Elron Electronic Industries : Files Shelf Offering Report in Israel

English Translation, for Convenience Purposes Only, of the Hebrew Shelf Offering Report

submitted to the Israeli Securities Authority and Tel Aviv Stock Exchange Ltd.

DISCLAIMER

The Company's share offering within the framework of the shelf offering report as described below ("Shelf Offering Report") will be made in Israel only, to Israeli residents only, in accordance with Israeli law and customary documentation and practices, and will not be made in the United States and/or to U.S. Persons, as defined in Regulation S pursuant to the United States Securities Act of 1933 (hereinafter: "U.S. Person", "Securities Act" and "Offered Securities", respectively) and/or to a person situated outside of Israel.

Any purchaser of the Offered Securities will be deemed to have declared that (1) he is a resident of Israel and that he is not a U.S. Person; (2) is not acquiring the Offered Securities for a U.S. Person or a person situated outside of Israel; (3) he was not in the United States when he submitted a request to acquire or when he acquired the Offered Securities; and (4) he is not acquiring the Offered Securities with the intention to execute a "distribution" (as defined in the regulations promulgated under the Securities Act) of the Offered Securities in the United States.

With respect to the shelf prospectus of the Company dated 25 February 2019 (" Shelf Prospectus"), and the Shelf Offering Report and the offer of securities made thereby and the purchase of the Offered Securities in accordance therewith and all that derives from and/or is related to the Shelf Prospectus and the Shelf Offering Report, only the laws of the State of Israel will apply and no other laws shall apply and the exclusive jurisdiction with respect to any matter relating to the aforementioned matters is granted solely to the competent courts in Israel and to them alone, and the offerees, by agreeing to acquire the Offered Securities in accordance with the Shelf Prospectus and the

English Translation, for Convenience Purposes Only, of the Hebrew Shelf Offering Report

submitted to the Israeli Securities Authority and Tel Aviv Stock Exchange Ltd.

Shelf Offering Report, accept upon themselves this exclusive jurisdiction and choice of law.

The Shelf Prospectus and the Shelf Offering Report are not intended for publication and/or distribution and/or allocation in the United States and/or to U.S. Persons and no person is authorized to act to sell the Offered Securities according to the Shelf Prospectus and the Shelf Offering Report in the United States.

The Shelf Prospectus and the Shelf Offering Report were not submitted to the U.S. Securities Authority. The Offered Securities according to the Shelf Prospectus and the Shelf Offering Report were not registered and will not be registered in accordance with the Securities Act in the United States and it is prohibited for the holders of the Offered Securities in accordance with the Shelf Prospectus and the Shelf Offering Report to sell or offer them for sale in the United States or to U.S Persons.

The Shelf Prospectus and the Shelf Offering Report do not constitute an offer of securities in any other country except for the State of Israel.

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English Translation, for Convenience Purposes Only, of the Hebrew Shelf Offering Report

submitted to the Israeli Securities Authority and Tel Aviv Stock Exchange Ltd.

Elron Electronic Industries Ltd.

(the "Company")

April 19, 2021

Shelf Offering Report

According to the Company's shelf prospectus dated February 25, 20191 as extended until February 24, 20222 (the "Shelf Prospectus" or the "Prospectus") and in accordance with the provisions of the Israeli Securities Regulations (Shelf Offering of Securities), 5766-2005 (the "Shelf Offer Regulations"), the Company hereby respectfully releases a shelf offering report for the issuance and listing on the Tel Aviv Stock Exchange Ltd. ("TASE") of ordinary registered shares of the Company of par value NIS 0.003 each (the "Ordinary Shares"), as specified in this shelf offering report below (the "Shelf Offering Report" or the "Report"). In this Report, the terms presented herein shall have the meaning afforded thereto in the Shelf Prospectus, unless stated otherwise.

The securities offered according to this Shelf Offering Report are offered by way of a uniform public offering with a range of quantities as stated in Regulation 4A of the Israeli Securities Regulations (Manner of Offering Securities to the Public), 5767-2007 (the "Offering Regulations"), and as specified below.

For details regarding any material change or update that occurred on any matter that is required to be described in the Shelf Prospectus, which occurred from the date of release of the Shelf Prospectus until the release of the Shelf Offering Report, see immediate and periodic reports that the Company filed subsequent to the release of the Shelf Prospectus, which are incorporated in the Shelf Offering Report by way of reference pursuant to the provisions of Section 4(a) of the Offering Regulations and Section 12 below.

1. The Offered Securities as part of a uniform offering with a range of quantities3 (Tender No. 7490279)

The Company is offering the following securities to the public in a uniform offering:

1.1. The securities are offered to the public according to this Shelf Offering Report between 2,744,100 and 8,232,400 ordinary shares in Units as detailed below, by way of a uniform offering with a range of quantities, as stated in Regulation 4A of the Offering Regulations, in a quantity between 27,441 Units and 82,324

• The shelf prospectus was published on February 24, 2019 (ISA reference number: 2019-01-015985).

• See immediate report published by the Company on February 18, 2021 (ISA reference no.: 2021-01-019872).
  3 Pursuant to the provisions of Section 1 of the Offering Regulations, a uniform offer with a range of quantities "means a uniform offer in which no prior commitment has been received, and in which the bidder has indicated in the prospectus a minimum quantity and maximum quantity of the securities to be sold or issued, as applicable."

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English Translation, for Convenience Purposes Only, of the Hebrew Shelf Offering Report

submitted to the Israeli Securities Authority and Tel Aviv Stock Exchange Ltd.

Units, by way of tender for the Unit price, with the composition of each Unit and its price being as follows:

100 Ordinary Shares at a price of 11.90 NIS per share	NIS1,190
	=========
Total minimum price per Unit	NIS1,190

The shares offered pursuant to this Shelf Offering Report shall hereinafter be referred to as: the "Shares" or the "Securities" or the "Offered Shares" or the "Offered Securities".

1. In the event of an over-allotment, as defined in the Offering Regulations, the Company will be entitled to allocate to all Bidders who submitted offers at the uniform selling price per Unit (as defined below) or a higher price, as applicable, an additional quantity of Units not exceeding 15% of the maximum amount offered under the Shelf Offering Report, namely, an additional amount of up to 12,348 Units, including up to 1,234,800 Ordinary Shares (the "Additional Allotment").4

2. Details Regarding the Company's Share Capital

1. Set forth below are data regarding the Company's registered share capital and the Company's issued and outstanding share capital, pre-offering and post- offering on the assumption that all the Offered Securities will be acquired.

• Pursuant to Regulation 9 of the Offering Regulations, for this purpose, the maximum quantity specified in the Offering with a range of quantities will be considered as the quantity offered according to the Shelf Offering Report.

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English Translation, for Convenience Purposes Only, of the Hebrew Shelf Offering Report

submitted to the Israeli Securities Authority and Tel Aviv Stock Exchange Ltd.

			Registered		Issued and		Issued and
			Share Capital		Outstanding		Outstanding
					Share Capital		Share Capital
							on a Fully
							Diluted Basis5
	Pre-offering	70,000,000	43,065,467	46,624,354
	Post-offering, assuming all of the	70,000,000	51,297,867	54,856,754
	Offered Securities are offered
	according to the Shelf Offering
	Report6
	Post-offering, assuming all of the		70,000,000		52,532,667		56,091,554
	Offered Securities are offered
	according to the Shelf Offering
	Report including the Additional
	Allotment

1. The amount of Offered Shares in accordance with the Minimum Amount and the Maximum Amount (as defined below), shall constitute, immediately after the issuances of the Offered Securities, between approximately 5.99% and approximately 16.05% of the issued and outstanding share capital of the Company and of the voting rights thereof.
2. The Shares offered according to this Shelf Offering Report shall be recorded in the securities registers of the Company, in the name of the transfer agent of Israel Discount Bank Ltd. or any transfer agent of the Company, as shall be at such time (the "Transfer Agent") and provided that all the Company's securities are registered in its name.
3. Below are details regarding the highest and lowest closing prices on TASE of the Company's shares in 2019, 2020 and in the period from January 1, 2021 until shortly prior to the date of release of this Report (in Agorot):

		Period			Highest closing price		Lowest closing price
				Price		Date		Price		Date
		Jan. 1, 2019 - Dec. 31, 2019	1,070		February	470.9		Aug. 6,
						4, 2019			2019
		Jan. 1, 2020 - Dec. 31, 2020	1,246		Oct. 19,	448.4		Mar. 18,
						2020			2020
		Jan. 1, 2021 - and until proximity to the		1,299		February		1,055		Jan. 18,
		date of this Report				21,2021				2021

• Regarding the fully diluted share capital, it is clarified that it is based on the assumption of exercise in accordance with the cashless exercise mechanism of all 5,023,582 existing options (of employees and officers) at the ceiling share price with respect to options for which such ceiling price was determined (as defined in the Immediate Report convening a shareholders meeting published on November 21, 2018, ISA ref. no. 2018-01-112131, and the Immediate Report published on November 21, 2018 regarding a private placement, ISA ref no.2018-01- 112131), which takes into account the maximum dilution. In actuality, the amount of exercised shares may be lower insofar as the exercise is at an exercise price lower than the said ceiling price ("Fully Diluted").
  6 Without taking the Additional Allotment into account.

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