statements, the inventory provision as of December 31, 2025 and 2024 were $3,703 thousand and $4,336 thousand, respectively. The Company estimates the inventory provision at the end of each period for damaged, obsolete, excess and slow-moving items in order for inventory to be presented at the lower of cost or net realizable value. In making this estimate, the Company periodically evaluates its inventory composition, giving consideration to factors such as changes in product demands due to uncertain industry-related market conditions and technological changes, the probability and timing of anticipated usage and the physical condition of the items. Presentation at net realizable value creates a new cost basis that is not subsequently marked up.
We identified the evaluation of the inventory provision estimate as a critical audit matter. Challenging auditor judgment was required to evaluate the Company’s assumptions about changing product demands and probability of anticipated usage of inventory items.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the inventory provision process, including controls related to the assumptions noted above. We assessed the changes in product demands and probability of anticipated usage assumptions by performing an independent analysis of available market information that took into consideration industry-related market conditions and possible technological changes. We considered the effect of technological changes on the inventory provision estimate through inquiry of finance and operational personnel. We also compared historical inventory provisions to actual quantity sold in subsequent periods to evaluate management’s ability to accurately estimate the reserve.
Member Firm of KPMG International
We have served as the Company’s auditor since 2006.
March 19, 2026
F - 4
Camtek Ltd. and its subsidiaries
Consolidated Balance Sheets
|
December 31,
|
||||||||||||
|
2025
|
2024
|
|||||||||||
|
Note
|
U.S. Dollars (In thousands)
|
|||||||||||
|
Assets
|
||||||||||||
|
Current assets
|
||||||||||||
|
Cash and cash equivalents
|
3
|
|
|
|||||||||
|
Short-term deposits
|
2F
|
|
|
|
||||||||
|
Marketable securities
|
4,21
|
|
|
|||||||||
|
Trade accounts receivable, net
|
14
|
|
|
|||||||||
|
Inventories
|
5
|
|
|
|||||||||
|
Other current assets
|
6
|
|
|
|||||||||
|
Total current assets
|
|
|
||||||||||
|
Long-term deposits
|
7
|
|
|
|||||||||
|
Marketable securities
|
4,21
|
|
|
|||||||||
|
Long-term inventory
|
5
|
|
|
|||||||||
|
Deferred tax asset, net
|
19
|
|
|
|||||||||
|
Other assets, net
|
|
|
||||||||||
|
Property, plant and equipment, net
|
8, 2X
|
|
|
|||||||||
|
Intangible assets, net
|
9
|
|
|
|||||||||
|
Goodwill
|
2M
|
|
|
|||||||||
|
Total non-current assets
|
|
|
||||||||||
|
Total assets
|
|
|
||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F - 5
Camtek Ltd. and its subsidiaries
Consolidated Balance Sheets (continued)
|
December 31,
|
||||||||||||
|
2025
|
2024
|
|||||||||||
|
Note
|
U.S. Dollars (In thousands)
|
|||||||||||
|
Liabilities and shareholder’s equity
|
||||||||||||
|
Current liabilities
|
||||||||||||
|
Trade accounts payable
|
|
|
||||||||||
|
Other current liabilities
|
10
|
|
|
|||||||||
|
Total current liabilities
|
|
|
||||||||||
|
Long-term liabilities
|
||||||||||||
|
Deferred tax liabilities, net
|
19
|
|
|
|||||||||
|
Other long-term liabilities
|
11 ,13
|
|
|
|||||||||
|
Convertible notes
|
12
|
|
|
|||||||||
|
|
|
|||||||||||
|
Total liabilities
|
|
|
||||||||||
|
Commitments and contingencies
|
13
|
|||||||||||
|
Shareholders’ equity
|
15
|
|||||||||||
|
Ordinary shares NIS
|
||||||||||||
|
|
||||||||||||
|
|
|
|
||||||||||
|
Additional paid-in capital
|
|
|
||||||||||
|
Accumulated other comprehensive income
|
|
|
||||||||||
|
Retained earnings
|
|
|
||||||||||
|
|
|
|||||||||||
|
Treasury stock, at cost (
|
(
|
)
|
(
|
)
|
||||||||
|
Total shareholders' equity
|
|
|
||||||||||
|
Total liabilities and shareholders' equity
|
|
|
||||||||||
|
Chief Executive Officer
|
Chief Financial Officer
|
Date of approval of the financial statements: March 19, 2026
The accompanying notes are an integral part of the consolidated financial statements.
F - 6
Camtek Ltd. and its subsidiaries
Consolidated Statements of Income
|
Year Ended December 31,
|
||||||||||||||||
|
2025
|
2024
|
2023
|
||||||||||||||
|
Note
|
U.S. Dollars (In thousands)
|
|||||||||||||||
|
Revenues
|
17, 18A
|
|
|
|
|
|||||||||||
|
Cost of revenues
|
|
|
|
|||||||||||||
|
Gross profit
|
|
|
|
|||||||||||||
|
Operating expenses:
|
||||||||||||||||
|
Research and development
|
|
|
|
|||||||||||||
|
Selling, general and administrative
|
18B
|
|
|
|
|
|||||||||||
|
Total operating expenses
|
|
|
|
|||||||||||||
|
Operating profit
|
|
|
|
|||||||||||||
|
Financial income, net
|
18C
|
|
|
|
|
|||||||||||
|
Other expenses
|
12A
|
|
(
|
)
|
|
|
||||||||||
|
Income before income tax expense
|
|
|
|
|||||||||||||
|
Income tax expense
|
19
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||
|
Net income
|
|
|
|
|||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F - 7
Camtek Ltd. and its subsidiaries
Consolidated Statements of Income
|
Year Ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
U.S. Dollars
|
||||||||||||
|
Earnings per share information (see Note 16):
|
||||||||||||
|
Basic net earnings per share
|
|
|
|
|||||||||
|
Diluted net earnings per share
|
|
|
|
|||||||||
|
Weighted average number of
|
||||||||||||
|
ordinary shares outstanding (in thousands):
|
||||||||||||
|
Basic
|
|
|
|
|||||||||
|
Diluted
|
|
|
|
|||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F - 8
Camtek Ltd. and its subsidiaries
Consolidated Statements of Comprehensive Income
|
Year Ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
U.S. Dollars (in thousands)
|
||||||||||||
|
Net income
|
|
|
|
|||||||||
|
Other comprehensive income, net of tax:
|
||||||||||||
|
Change in net unrealized gains (loss) on available-for-sale marketable securities
|
|
(
|
) |
|
||||||||
|
Deferred tax income (expenses)
|
(
|
)
|
|
|
( |
)
|
||||||
|
Total other comprehensive income
|
|
|
|
|||||||||
|
Total comprehensive income
|
|
|
|
|||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F - 9
Camtek Ltd. and its subsidiaries
Consolidated Statements of Shareholders’ Equity
|
Accumulated
|
||||||||||||||||||||||||||||||||
|
Ordinary Shares
|
Treasury Stock
|
Additional
|
Other
|
Total
|
||||||||||||||||||||||||||||
|
NIS 0.01 par value
|
NIS 0.01 par value
|
paid-in
|
Comprehensive
|
Retained
|
shareholders'
|
|||||||||||||||||||||||||||
|
Number of
|
U.S. Dollars
|
Number of
Shares
|
U.S. Dollars
|
capital
|
Income
|
earnings
|
equity
|
|||||||||||||||||||||||||
|
Shares
|
(In thousands)
|
(In thousands)
|
U.S. Dollars (In thousands)
|
|||||||||||||||||||||||||||||
|
Balances at
|
||||||||||||||||||||||||||||||||
|
December 31, 2022
|
|
|
(
|
)
|
(
|
)
|
|
|
|
|
||||||||||||||||||||||
|
Exercise of share
|
||||||||||||||||||||||||||||||||
|
options and RSUs
|
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Share-based
|
||||||||||||||||||||||||||||||||
|
compensation expense
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Share-based
|
||||||||||||||||||||||||||||||||
|
compensation adjustment
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Unrealised gain on
|
||||||||||||||||||||||||||||||||
|
investments
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Deferred tax expense
|
-
|
|
-
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||||||
|
Net income
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Balances at
|
||||||||||||||||||||||||||||||||
|
December 31, 2023
|
|
|
(
|
)
|
(
|
)
|
|
|
|
|
||||||||||||||||||||||
|
Exercise of share
|
||||||||||||||||||||||||||||||||
|
options and RSUs
|
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Shared-based
|
||||||||||||||||||||||||||||||||
|
compensation expense
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Unrealised loss on
|
|
|
|
|
||||||||||||||||||||||||||||
|
investments
|
- |
(
|
)
|
|
(
|
)
|
||||||||||||||||||||||||||
|
Deferred tax income
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Dividend paid ($
|
||||||||||||||||||||||||||||||||
|
ordinary share)
|
-
|
|
-
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||
|
Net income
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Balances at
|
||||||||||||||||||||||||||||||||
|
December 31, 2024
|
|
|
(
|
)
|
(
|
)
|
|
|
|
|
||||||||||||||||||||||
|
Exercise of share
|
||||||||||||||||||||||||||||||||
|
options and RSUs
|
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Share-based
|
||||||||||||||||||||||||||||||||
|
compensation expense
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Unrealised gain on
|
||||||||||||||||||||||||||||||||
|
investments
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Deferred tax expenses
|
-
|
|
-
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||||||
|
Net income
|
-
|
|
-
|
|
|
|
|
|
||||||||||||||||||||||||
|
Balances at
|
||||||||||||||||||||||||||||||||
|
December 31, 2025
|
|
|
(
|
)
|
(
|
)
|
|
|
|
|
||||||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F - 10
Camtek Ltd. and its subsidiaries
Consolidated Statements of Cash Flows
|
Year Ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
U.S. Dollars (In thousands)
|
||||||||||||
|
Cash flows from operating activities:
|
||||||||||||
|
Net income
|
|
|
|
|||||||||
|
Adjustments to reconcile net income to net cash
|
||||||||||||
|
provided by operating activities:
|
||||||||||||
|
Depreciation and amortization
|
|
|
|
|||||||||
|
Deferred tax benefit
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Amortization of debt issuance costs
|
|
|
|
|||||||||
|
Share based compensation expense
|
|
|
|
|||||||||
|
Change in provision for doubtful debts
|
(
|
)
|
|
|
||||||||
|
Other non-cash expenses
|
|
|
|
|||||||||
|
Other expenses
|
|
|
|
|||||||||
|
Financial income related to finance lease liabilities
|
|
(
|
)
|
|
||||||||
|
Amortization of marketable securities
|
(
|
)
|
|
|
||||||||
|
Changes in operating assets and liabilities:
|
||||||||||||
|
Trade accounts receivable, gross
|
|
(
|
)
|
(
|
)
|
|||||||
|
Inventories
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Due from related parties
|
(
|
)
|
|
(
|
)
|
|||||||
|
Other assets
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Trade accounts payable
|
(
|
)
|
|
|
||||||||
|
Other current liabilities
|
(
|
)
|
|
(
|
)
|
|||||||
|
Change in operating lease asset
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Change in operating lease liability
|
|
|
|
|||||||||
|
Net cash provided by operating activities
|
|
|
|
|||||||||
|
Cash flows from investing activities:
|
||||||||||||
|
Acquisition of subsidiary consolidated for the first time (a)
|
|
|
(
|
)
|
||||||||
|
Proceeds from acquisition (a)
|
|
|
|
|||||||||
|
Proceeds from (investment in) short-term deposits, net
|
(
|
)
|
(
|
)
|
|
|||||||
|
Proceeds from (investment in) long-term deposits
|
|
(
|
)
|
|
||||||||
|
Purchase of fixed assets
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Purchase of intangible assets
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Purchase of marketable securities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Redemption of marketable securities
|
|
|
|
|||||||||
|
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
F - 11
Camtek Ltd. and its subsidiaries
Consolidated Statements of Cash Flows (continued)
|
Year Ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
U.S. Dollars (In thousands)
|
||||||||||||
|
Cash flows from financing activities:
|
||||||||||||
|
Proceeds from exercise of share options
|
|
|
|
|||||||||
|
Finance lease liability
|
(
|
)
|
(
|
)
|
|
|||||||
|
Dividend payment
|
|
(
|
)
|
|
||||||||
|
Convertible Notes issued
|
|
|
|
|||||||||
|
Issuance costs for Convertible Notes |
( |
) | ||||||||||
|
Redemption of Convertible Notes
|
(
|
)
|
|
|
||||||||
|
Net cash (used in) provided by financing activities
|
|
(
|
)
|
|
||||||||
|
Effect of exchange rate changes on cash
|
|
(
|
)
|
(
|
)
|
|||||||
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(
|
)
|
||||||||
|
Cash and cash equivalents at beginning of the year
|
|
|
|
|||||||||
|
Cash and cash equivalents at end of the year
|
|
|
|
|||||||||
|
Year Ended December 31,
|
||||||||||||
| 2025 |
2024
|
2023
|
||||||||||
|
(a) Acquisition of subsidiary, consolidated for the first time:
|
U.S. Dollars (in thousands)
|
|||||||||||
|
Working capital (excluding cash and cash equivalents)
|
|
(
|
)
|
|||||||||
|
Fixed assets, net
|
|
(
|
)
|
|||||||||
|
Intangible assets
|
|
(
|
)
|
|||||||||
|
Goodwill
|
|
(
|
)
|
|||||||||
|
Deferred taxes liabilities, net
|
|
|
||||||||||
|
Working capital adjustments
|
|
(
|
)
|
|||||||||
|
|
(
|
)
|
||||||||||
|
Increase in goodwill against share-based compensation
|
|
|
||||||||||
|
|
(
|
)
|
||||||||||
F - 12
Camtek Ltd. and its subsidiaries
Consolidated Statements of Cash Flows (continued)
| Year Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| U.S. Dollars (In thousands) | ||||||||||||
|
Supplementary cash flows information:
|
||||||||||||
|
A. Cash paid and received during the year for:
|
||||||||||||
|
Income taxes paid (Note 19I)
|
|
|
|
|||||||||
|
Interest received
|
|
|
|
|||||||||
|
Operational lease payments
|
|
|
|
|||||||||
|
B. Non-cash transactions:
|
||||||||||||
|
Fixed assets purchased with supplier credit
|
|
|
|
|||||||||
|
Right-of-use asset recognized with corresponding operating lease liability
|
|
|
|
|||||||||
|
Right-of-use asset recognized with corresponding financial lease liability
|
|
|
|
|||||||||
|
Exercise of shares prior to receipt of payment
|
|
|
|
|||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F - 13
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 1 - Nature of Operations
| A. |
Camtek Ltd. (“Camtek” or “Company”), an Israeli corporation, is jointly controlled by (
|
| B. |
In September 2025, the Company closed an offering of $
|
| C. |
In September 2025, the Company repurchased $
|
| D. |
In October 2023, the Company completed the acquisition of
|
F - 14
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 2 - Significant Accounting Policies
A. Basis of preparation of the financial statements
The consolidated financial statements of Camtek and its subsidiaries (collectively “the Company”) have been prepared in accordance with accounting principles generally accepted in United States of America (“US GAAP”). All amounts in the notes to the financial statements are in thousands unless otherwise stated.
| B. |
Principles of consolidation
|
The accompanying consolidated financial statements include the accounts of Camtek and its subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.
| C. |
Use of estimates
|
The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. As applicable to these financial statements, the most significant estimates and assumptions relate to stand alone pricing, allowance for doubtful debts, slow moving inventories and valuation allowance on deferred tax assets. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances.
| D. |
Foreign currency transactions
|
The functional currency of Camtek and its subsidiaries is the U.S. Dollar. Revenue generated by Camtek and its subsidiaries is primarily generated outside of Israel and a majority thereof is received in U.S. Dollars. A significant portion of materials and components purchased and operating expenses incurred are either paid for in U.S. Dollars or in New Israeli Shekels (“NIS”).
Transactions not denominated in U.S. Dollars are recorded upon their initial recognition according to the exchange rate in effect on the date of the transaction. Exchange rate differences arising upon the settlement of monetary items or upon reporting the Company’s monetary items at exchange rates different from that by which they were initially recorded during the period, or reported in previous financial statements, are charged to financial income, net.
F - 15
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 2 - Significant Accounting Policies (cont’d)
| E. |
Cash and cash equivalents
|
All highly liquid investments purchased with original maturities of three months or less are considered to be cash equivalents.
| F. |
Short-term deposits
|
Short-term deposits are bank deposits in US Dollars with an original maturity of more than three months and remaining term at the balance sheet date of no more than twelve months. As of December 31, 2025 the average annual interest rate was 5.11 % (2024 – 5.96 %).
| G. |
Marketable Securities
|
The Company accounts for marketable securities in accordance with ASC Topic 320, “Investments – Debt Securities”. The Company’s investments in marketable securities consist of high-grade treasury, corporate and municipal bonds.
Investments in marketable securities are classified as available for sale at the time of purchase. Available for sale securities are carried at fair value based on quoted market prices, with unrealized gains and losses, reported in accumulated other comprehensive income in the statement of comprehensive income and shareholders’ equity. Realized gains and losses on sales of marketable securities, are included in financial income, net. The amortized cost of marketable securities is adjusted for amortization of premium and accretion of discount to maturity, both of which, together with interest, are included in financial income, net.
The Company classifies its marketable securities as either short term or long term based on each instrument’s underlying contractual maturity date. Marketable securities with maturities of 12 months or less are classified as short-term and marketable securities with maturities greater than 12 months are classified as long-term.
The Company accounts for credit losses in accordance with ASU 2016-13, Topic 326 “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments”. The guidance requires the Company to determine whether a decline in fair value below the amortized cost basis of an available for sale debt security is due to credit related factors or noncredit related factors. A credit related impairment should be recognized as an allowance on the balance sheet with a corresponding adjustment to earnings, however, if the Company intends to sell an impaired available for sale debt security or more likely than not would be required to sell such a security before recovering its amortized cost basis, the entire impairment amount would be recognized in earnings with a corresponding adjustment to the security’s amortized cost basis.
The Company did not recognize an allowance for credit losses on marketable securities as there were no expected credit losses for the year ended December 31, 2025 and 2024.
| H. |
Trade accounts receivable and allowance for doubtful accounts
|
Trade accounts receivables are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts, in accordance with ASC 326. The Company makes estimates of expected credit losses based upon its assessment of various factors, including historical experience, the age of the trade receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers.
F - 16
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 2 - Significant Accounting Policies (cont’d)
| I. |
Inventories
|
Inventories consist of completed systems, partially completed systems and components and other raw materials, and are recorded at the lower of cost or net realizable value. Cost is determined by the moving – average cost method basis.
Inventory write-downs are recorded at the end of each fiscal period for damaged, obsolete, excess and slow-moving inventory. These write-downs, to the lower of cost or net realizable value, create a new cost basis that is not subsequently marked up based on changes in underlying facts and circumstances.
Management periodically evaluates its inventory composition, giving consideration to factors such as changes to product demands due to uncertain industry related market conditions and technological changes, the probability and timing of anticipated usage and the physical condition of the items, and then estimates a charge (reducing the inventory) to be provided for slow moving, technological obsolete or damaged inventory. These estimates could vary significantly from actual use based upon future economic conditions, customer inventory levels or competitive factors that were not foreseen or did not exist when the inventory write-downs were established.
Spare parts included in inventory that are not expected to be converted or consumed within the next year are classified as non-current, based on Management’s estimates taking into account market conditions.
| J. |
Property, plant and equipment
|
These assets are stated at cost less accumulated depreciation and are depreciated over their estimated useful lives on a straight-line basis.
Annual rates of depreciation are as follows:
|
Land
|
|
|
Building
|
|
|
Machinery and equipment
|
|
|
Computer equipment and software
|
|
|
Office furniture and equipment
|
|
|
Automobiles
|
|
Leasehold improvements are amortized by the straight-line method over the shorter of the lease term or the estimated useful economic life of such improvements.
Certain of the Company’s finished goods are systems used as demonstration systems, training systems, and for product development in the Company’s laboratories (“internal use”). These systems are identical to the systems that Camtek sells in its ordinary course of business. In circumstances where the Company intends to utilize such systems for its internal use, the Company transfers them from inventory to fixed assets. The rationale for the transfer is that the Company does not have the intention to sell these systems in the ordinary course of business but rather expects to use them for its internal use over their expected useful lives. These systems are recorded as fixed assets at cost and depreciated over their useful lives.
F - 17
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 2 - Significant Accounting Policies (cont’d)
| K. |
Business Combinations
|
The Company accounts for business combinations in accordance with ASC 805, "Business Combinations" ("ASC 805"). Under ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business (“2017-01”), the Company first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the single asset or group of assets, as applicable, is not a business.
ASC 805 requires recognition of assets acquired, liabilities assumed, and any non-controlling interest at the acquisition date, measured at their fair values as of that date. Any excess of the fair value of net assets acquired over purchase price and any subsequent changes in estimated contingencies are to be recorded in earnings.
When the Company acquires a business, the purchase price is allocated to the tangible and identifiable intangible assets, net of liabilities assumed. Any residual purchase price is recorded as goodwill. The allocation of the purchase price requires management to make significant estimates in determining the fair values of assets acquired and liabilities assumed, especially with respect to intangible assets. The Company uses the Discounted Cash Flow Method to assign fair values to acquired identifiable intangible assets. These estimates can include, but are not limited to, the cash flows that an asset is expected to generate in the future, forecasted future revenue, forecasted operating results, discount rates and the appropriate weighted-average cost of capital. These estimates are inherently uncertain and unpredictable.
These models are based on reasonable estimates and assumptions given available facts and circumstances, including industry estimates and averages, as of the acquisition dates and are consistent with the plans and estimates of management.
During the measurement period, which may be up to one year from the acquisition date, adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company’s consolidated statements of income.
| L. |
Intangible assets
|
Intangible assets purchased as part of the FRT acquisition are recorded at their fair value and amortized based on their estimated revenue producing life span.
F - 18
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 2 - Significant Accounting Policies (cont’d)
| M. |
Goodwill
|
Goodwill has been recorded as a result of the acquisition of FRT. Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and identifiable intangible assets acquired, and related liabilities.
Goodwill is carried at cost and is not amortized, but rather is subject to an impairment test, in accordance with ASC 350, “Intangibles – Goodwill and Other”, at least annually, or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The Company performs the test in the third quarter each year. ASC 350 allows the Company to first perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value prior to performing the quantitative goodwill impairment test. The Company operates in one operating segment, and this segment comprises its only reporting unit. The Company compared the value of its net assets to its market cap and found there was no impairment to the carrying value.
Any excess of the carrying value of the reporting unit over its fair value is recognized as an impairment loss, and the carrying value of goodwill is written down to the fair value of the reporting unit.
| N. |
Impairment of long-lived assets
|
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the long-lived asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized to the extent that the asset’s carrying amount exceeds its fair value. In 2025 and 2024, no impairment was noted.
| O. |
Fair values of financial instruments
|
The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, short-term deposits, trade accounts receivable, trade accounts payable and amounts from related parties approximate fair value because of their short-term nature.
F - 19
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 2 - Significant Accounting Policies (cont’d)
| P. |
Revenue recognition
|
The Company’s contracts with its customers include performance obligations to provide its products or to service the installed products. A product sale contract may include an extended warranty (that is, for longer than the twelve-month standard warranty) as well as installation, both of which are considered separate performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on the prices charged to customers.
The Company recognizes revenue from contracts for sales of products at the point of time when the Company transfers control of the product to the customer. The transfer in control event is generally determined based on shipping terms. Shipping and handling costs are included in selling, general and administrative expenses.
Revenues from the contract are recognized in an amount that reflects the consideration the Company expects to be entitled to receive once the control of the product had been transferred to the customer and signed documentation of the arrangement, such as a signed contract or purchase order, has been received. Payment terms with customers may vary but are generally based on milestones within the delivery process such as shipping and installation. Payment terms do not include significant financing components.
The Company does not incur costs in obtaining a contract except for agents’ commissions, which are incurred upon the recognition of revenues. Since revenues are recognized over a period of less than a year, sales commissions are not required to be capitalized.
Service revenues consist mainly of contracts charged under time and material arrangements. Service revenues from maintenance contracts are recognized ratably over the contract period.
The Company records contract liabilities when the customer has been billed in advance of the Company completing its performance obligations. These amounts are recorded as deferred revenue in the Consolidated Balance Sheets.
|
Year Ended December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Beginning of year
|
|
|
||||||
|
Deferral of revenue
|
|
|
||||||
|
Recognition of deferred revenue
|
(
|
)
|
(
|
)
|
||||
|
Balance at end of year
|
|
|
||||||
F - 20
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 2 - Significant Accounting Policies (cont’d)
Q. Warranty
The Company records a liability for standard product warranty obligations at the time of sale based upon historical warranty experience. The term of the warranty is generally twelve months.
R. Income taxes
The Company accounts for income taxes in accordance with the asset and liability method whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws expected to apply to taxable income in the years in which the deferred tax asset or liability is expected to be recovered or settled. The Company includes the foreign currency transaction gains or losses that result from re-measuring deferred taxes in income tax expense. If necessary, the Company reduces deferred tax assets with a valuation allowance to the amount that is more likely than not to be realized.
The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50 percent likely to be realized. Changes in recognition or measurement are reflected in the period in which the change occurs. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expenses.
The Company may incur an additional tax liability in the event of intercompany dividend distributions by some of its subsidiaries. Such additional tax liability in respect of other non-Israeli subsidiaries has not been provided for in these consolidated financial statement as it is the Company’s policy permanently to reinvest the subsidiaries’ earnings and to consider distributing dividends only when this can be facilitated in connection with a specific tax or other opportunity that may arise.
Tax liabilities which would apply in the event of disposal of investments in non-Israeli subsidiaries have not been taken into account in computing the deferred taxes, as it is the Company’s intention to hold, and not to realize, these investments.
S. Research and development
Research and development costs, which consist primarily of salaries, materials consumption and costs associated with subcontracting certain development efforts, are expensed as incurred.
T. Earnings per ordinary share
Basic earnings per ordinary share are calculated using only weighted average ordinary shares outstanding. Diluted earnings per share, if relevant, give effect to dilutive potential ordinary shares outstanding during the year. Such dilutive shares consist of incremental shares, using the treasury stock method, from the assumed exercise of equity awards.
The Company’s convertible notes are included in the calculation of diluted Earnings Per Share (“EPS”) if the assumed conversion into common shares is dilutive, using the “if-converted” method. This involves adding back the periodic non-cash interest expense net of tax associated with the convertible notes to the numerator and by adding the shares that would be issued in an assumed conversion (regardless of whether the conversion option is in or out of the money) to the denominator for the purposes of calculating diluted EPS, unless the convertible notes are antidilutive (See also Note 2Y).
F - 21
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 2 - Significant Accounting Policies (cont’d)
U. Share-based compensation
The Company accounts for its employee share-based compensation as an expense in the financial statements. All awards are equity classified and therefore such cost is measured at the grant date fair value of the award. The Company estimates share option grant date fair value using the Black-Scholes-Merton option-pricing model. Forfeitures are recognized when they occur. The Company recognizes compensation cost for an award with performance conditions or service conditions that have a graded vesting schedule on a straight-line basis over the requisite period for the entire award, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date (For details see Note 15B).
| V. |
Fair value measurements
|
The Company implements the provisions of ASC Topic 820 "Fair Value Measurements and Disclosures" ("ASC 820"). ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy provides the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
The level in the fair value hierarchy within which an asset or liability is classified is based on the lowest level input that is significant to the fair value measurement in its entirety.
| W. |
Contingent liabilities
|
A contingency (provision) is an existing condition or situation involving uncertainty as to the range of possible loss to the entity.
A provision for claims is recognized if it is probable (likely to occur) that a liability has been incurred and the amount can be estimated reasonably.
F - 22
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 2 - Significant Accounting Policies (cont’d)
| X. |
Leases
|
Under Topic 842, the Company determines if an arrangement is a lease at inception. Rights of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company's incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be (6.3% in 2025). The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. When determining the probability of exercising such options, the Company considers contract-based, asset-based, entity-based, and market-based factors. For lease agreements, the Company has elected the practical expedient to account for the lease and non-lease maintenance components as a single lease component. Therefore, for those leases, the lease payments used to measure the lease liability include all of the fixed consideration in the contract. The Company's lease agreements generally do not contain any residual value guarantees or restrictive covenants.
Operating lease ROU assets consist mainly of vehicles and real estate and are presented as property, plant and equipment on the consolidated balance sheet. The current portion of operating lease liabilities is included in other current liabilities and the long-term portion is presented within long-term liabilities on the consolidated balance sheet.
For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
ROU assets for operating leases are periodically reduced by impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment – Overall, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize. See Note 2N.
Finance lease ROU assets consist of real estate at a German subsidiary, for which a purchase option is reasonably certain to be exercised, and are presented as property, plant and equipment on the consolidated balance sheet. The asset is depreciated over the expected useful life of the asset. The carrying amount of the liability includes the present value of future lease payments and the exercise price of the option.
F - 23
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 2 - Significant Accounting Policies (cont’d)
Y. Convertible Notes
The Company accounts for its convertible notes in accordance with ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (Topic 470-20). The Notes are accounted for as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives.
The transaction costs are amortized on a straight-line basis along the lifetime of the Notes.
Z. Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosure. The standard requires to disclose additional information in tax rate reconciliation table about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories. The standard became effective for fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-09 during the year ended December 31, 2025, which resulted in updated income tax disclosures on a prospective basis.
AA. New Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03 “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”, which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This amendment introduces a practical expedient for the application of the current expected credit loss (“CECL”) model to current accounts receivable and contract assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the timing of adoption and impact of this amendment on its Consolidated Financial Statements and related disclosures.
In September 2025, the FASB issued ASU 2025-06 Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40). The amendment modernizes the accounting for software costs and enhances the transparency about an entity's software costs. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted, and may be applied either through a prospective, retrospective or a modified transition approach. The Company is currently evaluating the timing of adoption and impact of this amendment on its Consolidated Financial Statements and related disclosures.
F - 24
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 2 - Significant Accounting Policies (cont’d)
AA. New Accounting Pronouncements (cont’d)
In December 2025, the FASB issued ASU 2025-11, Interim Reporting, Narrow-Scope Improvements. The ASU was updated to improve the navigability of the required interim disclosures within ASC No. 270 and to clarify when the guidance applies. This ASU is not intended to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. The Company is currently evaluating the effect of adopting the ASU on its condensed consolidated financial statement disclosures.
AB. Prior Year Adjustments
The Company has reclassified certain amounts relating to its prior period results to conform to its current period presentation. These reclassifications have not changed the results of operations of prior periods.
F - 25
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 3 - Cash and Cash Equivalents
The Company’s cash and cash equivalents balance at December 31, 2025 and 2024, is denominated in the following currencies:
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
US Dollars
|
|
|
||||||
|
New Israeli Shekels
|
|
|
||||||
|
Other currencies
|
|
|
||||||
|
|
|
|||||||
Note 4 - Marketable Securities
Summary of marketable securities amortized cost, unrealized gains, unrealized losses, and fair value as of December 31, 2025:
|
Marketable Securities
|
Amortized Cost
|
Unrealized Gains
|
Unrealized Losses
|
Fair Value
|
||||||||||||
|
Matures within one year:
|
||||||||||||||||
|
Corporate bonds
|
|
|
(
|
)
|
|
|||||||||||
|
Government bonds
|
|
|
|
|
||||||||||||
|
|
|
(
|
)
|
|
||||||||||||
|
Matures after one year:
|
||||||||||||||||
|
Corporate bonds
|
|
|
(
|
)
|
|
|||||||||||
|
Government bonds
|
|
|
|
|
||||||||||||
|
|
|
(
|
)
|
|
||||||||||||
|
|
|
(
|
)
|
|
||||||||||||
Summary of marketable securities amortized cost, unrealized gains, unrealized losses, and fair value as of December 31, 2024:
|
Marketable Securities
|
Amortized Cost
|
Unrealized Gains
|
Unrealized Losses
|
Fair Value
|
||||||||||||
|
Matures within one year:
|
||||||||||||||||
|
Corporate bonds
|
|
|
|
|
||||||||||||
|
Government bonds
|
|
|
|
|
||||||||||||
|
|
|
|
|
|||||||||||||
|
Matures after one year:
|
||||||||||||||||
|
Corporate bonds
|
|
|
(
|
)
|
|
|||||||||||
|
Government bonds
|
|
|
|
|
||||||||||||
|
|
|
(
|
)
|
|
||||||||||||
|
|
|
(
|
)
|
|
||||||||||||
F - 26
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 4 - Marketable Securities (cont’d)
The amortized cost and estimated fair value of marketable securities classified by the maturity date listed on the security, regardless of the Consolidated Balance Sheet classification, is as follows at December 31, 2025 and 2024:
|
December 31, 2025
|
||||||||
|
Amortized
Cost
|
Fair
Value
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Due within one year
|
|
|
||||||
|
Due after one through five years
|
|
|
||||||
|
Total marketable securities
|
|
|
||||||
|
December 31, 2024
|
||||||||
|
Amortized
Cost
|
Fair
Value
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Due within one year
|
|
|
||||||
|
Due after one through five years
|
|
|
||||||
|
Total marketable securities
|
|
|
||||||
The following table summarizes the estimated fair value and gross unrealized holding losses of marketable securities, aggregated by investment instrument and period of time in an unrealized loss position, at December 31, 2025 and 2024.
|
In Unrealized Loss Position For Less Than 12 Months
|
In Unrealized Loss Position For Greater Than 12 Months
|
|||||||||||||||
|
December 31, 2025
|
Fair Value
|
Gross Unrealized Loss
|
Fair Value
|
Gross Unrealized Loss
|
||||||||||||
|
Corporate bonds
|
|
(
|
)
|
|
|
|||||||||||
|
Government bonds
|
|
|
|
|
||||||||||||
|
|
(
|
)
|
|
|
||||||||||||
|
In Unrealized Loss Position For Less Than 12 Months
|
In Unrealized Loss Position For Greater Than 12 Months
|
|||||||||||||||
|
December 31, 2024
|
Fair Value
|
Gross Unrealized Loss
|
Fair Value
|
Gross Unrealized Loss
|
||||||||||||
|
Corporate bonds
|
|
(
|
)
|
|
|
|||||||||||
|
Government bonds
|
|
|
|
|
||||||||||||
|
|
(
|
)
|
|
|
||||||||||||
F - 27
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 5 - Inventories
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Components
|
|
|
||||||
|
Work in process
|
|
|
||||||
|
Finished products *
|
|
|
||||||
|
|
|
|||||||
* includes systems at customer locations not yet sold, as of December 31, 2025 and 2024, in the amount of $12,305 and $12,447 respectively.
Inventories are presented in:
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Current assets
|
|
|
||||||
|
Non-current assets (A)
|
|
|
||||||
|
|
|
|||||||
F - 28
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 5 - Inventories (cont’d)
(A) Long-term Inventory:
At December 31, 2025, $15,569 of the Company's inventory is classified among long-term assets according to Management’s estimate based on the recent level of sales (at December 31, 2024 - $11,879 ). These amounts are comprised of spare parts. The Company’s policy is to keep components to provide support and service to systems sold by it to its customers over the past years (usually the support is over a period of seven to ten years ) until the Company announces it will not continue to support certain systems. Therefore, this inventory is usually consumed over longer periods than inventory classified as current, and as such the respective amount that is not expected to be consumed in the next year is classified as non-current. Management believes that this inventory will be utilized according to its forecasted sales and that no loss will be incurred.
(B) Inventory provision
As of December 31, 2025, based on Management's estimates regarding future sales, a provision of $3,703 was made against damaged, obsolete, excess and slow-moving inventory (December 31, 2024 - $4,336 ).
The provisions were recorded in the costs of revenues line item in the consolidated statement of income. The provisions result in a new cost basis that is not subsequently marked up based on changes in underlying facts and circumstances.
Note 6 - Other Current Assets
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Interest receivable
|
|
|
||||||
|
Prepaid expenses and vendor downpayments
|
|
|
||||||
|
Due from Government institutions and income tax receivables
|
|
|
||||||
|
Other
|
|
|
||||||
|
|
|
|||||||
Note 7 - Long-term Deposits
There were no such deposits as of December 31, 2025. Long-term deposits as of December 31, 2024 include bank deposits in US Dollars with terms at the balance sheet date of more than 12 months with average annual interest rates of 5.61 %.
F - 29
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 8 - Property, Plant and Equipment, Net
| December 31, | ||||||||
| 2025 | 2024 | |||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Cost:
|
||||||||
|
Land
|
|
|
||||||
|
Building
|
|
|
||||||
|
Machinery and equipment
|
|
|
||||||
|
Office furniture and equipment
|
|
|
||||||
|
Computer equipment and software
|
|
|
||||||
|
Automobiles
|
|
|
||||||
|
Leasehold improvements
|
|
|
||||||
|
Operating lease right of use assets
|
|
|
||||||
|
Finance lease right of use assets
|
|
|
||||||
|
|
|
|||||||
|
Less accumulated depreciation
|
|
|
||||||
|
|
|
|||||||
Depreciation for the years ended December 31, 2025, 2024 and 2023 amounted to $8,081 , $6,809 , and $5,501 , respectively.
Note 9 - Intangible Assets, Net
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Cost:
|
||||||||
|
Patent registration costs
|
|
|
||||||
|
Acquired technology
|
|
|
||||||
|
Acquired trade names
|
|
|
||||||
|
Acquired customer relationship
|
|
|
||||||
|
|
|
|||||||
|
Less accumulated amortization
|
|
|
||||||
|
Total intangible assets, net
|
|
|
||||||
F - 30
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 9 - Intangible Assets, net (cont’d)
Amortization expense for the years ended December 31, 2025, 2024 and 2023 amounted to $3,698 , $3,841 and $733 , respectively.
As of December 31, 2025, the estimated amortization expenses of intangible assets for the years 2026 to 2030 is as follows:
|
Year ended December 31,
|
U.S. Dollars
(in thousands)
|
|||
|
2026
|
|
|||
|
2027
|
|
|||
|
2028
|
|
|||
|
2029
|
|
|||
|
2030
|
|
|||
Note 10 - Other Current Liabilities
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Advances from customers and deferred revenues
|
|
|
||||||
|
Accrued employee compensation and other related benefits
|
|
|
||||||
|
Commissions
|
|
|
||||||
|
Government institutions and income tax payable
|
|
|
||||||
|
Accrued warranty costs (1)
|
|
|
||||||
|
Accrued expenses
|
|
|
||||||
|
Operating lease obligations (See Note 2(X))
|
|
|
||||||
|
Finance lease obligations
|
|
|
||||||
|
|
|
|||||||
| (1) |
Changes in the accrued warranty costs are as follows:
|
|
Year ended December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Beginning of year
|
|
|
||||||
|
Accruals
|
|
|
||||||
|
Usage
|
(
|
)
|
(
|
)
|
||||
|
Balance at end of year
|
|
|
||||||
F - 31
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 11 - Other Long-Term Liabilities
Other long-term liabilities consist of the following:
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Liability for severance pay (A)
|
|
|
||||||
|
Deferred revenues related to non-standard warranty (B)
|
|
|
||||||
|
Operating lease obligations
|
|
|
||||||
|
Finance lease obligations
|
|
|
||||||
|
|
|
|||||||
A. Liability for Employee Severance Benefits
Under Israeli law and labor agreements the Company is required to pay severance payments to each employee who was employed by the Company for over one year and has been terminated by the Company or resigned under certain specified circumstances. The liability related to these severance payments is calculated on the basis of the latest salary of the employee multiplied by the number of years of employment as of the balance sheet date. The Company also has defined contribution plans for which it makes contributions to severance pay funds and appropriate insurance policies. Withdrawal of the reserve monies is contingent upon the fulfillment of detailed provision in the Severance Law.
Under local law in various territories in which the Company operates, employees with one year or more of service are entitled to receive a lump-sum payment upon termination of their employment based on their length of service and rate of pay at the time of termination.
| 1. |
The liability in respect of most of its employees in Israel is discharged by participating in a defined contribution pension plan and making regular deposits with a pension fund or by individual insurance policies. The liability deposited with the pension fund is based on salary components as prescribed in the existing labor agreement. The custody and management of the amounts so deposited are independent of the companies and accordingly such amounts funded (included in expenses on an accrual basis) and related liabilities are not reflected in the balance sheet.
|
| 2. |
Severance pay expenses were $
|
B. Deferred Revenues
As of December 31, 2025, deferred revenues related to non-standard warranty in the amount of $3,631 are expected to be recognized in 2026-2027.
F - 32
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 12 - Convertible Notes
A. November 2026 Convertible Notes
On November 17, 2021, the Company sold $200,000 aggregate principal amount of its 0.00 % convertible senior notes due 2026 (the “2026 Notes”). The 2026 Notes will not bear regular interest, and the principal amount of the 2026 Notes will not accrete. The 2026 Notes will mature on December 1, 2026, (“the Maturity Date”) unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date.
The Company may not redeem the 2026 Notes prior to December 6, 2024, except in the event of certain tax law changes. On or after December 6, 2024, the Company may at any time and from time to time redeem for cash all or part of the 2026 Notes (subject to a certain partial redemption limitation), at the Company’s option, if the last reported sale price of the Company’s ordinary shares has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100 % of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid special interest (if any) to, but excluding, the redemption date. Holders of the 2026 Notes will have the right to require the Company to repurchase all or a portion of their 2026 Notes upon the occurrence of a fundamental change (as defined in the indenture governing the 2026 Notes) at a cash repurchase price equal to 100 % of the principal amount of the 2026 Notes to be repurchased, plus any accrued and unpaid special interest (if any) to, but excluding the fundamental change repurchase date.
The 2026 Notes are the Company’s general unsecured obligations that rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2026 Notes; will rank equal in right of payment with all of the Company’s unsecured indebtedness that is not so subordinated; will effectively rank junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness, and to the Company’s liabilities in priority under the applicable bankruptcy laws of Israel; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.
In September 2025, the Company repurchased $167,067 of the $200,000 aggregate principal amount of the 2026 Notes (83.53 %) for an amount of $266,951 . For accounting purposes this was considered an extinguishment of the debt and the net loss, including related expenses, was recorded as Other Expenses after Operating Profit in the Consolidated Statements of Income.
F - 33
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 12 – Convertible Notes (cont’d)
A. November 2026 Convertible Notes (cont’d)
The Convertible Senior 2026 Notes consisted of the following:
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Liability:
|
||||||||
|
Principle:
|
|
|
||||||
|
Unamortized issuance costs
|
(
|
)
|
(
|
)
|
||||
|
Net carrying amount
|
|
|
||||||
As of December 31, 2025, the debt issuance costs of the 2026 Notes will be amortized over the remaining term of approximately 1 year.
The annual effective interest rate of the 2026 Notes is 0.56 %. In the year ended December 31, 2025, $865 (2024 -$1,094 ) was recorded as amortization of debt issuance costs.
As of December 31, 2025, the estimated fair value of the 2026 Notes, which the Company has classified as Level 2 financial instruments, is $62,853 (2024 - $301,157 ). The estimated fair value was determined based on the quoted bid price of the 2026 Notes in an over-the-counter market on the last trading day of the reporting period.
As of December 31, 2025, the if-converted value exceeded the principal amount of the 2026 Notes by $29,920 (2024 – the principle amount exceeded the if-converted value by $101,157 ).
B. September 2030 Convertible Notes
In September 2025 the Company issued $500 million 0 % Convertible Senior Notes. The Securities will be convertible into cash, ordinary shares (the “Underlying Securities”, or “2030 Notes”) of the Company, nominal (par) value NIS 0.01 per share (the “Ordinary Shares”), or a combination of cash and Underlying Securities, at the Company’s election. The Securities are due September 2030.
The Company may redeem for cash (1) all of the 2030 Notes at any time on or prior to the 40th scheduled trading day immediately preceding the maturity date if certain tax-related events occur and (2) all or any portion (subject to certain limitations) of the 2030 Notes, at any time, and from time to time, on or after September 20, 2028, and on or before the 40th scheduled trading day immediately before the maturity date, at its option at any time and from time to time, if the last reported sale price per share of the Company’s ordinary shares has been at least 130 % of the conversion price for a specified period of time and certain other conditions are satisfied. For any 2030 Notes the Company redeems, a redemption price will be paid equal to the principal amount of the 2030 Notes redeemed (plus accrued and unpaid special interest, if any is payable at the time).
F - 34
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 12 – Convertible Notes (cont’d)
B. September 2030 Convertible Notes (cont’d)
If certain corporate events that constitute a “fundamental change” occur, then, subject to a limited exception, holders of the 2030 Notes may require the Company to repurchase all or a portion of their 2030 Notes for cash. The repurchase price will be equal to 100 % of the principal amount of the 2030 Notes to be repurchased, plus accrued and unpaid special interest, if any, to, but excluding, the applicable repurchase date. In connection with certain corporate events that occur prior to the maturity date of the 2030 Notes or following the Company’s delivery of a notice of redemption, the Company will, under certain circumstances, temporarily increase the conversion rate for holders who elect to convert their 2030 Notes in connection with such corporate event or notice of redemption, as the case may be.
When issued, the 2030 Notes will be the Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s unsecured indebtedness that is expressly subordinated in right of payment to the 2030 Notes; equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.
The Convertible Senior 2030 Notes consisted of the following:
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Liability:
|
||||||||
|
Principle:
|
|
|
||||||
|
Unamortized issuance costs
|
(
|
)
|
|
|||||
|
Net carrying amount
|
|
|
||||||
As of December 31, 2025, the debt issuance costs of the 2030 Notes will be amortized over the remaining term of approximately 4.75 years.
The annual effective interest rate of the 2030 Notes is 0.56 %. In the year ended December 31, 2025, $791 was recorded as amortization of debt issuance costs.
As of December 31, 2025, the estimated fair value of the Notes, which the Company has classified as Level 2 financial instruments, is $579,848 . The estimated fair value was determined based on the quoted bid price of the Notes in an over-the-counter market on the last trading day of the reporting period.
As of December 31, 2025, the if-converted value exceeded the principal amount of the Notes by $79,848 .
F - 35
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 13 - Commitments and Contingencies
| A. |
Operating leases
|
The Company’s subsidiaries have entered into various non-cancelable operating lease agreements for office space and operating leases for vehicles.
Liabilities reported in the consolidated balance sheets are as follows:
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Other current liabilities
|
|
|
||||||
|
Other long-term liabilities
|
|
|
||||||
|
Total lease liabilities
|
|
|
||||||
F - 36
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 13 - Commitments and Contingencies (contd.)
| A. |
Operating leases (cont.)
|
|
In the year ended December 31, 2025, the Company recognized lease costs in the amount of $2,663 (2024 - $2,153 ; 2023 - $1,854 ).
Minimum future payments under non-cancellable leases as of December 31, 2025 are as follows:
|
Year ended December 31,
|
U.S. Dollars (in thousands)
|
|||
|
2026
|
|
|||
|
2027
|
|
|||
|
2028
|
|
|||
|
2029
|
|
|||
|
2030 and after
|
|
|||
|
|
||||
|
Less imputed interest
|
(
|
)
|
||
|
Total lease liabilities
|
|
|||
The weighted average term of the operating leases as of December 31, 2025 is 70 months.
| B. |
Finance leases
|
One of the Company’s subsidiaries has entered into a non-cancelable lease agreements for office and factory space. The lease agreement contains a purchase option which is reasonably certain to be exercised. As such, the Company classifies this as a finance lease.
Amounts reported in the consolidated balance sheets are as follows:
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Cost:
|
||||||||
|
ROU assets – opening balance
|
|
|
||||||
|
ROU assets – additions
|
|
|
||||||
|
ROU assets – disposals
|
|
|
||||||
|
|
|
|||||||
|
Less accumulated depreciation
|
|
|
||||||
|
|
|
|||||||
F - 37
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 13 - Commitments and Contingencies (contd.)
| B. |
Finance leases (cont.)
|
|
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Other current liabilities
|
|
|
||||||
|
Other long-term liabilities
|
|
|
||||||
|
Total lease liabilities
|
|
|
||||||
In the year ended December 31, 2025, the Company recognized finance lease costs in the amount of $331 (2024 - $42 and 2023 - $0 ).
Minimum future payments under non-cancellable finance leases as of December 31, 2025 are as follows:
|
Year ended December 31,
|
U.S. Dollars (in thousands)
|
|||
|
2026
|
|
|||
|
2027
|
|
|||
|
2028
|
|
|||
|
2029
|
|
|||
|
2030 and after
|
|
|||
|
|
||||
|
Less imputed interest
|
(
|
)
|
||
|
Total lease liabilities
|
|
|||
The weighted average term of the finance leases as of December 31, 2025 is 47 months.
F - 38
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 14 - Concentration of Risk and Financial Instruments
Financial instruments that potentially expose the Company to concentrations of credit risk consist of cash equivalents, short-term bank deposits and trade receivables. The carrying amounts of financial instruments approximate fair value.
Cash and cash equivalents, short-term deposits and long-term deposits
The Company's cash equivalents, short-term deposits and long-term deposits are maintained with multiple high-quality institutions and the composition and maturities of investments are regularly monitored by management.
Trade receivables
The trade receivables of the Company are derived from sales to a large number of customers, primarily large industrial corporations located mainly in Asia, the United States and Europe. The Company generally does not require collateral: however, in certain circumstances, the Company may require a letter of credit, other collateral or additional guarantees. An allowance for doubtful accounts is determined with respect to those amounts that the Company has determined to be doubtful of collection. The Company performs ongoing credit evaluations of its customers.
Marketable securities
The Company's marketable securities are maintained with high-grade securities and limits the amount of credit exposure to any one issuer.
Allowance for doubtful debts
The following is a summary of the allowance for doubtful accounts related to accounts receivable for the years ended December 31:
|
Balance at
beginning
of year
|
Provision
|
Reversal of
provision
|
Write-off of
provision
|
Balance at
end of
year
|
||||||||||||||||
|
U.S. Dollars (in thousands)
|
||||||||||||||||||||
|
2023
|
|
|
|
|
|
|||||||||||||||
|
2024
|
|
|
|
|
|
|||||||||||||||
|
2025
|
|
|
(
|
)
|
(
|
)
|
|
|||||||||||||
Trade payables
The Company relies on limited source of suppliers and in some cases a sole supplier and/or subcontractors for a number of essential components and subsystems of its products. The Company does not have agreements with all of these suppliers and subcontractors for the continued supply of the components or subsystems they provide. An interruption in supply from these sources would disrupt production and adversely affect the Company’s ability to deliver products to its customers, which could have an adverse effect on the Company’s business, revenues and results of operations.
F - 39
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 15 - Shareholders’ Equity
A. General
The Company shares are traded on the NASDAQ Global Market under the symbol of CAMT and are also listed and traded on the Tel-Aviv stock exchange.
B. Stock Option Plan
As of December 31, 2025, the Company has one effective Share Incentive Plan (and Sub-Plan for Grantees Subject to Israeli Taxation) for the issuance of options, restricted share units and/ or restricted shares to employees, officers, directors, consultants and other services providers of the Company or any affiliated companies thereof (the “2018 Plan”). The 2018 Plan was adopted by the Company in April 2018 and thereby replaced the Company’s previous equity plans (the “2014 Share Option Plan” and the “2007 Restricted Share Unit Plan”). The total number of equity awards that may be granted under the 2018 Plan during each calendar year is equal to three and a half percent (3.5 %) of the Company’s total issued and outstanding Share capital as of December 31 of the preceding calendar year.
The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option-pricing model that used the weighted average assumptions in the following table and recognized over the vesting period of four years. The risk‑free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. In 2025, 4,380 options were granted (2024 - 4,905 options). The contractual life of the stock options is 7 years.
|
2025 Grant
|
2024 Grant
|
||
|
Valuation assumptions:
|
|||
|
Dividend yield
|
|
|
|
|
Expected volatility
|
|
|
|
|
Risk-free interest rate
|
|
|
|
|
Expected life (years) *
|
|
|
|
|
Vesting period (years)
|
|
|
*Expected life for the periods presented was determined according to the simplified method. The Company determined that the simplified method is appropriate due to substantial changes in vesting periods of options granted which cause existing historical experience to be irrelevant to expectations for current grants.
F - 40
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 15 - Shareholders’ Equity (cont’d)
B. Stock Option Plan (cont’d)
The total intrinsic value of outstanding options as of December 31, 2025, 2024, and 2023 is $1,338 , $863 and $1,207 , respectively.
The total intrinsic value of vested options as of December 31, 2025, 2024, and 2023 is $1,183 , $863 and $1,189 respectively.
The total stock option compensation expense amounted to $220 , $140 , and $100 in 2025, 2024 and 2023, respectively.
As of December 31, 2025, 4,380 options were unvested. The unrecognized compensation cost related to non-vested share-based compensation arrangements amounted to $49 , which will be recognized over one year.
Share option activity during the past three years is as follows:
|
Year Ended December 31,
|
||||||||||||||||||||||||
|
2025
|
2024
|
2023
|
||||||||||||||||||||||
|
Weighted
|
Weighted
|
Weighted
|
||||||||||||||||||||||
|
Number
|
average
|
Number
|
average
|
Number
|
average
|
|||||||||||||||||||
|
of
|
exercise
|
of
|
exercise
|
of
|
exercise
|
|||||||||||||||||||
|
options
|
price US$
|
options
|
price US$
|
options
|
price US$
|
|||||||||||||||||||
|
Outstanding at January 1
|
|
|
|
|
|
|
||||||||||||||||||
|
Granted
|
|
|
|
|
|
|
||||||||||||||||||
|
Forfeited and cancelled
|
|
|
|
|
|
|
||||||||||||||||||
|
Exercised
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|
|||||||||||||||
|
Outstanding at year end
|
|
|
|
|
|
|
||||||||||||||||||
|
Exercisable at year end
|
|
|
|
|
|
|
||||||||||||||||||
The income tax benefit associated with stock options exercised each year was immaterial.
F - 41
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 15 - Shareholders’ Equity (cont’d)
B. Stock Option Plan (cont’d)
|
Weighted
|
Aggregate
|
|||||||||||||||
|
Number
|
Weighted
|
Average
|
intrinsic
|
|||||||||||||
|
of
|
average
|
Remaining
|
Value (in
|
|||||||||||||
|
options
|
exercise
|
Contractual
|
US$
|
|||||||||||||
|
outstanding
|
price US$
|
term (years)
|
thousands)
|
|||||||||||||
|
Outstanding as of December 31, 2025
|
|
|
|
|
||||||||||||
The following table summarizes information about non-vested options at December 31, 2025:
|
Options
|
Weighted
average
grant- date
fair value
|
|||||||
|
Balance at January 1, 2025
|
|
|
||||||
|
Granted
|
|
|
||||||
|
Vested
|
(
|
)
|
|
|||||
|
Balance at December 31, 2025
|
|
|
||||||
F - 42
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 15 - Shareholders’ Equity (cont’d)
| C. |
Restricted Share Unit Plan
|
In April 2018, the Company adopted a Restricted Share Unit (“RSU”) Plan (the “Plan”) to replace the 2007 Restricted Share Unit Plan, pursuant to which the Company’s Board of Directors may grant shares to officers and key employees. The total number of shares, which may be granted to directors, officers, employees and consultants under this Plan, is limited to 3.5 % out of the outstanding shares (1,603,985 as of December 31, 2025). Forfeited units are returned to the pool.
The exercise price for each grantee shall be as determined by the Board and specified in the applicable RSU notice of grant; provided, however, that unless otherwise determined by the Board (which determination shall not require shareholder approval unless so required in order to comply with Mandatory Law), the exercise price shall be no more than the underlying share’s nominal value. For the removal of any doubt, the Board is authorized (without the need for shareholder approval unless so required in order to comply with Mandatory Law) to determine that the exercise price of an RSU is to be $0.00 .
Unless otherwise determined by the Board with respect to any specific grantee or to any specific grant, (which determination shall not require shareholder approval unless so required in order to comply with Mandatory Law) and provided accordingly in the applicable RSU notice of grant, the RSUs shall vest (become automatically exercised) according to the vesting schedules as determined by the Board.
| RSUs | Weighted average grant date value | |||||||
|
Balance at January 1, 2025
|
|
$
|
|
|||||
|
Granted
|
|
$
|
|
|||||
|
Vested
|
(
|
)
|
$
|
|
||||
|
Forfeited
|
(
|
)
|
$
|
|
||||
|
Balance at December 31, 2025
|
|
$
|
|
The total intrinsic value of outstanding RSUs as of December 31, 2025, 2024 and 2023 is $69,110 , $62,079 and $78,077 , respectively.
The income tax benefit recognized in income associated with RSUs is $574 .
Total grant date fair value of shares vested in 2025 was $15,712 .
The weighted average grant date fair value of RSUs granted during 2025, 2024, and 2023 is $63.65 , $83.83 and $26.43 , respectively.
The total compensation cost from RSUs recognized in the years ending December 31, 2025, 2024 and 2023 was recorded as follows:
|
Year Ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
U.S. Dollars (in thousands)
|
||||||||||||
|
Cost of revenues
|
|
|
|
|||||||||
|
Research and development
|
|
|
|
|||||||||
|
Selling, general and administrative
|
|
|
|
|||||||||
|
|
|
|
||||||||||
The unrecognized compensation expense in the amount of $26,088 will be recognized in the years 2026 to 2029.
F - 43
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 16 - Earnings Per Share
The following table summarizes information related to the computation of basic and diluted earnings per Share for the years indicated:
|
Year Ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Basic EPS:
|
||||||||||||
|
Net income attributable to Shares (US$ in thousands)
|
|
|
|
|||||||||
|
Weighted average number of Shares outstanding used in basic earnings per Share calculation
|
|
|
|
|||||||||
|
Diluted EPS:
|
||||||||||||
|
Net income attributable to Shares (US$ in thousands)
|
|
|
|
|||||||||
|
Add amortization of notes issuance costs
|
|
|
|
|||||||||
|
Net income used in diluted earnings per Share calculation
|
|
|
|
|||||||||
|
Weighted average number of Shares outstanding used in basic earnings per Share calculation
|
|
|
|
|||||||||
|
Add assumed exercise of outstanding dilutive securities:
|
||||||||||||
|
Effect of stock-based awards
|
|
|
|
|||||||||
|
Effect of conversion of Notes
|
|
|
|
|||||||||
|
Weighted average number of Shares Outstanding used in diluted earnings per Share calculation
|
|
|
|
|||||||||
|
Basic net income per Share ($)
|
|
|
|
|||||||||
|
Diluted net income per Share ($)
|
|
|
|
|||||||||
|
Number of options excluded from the diluted
|
||||||||||||
|
earnings per share calculation due to their
|
||||||||||||
|
anti-dilutive effect
|
|
|
|
|||||||||
F - 44
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 17 - Segments and Entity-Wide Information
The Company has one reporting segment as described in Note 2M above.
The Company’s chief operating decision maker (“CODM”) is its chief executive officer.
The CODM assesses performance and decides how to allocate resources based on net income that is also reported on the income statement as net income. The CODM is regularly provided only with the consolidated expenses as noted on the face of the income statement.
The measurement of segment assets is reported on the balance sheet as total consolidated assets.
The chief operating decision maker uses net income to evaluate income generated from the segment assets (return on assets) in deciding whether to reinvest profits into the segment or into other parts of the entity, such as for acquisitions or to pay dividends.
Net income is used to monitor budget versus actual results. The chief operating decision maker also used net income in competitive analysis by benchmarking to the Company’s competitors. The competitive analysis along with monitoring of budget versus actual results are used in assessing performance of the segment and in establishing management’s compensation.
The majority of long-lived assets are located in Israel and substantially all revenues are derived from sales to other countries. Revenues are attributable to geographic areas/countries based upon the destination of shipment of products and related services as follows:
|
Year Ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
U.S. Dollars (in thousands)
|
||||||||||||
|
China
|
|
|
|
|||||||||
|
Asia Pacific
|
|
|
|
|||||||||
|
Korea
|
|
|
|
|||||||||
|
United States
|
|
|
|
|||||||||
|
Europe
|
|
|
|
|||||||||
|
|
|
|
||||||||||
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
%
|
||||||||
|
Israel
|
|
|
||||||
|
Germany
|
|
|
||||||
|
Other
|
|
|
||||||
|
Total long-lived assets (*)
|
|
|
||||||
(*) Long-lived assets are comprised of property, plant and equipment, net, and intangible assets excluding goodwill
F - 45
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 18 - Selected Income Statement Data
A. Revenues
|
Year Ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
U.S. Dollars (in thousands)
|
||||||||||||
|
Sales of products
|
|
|
|
|||||||||
|
Service fees
|
|
|
|
|||||||||
|
|
|
|
||||||||||
In 2025, one customer accounted for 11 % of total revenues. In 2024, three customers accounted for 15 %, 10 % and 10 % of total revenues, respectively. In 2023, one customer accounted for 15 % of total revenues.
B. Selling, general and administrative expenses
|
Year Ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
U.S. Dollars (in thousands)
|
||||||||||||
|
Selling (*)
|
|
|
|
|||||||||
|
General and administrative
|
|
|
|
|||||||||
|
|
|
|
||||||||||
|
|
|
|
|
|||||||||
(*) Including shipping and handling costs
C. Financial income, net
|
Year Ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
U.S. Dollars (in thousands)
|
||||||||||||
|
Interest income
|
|
|
|
|||||||||
|
Convertible notes amortization
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Other, net (*)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
|
|
|
||||||||||
| (*) |
Other, net includes foreign currency income (expense) resulting from transactions not denominated in U.S. Dollars amounting to $(
|
F - 46
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 19 - Income Taxes
| A. |
Tax under various laws
|
Camtek and its subsidiaries are each assessed for income tax purposes on a separate basis. Each of the subsidiaries is subject to the tax rules prevailing in the country tax residence.
| B. |
Details regarding the tax environment of the Israeli companies
|
| (1) |
Corporate tax rate
|
The standard tax rate in Israel for the years 2023-2025 is 23
Current taxes for the reported periods are calculated according to the enacted tax rates presented above, subject to the reduced tax rate under the Law for the Encouragement of Capital Investment discussed below.
| (2) |
Benefits under the Law for the Encouragement of Capital Investments (hereinafter - “the Encouragement Law”)
|
| (a) |
Amendment to the Law for the Encouragement of Capital Investments – 1959
|
The Company filed a notice to the Israeli Tax Authorities regarding the implementation of the preferred enterprise to its preferred income. As the Company is located in Development Area A, the applied corporate tax rate is 7.5 %.
F - 47
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 19 - Income Taxes (cont’d)
| B. |
Details regarding the tax environment of the Israeli companies (cont’d)
|
| (b) |
In November 2021, an amendment to the Law of Encouragement of Capital Investment was enacted (the "2021 Amendment"). According to the 2021 Amendment, any future dividend distributed by an entity with tax exempt retained earnings will be deemed to be distributed proportionately from such tax exempt retained earnings. As part of the 2021 Amendment, the Israeli Tax Authorities enacted a temporary rule which reduces the tax rate applicable to the distribution of such tax exempt retained earnings.
During the fourth quarter of 2021, the Company entered into a tax assessment with the Israeli Tax Authorities for the years 2017-2020. The settlement of the tax assessment finalized in February 2022 will allow the Company to distribute dividends from these earnings in the future with no additional corporate tax liability. The dividend distributed in April 2024 was tax-free under this settlement.
|
F - 48
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 19 - Income Taxes (cont’d)
| C. |
Details regarding the tax environment of the Non-Israeli companies
|
Non-Israeli subsidiaries are taxed according to the tax laws in their countries of residence under local tax laws and regulations. The tax rates range from 16.5 -34 %.
| D. |
Composition of income before income taxes and income tax expense
|
|
Year Ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
U.S. Dollars (in thousands)
|
||||||||||||
|
Income (loss) before income taxes:
|
||||||||||||
|
Israel
|
|
|
|
|||||||||
|
Non-Israeli
|
|
|
|
|
||||||||
|
|
|
|
||||||||||
|
Income tax expense:
|
||||||||||||
|
Current:
|
||||||||||||
|
Israel
|
|
|
|
|||||||||
|
Non-Israeli
|
|
|
|
|||||||||
|
|
|
|
||||||||||
|
Deferred tax (benefit) expense:
|
||||||||||||
|
Israel
|
(
|
)
|
|
|
||||||||
|
Non-Israeli
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||
|
|
|
|
||||||||||
In addition, $1,097 of income tax expense was allocated to the gains and losses on intra-entity foreign currency transactions that are of a long-term investment nature component of other comprehensive income. ($632 of income tax income and $611 of income tax expense was allocated in 2024 and 2023, respectively.)
F - 49
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 19 - Income Taxes (cont’d)
E. Reconciliation of income tax expense at the statutory rate to actual income tax expense
The following is a reconciliation of the theoretical income tax expense, assuming all income is taxed at the statutory income tax rate applicable to Israeli companies, the standard income tax rate of the Company’s country of tax residence, and the actual income tax expense:
|
Year Ended December 31,
|
||||||||
|
2025
|
||||||||
|
Percent
|
U.S. Dollars
(in thousands)
|
|||||||
|
Israeli statutory tax rate
|
|
%
|
|
|||||
|
Israeli tax effects:
|
||||||||
|
Domestic
|
|
|||||||
|
Non-taxable and non-deductible:
|
||||||||
|
Share-based compensation
|
|
%
|
|
|||||
|
Other
|
|
%
|
|
|||||
|
Cross-border tax laws
|
(
|
)%
|
(
|
)
|
||||
|
Change in valuation allowance
|
|
%
|
|
|||||
|
Tax rate differential
|
(
|
)%
|
(
|
)
|
||||
|
Worldwide changes in unrecognized tax benefits
|
|
%
|
|
|||||
|
Other items
|
(
|
)%
|
(
|
)
|
||||
|
Foreign Tax Effects
|
|
|||||||
|
Other
|
(
|
)%
|
(
|
)
|
||||
|
Effective income tax rate
|
|
%
|
|
|||||
F - 50
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 19 - Income Taxes (cont’d)
E. Reconciliation of income tax expense at the statutory rate to actual income tax expense (cont’d)
|
Year Ended December 31,
|
||||||||
|
2024
|
2023
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Income before income taxes
|
|
|
||||||
|
Statutory tax rate
|
|
%
|
|
%
|
||||
|
Theoretical income tax expense
|
|
|
||||||
|
Increase (decrease) in income tax expense resulting from:
|
||||||||
|
Non-deductible expenses (*)
|
|
|
||||||
|
Income tax rate differential
|
(
|
)
|
(
|
)
|
||||
|
Other
|
|
|
||||||
|
Actual income tax expense
|
|
|
||||||
(*) Including non-deductible share-based compensation and FRT transaction expenses.
F - 51
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 19 - Income Taxes (cont’d)
F. Deferred tax assets and liabilities
The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets and liabilities are presented below:
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Deferred tax assets:
|
||||||||
|
Deferred revenue
|
|
|
||||||
|
Accrued expenses
|
|
|
||||||
|
Operating lease obligations
|
|
|
||||||
|
Carry forward losses
|
|
|
||||||
|
Other temporary differences
|
|
|
||||||
|
Total deferred tax assets
|
|
|
||||||
|
Valuation allowance
|
(
|
)
|
|
|||||
|
Deferred tax asset, net of valuation allowance
|
|
|
||||||
|
Deferred tax liabilities:
|
||||||||
|
Property, plant and equipment
|
(
|
)
|
(
|
)
|
||||
|
Inventories
|
(
|
)
|
(
|
)
|
||||
|
Intangible assets
|
(
|
)
|
(
|
)
|
||||
|
Right of use assets
|
(
|
)
|
(
|
)
|
||||
|
Undistributed earnings
|
(
|
)
|
(
|
)
|
||||
|
Other temporary differences
|
(
|
)
|
|
|||||
|
Total deferred tax liabilities
|
(
|
)
|
(
|
)
|
||||
|
Net deferred tax assets (liabilities)
|
|
(
|
)
|
|||||
F - 52
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 19 - Income Taxes (cont’d)
F. Deferred tax assets and liabilities (cont’d)
The deferred tax assets and liabilities were presented on the consolidated balance sheet as below:
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Deferred tax asset, net
|
|
|
||||||
|
Deferred tax liabilities, net
|
(
|
)
|
(
|
)
|
||||
|
Net deferred tax assets (liabilities)
|
|
(
|
)
|
|||||
Deferred tax assets are recognized for the anticipated tax benefits associated with operating loss carryforwards, tax credit carryforwards and deductible temporary differences. If it is more likely than not that some or all of the deferred tax assets will not be realized, the deferred tax credits are reduced by a valuation allowance.
In 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 not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.
At December 31, 2025 the company had a valuation allowance of $10,960 . At December 31, 2024 the Company had no valuation allowance.
F - 53
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 19 - Income Taxes (cont’d)
G. Accounting for uncertainty in income taxes
For the years ended December 31,2025, 2024 and 2023, the Company recorded an unrecognized tax benefit of $2,482 , $1,393 and $1,718 respectively, as result of a tax position taken during the current period. In addition, the Company does not expect that the amount of unrecognized tax benefits will change significantly within the next twelve months.
As of December 31, 2025, the entire amount of the unrecognized tax benefits could affect the Company’s income tax provision and the effective tax rate.
The Company accounts for interest and penalties related to income taxes as a component of income tax expense. For the years ended December 31, 2025, 2024 and 2023, no interest and penalties related to income taxes have been incurred.
H. Tax assessments
The Company files its income tax returns in Israel while its principle foreign subsidiaries file their income tax returns in Belgium, Germany, Hong Kong, and United States of America. The Israeli tax return of Camtek is open to examination by the Israeli Tax Authorities for the tax year 2021 -2025, while the tax returns of its principal foreign subsidiaries remain subject to examination for the tax years beginning 1999 in Belgium, 2020 in Germany, 2018 in Hong Kong and 2021 in the United States of America.
I. Income tax paid in cash
|
Year Ended December 31,
|
||||
|
2025
|
||||
|
U.S. Dollars (in thousands)
|
||||
|
Income taxes paid in cash by territory:
|
||||
|
Israel
|
|
|||
|
China
|
|
|||
|
Hong Kong
|
|
|||
|
Germany
|
|
|||
|
USA
|
|
|||
|
Taiwan
|
|
|||
|
Singapore
|
|
|||
|
|
||||
Note 20 - Balances and Transactions with Related Parties
A. Balances with related parties:
|
December 31,
|
December 31,
|
|||||||
|
2025
|
2024
|
|||||||
|
U.S. Dollars (in thousands)
|
||||||||
|
Due from related parties
|
|
|
||||||
The related party balances are recorded in the Other Current Assets line item on the consolidated balance sheets.
F - 54
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 20 - Balances and Transactions with Related Parties (cont’d)
B. Registration Rights Agreement with Priortech
On March 1, 2004, the Company entered into a registration rights agreement providing for the Company to register with the SEC certain of its ordinary shares held by Priortech. This registration rights agreement may be used in connection with future offerings of ordinary shares, and includes, among others, the following terms: (a) Priortech is entitled to make up to three demands that the Company registers its ordinary shares held by Priortech, subject to delay due to market conditions; (b) Priortech will be entitled to participate and sell the Company’s ordinary shares in any future registration statements initiated by the Company, subject to delay due to market conditions; (c) the Company will indemnify Priortech in connection with any liabilities incurred in connection with such registration statements due to any misstatements or omissions other than information provided by Priortech, and Priortech will indemnify the Company in connection with any liabilities incurred in connection with such registration statements due to any misstatements or omissions in written statements by Priortech made for the purpose of their inclusion in such registration statements; and (d) the Company will pay all expenses related to registrations which the Company has initiated, except for certain underwriting discounts or commissions or legal fees, and Priortech will pay all expenses related to a registration initiated at its demand in which the Company is not participating.
On December 30, 2004, the Registration Rights Agreement with Priortech was amended. The amendment concerns primarily the grant of unlimited shelf registration rights thereunder to Priortech with respect to its holdings in the Company, and the assignability of those shelf registration rights to its transferees.
On May 13, 2015, following the approval of the Company’s Audit Committee and Board of Directors the Registration Rights Agreement with Priortech was renewed for an additional 5 year period effective as of December 31, 2014.
In 2019, the Company entered into a Second Amended and Restated Registration Rights Agreement with Priortech and Chroma which replaced the previous Registration Rights Agreement, according to which Chroma is entitled to the same rights Priortech has with respect to registration of the Company’s shares.
Technological Cooperation Agreement with Chroma
In 2019, the Company entered into a Technological Cooperation Agreement with Chroma under which the Company granted Chroma a license for an application under Company’s triangulation technology platform. No revenue was recorded from this agreement in 2025, 2024 or 2023.
Employment Agreements with the Chief Executive Officer
Pursuant to the employment agreement with the Chief Executive Officer ("CEO"), the CEO dedicates 10% of his time in providing consulting and management services for Priortech. The CEO receives from the Company 90% of a full-time salary and is compensated directly by Priortech for the remaining 10% of his time.
The CEO serves as a member of the board of directors of Priortech.
F - 55
Camtek Ltd. and its subsidiaries
Notes to the Consolidated Financial Statements as at December 31, 2025
(Amounts in thousands, except per share data)
Note 21 - Fair Value Measurements
The level in the fair value hierarchy within which an asset or liability is classified is based on the lowest level input that is significant to the fair value measurement in its entirety.
The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024, aggregated by the level in the fair-value hierarchy within which those measurements fall:
|
December 31,
|
Quoted Prices in
Active Markets
for Identical Assets
|
Significant Other
Observable Inputs
|
Significant
Unobservable
Inputs
|
|||||||||||||
|
Description
|
2025
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||||
|
U.S. Dollars
|
||||||||||||||||
|
Assets
|
||||||||||||||||
|
Marketable securities (current assets)
|
|
|
|
|
||||||||||||
|
Marketable securities (non-current assets
|
|
|
|
|
||||||||||||
|
Total Assets
|
|
|
|
|
||||||||||||
|
December 31,
|
Quoted Prices in
Active Markets
for Identical Assets
|
Significant Other
Observable Inputs
|
Significant
Unobservable
Inputs
|
|||||||||||||
|
Description
|
2024
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||||
|
U.S. Dollars
|
||||||||||||||||
|
Assets
|
||||||||||||||||
|
Marketable securities (current assets)
|
|
|
|
|
||||||||||||
|
Marketable securities (non-current assets
|
|
|
|
|
||||||||||||
|
Total Assets
|
|
|
|
|
||||||||||||
The Company’s accounting policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer.
Marketable securities that are classified within Level 2 are classified as such because these assets are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs. See also Note 4.
F - 56
Item 19. Exhibits.
Exhibit No. | Exhibit |
1.1 | Memorandum of Association of Registrant (incorporated herein by reference to Exhibit 3.1 to Amendment No. 1 to the Registrant’s Registration Statement on Form F‑1, File No. 333‑12292, filed with the Securities and Exchange Commission on July 21, 2000); |
1.2 | Articles of Registrant, as amended (incorporated herein by reference to Exhibit 1.2 to the Registrant’s Annual Report on Form 20-F, File No. 000-30664, filed with the Securities and Exchange Commission on March 19, 2025). |
2.1 | Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated herein by reference to Exhibit 2.1 to the Registrant’s Annual Report on Form 20-F, File No. 000-30664, filed with the Securities and Exchange Commission on March 19, 2025). |
4.1 | 2018 Share Incentive Plan (incorporated herein by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-8, File No. 333-227931, filed with the Securities and Exchange Commission on October 22, 2018). |
4.2 | Form of Indemnification Agreement (incorporated herein by reference to Exhibit A to the Registrant’s Report of Foreign Private Issuer on Form 6-K, File No. 000‑30664, filed with the Securities and Exchange Commission on June 04, 2018). |
4.3 | Share Purchase Agreement by and between Chroma ATE Inc. and the Registrant dated February 11, 2019 (incorporated herein by reference to Exhibit 4.4 to the Registrant’s Annual Report on Form 20-F, File No. 000-30664, filed with the Securities and Exchange Commission on March 30, 2020). |
4.4 | Indenture, dated as of September 16, 2025, between Camtek Ltd and U.S. Bank Trust Company, National Association, as trustee, for the 0.00% Convertible Senior Notes due 2030 (incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 6-K, File No. 000-30664, filed with the Securities and Exchange Commission on September 16, 2025). |
| 4.5 | Form of 0.00% Convertible Senior Note due 2030 (included in Exhibit 4.4) |
8.1 | Subsidiaries of the Registrant (incorporated herein by reference to Exhibit 8.1 to the Registrant’s Annual Report on Form 20-F, File No. 000-30664, filed with the Securities and Exchange Commission on March 21, 2024). |
11.1 | Insider Trading Policy of the Registrant (incorporated herein by reference to Exhibit 11.1 to the Registrant’s Annual Report on Form 20-F, File No. 000-30664, filed with the Securities and Exchange Commission on March 19, 2025). |
12.1 | Certification of Chief Executive Officer required by Rules 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.* |
12.2 | Certification of Chief Financial Officer required by Rules 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.* |
13.1 | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** |
15.1 | Consent of Somekh Chaikin, Independent Registered Public Accounting Firm, a member firm of KPMG International.* |
97.1 | Camtek Ltd. Policy for Recovery of Erroneously Awarded Compensation (incorporated herein by reference to Exhibit 97.1 to the Registrant’s Annual Report on Form 20-F, File No. 000-30664, filed with the Securities and Exchange Commission on March 21, 2024). |
101 | Inline XBRL Instance Document |
101.SCH | Inline XBRL Taxonomy Extension Schema Document |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
__________
| ‡ | English translations from Hebrew original. |
| * | Filed herewith. |
| ** | Furnished herewith. |
82
SIGNATURES
The Company 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.
CAMTEK LTD. By: /s/ Rafi Amit Name: Rafi Amit Title: Chief Executive Officer |
Date: March 19, 2026
83
FAQ
What does Camtek Ltd. (CAMT) describe as its core business in this Form 20-F?
Camtek Ltd. focuses on inspection and metrology systems for semiconductor manufacturing. Its tools scan wafers with advanced optics and software to detect defects and measure features, supporting advanced packaging, chiplets, HBM, compound semiconductors, memory, CMOS image sensors, power, RF and MEMS applications.
How dependent is Camtek Ltd. (CAMT) on AI-related semiconductor demand?
Camtek states that approximately 50% of its revenues come from products supporting AI applications. These include inspection and metrology systems used for high-bandwidth memory and advanced packaging, so any slowdown or contraction in AI-related semiconductor investment could materially affect sales, utilization and profitability.
What geographic concentration risks does Camtek Ltd. (CAMT) report?
Camtek reports that in 2025 about 91% of sales came from the Asia-Pacific region, with China alone representing 49% of total revenues. Political tensions, export controls, trade barriers or economic slowdowns in these markets could significantly impact demand, collections, logistics and overall financial performance.
How do recent Middle East conflicts affect Camtek Ltd. (CAMT)?
Camtek’s main facilities are in northern Israel, and it describes repeated conflicts involving Iran, Hamas, Hezbollah and other groups between 2023 and 2026. Missile attacks, regional instability and disrupted air and sea routes could hinder operations, supply chains, staffing and product deliveries, harming results.
What capital structure developments does Camtek Ltd. (CAMT) disclose?
Camtek discusses prior equity offerings and two series of convertible senior notes, due 2026 and 2030. It used part of the 2030 notes proceeds to repurchase a substantial portion of the 2026 notes, while a small amount of the earlier series remains outstanding, affecting leverage and future dilution potential.
Who are the controlling shareholders of Camtek Ltd. (CAMT)?
Camtek notes that Priortech and Chroma together beneficially hold 38.04% of its ordinary shares as of March 5, 2026. A voting agreement means they act as joint controlling shareholders, allowing significant influence over director elections and major corporate decisions, which may diverge from minority shareholder interests.
How volatile has Camtek Ltd. (CAMT) stock been according to the filing?
Camtek reports its share price ranged from $47.41 to $174.61 between January 1, 2025 and March 4, 2026. It warns that such volatility, driven by market conditions, results, product news and geopolitics, can limit investors’ ability to time trades and may attract securities class action litigation.
Camtek
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Mar 3, 2026
[144] CAMTEK LTD SEC Filing
Feb 26, 2026
[144] CAMTEK LTD SEC Filing
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[144] CAMTEK LTD SEC Filing
Feb 25, 2026
[144] CAMTEK LTD SEC Filing
Feb 25, 2026
[144] CAMTEK LTD SEC Filing