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DGAP-HV: Electronics Line 3000 Ltd.: -11-

DJ DGAP-HV: Electronics Line 3000 Ltd.: Bekanntmachung der Einberufung zur Hauptversammlung am 03.08.2015 in Rishon LeZion mit dem Ziel der europaweiten Verbreitung gemäß §121 AktG

Electronics Line 3000 Ltd.  / Bekanntmachung der Einberufung zur Hauptversammlung 
 
30.06.2015 16:43 
 
Bekanntmachung gemäß  §121 AktG, übermittelt durch DGAP - ein Service der 
EQS Group AG. 
Für den Inhalt der Mitteilung ist der Emittent verantwortlich. 
 
=-------------------------------------------------------------------------- 
 
   ELECTRONICS LINE 3000 LTD. 
   (the 'Company') 
 
   14 Hachoma Street, Rishon LeZion, Israel 
   Telephone: +972-3- 9637777, Fax: +972-3-961658 
   www.electronics-line.com 
 
 
   NOTICE OF A SPECIAL GENERAL MEETING OF SHAREHOLDERS 
 
   Rishon LeZion, Israel 
   June 26, 2015 
 
   Dear Shareholder, 
 
   You are hereby invited to attend the Annual and special General 
   Meeting of Shareholders ('the Meeting') of the Company to be held at 
   14:30 on Monday, August 3, 2015, at the Company's offices at 14 
   Hachoma Street, Rishon LeZion, Israel. 
 
   The purpose of this Meeting is set forth in the accompanying 
   'Statement of the Company' for voting by means of Proxy. For the 
   reasons set forth in the Statement of the Company, the Company's Board 
   of Directors recommends that you vote 'FOR' the proposal set forth and 
   specified on the enclosed form for voting by means of Proxy (Appendix 
   B). 
 
   A copy of the Proxy is also available on the Company's web site: 
   www.electronics-line.com 
 
   The record date determining the eligibility of shareholders to vote at 
   the Meeting, as stated in Section 182 of the Israeli Companies Law, 
   1999, is the end of the day of trading in Frankfurt, Germany, the 
   exchange on which the shares of the Company are traded, on Monday, 
   July 6, 2015. If no trading of the Company's shares takes place on 
   such date the determining date shall be the last day of trading 
   preceding such date ('Record Date'). 
 
   The share capital of the Company at the time of the notice of the 
   Meeting is NIS (New Israeli Shekel) 68,564,240 divided into 13,712,848 
   ordinary shares. The total number of voting rights at time of notice 
   of the Annual General Meeting of Shareholders is 13,712,848. 
 
   Shareholders, whose shares are represented by a global share 
   certificate deposited at Clearstream Banking AG, and who wish to 
   exercise their voting rights, may choose one of the following three 
   alternative voting procedures approved by a recognized financial 
   institution: 
 
     1.    To send their Ownership Certificate in the form 
           attached hereto as Appendix A ('Ownership Certificate') 
           confirming their ownership of shares of the Company on the 
           Record Date approved by a recognized financial institution 
           together with the notice of appointment and instructions for 
           voting by means of Proxy in the form attached hereto as 
           Appendix B ('Proxy') directly to the Company. The Ownership 
           Certificate and the Proxy must be received by the Company at 
           its offices no later than 48 hours before the Meeting, via the 
           Company's fax number, +972-3-9616584 or mail 
           investor.relations@electronics-line.com as an alternative, or 
 
 
     2.    To send their Ownership Certificate approved by a 
           recognized financial institution together with the notice of 
           appointment and instructions for voting by means of Proxy via 
           their depository bank to BANKHAUS NEELMEYER AG, Am Markt 
           14-16, 28195 Bremen, GERMANY, fax number +49-(0) 421-3603-153, 
           no later than 48 hours before the Meeting. BANKHAUS NEELMEYER 
           AG will forward the shareholders' Proxies together with the 
           Ownership Certificate to the Company, or 
 
 
     3.    Shareholders who wish to vote in person shall 
           attend the Meeting at the said time and place with their 
           original Ownership Certificate, provided that they have 
           delivered their Ownership Certificate approved by a recognized 
           financial institution directly to the Company and that their 
           Ownership Certificate was received by the Company at its 
           offices no later than 48 hours before the Meeting, via the 
           said Company's fax number or mail as an alternative. 
 
 
   By Order of the Board, 
   Mr. Moshe Alkelai 
   Chairman of the Board 
 
   ELECTRONICS LINE 3000 LTD. 
   STATEMENT OF THE COMPANY 
 
   The enclosed Statement is solicited on behalf of the Board of 
   Directors (the 'Board') of Electronics Line 3000 Ltd. (the 'Company') 
   for use at the Company's special General Meeting of Shareholders (the 
   'Meeting') to be held at 14:30 on Monday, August 3, 2015, at the 
   Company's offices at 14 Hachoma Street, Rishon LeZion, Israel or at 
   any adjournment or postponement thereof, for the purposes set forth 
   herein. 
 
   It is proposed that at the Meeting, the shareholders of the Company 
   (the 'Shareholders') approve the following resolution: 
 
   To approve the Merger between a subsidiary of the Company's 
   controlling shareholder, RISCO Ltd. ('RISCO'), and the Company, the 
   details of which are set forth below (the 'Merger'). 
 
   The approval of this proposal requires the affirmative vote of at 
   least a majority of the votes of shareholders present and voting at 
   the Meeting in person or by proxy. In addition, the Merger will not be 
   approved if a majority of the shareholders present at the vote who are 
   not RISCO, RISCO's shareholders or anybody on their behalf, including 
   their relatives or bodies corporate under their control, are opposed 
   to it. 
 
   Only shareholders of record at the close of business on the Record 
   Date will be entitled to a notice of and to vote at the Meeting, 
   provided that such shareholders sent their Ownership Certificate and 
   Proxy to the offices of the Company, no later than 48 hours before the 
   Meeting, as detailed in the notice. 
 
   Shareholders may revoke the authority granted by their execution of 
   proxies at any time before the effective exercise thereof, by filing 
   with the Company a written notice of revocation or a duly executed 
   proxy bearing a later date, or by voting in person at the Meeting. 
 
   In order for there to be a legal quorum at the Meeting, there must be 
   present, in person or by proxy, no less than two (2) shareholders 
   holding or representing at least one-quarter (1/4) of the voting 
   rights in the Company. If after half an hour of the commencement of 
   the Meeting no legal quorum is present, the Meeting will automatically 
   be adjourned for one week and shall reconvene at the same time and 
   location, unless notified otherwise by the Board. At such adjourned 
   Meeting the same agenda will be applicable and the legal quorum will 
   be two (2) shareholders. 
 
   The share capital of the Company at the of time of the notice of the 
   Annual General Meeting of Shareholders is NIS (New Israeli Shekel) 
   68,564,240 divided into 13,712,848 ordinary shares. The total number 
   of voting rights at time of notice of the Annual General Meeting of 
   Shareholders is 13,712,848. 
 
   ITEM 1 -a Merger between the Company and RISCO's subsidiary 
 
   The Board and the Audit Committee have recommended to approve the 
   Merger between RISCO Line Ltd.- an Israeli corporation wholly owned by 
   RISCO which was incorporated in 31 May, 2015 (the 'Subsidiary') and 
   the Company, the details of which are set forth below. 
 
   The Proposed Merger contemplates the purchase by RISCO of all of the 
   Company's outstanding share capital owned by the public for a cash 
   consideration of 0.46 Euro per share (subject to withholding Taxes as 
   set forth below), in accordance with Sections 314-327 of the Israeli 
   Companies Law, 5759-1999 (the 'Israeli Companies Law'). RISCO, the 
   Subsidiary and the Company intend to effect the merger of the 
   Subsidiary with and into the Company, pursuant to which the Subsidiary 
   shall cease to exist, the Company shall become a wholly-owned 
   subsidiary of RISCO and its controlling shareholders- Mr. Moshe 
   Alkelai and Mrs. Mazal Alkelai (the 'Controlling Shareholders')- and 
   the Company Ordinary Shares issued and outstanding immediately prior 
   to the Effective Time, except Shares held directly by the Parent and 
   by Controlling Shareholders (Collectively, the 'Controlling 
   Shareholders Shares') (the Company Ordinary Shares except for the 
   Controlling Shareholders Shares being the 'Converting Shares'), will 
   be converted into the right to receive the Merger Consideration. 
 
   As further detailed below, The Company, RISCO, and the Subsidiary, 
   approached the Israeli Tax Authority, in order to request to 
   pre-approve withholding tax procedures applicable to the Merger, 
   according to which 30% of the Merger Consideration, as defined 
   hereunder, will be held in trust (0.138 Euro per share) (the 'Trust 
   Amount'). The Trust Amount applicable to certain shareholder will be 
   released by the Israeli Paying Agent, as defined hereunder, only if 
   such shareholder provides the Israeli Paying Agent with a written 
   Declaration in the agreed and approved format by the Israeli Tax 
   Authority. 
 
   Background of the Merger 
 
   On 21 May, 2015, RISCO presented to the Company its proposal as to the 
   major terms of a merger between the Company and the Subsidiary (the 
   'Proposed 
   Merger'). 
 
   The Proposed Merger contemplates the purchase by RISCO of all of the 
   Company's issued and outstanding share capital held by the public for 
   a cash consideration of 0.46 Euro per share, as a result of which the 
   Subsidiary would be merged with and into the Company and the Company 
   would become a wholly owned subsidiary of RISCO and its controlling 
   shareholders. 
 
   After considering the Proposed Merger as well considering the 
   definitive appraisal as to the share capital of the Company (as 
   attached hereto as Appendix C) that was prepared by an external 

(MORE TO FOLLOW) Dow Jones Newswires

June 30, 2015 10:43 ET (14:43 GMT)

DJ DGAP-HV: Electronics Line 3000 Ltd.: -2-

independent appraiser-Fahn Kanne Consulting, the subsidiary of Fahn 
   Kanne & Co which is the Israeli member of Grant Thornton (the 'Appraiser' 
   and the 'Appraisal'), the Audit Committee of the Company and the Board 
   of Directors of the Company approved the proposed terms of the 
   proposed merger and resolved to submit the Merger to the shareholders 
   general meeting for voting. 
 
   As required under Israeli law, Mr. Moshe Alkelai and Mrs. Sharon 
   Sheep, who were deemed to have personal interest in the Merger, did 
   not attend and participate in the Board meeting. The directors present 
   in the Audit Committee and the Board meeting were the external 
   directors- Prof. Dan Elnathan and Mr. Rafi Durst- as well as Mr. Yigal 
   Fatran. 
 
   On June 24, 2015, the parties executed the Merger Agreement. 
 
   Reasons for the Merger; Recommendation of the Board of Directors 
 
   The Audit Committee and the Board of Directors evaluated the terms of 
   the Merger, including the terms and conditions of the Merger Agreement 
   between the Company, Risco and the Subsidiary (the 'Merger Agreement'). 
   The Audit Committee and the Board of Directors approved the Merger 
   Agreement and the Merger, determined that the Merger is in the best 
   interests of the Company and its shareholders, unanimously approved 
   the execution, delivery and performance of the Merger Agreement and 
   the completion of the Merger, directed management to take such other 
   actions as are necessary to complete the Merger, resolved to recommend 
   that the shareholders approve the Merger and directed that such matter 
   be submitted for consideration by the shareholders at the Meeting. 
 
   In reaching these determinations, the Audit Committee and Board of 
   Directors considered (a) the information provided by the Company's 
   management as to the business, financial condition, results of 
   operations, and future prospects of the Company, (b) its familiarity 
   with the risks involved in achieving those prospects and objectives 
   under current industry and market conditions, and its familiarity with 
   the nature of the markets in which the Company operate, and (c) the 
   Appraisal which supports the consideration to be paid to the Company's 
   shareholders in connection with the Merger and was provided by the 
   Appraiser who is independent of each of the Company and its 
   Controlling Shareholders. 
 
   The Merger Agreement 
 
   The Merger Agreement provides for the Merger of the Subsidiary, with 
   and into the Company, upon the terms, and subject to the conditions of 
   the Merger Agreement, with the Company as the Surviving Company, all 
   in accordance with the relevant provisions of the Israeli Companies 
   Law. The Company will continue to exist following the Merger as 
   RISCO's and the Controlling Shareholders' wholly owned subsidiary. 
 
   Following the Merger, the Company will initiate the delisting of its 
   share capital, which will then be, in its entirety, owned by RISCO and 
   the Controlling Shareholders, from the Frankfurt Stock Exchange, so 
   that the share capital of the Company will no longer be publicly 
   traded. In addition, the Company's former shareholders will cease to 
   have any rights as shareholders of the Company, except for the right 
   to receive the Merger Consideration. 
 
   Effective Time of the Merger; Closing Date 
 
   The Merger will become effective upon the issuance and delivery by the 
   Companies Registrar of the Certificate of Merger in accordance with 
   the Israeli Companies Law (the 'Effective Time'). The certificate of 
   merger will be issued by the Israeli Companies Registrar following the 
   satisfaction of all requirements under the Companies Law if at least 
   fifty (50) days shall have elapsed after the filing of the merger 
   proposals by both the Company and the Subsidiary with the Israeli 
   Companies Registrar and at least thirty (30) days have elapsed after 
   the approval of the Merger by the Company's and the Subsidiary's 
   shareholders. The Merger Agreement provides that the closing of the 
   Merger shall take place as promptly as reasonably practicable (but no 
   later than the fifth business day) after satisfaction or waiver of the 
   conditions to the Merger (the 'Closing'). The parties are working to 
   complete the Merger as soon as practicable. However, the Merger is 
   subject to various closing conditions. No assurances can be given that 
   the parties will obtain the necessary approvals to complete the Merger 
   or that the parties will obtain them in a timely manner. 
 
   Merger Consideration 
 
   Ordinary Shares. The Converting Shares shall be converted into the 
   right to receive from RISCO 0.46 Euro in cash per Company Ordinary 
   Share without interest (the amount payable to a holder of Company 
   Ordinary Shares as a result of the Merger, the 'Merger Consideration', 
   which shall be subject to withholding Taxes as set forth below). 
 
   Stock Options. Prior to the Effective Time, the Company shall take all 
   actions necessary to provide that each option to acquire Company 
   Ordinary Shares automatically shall be cancelled and terminated at the 
   Effective Time without any payment or further rights or claims of the 
   holder thereof. 
 
   Share Capital of Subsidiary. The ordinary shares of the Subsidiary 
   issued and outstanding immediately prior to the effective time of the 
   Merger, will automatically be cancelled without any consideration 
   thereof, upon the effective time of the Merger. 
 
   Payment of the Merger Consideration 
 
   Prior to the Effective Time, RISCO shall appoint a Germany based bank 
   or trust company (the 'German Paying Agent') to act as paying agent 
   for the holders of Company Ordinary Shares in connection with the 
   Merger. In addition, under the Israeli Tax Ruling, as defined below, 
   assuming such Ruling will in fact be obtained, an Israeli Paying Agent 
   shall be appointed to act as a trustee for the Israeli withholding tax 
   purposes, as described below (the 'Israeli Paying Agent'). The German 
   Paying Agent and/or the Israeli Paying Agent shall receive, and hold 
   in trust for the benefit of holders of Company Ordinary Shares, the 
   aggregate Merger Consideration. RISCO shall deposit such aggregate 
   Merger Consideration with the German Paying Agent and/or the Israeli 
   Paying Agent not later than three business days following the 
   Effective Time. 
 
   RISCO and the Company shall instruct the German Paying Agent, as 
   promptly as reasonably practicable (but not later than the fifth 
   business day) after the Effective Time, to release to German central 
   depository Clearstream Banking AG, Frankfurt ('Clearstream'), cash in 
   an amount equal to the product of (A) the Merger Consideration payable 
   per Company Ordinary Share less the Withholding Tax Amount as defined 
   hereunder, multiplied by (B) the number of Converting Shares (the 
   product of (A) and (B), the 'Conversion Fund'). Clearstream shall 
   promptly deliver the Conversion Fund to the accounts of the depositary 
   banks of the owners of Converting Shares, which shall distribute the 
   respective and appropriate portion of the Conversion Fund to the 
   accounts of the owners of Converting Shares with such depositary banks 
   in accordance with customary stock surrender and payment procedures 
   under applicable regulations and terms and conditions of Clearstream. 
 
   At any time following the first anniversary of the Closing, Risco may 
   require the German Paying Agent to deliver to it any funds deposited 
   with the German Paying Agent which have not been disbursed to the 
   former holders of Converting Shares, and the Company shall be entitled 
   to require the German Paying Agent to return any portion of the 
   Conversion Fund not distributed to the owners of the Converting 
   Shares. Any amounts remaining unclaimed by such former shareholders 
   shall become, to the extent permitted by applicable Law, the property 
   of Risco, free and clear of all claims or interest of any Person 
   previously entitled thereto. If this Agreement is terminated prior to 
   the Closing (or the Merger does not become effective) for any reason 
   and any cash has been transmitted to the Paying Agent or Clearstream 
   prior to termination, such cash together with any interest or other 
   earnings thereon shall promptly be returned to RISCO. 
 
   Withholding Tax Procedures 
 
   Each of RISCO, the Company, the Depositary Banks of the owners of 
   Converting Shares the German Paying Agent and the Israeli Paying Agent 
   shall be entitled to deduct and withhold from the consideration 
   otherwise payable to any former holder of Converting Shares pursuant 
   to the Merger Agreement, any amounts required to be deducted and 
   withheld from such payments under the Israeli Income Tax Ordinance 
   [New Version], 1961, as amended, and the rules and regulations 
   promulgated thereunder (the 'Ordinance'), or under any other 
   applicable state, local, domestic or foreign Law (the amount withheld 
   per Converting Share being the 'Withholding Tax Amount'), provided, 
   however, that the withholding Taxes deduction in Israel shall be at 
   the highest applicable tax rate, unless otherwise indicated to the 
   Company the German Paying Agent and/or the Israeli Paying Agent, as 
   applicable, in a written approval from the ITA which provides a 
   withholding exemption or a reduced Tax rate, in which case the 
   deduction and withholding of any amounts under the Ordinance or any 
   other provision of Israeli law or requirement, if any, from the 
   aggregate Merger Consideration payable to such holder of record of 
   Converting Shares shall be made only in accordance with the provisions 
   of such approval. 
 
   The Company, RISCO and the Subsidiary, approached the Israeli Tax 
   Authority, in order to request to pre-approve the following 
   withholding tax procedures, applicable to the Merger (the 'Israeli Tax 

(MORE TO FOLLOW) Dow Jones Newswires

June 30, 2015 10:43 ET (14:43 GMT)

DJ DGAP-HV: Electronics Line 3000 Ltd.: -3-

Ruling'). To the extent the request is approved, the following 
   procedures shall apply: 30% of the Merger Consideration will be held 
   in trust (0.138 Euro per share) (the 'Trust Amount') for a period of 
   up to 180 days from the Closing Date (the 'Trust Period'), and an 
   Israeli Paying Agent will be appointed for this purpose. The Trust 
   Amount applicable to certain shareholder will be released by the 
   Israeli Paying Agent only if such shareholder provides the Israeli 
   Paying Agent during the Trust Period with a written Declaration in the 
   agreed and approved format by the Israeli Tax Authority, , that all of 
   the following conditions are met: (a) such shareholder is not an 
   Israeli resident; and (b) such shareholder acquired the shares after 
   the registration for trade of such shares on the Frankfurt Stock 
   Exchange (i.e., after 28 June, 2004); and (c) the shares were no 
   acquired by such shareholder while being an Israeli tax resident; and 
   (d) such shareholder holds less than 5% of the issued share capital 
   (the 'Declaration'). Such procedures shall not be applicable to shares 
   of the Company that were purchase through lsraeli brokers, In such a 
   case, the Trust Amount shall be released by the Israeli Paying Agent 
   to such Israeli brokers who will be responsible for the Israeli 
   withholding process. In any case that such Declaration is not provided 
   within the Trust Period, the Trust Amount will be fully transferred to 
   the Israeli Tax Authority. It should be stressed that at this date no 
   assurances can be given that the requested Israeli Tax Ruling will in 
   fact will be obtained. The Company will publish an immediate report 
   upon the receiving of the Israeli Tax Ruling. 
 
   To the extent that amounts are so withheld and paid over to the 
   appropriate Governmental Authority by or on behalf of RISCO or the 
   Company (such as, by a Depositary Bank of the beneficial owners of 
   Converting Shares the Paying Agent and/or the Israeli Paying Agent), 
   RISCO or the Company, as the case may be, shall be treated as though 
   it withheld an appropriate amount of consideration otherwise payable 
   pursuant to the Merger Agreement to any former holder of Converting 
   Shares and paid an appropriate amount to such Governmental Authority. 
   Any amounts so withheld and paid over to the appropriate Governmental 
   Authority shall be treated for all purposes as having been paid 
   directly to the Person in respect of which such deduction and 
   withholding was made. RISCO and the Company applied to the ITA to seek 
   a pre-ruling for the method of deduction and applicable Tax rules. In 
   no event shall RISCO or the Company be required to pay interest on any 
   amounts payable to holders of Converting Shares so long as RISCO 
   timely complies with its obligations under the Merger Agreement. 
 
   Conditions to the Completion of the Merger 
 
   The obligations of each of the Company, RISCO and the Subsidiary to 
   effect the Merger are subject to the satisfaction (or waiver, if 
   permissible under applicable Law) of the following conditions: 
 
     -     The Company Shareholders Approval shall have been 
           obtained in accordance with applicable Laws and the Company 
           Charter Documents; 
 
 
     -     No Law or Order enacted, promulgated, issued, 
           entered, amended or enforced by any Governmental Authority 
           (collectively, 'Restraints') shall be in effect enjoining, 
           restraining, preventing, prohibiting or making illegal the 
           consummation of the Merger. 
 
 
     -     At least 50 days shall have elapsed after the 
           filing of the Merger Proposals with the Companies Registrar 
           and at least 30 days shall have elapsed after the receipt of 
           the Company Shareholders Approval; 
 
 
     -     The Parties shall have performed in all material 
           respects all obligations required to be performed by it under 
           the Merger Agreement at or prior to the Closing Date; 
 
 
     -     The Company shall have obtained the Required 
           Regulatory Consent, which shall not include any burdensome 
           terms or conditions applicable to the Company, RISCO or their 
           respective Subsidiaries and Affiliates; 
 
 
     -     There shall not be any Restraint in effect or any 
           Action pending or, to the Knowledge of the Company, threatened 
           by or before any Governmental Authority that is reasonably 
           likely to (i) restrain, enjoin, prevent, prohibit or make 
           illegal the acquisition of some or all of the Converting 
           Shares by RISCO or the Subsidiary or the consummation of the 
           Merger, (ii) impose limitations on the ability of RISCO 
           effectively to exercise full rights of ownership of the 
           Company, (iii) restrain, enjoin, prevent, prohibit or make 
           illegal, or impose limitations on, RISCO's ownership or 
           operation of all or any material portion of the businesses and 
           assets of the Company, RISCO or any of their respective 
           Subsidiaries, or (iv) compel RISCO to dispose of any shares of 
           the Company or to dispose of or hold separate any material 
           portion of the businesses or assets of the Company, RISCO or 
           any of their respective Subsidiaries; 
 
 
   Insurance 
 
   The Merger Agreement provides that the Company shall purchase, as of 
   the effective time of the Merger, a 'run off' policy to maintain in 
   effect the directors' and officers' liability insurance with respect 
   to the period prior to the effective time of the Merger in the same 
   amount and terms as applicable prior to the effective time of the 
   Merger, with an effective term of seven years from the effective time 
   of the Merger, to cover any insured events up until the effective time 
   of the Merger. The 'run off' policy shall specifically state it may 
   not be terminated by the insurance company. 
 
   The Merger Agreement provides that the Company, for a period of seven 
   years after the effective time of the Merger, shall maintain in effect 
   the above 'run off' policy in accordance with its terms. 
 
   Termination 
 
           The Company and RISCO also agreed that the Merger 
           Agreement shall be terminated in any of the following events: 
 
 
     -     if the Merger is not consummated on or before the 
           Termination Date; provided, however, that the right to 
           terminate this Agreement under this clause shall not be 
           available to a party if the failure of the Merger to have been 
           consummated on or before the Termination Date was primarily 
           due to the failure of such party to perform any of its 
           obligations under this Agreement. 'Termination Date' means 
           December 31, 2015; provided, that the Termination Date may be 
           extended at RISCO's sole election by no more than 90 days in 
           the aggregate if on such date (a) the Company Shareholder 
           Meeting has not yet been held, (b) there are any Restraints 
           then in effect which are being challenged or appealed by RISCO 
           or at RISCO's request, (c) any Required Regulatory Consents 
           are then pending or have not been finally denied, (d) the 
           applicable waiting periods have not yet expired; 
 
 
     -     if any Restraint shall be in effect and shall have 
           become final and nonappealable; provided, however, that the 
           right to terminate this Agreement under this clause shall not 
           be available to a party if such Restraint was primarily due to 
           the failure of such party to perform any of its obligations 
           under the Merger Agreement required by applicable law; 
 
 
     -     if the Company Shareholder Approval is not obtained 
           by applicable law; 
 
 
     -     if the Company or RISCO shall have breached or 
           failed to perform any of its covenants or agreements set forth 
           in the Merger Agreement (or if any of the representations or 
           warranties of the Company or RISCO set forth in the Merger 
           Agreement shall fail to be true), which breach, failure or 
           inaccuracy (A) would (if it occurred or was continuing as of 
           the Closing Date) give rise to the failure of a condition set 
           forth in the Merger Agreement (B) is incapable of being cured, 
           or, if susceptible to cure, is not cured by the violative 
           party within 30 calendar days following receipt of written 
           notice from the other Party of such breach or failure; or 
 
 
   Amendment of the Merger Agreement 
 
   At any time prior to the Effective Time, the Merger Agreement may be 
   amended or supplemented in any and all respects, whether before or 
   after receipt of the Company Shareholder Approval, by written 
   agreement of the parties hereto; provided, however, that following 
   receipt of the Company Shareholder Approval, there shall be no 
   amendment or change to the provisions which by Law would require 
   further approval by the Company's shareholders without such approval. 
 
   Governing Law; Venue 
 
   The Merger Agreement shall be governed by, and construed in accordance 
   with, the Laws of the State of Israel without regard to its conflict 
   or choice of law principles. In the event of any controversy, claim or 
   dispute between the parties arising out of or relating to the Merger 
   Agreement or any alleged breach thereof, either party may demand that 
   the dispute be exclusively resolved through binding arbitration by so 
   notifying the other party in writing. The arbitrator's decision shall 
   be final, conclusive and binding on the parties to the Arbitration, 
   and if either party requests the Arbitration shall be the exclusive 
   forum and dispute resolution procedure for any claims arising out of 

(MORE TO FOLLOW) Dow Jones Newswires

June 30, 2015 10:43 ET (14:43 GMT)

DJ DGAP-HV: Electronics Line 3000 Ltd.: -4-

this Agreement or the subject matter hereof. 
 
   Interests of Controlling Shareholders in the Merger 
 
   Since RISCO is a controlling shareholder of both the Company and the 
   Subsidiary, then the Merger, with respect to the Company is deemed a 
   transaction in which a controlling shareholder has a personal 
   interest, pursuant to Section 270(4) of the Companies Law, and 
   therefore the Required Approval, as more specifically detailed above, 
   is subject to the requirements of Section 275 of the Companies Law, 
   requiring for an extraordinary transaction of a public company, with a 
   controlling shareholder, or in which a controlling shareholder has a 
   personal interest, the approval of the audit committee, the board of 
   directors and the shareholders, in that order. 
 
   It is proposed that at the Meeting, the following resolution be 
   adopted: 
 
   1. 'RESOLVED, to approve the Merger between the Subsidiary and the 
   Company.' 
 
   The Board recommends a vote FOR the approval of this proposed 
   resolution. 
 
   Dated: June 26, 2015 
 
   By Order of the Board of Directors, 
   Mr. Moshe Alkelai 
   Chairman of the Board 
 
   Appendix A 
 
   Electronics Line 3000 Ltd. 
 
   Ownership Certificate 
 
        Company Name:    Electronics Line 3000 Ltd. 
 
   Company Registration Number: 51-334253-5 
 
   We, the undersigned, hereby certify, as of July 6, 2015, as follows: 
 
   Details of Shareholder: 
 
   (If there are several joint owners of the shares, their details should 
   all be included) 
 
     (1)   Name of shareholder ________________ 
 
 
     (2)   Nationality of shareholder ___________ 
 
 
     (3)   I.D. No. __________________ 
 
 
           If shareholder does not hold an Israeli I.D. - 
 
 
           Passport No. ______________ The Country of issuance 
           ________________ 
 
 
           If shareholder is a corporation - 
 
 
           Corporate identity number ___________ 
 
 
           Country of incorporation __________ 
 
 
   Details on the Shares: 
 
     (4)   Name of the security - Ordinary Share; 
 
 
           Par value - N.I.S 5.00; 
 
 
           ISIN code - IL 0010905052 
 
 
     (5)   Number of Share - __________ 
 
 
     (6)   Type of Shares: Ordinary 
 
 
   Approval by the recognized financial institution: 
 
   By: ____________ 
 
   Date: _____________ 
 
   Appendix B 
 
   ELECTRONICS LINE 3000 LTD. 
   THIS NOTICE OF APPOINTMENT AND INSTRUCTIONS FOR VOTING BY 
   MEANS OF PROXY ('PROXY') IS SOLICITED BY THE BOARD OF DIRECTORS 
   FOR THE SPECIAL GENERAL MEETING OF SHAREHOLDERS 
   TO BE HELD ON AUGUST 3, 2015 
 
   KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned hereby 
   constitutes Sari Ellenberg and Yaron Herman, each of them, the true 
   and lawful attorneys, agents and proxies of the undersigned, with full 
   power of substitution, to vote with respect to all the Ordinary Shares 
   of ELECTRONICS LINE 3000 LTD. (the 'Company'), standing in the name of 
   the undersigned at the close of trading on Monday, July 6, 2015, at 
   the General meeting of Shareholders of the Company to be held at 14:30 
   on Monday, August 3, 2015, at the Company's offices at 14 Hachoma 
   Street, Rishon LeZion, Israel and any and all adjournments thereof, 
   with all power that the undersigned would posses if personally present 
   and especially (but without limiting the general authorization and 
   power hereby given) to vote as follows: 
 
   The shares represented by the Proxy will be voted in the manner 
   directed, and if no instructions to the contrary are indicated, will 
   be voted 'FOR' in all Proposals listed above. 
 
 
 
        Dated:       , 2015 
 
 
 
        Name 
 
 
 
        Signature 
 
 
 
   Please sign exactly as name appears at the Ownership Certificate. Each 
   joint owner should sign. Executors, administrators, trustees, etc. 
   should indicate the capacity in which they sign. 
 
   Appendix C 
 
   Share Capital Appraisal 
 
   Electronics Line 3000 Ltd. 
   Company Valuation (May 2015) 
 
   Table of Contents 
 
        1.     INTRODUCTION 
 
        1.1    Purpose of engagement 
 
        1.2    About the Company 
 
        1.3    Objective of the Work 
 
        1.4    Sources of information 
 
        1.5    Summary of valuation results 
 
        2.     LIMITING CONDITIONS 
 
        3.     COMPANY OVERVIEW 
 
        3.1    General 
 
        3.2    New business model - distribution via Risco 
 
        3.3    Main products and products families 
 
        3.4    Global Partnerships 
 
        3.5    Company's Strategy 
 
        3.6    Historical financial performance 
 
        4.     INDUSTRY OUTLOOK 
 
        4.1    The Smart Home Security Market 
 
        4.2    Market forecast 
 
        4.3    Falling System Costs 
 
        4.4    Increased competition in the market 
 
        4.5    Trends in technology 
 
        4.6    Intrusion alarm trends 
 
        4.7    Competitors 
 
        5.     METHODOLOGY 
 
        5.1    General 
 
        5.2    Applied Valuation Method 
 
        5.3    Date of Valuation 
 
        6.     VALUATION ASSUMPTIONS 
 
        6.1    Forecast Period 
 
        6.2    New business model 
 
        6.3    Underlying assumptions of the forecast 
 
        6.4    Discount rate 
 
        6.5    Financial Liabilities 
 
        6.6    Summary of the valuation 
 
   1. Introduction 
 
   1.1 Purpose of engagement 
 
   At the request of the management of Electronics Line 3000 Ltd. 
   (hereinafter - 'EL' or 'Electronics Line' or 'the Company'), we were 
   engaged to assist in performing a valuation of the share capital of 
   the Company as of December 31, 2014. 
 
   1.2 About the Company 
 
   Electronics Line was incorporated in Israel in December 2002. The 
   Company's shares are publicly traded on the General Standard, a market 
   operated by the Frankfurt Stock Exchange. 
 
   The Company is engaged in the design, development, production, 
   marketing and sale of electronic security with remote management 
   solutions, and complementary products for the mass residential and 
   small commercial markets. These solutions can be monitored and can 
   enable remote management of the premises for security, and automation 
   and video application. 
 
   The registered office of the Company is located at Rishon LeZion, 
   Israel. 
 
   1.3 Objective of the Work 
 
   For the purpose of this valuation analysis, we have employed the 
   Income Approach that is based on the Discounted Cash Flow (DCF) method 
   of valuation, which we found to be the most appropriate in this case. 
 
   The valuation of the Company is primarily dependent on the feasibility 
   of the financial projections provided by the management of the Company 
   and ultimately achieving the projected results. 
 
   1.4 Sources of information 
 
   The information was principally obtained through discussions with the 
   management of the Company, a review of several agreements, financial 
   reports, investor presentations, business plans and other relevant 
   documents and through outside research. 
 
   All the information provided by management have been accepted without 
   further verification as correctly reflecting the results of operations 
   and the financial and business conditions of the Company. We have not 
   performed an audit, review or compilation of this information in the 
   capacity of certified public accountants. Our work cannot be relied 
   upon to discover errors, irregularities, or illegal acts. 
 
   Please refer to the Limiting Conditions under which this work was 
   prepared. 
 
   The valuation was performed, among other things, on the basis of the 
   following sources of information: 
 
     *     5 year's business plan of the Company (including 
           financial projections). 
 
 
     *     Presentation regarding Company's finance 
           projections. 
 
 
     *     Annual financial statements of the Company for the 
           years 2010 - 2014. 
 
 
     *     Legal agreements. 
 
 
     *     Other information we received, at our request, from 
           the management of EL, including meetings and discussions we 
           held with the management. 
 
 
     *     In addition, we also made use of other available 
           public information collected by us. 
 
 
   1.5 Summary of valuation results 
 
   Below is a summary of the valuation results of the company. 
 
   a. Methodology 
 
   To value the equity of Electronics Line, we applied the Income 
   Approach, utilizing the DCF model. 
 
   When applying the Income Approach, the annual free cash flows of the 
   Company was forecasted for the entire projection period. This was then 
   subsequently discounted to the present value through the application 
   of a discount rate of 15% that reflects the appropriate risk for the 
   Company. The present value of aggregate annual free cash flows 
   represents the total capital or the net asset value of the operating 
   entity, which totals the combined debt and equity capital or 
   enterprise value of the Company. 
 
   b. Valuation results 
 
   Based on the assumptions and estimates as set out below in this 
   report, the equity value of Electronics Line is estimated between $7.5 
   and $8.5 million, as follows: 
 
              Lower Range   Upper Range 
 
        WACC  USD Thousand  USD Thousand 
 
        14%      7,927         9,073 
 
        15%      7,456         8,502 
 
        16%      7,053         8,009 
 
   For further details see chapter 6 and appendixes A, B and C. 
 
   c. Trading Market Value 
 
   It should be noted that the Trading Market Value of the company in the 
   last few months is lower than the calculated estimated value: the 
   average adjusted close price of the shares was EUR0.25 in the last 
   month, EUR0.31 in the last 6 months and EUR0.41 in the last year. 
 
   For further details about the Trading Market Value see appendix F. 
 
   d. Book Value 
 
   The equity book value as of December 31st 2014 is $4,449 thousands. 
 
   e. Contingent Claim 
 

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It should be noted that the Company is in process of filing a lawsuit 
   against its battery manufacturer (as well as against the insurance 
   company of the battery manufacturer) in sum of NIS 13.5M. We were 
   informed that as of the valuation date, the legal advisors of the 
   Company cannot predict the chances of winning the lawsuit since the 
   legal process is still at its preliminary stage, before a statement of 
   defense was submitted (see appendix E). 
 
   In addition, one of the Company's clients filed a lawsuit against the 
   Company on the grounds of a commercial dispute. The customer claims 
   damages and compensation in the amount of NIS 5M. We were informed 
   that as of the valuation date, the legal advisors of the Company do 
   not expect the Company to pay any material compensation. 
 
   Therefore, the estimated value of the Company as described below does 
   not include the possible positive effect and negative effect of the 
   abovementioned lawsuits. 
 
   The reader of this report should take into account the adjusted value 
   according to the predicted chances of this contingent claims. 
 
   We reserve the right to update our work in view of new information 
   that will be brought to our attention in this matter. 
 
   2. Limiting Conditions 
 
   This work constitutes the estimated value of Electronics Line 3000 
   Ltd. No other use may be made of this work, including being quoted in 
   a prospectus and/or any other document, without first obtaining the 
   express written consent from Fahn Kanne Consulting Ltd., save that 
   Fahn Kanne Consulting Ltd. has consented that this work may be 
   included in the materials sent to EL shareholders together with the 
   invitations for convening of shareholders meetings to be published by 
   the Company at Frankfurt Stock Exchange. 
 
   This work is based on, among other things, data obtained from the 
   management of the Company. The responsibility for the reliability of 
   the information, the data, representations and various explanations 
   with which we were provided in connection with the performance of the 
   work rests with the suppliers of the information. We are unable to 
   confirm the accuracy, integrity and fairness of the information. We 
   would like to emphasize that this work does not include a due 
   diligence and does not include an examination and verification of the 
   aforementioned data. Therefore, our work shall not be construed or 
   considered to be confirmation of the correctness, integrity or 
   accuracy of the data with which we were provided. 
 
   Under no circumstances whatsoever, are we to be held liable for any 
   loss, damage, cost or expense to be caused in any manner or form from 
   acts of fraud, misrepresentation, misstatement, provision of incorrect 
   information or withholding of information from us. 
 
   For purposes of this work, we assumed that the information provided to 
   us is accurate, complete, and fair and nothing has come to our 
   knowledge that might indicate a lack of reasonableness of the data we 
   used. If it becomes apparent that this assumption is incorrect, our 
   recommendation would change accordingly. Therefore, we reserve the 
   right to update our work in view of new information that was not 
   brought to our attention prior to our rendering a valuation in this 
   matter. In addition, this work should not be construed as a 
   recommendation to hold any shares, to vote in any matter, or as a 
   recommendation to purchase or sell the shares of the Company on the 
   basis of the findings of the work. 
 
   This opinion should not be construed as legal advice or a legal 
   opinion. Explanations of various documents that we reviewed were given 
   solely for purposes of this economic opinion. The information 
   appearing in our report should not be construed as containing all of 
   the information that a potential investor might need and it is not 
   designed to appraise the value of the Company for a different 
   investor, since different investors may have different goals and 
   considerations, as well as different methods of examination based on 
   different assumptions. Accordingly, the estimated economic value on 
   the basis of which various factors may perform economic transactions 
   could also be different. 
 
   We would like to point out that we have no personal interest in the 
   shares of the Company. 
 
   This valuation reflects our assessment of the various parameters and 
   is based an the information in our possession. If such assessments do 
   not reach fruition, the actual results may be significantly different 
   than the results of our appraisal. 
 
   Any third party who would wish to make use of this work may do so only 
   after signing a Consultant Release Letter in the formulation agreed by 
   us. 
 
   Neither bahn Kanne Consulting Ltd. nor any individuals associated with 
   this report shall be required by reason of this report to provide 
   testimony or to appear in tourt or at other legal proceedings, unless 
   specific arrangements to do so have been made. 
 
   We recommend that the reader peruse all of the assumptions made during 
   the entire appraisal process. 
 
   Sinccrely yours, 
 
   Kahn Kanne Consulting Ltd. 
 
   May 21, 2015 
 
   3. Company Overview 
 
   3.1 General 
 
   Electronics Line was incorporated in Israel in December 2002. The 
   Company's shares are publicly traded on the General Standard, a market 
   operated by the Frankfurt Stock Exchange. 
 
   The Company provides security solutions for the residential and small 
   commercial markets. 
 
   The Company is engaged in the design, development, production, 
   marketing and sale of electronic security with remote management 
   solutions, and complementary products for the mass residential and 
   small commercial markets. These solutions can be monitored and can 
   enable remote management of the premises for security, and automation 
   and video application. The registered office of the Company is located 
   at 14 Hachoma Street, Rishon LeZion, Israel. 
 
   3.2 New business model - distribution via Risco 
 
   We were informed that the Company signed a distribution agreement with 
   Risco Ltd. (hereinafter 'Risco') commencing October 2014. 
 
   Starting October 2014, all distribution activity will be provided via 
   Risco - sales managers, warehouse management, shipments, custom etc. 
   will be Risco's responsibility. 
 
   According to the Company management, the main reasons for this 
   decision are as follow: 
 
 
 
       1.    Use Risco's global structure for better coverage. 
 
 
       2.    Saving sales cost using Risco's professional 
             sales team. 
 
 
       3.    Operational synergies with Risco that will allow 
             the Company to invest in R&D and marketing activities. 
 
 
       4.    Introduce affordable products to Risco's 
             customers. 
 
 
       5.    Reduce dependency on key customers. 
 
 
 
   For its distribution efforts, Risco will receive 15% of sales to 
   current customers and 20%-25% from sales to new customers. 
 
   Following the agreement, the Company has reduced its S&M personnel and 
   other S&M expenses. 
 
   In addition, the Company sold its entire inventory to Risco in the 
   last quarter of 2014, thus effecting 2014 financial results. 
 
   3.3 Main products and products families 
 
   The Company offers an array of security solutions for every need. EL's 
   wireless control systems enable end-users to choose the level of 
   control and monitoring they require using innovative remote solutions. 
 
   EL solutions enable new levels of control and maintenance in protected 
   sites through the ELAS (Electronics Line Application Server - see 
   description below), a proprietary remote management server. The 
   Company enjoys a unique market position in supplying ELAS-governed 
   systems for the home and workplace, which provide the multiple 
   benefits of a virtual security presence, convenient home automation, 
   and energy efficiency, all customized by the end-user and/or the 
   service provider. 
 
   EL's extensive product line includes both wired and wireless 
   solutions, as well as the integration of both types into one hybrid 
   system. EL solutions offer enhanced detection and 
   PSTN/IP/GSM/GPRS-based event reporting, along with advanced remote 
   management tools. The back-office support and customized branding of 
   EL solutions provide superior security with significant business 
   benefits and market expansion potential. 
 
   Advanced security detectors supply excellent interior and perimeter 
   protection while safety detectors offer enhanced environmental and 
   personal safety including: smoke, gas and water leak detection, panic 
   buttons and much more. 
 
   The systems can be activated using a variety of local control devices 
   such as keyfobs and keypads. EL also offers end-users and providers 
   advanced remote management applications for comprehensive control over 
   the system from any location. 
 
   Complementing accessories and add-ons include home automation modules, 
   zone expanders, receivers, sirens and more for a complete security 
   offering. 
 
   ELAS (Electronics Line Application Server) 
 
   ELAS is EL's cloud-based server which enables EL's intrusion systems 
   to be controlled remotely using the MyELAS smartphone app. 
 
   ELAS acts as a proxy that mediates between the various applications 
   and the panels. When the end-user exerts the MyELAS app, the 
   application connects to ELAS and ELAS in turn connects to its main 
   panel. Data is then transferred between the panel and the smartphone 
   in real-time. 
 
   Smartphone App 
 
   The MyELAS app enables end-users to control their EL intrusion systems 
   remotely, directly from their smartphones or via the web application 
   with the push of a button, giving them peace of mind at all times. 
 
   Remote Configuration and Diagnostics 
 

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ELAS enables remote configuration and diagnostics, providing a more 
   efficient way for installers to troubleshoot and solve issues without 
   the need for extraneous onsite visits. 
 
   Utilizing the most Stringent Security Technologies 
 
   ELAS utilizes security technologies including encryption, advanced 
   firewalls and additional security safeguards that comply with the most 
   rigorous security standards to ensure that data cannot be accessed by 
   unauthorized users. 
 
   Reliable and Scalable 
 
   Our ELAS cloud server offers total reliability with full redundancy 
   during server downtime, enabling seamless operation in times of 
   crisis. The system offers a totally scalable architecture, i.e. the 
   ability to easily increase the capability of the server with the 
   growth of your company. 
 
   iConnect 2-Way 
 
   A powerful and streamlined 2-way wireless intrusion system, designed 
   for the residential and small commercial markets. 
 
   Connection to the cloud-based ELAS server enables users to remotely 
   control their iConnect 2-Way systems through the myELAS app (also 
   available via web browser). Visual verification is also supported with 
   the purchase of a PIR camera detector enabling users to view images on 
   demand of their homes or businesses directly from their smartphones, 
   allowing them to feel totally in control at all times. Users will 
   receive email/ SMS/ voice notifications in the event of an alarm, and 
   can also arm or disarm their iConnect 2-Way systems remotely. 
 
   iConnect 2-Way supports GPRS with GSM and IP as backup or IP and PSTN 
   as backup, and can be remotely configured saving installers time and 
   hassle. A wide range of 2-way detectors and accessories can be used 
   with the system. 
 
   Commpact 
 
   The Commpact intrusion system is named for its streamlined, 
   space-saving design, while offering a professional, highly reliable 
   system at a competitive price. 
 
   Commpact's connectivity to the cloud-based ELAS server enables it to 
   be controlled remotely by EL's smartphone app (also available via web 
   browser) which offers users the possibility to arm/disarm the system 
   remotely as well as to receive email/ SMS/ voice notifications and to 
   view and store a history of events. 
 
   Commpact supports a wide range of security and safety accessories 
   including elderly care and detectors against smoke, flood and 
   poisonous gases. 
 
   The simple and quick wireless installation and remote programming of 
   the Commpact system add further to its appeal as a powerful, 
   convenient system which allows users to enjoy a complete sense of 
   control as well as peace of mind. 
 
   Prime 
 
   A basic, reliable and robust security system using one-way wireless FM 
   technology. The system uses PSTN and GSM connectivity and is 
   compatible with all of EL's wireless keypads and peripherals. Prime 
   supports variable applications such as SMS event notifications, remote 
   programming and maintenance, audio communication or range extension. 
 
   3.4 Global Partnerships 
 
   In March 2010 Risco acquired a controlling interest in the Company. 
   Risco intends to maintain the Company's product offerings and 
   independence in the market by growing it as Risco's residential arm, 
   through product portfolio expansion into video and management 
   solutions together with its major partners worldwide. 
 
   In order to increase the Company's global coverage and to have better 
   penetration into new and existing markets, in August 2010, the Company 
   entered into management and distribution agreements with Risco as 
   Risco has the facilities to import, promote, sell, market and 
   distribute the products in the territory (as defined in the agreement) 
   and is willing to act as the supplier's non-exclusive distributor of 
   the 'Products in the Territory'. 
 
   The Company reorganized its sales force in order to achieve a better 
   coverage in its target markets. Mr. Douglas Luscombe, the Company's 
   CEO, was located in the UK, and several regional Sales Managers (RSM) 
   were assigned to cover the rest of Europe and the Russian markets. 
 
   The Company has a presence, and believes it is well positioned in 
   important markets around the world, in particular Northern and Western 
   Europe, and consistently strengthening its position in additional 
   regions in Latin America, APAC and more. The Company's brand is 
   associated with high quality products and solutions. 
 
   The Company continues to develop and expand its marketing and sales 
   capabilities with a focus on strategic customers and markets, while at 
   the same time, providing more marketing and technical support to 
   existing customers. 
 
   3.5 Company's Strategy 
 
   The Company is engaged in the design, development, production, 
   marketing and sales of next-generation security solutions for the 
   residential and small commercial markets. 
 
   Key elements of the Company's growth strategy include: 
 
           * Continuing to position the Company's advanced 
           2way wireless products as an innovative quality solution that 
           reduces operating expenses for the service provider and 
           increases functionality and control for the end user. 
 
 
           * Expanding and strengthening relationships with 
           key target customers in order to sell wireless security with 
           remote management solutions to their customers. 
 
 
           * Providing a full range of market solutions - from 
           standard, low cost solutions to high end, advanced solutions. 
 
 
           * Increasing services which are available as part 
           of the Company's platform for remote management solutions, 
           including advanced video capabilities, remote management 
           applications and more. 
 
 
           * Leveraging wireless technology and various 
           platforms to develop new solutions. 
 
 
           * Invest in both short-term and long-term R&D in 
           order to improve product design and achieve lower production 
           costs. 
 
 
   3.6 Historical financial performance 
 
   Below are the income statements of the Company as of December 31st for 
   the years 2010-2014 (in USD thousands): 
 
  USD        Audited   Audi-   Audi-   Audi-  Audited  10'-14-  10'-14' 
  Thousands     2010     ted     ted     ted     2014        '  Accumu- 
                        2011    2012    2013            Avera-    lated 
                                                            ge 
 
  Revenues    26,717  24,164  14,331  16,534   12,200   18,789   93,946 
 
  Cost of     18,338  15,745   9,007   9,507    8,286   12,177   60,883 
  revenues 
 
  Gross        8,379   8,419   5,324   7,027    3,914    6,613   33,063 
  profit 
 
               31.4%   34.8%   37.2%   42.5%    32.1%    35.2%    35.2% 
 
  Operating    1,884   1,733   1,247   1,235    1,119    1,444    7,218 
  costs and 
  expenses: 
  Research 
  and 
  develop- 
  ment 
 
                7,1%    7,2%    8,7%    7,5%     9,2%     7,7%     7,7% 
 
  Selling      3,840   2,878   1,556   1,851    1,635    2,352   11,760 
  and 
  marketing 
 
               14.4%   11.9%   10.9%   11.2%    13.4%    12.5%    12.5% 
 
  General      3,167   1,977   1,678   2,146    1,965    2,187   10,933 
  and 
  adminis- 
  trative 
 
               11.9%    8.2%   11.7%   13.0%    16.1%    11.6%    11.6% 
 
  Other        4,450     315   (402)       -        -      873    4,363 
  expenses 
  (income), 
  net 
 
  Total       13,341   6,903   4,079   5,232    4,719    6,855   34,274 
  operating 
  costs 
 
               49.9%   28.6%   28.5%   31.6%    38.7%    36.5%    36.5% 
 
  EBIT         (512)   1,831     843   1,795    (805)      630    3,152 
  excluding 
  other 
  expenses 
 
               -1.9%    7.6%    5.9%   10.9%    -6.6%     3.4%     3.4% 
 
  Operating  (4,962)   1,516   1,245   1,795    (805)    (242)  (1,211) 
  profit 
  (loss) 
 
              -18.6%    6.3%    8.7%   10.9%    -6.6%    -1.3%    -1.3% 
 
  Financial       62      51       -     167       49       66      329 
  income 
 
  Financial      428     405     166     130      130      252    1,259 
  expenses 
 
  Gain from        -   1,224       -       -        -      245    1,224 
  sale of 
  subsidia- 
  ry 
 
  Income     (5,328)   2,386   1,079   1,832    (886)    (183)    (917) 
  before 
  taxes 
 
  Taxes on     (523)    (54)       -   1,095  (1,352)    (167)    (834) 
  income 
  (tax 
  benefit) 
 
  Net        (5,851)   2,332   1,079   2,927  (2,238)    (350)  (1,751) 
  profit 
  (loss) 
 
  Net         (0.58)    0.18    0.08    0.21   (0.16)   (0.05)   (0.27) 
  profit 
  (loss) 
  per share 
 
           * The Company's sales volume decreased by 26% from 
           US$ 16.5 million in 2013 to US$ 12.2 million in 2014, mainly 
           as a result of the delay in launching a new product line, 
           which serves as the basis for the Company's volume 
           expectations. 
 
 
           * Accordingly, the gross profit decreased from US$7.0 million 
           2013 to US$ 3.9 million in 2014. The gross profit margin 
           decreased from 42.5% in 2013 to 32.9% in 2014. 
 
 
           * In addition to the sales drop, the sharp decrease in the 
           gross margin was amplified by special discounts and promotion 
           activities carried out in order to stimulate sales. 
 
 
           * It should be noted that sales starting from the fourth 
           quarter of 2014 and onwards are presented as net sales, after 
           deduction of Risco's commission. The reader should consider 
           this when comparing profit ratios across the years. 
 
 
   Below are the Company's balance sheets as of December 31st, for the 
   years 2010-2014 (in USD thousands): 
 
  USD Thousands            Dec-31    Dec-31    Dec-31    Dec-31    Dec-31 
                             2010      2011      2012      2013      2014 
 

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Cash and cash               983     1,687       803     1,988       219 
  equivalents 
 
  Trade receivables         2,970     2,017       658       927     3,971 
 
  Other accounts            1,484     1,912       170       164        38 
  receivable 
 
  Inventories               5,494     1,423     4,042     3,912     2,023 
 
  Total current assets     10,931     7,039     5,673     6,991     6,251 
 
  Property, plant and       1,987       524       609       574       466 
  equipment, net 
 
  Intangible assets           504       403       303       202       101 
 
  Deferred taxes              491       483       498     1,593       241 
 
  Security deposits            97        80        17        34        12 
 
  Total non current         3,079     1,490     1,427     2,403       820 
  assets 
 
  Total Assets             14,010     8,529     7,100     9,394     7,071 
 
  Short term credit         3,517     1,244       351       179         - 
  from banks 
 
  Short term credit         3,817         -         -         -         - 
  from related parties 
 
  Trade payables            5,024     2,796     1,956     1,728       851 
 
  Income taxes payable        149         -         -         -         - 
 
  Other current             2,162       925       811       563     1,737 
  liabilities 
 
  Total current            14,669     4,965     3,118     2,470     2,588 
  liabilities 
 
  Loans from banks          1,065       527       179         -         - 
 
  Employee benefit            165       140       143       240        34 
  liabilities, net 
 
  Other long term           1,201       426         -         -         - 
  liabilities 
 
  Deferred taxes              379         -         -         -         - 
 
  Total non current         2,810     1,093       322       240        34 
  liabilities 
 
  Share capital            10,933    15,933    15,933    15,933    15,933 
 
  Additional paid in        6,453     6,474     6,584     6,632     6,651 
  capital 
 
  Foreign currency          1,413         -         -         -         - 
  translation reserve 
 
  Accumulated deficit    (22,268)  (19,936)  (18,857)  (15,881)  (18,135) 
 
  Total equity             -3,469     2,471     3,660     6,684     4,449 
 
  Total liabilities and    14,010     8,529     7,100     9,394     7,071 
  equity 
 
   4. Industry Outlook 
 
   4.1 The Smart Home Security Market1 
 
   General 
 
   Security, as such, is becoming a huge market worldwide, mainly due to 
   the rising crime rates in different parts of the world. As a result, 
   the electronic security equipments are expected to find potential 
   opportunities in this market. 
 
   The penetration level of security solutions in residential sector is 
   witnessing a rapid growth since the last few years. There are several 
   factors that can be attributed to this growth, such as increase in 
   home burglary rates, attractive insurance policies to residents for 
   installation of security solutions, growth in the tablets markets and 
   more. 
 
   The market for home security system solutions is, however, facing 
   challenges with respect to awareness levels about technological 
   advancements and higher cost of the solution. There are numerous 
   initiatives being taken by companies as well as governments to enhance 
   the awareness levels and achieve better co-operation amongst the 
   solution providers present along the value chain. 
 
   1 Source: the smart home security market, market analysis, vendor 
   Profiles & forecast, nextmarket insights. 
 
   Market Share 
 
   With increased awareness and increased adoption, it is expected that 
   the price of the solution will gradually decrease. In terms of revenue 
   generation as of 2011, North America held the highest share, i.e. 
   55.6%, followed by Asia-Pacific with 28.4%. 
 
   These systems are thus supposed to provide potential growth 
   opportunities to the solution providers. With respect to different 
   types of homes wherein the security solutions are utilized, 
   independent homes are observed to hold the highest share, i.e. 80.1% 
   in 2011. However, the adoption rate is expected to grow rapidly in 
   apartments in near future owing to the rise in nuclear families. 
 
   The global home security solutions market is expected to grow from 
   $20.64 billion in 2011 to $34.46 billion in 2017 at a CAGR of 9.1% 
   from 2012 to 2017. In order to achieve appropriate growth along with 
   profitability, companies need to largely focus on three specific 
   areas; namely provision of cost effective solution, product 
   leadership, and significant market presence. 
 
   Market transition 
 
   The home security market is in a period of great transition. A market 
   built over decades upon the bedrock of professionally installed and 
   monitored solutions is beginning to see cracks in the foundation as 
   new providers and technologies begin to enter the market. 
 
   One of the biggest changes in this market over the past few years is 
   the maturation and mass commercialization of smart home and Internet 
   of things technology. The mobile war 'peace dividend' has resulted in 
   low cost sensors and widely pervasive touch screen powered mobile 
   phones and tables with associated app frameworks, while cloud 
   computing has enabled scalable, low-cost internet based management of 
   in-home security and smart home networks. 
 
   Newer, more modern security approaches come in different forms. From 
   the completely self-installed, retail based offerings like that of 
   Dropcam's Tab, to professionally installed smart home-based security 
   offerings based on platform's like iControl is providing new 
   alternatives for consumers who traditionally either chose not to pay 
   for the higher cost of home security or had a lifestyle - a renter or 
   highly mobile person - who wasn't a fit for the traditional profile of 
   a monitored home security subscriber. 
 
   Newer security offerings can be defined based on modern cloud-centric 
   monitoring and smart home technology 'smart security'. 
 
   These offerings come in three different forms: 
 
 
 
       1.    completely DIY (self-installed, self-monitored) 
 
 
       2.    DIY self-installed home security with 
             professional monitoring and 
 
 
       3.    Professionally installed and monitored solutions 
             that integrate smart home and cloud technologies as a core 
             part of their architecture. 
 
 
 
   Smart security is the offspring of the security market and the smart 
   home automation market. Smart security devices allow homeowners to 
   monitor, and manage their home security remotely by interacting with 
   these devices via smart phones, tablets and computers. 
 
   4.2 Market forecast2 
 
   The US smart security market is expected to increase from nearly 3 
   million users in 2014 to over 22 million users by 2020. 
 
   The home automation systems and services market is forecast to grow 
   from $3.6 billion in total systems hardware and recurring services and 
   subscriptions revenues in 2012 to $14.7 billion by 2017 worldwide, 
   driven in large part by a fast-growing service provider market where 
   home security companies, telcos, cable MSOs and electric/gas utilities 
   offer managed home automation services which help propel the market 
   from its fairly modest size today to one which serves over 35 million 
   households by 2017. 
 
   Initially, the vast majority of smart security users will be 
   subscribers of a professionally installed solution, whether that 
   service is offered from a traditional security provider or an emerging 
   offering from a broadband service provider such as Comcast or AT&T. 
 
   The market for self-installed solutions, however, is expected to grow 
   very rapidly over the forecast period and will account for over 
   one-third of smart security users by 2020. 
 
   Within self-installed category, basic all-in-one self-installable home 
   security appliances will have the greatest growth as these products 
   progress from early stage life cycle to more mature products with the 
   associated developed channel and marketing strategies. The total US 
   DIY home security hardware and services market in 2020 will be app. 
   $1.5 billion annual market by 2020. 
 
   The following chart presents the total smart home systems hardware and 
   services revenue 2012-2017 (US$ Millions): 
 
   2 Source: Smart Home & Home Automation, Analysis & Market Forecast 
   2012-2017, NextMarket Insights 
 
   4.3 Falling System Costs 
 
   The smart home could soon become truly commonplace by appealing to the 
   middle class consumers that previously neither possessed the technical 
   knowhow to build their own system, nor the requisite finance to hire a 
   specialist to design and install one on their behalf. One of the main 
   reasons for this is the fact that home automation systems are becoming 
   much more affordable to many more people. 
 
   Historically, the high cost of this technology has acted as the main 
   barrier to greater adoption but a number of factors are helping reduce 
   costs. 
 
   4.4 Increased competition in the market3 
 
   Some companies have introduced relatively inexpensive offerings that 
   are analogous in functionality to the luxury systems that have 
   dominated the market for some time. 
 
   In response, industry heavyweights such as Crestron have begun to 
   offer more basic solutions. Additionally, service providers are 
   providing managed subscription-based offerings. Lowe's, Verizon and 
   now Comcast, all offer smart home packages for less than $10 per 
   month. 
 
   The impact that quality, performance and sharp pricing is having on 
   competitors comes in multiple directions. Some have dropped prices; 
   some have standardized internal components as is increasingly common 
   in the consumer DSLR market. 
 
   3 Sources: (1) Smart Home & Home Automation, Analysis & Market 
   Forecast 2012-2017, NextMarket Insights (2) 2014: State of the market 

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| Security Electronics and Networks, 01/12/2015 
 
   4.5 Trends in technology4 
 
   In the domestic market, digital continues to be a slowly unfolding 
   revolution. This is in considerable part due to the fact key 
   components of electronic security technology are now in lockstep with 
   consumer electronics and networking technologies. The cloud is the 
   biggest potential component. 
 
   Affordable bandwidth is the greatest stumbling block for the industry 
   and the strongest lever for telecommunications providers capable of 
   bundling security services with Internet, comms and TV. 
 
   Home automation was big in 2013 and it was strong again in 2014. It's 
   hard to say how big automation is locally when compared to straight 
   alarm panels but it's instructive to consider that 70% of ADT's sales 
   this year went on the company's Pulse security and automation panel. 
   AT&T spent 2014 continuing its rollout of Digital Life, a security and 
   automation solution and most other companies continued strengthening 
   their automation lineups. 
 
   4 Source: State of the market | Security Electronics and Networks, 
   01/12/2015 
 
   4.6 Intrusion alarm trends5 
 
   Alarm systems have had a giddy year. The primary drivers here are 
   towards local wireless communications, 3G and internet monitoring, 
   automation and remote management of security and domestic sub systems 
   via apps on smart devices. 
 
   Hardwire means no batteries and no interference with unsecure 433MHz 
   sensor-to-panel comms. Wireless means no chasing of cabling behind 
   walls, between different levels of buildings and far simpler control 
   panel installation. If sensor comms were highly secure and had 
   sufficient bandwidth to shift a handful of images for verification, 
   and battery life was 5 years or more on all devices, wireless would 
   win the day, though there are always sites that defy the passage of RF 
   signals. 
 
   5 Source: State of the market | Security Electronics and Networks, 
   01/12/2015 
 
   4.7 Competitors 
 
   The Company operates in a highly competitive market. 
 
   Its competitors are mainly small-mid size companies which design 
   and/or develop and/or produce and/or market security solutions for the 
   residential and small commercial markets. These companies include, 
   among others, Pyronix, Paradox, Satel, Pima and Bentel. 
 
   In addition, there are some big international companies that operate 
   in the same field, such as Tyco International Plc, Honeywell 
   International Inc., Napco Security Technologies Inc., Secom Co Ltd and 
   more. 
 
   5. Methodology 
 
   5.1 General 
 
   There are several approaches / methods to performing an economic 
   valuation. Each method has advantages and disadvantages and each 
   method can yield different results. When choosing a suitable method, 
   the nature of the asset, the purpose of the valuation as well as other 
   additional factors should be properly assessed. Below are the three 
   main approaches for performing an economic valuation: 
 
   Income Approach - According to the income approach, the value of an 
   asset is derived from the present value of the expected cash flows 
   throughout the asset's remaining economic life. When implementing this 
   approach, the expected cash flows that a specific asset will generate 
   are estimated (future receipts and payments) and are based, in part, 
   on an analysis of financial and operational information. 
 
   During the second stage, the values of future cash flows are brought 
   to their present value at the time of the valuation by their discount 
   rate (Discounted Cash Flow, or in short: DCF). The discounted cash 
   flow process uses a rate of return which should reflect the time value 
   of money, as well as the business risk. The fair value is essentially 
   the present value of future cash flows at the end of the forecast 
   period, including the residual value, if relevant. 
 
   One of the main advantages of this method is the fact that it is 
   applicable to each specific asset, taking into account specific 
   characteristics of that asset. The main disadvantages of this method 
   are due, in part, to the difficulty in predicting the future cash 
   flows, at the end of the forecast period, as well as the residual 
   value, if relevant. 
 
   Net Asset Value (NAV) - According to the NAV approach, the value of a 
   company is estimated according to the main economic value of the 
   assets and liabilities within it. In order to perform a valuation 
   based on this approach, the assets and liabilities that make up a 
   specific company are adjusted to their economic value. In other words, 
   this method adjusts the 'book value' of each asset and liability to 
   their 'fair value', based on the exit value. The difference between 
   the economic value of the assets and liabilities of the assessed 
   entity are meant to express its estimated economic value. 
 
   The NAV approach can be categorized as one of the cost approach 
   methods of valuation. The cost approach method is based on the 
   assumption that an investor will not pay for an asset that is valued 
   in excess of the amount required to replace it with another asset. 
 
   Market Approach / Multiplier - According to the market approach, a 
   company is evaluated on the basis of comparison between similar 
   entities. This approach is based on the premise that companies in the 
   same industry can be characterized by similar multiples and financial 
   ratios. This comparison is made by certain ratios known as 
   'multipliers.' A multiplier is usually a calculated ratio between the 
   market value or the enterprise value of a specific entity and a 
   selected index of performance, typically an accounting measure. 
 
   The use of comparative multipliers is based on the assumption that it 
   is possible to estimate the equity value of a company by using a 
   multiple of a certain number. 
 
   5.2 Applied Valuation Method 
 
   The Company valuation was performed on the basis of the income 
   approach using the discounted free cash flow method (DCF). 
 
   The underlying assumption of the DCF method, as stated above, is that 
   the value of a business is the discounted present value of the future 
   cash flows derived from the operating assets and working capital items 
   of the Company over time. 
 
   In making the analysis of the discounted cash flows, the appraiser 
   utilizes unlevered free cash flows. The result of the calculation 
   represents the value of the activity. 
 
   The analysis requires detailed assessments of the activity in each of 
   the coming years. Accepted practice is to divide the analysis into two 
   periods, the first period in which a detailed analysis is performed, 
   and the second period compromising the balance of the period, in which 
   the discount is based on a 'representative cash flow' due to the 
   inability to formulate a detailed forecast for a longer period of 
   time. 
 
   After obtaining the Company's enterprise value we reduced/added the 
   net financial liabilities/assets from the discounted cash flow and 
   valuated the Company options in order to calculate the value of the 
   shareholder's stock. 
 
   5.3 Date of Valuation 
 
   It is important to note that the valuation was performed as of 
   December 31, 2014. 
 
   6. Valuation assumptions 
 
   6.1 Forecast Period 
 
   In performing the valuation, we divided the forecast into two periods: 
   the first period was comprised the forecast years 2015-2019. The 
   second period included year 2020, from which we derived a 
   'representative cash flow'. 
 
   We estimated the expected cash flows of the Company on the basis of 
   the forecast that the Company Management provided us regarding the 
   future results of operations and capital investments over the next few 
   years. 
 
   6.2 New business model 
 
   We were informed that starting October 1st, 2014, all the distribution 
   activity of Company's products is carried out by Risco. 
 
   According to the Company, the main reasons for the change in the 
   distribution process are as follows: 
 
           * Ability to use Risco's global structure for 
           better coverage. 
 
 
           * Saving sales costs by using Risco's professional sales 
           teams. 
 
 
           * Distribution through Risco's channels enables operational 
           synergies with Risco that will allow the Company to invest in 
           developing and marketing activities. 
 
 
           * Introduction of affordable products to Risco's clients. 
 
 
   The reader of this report must take into consideration that the 
   implementation of the new business model might affect Company's 
   results in the short term. 
 
   6.3 Underlying assumptions of the forecast 
 
   Revenues 
 
   As mentioned above, starting from the fourth quarter of 2014, the 
   Company's distribution is being carried out by Risco. Thus, all of 
   EL's revenues are assumed to stem from Risco, while Risco is expected 
   to receive for its distribution efforts a 15% commission from sales to 
   existing customers and 20%-25% from sales to new customers. 
 
   The sales forecast in the valuation model is presented in net terms, 
   i.e. after deduction of Risco's commission for the sales. 
 
   The Company does not predict a sharp incline in revenues in the 
   forecast years. However, it should be noted, that in 2015, as 
   mentioned in Company's '2014 annual report management discussion and 
   analysis', EL is expected to launch a new product to market, which may 
   lead to a revenue growth and to future growth, in oppose to the 
   decline in revenues as observed in the last years. Consequently, the 
   expected gross revenues in 2015 (including Risco's commission) are 
   expected to total $13.6 million in the lower range and $14.0 million 
   in the upper range, reflecting net sales (after deduction of Risco's 
   commission) of $11.3 million in the lower range and $11.9 million in 

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the upper range. For the years 2016 - 2019, we assumed that the 
   revenues will increase by 3%-4% each year. In 2020, the representative 
   year, we assumed that the Company's revenues will increase by terminal 
   growth rate of 2.5%. 
 
   It should be noted that the delay in launching the new product line, 
   as mentioned above, might affect revenues in the short term, which may 
   differ from the predicted revenues in this report. 
 
   Since the Company's main functional currency is USD but close to 70% 
   of revenues are in Euro, the Company is exposed to fluctuations in 
   exchange rates, mainly USD-Euro exchange rate. We were informed that 
   the weakening of the Euro exchange rate causes major European clients 
   to reduce their orders or to demand bigger discounts. Moreover, 
   Company is operating in a very competitive market with hard 
   competitors, which also contributes to the lower growth rate 
   assumption for the forecast years. 
 
   The Company's predictions regarding future growth rates were lower 
   than the ones taken in our valuation. 
 
   Gross Profit 
 
   EL outsourced all of its production to China in 2012. The cost of 
   revenues includes cost of goods bought from the suppliers in China, 
   labor costs, depreciation and other related expenses. 
 
   The gross profit for the forecasted years is based on the Company's 5 
   year budget, and expected to total 33% of Company's gross sales. It 
   should be noted that gross sales are presented after deduction of 
   Risco's commission. 
 
   Research & Development expenses 
 
   The Company's products depend on its technology. Therefore, the 
   Company must continually invest in product development in order to 
   stay on the cutting edge of technology in its market and secure its 
   market position. 
 
   It was assumed that R&D expenses for 2015 will be in accordance to 
   Company's budget, which is 4.7% of revenues. 
 
   In the forecast years we assumed that the Company will keep 
   maintaining its existing technology and develop new products, 
   continuing the trend of previous years. Consequently, we assumed that 
   the R&D expenses will total 7% of revenues from 2016 onwards, similar 
   to the average rate in the years 2010-2014. 
 
   Selling & Marketing expenses 
 
   Since October 2014, Risco bears the majority of the sales costs of the 
   Company. According to the sales and marketing agreement, Risco 
   receives for its efforts 15% from sales to existing customers and 
   20%-25% from sales to new customers. 
 
   It should be noted that Risco will bear only sales expenses, while the 
   Company is expected to continue paying all the marketing expenses, 
   including (but not limited to) registration of new products, launching 
   new products, technical writing etc. We assume that those expenses 
   will amount to 3.7% of revenues. In case of weaker sales, we assume a 
   small reduction in Selling & Marketing costs, to a rate of 3.2% of 
   revenues. 
 
   General & Administrative expenses 
 
   Since August 2010, the Company entered into management service 
   agreements with Risco in order to assist the Company in the following 
   fields: (i) sales administration services; (ii) IT and computerized 
   systems; (iii) finance management and accounting; (iv) human 
   resources; (v) directors and consulting services; (vi) legal and 
   company secretarial services. 
 
   On August 29, 2013, the Company's shareholders approved an amendment 
   to the Management services agreement with Risco. The revised agreement 
   includes; (i) additional services which will be rendered by Risco to 
   the Company and (ii) revises the annual amount payable to Risco so 
   that the base amount will be $800K instead of $300K, and (iii) the 
   agreement has been extended for an additional three years period. 
 
   General and administrative costs in 2015, according to Company's 
   budget, are forecasted at 16.7% of revenues. We assume G&A to decrease 
   gradually as a percentage of income, reflecting amounts of general and 
   administrative expenses of the private company. 
 
   Taxes on income 
 
   As of December 31st, 2014, the Company has accumulated losses in the 
   amount of app. NIS 56 million. 
 
   According to the forecast, the Company will be able to use those 
   accumulated losses against operating revenues. 
 
   In years 2015-2019 we assumed there will be no tax liabilities due to 
   the accumulated losses. Since the Company will not use all the 
   accumulated losses until 2020, we calculated the remaining tax shield 
   in the year 2020 and added it to the Company's value, while assuming 
   tax liability in the representative year. 
 
   Depreciation and Amortization and Capital Expenditures 
 
   Through all the forecast years, as well as in the representative year, 
   it was assumed that the investment rate in fixed assets (CAPEX) will 
   be equal to the depreciation rate. 
 
   Depreciation and Amortization were taken according to the Company 
   budget and past records, an average of app. 2% of Company's revenues. 
 
   Working Capital 
 
   In order to obtain the Company's free cash flow, it is necessary to 
   deduct the Company's investments in operating working capital. 
 
   Operating working capital is the capital required by the Company to 
   finance its current operations. The Company's Operating working 
   capital consists of credit granted to customers (mainly Risco) and 
   other receivables and inventory financing costs, minus the credit 
   obtained by the Company from its suppliers, service providers and 
   other payables. 
 
   The working capital for the projected period was based on Company 
   historical data, as also on the new credit terms that are expected 
   according to the new distribution agreement with Risco. 
 
   Below are the main parameters that were used in order to obtain the 
   projected investment in working capital: 
 
           * Days Sales Outstanding - all distribution 
           activity of the Company's products is being done via Risco 
           starting October 1st 2014. We assumed the account receivables 
           days of Risco for the entire forecast period will be equal 90 
           days. 
 
 
           * Days for accounts payables - the accounts payables days for 
           2014 were app. 45 days. We determined that supplier's credit 
           days through the projection period will be in accordance with 
           the historical performance. 
 
 
           * Inventory Days - by the end of 2014, the inventory balance 
           was significantly low ($0.5 million as of the end of 2014 
           compared to $3.2 million as of September 30th, 2014). The 
           decrease in the inventory balance resulted mainly due to the 
           sale of most of the inventory to Risco. The Company believes 
           that it will not need higher inventory balances in the coming 
           years. This assumption reflects an average of 20 inventory 
           days through the projection period. 
 
 
   6.4 Discount rate 
 
   When applying the income approach, annual cash flows derived from an 
   estimated asset should be discounted by a discount rate which 
   considers all relevant inherent risks. 
 
   For the purpose of this report it was estimated that the appropriate 
   weighted average cost of capital (WACC) of EL is 15%. 
 
   The Discount rate calculation is presented in Appendix A. 
 
   6.5 Financial Liabilities 
 
   The following are the financial assets and financial liabilities of 
   EL, as of December 31st, 2014: 
 
        USD Thousands 
 
        Cash and Cash Equivalents      219 
 
        Security deposits               12 
 
        Severance Pay Fund*          (253) 
 
        Total                         (22) 
 
   * Inc. 219K that were reclassified to current liability 
 
   6.6 Summary of the valuation 
 
   Based on the assumptions and estimates as set out below in this 
   report, the equity value of EL is estimated between $7.5 and $8.5 
   million, as follows: 
 
                                                         Lower  Upper 
                                                         Range  Range 
 
        Estimated Enterprise Value as of 31.12.2014      6,688  7,753 
        (USD Thousands) 
 
        Tax shield after 2019                             790    771 
 
        Financial Liabilities, net: 
 
        Cash and Cash Equivalents                         219    219 
 
        Security deposits                                 12     12 
 
        Severance Pay Fund*                              (253)  (253) 
 
        Total                                            (22)   (22) 
 
        Estimated Equity Value of Electronics Line       7,456  8,502 
 
        Estimated Equity Value of Electronics Line       7,500  8,500 
        (Rounded) in USD 
 
        Estimated Share Price (Rounded) in USD as of     0.55   0.62 
        31.12.2014 
 
        Estimated Share Price (Rounded) in Euro as of    0.45   0.51 
        31.12.2014 
 
   * Inc. 219K that were reclassified to current liability 
 
   The equity value of EL is estimated between $7.5 and $8.5 million, 
   reflecting an estimated price per share of $0.55-$0.62, or 
   EUR0.45-EUR0.51 (as of 31st December 2014). 
 
   Appendix A - Discount rate (WACC) 
 
   The Weighted Average Cost of Capital (WACC) formula is as described 
   below: 
 
   Where: 
 
           * D/(D+E) - Long term level of leverage - was 
           estimated at 15%, based upon estimation of long term leverage 
           ratio of the Company. 
 
 
           * Re- Return on equity - is calculated by the following 
           formula: 
 
 
 
 
 
           * Rf- Risk-free interest rate - estimated at app. 2.17% based 
           on 10 year zero-coupon yield of government bonds in USA6. 
 
 
           * (Rm-Rf)- Risk premium7 - estimated at 5.75% as an average 
           risk premium expected on an equity investment in a fully 
           diversified portfolio in the US market. 
 
 
           * ß- beta8 - reflects the measure of volatility that a 

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particular asset contributes to the total volatility of the 
           entire market portfolio. For the purposes of this report, the 
           beta was estimated based on betas of companies in the security 
           products and services. We estimated a beta of approximately 
           0.9 using the weighted average unleveraged betas of the 
           comparison companies. 
 
 
           * ARP- Additional Risk Premium9 - It was assumed that a 
           premium of 9% would appropriately accumulate the non-liquidity 
           risk of the Company and other Company specific risks stemming 
           from its characteristics, above the industrial average risks 
           that are expressed in the average beta as estimated above. 
 
 
   Based on the CAPM model as described above, we assume the appropriate 
   discount rate of EL at 15%. 
 
   6 Source: Yahoo Finance. 
 
   7 Source: www.damodaran.com. 
 
   8 Source: Bloomberg 
 
   9 Source: Duff&Phelps 2014. 
 
   Appendix B - DCF calculation - Lower Range 
 
  USD     Audi-  Au-  Au-  Au-   Audi-   Fore-   Fo-   Fore-  Fo-   Fore-  Ter- 
  Thou-     ted  di-  di-  di-     ted    cast   re-    cast  re-    cast   mi- 
  sand-    2010  te-  te-  te-    2014    2015  cas-    2017  ca-    2019   nal 
  s                d    d    d                     t           st          202- 
                 20-  20-  20-                  201-          20-             0 
                  11   12   13                     6           18           on- 
                                                                           war- 
                                                                             ds 
 
  Reve-  26,717  24-  14-  16-  12,200  11,34-  11,-  12,27-  12-  13,085  13,- 
  nues           ,1-  ,3-  ,5-              9*   803       5  ,7-           413 
                  64   31   34                                 04 
 
  grow-          -9-  -4-  15-  -26.2%   -7.0%  4.0-    4.0%  3.-    3.0%  2.5- 
  th             .6-  0.-  .4-                     %           5%             % 
  rate             %   7%    % 
 
  Cost   18,338  15-  9,-  9,-   8,286   7,633  7,9-   8,224  8,-   8,767  8,9- 
  of             ,7-  00-  50-                    20          51-            86 
  Reve-           45    7    7                                  2 
  nues 
 
  Gros-   8,379  8,-  5,-  7,-   3,914   3,715  3,8-   4,051  4,-   4,318  4,4- 
  s              41-  32-  02-                    83          19-            26 
  Pro-             9    4    7                                  2 
  fit 
 
  % of    31.4%  34-  37-  42-   32.1%   32.7%  32,-   33.0%  33-   33.0%  33.- 
  reve-          .8-  .2-  .5-                    9%          .0-            0% 
  nues             %    %    %                                  % 
 
  Rese-   1,884  1,-  1,-  1,-   1,119     858   826     859  88-     916   939 
  arch           73-  24-  23-                                  9 
  and              3    7    5 
  deve- 
  lop- 
  ment 
  ex- 
  pen- 
  ses 
 
  Sel-    3,840  2,-  1,-  1,-   1,635     443   379     394  40-     420   430 
  ling           87-  55-  85-                                  7 
  and              8    6    1 
  Mar- 
  ke- 
  ting 
  Ex- 
  pen- 
  ses 
 
  Gene-   3,167  1,-  1,-  2,-   1,965   1,992  1,9-   1,900  1,-   1,900  1,9- 
  ral            97-  67-  14-                    00          90-            00 
  and              7    8    6                                  0 
  Admi- 
  nis- 
  tra- 
  tive 
  Ex- 
  pen- 
  ses 
 
  To-     8,891  6,-  4,-  5,-   4,719   3,292  3,1-   3,153  3,-   3,236  3,2- 
  tal            58-  48-  23-                    05          19-            69 
  ope-             8    1    2                                  7 
  ra- 
  ting 
  ex- 
  pen- 
  ses 
 
  Ope-    (512)  1,-  84-  1,-   (805)     423   778     898  99-   1,083  1,1- 
  ra-            83-    3  79-                                  6            57 
  ting             1         5 
  Pro- 
  fit 
 
  % of    -1.9%  7.-  5.-  10-   -6.6%    3.7%  6.6-    7.3%  7.-    8.3%  8.6- 
  reve-           6%   9%  .9-                     %           8%             % 
  nues                       % 
 
  EBIT-                                    707  1,0-   1,143  1,-   1,344  1,4- 
  DA                                              14          25-            25 
                                                                0 
 
  % of                                    6.2%  8.6-    9.3%  9.-   10.3%  10.- 
  reve-                                            %           8%            6% 
  nues 
 
  Tax                                        0     0       0    0       0   307 
 
  Ope-                                     423   778     898  99-   1,083   850 
  ra-                                                           6 
  ting 
  Pro- 
  fit 
  af- 
  ter 
  Tax 
 
  De-                                      284   236     245  25-     262   268 
  pre-                                                          4 
  cia- 
  tion 
  and 
  Amor- 
  tiza- 
  tion 
 
  Capi-                                  (227)  (23-   (245)  (2-   (262)  (26- 
  tal                                             6)          54-            8) 
  Ex-                                                           ) 
  pen- 
  ditu- 
  res 
  (CAP- 
  EX) 
 
  Chan-                                  (417)  (92-   (168)  (1-   (134)  (11- 
  ge                                               )          51-            5) 
  in                                                            ) 
  Wor- 
  king 
  Capi- 
  tal 
 
  Chan-                                  1,500 
  ge 
  in 
  Wor- 
  king 
  Capi- 
  tal 
  as a 
  re- 
  sult 
  of 
  the 
  sale 
  of 
  the 
  in- 
  ven- 
  tory 
  to 
  Ris- 
  co 
 
  Net                                    1,563   686     729  84-     948   735 
  Cash                                                          4 
  Flow 
 
  Year-                                    0.5   1.5     2.5  3.-     4.5 
  s to                                                          5 
  Dis- 
  coun- 
  t 
 
  Dis-                                    1.07  1.2-    1.42  1.-    1.88 
  coun-                                            3           63 
  t 
  Rate 
 
  Dis-                                   1,458   556     514  51-     506  3,1- 
  coun-                                                         8            36 
  ted 
  Cash 
  Flow 
 
   * correlates with Risco's sales of app. USD 13.6 M 
 
   Estimated Enterprise Value as of 31.12.2014 (USD Thousands) 6,688 
 
   Appendix C - DCF calculation - Upper Range 
 
  USD     Audi-  Au-  Au-  Au-   Audi-   Fore-   Fo-   Fore-  Fo-   Fore-  Ter- 
  Thou-     ted  di-  di-  di-     ted    cast   re-    cast  re-    cast   mi- 
  sand-    2010  te-  te-  te-    2014    2015  cas-    2017  ca-    2019   nal 
  s                d    d    d                     t           st          202- 
                 20-  20-  20-                  201-          20-             0 
                  11   12   13                     6           18           on- 
                                                                           war- 
                                                                             ds 
 
  Reve-  26,717  24-  14-  16-  12,200  11,94-  12,-  12,92-  13-  13,774  14,- 
  nues           ,1-  ,3-  ,5-              6*   424       1  ,3-           118 
                  64   31   34                                 73 
 
  grow-          -9-  -4-  15-  -26.2%   -2.1%  4.0-    4.0%  3.-    3.0%  2.5- 
  th             .6-  0.-  .4-                     %           5%             % 
  rate             %   7%    % 
 
  Cost   18,338  15-  9,-  9,-   8,286   7,633  8,3-   8,657  8,-   9,229  9,4- 
  of             ,7-  00-  50-                    36          96-            59 
  Reve-           45    7    7                                  0 
  nues 
 
  Gros-   8,379  8,-  5,-  7,-   3,914   4,313  4,0-   4,264  4,-   4,545  4,6- 
  s              41-  32-  02-                    87          41-            59 
  Pro-             9    4    7                                  3 
  fit 
 
  % of    31.4%  34-  37-  42-   32.1%   36.1%  32,-   33.0%  33-   33.0%  33.- 
  reve-          .8-  .2-  .5-                    9%          .0-            0% 
  nues             %    %    %                                  % 
 
  Rese-   1,884  1,-  1,-  1,-   1,119     858   870     904  93-     964   988 
  arch           73-  24-  23-                                  6 
  and              3    7    5 
  deve- 
  lop- 
  ment 
  ex- 
  pen- 
  ses 
 
  Sel-    3,840  2,-  1,-  1,-   1,635     443   461     479  49-     511   523 
  ling           87-  55-  85-                                  6 
  and              8    6    1 
  Mar- 
  ke- 
  ting 
  Ex- 
  pen- 
  ses 
 
  Gene-   3,167  1,-  1,-  2,-   1,965   1,992  1,9-   1,900  1,-   1,900  1,9- 
  ral            97-  67-  14-                    00          90-            00 
  and              7    8    6                                  0 
  Admi- 
  nis- 
  tra- 
  tive 
  Ex- 
  pen- 
  ses 
 
  To-     8,891  6,-  4,-  5,-   4,719   3,292  3,2-   3,283  3,-   3,375  3,4- 
  tal            58-  48-  23-                    30          33-            12 
  ope-             8    1    2                                  2 
  ra- 
  ting 
  ex- 
  pen- 
  ses 
 
  Ope-    (512)  1,-  84-  1,-   (805)   1,020   857     980  1,-   1,171  1,2- 
  ra-            83-    3  79-                                08-            47 
  ting             1         5                                  1 
  Pro- 
  fit 
 
  % of    -1.9%  7.-  5.-  10-   -6.6%    8.5%  6.9-    7.6%  8.-    8.5%  8.8- 
  reve-           6%   9%  .9-                     %           1%             % 
  nues                       % 
 
  EBIT-                                  1,319  1,1-   1,239  1,-   1,446  1,5- 
  DA                                              06          34-            30 
                                                                9 
 

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June 30, 2015 10:43 ET (14:43 GMT)

% of                                   11.0%  8.9-    9.6%  10-   10.5%  10.- 
  reve-                                            %          .1-            8% 
  nues                                                          % 
 
  Tax                                        0     0       0    0       0   331 
 
  Ope-                                   1,020   857     980  1,-   1,171   917 
  ra-                                                         08- 
  ting                                                          1 
  Pro- 
  fit 
  af- 
  ter 
  Tax 
 
  De-                                      299   248     258  26-     275   282 
  pre-                                                          7 
  cia- 
  tion 
  and 
  Amor- 
  tiza- 
  tion 
 
  Capi-                                  (239)  (24-   (258)  (2-   (275)  (28- 
  tal                                             8)          67-            2) 
  Ex-                                                           ) 
  pen- 
  ditu- 
  res 
  (CAP- 
  EX) 
 
  Chan-                                  (417)  (92-   (168)  (1-   (134)  (11- 
  ge                                               )          51-            5) 
  in                                                            ) 
  Wor- 
  king 
  Capi- 
  tal 
 
  Chan-                                  1,500 
  ge 
  in 
  Wor- 
  king 
  Capi- 
  tal 
  as a 
  re- 
  sult 
  of 
  the 
  sale 
  of 
  the 
  in- 
  ven- 
  tory 
  to 
  Ris- 
  co 
 
  Net                                    2,163   765     812  93-   1,037   802 
  Cash                                                          0 
  Flow 
 
  Year-                                    0.5   1.5     2.5  3.-     4.5 
  s to                                                          5 
  Dis- 
  coun- 
  t 
 
  Dis-                                    1.07  1.2-    1.42  1.-    1.88 
  coun-                                            3           63 
  t 
  Rate 
 
  Dis-                                   2,017   620     573  57-     553  3,4- 
  coun-                                                         0            20 
  ted 
  Cash 
  Flow 
 
   * correlates with Risco's sales of app. USD 14.4 M 
 
   Estimated Enterprise Value as of 31.12.2014 (USD Thousands) 7,753 
 
   Appendix D 
 
   Sensitivity Analysis - Lower Range 
 
       % WACC % representative year growth rate 
 
                                            1.5%  2.0%  2.5%  3.0%  3.5% 
 
       13%                                 8,126  8,298 8,485 8,691 8,917 
 
       14%                                 7,635  7,775 7,927 8,091 8,271 
 
       15%                                 7,216  7,331 7,456 7,590 7,735 
 
       16%                                 6,853  6,950 7,053 7,164 7,283 
 
       17%                                 6,536  6,618 6,705 6,798 6,897 
 
   Sensitivity Analysis - Upper Range 
 
  % WACC % representative year growth rate 
 
                                       1.5%  2.0%  2.5%  3.0%   3.5% 
 
  13%                                 9,357  9,543 9,746 9,968 10,214 
 
  14%                                 8,759  8,910 9,073 9,251 9,446 
 
  15%                                 8,243  8,368 8,502 8,646 8,803 
 
  16%                                 7,794  7,898 8,009 8,128 8,257 
 
  17%                                 7,398  7,486 7,579 7,678 7,785 
 
   Appendix E - Letter from the legal advisors regarding the damaged 
   battery lawsuit 
 
   Adv. Sari Ellenberg 
   Risco Group Ltd. 
   By e-mail 
 
   Dear Madam, 
 
        Re:    Civil Suit 7597-05-15 (Lod Central District Court) 
               Electronics Line 3000 Ltd. (a Risco Group company) vs. 
               Semicom Lexis Ltd. and Migdal Insurance Company 
               Ltd. Claim no.: 130566000123 
 
   At your request 1 am pleased to provide you with an updated report: 
 
   1. The cause of action of the lawsuit which was filed in the sum of 
   NIS 13.58 million in the Central Distrid Court (Civil Suit 7597-05-15) 
   is a fundamental defect in batteries supplied by the defendant and 
   assembled in end units which were sold and assembled by customers in 
   Europe. Thousands of complaints were received, the majority relating 
   to the extremely short time the batteries operated, creating a 
   situation whereby the customers had to deal with numerous call-outs 
   for technicians to replace the defective batteries. 
 
   2. The claim filed is based on direct costs that were invested in 
   repairing malfunctions as well as consequential losses your company 
   sustained which were calculated by way of a comparison between the 
   forecasts prepared by the company and the actual results; all as 
   calculated by specialist loss assessors whose expert reports form the 
   Basis of the claim. 
 
   3. From the factual perspective, the claim relies on laboratory tests 
   which revealed that the batteries supplied were defective and the fact 
   that the supplier (defendant no. 1) agreed to credit you company with 
   the cost of the batteries. 
 
   4. The case has been set for a pre-trial Kearing before Hon. Judge 
   Yehezkiel Keenar on 18/10/15 at 09:30 hours, and by then the 
   statements of defence in the case will have been filed. At this stage 
   Migdal is not providing insurance cover to Semicom and hence separate 
   defences will be filed and it is possible that a legal dispute will 
   arise on a separate front between Semicom and Migdal regarding the 
   proper interpretation of the insurance policy. 
 
   5. Furthermore, Semicom' s Iawyer told me that they are considering 
   the possibility of bringing the Chinese manufacturer of the batteries 
   into the lawsuit. This procedure would require a permit from the court 
   for service outside of the Israeli jurisdiction of the court 
   (ex-juris). 
 
   Such a procedure would complicate and lengthen the case, although it 
   would have a clear advantage due to the fact that counter allegations 
   between the various defendants would play in our favour. 
 
   6. The claim is supported by the expert report of a loss adjuster who 
   made an in-depth review of the financial data relating to the damaltes 
   your company suffered and if it is put to the test - the claim has a 
   good chance of succeeding. 
 
   7. After the stage of filing the pleadings has been completed, I will 
   continue to update you and provide you with a detailed opinion. 
 
   Yours sincerely, 
 
   Mordechay Tagar 
 
   Appendix F - Market cap analysis 
 
  Adj Close Price                     Average Daily 
  (08/05/2015):                       Volume in EUR 
                                      (08/05/2015): 
 
  in EUR           Aver-   MIN   MAX  in EUR          Aver-   MIN     MAX 
                     age              thousands         age 
 
  Last week         0.23  0.21  0.26  Last week        0.16  0.00    0.67 
 
  Last month        0.25  0.21  0.28  Last month       0.28  0.00    1.62 
 
  Last 3 months     0.28  0.21  0.34  Last 3 months    0.38  0.00    4.87 
 
  Last 6 months     0.31  0.21  0.40  Last 6 months    0.52  0.00    5.81 
 
  Last 12 months    0.41  0.21  0.69  Last 12 months   1.75  0.00  133.72 
 
  Average Daily                        Market Cap 
  Volume                               (08/05/2015): 
  (08/05/2015): 
 
  No. of shares   Avera-  M-      MAX  in EUR          Avera-    MIN    MAX 
                      ge  I-           thousands           ge 
                           N 
 
  Last week          740   0    3,200  Last week        3,087  2,852  3,565 
 
  Last month       1,182   0    6,800  Last month       3,408  2,852  3,839 
 
  Last 3 months    1,372   0   17,400  Last 3 months    3,861  2,852  4,661 
 
  Last 6 months    1,708   0   17,400  Last 6 months    4,246  2,852  5,484 
 
  Last 12 months   3,898   0  284,500  Last 12 months   5,657  2,852  9,460 
 
   Daily Market Price and Volume (in EUR) 
 
   Appendix G 
 
   Appraiser Details 
 
   Fahn Kanne Consulting is a subsidiary of Fahn Kanne & Co., CPAs 
   (Isr.), one of Israel's six largest accounting firms. 
 
   Fahn Kanne Consulting is the Special Advisory Services division of 
   Grant Thornton International, a firm that specializes in international 
   lead transaction services, performance of company valuations and 
   transaction consulting, taking firms public on global markets and 
   management consulting and project financing. 
 
   Shlomi Bartov, CPA (Isr.), a partner and CEO of Fahn Kanne Consulting, 
   has an MBA and a BA in accounting and economics, both from Tel Aviv 
   University. 
 
   Mr. Bartov has extensive experience in accompaniment and consulting 
   for some of Israel's largest companies. 
 
   Mr. Roman Falk, CPA (Isr.), a director at Fahn Kanne Consulting Ltd., 
   holds a BA degree in accounting and economics from Tel Aviv 
   University. 
 
   (c) 2015 Fahn Kanne Consulting Ltd. All rights reserved 
   Fahn Kanne Consulting Ltd. is a subsidiary of Fahn Kanne & Co. Grant 
   Thornton Israel, a member firm within Grant Thornton International 
   Ltd. Fahn Kanne Consulting Ltd. renders Specialist Advisory Services, 
   such as: M&A, Valuations, Transaction Advisory Services, Forensic and 
   Litigation Support, business risk services, Project Finance, Recovery 
   and Reorganization. 
   Grant Thornton International is one of the world's leading 
   organizations of independently owned and managed accounting and 
   consulting firms. These firms provide assurance, tax and specialist 
   advisory services to privately held businesses and public interest 
   entities. Clients of member and correspondent firms can access the 
   knowledge and experience of more than 2400 partners in over 100 
   countries and consistently receive a distinctive, high quality and 
   personalized service wherever they choose to do business. 
 
 
 
 
 
30.06.2015 Die DGAP Distributionsservices umfassen gesetzliche 
Meldepflichten, Corporate News/Finanznachrichten und Pressemitteilungen. 
DGAP-Medienarchive unter www.dgap-medientreff.de und www.dgap.de 
 

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