Annual and Transition Report (foreign Private Issuer) (20-f)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

o REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 0-29360

RiT TECHNOLOGIES LTD.

(Exact name of Registrant as specified in its charter)

Israel

(Jurisdiction of incorporation or organization)

24 Raoul Wallenberg Street, Tel Aviv, Israel

(Address of principal executive offices)

Eran Erov, VP Finance

RiT Technologies Ltd.

24 Raoul Wallenberg Street, Tel Aviv, Israel

Tel: +972-77- 270-7210

Fax: +972-77- 270-7211

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange On Which Registered
Ordinary Shares, NIS 0.8 par value per share	NASDAQ Capital Market
Warrants to purchase Ordinary Shares, at an exercise price of $2.50 per share	NASDAQ Capital Market

Securities registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report (December 31, 2014): 15,541,306 Ordinary Shares (excluding 2,125 Ordinary Shares held as treasury shares) and 1,725,000 Warrants.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o Yes x No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

o Yes x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such reports).

x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP

o	International Financial Reporting Standards as issued by the International Accounting Standards Board

Other

If "Other" has been checked in response to the previous question indicate by check mark which financial statements the registrant has elected to follow:

o Item 17 o Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes x No

TABLE OF CONTENTS

PART I	1
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	1
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE	1
ITEM 3. KEY INFORMATION	1
ITEM 4. INFORMATION ON THE COMPANY	15
ITEM 4A. UNRESOLVED STAFF COMMENTS	15
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS	26
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	40
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	53
ITEM 8. FINANCIAL INFORMATION	60
ITEM 9. THE OFFER AND LISTING	61
ITEM 10. ADDITIONAL INFORMATION	63
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	82
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	83
PART II	84
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	84
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	84
ITEM 15. CONTROLS AND PROCEDURES	84
ITEM 16: [RESERVED]	85
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT	85
ITEM 16B. CODE OF ETHICS	85
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES	85
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	86
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	86
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	86
ITEM 16G. CORPORATE GOVERNANCE	87
ITEM 16H. MINE SAFETY DISCLOSURE	87
PART III	88
ITEM 17. FINANCIAL STATEMENTS	88
ITEM 18. FINANCIAL STATEMENTS	88
ITEM 19. EXHIBITS	89

INTRODUCTION

Unless indicated otherwise by the context, all references in this annual report to:

"RiT","we", "us", "our", the "Registrant" or the "Company" are to RiT Technologies Ltd. and its wholly-owned subsidiaries;

“APAC” are to Asia Pacific;

“CIS” are to the Commonwealth of Independent States, i.e., Russia and the countries comprising the former Soviet Union;

"Companies Law" or the "Israeli Companies Law" are to the Israeli Companies Law, 5759-1999, as amended;

"Convertible Loan Agreement" or "Convertible Loan" are to the Convertible Loan Agreement between RiT and STINS COMAN, dated June 11, 2009, as amended on June 17, 2009, February 17, 2010, April 14, 2011, December 8, 2011, April 17,2012, August 6, 2012, October 23, 2012 and August 12, 2014;

"dollars" or "$" are to United States Dollars;

"Enterprise" and "carrier" relate to the sectors we formerly identified as "datacom" and "telecom," respectively, with our enterprise solutions also referred to as our "IIM solutions";

"IIM" are to Intelligent Infrastructure Management;

"Invencom" are to Invencom Technologies Ltd. (formerly known as Quartz (Israel) Commerce & Investments Ltd.), an Israeli private company owned by the wife of Mr. Sergey Anisimov, Chairman of the Board of Directors of the Company and president of STINS COMAN;

“IWON” are to our Indoor Wireless Optical Network technology;

“NGN” are to Next Generation Networks;

“NIS” are to New Israeli Shekels, the currency of the State of Israel;

"R&D" are to research and development;

"SEC" are to the United States Securities and Exchange Commission; and

“STINS” or “STINS COMAN” are to STINS COMAN Incorporated, a Russian corporation headquartered in Moscow, Russia, and which is our largest shareholder.

Incorporation by Reference

Statements made in this annual report concerning the contents of any contract, agreement or other document are summaries of such contracts, agreements or documents and are not complete descriptions of all of their terms. If we filed any of these documents as an exhibit to this annual report or to any registration statement or annual report that we previously filed, you may read the document itself for a complete description of its terms, and the summary included herein is qualified by reference to the full text of the document which is incorporated by reference into this annual report.

Trademarks

We have obtained trademark registrations for our name "RiT" (together with our logo) and for our products "PatchView", "Centermind" and "Beamcaster". Unless indicated otherwise by the context, trade names, trademarks and/or service marks appearing throughout this annual report are trademarks of RiT, its subsidiaries and/or its affiliates and may be registered in certain jurisdictions.

Cautionary Statement Concerning Forward-Looking Statements

Except for the historical information contained in this annual report, the statements contained in this annual report are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, Section 21.E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the Private Securities Litigation Reform Act of 1995, as amended, and other federal securities laws with respect to our business, financial condition and results of operations. Such forward-looking statements reflect our current view with respect to future events and financial results.

We urge you to consider that statements which use the terms “anticipate,” “believe,” “expect,” “plan,” “intend,” “estimate,” and similar expressions are intended to identify forward-looking statements. We remind readers that forward-looking statements are merely predictions and therefore inherently subject to uncertainties and other factors and involve known and unknown risks that could cause the actual results, including revenues from agreements we signed, performance, levels of activity, our achievements, or industry results, to be materially different from any future results, performance, levels of activity, or our achievements, or industry results, expressed or implied by such forward-looking statements. Such forward-looking statements appear in Item 3.D “Risk Factors”, Item 4 “Information on the Company” and Item 5 “Operating and Financial Review and Prospects” as well as elsewhere in this annual report. The forward-looking statements contained in this annual report are subject to risks and uncertainties, including those discussed under Item 3.D “Risk Factors” and in our other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

Except as required by applicable law, including the securities laws of the United States, we undertake no obligation to publicly release any update or revision to any forward-looking statements to reflect new information, future events or circumstances, or otherwise after the date hereof.

PART I

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

3.A. Selected Financial Data

We have derived the following selected consolidated balance sheet data as of December 31, 2014 and 2013, and the selected consolidated operating data for the years ended December 31, 2014, 2013 and 2012 from our audited consolidated financial statements included elsewhere in this annual report, which have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. We have derived the following selected consolidated balance sheet data as of December 31, 2012, 2011 and 2010 and the selected consolidated operating data for the years ended December 31, 2011 and 2010 from our audited consolidated financial statements which have been prepared in accordance with U.S. GAAP and that were filed with the SEC and are not included in this annual report.

You should read the following selected consolidated financial data together with "Item 5. - Operating and Financial Review and Prospects" and our consolidated financial statements and notes thereto and the other financial information appearing elsewhere in this annual report.

Operating Data

	Year Ended December 31,
	2014			2013			2012			2011			2010
	(In thousands of US dollars except share and per share data)
Sales	$	6,619		$	11,179		$	8,436		$	13,720		$	11,400
Cost of sales		5,196			7,864			7,065			7,489			6,319

Gross profit		1,423			3,315			1,371			6,231			5,081

Operating expenses:
Research and development, gross		3,003			4,683			3,922			1,871			1,976
Less – Government Grants		(234	)		(558	)		-			-			(73	)

Research and development, net		2,769			4,125			3,922			1,871			1,903
Sales and marketing		3,948			4,786			5,465			5,684			4,581
General and administrative		4,021			3,803			3,043			2,463			2,012

Total operating expenses		10,738			12,714			12,430			10,018			8,496

Operating loss		(9,315	)		(9,399	)		(11,059	)		(3,787	)		(3,415	)
Financing expenses, net		(77	)		(129	)		(48	)		(102	)		(71	)
Other income (expense), net		(7	)		-			-			32			-
Net loss	$	(9,399	)	$	(9,528	)	$	(11,107	)	$	(3,857	)	$	(3,486	)
Net loss per share - Basic and diluted	$	(0.70	)	$	(1.04	)	$	(1.91	)	$	(0.88	)	$	(1.10	)
Weighted average number of ordinary
shares outstanding - Basic and diluted		13,471,060			9,138,947			5,802,803			4,378,942			3,171,124

Balance Sheet Data

	As of December 31,
	2014		2013		2012		2011		2010
	(In thousands of US dollars)
Working capital	$	4,715	$	9,106	$	4,965	$	5,375	$	4,361
Total assets		8,674		14,578		9,672		10,501		9,683
Share capital and additional paid-in capital (less treasury stock)		75,596		69,697		55,030		46,668		40,707
Shareholders' equity		3,929		7,429		2,290		5,035		2,931

3.B. Capitalization and Indebtedness

Not applicable.

3.C. Reasons for the Offer and Use of Proceeds

Not applicable.

3.D. Risk Factors

Investing in our securities involves a high degree of risk and uncertainty. You should carefully consider the risks and uncertainties described below, in addition to the other information contained elsewhere in this annual report, before investing in our securities. The following risk factors are not the only risk factors facing our company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business. If any of the following risks actually occurs, our business, prospects, financial condition and results of operations could be seriously harmed

Risks Related to Our Business

We have a history of operating and net losses and we expect to incur additional losses in the foreseeable future.

We incurred net losses and negative cash flows from operating activities in each fiscal year since 2007 and we expect such losses and negative cash flows to continue in the foreseeable future. As of December 31, 2014, 2013 and 2012, we had working capital of $4,715,000, $9,106,000 and $4,965,000, respectively, and shareholders’ equity of $3,929,000, $7,429,000 and $2,290,000, respectively. For the years ended December 31, 2014, 2013 and 2012, we incurred net losses of $9,399,000, $9,528,000 and $11,107,000, respectively. We expect that we will continue to incur net losses and negative cash flows in 2015, even if our revenues increase as planned, and we may never achieve profitability. Even if we do achieve profitability in the future, we may not succeed in sustaining or increasing it on a quarterly or annual basis and we cannot assure that any future net income will offset our cumulative losses, which, as of December 31, 2014, were $71.7 million.

We have invested, and intend to continue to invest, significant resources in a new line of products based upon an unproven technology with which we have no meaningful previous experience.

In 2013 we introduced Beamcaster™, the first product in our indoor wireless optical network product family, addressing mainly the needs of open space officesand during the third quarter of 2013 we commenced selling initial pilot installations of Beamcaster™.

During 2014, we identified a number of issues in our Beamcaster product relating to the number of ports in the product and the optimal market for this product (i.e., high density open space offices), and are currently working on upgrading the Beamcaster configuration as well as making marketing efforts to penetrate said optimal market. In order to leverage the IWON technology for other commercial applications, we continue to invest resources in developing and commercializing this technology. For example, we are currently examining additional potential applications for our IWON technology, primarily for a few industrial fields such as robotics communication applications, which may extend the time and increase the resources needed to complete the development and commercialization of this technology line.

While we believe that our experience in developing IIM solutions that optimize cable infrastructure is associated with the targeted markets of Beamcaster™, we do not have any meaningful previous experience in developing, marketing or distributing this type of product. The success of this new line of products will depend, among other factors, on market acceptance of the benefits anticipated from Beamcaster™. In addition, as we continue the development of the Beamcaster family of products and IWON technology, we may encounter additional technical or other difficulties that could delay the timely introduction of enhancements to these products. Even if we are able to successfully continue the development of these products, we expect it will take at least the remainder of 2015 before the development and manufacturing costs of the Beamcaster™ stabilize, which is expected to adversely affect operating results during such period. Marketing, sales and customer support of the Beamcaster™ products, especially if Beamcaster™ systems are mass produced, will likely require investment in additional resources and reconsideration of our sales and marketing strategy. There is no assurance that this new product line will be successful or that we will be able to recover the costs incurred in developing and marketing this product line based on our indoor wireless optical network technology. If we are unable to introduce these products on a timely and cost-effective basis and to gain market acceptance for such products, our business, prospects, financial condition and results of operations may be materially adversely affected.

To support our long-term growth strategy, we may need to raise additional financing. If we are unsuccessful, we may not be able to carry out our long-term strategy as planned.

Revenues generated from our operations are not presently sufficient to sustain our operations. Although we anticipate that our existing capital resources, including availability of funds under the Convertible Loan, as described elsewhere in this annual report, will be adequate to satisfy our working capital and capital expenditure requirements for the next twelve months, we may need to raise additional funds to support the execution of our long-term growth strategy described elsewhere in this annual report. There can be no assurance that additional funds will be available when needed from any source, including debt or equity financing, or, if available, will be available on terms that are acceptable to us. Also, the terms of securities we may issue in future capital transactions may be more favorable for our new investors. Newly issued securities may include preferences, superior voting rights, the issuance of warrants or other derivative securities. Further, we may incur substantial costs in pursuing future capital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition. Our ability to obtain needed financing may be impaired by such factors as the capital markets and our history of losses, which could impact the availability or cost of future financings.

Global economic conditions may materially adversely affect our business.

Our business and financial condition is affected by global economic conditions. For example, starting in late 2008 and lasting through much of 2009, a steep downturn in the global economy sparked by uncertainty in credit markets and deteriorating consumer confidence, reduced technology spending by many organizations. In the past several years, credit and sovereign debt issues have destabilized certain European economies as well and thereby increased global macroeconomic uncertainties. Uncertainty about current global economic conditions continues to pose a risk as customers may postpone or reduce spending in response to restraints on credit. Should the economic slowdown increase and/or companies in our target markets reduce capital expenditures, it may cause our customers to reduce or postpone their technology spending significantly, potentially resulting in reductions in sales of our products, longer sales cycles, collectability delays, non-payment for product, slower adoption of new technologies and increased price competition. In addition, if the market is flat and customers experience low visibility we may not be able to increase our sales. Each of the above scenarios could have a material adverse effect on our business, operating results, prospects and financial condition.

Although our internal control over financial reporting was considered effective as of December 31, 2014, there is no assurance that our internal control over financial reporting will continue to be effective in the future, which could result in our financial statements being unreliable, government investigation or loss of investor confidence in our financial reports.

The Sarbanes-Oxley Act of 2002, or SOX, imposes certain duties on us. Our efforts to comply with the management assessment requirements of Section 404(a) of SOX have resulted in a devotion of management time and attention to compliance activities, and these efforts are expected to require the continued commitment of significant resources. For example, we identified a material weakness in our internal control over financial reporting related to our revenue recognition process for the years ended December 31, 2012 and 2011 and, as a result, we had to implement a remediation plan designed to address this specific material weakness as well as other SOX requirements during 2013 and 2012. If we fail to maintain the adequacy of our internal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting. We may also identify material weaknesses or significant deficiencies in our internal control over financial reporting. In addition, such internal control has not and is not currently required to be audited. In the future, if we are unable to assert that our internal controls are effective, our investors could lose confidence in the accuracy and completeness of our financial reports, which in turn could cause our stock price to decline. Failure to maintain effective internal control over financial reporting could also result in investigation or sanctions by regulatory authorities.

We may experience significant fluctuations in our quarterly financial performance.

Our quarterly operating results may fluctuate significantly due to a number of factors, including the size, timing and shipment of orders; customer budget cycles and budgetary freezes; the timing of introductions of new products or product upgrades (both ours and those of our competitors); customer order deferrals in anticipation of new products or product upgrades; the mix of product sales; software and hardware development problems; product quality problems; product pricing; our effective provision of customer support; and the relatively low level of general business activity during the summer months in the European market. In addition, because our customers typically request delivery within two to four weeks of order placement (which generally follows extensive sales efforts that take place over an extended period of time), a majority of our quarterly sales derive from orders placed in that quarter and, consequently, changes in the timing of expected large orders can significantly impact our operating results for that quarter.

For the foregoing reasons, we believe that quarter-to-quarter comparisons of our results of operations are not necessarily meaningful and that our operating results for any particular quarter should not be relied upon as an indication of future performance. Also, our quarterly operating results for future periods may be below the expectations of public market analysts and investors. In such event, it is likely that the price of our ordinary shares would be materially adversely affected.

Since our order backlog is limited, we have a limited ability to project our future sales.

Since we have a limited order backlog, our revenues for any specific quarter are dependent primarily on orders received and delivered during that same quarter. A delay in the recognition of revenue, even from one customer, may have a significant negative impact on our results of operations for a given period. We base our decisions regarding our operating expenses on anticipated revenue trends, and our expense levels are relatively fixed, or require some time for adjustment. Because only a small portion of our expenses varies with our revenues, if revenue levels fall below our expectations, our earnings will decrease.

We depend upon independent distributors, representatives and strategic alliance partners for a significant portion of our sales.

Our sales strategy relies primarily upon sales through independent distributors, resellers/integrators, original equipment manufacturers, or OEMs, and other strategic alliance partners with major cabling companies. While we are highly dependent upon acceptance of our products and solutions by such third parties and their active marketing and sales efforts relating to our products and solutions, most of our OEMs and distributors are not obligated to deal with us exclusively, and are not contractually subject to minimum purchase requirements. In addition, some of our distributors may sell competing products or solutions. As a result, our distributors may give higher priority to products or services of our competitors or their own products and solutions, thereby reducing their efforts to sell our products and services.

There can be no assurance that such distributors, representatives or strategic alliance partners will act as effective sales agents for us, that they will remain our partners, or that, if we terminate or lose any of them, we will be successful in replacing them. Any such disruption in our distribution channels could adversely affect our business, operating results and financial condition.

We have discontinued our Carrier product line and are still subject to warranty obligations and possible technical and logistic support to our Carrier customers.

In December 2012, we declared the end-of-life of our Carrier products and as a result we recorded an inventory write-off totaling approximately $0.7 million in our fourth quarter 2012 financial results. If an opportunity arises, we may still sell Carrier products already existing in our written- off inventories but we do not expect any meaningful sales. In addition, despite the discontinuance, we may still be subject to warranty obligations and possible technical and logistic support for Carrier transactions carried out in the past and/or in the future as aforesaid.

To remain competitive, we must develop new products and enhancements to existing products on a timely and cost-effective basis.

Our target markets are characterized by rapidly changing technology, changing customer requirements, relatively short product lifecycles, evolving industry standards and frequent new product introductions. The dynamism that characterizes our target markets is both an opportunity and a challenge for RiT. However, changes in technologies, customer requirements and industry standards and new product introductions by our existing competitors or by new market entrants could reduce the markets for our products or require us to develop new products and we cannot guarantee that we will emerge as the market leaders. Therefore, our ability to correctly anticipate changes in technology and customer requirements and to secure timely access to information concerning the emergence of new industry standards, as well as our ability to develop, manufacture and market new and enhanced products successfully and on a timely basis, are significant factors in our ability to remain competitive.

We continue to develop new products and technologies. For example, during 2012 we acquired the technology underlying Beamcaster™ and we intend to continue to invest resources in developing such product. However, there can be no assurance that Beamcaster™ or our other products will be successful or profitable, or that we will not encounter technical or other difficulties that could delay the introduction of these or other new or enhanced products in the future. In addition, it often takes several months before the development and manufacturing costs of new products stabilize, which may adversely affect operating results during such period. If we are unable to introduce new or enhanced products on a timely and cost-effective basis and to gain market acceptance for such products, our business, financial condition and results of operations may be materially adversely affected.

We operate in exceedingly competitive markets.

The markets for our products and solutions are very competitive, and we expect that they will become more competitive in the future. Increased direct and indirect competition could adversely affect our revenues and profitability, whether through pricing pressure, loss of market share and/or other factors. Many of our competitors are far larger, have substantially greater resources (including financial, technological, manufacturing and marketing and distribution capabilities) and are much more widely recognized than we are. There can be no assurance that we will be able to compete successfully against existing or new competitors as the market for our products and solutions evolves and the level of competition increases. Moreover, there can be no assurance that we will be able to differentiate our products and solutions from the products and solutions of our competitors or to develop or introduce successfully new products and solutions that are less costly or offer better performance than those of our competitors or that competition will not have a material adverse effect on our future revenues and, consequently, on our business, prospects, financial condition and results of operations.

We are dependent, to some extent, on third-party assembly and manufacturing vendors to provide our finished products as well as other suppliers.

Our manufacturing process requires unique production and testing equipment that was designed and produced especially for our products. Since we outsource our manufacturing process to third-party assembly and manufacturing vendors, these vendors have the required know-how, certifications and special tooling needed for production of our products. If we are unable to continue to acquire products from these vendors on acceptable terms, or should any of them cease to supply us with such products for any reason, we may not be able to identify and integrate an alternative source of supply in a timely fashion or at the same costs. Any transition to one or more alternate manufacturers would likely result in delays, operational problems and increased costs, and may limit our ability to deliver our products to our customers on time for such transition period, any of which could result in a material adverse effect on our business, prospects, financial condition and results of operations.

In addition, certain components used in our products and solutions are presently available from, or supplied by, only one source, and certain other components are available only from limited sources. Although we do not have long-term supply contracts with some of our existing suppliers, we have generally been able to obtain supplies of components in a timely manner under acceptable terms, while working to establish alternative suppliers for all products. However, there can be no assurance that delays in key component or product deliveries will not occur in the future due to shortages resulting from the limited number of suppliers, the financial condition or other difficulties of such suppliers. Any inability to obtain sufficient key components or to develop alternative sources for such components, if and as required in the future, could result in delays, interruptions or reductions in product shipments, which could have a material adverse effect on our customer relationships and, in turn, on our business and results of operations. In addition, the components used in our products may be subject to significant volatility in prices for raw materials and components. Significant volatility in prices for raw material and components may result in a required increase in prices that, if we are unable or fail to apply, may adversely affect the results of our operations.

Our international sales may expose us to additional risks.

We currently market our products and solutions in numerous countries and are subject to many risks associated with international sales, including limitations and disruptions resulting from the imposition of government controls, local taxes, national standardization and certification requirements, export license requirements, economic or political instability, trade restrictions, changes in tariffs, currency fluctuations and difficulties in managing international operations. Any of these risks could have a material adverse effect on our ability to deliver our products, solutions and services on a competitive and timely basis, or to collect payments from customers in these countries and on our results of operations. For example, we are required to comply with European Union Directives with respect to environmental standards. There is no assurance that we will not encounter difficulties in connection with the sale of our products and solutions in the future or that one or more of these factors will not have a material adverse effect on our business, prospects, financial condition and results of operations.

We may be subject to warranty and product liability claims.

Our product warranties permit customers to return any products deemed to be defective for repair or replacement. In general, it is our policy to grant a warranty for the hardware components of our products for periods ranging from 12 to 24 months. This policy does not apply to our cabling systems solutions, for which, when installed by a certified cabling installer, we provide a warranty ranging from 20-years to 25 years, depending on the relevant warranty. These warranty periods are customary in the structured cabling industry, but significantly longer than product warranties generally offered in other industries. We may also be subject to other direct and indirect product liability claims, and our reputation may suffer in the event of any warranty claims or product failures. Although we have obtained insurance coverage to help limit our exposure to potential material warranty claims, we cannot assure that such claims would not exceed the available insurance coverage or would not otherwise have a material adverse effect on our business, prospects, financial condition and results of operations.

Changes in exchange rates between currencies may negatively impact our costs.

Most of our revenues are denominated in U.S. dollars or dollar-linked. We collect a portion of our revenues in Europe in Euros. Most of our purchases of materials and components, and most of our marketing costs, are denominated in dollars or are dollar-linked. However, a material portion of our expenses, including salaries and personnel expenses paid in Israel, are denominated in New Israeli Shekels, or NIS. As a result, we are exposed to several risks, including that either the NIS or the Euro may increase in value relative to the dollar. If either of such events occurs, the dollar cost of our operations in Israel or Europe will increase and our dollar-measured operating results will be adversely affected. For example, during 2013, we witnessed a strengthening of the average exchange rate of the NIS against the dollar, which increased the dollar value of Israeli expenses.

Risks Related to Our Intellectual Property

If we fail to establish, maintain and enforce intellectual property rights with respect to our technology, our business, prospects, financial condition and results of operations may be materially adversely affected.

We are dependent upon our proprietary technology and we rely upon a combination of patents, designs, patent applications, contractual rights, trade secrets, copyrights, non-disclosure agreements and technical measures to establish and protect our proprietary rights in our products, systems and technologies. In addition, we enter into nondisclosure and confidentiality agreements with our employees and with certain suppliers and customers with access to sensitive information.

We have filed patent applications with respect to certain aspects of our technologies and have obtained numerous patents in a number of jurisdictions. Certain aspects of our Beamcaster™ technology are currently either subject to patents we have been granted or are patent-pending. However, we cannot be certain that patents will be issued or granted with respect to applications that are currently pending, or that issued or granted patents will not later be found to be invalid or unenforceable. In addition, we cannot provide any assurances that the patents that have been issued will provide sufficient protections for our technology against competitors and that any of our outstanding patent applications, including the ones related to our Beamcaster™ technology, will ultimately result in issued patents. Also, the laws of some of the foreign jurisdictions in which we sell and seek to sell our products (such as China) may afford little or no protection of our intellectual property rights. We cannot assure you that third parties will not assert infringement claims against us based on foreign intellectual property rights and laws that are different from those established in the United States. In addition, patents and other intellectual property rights held by third parties in specific territories could prevent or discourage us from selling our products in such territories.

While we strive to maintain systems and procedures to protect the confidentiality of our trade secrets and technical know-how, these systems and procedures may fail to provide an adequate degree of protection. For example, although we generally enter into agreements with our employees, consultants, advisors, and strategic partners restricting the disclosure and use of trade secrets, technical know-how and confidential information, we cannot provide any assurance that these agreements will be sufficient to prevent unauthorized use or disclosure of our trade secrets and technical know-how.

Our commercial success will depend in part on our ability to obtain additional patents and other intellectual property rights to maintain adequate protection of our technologies in the United States and other countries. If we do not adequately protect our patents and other intellectual property, competitors may be able to use our technologies and erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitability. Monitoring and policing unauthorized use and disclosure of intellectual property is difficult. If we learned that a third party was in fact infringing or otherwise violating our intellectual property, we may need to enforce our intellectual property rights including through litigation. Litigation relating to our intellectual property may not prove successful and might result in substantial costs and diversion of resources and management attention.

From the standpoint of our customers, the strength of the intellectual property under which we may grant licenses can be a determinant of the value of these licenses. If we are unable to secure, protect and enforce our intellectual property, it may become more difficult for us to attract new customers. Any such development could have a material adverse effect on our business, prospects, financial condition and results of operations.

We may face claims that we are violating the intellectual property rights of others.

We may face claims, including from direct competitors, asserting that the commercial use of our technology infringes or otherwise violates the intellectual property rights of others. We cannot be certain that our technologies and processes do not violate the intellectual property rights of others. We expect that we may increasingly be subject to such claims as our revenues and market profile grows.

If we were found to be infringing or otherwise violating the intellectual property rights of others, we could face significant costs to implement work-arounds, and we cannot provide any assurance that any such work-around would be available or technically equivalent to our current technology. In such cases, we might need to license a third party’s intellectual property, and such required licenses might not be available on acceptable terms, or at all. If we are unable to work around such infringement or obtain a license on acceptable terms, we might face substantial monetary judgments against us or an injunction, which might cause us to cease operations.

In addition, even if we are not infringing or otherwise violating the intellectual property rights of others, we could nonetheless incur substantial costs in defending ourselves in suits brought against us for alleged infringement. Also, if any license agreements provide that we will defend and indemnify our customers for claims against them relating to any alleged infringement of the intellectual property rights of third parties in connection with such customers’ use of our technologies, we may incur substantial costs defending and indemnifying customers to the extent they are subject to these types of claims. Such suits, even if without merit, would likely require our management team to dedicate substantial time to address the issues presented.

Any claims brought against us or any customer licensees alleging that we have violated the intellectual property of others could have a material adverse effect on our business, prospects, financial condition and results of operations.

Intellectual property litigation may lead to unfavorable publicity that harms our reputation and causes the market price of our ordinary shares to decline.

During the course of any intellectual property litigation, there could be public announcements of the results of hearings, rulings on motions, and other interim proceedings in the litigation. If securities analysts or investors regard these announcements as negative, the perceived value of our products, services or intellectual property could be diminished and the market price of our ordinary shares may decline as a result.

Under applicable employment laws, we may not be able to enforce covenants not to compete and therefore may be unable to prevent our competitors from benefiting from the expertise of some of our former employees. In addition, our Israeli employees may be entitled to seek compensation for their inventions irrespective of their contractual agreements with us.

Our agreements with most of our employees and key consultants include non-competition provisions. These provisions prohibit such employees and key consultants, if they cease working for us, from competing directly with us or working for our competitors or clients for a limited period of time. We may be unable to enforce these provisions under the laws of the jurisdictions in which our employees and consultants work and it may be difficult for us to restrict our competitors from benefitting from the expertise our former employees or consultants developed while working for us. For example, Israeli courts have required employers seeking to enforce non-compete undertakings of a former employee to demonstrate that the competitive activities of the former employee will harm one of a limited number of material interests of the employer which have been recognized by the courts, such as the secrecy of a company’s confidential commercial information or the protection of its intellectual property. If we cannot demonstrate that such interests will be harmed, we may be unable to prevent our competitors from benefiting from the expertise of our former employees or consultants and our ability to remain competitive may be diminished. In addition, we cannot guarantee that any waiver of rights by our employees and consultants to receive compensation for service inventions will be upheld by Israeli courts even when our agreements with them include provisions regarding assignment and waiver of rights in respect of inventions created within the course of their employment with us, including in respect of "service inventions" as defined under the Israeli Patents Law, 1967.

Risks Related to our Relationship with STINS COMAN

STINS COMAN and its affiliates beneficially own 78.4% of our ordinary shares and may therefore be able to control the outcome of matters requiring shareholder approval.

As of April 13, 2015, STINS COMAN and Invencom together beneficially owned approximately 78.4% of our outstanding shares. Accordingly, STINS COMAN has, subject to special approvals required by Israeli law for transactions involving controlling shareholders, sufficient voting power to elect all of our directors (subject to the provisions of the Companies Law with regard to outside directors), control our management and approve or reject any merger or similar transaction. Mr. Sergey Anisimov, the Chairman of our Board of Directors, is the President of, and owns a majority interest in, STINS COMAN. This concentration of ownership of our ordinary shares could delay or prevent proxy contests, mergers, tender offers, open-market purchase programs or other purchases of our ordinary shares that might otherwise give our shareholders the opportunity to realize a premium over the then prevailing market price for our ordinary shares. It could also adversely affect our share price. In addition, the market price of our ordinary shares may be adversely affected by events relating to STINS COMAN that are unrelated to us.

We may be affected by transactions with STINS COMAN.

We are engaged and may in the future engage in transactions with STINS COMAN or its affiliates. In particular, STINS COMAN has been our non-exclusive distributor in the CIS market, for our enterprise products since 1994, and in 2015 we appointed RiT CIS Ltd., or RiT CIS, a Russian company affiliated with Stins Coman, as an additional non-exclusive distributor of our products in Russia and the CIS. In addition, in 2012, we acquired the Beamcaster technology from Invencom, a technology for which we continue to dedicate significant resources. We believe that such transactions are beneficial to us and are, or will be, conducted upon terms that are no less favorable to us than would be available to us from unaffiliated third parties. However, STINS COMAN could, subject to compliance with provisions of Israeli law concerning related-party transactions, exercise its influence over our affairs in its own interest.

Some members of our Board of Directors may have conflicts of interest with us.

Mr. Sergey Anisimov, the Chairman of our Board of Directors, and Mr. Boris Granovsky, a member of our Board of Directors, are executive officers and directors of STINS COMAN. In addition, Mr. Anisimov owns a majority interest in STINS COMAN and Mr. Granovsky owns a minority interest in STINS COMAN. Accordingly, these individuals may occasionally have conflicts of interest with respect to business opportunities and similar matters that may arise in the ordinary course of RiT’s and STINS COMAN’s businesses.

Risks Related to Our Securities

The price of our ordinary shares and warrants may be volatile.

Our ordinary shares and the warrants we issued as part of our public offering in November 2013 have experienced significant market price and volume fluctuations in the past and may experience significant market price and volume fluctuations in the future. There can be no assurance that the volatility of our share and warrant prices and trading volumes therein will not continue or increase. A substantial decrease in market price of our ordinary shares or warrants and low trading volumes could frustrate our efforts to raise funds through both debt and equity, discourage potential customers and partners from doing business with us, and could result in a material adverse effect on our business, financial condition and results of operations. Market fluctuations could also adversely affect the price of our ordinary shares and warrants.

We may not satisfy the NASDAQ Capital Market's requirements for continued listing. If we cannot satisfy these requirements, NASDAQ could delist our ordinary shares and warrants.

Our ordinary shares and warrants are listed on the NASDAQ Capital Market, or NASDAQ, under the symbol RITT. For our ordinary shares to continue to be listed on NASDAQ, we are required to satisfy a number of conditions, including a minimum bid price of at least $1.00 per share, a market value of our publicly held shares, or MVPHS, of at least $1 million and shareholders' equity of at least $2.5 million. For our warrants to continue to be listed on NASDAQ, the underlying security, our ordinary shares, generally must be listed on NASDAQ.

In past years, we failed to remain in compliance with several of NASDAQ’s continued listing requirements and regained compliance only after we carried out several transactions, including a reverse stock split in August 2009 and several conversions of outstanding amounts under the Convertible Loan into ordinary shares. We cannot assure you that we will continue to remain in compliance with these continued listing requirements in the future. If we are delisted from NASDAQ, trading in our ordinary shares and warrants may be conducted, if available, on the "OTC Bulletin Board Service" or, if available, via another market. In the event of such delisting, an investor would likely find it significantly more difficult to dispose of, or to obtain accurate quotations as to the value of our ordinary shares and warrants, and our ability to raise future capital through the sale of our securities could be severely limited.

In addition, if our ordinary shares were delisted from NASDAQ, our ordinary shares could be considered a "penny stock" under the U.S. federal securities laws. Additional regulatory requirements apply to trading by broker-dealers of penny stocks that could result in the loss of an effective trading market for our ordinary shares.

The sale of a substantial number of our securities in the public market, or the expectation thereof, could materially adversely affect the market price of our securities and our ability to raise capital through an offering of securities.

As of April 13, 2015, we had approximately 15.5 million ordinary shares issued and outstanding, approximately 1 million ordinary shares that are issuable upon exercise of outstanding options under our equity incentive plans with exercise prices ranging from $1.00 - $14.88 per share, and approximately 1.9 million ordinary shares that are issuable upon exercise of outstanding warrants (including the Underwriter Warrants described elsewhere in this annual report) with an exercise price of $2.50 per share. In addition, under the Convertible Loan, STINS COMAN, our controlling shareholder, may further exercise its right to convert its $3.0 million outstanding Convertible Loan into 2,365,867 ordinary shares. Sales of ordinary shares previously issued in private placements or issuable upon exercise of options and warrants or conversion of the Convertible Loan, or even the prospect of such sales or issuances, could materially adversely affect the market price of our ordinary shares and warrants and our ability to raise capital through our offering of securities at acceptable prices. A substantial decrease in the market price of our securities could also discourage potential customers and partners from doing business with us, and could result in a material adverse effect on our business, financial condition, and results of operations.

Our warrants are speculative in nature.

On November 27, 2013, as part of our public offering of 3.0 million ordinary shares, we issued warrants to purchase 1,725,000 ordinary shares (and additional 150,000 warrants were issued to the underwriter, or the Underwriter Warrants). The warrants do not confer any rights of ownership of ordinary shares on its holders, such as voting rights or the right to receive dividends, but only represent the right to acquire ordinary shares at a fixed price for a limited period of time. Specifically, commencing on the date of issuance, holders of the warrants may exercise their right to acquire the ordinary shares and pay an exercise price of $2.50 per share, subject to adjustment upon certain events, prior to five years from the date of issuance, after which date any unexercised warrants will expire and have no further value.

Moreover, the market value of the warrants may be volatile and there can be no assurance that the market value of the warrants will equal or exceed their public offering price. There can be no assurance that the market price of the ordinary shares will ever equal or exceed the exercise price of the warrants, and consequently, whether it will ever be profitable for holders of the warrants to exercise the warrants.

Regulations related to conflict minerals may force us to incur additional expenses and may damage our relationship with certain customers.

In August 2012, the SEC adopted disclosure and reporting rules intended to improve transparency and accountability concerning the supply of certain minerals, known as conflict minerals (including tantalum, tin, tungsten and gold), originating from the Democratic Republic of Congo (“DRC”) and adjoining countries. These rules require us to determine the origin of certain materials used in our products and to file a report with the SEC on an annual basis disclosing, among other things, whether we use any materials containing conflict minerals originating from the DRC and adjoining countries. If it is determined that our products contain or use any conflict minerals from the DRC or adjoining countries, additional requirements will be triggered. Compliance with conflict mineral disclosure requirements may result in increased costs of regulatory compliance, potential risks to our reputation, difficulty satisfying any customers that insist on conflict-free products and harm to our business. Since our supply chain is complex, we may not be able to sufficiently verify the origins for these minerals and metals used in our products through the diligence procedures that we implement, which may harm our reputation. In such event, we may also face difficulties in satisfying customers who require that all of the components of our products are certified as conflict mineral free.

We do not intend to pay dividends.

We have never declared or paid any cash dividends on our ordinary shares. We currently intend to retain any future earnings to finance operations and to expand our business and, therefore, do not expect to pay any cash dividends in the foreseeable future.

Risks Related to Operating In Israel

Security, political and economic instability in the Middle East may harm our business.

We are incorporated under the laws of the State of Israel, and our principal offices and R&D facilities are located in Israel. Accordingly, security, political and economic conditions in the Middle East in general, and in Israel in particular, directly affect our business.

Over the past several decades, a number of armed conflicts have taken place between Israel and its Arab neighbors and a state of hostility, varying in degree and intensity, has led to security and economic problems for Israel. Since late 2000, there has also been a high level of violence between Israel and the Palestinians including, most recently, during the summer of 2014, when Israel was engaged in armed conflicts with Hamas, a militia group and political party operating in the Gaza Strip. This violence has strained Israel’s relationship with its Arab citizens, Arab countries and, to some extent, with other countries around the world. Since the end of 2010 several countries in the region, including Egypt and Syria, have been experiencing increased political instability, which led to changes in government in some of these countries, the effects of which are currently difficult to assess. In addition, Iran has threatened to attack Israel and is widely believed to be developing nuclear weapons. Iran is also believed to have a strong influence among extremist groups in areas that neighbor Israel, such as Hamas in Gaza and Hezbollah in Lebanon. This situation may potentially escalate in the future to violent events which may adversely affect Israel and us. In addition, this instability may affect the global economy and marketplace. Any armed conflicts or political instability in the region, including acts of terrorism or any other hostilities involving or threatening Israel, would likely negatively affect business conditions and could make it more difficult for us to conduct our operations in Israel, which could increase our costs and adversely affect our financial results.

Furthermore, some neighboring countries, as well as certain companies and organizations, continue to participate in a boycott of Israeli firms and others doing business with Israel or with Israeli companies. Restrictive laws, policies or practices directed towards Israel or Israeli businesses could have an adverse impact on the expansion of our business. In addition, we could be adversely affected by the interruption or curtailment of trade between Israel and its trading partners, a significant increase in the rate of inflation, or a significant downturn in the economic or financial condition of Israel

Our commercial insurance does not cover losses that may occur as a result of events associated with the security situation in the Middle East. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained. Any losses or damages incurred by us could have a material adverse effect on our business.

Our operating results may be negatively affected by the obligation of some of our key personnel to perform military service.

Some of our executive officers and employees in Israel are obligated to perform military reserve duty annually. In addition, they may also be further subject to being called to active duty at any time under emergency circumstances and could be required to serve in the military for extended periods of time. This could disrupt our operations and harm our business.

Because we have received grants from the Office of the Chief Scientist, we are subject to on-going restrictions.

We have received grants from the Office of the Chief Scientist of the Israeli Ministry of Economy, known as the Chief Scientist, including recent grants we received during 2014, for R&D programs and intend to apply for further grants in the future. In order to maintain our eligibility for these grants, we must meet specified conditions, including the payment of royalties with respect to grants received. If we fail to comply with these conditions in the future, sanctions (such as the cancellation of grants) might be imposed on us, and we could be required to refund any payments previously received under these programs. Any products developed with funds provided by these grants are required to be manufactured in Israel, unless we obtain prior approval from a governmental committee and we pay increased royalties. In addition, the terms of the Chief Scientist’s grants limit our ability to transfer know-how developed under an approved R&D program outside of Israel. The Government of Israel has reduced the grants available under the Chief Scientist’s program in recent years, and this program may be discontinued or curtailed in the future. If we do not receive these grants in the future, we will be required to allocate other funds to product development at the expense of other operational costs. For more information about grants from the Chief Scientist, see "Item 5.C. – Research and Development, Patents and Licenses" below.

It may be difficult to enforce a U.S. judgment against us or our officers and directors and to assert U.S. securities laws claims in Israel.

We are incorporated under the laws of the State of Israel. Service of process upon us, our Israeli subsidiaries, our directors and officers and the Israeli experts, if any, named in this annual report, substantially all of whom reside outside the United States, may be difficult to obtain within the United States. Furthermore, because the majority of our assets and investments, and substantially all of our directors, officers and such Israeli experts, if any, are located outside the United States, any judgment obtained in the United States against us or any of them may be difficult to collect within the United States.

We have been informed by our legal counsel in Israel that it may also be difficult to assert U.S. securities law claims in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws reasoning that Israel is not the most appropriate forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. There is little binding case law in Israel addressing these matters. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law.

Subject to specified time limitations and legal procedures, under the rules of private international law currently prevailing in Israel, Israeli courts may enforce a U.S. judgment in a civil matter, including a judgment based upon the civil liability provisions of the U.S. securities laws, as well as a monetary or compensatory judgment in a non-civil matter, provided that the following conditions are met:

subject to limited exceptions, the judgment is final and non-appealable;

the judgment was given by a court competent under the laws of the state of the court and is otherwise enforceable in such state;

the judgment was rendered by a court competent under the rules of private international law applicable in Israel;

the laws of the state in which the judgment was given provide for the enforcement of judgments of Israeli courts;

adequate service of process has been effected and the defendant has had a reasonable opportunity to present his arguments and evidence;

the judgment and its enforcement are not contrary to the law, public policy, security or sovereignty of the State of Israel;

the judgment was not obtained by fraud and does not conflict with any other valid judgment in the same matter between the same parties; and

an action between the same parties in the same matter was not pending in any Israeli court at the time the lawsuit was instituted in the U.S. court.

Provisions of Israeli law may delay, prevent or make difficult a change of control and therefore depress the price of our stock.

Provisions of Israeli corporate and tax law may have the effect of delaying, preventing or making an acquisition of our company more difficult. For example, under the Companies Law, upon the request of a creditor of either party to a proposed merger, the court may delay or prevent the merger if it concludes that there exists a reasonable concern that as a result of the merger the surviving company will be unable to satisfy the obligations of any of the parties to the merger. These provisions could cause our ordinary shares to trade at prices below the price for which third parties might be willing to pay to gain control of us. Third parties who are otherwise willing to pay a premium over prevailing market prices to gain control of us may be unable or unwilling to do so because of these provisions of Israeli law. See “Item 10.B. - Additional Information — Memorandum and Articles of Association — Anti-Takeover Provisions; Mergers and Acquisitions.”

Your rights and responsibilities as a shareholder are governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. companies.

We are incorporated under Israeli law. The rights and responsibilities of the holders of our ordinary shares are governed by our Articles of Association and Israeli law. These rights and responsibilities differ in various respects from the rights and responsibilities of shareholders in typical U.S.-based corporations. In particular, a shareholder of an Israeli company has a duty to act in good faith toward the company and other shareholders and to refrain from abusing its power in the company, including, among other things, in voting at the general meeting of shareholders on matters such as amendments to a company’s articles of association, increases in a company’s authorized share capital, mergers and acquisitions and interested party transactions requiring shareholder approval. In addition, a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or to appoint or prevent the appointment of a director or executive officer in the company has a duty of fairness toward the company. There is limited case law available to assist us in understanding the implications of these provisions that govern shareholders’ actions, and these provisions may be interpreted to impose additional obligations and liabilities on holders of our ordinary shares that are not typically imposed on shareholders of U.S. corporations.

ITEM 4. INFORMATION ON THE COMPANY

4.A. History and Development of the Company

Corporate History and Details

RiT Technologies Ltd. was incorporated under the laws of the State of Israel in 1989 and operates as a company limited by shares under the Israeli Companies Law.

Our main offices are located at 24 Raoul Wallenberg Street, Tel Aviv 69719, Israel, telephone number +972-77-2702720. Our address on the Internet is http://www.rittech.com. The information on our website is not incorporated by reference into this annual report.

Our agent in the United States is our wholly-owned subsidiary, RiT Technologies, Inc., which was incorporated in 1993 under the laws of the State of New Jersey and is located at 72 South Maple Avenue Ridgewood, New Jersey 07450, telephone number +1-201-512-1970. Our U.S. subsidiary is primarily engaged in the selling and marketing of our products in the United States.

We became a publicly-traded company on the NASDAQ Global Market (formerly known as the NASDAQ National Market) upon our initial public offering on July 22, 1997. The listing of our shares was transferred to the NASDAQ Capital Market (formerly known as the NASDAQ SmallCap Market) on January 12, 2004. Our ordinary shares are traded under the symbol RITT and our warrants are traded under the symbol RITTW.

Recent Major Business Developments

Below is a summary of the major business developments in RiT since January 1, 2014:

Distributor Agreement with RiT CIS. In efforts to realign and improve our sales in the CIS market, we entered into a Distributor Agreement dated January 6, 2015, with 'RiT CIS Ltd., a Russian company affiliated with Stins Coman ("RiT CIS"), whereby we designated RiT CIS as our additional and non-exclusive distributor in said territory (See “Item 7.B - Related Party Transactions” below).

Distributor Agreement with Stins Engineering. In efforts to increase our sales in Singapore and South Asia, we entered into a Distributor Agreement dated February 16, 2015 with Stins Engineering Pte Ltd. ("Stins Engineering"), a Singaporean company affiliated with Stins Coman, whereby we designated Stins Engineering as our non-exclusive distributor in said territory (excluding China and India). (See “Item 7.B - Related Party Transactions” below).

Management changes. In January 2014, Motti Hania, our then Deputy CEO, was appointed as our new President and CEO, replacing Vadim Leiderman, who served as our President and CEO since February 2012. Other management changes include: in June 2014, following receipt of the approval of our shareholders, we appointed Slava Anisimov, the son of Sergey Anisimov, Chairman of our Board of Directors and president of STINS COMAN, as our VP Operations; in October 2014, Raphael Sankar joined our management team in the position of VP Sales & Business Development (Americas & UK); in December 2014, Elan Yaish, our former Deputy CEO and CFO, resigned, and Eran Erov, our Controller, was promoted to VP Finance; and in January 2015, Kobi Haggay, who previously served as our Product Manager, was promoted to be our VP Products.

PV+ product family. During 2014, we continued the marketing of our PV+ product family and have sold and installed to date some pilot installations. Our PV+ product family supports both interconnect and cross-connect network topologies using unique dual-wire bus technology for high speed asynchronous scanning.

For a discussion of other important events in the development of our business, see “Item 4.B. - Business Overview.”

For a discussion of our principal capital expenditures and divestitures, see Item 5.B "Operating and Financial Review and Prospects –Liquidity and Capital Resources –Principal Capital Expenditure and Divestitures.”

4. B. Business Overview

Overview

We are a leading provider of IIM solutions and a developer of an innovative indoor optical wireless technology solution:

Our IIM products, including PatchView™, our main IIM solution, provide and enhance security and network utilization for data centers, communication rooms and work space environments. They help companies plan and provision, monitor and troubleshoot their communications networks, maximizing utilization, reliability and physical security of the network while minimizing unplanned downtime. Our IIM solutions are deployed around the world, in a broad range of organizations, including data centers in the private sector, government agencies, financial institutions, airport authorities, healthcare and education institutions.

Our Beamcaster™ product is the first of our IWON technology solutions, targeted mainly for open-space offices. It is designed to help customers streamline deployment, reduce infrastructure design, installation and maintenance complexity and enhance security in a cost effective way. During the third quarter of 2013, we commenced selling initial pilot installations of Beamcaster™. During 2014, we identified a number of issues in our Beamcaster product relating to the number of ports in the product and the optimal market for this product (i.e., high density open space offices), and are currently working on upgrading the Beamcaster configuration as well as making marketing efforts to penetrate said optimal market. In order to leverage the IWON technology for other commercial applications, we continue to invest resources in developing and commercializing this technology. For example, we are currently examining additional potential applications for our IWON technology, primarily for a few industrial fields such as robotics communication applications.

The Market Opportunity and Our Solutions

Enterprise Data Centers. The targeted market for our IIM solutions is the enterprise data center market, which consolidates organizational information technology (IT) assets. Enterprise data centers are “all-in-one” facilities that physically house and execute the full range of data management and communication services, including storage, management, process and exchange of digital data and information, while providing application services and management of various data processing such as intranet, telecommunications and information technology. The data center physically houses various equipment, such as multiple servers (web servers, application servers and database servers), data storage devices, computers, switches and routers, load balancers, wire cages or closets, vaults, racks and related equipment. We believe the key challenges that concern participants in this market include reliability (ideally zero or minimal downtime); power consumption; environmental controls; effective disaster recovery solutions; security (physical safety) protection against intruders damaging or stealing the data or equipment and general safety while operating physical connections; full control capabilities for customers over network components; and flexibility and transparency in quantifying performance, billing architectures and efficiency.

We believe that our solutions respond to these challenges and market needs by offering a comprehensive solution for enterprise data centers (fully integrated from hardware components through management software and applications), an advantage that enables us to be a comprehensive solution provider. Our IIM solutions address data center concerns by improving planning and deployment while optimizing daily operations, increasing the efficiency of the IT staff, enhancing network continuity, improving security and reducing overall network cost-of-ownership. Our PV+ hardware products support both inter-connect and cross-connect network topologies, reducing the amount of space required for inter-connect installations, the required bill of materials and increasing the efficiency, performance and security within the organization. Our CenterMind™ product supports comprehensive monitoring of power distribution units (PDUs) and monitoring of environmental parameters in data centers, and enables easy integration into the customer work flow, enhanced reporting and increased dashboard capabilities.

We intend to leverage our vast experience and track record as a pioneer and leading provider of IIM systems, having developed expertise in the deployment of complex IIM systems with numerous clients throughout the world, to develop new alliances with leading global providers and increase sales.

During 2014 an initiative was started by the two main standard organizations, ISO/IEC and ANSI/TIA, to define IIM systems, including the functions, values and integration capabilities of such systems. We strive to ensure that these IIM standards will be leveraged into any of our IT environment solutions, such as DataCenters and IT enterprises.

Beamcaster™. The indoor network for commercial and residential office space is currently dominated by cabling infrastructure of copper or optical fibers, with the use of Wi-Fi routers in open spaces.

We believe the key challenges that concern participants in these markets include an overly complex design of network infrastructure, costly and timely installation, security and performance. Our Beamcaster™ solution is intended to address these challenges by reducing the need for both cabling and switches, while (1) significantly enhancing organizational security using symmetrical, bi-directional optical links, (2) reducing the need for cabling, and (3) initially offering competitive bandwidth of 1 to 10 GBPS.

While we believe that our Beamcaster™ product will be suited for multiple environments, our initial focus is on open space indoor use, labs and exhibition halls, where easy deployment and the ability to have a direct sight line between the central station and the user station can be easily maintained. We believe that our Beamcaster™ solution will present an attractive offering for customers who want to deploy an ultra-high-speed network infrastructure in an expedited and cost-effective manner, including customers looking to replace their old low-performance network cabling infrastructure.

Our Strategy

Our objective is to utilize our new products-in-development, such as our Beamcaster™ and PatchView Plus, to penetrate new potential markets and leverage our innovative IIM technologies to lead the enterprise data center industry with optimized managed infrastructure.

Key elements of our strategy to achieve these objectives include:

●

Strategically Expand Our Product Lines. Our close relationships with our customers provide us with valuable insights into the enterprise data center market needs and trends. In addition, our system-level expertise, engineering talent and broad technology portfolio provide us with a strong foundation for delivering new products and solutions. We plan to continue to leverage these benefits to develop and enhance our product offerings. In particular, we expect to expand into adjacent markets through organic development and strategic partnerships.

●	Extend Our Technology Positioning. We intend to leverage our positioning as a full solution provider in highly usable, flexible, fast-return on investment enterprise data center infrastructure management solutions.

●	Realign our Selling and Marketing Capabilities. We plan to reinforce our competitive positioning through realignment of sales personnel and marketing activities.

●

Expand and Leverage our Strategic Relationships. We believe that a significant market opportunity exists to sell our solutions with the complementary products and services provided by other organizations, especially leading global providers in our markets. We plan to extend our existing strategic relationships and develop new alliances with leading global providers in order to extend the functionality of our solutions and increase sales.

●	Increase Operational Efficiency and Flexibility. We will also continue to focus on improving the operational efficiency and professional management of all of our operations, while achieving greater capacity utilization and flexibility and continuing to optimize our supply chain.

Our Products

Enterprise Solutions. More than a decade ago, we introduced IIM to the enterprise information technology (IT) world. The underlying premise of IIM was to bring intelligent “self-awareness” to the physical network infrastructure, thereby enabling it to be automatically mapped and monitored. Using accurate and comprehensive information about the presence and status of all network components, our IIM solutions are able to implement a broad range of applications, such as guided MACs (Moves Adds and Changes), automatic provisioning and troubleshooting, thereby affording comprehensive visibility and control into the layer network infrastructure. As such, our systems are designed to improve planning and deployment while optimizing daily operations, increasing the efficiency of the IT staff, enhancing network continuity, improving security and reducing overall network cost-of-ownership.

Our main IIM solution, known as PatchView™, includes our PatchView Manager infrastructure management software (previously known as Centermind and PV4E) and a broad line of associated hardware products, which are used together to secure real time connectivity information with respect to the data network’s connectivity infrastructure. Currently, PatchView™ hardware is offered in a traditional cross-connect topology, the PatchView Max. We began marketing our new inter-connect hardware configuration, PatchView Plus or PV+ product family during the second half of 2013 and have sold and installed to date some pilot installations. The PV+ hardware product family will support both inter-connect and cross-connect network topologies reducing the amount of space required for inter-connect installations, the required bill of materials and increasing the efficiency, performance and security within the organization.

Commencing in early 2012, we also began to offer our CenterMind™ data center management software (previously known as PV4E) either as a stand-alone solution for data centers or as a software combined with integration services tailored and provided by RiT. In addition, we expanded this stand-alone software to support comprehensive monitoring of PDUs, monitoring environmental parameters in data centers and to enable easy integration into the customer work flow, enhanced reporting and dashboard capabilities.

Integrating our IIM hardware solutions with the advanced functionality of CenterMind™ results in a system that is designed to provide superior space, connectivity and security management capabilities, enabling the system to deliver a new level of control for data center managers and achieve a previously unreachable level of performance optimization for data center operations.

In addition to our PatchView™ hardware and CenterMind™ software products, we also offer SMART Cabling System™, our end-to-end structured network infrastructure solution designed for both copper and fiber cabling environments.

Indoor Wireless Optical Solutions. Our Beamcaster™ product is the first of our indoor wireless optical network products. Beamcaster™ is a system comprised of symmetrical, bi-directional optical links that allow high-speed, high-bandwidth transmission through optical signals between the central station and the user station. A Beamcaster™ deployment will require a central station (ODU), typically fitted to the ceiling, that can currently serve up to eight user stations (Smart Outlet) via a line-of-sight optical connection, which is connected back to the corporate backbone local area network (LAN) via only one fiber optic or copper cable. The Beamcaster™ technology uses special collimated infra-red beam technology that increases its operational range while assuring maximum security over the link. An electro-optical feature will also enable alignment of the infra-red signal to compensate for narrow beam collimation issues.

We believe that the Beamcaster™ product will enable companies to achieve their high-speed, high-bandwidth network needs by reducing the need for today’s cumbersome cabling networks and switching panels. We anticipate that the use of Beamcaster’s™ robust, cost effective and high-performance optical connections will also reduce the time and effort required to design and install traditional cable-based network infrastructure while significantly enhancing network performance, flexibility and security and allowing quick and easy deployment. It brings a unique approach to open-space networking that delivers the ultra-high bandwidth of structured cabling without the related infrastructure expenses, while significantly enhancing organizational security using symmetrical, bi-directional optical links, making it less susceptible to hacking than Wi-Fi networks. Nevertheless, the success of this new line of products will depend on market acceptance as well as other factors. During 2014, we identified a number of issues in our Beamcaster product relating to the number of ports in the product and the optimal market for this product (i.e., high density open space offices), and are currently working on upgrading the Beamcaster configuration as well as making marketing efforts to penetrate said optimal market. In order to leverage the IWON technology for other commercial applications, we continue to invest resources in developing and commercializing this technology. For example, we are currently examining additional potential applications for our IWON technology, primarily for a few industrial fields such as robotics communication applications.

Sales and Marketing

General

Our IIM sales and marketing strategy has relied primarily upon sales through independent distributors, resellers/integrators, OEMs and other strategic alliance partners with major cabling companies.

Most of our customers in the Enterprise market do not have a contractual obligation to purchase products from us. During the fiscal year ended December 31, 2014 we had three customers that represented 20%, 14% and 12% of our total sales, respectively. During 2013 we had three customers that represented 16%, 10% and 10% of our total sales, respectively, and during the fiscal year ended December 31, 2012 we had four customers that represented 14%, 12%, 10%, and 10% of our total sales, respectively. See Note 8 to our Consolidated Financial Statements included elsewhere in this annual report.

For additional details regarding the breakdown of our revenues by geographical distribution and by type of activity, see "Item 5.A - “Operating and Financial Review and Prospects – Operating Results – Results of Operations.”

Enterprise Solutions

The sales and marketing strategy for this product line utilizes the following channels:

Distributors: Our distributor network includes a broad variety of distributors as well as value-added resellers (VARs), systems integrators and installers, in regions throughout the world. As a general rule, our distributors sign non-exclusive International Distributor Agreements. In the United States, we sell our products through our wholly-owned subsidiary, RiT Technologies, Inc., which sells our products primarily through independent manufacturers’ representatives, distributors and system integrators. Most of our distributors are not bound to deal with us exclusively nor contractually subject to minimum purchase requirements with respect to our products or solutions. In the CIS market, we have designated STINS COMAN, our principal shareholder, as our non-exclusive distributor, and most recently we designated RiT CIS as an additional non-exclusive distributor for this territory. For the Singapore and South Asia markets, we recently designated Stins Engineering PTE Ltd. as our non-exclusive distributor in such territory. For more information, see “Item 7.B - Related Party Transactions” below. Our distributors serve as an integral part of our marketing and service network around the world.

We invest significant sales, technical and marketing resources on our distributors, providing them with ongoing training, communications and support. Our employees regularly visit distributors’ sites, and we organize meetings, focused events and technical seminars, and participate in industry conferences and trade shows periodically to further advance our relationships and to familiarize distributors with our products. In addition, in co-operation with our distributors, we advertise in local publications, contribute editorials to journals and prepare direct mailings (both print and electronic) focusing on our products.

In January 2015, we decided to change the business model we use for the sale of our horizontal cables (which form part of our SMART Cabling System™). Under the new royalties model, instead of RiT ordering, selling and delivering horizontal cables, a license is granted to our suitable international distributors to place orders with our manufacturer, with direct delivery to and sale by the relevant distributor in the respective territory. RiT retains control of orders and quality checks at the manufacturer factory and, in return for such license, RiT is entitled to royalties payment of any horizontal cable sold by these distributors.

OEM Partners: Our OEM partners sell our products under their own brands as a component of the complete solutions that they provide to their customers. In some regions, we also have local OEM partners. We support our OEM partners with training, sales materials and technical support and in some cases, we carry out joint marketing and sales activities with such partners.

In addition, our sales force is responsible for large projects and strategic accounts as well as carrying out marketing and sales activities through existing channels. We maintain a representative office and/or local representatives for technical support and sales support in Beijing and Shanghai, China; London, U.K.; and Mumbai, Chennai and Delhi, India.

In 2014, distributors and OEM partners accounted for approximately 93% of our total enterprise sales, compared to 94% in 2013.

Beamcaster™

We began marketing our Beamcaster™ product during the first quarter of 2013, and commenced sales of initial pilot installations during the third quarter of 2013. Our Beamcaster™ sales and marketing strategy is expected to focus in China and the United States primarily through business and strategic partners.

Seasonality

We have not identified any specific seasonality trends in regards to the sale of any of our products or services.

Manufacturing

Enterprise Solutions

In general, we use sub-contractors to manufacture our products and components, reserving the use of our limited manufacturing facilities located in Tel Aviv, Israel for final assembly, testing and quality control of materials, subassemblies and systems. The majority of our products and components are manufactured, assembled and tested by subcontractors according to our designs and specifications.

Our manufacturing process requires unique production and testing equipment that was designed and produced especially for our products. Since we outsource our manufacturing process to third-party assembly and manufacturing vendors, these vendors have the required know-how, certifications and special tooling needed for production of our products. Generally, the prices of components used in our products are not volatile, however, if we are unable to continue to acquire products from these vendors on acceptable terms, or should any of them cease to supply us with such products for any reason, we may not be able to identify and integrate an alternative source of supply in a timely fashion or at the same costs.

In addition, certain components used in our products and solutions are presently available from, or supplied by, only one source, and certain other components are available from a limited number of sources. Although we generally do not have long-term supply contracts with our component suppliers, we have generally been able to obtain supplies of components and products in a timely manner. However, in the event that certain of our suppliers or contract manufacturers were to experience financial or other difficulties that result in a reduction or interruption in supply to us, our results of operations would be adversely affected until such time as we established alternate sources.

Beamcaster™

The final production and testing is currently being performed at RiT's facilities. We plan to evaluate the outsourcing of our production and assembly process in the future.

Customer Service and Support

Enterprise Solutions

We believe that providing a high level of customer service and support to our end-user customers is essential to the success and acceptance of our products and solutions. As such, we operate a technical support help desk to support our distributors and customers worldwide via phone, fax, e-mail and on-site visits. We also publish applications and technical notes for distributors, integrators, manufacturers’ representatives and end-users to assist them with the use of our products more efficiently. In certain territories, we maintain local customer support personnel.

In addition to our direct service and support activities, our worldwide OEMs, distributors and representatives provide sales, service and technical support functions (first and second level support) for our products and solutions to end-user customers in their respective territories. They offer technical support in the end-user's language, attend to customer needs during local business hours, translate our product and marketing literature into the local language and conduct user programs and seminars.

We conduct periodic technical seminars in Israel and other countries to qualify and further advance the technical knowledge of our distributors and installers in the use of our products and solutions. We also conduct technical seminars for staff of our OEM partners in various parts of the world.

We offer second and third level maintenance and support services for our software products to OEMs and distributors and first, second and third level maintenance and support services to our direct customers.

Beamcaster™

We began marketing our Beamcaster™ product during the first quarter of 2013, and commenced sales of initial pilot installations during the third quarter of 2013. We are currently directly supporting these pilot installations. We are currently developing our Beamcaster™ customer service and support program and will finalize the program prior to mass market sales.

Proprietary Rights

We rely upon a combination of patents, designs, patent applications, trademarks, copyrights, trade secret laws, contractual restrictions and technical measures to establish and protect our proprietary rights in our products, systems and technologies. We currently have a total of 46 registered designs of various scope in the United States, Benelux, Brazil, China, Europe, France, Germany, India, Ireland, Israel, Japan, Russia, Singapore, Switzerland, South Africa and the United Kingdom, and two pending designs in Israel. We also currently have 51 patents of various scopes in the United States, China, Israel, Germany, Spain, France, the United Kingdom, Italy, Czechoslovakia, Taiwan and Japan, one international patent application and 18 patent applications pending in the United States, China, India, Brazil, Israel, European Patent Office and Japan that seek to cover certain aspects of our technologies including technologies embodied in our PatchView (including cabling), PairView and Beamcaster technologies. During 2014, we obtained several new patents and filed new patent applications in a number of jurisdictions, including patent applications that we filed in connection with our Beamcaster product in the United States, European Union, Israel, China, India, Japan and Brazil.

We have also obtained trademark registrations in the United States, European Union, Brazil, China, and India for our name “RiT” together with our logo and for our products “PatchView” in the U.S. and EU and “Centermind” in the United States, Israel, European Union, Brazil, India, Russia and China. In 2012 we acquired the Beamcaster technology from Invencom pursuant to the terms of our MOU with Invencom, as discussed in “Related Party Transactions” below, and in April 2013 we filed trademark applications for the Beamcaster and its logo in the United States, European Union, Israel, Brazil, China, India and Japan.

In addition, we enter into nondisclosure and confidentiality agreements with our employees and with certain partners, suppliers and customers with access to proprietary information. Although we cannot assure that the steps we have taken to protect our proprietary rights will be adequate to prevent misappropriation of our technology or independent development and sale by others of software products with features based upon, or otherwise similar to, those of our products and solutions, we intend to vigorously pursue those who commit infringement in order to protect our proprietary technology.

Given the rapid pace of technological development in the communications industries, we cannot assure that certain aspects of our products and solutions do not or will not infringe on existing or future proprietary rights of others. Although we believe our technology has been independently developed and that none of our technology or intellectual property infringes on the rights of others, third parties could assert infringement claims against us in the future. If such infringement is found to exist, we may attempt to receive the requisite licenses or rights to use such technology or intellectual property. However, we cannot assure that such licenses or rights can be obtained under acceptable terms or obtained at all.

In addition, the laws of the foreign jurisdictions in which we sell and seek to sell our products (such as China) may afford little or no protection of our intellectual property rights. We cannot assure that the protection provided to our intellectual property rights by the laws and courts of foreign nations will be substantially similar to the remedies available under U.S. law. We also cannot assure that third parties will not assert infringement claims against us based on foreign intellectual property rights and laws that are different from those established in the United States. In addition, patents and other intellectual property rights held by third parties in specific territories could prevent or discourage us from selling our products in such territories.

Competitive Position

Enterprise Solutions

Competition in our markets is intense. Many companies develop and sell products that directly or indirectly compete with our products. We believe that the principal competitive factors in this market are product price-performance ratio, brand name recognition, technical features, quality, price, and customer service and support. We cannot assure that we will be able to compete successfully in the future with existing or anticipated competitors.

Many of our existing and potential competitors have or are likely to have more extensive engineering, manufacturing, marketing and distribution capabilities (including direct sales forces) and greater financial, technological and personnel resources than we do. Moreover, we cannot assure that we will be able to differentiate our products from the products of our competitors or to develop or successfully introduce new products which are less costly or offer better performance than those of our competitors. In addition, our existing and prospective competitors may have established, or may in the future establish, relationships with our existing and potential customers, which could have a material adverse effect on our ability to compete.

We are aware of a number of products currently in the market that compete directly with our enterprise solutions, such as: the iTRACS Infrastructure Manager, the Quareo and the imVision systems (all by Commscope Inc.); MapiT G2 (by Siemon Interconnect Solutions); MIIM (by Molex Incorporated); PanView IQ and PanView systems (by Panduit Corp.); Intact (by Leviton Manufacturing Co., Inc.) and R&MinteliPhy (by Reichle & De-Massari AG).

However, we believe we are differentiated by our positioning as a complete solution provider for comprehensive enterprise solutions, the strength of our technologies, the depth of our product portfolio and the breadth of our experience in this marketplace, as well as by our competitive prices. Although many vendors offer various aspects of enterprise solutions, relatively few currently offer a broad portfolio of products ranging from fully-featured, end-to-end systems with an in-depth visibility of connectivity, utilization, power consumption and environmental parameters, like our comprehensive solutions.

Our SMART cabling products compete with Commscope (SYSTIMAX division), TE Connectivity Ltd., Panduit Corp., Legrand and the Siemon Company, each of which develops and sells products that directly or indirectly compete with our structured cabling infrastructure.

Beamcaster™

While there are indoor wireless radio-frequency network solutions in the market, we are not aware of any direct competitors with our Beamcaster™ product that utilizes symmetrical, bi-directional optical links. Consequently, we believe that our Beamcaster™ solution, once commercially available, will compete with traditional structured cable systems primarily in high density open-space offices.

We believe that, when used in high density open-space offices, the main advantages of Beamcaster™ over traditional cable systems will be:

Lower cost: Beamcaster™ will significantly eliminate the need for today’s cumbersome cabling networks and reduces the usage of switching panels, thereby introducing a cost-effective solution;

Fast and easy deployment: Beamcaster™ will significantly reduce the time required to install network infrastructure within a room;

Flexibility and ease of use: Beamcaster™ will substantially simplify the installation process typically associated with traditional structured cable systems; and

Environmental Friendly System. Beamcaster™ will offer a “green” system because its deployment significantly reduces the demand for horizontal cabling and exploits less natural resources.

Government Regulations

General

Israel has the benefit of a free trade agreement with the United States that, generally, permits tariff-free access into the United States for products produced by us in Israel. In addition, as a result of an agreement entered into by Israel with the European Union, or the EU, and countries remaining in the European Free Trade Association, or EFTA, the EU and EFTA have abolished customs duties on Israeli industrial products.

Grants from the Israeli Office of the Chief Scientist

See Item "5C. - Research and Development, Patents and Licenses - Grants from the Office of the Chief Scientist" below in this annual report.

Environmental Regulation

Our products are sold worldwide and, consequently, are subject to environmental laws and regulations which vary from country to country. For example, our European activities require us to comply with European Union Directives with respect to product quality assurance standards and environmental standards. Directive 2002/95/ec of the European Parliament on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment, also known as the RoHS Directive, provides that producers of electrical and electronic equipment may not place new equipment containing lead, mercury and certain other materials deemed to be hazardous, in amounts exceeding the set maximum concentration values, on the market in the European Union. European Directive 2002/96/EC on waste, electrical and electronic equipment, known as the WEEE Directive, makes manufacturers of electrical and electronic equipment financially responsible for specified collection recycling, treatment and disposal of past and future covered products.

We require our suppliers for components and sub-system modules to comply with these requirements, and some of our products have been modified to meet these directives. Complying with these directives imposes some additional costs and administrative burden on us. To our knowledge, compliance with environmental laws and regulations has had no material effect on our operations to date. However, we could incur substantial costs, including cleanup costs, fines and civil or criminal sanctions, third-party damages or personal injury claims, if we were to breach environmental laws, if our products were found not to comply with environmental laws or if we become subject to newly enacted environmental laws and regulations in the markets in which we operate.

4. C. Organizational Structure

We were incorporated under the laws of the State of Israel in 1989 as a company limited by shares.

Our wholly-owned subsidiary in the United States, RiT Technologies, Inc., was incorporated in 1993 under the laws of the State of New Jersey and is primarily engaged in the selling and marketing of our products in the United States.

In 1997, we incorporated a wholly-owned subsidiary in Israel, RiT Tech (1997) Ltd., which was intended to make various investments, including in our securities. RiT Tech (1997) Ltd. is inactive but holds 2,125 of our ordinary shares. Pursuant to the Israeli Companies Law, the shares held by our subsidiary do not bear any voting rights.

4.D. Property, Plants and Equipment

General. Other than the leased properties described below, we do not own or lease any material tangible fixed assets.

Israel. We lease an aggregate of 15,758 square feet of office and manufacturing premises in Tel Aviv, Israel and 6,544 square feet of warehousing premises in Rosh Ha’ayin, Israel. These leases expire in December 2016 and June 2015, respectively. Aggregate annual lease payments in 2014 for the Tel Aviv and Rosh Ha’ayin premises were approximately $480,000, compared with $395,000 in 2013.

Other Locations. We lease approximately 1,400 square feet of office premises for our representative office in Beijing, China and approximately 1,888 square feet of office premises for our United States subsidiary in Mahwah, New Jersey. The annual rent for all of these premises was approximately $70,000 in 2014, compared with $91,000 in 2013. In September 2014 we terminated the lease agreement in Mahwah, New Jersey and since then, we use the office space of one of our service providers in Ridgewood, New Jersey, for no additional consideration.

Outlook. We believe that our facilities listed above are suitable and adequate for our operations as currently conducted and as currently foreseen. In the event that additional facilities are required, we believe that we could obtain such facilities at commercially reasonable rates.

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

5.A Operating Results

You should read the following discussion of our financial condition and results of operations in conjunction with our annual consolidated financial statements and the related notes included elsewhere in this annual report. These financial statements have been prepared in accordance with U.S. GAAP.

The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth in “Risk Factors” above.

Overview

We commenced operations in 1989. We are a leading provider of IIM solutions and a developer of an innovative indoor optical wireless technology solution. Our IIM products provide and enhance security and network utilization for data centers, communication rooms and work space environments. They help companies plan and provision, monitor and troubleshoot their communications networks, maximizing utilization, reliability and physical security of the network while minimizing unplanned downtime. Our IIM solutions are deployed around the world, in a broad range of organizations, including data centers in the private sector, government agencies, financial institutions, airport authorities, healthcare and education institutions. Our Beamcaster™ product is the first of our indoor optical wireless technology solutions. It is designed to help customers streamline deployment, reduce infrastructure design, installation and maintenance complexity and enhance security in a cost effective way. During the third quarter of 2013, we commenced selling initial pilot installations of Beamcaster™.

Financial Highlights For Full Year 2014

Revenues: 2014 revenues totaled $6.6 million, a 41% decrease compared with $11.2 million in 2013. The decrease was attributable primarily to decreased sales in Asia Pacific, Latin America and Europe. We believe the decrease in sales in these regions is primarily as a result of the geopolitical situation in these regions (e.g., the elections in Brazil and India) and the economic crisis in Russia, which impacted potential infrastructure projects in these regions. As we publicly released, at the end of 2014 and the beginning of 2015, RiT entered into several Agreements (i.e. an OEM Agreement with Belden for Asia Pacific; an MOU with WIPRO for India; a distributor Agreement with RiT CIS Ltd. for the Russia and CIS and a distributor Agreement with Stins Engineering for Singapore and South Asia), which have the potential to increase our sales volume in 2015. In addition, our new Beamcaster and Patch View Plus products are yet to achieve satisfactory sales results up to now. We continue to make efforts towards higher sales of the new products which can lead to higher sales revenues in the future.

Cost of sales: Cost of sales as a percentage of revenues in 2014 was 78%, compared to 70% in 2013. Our cost of sales percentage was higher in 2014 as compared to 2013, as a result of decrease of $4.6 million in sales offset by decrease of $2.5 million in variable costs and decrease of $0.1 million in fixed costs.

Operating expenses: Operating expenses for 2014 totaled $10.7 million, a decrease of 16% compared with $12.7 million in 2013. R&D expenses were lower primarily a result of a decrease in employee compensation in our R&D department of approximately $0.7 million compared to 2013, a decrease in stock-based compensation expenses in 2014 of approximately $0.2 million as compared to 2013 as well as decreased development costs of new products of approximately $0.6 million in 2014 as compared to 2013.

S&M expenses were lower attributable to decreased sales and marketing expenses of approximately $0.4 million, decreased costs of certain ineffective sales channels during 2014.

Net loss: Net loss for 2014 was $9.4 million compared with $9.5 million in 2014. The decrease in net loss was related primarily to reduction in costs offset by the decrease in sales.

Liquidity: Our cash and cash equivalents decreased from $5.2 million as of December 31, 2013 to approximately $1.6 million as of December 31, 2014, primarily as a result of cash used in operations of approximately $7.5 million during 2014, partially offset by draw-downs under the Convertible Loan Agreement during 2014 in a total principal amount of $4.0 million. As of December 31, 2014, we had drawn down a total principal amount of approximately $30.9 million under the Convertible Loan Agreement, of which $29.9 million has been converted into our ordinary shares in accordance with the Convertible Loan Agreement. As of December 31, 2014, we could borrow up to an additional $14.1 million from STINS COMAN under the Convertible Loan Agreement.

Shareholders’ equity: Our shareholders’ equity decreased from $7.4 million as of December 31, 2013 to approximately $3.9 million as of December 31, 2014 as a result of our losses recorded during 2014 offset by the conversions by STINS COMAN of a total principal amount of approximately $5.0 million of the Convertible Loan into our ordinary shares.

Critical Accounting Policies

The preparation of our financial statements in conformity with generally accepted accounting principles requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates on a regular basis and may revise our estimates. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent. Some of those judgments can be subjective and complex, and consequently, actual results may differ from those estimates. For any given individual estimate, judgment or assumption made by us, there may be alternative estimates, judgments or assumptions, which are also reasonable.

The following sections include references to certain critical accounting policies that are impacted significantly by judgments, assumptions and estimates used in the preparation of our consolidated financial statements. These policies are also discussed in Note 2 to our consolidated financial statements included elsewhere in this annual report. We believe that the following significant accounting policies are the basis for the most significant judgments and estimates used in the preparation of our consolidated financial statements:

Revenue recognition

We follow very specific and detailed guidelines for the measurement of revenue, several of which are discussed below. However, such guidelines may require the exercise of certain judgments, estimates and assumptions.

Contracts and customer purchase orders are generally used to determine the existence of an arrangement. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. We assess collectability based primarily on the creditworthiness of the customer as determined by credit checks and analysis, as well as the customer’s payment history. When the sale arrangement includes customer acceptance provisions, revenue is not recognized before we have demonstrated that the criteria specified in the acceptance provisions have been satisfied, including a written approval received from the customer.

We apply the guidance in Accounting Standards Codification, or ASC, No. 605, “Revenue Recognition”, to determine if the contract or arrangement contains more than one unit of accounting, as defined in ASC No. 605, and, if applicable, the allocation of the arrangement consideration to such units of accounting.

All of our contracts include a warranty period and some also include training services. We have no obligation to provide installation services or customer service and support with sales of our products. In some cases, we offer support agreements as separate items with their own prices and sales terms.

We believe that in the future these services/features may be sold separately, after the delivery of the systems.

We sell most of our products and solutions through distributors, strategic alliance partners, value-added resellers, system integrators, OEMs and installers. We generally recognize revenue at the time of shipment to such distribution channels.

Amounts received from customers prior to product shipment are classified as advances from customers.

We generally do not grant the right to return except for replacement of defective products, for which a warranty allowance is recorded.

Allowances for product warranties

In general, we provide a 12-to-24 month warranty on all of our hardware products except for SMART Cabling System components, for which, when installed by a certified cabling installer registered with us, we provide 20-to-25 year warranty for system performance. The balance sheet provision for warranties for all periods through December 31, 2014 is determined based upon our experience regarding the relationship between sales and actual warranty expenses incurred. See Note 2 to our consolidated financial statements included elsewhere in this report. This determination may require the exercise of certain judgments, estimates and assumptions.

The warranty for our products is a basic manufacturer warranty accounted for under ASC No. 450, “Contingencies”, and is not a portion of multiple element revenue. Besides the warranty period, we have no obligation for continuing customer service and support.

Allowances for doubtful accounts

Our financial statements include an allowance that we believe adequately reflects the potential loss inherent in existing receivables for which collection is in doubt. In determining the adequacy of the allowance, we base our estimate on information-at-hand regarding the financial situation of debtors, the volume of their operations, the age of the balance owed, evaluation of security received from them or their guarantors and the existence of credit insurance policies and the terms of payment. If there is a substantial deterioration in a major customer’s credit worthiness, or if actual defaults are higher than our historical experience, our estimates of the recoverability of amounts due to us could be adversely affected. This would result in an increase in our allowance for bad and doubtful debts, resulting in an increase in our general and administrative expenses and a decrease in our trade receivables.

The balance sheet allowance for doubtful debts for all the periods through December 31, 2014 is determined as a specific amount for all accounts for whom collection is uncertain. In performing this evaluation, significant judgments and estimates are involved based upon the factors that affect a debtor’s ability to pay, all of which can change rapidly and without advance warning.

Inventories

Inventories are stated at the lower of cost or market. In respect of work-in-process and finished products, the cost of raw materials and components is determined using the Weighted Average Cost Method and labor costs, and the cost of overhead components is determined on the basis of actual manufacturing costs. In determining inventory value, we make assumptions as to the market value of inventory. If there is a sudden and significant decrease in demand for our products or there is a higher risk of inventory obsolescence because of a rapidly changing technology and customer requirements, we may be required to increase our inventory write–downs and our gross margin could be adversely affected. In addition, we add the overhead from our manufacturing process to the cost of our inventory items. The amount of overhead allocated to cost of revenues is reviewed and updated periodically. We had write-offs of inventory at the amount of approximately $0.6 million in each of 2014 and 2013.

Accounting for Stock-based Compensation

As of December 31, 2014, we had several employee compensation plans, which are more fully described in “Management – Compensation of Directors and Officers – Share Option Plans”. Prior to January 1, 2006, we accounted for those plans under the recognition and measurement provisions of ASC No. 718, “Compensation – Stock Compensation”, and related interpretations as permitted by ASC No. 718. Effective January 1, 2006, we adopted the fair value recognition method detailed in ASC No. 718 using the modified prospective transition method. Under that transition method, compensation cost recognized includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of ASC No. 718, and (b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of ASC No. 718.

The fair value of each option grant is estimated on the date of grant using the Black - Scholes option pricing model using the following assumptions:

●

The current price of the share is the fair market value of such shares at the date of issuance;

●

Dividend yield of zero percent for all relevant periods

●

Risk free interest rates are as follows:

Year ended December 31,	Interest rate (%)
2014		1.3
2013		0.6
2012		0.5

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In 2014, grants of options totaled 132,608;

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In 2013, grants of options totaled 557,000;

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In 2012, grants of options totaled 338,038;

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Expected term of 1 – 4 years for each option granted; and

●

Volatility ranged between 88.0% - 114.9%, 130.7% - 133.6% and 130.3% - 134.4% for options granted during the years ended December 31, 2014, 2013 and 2012, respectively.

Most of our option awards are generally subject to ratable vesting over a service period. In those cases, we recognize compensation cost on a straight-line basis over the requisite service period for the entire award.

Accounting for Income Taxes

ASC No. 740, "Income Taxes", contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement.

As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process requires us to estimate our actual current tax exposure and make an assessment of temporary differences resulting from differing treatment of items, for tax and accounting purposes. We have recorded a valuation allowance of approximately $20.0 million as of December 31, 2014, which relates primarily to the total value of the deferred tax asset consisting of our net operating loss carry-forwards. This indicates our management’s current determination that because we have yet to generate taxable income, we cannot determine that it is more likely than not that we will be able to use this asset in the future. For the year ending December 31, 2014, we did not generate any taxable income. In the event that we generate taxable income in the future, we may be required to adjust our valuation allowance.

While we believe the resulting tax balances as of December 31, 2014, 2013 and 2012 are appropriately accounted for in accordance with ASC No. 450 and ASC No. 740 as applicable; the ultimate outcome of such matters could result in favorable or unfavorable adjustments to our consolidated financial statements. We believe that we adequately provided for any reasonably foreseeable outcomes related to tax audits and settlement. However, our future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, audits are closed or when statutes of limitation on potential assessments expire. See Note 7 to our consolidated financial statements included elsewhere in this annual report.

Results of Operations

The following table sets forth, for the periods indicated, certain financial data expressed in dollars (U.S. dollars in thousands) and as a percentage of total revenue:

	Year Ended December 31,
	2014					2013					2012
Sales	$	6,619		100.0	%	$	11,179		100.0	%		8,436		100.0	%
Cost of sales		5,196		78.5	%		7,864		70.3	%		7,065		83.7	%
Gross profit		1,423		21.5	%		3,315		29.7	%		1,371		16.3	%
Operating expenses
Research and development, net		2,769		41.8	%		4,125		36.9	%		3,922		46.5	%
Sales and marketing		3,948		59.6	%		4,786		42.8	%		5,465		64.8	%
General and administrative		4,021		60.7	%		3,803		34.0	%		3,043		36.1	%

Total operating expenses		10,738		162.2	%		12,714		113.7	%		12,430		147.3	%

Operating loss		(9,315	)	(140.7	)%		(9,399	)	(84.1	)%		(11,059	)	(131.1	)%
Financing expenses, net		(77	)	(1.2	)%		(129	)	(1.2	)%		(48	)	(0.6	)%
Other expenses, net		(7	)	(0.1	)%		-					-
Loss before income tax expense		(9,399	)	(142.0	)%		(9,528	)	(85.2	)%		(11,107	)	(131.7	)%
Taxes on income		-					-					-
Net loss	$	(9,399	)	(142.0	)%	$	(9,528	)	(85.2	)%		(11,107	)	(131.7	)%

Comparison of 2014 and 2013

Sales. Sales consist of gross sales of products less discounts. For additional details regarding the manner in which we recognize revenues, see the discussion under “Critical Accounting Policies - Revenue Recognition” above.

Substantially all of our revenues during 2014 and 2013 were from sales of our enterprise solutions. The following table provides a breakdown of our revenues (including maintenance and services revenues) by geographical area (based on location of customers) and relative percentages of our total revenue during the periods indicated (U.S. dollars in thousands):

	Twelve Months Ended December 31
	2014				2013				2012

United States	$	103	2	%	$	110	1	%	$	91	1	%
Europe		2,756	42	%		3,841	34	%		3,194	38	%
Israel		2,341	35	%		2,467	22	%		2,118	25	%
South and Latin America		711	11	%		1,817	16	%		1,184	14	%
Asia Pacific		598	10	%		2,717	24	%		1,677	20	%
Rest of the World		110	2	%		227	2	%		172	2	%

	$	6,619	100	%	$	11,179	100	%	$	8,436	100	%

Sales decreased to approximately $6.6 million during 2014, a 40.8% decrease compared with sales of approximately $11.2 million during 2013, with decreased sales in Asia Pacific, Latin America and Europe. We believe the decrease in sales in these regions is primarily as a result of the geopolitical situation in these regions (e.g., the elections in Brazil and India) and the economic crisis in Russia, which impacted potential infrastructure projects in these regions. As we publicly released, at the end of 2014 and the beginning of 2015, RiT entered into several Agreements (i.e. an OEM Agreement with Belden for Asia Pacific; an MOU with WIPRO for India; a distributor Agreement with RiT CIS Ltd. for the Russia and CIS and a distributor Agreement with Stins Engineering for Singapore and South Asia), which have the potential to increase our sales volume in 2015. In addition, our new Beamcaster and Patch View Plus products are yet to achieve satisfactory sales results up to now. We continue to make efforts towards higher sales of the new products which can lead to higher sales revenues in the future.

Cost of Sales. Cost of sales consists primarily of materials, sub-contractors expenses, warranty expenses, compensation costs attributable to employees, write-downs of inventory and overhead expenses related to our manufacturing operations.

Cost of sales was approximately $5.2 million during 2014 and $7.9 million in 2013. Cost of sales as a percentage of sales was 78.5% in 2014 compared to 70.3% for 2013. Our cost of sales percentage was higher in 2014 as compared to 2013, as a result of decreased sales in 2014 offset by a reduction in fixed costs in 2014.

Gross Profit. Gross profit decreased from 29.7% in 2013 to 21.5% in 2014, mainly due to the decrease in sales during the period, as described above.

Operating Expenses. The following table sets forth a breakdown of our operating expenses for the periods indicated:

	Year Ended December 31,
							% Change			% Change
	2014		2013		2012		2014 vs. 2013			2013 vs. 2012
	(Dollars in thousands)

Research and development, net		2,769		4,125		3,922		(33	)%		5	%
Selling and marketing		3,948		4,786		5,465		(18	)%		(12	)%
General and administrative		4,021		3,803		3,043		6	%		25	%

		10,738		12,714		12,430		(16	)%		2	%

Research and Development Expenses. R&D expenses consist primarily of compensation costs attributable to employees engaged in ongoing R&D activities, development-related raw materials and sub-contractors, and other related costs.

R&D expenses, net were approximately $2.8 million in 2014 compared with $4.1 million in 2013, a decrease of approximately $1.4 million or 33%. R&D expenses, net, include grants received from the Israeli Office of the Chief Scientist of approximately $0.2 million and $0.6 million during 2014 and 2013, respectively that are recorded as a reduction of R&D expenses.

The decrease of the R&D expenses in 2014, is primarily a result of a decrease in employee compensation in our R&D department of approximately $0.7 million compared to 2013, a decrease in stock-based compensation expenses in 2014 of approximately $0.2 million as compared to 2013 as well as decreased development costs of new products of approximately $0.6 million in 2014 as compared to 2013. In terms of specific R&D activities, in 2014 we continued our efforts towards reduction in R&D expenses by the following activities (i) reducing R&D personnel (by 5 people) (ii) closing ancillary developments based on further evaluation of our development targets and (iii) reorganizing of our R&D department.

Sales and Marketing Expenses. Sales and marketing expenses consist primarily of costs relating to compensation attributable to employees engaged in sales and marketing activities, promotion, advertising, trade shows and exhibitions, sales support, travel, commissions and related expenses.

Sales and marketing expenses were approximately $3.9 million in 2014 compared with approximately $4.8 million in 2013, a decrease of $0.9 million or 18.75%. This decrease was attributable to decreased sales and marketing expenses of approximately $0.4 million, decreased costs of certain ineffective sales channels during 2014 and the resulting decrease in costs of approximately $0.3 million and a decrease in commissions paid to sales personnel due to lower sales.

In terms of specific sales and marketing activities, in 2014 we continued our efforts to reduce our expenses by the following activities (i) reducing headquarters sales and marketing personnel (by 6 people), (ii) reducing sales and marketing personnel employed by our subsidiary RiT Inc. in the US (iii) limiting the scope of service of our representative in the UK and (iv) changing the compensation structure related to new sales personnel only (at this stage), by providing conditional bonuses subject to sales-target achievements, rather than the previously used commissions formula for every sale. We continue to evaluate our sales and marketing expenses in 2015.

General and Administrative. General and administrative expenses consist primarily of compensation costs for administration, finance and general management personnel, office maintenance and administrative costs, taxes, and doubtful debt expenses.

General and administrative expenses were approximately $4.0 million in 2014 and approximately $3.8 million in 2013. This increase was attributable to an increase in expenses due to doubtful debts of approximately $0.2 million and an increase in stock based compensation expenses of approximately $0.1 million offset by a decrease in insurance costs and travel costs of approximately $0.1 million.

Financing expense, Net. Financing loss, net was approximately $77,000 in 2014 compared with approximately $129,000 in 2013.

Net loss. Net loss for 2014 was approximately $9.4 million, a decrease of 1.4% compared with a net loss of approximately $9.5 million in 2013. In 2014 we took steps to address and decrease our losses by reducing significantly our R&D expenses and sales and marketing expenses (as discussed hereinabove). Unfortunately, the low sales results in 2014 (see discussion about the reasons for the low sales hereinabove), caused our net loss to be similar to 2013, despite the significant lower operating expenses in 2014. With an expectation of higher sales in 2015 (related in part to new distribution agreements, see above) and with efforts to continue to achieve low operating expenses (as was carried out in 2014), we strive to achieve lower net losses in the future. As part of our ongoing evaluation of our efficiency and cost reductions, we intend to examine (i) our expensive lease agreements; including alternatives thereto (ii) the efficiency of our activities in specific regions in the world and required actions. In addition and generally, we continue the efforts to achieve lower operating expenses (as carried out in 2014).

Comparison of 2013 and 2012

Sales. Sales increased to approximately $11.2 million during 2013, a 32.5% increase compared with approximately $8.4 million during 2012. The increase was attributable primarily to increased sales in Asia Pacific, Latin America, Europe and Israel. During 2012, we began our internal reorganization with the hiring of new senior management, including a new CEO, as well as the closing of ineffective sales channels, which adversely affected our sales in that period.

Cost of Sales Cost of sales was approximately $7.9 million during 2013 and $7.1 million in 2012. Cost of sales as a percentage of sales was 70.3% in 2013 compared to 83.7% for 2012. Our cost of sales percentage was lower in 2013 as compared to 2012, as a result of increased sales in 2013 with fixed costs remaining relatively the same in both periods. Our cost of sales percentage during 2013 was closer to our historical cost of sales percentage.

Gross Profit. Gross profit increased from 16.3% in 2012 to 29.7% in 2013, mainly due to the increase in sales during the period, as described above.

Operating Expenses:

Research and Development Expenses. R&D expenses, net were approximately $4.1 million in 2013 compared with $3.9 million in 2012. As a percentage of sales, R&D expenses decreased to 36.9% in 2013 from 46.5% in 2012. R&D expenses, net, include grants received from the Israeli Office of the Chief Scientist of approximately $0.6 million and $0, during 2013 and 2012, respectively that are recorded as a reduction of R&D expenses. The increase is primarily a result of an increase in stock-based compensation expenses in 2013 of approximately $0.4 million as compared to 2012 as well as increased development costs of new products of approximately $0.4 million in 2013 as compared to 2012.

Sales and Marketing Expenses. Sales and marketing expenses were approximately $4.8 million in 2013 compared with approximately $5.5 million in 2012, a decrease of $0.7 million.

General and Administrative Expenses. General and administrative expenses were approximately $3.8 million in 2013 and approximately $3.0 million in 2012.

Financing Loss, Net. Financing loss, net was approximately $129,000 in 2013 compared with approximately $48,000 in 2012.

Net loss: Net loss for 2013 was approximately $9.5 million, a decrease of 14.2% compared with a net loss of approximately $11.1 million in 2012. The decrease in net loss was a result of the factors described above.

Impact of Currency Fluctuations and of Inflation

Information required by this section is set forth in “Item 11 – Qualitative and Quantitative Disclosures about Market Risk”.

Impact of Related Party Transactions

We have entered into a number of agreements with our principal shareholder or its affiliates. See “Item 7.B - Related Party Transactions” below.

We believe the terms of these related party transactions are beneficial to us and no less favorable than terms which might be available to us from unaffiliated third parties. Our management reviewed the pricing and other items of such transactions and confirmed that they were not materially different than could have been obtained from unaffiliated third parties, or that, in a few cases, the specific circumstances of the transaction made it advantageous to us despite the differences in terms.

Under the Companies Law and NASDAQ rules, certain transactions and arrangements with interested parties require approval by our Audit Committee (or Compensation Committee, as to compensation matters), Board of Directors, and, in some cases, shareholders.

5.B. Liquidity and Capital Resources

In the past few years, we financed our operations through cash generated from operations, R&D and marketing grants from the Government of Israel, short-term bank borrowing and loans from our major shareholder, STINS COMAN, including the conversion thereof into our ordinary shares and the public offering of our ordinary shares. In November 2013, we also raised proceeds in a public offering, as described below.

As described below in more detail, as of the date of this annual report, we have the right to draw an additional $12.1 million under the Convertible Loan Agreement until December 31, 2016.

We conduct our funding and treasury activities to maximize investment returns while reducing risk and maintaining appropriate liquidity for both our short and long term needs. Cash and cash equivalents are held primarily in U.S. dollars, Euro and NIS.

Principal Financing Activities

Our principal financing activities during the past five years were:

●

In June 2009, we entered into the Convertible Loan Agreement with STINS COMAN, according to which STINS COMAN agreed to extend to us a loan of, initially, up to $10 million (the “Maximum Amount”) at an annual interest rate of 2.47%. The Convertible Loan Agreement, including the Maximum Amount, has been amended several times. Currently, the Maximum Amount is set at $45 million and the period during which we may call and receive any portion of the loan not already used is scheduled to expire on December 31, 2016 (the “Term”). Under the Convertible Loan Agreement, as amended, we may call and receive any portion of the loan from STINS COMAN, but no more than $5 million at a time (up to the said Maximum Amount of $45 million) and at intervals of at least 30 days between each call request. As of the date of this annual report, we had drawn approximately $32.9 million of the principal of the loan under the Convertible Loan Agreement, which we received in installments, such that we still have available withdrawals of up to $12.1 million.

Part of the outstanding loans from STINS COMAN have been converted into our ordinary shares as follows: (1) in May 2010, approximately $1.5 million, representing principal and accrued interest, were converted pursuant to a share purchase agreement into 615,485 of our ordinary shares, reflecting an average conversion price of $2.465 per share, (2) in September 2010, approximately $1.5 million, representing principal and accrued interest, were converted pursuant to a share purchase agreement into 687,128 of our ordinary shares, reflecting an average conversion price of $2.214 per share, (3) in March 2011, approximately $1.2 million, representing principal and accrued interest, were converted pursuant to a share purchase agreement into 408,787 of our ordinary shares, reflecting an average conversion price of $2.876 per share, (4) in June 2011, approximately $1.0 million, representing principal and accrued interest, were converted pursuant to a share purchase agreement into 177,006 of our ordinary shares, reflecting an average conversion price of $5.680 per share, (5) in December 2011, approximately $3.2 million, representing principal and accrued interest, were converted pursuant to a share purchase agreement into 636,874 of our ordinary shares, reflecting an average conversion price of $5.090 per share, (6) in June 2012, approximately $4.2 million, representing principal and accrued interest, were converted pursuant to a share purchase agreement into 1,146,114 of our ordinary shares, reflecting an average conversion price of $3.667 per share, (7) in December 2012, approximately $3.8 million, representing principal and accrued interest, were converted pursuant to a share purchase agreement into 1,119,743 of our ordinary shares, reflecting an average conversion price of $3.42 per share, (8) in March 2013, approximately $4.5 million, representing principal and accrued interest, were converted pursuant to a share purchase agreement into 1,021,166 of our ordinary shares, reflecting an average conversion price of $4.440 per share, (9) in June 2013, approximately $2.0 million, representing principal and accrued interest, were converted pursuant to a share purchase agreement into 449,738 of our ordinary shares, reflecting an average conversion price of $4.46 per share(10) in September 2013, approximately $2.0 million, representing principal and accrued interest, were converted pursuant to a share purchase agreement into 582,494 of our ordinary shares, reflecting an average conversion price of $3.45 per share, and (11) in September 2014, approximately $5.0 million, representing principal and accrued interest, were converted pursuant to a share purchase agreement into 2,778,088 of our ordinary shares, reflecting an average conversion price of $1.82 per share. See “Related Party Transactions” below.

On November 27, 2013, we consummated an underwritten public offering of 3,000,000 ordinary shares and warrants to purchase up to 1,725,000 ordinary shares at an offering price of $2.00 per share and $0.01 per warrant (including warrants to purchase 225,000 ordinary shares issued to the underwriter, Aegis Capital Corp., upon exercise of its over-allotment option), or the Public Warrants. In connection with the offering, we also issued to the underwriter warrants to acquire an additional 150,000 ordinary shares, or the Underwriter Warrants. All of the warrants have a per share exercise price of $2.50, are exercisable immediately (except for the Underwriter Warrants that become exercisable on November 27, 2014), and expire 5 years from the date of issuance, i.e., on November 27, 2018. The Public Warrants began trading on The NASDAQ Capital Market on November 22, 2013 under the symbol "RITTW." Total gross proceeds from the offering were approximately $6,000,000, before deducting underwriting discounts and commissions and other offering expenses payable by the Company.

Working Capital and Cash Flows

On December 31, 2014, we had cash and cash equivalents of approximately $1.6 million, compared with $5.2 million on December 31, 2013.

The following table presents the major components of net cash flows used for and provided by operating, investing and financing activities for the twelve months ended December 31, 2014, 2013 and 2012 (dollars in thousands):

	2014			2013			2012
Net cash used in operating activities	$	(7,473	)	$	(9,180	)	$	(8,811	)
Net cash used in investing activities		(117	)		(84	)		(501	)
Net cash provided by financing activities		4,000			12,275			10,611

Net cash used in operating activities was $7.5 million in 2014 compared to $9.2 million in 2013. Net cash used in operating activities in 2014 primarily consisted of the decrease in trade payables by $1.0 million and a decrease in other payables by $0.4 million during the period partially offset by a decrease in trade receivables by $2.2 million during the period.

Net cash used in investing activities was $0.1 million in each of 2014 and 2013. Our principal investing activity in both periods was the purchase of property and equipment.

Net cash provided by financing activities was $4.0 million in 2014 and $12.3 million in 2013. During 2014, these amounts consisted of $4.0 million of loan proceeds from the Convertible Loan. During 2013, the amounts consisted of $6.0 million proceeds from our public offering partially offset by $1.1 million of issuance costs and $7.5 million of loan proceeds from the Convertible Loan.

Our contractual and contingent obligations and commitments as of December 31, 2014, primarily consisted of obligations associated with our future operating lease obligations, our suppliers’ obligations and a contingent liability to the Chief Scientist. On December 31, 2014, our unrecognized contingent liability to the Chief Scientist in respect of grants received was approximately $1.4 million. We are required to repay this liability in the form of royalties based on revenues derived from products developed with funding from these grants. See Note 5 to our consolidated financial statements included elsewhere in this annual report and “Item 5.F.-Tabular Disclosure of Contractual Obligations” below.

Principal Capital Expenditure and Divestitures

During the twelve months ended each of December 31, 2014 and 2013, our capital expenditures totaled approximately $0.1 million, all of which was used for the purchase of machinery, computers and research and development equipment. Other than similar future capital expenditures consistent with the amounts described above, we have no significant capital expenditures in progress.

We did not make any significant divestitures in the past three years.

Outlook

We believe that our cash and cash equivalents, together with cash generated from operations, as well as the availability of additional loans of up to approximately $12.1 million from STINS COMAN pursuant to the Convertible Loan Agreement, will be sufficient to finance our operations for at least the next 12 months. Subject to the terms of the Convertible Loan Agreement we are permitted to draw down any remaining principal amount outstanding under the agreement.

We cannot assure you that our actual cash requirements will not be greater than we currently expect, if circumstances change during 2015. In addition, we may need to raise additional funds during 2015 to support the execution of our long-term growth strategy described herein. There can be no assurance that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us. If we are unsuccessful in raising such financing on acceptable terms, we will not be able to carry out our plan and our operations and growth strategy would be materially adversely affected.

We are exploring strategic alternatives regarding our IIM business, including joint ventures and strategic alliances, licensing and distribution arrangements, and potential divestitures, sales and acquisitions.

5.C. Research and Development, Patents and Licenses

We believe that our future success will require the continued enhancement of our existing products and solutions as well as the continuous introduction of innovative new commercially-viable products and solutions on a timely basis.

As of December 31, 2014, we employed 18 persons (including three consultants) in R&D. Our gross R&D expenses were approximately $3.0 million in 2014, $4.7 million in 2013 and $3.9 million in 2012 (45.4%, 41.9% and 46.5% respectively, of our total sales). To date, all R&D expenses have been charged to operating expenses as incurred. Aggregate R&D expenses funded by the Chief Scientist recorded were approximately $234,000, $558,000 and $0.0 for 2014, 2013 and 2012, respectively.

Grants from the Office of the Chief Scientist

In the past, we have benefited from grants provided by the Israeli Government through the Office of Chief Scientist of the Israeli Ministry of Economy (formerly known as the Ministry of Industry, Trade and Labor), or the Chief Scientist, and we may apply for additional grants in the future.

The Government of Israel encourages research and development projects through the Chief Scientist pursuant to the Law for the Encouragement of Industrial Research and Development, 5744 - 1984, and the regulations promulgated thereunder, or the R&D Law. Generally, grants from the Chief Scientist constitute up to 33% of qualifying R&D expenditures for particular approved projects. Under the terms of these Chief Scientist projects, a royalty of 3% to 5% is due on revenues from sales of products and related services that incorporate know-how developed, in whole or in part, within the framework of projects funded by the Chief Scientist. Royalty obligations are usually 100% of the dollar-linked amount of the grant, plus interest. The royalty rate applicable to our programs is generally 3.5%.

The R&D Law provides that know-how developed under an approved research and development program may not be transferred to another person or entity in Israel without the approval of the research committee. Such approval is not required for the sale or export of any products resulting from such research or development. The R&D Law further provides that the know-how developed under an approved research and development program may not be transferred to another person or entity outside Israel, except in certain special circumstances and subject to prior approval. Generally, the Chief Scientist may approve the transfer of Chief Scientist-funded know-how outside Israel in the following circumstances: (a) the grant recipient pays to the Chief Scientist a portion of the sale price paid in consideration for such Chief Scientist-funded know-how (according to certain formulas, which may result in repayment of up to 600% of the grant amounts plus interest); (b) the grant recipient receives know-how from a third party in exchange for its Chief Scientist-funded know-how; or (c) such transfer of Chief Scientist-funded know-how arises in connection with certain cooperative research and development activities.

The R&D Law imposes reporting requirements with respect to certain changes in the ownership of a grant recipient. The law requires that the grant recipient and its controlling shareholders and non-Israeli interested parties notify the Chief Scientist of any change in control of the recipient or a change in the holdings of the means of control of the recipient that results in a non-Israeli becoming an interested party directly in the recipient. The law further requires that the new foreign interested party undertakes to the Chief Scientist to comply with the R&D Law. In addition, the rules of the Chief Scientist may require additional information or representations in respect of certain such events. For purposes of the R&D Law, “control” is defined as the ability to direct the activities of a company other than any ability arising solely from serving as an officer or director of the company. A person is presumed to have control if such person holds 50% or more of the means of control of a company. “Means of control” refers to voting rights or the right to appoint directors or the chief executive officer. An “interested party” of a company includes a holder of 5% or more of its outstanding share capital or voting rights, its chief executive officer and directors, someone who has the right to appoint its chief executive officer or at least one director, and a company with respect to which any of the foregoing interested parties owns 25% or more of the outstanding share capital or voting rights or has the right to appoint 25% or more of the directors. Accordingly, any non-Israeli who acquires 5% or more of our ordinary shares will be required to notify us that it has become an interested party and to sign an undertaking to comply with the R&D Law.

As of December 31, 2014, our total commitment payable, excluding interest, to the Chief Scientist in respect of grants received was approximately $1.4 million.

5.D. Trend Information

Macro-Economic Environment

Our target markets have been affected by a worldwide recession that began in 2008. There was a slight recovery in 2009, however, the recovery process in much of the developed world has been slower than expected, and we witnessed large infrastructure projects continue to be delayed and/or minimized to the lowest possible investment. The recession in Europe is currently expected to continue through 2015, while in contrast, the economies of a number of emerging regions, including Latin America, India, China, Africa and certain others, have been growing. However, there can be no assurance regarding the future continuity of these trends or their effects on our business and operating results.

Technological and Other Trends

General: As we publicly announced, at the end of 2014 and the beginning of 2015, we entered into several agreements (including, an OEM Agreement with Belden for Asia Pacific; an MOU with WIPRO for India; a Distributor Agreement with RiT CIS for the CIS market; and a Distributor Agreement with Stins Engineering for Singapore and South Asia), which have the potential to increase our sales volume in 2015. In addition, our new Beamcaster and Patch View Plus products have yet to achieve satisfactory sales results.

Enterprise: We see a growing number of data center projects and a significant ongoing investment in data center infrastructure. One of the key drivers of this trend is the fact that a data center must demonstrate high reliability and availability to be classified as a Tier 4 facility. In order to achieve this challenging target, data centers are investing in reliable, technologically advanced equipment, including physical network infrastructure components and increasingly, in advanced infrastructure management tools.

RiT is one of the few enterprise solution companies whose portfolio contains both physical network infrastructure components and comprehensive IT infrastructure management tools. To support data center needs for high quality foundation components, we continue to expand our portfolio of structured cabling offerings, especially in the fiber-optic segment. The use of fiber-optic infrastructure components in data centers is expanding due to their superior ability to support higher bandwidth and massive data traffic. The industry is currently discussing the transition to provide support for 40G and 100G data rates, and future directions may be even higher. Given increasing data center investment in high-end solutions, we offer state-of-the-art solutions for both fiber-optic and copper environments and assure that all of our products exceed the requirements established by industry standards.

Our Beamcaster™ solution is intended to address the overly complex design of network infrastructure, costly and timely installation, security and performance for open-space offices, by reducing the need for both cabling and switches, while (1) significantly enhancing organizational security using symmetrical, bi-directional optical links (2) reducing the need for cabling, and (3) initially offering competitive bandwidth of 1 to 10 GBPS with potential future increased bandwidth (Wi-Fi maximum bandwidth is up to 1.0 GBPS). During 2014, we identified a number of issues in our Beamcaster product relating to the number of ports in the product and the optimal market for this product (i.e., high density open space offices), and are currently working on upgrading the Beamcaster configuration as well as making marketing efforts to penetrate said optimal market. We believe that our Beamcaster™ solution will present an attractive offering for customers who want to deploy an ultra-high-speed network infrastructure in an expedited and cost-effective manner, including customers looking to replace their old low-performance network cabling infrastructure. Our Beamcaster™ solution will require investment in additional resources relating to, among other things, its further development, sales and marketing and there is no assurance that sales of this solution will be meaningful in 2015 or that this new product line will be successful. In order to leverage the IWON technology for other commercial applications, we continue to invest resources in developing and commercializing this technology. For example, we are currently examining additional potential applications for our IWON technology, primarily for a few industrial fields such as robotics communication applications.

5.E. Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

5.F. Tabular Disclosure of Contractual Obligations

The following table summarizes our contractual obligations related to our long-term debt, operating leases and accrued severance pay, as of December 31, 2014 (dollars in millions):

	Total		Less than 1 Year		1-3 years		3-5 years		More than 5 years
Contractual Obligations:
Leases on premises		0.76		0.4		0.36		-		-
Operating lease obligations		0.23		0.17		0.06		-		-
Liability in respect of employees’ severance benefits, net*		0.26		-		-		-		0.26
Principal shareholder convertible loan		1.0		-		1.0		-		-
Total	$	2.25	$	0.57	$	1.42	$	0.00	$	0.26

*Severance pay obligations to our Israeli employees, as required under Israeli labor law, are payable only upon termination, retirement or death of the respective employee.

On December 31, 2014, our unrecognized contingent liability to the Chief Scientist in respect of grants received was approximately $1.4 million. See Note 5 to our consolidated financial statements included elsewhere in this annual report. We are required to repay this liability in the form of royalties based on revenues derived from products developed with funding from these grants.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

6.A. Directors and Senior Management

The following table sets forth the name, age and position of each of our current directors and senior management:

Name*	Age	Position
Sergey Anisimov	60	Chairman of the Board of Directors
Boris Granovsky	47	Director
Israel Frieder (1)(2)(3)(4)	64	Director
Hanan Samet (1)(3)(4)	44	Director
Galia Druker (1)(2)(3)	68	Director
Moti Hania	56	President and Chief Executive Officer
Alex Shar	55	Deputy CEO and Chief Technology Officer
Eran Erov	35	VP Finance
Assaf Skolnik	42	Vice President Sales
Viachislav (Slava) Anisimov	37	VP Operations
Raphael Sankar	51	VP Sales & Business Development (Americas & UK)
Kobi Haggay	42	VP Products

___________________

* Unless otherwise indicated, the address for each of our directors and senior management is c/o RiT Technologies, Ltd., 24 Raoul Wallenberg Street, Tel Aviv, Israel.

(1) Designated as “Independent Director” under NASDAQ Marketplace Rules.

(2) External Director (as defined in the Israeli Companies Law).

(3) Member of the Audit Committee and Compensation Committee.

(4) Member of the Nomination Committee.

Mr. Sergey Anisimov has served as the Chairman of our Board of Directors since June 2008. In 1992, Mr. Anisimov founded STINS COMAN Incorporated, a Russian holding company which is engaged, through its group companies, in IT system distribution, integration, training and service and other fields of operation, and since then has served as its president. Mr. Anisimov has over 30 years of experience in various positions in the information technology business. He received an engineer diploma from the Moscow Institute of Aviation Technology and holds a Ph.D. degree in technologies from Moscow State Technical University N.A. N.E. Bauman. The address for Mr. Anisimov is c/o STINS COMAN Incorporated, 126 Pervomayskaya Street, Moscow 105203, Russia.

Mr. Boris Granovsky has served as a director since June 2008. He has served as Vice President of STINS COMAN Incorporated since 2009 and was its CEO since 2006. Prior to that, Mr. Granovsky served as a sales manager and thereafter as Vice President of Sales of STINS COMAN since 1995. Mr. Granovsky received a diploma in engineering in automated control systems from the Moscow Institute of Radio Engineering, Electronics and Automation and a BBA (Bachelor of Business Administration) degree in management from Business School of the Open University of United Kingdom. The address for Mr. Granovsky is c/o STINS COMAN Incorporated, 126 Pervomayskaya Street, Moscow 105203, Russia.

Dr. Israel Frieder has served as an external director since January 2002. Mr. Frieder is the Chairman of A.A. Pearl Investments and serves as a director of several other companies, including Nisko Telematics Systems and ETV Energy Ltd.. Mr. Frieder’s previous positions include serving as the Co-Chairman of IXI Mobile Inc., Chairman and CEO of Israel Technology Acquisition Corp Inc., CEO of Kardan Communications Ltd., Corporate VP of Business Development & Strategic Planning of ECI Telecom, President of ECI Telecom, Inc., President of Network Systems of Tadiran Telecommunication Ltd. (Tadiran), and President of Elisra Tadiran, Public Switching Ltd. Dr. Frieder holds a B.Sc. degree in electrical engineering from The Technion, Israel Institute of Technology, Haifa, and an M.B.A. in operational research from the Hebrew University in Jerusalem and a Ph.D. degree in business administration from the Bar-Ilan University in Ramat Gan, Israel.

Ms. Galia Druker has served as an external director since September 2009. From 2005 to 2009, she served as deputy manager of Bank Hapoalim in Geneva, Switzerland, and from 2003 to 2005 as the head of the East European desk of Bank Hapoalim in Zurich, Switzerland. From 2002 to 2003, Ms. Druker served as the head of foreign trade at Bank Otsar Hachayal’s head office. Between 1972 and 2002, Ms. Druker was employed by Bank Hapoalim in a variety of managerial positions. Ms. Druker holds an MA degree in English philology from the Vilnius State University and a banking diploma obtained through Bank Hapoalim’s internal school.

Mr. Hanan Samet has served as a director since June 2014. Mr. Samet serves as a Managing Partner of Efrat Regev Samet & Co, CPA, an Israeli accounting firm. From 2001 to 2004, Mr. Samet served as chief financial officer of ICTS Global BV, a Dutch consulting company in the fields of loss prevention and general security. From 1999 to 2001, Mr. Samet served as chief financial officer and controller of Gilat to Home Latin America, a U.S.-based company engaged in development and sale of wide band internet services via satellites throughout Latin America. From 1995 to 1999, Mr. Samet served as audit manager in KPMG Somech Chaikin (Israel), where he was involved in the audit of public and private companies in Israel and abroad. Mr. Samet is a certified Israeli CPA and holds a B.A. degree in economics and accounting from the Ben-Gurion University, Israel, and an M.L.B. in law from the Bar-Ilan University, Israel.

Mr. Moti Hania joined RiT as Deputy CEO and Chief Operating Officer in April 2012 and was appointed President and Chief Executive Officer in January 2014. Mr. Hania has completed 30 years as a high ranked operational officer in the Israeli Air Force (Colonel Ret.). This followed by several senior positions in the high-tech industry, including as VP Special Projects & Operations of Star Defense Systems Ltd. from 2007 to 2008 and, from 2008 to 2010, as co-founder and acting CEO of BNM Technologies Ltd. BNM was partially acquired by Starling Advanced Communication Systems Ltd., where Mr. Hania held a COO position between 2010 to 2011, when Starling's activity was acquired by Panasonic Avionics Corporation and Mr. Hania held director of operation position in Panasonic's Antenna R&D center in Israel. Mr. Hania holds an executive MBA degree from Tel-Aviv University Business School.

Mr. Alex Shar has served as our VP Research and Development since August 2010 and in January 2014 was promoted to hold the title of Deputy CEO & CTO. Mr. Shar joined RiT in 1995 and held various R&D positions, leading the Hardware Development department before being promoted to the VP R&D position. With over 30 years in the private and government sectors, he brings RiT vast experience in the development of intelligent electronic systems for air industry corporations and telecommunications companies in Israel and abroad. Mr. Shar holds a M.Sc. degree in electronics engineering from Ufa University of Aeronautics, Russia.

Mr. Eran Erov has served as our VP Finance since December 2014. Mr. Erov Joined RiT in July 2013 as our Corporate Controller, bringing over eight years of experience as an accountant and controller and in finance in the high tech industry and the Oil & Gas industry. Prior to joining RiT Eran served as Finance Manager in GeoGlobal Resources Ltd. Mr. Erov holds an MBA degree from the College of Management in Israel.

Mr. Assaf Skolnik has served as our VP Sales since December 2012. Mr. Skolnik joined RiT in November 2009 as Sales Manager, Israel, bringing over 10 years of business experience in the communications industry. Prior to RiT, Mr. Skolnik served as a Unit Manager in Bynet Electronics. Mr. Skolnik holds a B.A. degree in economics and management from The Open University of Israel.

Mr. Viachislav (Slava) Anisimov has served as our VP of Operations since June 2014. He has held different positions in RiT since June 2008, including in our quality assurance department, support department and production planning and control department. Mr. Slava Anisimov holds an MBA degree from the Tel Aviv University.

Mr. Raphael Sankar joined RiT in October 2014 as our VP Sales & Business Development (Americas & UK), bringing more than 20 years of global experience in all aspects of technology business. Prior to joining RiT, Mr. Sankar served as EVP, Sales and Business Development of PointGrab, a leading provider of Gesture Control software for consumer electronics devices. Mr. Sankar's previous positions include Vice President and Co-General Manager of the FTTH Division at PMC-Sierra, VP Worldwide Sales of BroadLight, a leading FTTH semiconductor start-up, and leadership positions at Memlink, ECI Telecom and Vsoft. Mr. Sankar holds a B.Sc. degree in Electrical Engineering from the Technion, Israel Institute of Technology and an MBA degree, cum laude, from the Hebrew University, Jerusalem.

Mr. Kobi Haggay has served as our VP Products since January 2015. Prior to that, since 2009 Mr. Haggay served as our Product Manager. With over 10 years of experience in R&D products developments and five years as our Product Manager, Mr. Haggay brings a vast experience in the telecommunication industry. Mr. Haggay holds a B.Sc. Degree in Physics from Tel-Aviv University, Israel.

Additional Information

There are no family relationships between any of the directors or members of senior management named above, except that Mr. Slava Anisimov is the son of Mr. Sergey Anisimov.

As described in Item 4A under "Recent Major Business Developments", we underwent several key management changes in the past year.

6.B. Compensation

General

Our objective is to attract, motivate and retain highly skilled personnel who will assist RiT to reach its business objectives, performance and the creation of shareholder value and otherwise contribute to its long-term success. In June 2013, our shareholders approved the compensation policy for our executive officers and directors (the "Compensation Policy"), which was designed to correlate executive compensation with RiT's objectives and goals and otherwise embraces a performance culture that is based on merit, and differentiates and rewards excellent performance in the long term. See also “Item 10.B. - Additional Information — Memorandum and Articles of Association — Approval of Office Holder Compensation” below.

The following table sets forth all cash and cash-equivalent compensation we paid with respect to all of our directors and executive officers as a group for the periods indicated (in millions):

Year	Salaries, fees, commissions and bonuses*		Pension, retirement and similar benefits
2014 - All directors and executive officers as a group, consisting of 15 persons for the year ended December 31, 2014(including 3 persons who left RiT during 2014)	$	1.4	$	0.4
2013 - All directors and executive officers as a group, consisting of 15 persons for the year ended December 31, 2013 (including 4 persons who left RiT during 2013)	$	1.9	$	0.2

This includes amounts expended by us for automobiles made available to our officers and other fringe benefits commonly reimbursed or paid by companies in Israel. It excludes any expenses (including business travel, professional and business association dues and expenses) reimbursed to officers or directors.

During 2014, we granted a total of 102,608 options to our executive officers at exercise prices ranging from $1.06 to $1.63 per ordinary share. Such options will expire in 2020. No options have been granted to any of our directors during 2014. For a discussion of the accounting method and assumptions used in valuation of such options, see Note 6 to our consolidated financial statements included in our annual report on Form 20-F for the year ended December 31, 2014. See also "Item 6.E. - Directors, Senior Management and Employee – Share Ownership –– Share Option Plans” below.

For a discussion of the compensation granted to our five most highly compensated executive officers during 2014, see “Compensation of Executive Officers” below, and for a discussion of the compensation paid to our non-employee directors, see “Compensation of Directors” below.

Compensation of Executive Officers

The table and summary below outline the compensation granted to our five most highly compensated executive officers during or with respect to the year ended December 31, 2014. We refer to the five individuals for whom disclosure is provided herein as our “Covered Executives.”

For purposes of the table and the summary below, “compensation” includes base salary, bonuses (including sales commissions), equity-based compensation, retirement or termination payments, benefits and perquisites such as car, and social benefits and any undertaking to provide such compensation. All amounts reported in the table are in terms of cost to the Company, as recognized in our financial statements for the year ended December 31, 2014.

Name and Principal Position (1)	Annual Base Salary (2)		Bonus (3)		Equity-Based Compensation (4)		All Other Compensation (5)		Total
	(US$ in thousands)
Motti Hania, President and CEO		249		-		211		101		561
Elan Yaish, former CFO		197		-		6		87		290
Assaf Skolnik, VP Sales		149		40		2		81		272
Alex Shar, Deputy CEO and CTO		154		-		166		67		387
Vadim Leiderman, former CEO		102		-		314		38		454

(1)

Unless otherwise indicated herein, all Covered Executives are (or were, for former executive officers) (i) employed on a full-time (100%) basis; and (ii) subject to customary confidentiality, intellectual property assignment and non-solicitation provisions as well as an undertaking not to compete with us or in our field of business for nine to twelve months following termination of employment.

(2)	Unless otherwise indicated herein, reflects the annual gross salary. Since all or part of the base salary may be denominated in currencies other than the US dollar, fluctuations in dollar amounts may be attributed to exchange rate fluctuations.

(3)

Amounts reported in this column represent annual bonuses, including sales commissions, granted to the Covered Executives based on formulas set forth in their respective employment agreements. Consistent with our Compensation Policy, the bonuses/commissions granted to our sales executive officers (in this list, only Assaf Skolnik), are based upon amount of sales achieved.

(4)

Amounts reported in this column represent the grant date fair value (and the associated accounting expense recognized by the Company) in accordance with accounting guidance for stock-based compensation. For a discussion of the assumptions used in reaching this valuation, see Note 6 to our consolidated financial statements included elsewhere in this annual report. All of the awards were in the form of stock options, which expire six years after the grant date, and were made pursuant to our equity incentive plan.

(5)

Amounts reported in this column include benefits and perquisites, including those mandated by applicable law. Such benefits and perquisites may include, to the extent applicable to the Covered Executive, payments, contributions and/or allocations for savings funds (e.g., Managers Life Insurance Policy), education funds ('keren hishtalmut'), pension, severance, vacation, car or car allowance, medical insurances and benefits, risk insurances (e.g., life, or work disability insurance), convalescence or recreation pay, relocation, employers payments for social security, tax gross-up payments and other benefits and perquisites consistent with RiT's guidelines. Unless otherwise indicated herein, all Covered Executives in Israel are entitled (including by virtue of Israeli labor laws), among other things, to (i) a company car and all related expenses; (ii) Company contributions for the benefit of the Covered Executive to (a) Managers Insurance Policy or pension fund, in the amount of at least 13.33% of the Covered Executive gross salary (a portion of which is for severance pay, to which the Covered Executive would be entitled), and (b) Education Fund (“Keren Hishtalmut”) in the amount of 7.5% of the Covered Executive’s gross salary; (iii) between 21 to 28 days paid vacation per year; (iv) between 7 to 14 days recreation (“Havra’a”) payment a year in an amount normally paid by our Company in accordance with applicable law; and (v) a notice period of between one month and up to 6 months prior to termination (other than termination for cause), during which they are generally entitled to all compensation and rights under their employment agreements.

Compensation of Directors

As of March 6, 2008, our external directors receive amounts consistent with the regulations promulgated under the Companies Law regarding compensation to external directors. The regulations mandate, among other things, that Israeli public companies, such as RiT, provide external directors with minimum cash compensation. Consistent with the aforesaid, the annual compensation paid to our external directors is NIS 83,397 (approximately $21,000) and NIS 4,059 (approximately $1,000) per board meeting or per board committee meeting, all linked to the Israeli consumer price index, effective March 6, 2008. All other independent directors of the Company (currently consisting of Hanan Samet) receive the same compensation as the external directors.

Other than the foregoing fees, and reimbursement for expenses, we do not compensate our directors for serving on our Board of Directors.

Equity Incentives

During 2014, we granted a total of 102,608 options to our executive officers at exercise prices ranging from $1.06 to $1.63 per ordinary share. No options were granted to any of our directors during 2014. See also "Item 6.E. - Directors, Senior Management and Employee – Share Ownership –– Share Option Plans” below.

6.C. Board Practices

General

We are subject to the provisions of the Israeli Companies Law and the regulations promulgated thereunder. In addition, as a NASDAQ-listed company, we are also subject to certain corporate governance standards adopted by NASDAQ, or NASDAQ rules. For further information, see also “Item 16G – Corporate Governance.”

Board of Directors

Our Articles of Association provide that the Board of Directors shall consist of not less than three and not more than seven directors. Currently, our Board of Directors consists of five members (including two external directors).

According to the Israeli Companies Law and our Articles of Association, the oversight of the management and determination of the policy of our business is vested in our Board of Directors. The Board of Directors may exercise all powers and may take all actions that are not specifically granted to our shareholders. As part of its powers, our Board of Directors may cause us to borrow or secure payment of any sum or sums of money for our purposes, at times and upon terms and conditions as it determines, including the grant of security interests in all or any part of our property.

Our directors are elected by the shareholders, except in certain cases where directors are appointed by the Board of Directors, such as filling vacancies, and their appointment is subject to ratification by the shareholders at the next annual or extraordinary meeting of shareholders. Except for external directors (as described below), directors elected by the shareholders hold office until the next annual meeting of shareholders, which is required to be held at least once during every calendar year and not more than 15 months after the last preceding meeting. Directors may be removed earlier from office by resolution passed at a general meeting of our shareholders.

External Directors

Under the Companies Law, companies incorporated under the laws of Israel whose shares are listed for trade on a stock exchange or have been offered to the public in or outside of Israel, such as RiT, are required to appoint at least two external directors. The Companies Law provides that a person may not be appointed as an external director if the person or the person’s relative, partner, employer or any entity under the person’s control, has, as of the date of the person’s appointment to serve as external director, or had, during the two years preceding that date, any “affiliation” with, in our case, the company (i.e., RiT), any entity controlling the company (i.e., STINS COMAN) or any entity controlled by the company or by its controlling entity. The term affiliation includes:

an employment relationship;

a business or professional relationship;

control; and

service as an “office holder.”

The Companies Law defines the term “office holder” of a company to include a director, the chief executive officer, the chief financial officer and any officer of the company who is directly subject to the chief executive officer.

Until the lapse of two years from termination of office, a company or its controlling shareholder may generally not give any direct or indirect benefit to the former external director or his relatives.

In general, pursuant to the Companies Law, (1) each external director must have either accounting or financial expertise or professional qualifications (as such terms are defined in regulations promulgated under the Companies Law) and (2) at least one of the external directors must have accounting and financial expertise. We have determined that our external director, Mr. Israel Frieder has the requisite accounting and financial expertise and that Ms. Galia Druker has the necessary professional qualifications.

External directors are to be elected by a majority vote at a shareholders’ meeting, provided that either:

at least a majority of the shares voted at the meeting by shareholders who are neither (a) “controlling shareholders” (as such term is defined in the Companies Law) nor (b) having a “personal interest” in the appointment merely as a result of relationship with the controlling shareholder vote in favor of the election; or

the total number of shares voted against the election of the external director by the disinterested shareholders described in the preceding clause does not exceed two percent of the aggregate voting rights in the company.

The initial term of an external director is three years and he or she may be reelected for up to two additional three-year terms. Thereafter, our external directors may be reelected by our shareholders for additional periods of up to three years each only if the audit committee and the Board of Directors confirm that, in light of the external director’s expertise and special contribution to the work of the Board of Directors and its committees, the reelection for such additional period is beneficial to the Company. Reelection of an external director may be effected through one of the following mechanisms: (1) the Board of Directors proposed the reelection of the nominee and the election was approved by the shareholders by the majority required to appoint external directors for their initial term, as described above; or (2) a shareholder holding 1% or more of the voting rights or the external director proposed the reelection of the nominee, and the reelection is approved by a majority of the votes cast by the shareholders of the company, excluding the votes of controlling shareholders and those who have a personal interest in the matter as a result of their relations with the controlling shareholders; provided that the aggregate votes cast in favor of the reelection by such non-excluded shareholders constitute more than 2% of the voting rights in the company.

Our two external directors are Mr. Israel Frieder and Ms. Galia Druker. Mr. Israel Frieder became an external director in January 2002 and was reelected four times since then, such that his current term will expire in January 2017. Ms. Galia Druker became an external director in September 2009 and was reelected at the 2012 Annual General Meeting, such that her current term will expire in September 2015.

External directors may be removed from office only by the same percentage of shareholders as is required for their election, or by a court, only if the external directors cease to meet the statutory qualifications for their appointment or if they violate their duty of loyalty to the company.

Each committee of a company’s board of directors is required to include at least one external director, except that the audit committee and the compensation committee are required to include all the external directors. An external director is entitled to compensation as provided in regulations adopted under the Companies Law and is otherwise prohibited from receiving any other compensation, directly or indirectly, in connection with such service.

Independent Directors

Under NASDAQ rules, a majority of the members of an issuer’s board of directors are required to be “independent,” as defined thereunder. In general, in order to qualify as an independent director under NASDAQ rules, (1) the board of the listed company must determine that the director does not have any relationship with the listed company or any subsidiary of the listed company that would interfere with the independent director’s exercise of business judgment (but it should be noted that, according to NASDAQ, ownership of the listed company stock by itself would not preclude a board finding of independence), and (2) the director must meet certain objective criteria stipulated by NASDAQ rules, such as not having been an employee or an officer of the listed company or its subsidiaries in the past three years. As such, the key distinctions between external directors and independent directors are that external directors must be elected by a special majority and may not have a business or employment relationship not just with the listed company but also with its principal shareholders and, consequently, in most cases, a person that satisfies the external director requirements under the Israeli Companies Law will also fulfill the independence requirements under NASDAQ rules (but not necessarily the other way around).

The aforesaid NASDAQ requirement does not apply, however, where the issuer is a “controlled company,” a company of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company. Although we are a controlled company by virtue of STINS COMAN’s shareholdings in us, we currently satisfy this NASDAQ requirement as three of the five members of our Board of Directors, Mr. Israel Frieder, Ms. Galia Druker and Mr. Hanan Samet, were determined by our Board of Directors to qualify as independent directors under NASDAQ rules.

Committees

Audit Committee

Pursuant to applicable SEC and NASDAQ rules, we are required to have an Audit Committee of at least three members, each of whom must satisfy the independence requirements of the SEC and NASDAQ. In addition, pursuant to NASDAQ rules, all of the members of the Audit Committee must be financially literate and at least one member must possess accounting or related financial management expertise. The Audit Committee must also have a written charter specifying the committee’s duties and responsibilities, which include, among other things, the selection and evaluation of our independent auditors.

Under the Companies Law, our Board of Directors is required to appoint an Audit Committee, which must be comprised of at least three directors, include all of the external directors, a majority of its members must satisfy the independence standards under the Companies Law, and the chairman is required to be an external director. The duties of the Audit Committee under the Companies Law include, among others, examining flaws in the business management of the company and suggesting remedial measures to the board, assessing the company’s internal audit system and the performance of its internal auditor, and as more fully described under "Item 10.B. - Memorandum and Articles of Association " below, approval of certain interested party transactions.

Our Audit Committee consists of Mr. Israel Frieder, Chairman, Ms. Galia Druker and Mr. Hanan Samet and satisfies the requirements of the Companies Law, the SEC and NASDAQ rules. Our Board of Directors has determined that Mr. Israel Frieder is an Audit Committee financial expert, as defined by applicable SEC regulations, and that he also has the requisite financial expertise, as defined under the NASDAQ rules.

Our Audit Committee adopted a written charter specifying the committee’s duties and responsibilities, which include, among other things, the selection and evaluation of our independent auditors.

Our Audit Committee also functions as our Qualified Legal Compliance Committee, or the QLCC. In its capacity as the QLCC, the Audit Committee is also responsible for administering the confidential receipt, retention and consideration of any report of a material violation of federal securities laws, breach of fiduciary duty or similar violations by the Company or any officer, director, employee or agent of the Company.

Our Audit Committee meets at least once each quarter, with additional special meetings scheduled when required.

Compensation Committee

Pursuant to applicable NASDAQ Listing Rules that became effective on July 1, 2013, the compensation payable to a company’s chief executive officer and other executive officers must generally be approved by a compensation committee comprised solely of independent directors, subject to certain exceptions, including where the issuer is a controlled company.

Under a recent amendment to the Companies Law, our board of directors is required to appoint a compensation committee, which must be comprised of at least three directors, include all of the external directors, its other members must satisfy certain independence standards under the Companies Law, and the chairman is required to be an external director. Under the Companies Law, the role of the compensation committee is to recommend to the board of directors, for ultimate shareholder approval by a special majority, a policy governing the compensation of office holders based on specified criteria; to review, from time to time, modifications to the compensation policy and examine its implementation; to approve the actual compensation terms of office holders prior to approval thereof by the board of directors; and to resolve whether to exempt the compensation terms of a candidate for chief executive officer from shareholder approval.

Our Compensation Committee, established in February 2013, adopted in August 2013 a written charter specifying the committee's duties and responsibilities, which include, among other things, the duties and roles assigned to it pursuant to the Companies Law and applicable NASDAQ rules described above as well as oversight and administration of our equity based plans.

Our Compensation Committee is currently composed of Galia Druker, the Chairman of our Compensation Committee, Israel Frieder and Hanan Samet, all of whom satisfy the respective “independence” requirements of the Companies Law, SEC and NASDAQ rules for compensation committee members.

Our Compensation Committee meets when required.

Nominations Committee

Pursuant to applicable NASDAQ rules, director nominees must be selected or recommended for the board’s selection either by a nominations committee composed solely of independent directors or by a majority of independent directors, subject to certain exceptions, including where the issuer is a controlled company. Although we are a controlled company by virtue of STINS COMAN’s shareholdings in us, we maintain a Nominations Committee which consists of Messrs. Hanan Samet and Israel Frieder and satisfies the requirements of the NASDAQ rules relating to nomination of directors.

Our Nominations Committee meets when required.

Internal Auditor

Under the Companies Law, the Board of Directors of a public company must also appoint an internal auditor proposed by the Audit Committee. The duty of the internal auditor is to examine, among other things, whether the Company’s conduct complies with applicable law and orderly business procedure. Under the Companies Law, the internal auditor may not be an interested party, an office holder, or an affiliate, or a relative of an interested party, an office holder or affiliate, nor may the internal auditor be the company’s independent accountant or its representative. Starting in March 2015, our internal auditor is Doron Cohen, CPA (Isr.), CIA (USA), of the accounting firm Fahn Kanne Control Management Ltd., Grant Thornton Israel, who replaced Shmuel Rosenblum, our former internal auditor.

Directors’ Service Contracts

Except as set forth in "Item 6.B. Directors, Senior Management and Employees – Compensation,” there are no arrangements or understandings between us and any of our current directors for benefits upon termination of service.

For information on the duties of directors, officers and shareholders and requirements for the approval of related-party transactions, please see "Item 10.B - Memorandum and Articles of Association.”

6.D. Employees

The following table details certain data on the workforce (including temporary employees) of RiT and its consolidated subsidiaries for the periods indicated:

	As of December 31,
	2014		2013		2012
Approximate numbers of employees by geographic location
Israel		54		65		68
Europe, Far East		12		15		9
United States		0		2		3
Total workforce		66		82		80
Approximate numbers of employees by category of activity
Research and development		15		20		22
Sales and marketing		29		35		36
Operations		12		17		13
Management and administrative		10		10		9
Total workforce		66		82		80

The reduction in our workforce, from approximately 80 employees in 2012 to 66 employees at the end of 2014, is primarily as a result of our continued efforts to reduce our expenses including by reducing our headcount.

We consider our relations with our employees to be excellent and have never experienced a strike or work stoppage. Substantially all of our employees have employment agreements and none are represented by a labor union.

We maintain an incentive plan for our marketing and sales personnel, pursuant to which monthly remuneration is based, in part, upon sales and margin quotas. In addition, marketing and sales personnel occasionally receive bonuses for special achievements.

Our Israeli employees are not party to any collective bargaining agreement. However, we are subject to certain provisions of collective bargaining agreements among the Histadrut (General Federation of Labor in Israel) and the Coordinating Bureau of Economic Organizations (including the Industrialists' Association) that are applicable to our Israeli employees by virtue of expansion orders of the Israeli Ministry of Economy (formerly known as the Ministry of Industry, Trade and Labor). In addition, Israeli labor laws are applicable to all of our employees in Israel. Those provisions and laws principally concern the length of the workday, minimum daily wages for workers, procedures and restrictions regarding dismissal of employees, severance payments, certain social contributions and other conditions of employment.

Pursuant to Israeli law, we are legally required to pay severance upon the retirement or death of an employee or the termination of employment of an employee without due cause. We partially fund this liability by the purchase of managers' insurance policies. The current redemption value of such insurance policies is included in the balance sheet in current assets for employees terminated, retired or deceased and as assets held for severance benefits for all other employees. This policy provides a combination of savings plans, insurance and severance pay, if legally entitled, upon termination of employment. The remaining part of this obligation is presented in our balance sheet in other current payables and accrued liabilities for employees terminated, retired or deceased and liability in respect of employee severance benefits for all other employees. See Note 4 to the Consolidated Financial Statements included elsewhere in this annual report.

Typically, the employment agreements provide for employees in Israel to receive contributions for pension, severance and disability insurance to an insurance policy known as “managers' insurance” and/or to pension funds and a savings fund for professional enrichment.

All Israeli employers are required to provide certain salary increases as partial compensation for increases in the Consumer Price Index. The specific formula for such increases varies according to agreements reached among the Government of Israel, the Manufacturers' Association and the Histadrut. Israeli employees and employers also are required to pay pre-determined sums (which include a contribution to national health insurance) to the Israel National Insurance Institute, which provides a range of social security benefits.

Our non-Israeli employees are subject to local labor laws, regulations and/or collective bargaining agreements that vary from country to country.

6.E. Share Ownership

The following table details the number of our ordinary shares beneficially owned (including the shares underlying options or warrants held by such person that are exercisable within 60 days), by our directors and members of our senior management, as of April 13, 2015:

Name	Title/Office	Number of Ordinary Shares Beneficially Owned (1)		Percentage of Outstanding Ordinary Shares (2)
Sergey Anisimov (3)	Chairman of the Board of Directors		14,138,384		78.4	%
Boris Granovsky (4)	Director		13,898,821		77.1	%
Israel Frieder	Director		-		-
Hanan Samet	Director		-		-
Galia Druker	Director		-		-
Motti Hania	CEO and President		*		*
Alex Shar	Deputy CEO & CTO		*		*
Eran Erov	VP Finance		*		*
Assaf Skolnik	Vice President Sales		*		*
Viachislav (Slava) Anisimov	VP Operations		*		*
Raphael Sankar	VP Sales & Business Development (Americas & UK)		*		*
Kobi Haggay	VP Products		*		*
All directors and executive officers as a group (consisting of 12 persons)(5)			14,728,810		79.09	%

* Less than 1%

(1)

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Ordinary shares relating to options or warrants currently exercisable or exercisable within 60 days of the date of this table are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares shown as beneficially owned by them.

(2)	The percentages shown are based on 15,541,306 shares issued and outstanding, excluding 2,125 ordinary shares held as treasury shares, as of April 13, 2015.

(3)

Includes (i) 11,407,954 ordinary shares held by STINS COMAN, (ii) 239,563 ordinary shares held by an Israeli private company named Invencom Technologies Ltd. (former name 'Quartz') with which he may be affiliated due to his wife being an owner, director and manager of Invencom, (iii) 125,000 warrants, with an exercise price of $2.50 per share, held by STINS COMAN, and (iv) 2,365,867 ordinary shares which may be issued to STINS COMAN upon conversion of the $3.0 million outstanding under the Convertible Loan.

(4)

Includes (i) 11,407,954 ordinary shares held by STINS COMAN, (ii) 125,000 warrants, with an exercise price of $2.50 per share, held by STINS COMAN, and (iii) 2,365,867 ordinary shares which may be issued to STINS COMAN upon conversion of the $3.0 million outstanding under the Convertible Loan.. Mr. Granovsky disclaims beneficial ownership of such shares. See "Item 7A. – Major Shareholders."

(5)	Includes outstanding options exercisable within 60 days as of April 13, 2015 into 590,426 ordinary shares. These options have an exercise price ranging from $1.63 to $14.88 per ordinary share and with the last options expiring in 2020.

Share Option Plans

In July 2003, we adopted the RiT Technologies Ltd. 2003 Share Option Plan, or, as amended, the 2003 Plan, which is currently administered by our Board of Directors. The purpose of the 2003 Plan is to provide incentives to our employees, directors, consultants and contractors, or any subsidiary thereof, by providing them with opportunities to purchase our ordinary shares. The exercise price and vesting schedule of options granted under the 2003 Plan are approved by the Board of Directors, as specified in the grant letter issued by us to the grantee. Unless otherwise determined by the Board of Directors, the options fully vest on the third anniversary following their grant, vesting in three equal shares annually. In June 2013, our Board of Directors approved the increase of the reserve for the grant of options under the 2003 Plan to a total of 2,000,000 ordinary shares; as of April 13, 2015, we have outstanding options to purchase approximately 1 million ordinary shares pursuant to such plan. The term of the 2003 Plan was originally set to expire in July 2013 and in June 2013 our Board of Directors approved the extension of such plan for an additional term of four years, such that the plan will expire in July 2017.

In addition, in May 1999, we adopted the RiT Technologies, Inc. Employee Stock Option Plan, or the RiT Inc. Plan, pursuant to which options to purchase our ordinary shares may be granted to the employees of RiT Technologies, Inc. The RiT Inc. Plan is administered by our Board of Directors which designates the optionees, dates of grant and the exercise price of the options. We have reserved 27,242 ordinary shares for the grant of options under the RiT Inc. Plan; as of April 13, 2015, we have outstanding options to purchase 3,550 ordinary shares pursuant to such plan. This plan expired in May 2009.

See "Item 6B. – Compensation" above with respect to grants of options to our directors and executive officers.

The following table summarizes information about all stock options outstanding as of December 31, 2014:

	Options outstanding						Options exercisable
			Weighted
			average
			remaining		Average				Average
	Number of		contractual		exercise		Number of		exercise
Rates of exercise	shares		life		price		exercisable		price
prices (in US$)	unexercised		(in years)		(in US$)		shares		(in US$)

1.00-2.99		132,608		5.70		1.31		-		-
3.00-3.80		502,600		1.89		3.56		441,987		3.59
4.00-5.44		337,192		3.12		4.28		193,894		4.25
7.50-9.84		1,500		1.86		9.60		1,500		9.60
10.24-14.88		6,340		1.26		14.88		6,340		14.88

		980,240						643,721

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7.A. Major Shareholders

The following table sets forth certain information regarding the beneficial ownership of our ordinary shares as of April 13, 2015 (except as noted below) by each person who is known by us to own beneficially more than 5% of our outstanding ordinary shares:

Name	Number of Ordinary Shares Owned Excluding Options and Warrants		Number of Ordinary Shares Beneficially Owned*		Number of Ordinary Shares Beneficially Owned* as Percent of Total Shares(1)
Sergey Anisimov(2)		11,647,517		14,138,384		78.4	%
Boris Granovsky (3)		11,407,954		13,898,821		77.1	%

* Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to securities. Ordinary shares relating to options or warrants currently exercisable or exercisable within 60 days of the date of this table are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares shown as beneficially owned by them.

(1)

Based on 15,541,306 ordinary shares outstanding excluding 2,125 ordinary shares held as treasury shares as of April 13, 2015.

(2)

Mr. Anisimov is the President of, and owns a majority interest in, STINS COMAN. Based on a Schedule 13D/A report filed with the SEC on October 29, 2014, jointly by STINS COMAN, Sergey Anisimov and Boris Granovsky (the “13D/A Report”), the figure includes (i) 11,407,954 ordinary shares held by STINS COMAN (ii) 239,563 ordinary shares held by Invencom, an Israeli private company with which Anisimov may be affiliated due to his wife being a director and manager of Invencom, (iii) 125,000 warrants held by Stins Coman and (iv) 2,365,867 convertible shares based on the $3.0 million outstanding loan balance under the Convertible Loan Agreement.

(3)

Based on the 13D/A Report, Mr. Granovsky is the Vice President of, and owns a minority interest in, STINS COMAN. Consequently, Mr. Granovsky may be deemed the beneficial owner, and to share the power to vote and dispose of the shares held by STINS COMAN. Mr. Granovsky disclaims beneficial ownership of such shares.

Significant Changes in the Ownership of Major Shareholders

As of January 1, 2010, STINS COMAN beneficially owned approximately 59% of our outstanding shares. Since then, we issued a total of 9,622,623 ordinary shares to STINS COMAN in connection with the conversions of approximately $30.0 million (principal and interest), in the aggregate, of the Convertible Loan made by STINS COMAN. In November 2013, as part of the public offering, STINS COMAN purchased 250,000 ordinary shares and warrants to purchase up to 125,000 ordinary shares. Following such issuances, STINS COMAN beneficially owns, as of April 13, 2015, together with Invencom, 14,138,384 ordinary shares, representing approximately 78.4% of our outstanding shares. For additional information about such issuances, see "Item 7 – Major Shareholders and Related Party Transactions."

Major Shareholders Voting Rights

Each ordinary share is entitled to one vote per share and none of our major shareholders has any different voting rights than any other shareholder.

Record Holders

Based on a review of the information provided to us by our transfer agent, as of April 13, 2015, there were 12 holders of record of our ordinary shares, of which record holders, holding approximately 42% of our ordinary shares, had registered addresses in the United States. These numbers are not representative of the number of beneficial holders of our shares nor is it representative of where such beneficial holders reside since many of these ordinary shares were held of record by brokers or other nominees (including one U.S. nominee company, CEDE & Co.).

Change of Control

As described above, we are controlled by Mr. Sergey Anisimov (through STINS COMAN). To our knowledge, we are not directly or indirectly owned or controlled by any foreign government. We are not aware of any arrangements, the operation of which may at a subsequent date result in a change of our control.

7.B. Related Party Transactions

Distributor Agreement – Enterprise. STINS COMAN, which became our largest shareholder in June 2008, has served as one of our distributors in Russia for our enterprise products since 1994 and has worked with us consistently since that date. In May 2005, more than three years before STINS COMAN became a principal shareholder of RiT, we entered into an International Distributor Agreement with STINS Corp., a subsidiary of STINS COMAN, whereby STINS Corp. was appointed as our non-exclusive distributor of enterprise products in Russia. The term of the Distributor Agreement is until July 14, 2015, which term, subject to applicable law, is automatically renewed for additional one-year terms at the conclusion of each period, unless terminated by either party.

Under the Distributor Agreement, STINS Corp. undertook a series of obligations, to maintain an adequate and aggressive sales organization to distribute and procure sales, to actively promote and create a demand for our products, and to assure adequate advisory, installation and support services. We also undertook a series of obligations, to supply STINS Corp., at no cost, with such aids and technical assistance as we deem necessary to aggressively pursue product sales. The prices at which STINS Corp. is entitled to buy our products is, as it is for most of our distributors, according to our current international distributor price list and discount policy. In addition, we entered into an Addendum to the Distributor Agreement, dated as of December 23, 2013 (the “Addendum”), for providing Stins Corp. a rebate program targeted at encouraging sales in the territory of Russia. The Addendum provides for a scaled rebate program to Stins Corp. computed as percentage of sales in Russia, up to a maximum rebate cap of EUR 36,000 for sales of $3,000,000 and above (approximately 1.7% rebate on sales, up to said cap). The term of the rebate program started on January 1, 2013 and ended on December 31, 2014.

In 2014, 2013 and 2012, we generated approximately $ 433,000, $1,120,000 and $329,000, respectively, in revenues from orders placed by STINS COMAN under the Distributor Agreement.

Distributor Agreement with RiT CIS. For the realignment of our sales in Russia and the CIS, we entered into a Distributor Agreement with RiT CIS, a Russian company affiliated with Stins Coman, dated January 6, 2015, pursuant to which RiT CIS will serve as an additional distributor of our products in Russia and the CIS.

Under the Distributor Agreement, RiT CIS undertook a series of obligations, to maintain an adequate and aggressive sales organization to distribute and procure sales, to actively promote and create a demand for our products, and to assure adequate advisory, installation and support services. We also undertook a series of obligations, to supply RiT CIS, at no cost, with such aids and technical assistance as we deem necessary to aggressively pursue product sales. The prices at which RiT CIS is entitled to buy our products is, as it is for most of our distributors, according to our current international distributor price list and discount policy.

Distributor Agreement with Stins Engineering. In an effort to increase our sales in Singapore and South Asia, we entered into a Distributor Agreement dated February 16, 2015, with Stins Engineering, a Singaporean company affiliated with Stins Coman, pursuant to which Stins Engineering will serve as a non-exclusive distributor of our products in such territory (excluding China and India).

Under the Distributor Agreement, Stins Engineering undertook a series of obligations, to maintain an adequate and aggressive sales organization to distribute and procure sales, to actively promote and create a demand for our products, and to assure adequate advisory, installation and support services. We also undertook a series of obligations, to supply Stins Engineering, at no cost, with such aids and technical assistance as we deem necessary to aggressively pursue product sales. The prices at which Stins Engineering is entitled to buy our products is, at it is for most of our distributors, according to our current international distributor price list and discount policy.

Employment. Mr. Sergey Anisimov is the Chairman of our Board of Directors and is the founder and President of STINS COMAN. In July 2008, our Audit Committee and Board of Directors approved the employment of Mr. Anisimov's son, Mr. Slava Anisimov (the “Employee”), in the quality assurance department at a monthly gross salary of approximately NIS 12,000, and additional social benefits in accordance with our policy. Our Audit Committee and Board of Directors also approved, subject to shareholder approval, a framework arrangement pursuant to which any modifications or amendments to be made in the Employee’s employment terms or position by our officers in the future are approved; provided that any such modification or amendment is conditioned upon the following: (i) any increase in the gross salary will not exceed 20% per year, (ii) any bonus will not exceed the equivalent of one monthly salary per year, (iii) any change in position is permitted as long as he is not appointed as one of our office holders; and (iv) the further approval by the Audit Committee and the Board of Directors. Our shareholders approved the foregoing compensation and framework arrangement at the annual meeting held in August 2008.

In September 2010 and in line with said shareholder approval, our Audit Committee and Board of Directors approved the Employee’s change of position to work in our support department, and increased his salary by 20% for each of the years 2009 and 2010 starting August 2010 i.e. to a monthly gross salary of NIS 17,280. In addition, as part of his employment terms, the Employee was granted options to purchase 250 Ordinary Shares at an exercise price of US$4.80 per share, according to comparable criteria for options grant to our employees, including a vesting period of three years.

In April 2013, our Audit Committee and Board of Directors approved (i) the Employee's change of position to work in our production planning and control department, and (ii) a grant to the Employee of a special-bonus in the form of stock options exercisable into 38,500 Ordinary Shares, at an exercise price equal to the market value of the Ordinary Shares on the date of the grant (i.e., the closing price of the Company’s stock on the date of the Board meeting). In addition, our Audit Committee and Board of Directors approved all future modifications or amendments in the Employee’s employment terms or position; provided that any such modification or amendment is conditioned upon the following: (i) any increase in the gross salary will not exceed 20% per year, (ii) any bonus will not exceed the equivalent of one monthly salary per year, (iii) any change in position is permitted as long as the Employee is not an office holder of the Company; and (iv) the further approval by the Audit Committee, the Board of Directors and, starting June 2016, shareholder approval. Our shareholders approved the foregoing compensation and framework arrangement at the annual meeting held in June 2013.

On December 23, 2013, consistent with said shareholder resolution, our Audit Committee and Board of Directors approved (i) the Employee's change of position to work as the Assistant Vice President Operations, or AVP Operations, considered by us a non-office holder position, and (ii) the increase of the Employee's salary to NIS 26,000 per month.

On June 25, 2014, the Employee was appointed our VP Operations, following approval of our shareholders, which also approved the related compensation terms for such position, including (i) an increase of the Employee's salary to NIS 31,000 per month (equal to approximately $ 7,830), (ii) a grant of options to purchase 25,000 ordinary shares at an exercise price equal to $1.31, which was the market price of the shares as of June 25, 2014, (iii) two months termination notice under the Employee's employment agreement with us and (iv) additional customary benefits in accordance with our employment policies and practices for senior executives.

Convertible Loan Agreement. On June 11, 2009, we entered into a Loan Agreement with STINS COMAN, our controlling shareholder (as amended on June 17, 2009, February 17, 2010, April 14, 2011, December 8, 2011, April 17, 2012, August 6, 2012, October 23, 2012 and August 12, 2014 the "Convertible Loan Agreement").

Pursuant to the Convertible Loan Agreement, STINS COMAN agreed to extend to the Company an unsecured loan, originally of up to $10 million (the “Maximum Amount”) at an annual interest rate of 2.47%. The Maximum Amount was increased several times and currently is $45 million (amendment dated December 8, 2011- increased to $14 million; amendment dated April 17, 2012- increased to $20 million; amendment dated August 6, 2012- increased to $25 million; amendment dated October 23, 2012- increased to $35 million; and amendment dated August 12, 2014- increased to $45 million).

Pursuant to the Convertible Loan Agreement, at any time commencing October 1, 2009 through December 31, 2016 (the "Term"), we may call and receive any portion of the loan from STINS COMAN, but no more than $5 million at a time (up to the said Maximum Amount of $45 million) and at intervals of at least 30 days between each call request.

Under the Convertible Loan Agreement, we are required to repay the outstanding principal amount and the interest accrued thereon after 36 months from receipt of each part of the funds respectively. STINS COMAN has the right to convert any outstanding principal amount of the loan and the interest accrued thereon, in whole or in part, into our ordinary shares at a conversion price per share equal to the market price of our ordinary shares on NASDAQ on the day we received the funds from STINS COMAN (the “Base Price”), plus a premium of 10% thereon. The conversion is subject to 30 days prior notice and to the execution of a definitive purchase agreement to be substantially similar to the Securities Purchase Agreement entered between the parties on September 11, 2008.

As of April 13, 2015, we had drawn approximately 32.9 million in principal under the Convertible Loan Agreement, which we received in installments, of which STINS COMAN has converted $29.9 million into 9,622,623 of our ordinary shares as follows:

On June 9, 2010, STINS COMAN converted approximately $1.5 million loan amount, representing principal and accrued interest, into 615,485 of our ordinary shares, reflecting an average conversion price of $2.465 per share (i.e., with a 10% premium on the applicable Base Price at the time of each part of the funds received) pursuant to a Securities Purchase Agreement, by and between us and STINS COMAN, dated May 17, 2010.

On September 30, 2010, STINS COMAN converted approximately $1.5 million loan amount, representing principal and accrued interest, into 687,128 of our ordinary shares, reflecting an average conversion price of $2.214 per share (i.e., with a 10% premium on the applicable Base Price at the time of each part of the funds received), pursuant to a Securities Purchase Agreement, by and between us and STINS COMAN, dated September 13, 2010.

On March 31, 2011, STINS COMAN converted approximately $1.175 million loan amount, representing principal and accrued interest, into 408,787 of our ordinary shares, reflecting an average conversion price of $2.876 per share (i.e., with a 10% premium on the applicable Base Price at the time of each part of the funds received), pursuant to a Securities Purchase Agreement, by and between us and STINS COMAN, dated March 15, 2011.

On June 30, 2011, STINS COMAN converted approximately $1.0 million loan amount, representing principal and accrued interest, into 177,006 of our ordinary shares reflecting an average conversion price of $5.680 per share (i.e., with a 10% premium on the applicable Base Price at the time of each part of the funds received), pursuant to a Securities Purchase Agreement, by and between us and STINS COMAN, dated June 15, 2011.

On December 29, 2011, STINS COMAN converted approximately $3.2 million loan amount, representing principal and accrued interest, into 636,874 of our ordinary shares, reflecting an average conversion price of $5.090 per share (i.e., with a 10% premium on the applicable Base Price at the time of each part of the funds received), pursuant to a Securities Purchase Agreement, by and between us and STINS COMAN, dated December 8, 2011.

On July 17, 2012, STINS COMAN converted approximately $4.2 million loan amount, representing principal and accrued interest, into 1,146,114 of our ordinary shares, reflecting an average conversion price of $3.667 per share (i.e., with a 10% premium on the applicable Base Price at the time of each part of the funds received), pursuant to a Securities Purchase Agreement, by and between us and STINS COMAN, dated June 26, 2012.

On December 28, 2012, STINS COMAN converted approximately $3.8 million loan amount, representing principal and accrued interest into 1,119,743 of our ordinary shares, reflecting an average conversion price of $3.420 per share (i.e., with a 10% premium on the applicable Base Price at the time of each part of the funds received), pursuant to a Securities Purchase Agreement, by and between us and STINS COMAN, dated December 5, 2012.

On March 29, 2013, STINS COMAN converted approximately $4.5 million loan amount, representing principal and accrued interest, into 1,021,166 of our ordinary shares, reflecting an average conversion price of $4.440 per share (i.e., with a 10% premium on the applicable Base Price at the time of each part of the funds received), pursuant to a Securities Purchase Agreement, by and between us and STINS COMAN, dated March 14, 2013.

On June 27, 2013, STINS COMAN converted approximately $2.0 million loan amount, representing principal and accrued interest, into 449,738 of our ordinary shares, reflecting an average conversion price of $4.46 per share (i.e., with a 10% premium on the applicable Base Price at the time of each part of the funds received), pursuant to a Securities Purchase Agreement, by and between us and STINS COMAN, dated June 17, 2013.

On September 30, 2013, STINS COMAN converted approximately $2.0 million loan amount, representing principal and accrued interest, into 582,494 of our ordinary shares, reflecting an average conversion price of $3.45 per share (i.e., with a 10% premium on the applicable Base Price at the time of each part of the funds received), pursuant to a Securities Purchase Agreement, by and between us and STINS COMAN, dated September 12, 2013.

On September 30, 2014, STINS COMAN converted approximately $5.0 million loan amount, representing principal and accrued interest, into 2,778,088 of our ordinary shares, reflecting an average conversion price of $1.82 per share (i.e., with a 10% premium on the applicable Base Price at the time of each part of the funds received), pursuant to a Securities Purchase Agreement, by and between us and STINS COMAN, dated September 10, 2014.

IntElorg. In June 2009, the Company entered into a Representative Agreement (the "Previous Agreement") with IntElorg Pte Ltd., a Singapore company affiliated with STINS COMAN ("IntElorg"). Under the Previous Agreement, IntElorg agreed to act as our non-exclusive sales agent in Singapore and other countries in Asia where we did not have a local presence, in consideration for a monthly retainer fee of approximately 8,500 Singapore Dollars (equates to approximately US$ 6,912) and a 5% commission on sales of products in said territory. Due to the fact that no sale opportunities were generated by IntElorg, the Previous Agreement was mutually terminated in October 2010.

In early 2013 IntElorg approached us indicating that it may have potential sale-opportunities in the Singapore, Hong Kong, Macao, Taiwan, Indonesia, Vietnam, Thailand, Philippines, Kazakhstan (the “Territory”). Given that we do not have any representatives in the Territory, our Audit Committee and Board approved entering into a new Representative Agreement with IntElorg (the "Agreement") providing for IntElorg to act as our non-exclusive sales agent in the Territory. The Agreement provides for success fees only to Intelorg i.e. a commission of five percent (5%) on each actual sale generated in the Territory. The Agreement term is until March 1, 2016 (the "Term"), which shall automatically renew for additional one (1) year terms, unless terminated by either party, for any reason, upon thirty (30) days written notice, prior to the end of the Term, or any additional term, as the case may be. In addition, the Agreement may be terminated at any time by either party with or without cause by giving thirty (30) days written notice to the other party. On June 17, 2013 our shareholders approved entering into the Agreement, and the Agreement was signed as of June 17, 2013. This Agreement was most recently terminated by RiT effective as of April 3, 2015.

The IWON Technology.

MOU. On July 1, 2010, we entered into a Memorandum of Understanding (the “MOU”) with Invencom. The MOU related to an evaluation of the feasibility of the IWON technology, and the ultimate creation of a prototype system designed to demonstrate the qualities, specification and limitations of such Technology (the "Feasibility Check" and the “Project”, respectively). Under the MOU, we agreed to assign specific RiT professionals to work on a part-time basis (under agreed-upon limitations) with Invencom on the Project, while Invencom would recruit and hire specific experts. Invencom further undertook to compensate RiT's designated employees for their part-time employment for Invencom during the term of the Project.

On May 12, 2011, we entered into an Addendum to the MOU with Invencom, in which the term for carrying out the Project (originally six months), was extended until the actual completion of the Project. In addition, the Addendum provided that Invencom will be required to reimburse RiT for contractors hired by RiT for the Project.

Under the MOU, RiT was granted an option to purchase the Technology (the “Option”), at RiT’s sole discretion and following the results of the Feasibility Check, at a purchase price equal to the sum of (a) Invencom’s actual and direct costs incurred for the Project during the Term (“Invencom Costs”), plus (b) 25% of Invencom Costs (collectively, the “Purchase Price”). The Purchase Price was supplemented with an additional revenue-sharing right for Invencom, equal to 3% of the proceeds actually received by RiT in return for any future sale of the Technology and/or for any future sale of products using the Technology (the “Revenue Sharing”).

Technology Purchase Agreement. Following the results of a feasibility check, we decided to exercise the Option and purchased the Technology in accordance with the terms of a Technology Purchase Agreement, by and between RiT and Invencom, dated June 26, 2012 (the “Purchase Agreement”). The Purchase Agreement provides for the sale and transfer of the Technology and all rights thereto from Invencom to RiT. Consistent with the MOU, the consideration payable to Invencom (the “Purchase Consideration”) consisted of (a) the Purchase Price, which consistent with the formula set originally in the MOU, as described above, equaled US$583,270 and (b) the Revenue Sharing right described above.

Instead of cash payment, it was agreed that the Purchase Price (US$583,270) would be recorded as a loan amount provided by Invencom to RiT (the “Loan Amount”), which was to bear an interest of 2.47% per annum and was to be repaid not later than eighteen (18) months following the closing date. Invencom was granted with a right to convert the Loan Amount or any part thereof (together with interest accrued thereon), into RiT’s Shares (the “Conversion Right”) with a conversion price per share equal to the NASDAQ closing price of RiT’s shares on the day RiT received a written notice from Invencom notifying its election of conversion. In September 2012, Invencom converted the Loan Amount and interest accrued thereon into 218,813 ordinary shares pursuant to a Securities Purchase Agreement, dated as of September 10, 2012, reflecting a conversion price of $2.67 per share.

Additional Technology Feasibility check with Invencom. In an effort to examine and broaden our potential future technologies, we entered into an MOU, dated as of December 11, 2012, with Invencom. The MOU provides that both parties, RiT and Invencom, join specific professional personnel together to work on a feasibility study of a technology they named "Optical Matrix Technology", which is an idea in preliminary development (the "Feasibility Project"). Under the MOU, we agreed to allow several of RiT's employees ("Allowed Employees") to provide services to Invencom for the Feasibility Project (only in their leisure time and with additional limitations) together with Invencom's personnel. Invencom on the other hand undertook to recruit and hire specific experts for such Feasibility Project which will be managed solely by Invencom. Invencom further undertook to compensate RiT's Allowed Employees for their services during the term of the Feasibility Project.

Similar to the previous MOU dated July 1, 2010 regarding the Beamcaster™ technology, RiT was granted an option to acquire said technology following the results of such Feasibility Project, at the sole discretion of RiT and at a purchase price equal to the sum of (a) Invencom's actual and direct costs incurred for the Feasibility Project during its term (“Invencom's Costs”), plus (b) 25% of Invencom's Costs (together with Invencom's Costs, the “Purchase Price”). If the purchase option is exercised, the Purchase Price will be supplemented with an additional revenue sharing right for Invencom, equal to 3% out of the proceeds actually received by RiT in return for any future sale of said technology and/or any future sale of different products using said technology ("Revenue Sharing Right").

While the Feasibility Project has shown progress, it has not been finalized yet and is still undergoing additional analysis.

Training Services for Related Company. On October 26, 2011 we entered into a services agreement with the Academy of Informational Systems (“AIS”), an entity related to STINS COMAN, for the provision of training services in Russia for our enterprise products (the “AIS Services Agreement”). As discussed above, STINS Corp., a subsidiary of STINS COMAN, is RiT’s distributor of enterprise products in Russia. To educate STINS Corp.’s personnel/customers regarding RiT’s products, from time to time STINS Corp. arranges seminars and training workshops that are carried out by AIS in AIS facilities in Russia.

Under the AIS Services Agreement, RiT will provide AIS with higher level training and teaching services for RiT’s products in AIS facilities (the “Services”), as requested from time to time. AIS undertook to pay for the Services in accordance with RiT’s regular services’ price list, existing at the time of any Services given as well as to reimburse RiT for the costs and expenses incurred by RiT and any of its personnel in carrying out the Services.

7.C. Interests of Experts and Counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

8.A. Consolidated Statements and Other Financial Information

Financial Statements

See the consolidated financial statements, including the notes thereto, included in "Item 18 Financial Statements” of this annual report.

Export Sales

See "Item 4.B. –Sales and Marketing."

Legal Proceedings

During 2011, we were named a defendant (among other defendants) in a lawsuit filed in Tel Aviv, Israel by a former employee claiming damages for alleged illness caused due to unsuitable-work-conditions. We have referred the defense of such lawsuit to our insurance company and do not believe the lawsuit against us has any merits. However, the lawsuit is still pending and it is premature to estimate the outcome of this matter.

We may, from time to time, be named as a defendant in certain routine litigation incidental to our business. However, other than as disclosed above, we are currently not, and have not been in the recent past, a party to any legal proceedings which may have or have had in the recent past significant effects on our financial position or profitability.

Dividend Policy

We have never declared or paid any cash dividends on our ordinary shares and we do not anticipate paying any cash dividends on our ordinary shares in the future. We currently intend to retain all future earnings to finance our operations and to expand our business. Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including future earnings, capital requirements, financial condition and future prospects and other factors the board of directors may deem relevant. See also "Item 10.B. - Memorandum and Articles of Association - Dividends."

8.B. Significant Changes

Except as otherwise disclosed in this annual report, no significant change has occurred since December 31, 2014.

ITEM 9. THE OFFER AND LISTING

9.A. Share History

Ordinary Shares

Our ordinary shares are listed on the NASDAQ Capital Market under the symbol “RITT.”

The annual high and low sale prices for our ordinary shares for the five most recent full fiscal years are:

Year Ended December 31,	High ($)		Low ($)

2010		13.45	1.10
2011		12.94	2.55
2012		6.88	2.28
2013		4.74	1.56
2014		2.14	0.91

The quarterly high and low sale prices for our ordinary shares for the two most recent full fiscal years and any subsequent period are:

Financial Quarter	High ($)		Low ($)

2013
Q1		4.74		3.00
Q2		4.88		3.35
Q3		3.85		2.30
Q4		3.00		1.55

2014
Q1		2.14		1.58
Q2		1.79		1.29
Q3		1.93		0.91
Q4		1.40		0.91

2015
Q1		1.28		0.96

The monthly high and low sale prices for our ordinary shares during the past six months were:

Month	High ($)		Low ($)
October 2014		1.40		1.10
November 2014		1.19		1.05
December 2014		1.18		0.91
January 2015		1.48		0.96
February 2015		1.34		1.20
March 2015		1.27		1.12
April 2015 (through April 21, 2015)	1.17			1.10

On April 21, 2015, the last reported sale price of our ordinary shares on the NASDAQ was $1.17 per share.

Warrants

Our warrants began trading on The NASDAQ Capital Market on November 22, 2013 under the symbol "RITTW."

The annual high and low sale prices for our warrants for the fiscal years since the warrants began trading in November 2013 are:

Year Ended December 31,	High ($)		Low ($)

2013		0.70		0.45
2014		0.72		0.21

The quarterly high and low sale prices for our warrants since the warrants began trading in November 2013 are:

Financial Quarter	High ($)		Low ($)

2013
Q4		0.70		0.45

2014
Q1		0.72		0.45
Q2		0.49		0.25
Q3		0.40		0.21
Q4		0.36		0.25

2015
Q1		0.32		0.23

The monthly high and low sale prices for our warrants during the past six months were:

Month	High ($)		Low ($)
October 2014		0.36		0.25
November 2014		0.30		0.26
December 2014		0.31		0.25
January 2015		0.32		0.27
February 2015		0.31		0.28
March 2015		0.30		0.23
April 2015 (through April 21, 2015)	0.25			0.19

On April 21, 2015, the last reported sale price of our warrants on the NASDAQ was $0.19 per warrant.

9.B. Plan of Distribution

Not applicable.

9.C. Markets

Our ordinary shares were traded on the NASDAQ Global Market (formerly, NASDAQ National Market) from our initial public offering in 1997 until January 2004. Effective January 2004, our ordinary shares were transferred from the NASDAQ Global Market to the NASDAQ Capital Market (formerly NASDAQ SmallCap Market). Our ordinary shares are currently traded on the NASDAQ Capital Market, under the symbol “RITT.”

On November 27, 2013, we consummated an underwritten public offering of 3,000,000 ordinary shares and warrants to purchase up to 1,725,000 ordinary shares at a per share exercise price of $2.50. The warrants began trading on The NASDAQ Capital Market on November 22, 2013 under the symbol "RITTW."

9.D. Selling Shareholders

Not applicable.

9.E. Dilution

Not applicable.

9.F. Expenses of the Issue

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

10.A. Share Capital

Not applicable.

10.B. Memorandum and Articles of Association

Set out below is a description of certain provisions of our Amended Memorandum of Association ("Memorandum of Association" or the "Memorandum") and Amended and Restated Articles of Association ("Articles of Association" or the "Articles"), and of the Israeli Companies Law related to such provisions. This description is only a summary and does not purport to be complete and is qualified by reference to the full text of the Memorandum and Articles, which are filed as exhibits hereto and are incorporated herein by reference, and to Israeli law.

General

We were first registered under Israeli law on July 16, 1989 as a private company. In August 1997, we became a public company. We are registered with the Registrar of Companies in Israel under number 520043357.

Objects and Purposes

Pursuant to Section 2 of our Memorandum of Association, the objectives for which we were established include, among others, the following: to manufacture, market, sell, import, export, acquire, rent to, lease to, rent from, lease from and engage in any manner whatsoever in computer equipment; to manage an enterprise in the computer, electronics, mechanics sectors and in any other sector; to engage in the planning, research and development of equipment for computers, electronics, mechanics, including computer communications equipment and including any auxiliary equipment, electronic and mechanical components and items, and additional objectives defined therein.

The Powers of the Directors

Under our Articles, the authority conferred on the Board of Directors is subject to the provisions of the Companies Law. According to the Companies Law, in general, the Board of Directors is responsible for outlining the Company's policy and for the oversight of the management of our business. The Board of Directors is entrusted with additional powers, including the power to borrow or secure the payment of any sum of money for our purposes. The authority of our directors to enter into borrowing arrangements on our behalf is not limited, except in the same manner as any other transaction by us.

There is no requirement under our Articles or Israeli law for directors to retire on attaining a specific age. Our Articles do not require directors to hold our ordinary shares to qualify for election.

For additional details regarding the ability of directors to vote on a proposal, arrangement or contract in which the director is materially interested, including compensation, see below under "Approval of Specified Related Party Transactions under Israeli Law."

Share Capital

General; Voting Rights. Our share capital is divided into two classes of shares: (i) fifty million (50,000,000) ordinary shares, NIS 0.8 par value per share, which entitle their holders to notice of and to participate in and to vote one vote per ordinary share at shareholder meetings, the right to receive dividends upon the declaration of dividends by the board of directors and the right to participate in the distribution of our assets upon liquidation; and (ii) twenty thousand two hundred and thirty (20,230) deferred shares, NIS 0.1 par value per share, which entitle their holders no rights other than the right to their par value upon our liquidation. The shares do not entitle their holders to preemptive rights.

As of April 13, 2015, we had 15,541,306 shares issued and outstanding. This figure does not include:

2,125 ordinary shares held as treasury shares;

1,011,192 ordinary shares issuable upon exercise of outstanding options under our equity compensation plans, of which, 655,834 options to purchase our ordinary shares were exercisable as of April 13, 2014;

2,365,867 ordinary shares issuable to STINS COMAN upon conversion of the $3 million outstanding under the Convertible Loan;

1,725,000 ordinary shares issuable upon exercise of the outstanding Public Warrants (as described elsewhere in this annual report), at an exercise price of $2.50 per share, which warrants expire on November 27, 2018; and

150,000 ordinary shares issuable upon exercise of the outstanding Underwriter Warrants (as described elsewhere in this annual report), at an exercise price of $2.50 per share, which warrants expire on November 27, 2018.

Dividend Rights. Dividends on our ordinary shares may be paid only out of profits, as defined in the Companies Law, as of the end of the most recent fiscal year or as accrued over a period of two years, whichever is higher. Our board of directors is authorized to declare dividends, provided that there is not reasonable concern that the dividend will prevent us from satisfying our existing and foreseeable obligations as they become due. Notwithstanding the foregoing, dividends may be paid with the approval of a court, provided that there is no reasonable concern that payment of the dividend will prevent us from satisfying our existing and foreseeable obligations as they become due. Profits, for purposes of the Israeli Companies Law, means the greater of retained earnings or earnings accumulated during the preceding two years, after deduction of previous distributions that were not already deducted from the surpluses, as evidenced by financial statements prepared no more than six months prior to the date of distribution.

In general, our board of directors is entitled to invest or utilize the unclaimed amount of dividend in any manner to our benefit until it is claimed and, if after seven years since a dividend has been declared, it is still unclaimed, it is forfeited. We are not obligated to pay interest on an unclaimed dividend.

Rights to Share in Profits. Our holders of ordinary shares have the right to share in our profits distributed as a dividend and any other permitted distribution. See above under "Dividend Rights.”

Rights to Share in Surplus in Liquidation. In the event of our liquidation, after satisfaction of liabilities to creditors, our assets will be distributed to the holders of our outstanding shares in proportion to their holdings. This right may be affected by the grant of preferential dividend or distribution rights to the holders of a class of shares with preferential rights that may be authorized in the future.

Redemption Rights; Sinking Fund. Our ordinary shares are not redeemable and do not entitle their holders to preemptive rights. Under our Articles, the Company may, subject to the Companies Law provisions, issue redeemable shares.

Liability to Capital Calls by the Company. Under our Articles and the Companies Law, the liability of our shareholders is limited to the unpaid amount of the par value of the shares held by them.

Limitations on Existing or Prospective Major Shareholder. See below under "Approval of Specified Related Party Transactions Under Israeli Law.”

Changing Rights Attached to Shares. The rights attached to any class may be modified or abrogated by a simple majority of the voting power represented at a shareholder meeting, in person or by proxy, and voting thereon, subject to the approval of a majority of the shares of such class present and voting at a separate class meeting. Notwithstanding the foregoing, changes to the rights of our deferred shares, the creation of a new class of shares and an increase of authorized share capital, are subject to the approval of the shareholders by the holders of at least 75% of the votes of shareholders present by person or by proxy and voting in the shareholders meeting.

Shareholder Meetings

Shareholder Meetings. An annual shareholder meeting is required to be held once every calendar year, within a period not to exceed 15 months after the last preceding annual meeting. The Board of Directors, whenever it thinks fit, may convene an extraordinary shareholder meeting and, pursuant to the Companies Law, must convene a meeting upon the demand of two directors or one quarter of the directors in office or upon the demand of the holder or holders of at least 5% of our outstanding ordinary shares and 1% of the voting rights, or one or more shareholders holding in the aggregate at least 5% of the voting rights in the company.

Prior Notice Requirements. Under our Articles, we are required to give prior notice of a shareholder meeting as required by law or applicable stock exchange rules, but in any event not less than seven (7) days. Under the Companies Law, shareholder meetings generally require prior notice of not less than 21 days or, with respect to certain matters, such as election of directors and affiliated party transactions, prior notice of not less than 35 days.

Quorum. Two or more shareholders, present in person or by proxy and holding at least 35% of our outstanding voting power constitute a quorum. If there is no quorum within an hour of the time set, the meeting, if convened upon demand of shareholders or directors as described above shall be dissolved, but in any other case it will be postponed until the following week, or any other time that the chairman of the board of directors and the shareholders present agree to. At the postponed meeting, any two shareholders will constitute a quorum.

Resolutions. Unless otherwise required by the Companies Law, resolutions at shareholder meetings are deemed adopted if approved by the holders of a majority of the voting power represented at the meeting in person or by proxy and voting thereon.

Limitation on Rights to Own Shares

Neither our Memorandum of Association or our Articles of Association nor the laws of the State of Israel restrict in any way the ownership or voting of ordinary shares by non-residents of Israel, except with regard to subjects of countries which are in a state of war with Israel who may not be recognized as owners of ordinary shares.

Approval of Specified Related Party Transactions under Israeli Law

Fiduciary Duties of Office Holders

The Companies Law imposes a duty of care and a duty of loyalty on all office holders (as defined under the Companies Law, see "Item 6.C. – Board Practices") of a company. Each person listed in the table under "Directors and Senior Management" above is an office holder.

The duty of care requires an office holder to act with the level of care with which a reasonable office holder in the same position would have acted under the same circumstances. The duty of care of an office holder includes a duty to use reasonable means to obtain:

information on the advisability of a given action brought for his or her approval or performed by him or her by virtue of his or her position; and

all other important information pertaining to these actions.

The duty of loyalty of an office holder includes a duty to:

refrain from any conflict of interest between the performance of his or her duties in the company and the performance of his or her other duties or his or her personal affairs;

refrain from any activity that is competitive with the company;

refrain from exploiting any business opportunity of the company to receive a personal gain for himself or herself or others; and

disclose to the company any information or documents relating to a company's affairs which the office holder has received due to his or her position as an office holder.

Under the Companies Law, directors' and officers’ compensation arrangements in public companies, such as ours, generally require the approvals of the Compensation Committee, the Board of Directors and, in the case of directors, the shareholders as well, in that order.

Disclosure of Personal Interests of an Office Holder

The Companies Law requires that an office holder of a company disclose to the company any personal interest that he or she may have and all related material information known to him or her, in connection with any existing or proposed transaction by the company. The disclosure is required to be made promptly and in any event no later than the board of directors meeting in which the transaction is first discussed.

A personal interest of an office holder includes an interest of a company in which the office holder is, directly or indirectly, a 5% or greater shareholder, director or general manager or in which the office holder has the right to appoint at least one director or the general manager. In the case of an extraordinary transaction, the office holder's duty to disclose applies also to a personal interest of the office holder’s relative, which term is defined in the Companies Law to include the person's spouse, siblings, parents, grandparents, descendants, spouse's descendants and the spouses of any of the foregoing.

Under the Companies Law, an extraordinary transaction is a transaction:

other than in the ordinary course of business;

otherwise than on market terms; or

that is likely to have a material impact on the company's profitability, assets or liabilities.

Under the Companies Law, once an office holder complies with the above disclosure requirement, the board of directors may approve the transaction, unless the articles of association provide otherwise. Nevertheless, a transaction that is adverse to the company’s interest may not be approved.

If the transaction is an extraordinary transaction, approval of both the audit committee and the board of directors is required. Under specific circumstances, shareholder approval may also be required.

A director who has a personal interest in a matter which is considered at a meeting of the board of directors or the audit committee generally may not be present at this meeting or vote on this matter, unless a majority of members of the board of directors or the audit committee, as the case may be, has a personal interest in the matter. If a majority of the members of the board of directors has a personal interest, shareholder approval is generally also required.

Approval of Office Holder Compensation

Under the Companies Law, we are required to approve at least once every three years a compensation policy with respect to our officers and directors. Following the recommendation of our compensation committee, the compensation policy must be approved by our Board of Directors and shareholders. In general, all office holders’ terms of compensation – including fixed remuneration, bonuses, equity compensation, retirement or termination payments, indemnification, liability insurance and the grant of an exemption from liability – must comply with the company's Compensation Policy. On June 17, 2013 our shareholders (following approval of our Compensation Committee and Board), approved the Compensation Policy.

In addition, the compensation terms of directors, the chief executive officer, and any employee or service provider who is considered a controlling shareholder must be approved separately by the compensation committee, the board of directors and the shareholders of the company (by the same majority noted above), in that order. The compensation terms of other officers require the approval of the compensation committee and the board of directors.

Duties of Shareholders

Under the Companies Law, each shareholder has a duty to act in good faith in exercising his rights and fulfilling his obligations toward the company and other shareholders and to refrain from abusing its power in the company, such as in shareholder votes. In addition, specified shareholders have a duty of fairness toward the company. These shareholders include any controlling shareholder, any shareholder who knows that it possesses the power to determine the outcome of a shareholder vote and any shareholder who, pursuant to the provisions of the articles of association, has the power to appoint or to prevent the appointment of an office holder or any other power toward the company.

Transactions with Controlling Shareholder

Under the Companies Law, the disclosure requirements, which apply to an office holder, also apply to a controlling shareholder of a public company. A controlling shareholder is a shareholder who has the ability to direct the activities of a company, including a shareholder that holds 25% or more of the voting rights if no other shareholder owns more than 50% of the voting rights in the company, but excluding a shareholder whose power derives solely from his or her position as a director of the company or any other position with the company.

Extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest, and the engagement of a controlling shareholder as an office holder or employee, generally require the approval of the audit committee, the board of directors and the shareholders of the company, in that order. The shareholder approval must be by majority vote, provided that either:

at least a majority of the shares of shareholders who have no personal interest in the transaction and are present and voting, in person, by proxy or by written ballot, at the meeting, vote in favor; or

the shareholders who have no personal interest in the transaction who vote against the transaction do not represent more than two percent of the voting rights in the company.

In addition, any such extraordinary transaction whose term is longer than three years may require further shareholder approval every three years, unless, where permissible the Israeli Companies Law, the audit committee approves that a longer term is reasonable under the circumstances.

It should be noted that under regulations promulgated under the Companies Law, Israeli Companies Regulations (Relief for Interested Party Transactions), 2000 (the “Relief Regulations”), the aforesaid shareholder approval of extraordinary transactions is not required in certain instances, including without limitation, where the audit committee and board of directors determine that the transaction is solely to the benefit of the company, and in any case, provided that a shareholder(s) holding at least 1% of the company’s outstanding shares or voting power may demand such shareholder approval by sending a written notice within 14 days following announcement of the transaction pursuant to the Relief Regulations.

Approval of Private Placements

Under the Companies Law, a significant private placement of securities requires approval by the board of directors and the shareholders of the company, in that order. A private placement is considered a significant private placement if it will cause a person to become a controlling shareholder or if: (1) the securities issued or deemed issued represent to 20% or more of the company’s outstanding voting rights before the issuance; (2) some or all of the consideration is other than cash or securities listed for trading on a stock exchange or the transaction is not on market terms; and (3) the transaction will increase the holdings of a shareholder that holds 5% or more of the company’s outstanding shares or voting rights or will cause any person to become, as a result of the issuance, a holder of more than 5% of the company’s outstanding shares or voting rights.

It should be noted that under regulations promulgated under the Companies Law, Israeli Companies Regulations (Relief for Public Companies traded in stock exchange outside of Israel), 2000, we are not required to seek shareholder approval for any private placement of our securities.

Exculpation, Insurance and Indemnification of Office Holders

Exculpation of Office Holders

Under the Companies Law, an Israeli company may not exempt an office holder from liability for breach of his duty of loyalty, but may exempt in advance an office holder from liability to the company, in whole or in part, for a breach of his duty of care (except in connection with distributions), provided that the articles of association of the company allow it to do so. Our Articles of Association allow us to exempt our office holders from liability to the fullest extent permitted by law.

Insurance of Office Holders

Our Articles of Association provide that, subject to the provisions of the Companies Law, we may enter into a contract for the insurance of the liability of any of our office holders with respect to an act performed in his or her capacity as an office holder, for:

a breach of his or her duty of care to us or to another person;

a breach of his or her duty of loyalty to us, provided that the office holder acted in good faith and had reasonable cause to assume that his act would not prejudice our interests; or

a financial obligation imposed upon him or her in favor of another person.

Indemnification of Office Holders

Our Articles of Association provide that, subject to the provisions of the Companies Law, we may indemnify an office holder with respect to an act performed in his capacity as an office holder, retroactively (after the liability has been incurred) or in advance, against the following:

a financial liability imposed on him in favor of another person by any judgment, including a settlement or an arbitration award approved by a court; such indemnification may be approved (i) after the liability has been incurred or (ii) in advance, provided that our undertaking to indemnify is limited to events that our board of directors believes are foreseeable in light of our actual operations at the time of providing the undertaking and to a sum or criterion that our board of directors determines to be reasonable under the circumstances.

reasonable litigation expenses, including attorney's fees, expended by the office holder as a result of an investigation or proceeding instituted against him by a competent authority, provided that such investigation or proceeding concluded without the filing of an indictment against him and either (A) concluded without the imposition of any financial liability in lieu of criminal proceedings or (B) concluded with the imposition of a financial liability in lieu of criminal proceedings but relates to a criminal offense that does not require proof of criminal intent; and

reasonable litigation expenses, including attorney's fees, expended by the office holder or charged to him by a court, in proceedings we institute against him or instituted on our behalf or by another person, a criminal indictment from which he was acquitted, or a criminal indictment in which he was convicted for a criminal offense that does not require proof of criminal intent.

Limitations on Exculpation, Insurance and Indemnification

The Companies Law provides that a company may not exculpate or indemnify an office holder nor enter into an insurance contract that would provide coverage for any monetary liability incurred as a result of any of the following:

a breach by the office holder of his or her duty of loyalty, unless, with respect to insurance coverage or indemnification, the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;

a breach by the office holder of his or her duty of care if the breach was done intentionally or recklessly, unless the breach was done negligently;

any act or omission done with the intent to derive an illegal personal benefit; or

any fine imposed against the office holder.

Indemnity and Insurance

We have undertaken to indemnify our office holders to the fullest extent permitted by law by providing them with an Indemnification Agreement, substantially in the form approved by our shareholders in 2009. We currently maintain directors and officer's liability insurance with an aggregate coverage limit of $10.0 million, including legal costs incurred.

Anti-Takeover Provisions; Mergers and Acquisitions

Except for the quorum requirements for adjourned shareholders meetings described above, there are no specific provisions of our Memorandum or Articles that would have an effect of delaying, deferring or preventing a change in control of us or that would operate only with respect to a merger, acquisition or corporate restructuring involving us. However, as described below, certain provisions of the Companies Law may have such effect.

The Companies Law includes provisions that allow a merger transaction and requires that each company that is a party to a merger have the transaction approved by its board of directors and a vote of the majority of its shares. For purposes of the shareholder vote of each party, unless a court rules otherwise, the merger will not be deemed approved if shares representing a majority of the voting power present at the shareholders meeting and which are not held by the other party to the merger, or by any person who holds 25% or more of the voting power or the right to appoint 25% or more of the directors of the other party, vote against the merger. Upon the request of a creditor of either party to the proposed merger, the court may delay or prevent the merger if it concludes that there exists a reasonable concern that as a result of the merger the surviving company will be unable to satisfy the obligations of any of the parties to the merger. In addition, a merger may not be completed unless at least (i) 50 days have passed from the time that the requisite proposals for approval of the merger have been filed with the Israeli Registrar of Companies by each merging company and (ii) 30 days have passed since the merger was approved by the shareholders of each merging company.

The Companies Law also provides that an acquisition of shares in a public company must be made by means of a "special tender offer" if as a result of the acquisition the purchaser would become a 25% or greater shareholder of the company and there is no existing 25% or greater shareholder of the company. An acquisition of shares in a public company must be made by means of a tender offer if as a result of the acquisition the purchaser would become a 45% or greater shareholder of the company, unless there is already a 45% or greater shareholder of the company. These requirements do not apply if, in general, the acquisition (1) was made in a private placement that received shareholder approval, (2) was from a 25% or greater shareholder of the company which resulted in the acquirer becoming a 25% or greater shareholder of the company, or (3) was from a 45% or greater shareholder of the company which resulted in the acquirer becoming a 45% or greater shareholder of the company. The tender offer must be extended to all shareholders, but the offeror is not required to purchase more than 5% of the company's outstanding shares, regardless of how many shares are tendered by shareholders.

If, as a result of an acquisition of shares, the acquirer will hold more than 90% of a company's outstanding shares, the acquisition must be made by means of a "full tender offer" for all of the outstanding shares. For example, as of April 13, 2015, STINS COMAN together with Invencom “held”, for purposes of the aforesaid Israeli law 90% limitation, 74.9% of our outstanding shares. In general, if less than 5% of the outstanding shares are not tendered in the full tender offer and more than half of the offerees who have no personal interest in the offer tendered their shares, all the shares that the acquirer offered to purchase will be transferred to it. Shareholders may request appraisal rights in connection with a full tender offer for a period of six months following the consummation of the tender offer, but the acquirer is entitled to stipulate that tendering shareholders will forfeit such appraisal rights.

Finally, Israeli tax law treats some acquisitions, such as stock-for-stock acquisitions exchanges between an Israeli company and another company less favorably than does U.S. tax law. For example, Israeli tax law may, under certain circumstances, subject a shareholder who exchanges his ordinary shares for shares in another corporation, to taxation prior to the sale of the shares received in such stock-for-stock swap.

10.C. Material Contracts

Public Warrants

On November 27, 2013, as part of the underwritten public offering of 3,000,000 ordinary shares, we issued warrants to purchase up to 1,725,000 ordinary shares (including warrants to purchase 225,000 ordinary shares issued to the underwriter, Aegis Capital Corp., upon exercise of its over-allotment option), or the Public Warrants. Below is a summary of the key terms of the Public Warrants.

Exercisability. The warrants are exercisable immediately upon issuance and at any time up to the date that is five years from the date of issuance, i.e., until November 26, 2018. The warrants will be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice accompanied by payment in full for the number of our ordinary shares (except in the case of a cashless exercise as discussed below). Unless otherwise specified in the warrant, the holder will not have the right to exercise any portion of the warrant if the holder (together with its affiliates) would beneficially own in excess of 4.99% (which the holder may increase to 9.99% upon 61 days’ notice to us) of the number of our ordinary shares outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the warrants.

Cashless Exercise. In the event that a registration statement covering ordinary shares underlying the warrants, or an exemption from registration, is not available for the resale of such ordinary shares underlying the warrants, the holder may, in its sole discretion, exercise the warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, elect instead to receive upon such exercise the net number of ordinary shares determined according to the formula set forth in the warrant.

Exercise Price. The initial exercise price per ordinary share purchasable upon exercise of the warrants is $2.50 per share. The exercise price and the number of shares issuable upon exercise are subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock subdivisions and combinations, reclassifications or similar events affecting our ordinary shares.

Transferability. Subject to applicable laws, the warrants may be transferred at the option of the holders upon surrender of the warrants to us together with the appropriate instruments of transfer.

Fundamental Transaction. Except as described below, following the consummation of any “Fundamental Transaction” upon any subsequent exercise of a warrant, the holder will have the right to receive, for each ordinary share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number of ordinary shares or shares of common stock, if any, of the successor or acquiring corporation, or our ordinary shares if we are the surviving corporation, and any additional consideration receivable as a result of such Fundamental Transaction by a holder of the number of ordinary shares for which a warrant is exercisable immediately prior to such Fundamental Transaction. A “Fundamental Transaction” is defined under the warrants as any transaction (or, in regards to clauses (1), (4) and (5) below, one or more related transactions) in which we, directly or indirectly, (1) effect any merger or consolidation with or into another person, (2) effect any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of our assets in one or a series of related transactions, (3) make or allow any other person to make a purchase offer, tender offer or exchange offer that is completed pursuant to which holders of ordinary shares are permitted to sell, tender or exchange their shares for other securities, cash or property and which has been accepted by the holders of 50% or more of the outstanding ordinary shares, (4) effect any reclassification, reorganization or recapitalization of the ordinary shares or any compulsory share exchange pursuant to which the ordinary shares are effectively converted into or exchanged for other securities, cash or property, or (5) consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another person whereby such other person acquires more than 50% of the outstanding ordinary shares (not including any ordinary shares held by the other person or other persons making or party to, or associated or affiliated with the other persons making or party to, such stock or share purchase agreement or other business combination). Nevertheless, in the event of any Fundamental Transaction in which the consideration to be paid is solely in the form of cash and/or securities registered under the Securities Act on Form F-4 or other appropriate form or which securities are listed for trading on any reputable securities exchange, the unexercised portion of a warrant will (unless it has already expired) be deemed automatically exercised in full (and the warrant will be terminated) in connection with the transaction giving rise to the payment of the consideration, the ordinary shares issuable upon such exercise will be converted into the applicable per ordinary share consideration, and any applicable exercise price will be subtracted from such consideration in the manner provided for in the applicable transaction agreements.

Convertible Loan Agreement

See "Item 7.B. - Related Party Transactions – Convertible Loan Agreement”.

10.D. Exchange Controls

Israeli law and regulations do not impose any material foreign exchange restrictions on non-Israeli holders of our ordinary shares. There are currently no Israeli currency control restrictions on payments of dividends or other distributions with respect to our ordinary shares or the proceeds from the sale of the shares, except for the obligation of Israeli residents to file reports with the Bank of Israel regarding certain transactions. However, legislation remains in effect pursuant to which currency controls can be imposed by administrative action at any time.

The ownership or voting of our ordinary shares by non-residents of Israel, except with respect to citizens of countries which are in a state of war with Israel, is generally not restricted in any way by our memorandum of association or articles of association or by the laws of the State of Israel. Non-residents of Israel who purchase our ordinary shares will be able to convert dividends, if any, thereon, and any amounts payable upon our dissolution, liquidation or winding up, as well as the proceeds of any sale in Israel of our ordinary shares to an Israeli resident, into freely repatriable dollars, at the exchange rate prevailing at the time of conversion, provided that the Israeli income tax has been withheld (or paid) with respect to such amounts or an exemption has been obtained.

10.E. Taxation

Israeli Tax Considerations

The following is a summary of the current tax structure applicable to companies in Israel, with special reference to its effect on us and certain Israeli Government programs benefiting us. The following also contains a discussion of the material Israeli tax consequences to persons purchasing our ordinary shares and warrants. To the extent that the discussion is based on tax legislation, which has not been subject to judicial or administrative interpretation, we cannot assure you that the tax authorities or the courts will accept the views expressed in the discussion in question.

The following summary does not discuss all the aspects of Israeli tax law that may be relevant to a particular investor in light of his or her personal investment circumstances or to some types of investors subject to special treatment under Israeli law. Prospective purchasers of our ordinary shares and warrants should consult their own tax advisors as to Israeli or other tax consequences of the purchase, ownership and disposition of ordinary shares or warrants.

General Corporate Tax Structure

Israeli companies were subject to corporate tax on their taxable income at the rate of 25% for the 2013 tax year and were subject to corporate tax at the rate of 26.5% for the 2014 tax year. The corporate tax rate is scheduled to remain at 26.5% for future tax years. Israeli companies are generally subject to capital gains tax at the corporate tax rate. However, the effective tax rate payable by a company that derives income from an Approved Enterprise (as defined below) may be considerably less, as further discussed below.

Law for the Encouragement of Capital Investments, 1959

Pursuant to the above Law, the Company was entitled to tax benefits relating to investments in "Approved Enterprises" in accordance with letters of approval received from the Investment Center of the Ministry of Industry and Commerce of the State of Israel. The period of benefits in respect of the Company's production facilities terminated in 2011. Due to tax losses the Company did not utilize the benefits granted to "Approved Enterprises".

Law for the Encouragement of Industry (Taxes), 1969

According to the Industry Encouragement Law, an "Industrial Company" is a company resident in Israel, 90% or more of the income of which in any tax year, other than of income from government defense loans, capital gains, interest and dividends, is derived from an "Industrial Enterprise" owned by it. An "Industrial Enterprise" is defined as an enterprise whose major activity in a given tax year is industrial production.

The following corporate tax benefits are available to Industrial Companies, among others:

deduction of the cost of purchased know-how and patents over an eight-year period for tax purposes;

accelerated depreciation rates on equipment and buildings;

under specified conditions, an election to file consolidated tax returns with additional related Israeli Industrial Companies; and

deduction over a three-year period of expenses involved with the issuance and listing of shares on a recognized stock market.

Eligibility for the benefits under the Industry Encouragement Law is not subject to receipt of prior approval from any governmental authority. We believe that we currently qualify as an Industrial Company within the definition of the Industry Encouragement Law. No assurance can be given that we qualify or will continue to qualify as an "Industrial Company" or that the benefits described above will be available in the future.

Israeli Transfer Pricing Regulations

On November 29, 2006, Income Tax Regulations (Determination of Market Terms), 2006, promulgated under Section 85A of the Tax Ordinance, came into force (the “TP Regs”). Section 85A of the Tax Ordinance and the TP Regs generally require that all cross-border transactions carried out between related parties will be conducted on an arm’s length principle basis and will be taxed accordingly.

Capital Gains Tax

Israeli law generally imposes a capital gains tax on the sale of any capital assets by residents of Israel, as defined for Israeli tax purposes, and on the sale of assets in Israel including our ordinary shares by non-residents of Israel, unless a specific exemption is available or unless a tax treaty between Israel and the shareholder’s country of residence provides otherwise. The law distinguishes between the inflationary surplus and the real gain. The inflationary surplus is a portion of the total capital gain which is equivalent to the increase of the relevant asset’s purchase price that is attributable to the increase in the Israeli consumer price index (CPI) or, in certain circumstances, a foreign currency exchange rate, between the date of purchase and the date of sale. The real gain is the excess of the total capital gain over the inflationary surplus.

The tax rate generally applicable to capital gains derived from the sale of securities, whether listed on a stock market or not, is 25% for Israeli individuals, unless such shareholder claims a deduction for financing expenses in connection with such securities, in which case the gain will generally be taxed at a rate of 30%. Additionally, if such shareholder is considered a "securities shareholder" at any time during the 12-month period preceding such sale (i.e. such shareholder holds directly or indirectly, including jointly with others, at least 10% of any means of control in the company), the tax rate will be 30%. However, the foregoing tax rates will not apply to dealers in securities. Israeli companies are subject to the corporate tax rate on capital gains derived from the sale of securities.

As of January 1, 2013, shareholders that are individuals who have taxable income that exceeds NIS 800,000 in a tax year (linked to the CPI each year, which equated to NIS 811,560 in the 2014 tax year) will be subject to an additional tax, referred to as High Income Tax, at the rate of 2% on their taxable income for such tax year which is in excess of such threshold. For this purpose taxable income will include taxable capital gains from the sale of our securities and taxable income from dividend distributions.

Regarding sales of our shares through the exercise of warrants, the original price of such shares (i.e., the cost basis for tax purposes) will be considered as being the original price of the warrants, and the payment that will be paid when exercising the warrants into shares will be considered as additional cost basis of such shares for tax purposes. Also, for tax purposes, the date of purchase of said shares will be considered as the date of purchase of the warrants (excluding with respect to the payment for exercising the warrants which will result in a later date of purchase for the corresponding portion of the cost basis for tax purposes).

It is possible that the Israeli Tax Authority may seek to ascribe, for Israeli tax purposes, a portion of the offering price to the warrants issued in the offering, as is common practice in offerings on the Tel Aviv Stock Exchange. In such case, the ascription of a portion of the offering price to the warrants should be in accordance with the relative value of each type of securities (i.e. shares and warrants of each class), determined according to the average closing price for each security for the first three trading days following listing of such securities.

Non-Israeli residents are generally exempt from Israeli capital gains tax on any gains derived from the sale of securities of Israeli companies whether publicly traded or not, provided however that such capital gains are not derived from a permanent establishment in Israel. In addition, non-Israeli corporations will not be entitled to such exemption if Israeli residents (i) have a controlling interest of more than 25% in such non-Israeli corporation, or (ii) are the beneficiaries of or are entitled to 25% or more of the revenues or profits of such non-Israeli corporation, whether directly or indirectly.

In some instances where our shareholders may be liable to Israeli tax on the sale of their securities, the payment of the consideration may be subject to the withholding of Israeli tax at the source.

Application of the U.S.-Israel Income Tax Treaty to Capital Gains Tax

Pursuant to the Convention between the Government of the United States of America and the Government of Israel with Respect to Taxes on income, as amended (the "the U.S.-Israel Tax Treaty"), the sale of shares by a person who qualifies as a resident of the United States within the meaning of the treaty and who is entitled to claim the benefits afforded to a resident by the treaty will not be subject to Israeli capital gains tax. This exemption does not apply if (i) the person holds, directly or indirectly, shares representing 10% or more of our voting power during any part of the 12-month period preceding the applicable sale; or (ii) the capital gains from such sale can be allocated to a permanent establishment in Israel. A sale, exchange or disposition of our ordinary shares by a Treaty U.S. Resident who held, directly or indirectly, shares representing 10% or more of our voting power at any time during the 12-month period preceding the sale, exchange or disposition will be subject to Israeli capital gains tax, to the extent applicable. However, the person may be permitted to claim a credit for the capital gains tax paid in Israel against the U.S. federal income tax imposed with respect to the applicable sale, subject to the limitations in U.S. laws applicable to foreign tax credits. The U.S.-Israel Tax Treaty does not relate to state or local taxes.

Tax on Dividends for Non-Israeli Residents

Non-residents of Israel are subject to income tax on income accrued or derived from sources in Israel. These sources of income include passive income such as dividends. On distributions of dividends other than bonus shares, or stock dividends, income tax is applicable at the following rates: (i) 25%, or 30% for a shareholder that is considered a substantial shareholder at any time during the 12-month period preceding such distribution; (ii) 20%, if the income out of which the dividend is being paid is attributable to an Approved, Benefited or Preferred Enterprise. A different rate may be provided in a treaty between Israel and the shareholder’s country of residence. Under the U.S.-Israel Tax Treaty, the maximum tax on dividends paid to a holder of our ordinary shares who is a U.S. resident is 25% or 15% if the dividends are from income generated by an Approved, Benefited or Preferred Enterprise; however if the income out of which the dividend is being paid is not attributable to an Approved Enterprise, Benefited Enterprise or Preferred Enterprise, and not more than 25% of our gross income consists of interest or dividends, then the maximum tax is 12.5% for a shareholder who is a U.S. corporation holding at least 10% of our issued voting power during the part of the taxable year preceding the date of payment of the dividend and during the whole of the prior taxable year (and additional conditions under the U.S. -Israel Tax Treaty are met).

U.S. Federal Income Tax Considerations

The following summary describes the material U.S. federal income tax considerations relating to an investment in our ordinary shares or warrants. This summary is for general information only and deals only with ordinary shares and warrants held as capital assets within the meaning of section 1221 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), and does not address tax considerations of holders that may be subject to special tax rules, such as dealers or traders in securities or currencies, financial institutions, tax-exempt organizations, life insurance companies, individual retirement and tax-deferred accounts, persons holding ordinary shares or warrants as part of a hedging or conversion transaction or a straddle, persons subject to the alternative minimum tax, or persons who have a functional currency other than the U.S. dollar. In addition, this discussion does not address the tax treatment of U.S. holders (as defined below) who own, directly, indirectly or constructively, 10% or more of our outstanding voting stock. The discussion below is based upon the Code, existing and proposed Treasury regulations promulgated thereunder, and applicable administrative rulings and judicial decisions now in effect, all of which are subject to change, possibly on a retroactive basis, so as to result in U.S. federal income tax consequences different from those discussed below.

As used in this summary the term “U.S holder” means a beneficial owner of ordinary shares or warrants that is: (1) an individual citizen or resident of the United States, (2) a corporation created or organized in or under the laws of the United States or any political subdivision thereof, (3) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (4) a trust if either (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) the trust has a valid election in effect under applicable Treasury regulations to be treated as a United States person. Except to the limited extent discussed below, this summary does not consider the U.S. federal tax considerations to a person that is not a U.S. holder (a “non-U.S. holder”). In addition, the tax treatment of persons who hold ordinary shares or warrants through a partnership or other pass-through entity treated as a partnership for U.S. federal income tax purposes, generally depend upon the status of the partner and the activities of the partnership. The tax consequences to such a partner or partnership are not considered in this summary and partners and partnerships should consult their tax advisors with respect to the U.S. federal tax considerations of investing in our ordinary shares or warrants. In addition, this summary does not consider the possible application of U.S. federal gift or estate taxes or any aspect of state, local or non-U.S. tax laws.

This summary does not discuss all aspects of U.S. federal income taxation that may be relevant to a particular investor in light of its personal circumstances. Investors in our ordinary shares or warrants should consult their own tax advisors with respect to the specific U.S. federal income tax consequences to such person of purchasing, holding or disposing of the ordinary shares or warrants, as well as the effect of any state, local or other tax laws.

Distributions on Ordinary Shares

Subject to the discussion under the heading “Passive Foreign Investment Companies”, U.S. holders are required to include in gross income as ordinary income the amount of any distribution paid on ordinary shares to the extent of our current and accumulated earnings and profits attributable to the distribution, as determined for U.S. federal income tax purposes. A non-corporate U.S. holder that meets certain eligibility requirements may qualify for a lower rate of U.S. federal income taxation on dividends paid if we are a “qualified foreign corporation” for U.S. federal income tax purposes. We generally will be treated as a qualified foreign corporation if we are not a passive foreign investment company (see discussion below) and (i) we are eligible for benefits under the United States-Israel income tax treaty or (ii) our ordinary shares are listed on an established securities market in the United States (which includes the NASDAQ Capital Market). We believe that we currently are treated as a qualified foreign corporation. However, no assurance can be given that a change in circumstances will not affect our treatment as a qualified foreign corporation for U.S. federal income tax purposes in any taxable year. In addition, a non-corporate U.S. holder will not be eligible for the reduced U.S. federal income tax rate with respect to dividend distributions on ordinary shares if (a) such U.S. holder has not held the ordinary shares for at least 61 days during the 121-day period starting on the date which is 60 days before, and ending 60 days after the ex-dividend date, (b) to the extent the U.S. holder is under an obligation to make related payments on substantially similar or related property or (c) with respect to any portion of a dividend that is taken into account by the U.S. holder as investment income under Section 163(d)(4)(B) of the Code. Any days during which the U.S. holder has diminished its risk of loss with respect to ordinary shares (for example, by holding an option to sell the ordinary shares) are not counted towards meeting the 61-day holding period. Non-corporate U.S. holders should consult their own tax advisors concerning whether dividends received by them qualify for the reduced rate of tax.

To the extent a distribution paid with respect to our ordinary shares exceeds our current and accumulated earnings and profits (as determined for U.S. federal income tax purposes) such amount will be treated first as a non-taxable return of capital, reducing a U.S. holder’s tax basis for the ordinary shares to the extent thereof, and then as capital gain. Preferential tax rates for long-term capital gains are applicable for U.S. holders that are individuals, estates or trusts. Corporate holders generally will not be allowed a deduction for dividends received from us.

The amount of a distribution with respect to our ordinary shares equals the amount of cash and the fair market value of any property distributed plus the amount of any Israeli taxes withheld therefrom. The amount of any cash distributions paid in NIS equals the U.S. dollar value of the NIS on the date of distribution based upon the exchange rate in effect on such date, and U.S. holders who include such distribution in income on such date will have a tax basis in such NIS for U.S. federal income tax purposes equal to such U.S. dollar value. If the dividend is converted to U.S. dollars on the date of receipt, a U.S. holder generally will not recognize a foreign currency gain or loss. However, if the U.S. holder converts the NIS into U.S. dollars on a later date, the U.S. holder must include, in computing its income, any gain or loss resulting from any exchange rate fluctuations. The gain or loss will be equal to the difference between (i) the U.S. dollar value of the amount included in income when the dividend was received and (ii) the amount received on the conversion of the NIS into U.S. dollars. Such gain or loss will generally be ordinary income or loss and United States source for U.S. foreign tax credit purposes. U.S. holders should consult their own tax advisors regarding the tax consequences to them if we pay dividends in NIS or any other non−U.S. currency.

Pursuant to the U.S.-Israel Tax Treaty, the maximum rate of Israeli withholding tax on dividends paid to a U.S. holder is 25%.U.S. holders may be entitled to a credit against their U.S. federal income tax liability or a deduction against U.S. federal taxable income in an amount equal to the Israeli tax withheld on distributions on the ordinary shares. The Code applies various limitations, however, on the amount of foreign tax credits that may be available to a U.S. holder. Because of the complexity of the foreign tax credit rules and limitations, U.S. holders should consult their own tax advisors to determine whether and to what extent they would be entitled to such credit. Distributions paid by us will generally be foreign source passive income for U.S. foreign tax credit purposes.

Possible Constructive Distributions

The terms of each warrant provide for an adjustment to the number of shares for which the warrant may be exercised or to the exercise price of the warrant in certain events. An adjustment which has the effect of preventing dilution generally is not taxable. However, U.S. holders of warrants would be treated as receiving a constructive distribution from us if, for example, the adjustment increases the warrant holders’ proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of ordinary shares that would be obtained upon exercise) as a result of a distribution of cash to the holders of our ordinary shares which is taxable to the U.S. holders of such shares as described under “— Distributions on Ordinary Shares” above. Such constructive distribution would be subject to tax as described under that section in the same manner as if the U.S. holders of the warrants received a cash distribution from us equal to the fair market value of such increased interest.

Disposition of Ordinary Shares or Warrants

Subject to the discussion under the heading “Passive Foreign Investment Companies,” upon the sale, exchange or other disposition of ordinary shares or warrants, a U.S. holder generally will recognize capital gain or loss in an amount equal to the difference between the amount realized on the disposition and such U.S. holder’s adjusted tax basis in the ordinary shares or warrants. See “— Exercise or Lapse of a Warrant” for a discussion regarding a U.S. holder’s basis in ordinary shares acquired pursuant to the exercise of a warrant. The capital gain or loss realized on the sale, exchange or other disposition of ordinary shares or warrants will be long-term capital gain or loss if the U.S. holder held the ordinary shares or warrants for more than one year as of the time of disposition. Preferential tax rates for long-term capital gain will apply to individual U.S. holders. Any gain or loss realized by a U.S. holder on the sale, exchange or other disposition of ordinary shares or warrants generally will be treated as from sources within the United States for U.S. foreign tax credit purposes, except for certain losses which will be treated as foreign source to the extent certain dividends were received by the U.S. holder within the 24-month period preceding the date on which the U.S. holder recognized the loss. The deductibility of capital losses for U.S. federal income tax purposes is subject to limitations.

Exercise or Lapse of a Warrant

Subject to the discussion under “— Passive Foreign Investment Companies” below, a U.S. holder generally will not recognize gain or loss upon the acquisition of an ordinary share on the exercise of a warrant for cash. An ordinary share acquired pursuant to the exercise of a warrant for cash generally will have a tax basis equal to the U.S. holder’s tax basis in the warrant, increased by the amount paid to exercise the warrant. The holding period of such share generally begins on the day after the date of exercise of the warrant and will not include the period during which the U.S. holder held the warrant. If a warrant is allowed to lapse unexercised, a U.S. holder generally will recognize a capital loss equal to such holder’s tax basis in the warrant.

The tax consequences of a cashless exercise of a warrant are not clear under current tax law. Accordingly, U.S. holders should consult their tax advisors regarding the tax consequences of a cashless exercise.

Passive Foreign Investment Companies

A non-United States corporation, such as our company, will be a “passive foreign investment company”, or a “PFIC”, for United States federal income tax purposes in any taxable year in which either (1) 75% or more of its gross income for such year consists of certain types of “passive” income or (2) 50% or more of the average fair market value of its assets during such year (based on quarterly valuations) produce or are held for the production of passive income. Passive income generally consists of dividends, interest, rents, royalties, annuities, income from certain commodities transactions and from notional principal contracts and gains from the disposition of passive assets. An asset will generally be characterized as passive if it has generated (or is reasonably expected to generate in the reasonably foreseeable future) “passive income” in the hands of the foreign corporation. In determining whether a non−U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.

We believe that we were not a PFIC for U.S. federal income tax purposes for the 2014 taxable year. However, because our PFIC status is determined annually and depends on the composition of our income and the fair market value of our assets from time to time, there can be no assurance that we will not be a PFIC for any taxable year.

If we were a PFIC for any taxable year during which a U.S. holder held ordinary shares or warrants, unless an election has been made by a U.S. holder to be taxed under one of the alternative regimes discussed below, gain recognized by a U.S. holder on a sale or other disposition (including certain pledges) of the ordinary shares or warrants would be allocated ratably over the U.S. holder’s holding period for the ordinary shares or warrants. The amounts allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge would be imposed on the amount allocated to that taxable year. Similar rules would apply to any distribution in respect of shares in excess of 125% of the average of the annual distributions received by a U.S. holder during the preceding three years or such holder’s holding period, whichever is shorter.

Notwithstanding the default PFIC rules described in the preceding paragraph, certain elections may be available that would result in alternative tax consequences; i.e., the “qualified electing fund” or “QEF” election and the “mark to market” election. Under the “qualified electing fund” regime, we would have to provide information that enables the U.S. holder to make the election, but we are not obligated to provide such information. U.S. holders should consult their tax advisors to determine under what circumstances these elections would be available and, if available, what the consequences of the alternative treatments would be in their particular circumstances.

If a U.S. holder holds ordinary shares in any year in which we are treated as a PFIC with respect to such U.S. holder, the U.S. holder may be required to file Internal Revenue Service Form 8621 and certain other forms required by the United States Treasury Department.

U.S. holders should consult their tax advisors regarding the application of the PFIC rules to their investment in ordinary shares including the eligibility, manner and consequences to them of making a mark-to-market or QEF election with respect to our ordinary shares in the event that we are determined to be a PFIC.

Additional Tax on Investment Income

In addition to the income taxes described above, U.S. holders that are individuals, estates or trusts and whose income exceeds certain thresholds will be subject to a 3.8% Medicare contribution tax on net investment income, which generally includes dividends and capital gains. U.S. holders should consult their tax advisors with respect to the implications of the 3.8% Medicare contribution tax to their income and gains, if any, resulting from their ownership and disposition of their ordinary shares or warrants.

Information Reporting and Backup Withholding

A U.S. holder may be subject to backup withholding and information reporting requirements with respect to cash distributions and proceeds from a disposition of ordinary shares. In general, backup withholding will apply only if a U.S. holder fails to comply with certain identification procedures. Information reporting and backup withholding will not apply with respect to payments made to certain exempt recipients, such as corporations and tax-exempt organizations. Backup withholding is not an additional tax and may be claimed as a credit against the U.S. federal income tax liability of a U.S. holder, provided that the required information is furnished to the Internal Revenue Service.

Foreign Asset Reporting

Certain U.S. holders who are individuals may be required to report information relating to an interest in our ordinary shares or warrants, subject to certain exceptions. For example, individuals that own “specified foreign financial assets” with an aggregate value in excess of $50,000 are generally required to file Form 8938 with respect to such assets with their tax returns. “Specified foreign financial assets” include any financial accounts maintained by foreign financial institutions, as well as any of the following, but only if they are not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-United States persons; (ii) financial instruments and contracts held for investment that have non-United States issuers or counterparties; and (iii) interests in foreign entities. Certain domestic entities that are U.S. holders may also be required to file Form 8938 in the near future. In addition, a U.S. holder should consider the possible obligation to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts, as a result of holding ordinary shares or warrants. U.S. holders are urged to consult their tax advisors regarding the application of these and other reporting requirements that may apply to their ownership of ordinary shares

Non-U.S. Holders of Ordinary Shares or Warrants

Except as provided below, a non-U.S. holder of ordinary shares or warrants generally will not be subject to U.S. income or withholding tax on the payment of dividends on, and the proceeds from the disposition of ordinary shares or warrants.

A non-U.S. holder may be subject to U.S. federal income tax on dividends received on ordinary shares or upon the receipt of income from the disposition of ordinary shares or warrants if (1) such income is effectively connected with the conduct by the non-U.S. holder of a trade or business in the United States and, in the case of a resident of a country which has an income tax treaty with the United States, such item is attributable to a permanent establishment or a fixed place of business in the United States; (2) with respect to a U.S. holder that is an individual, the non-U.S. holder is present in the United States for 183 days or more in the taxable year of the sale and certain other conditions are met; or (3) the non-U.S. holder is subject to tax pursuant to the provisions of the U.S. tax laws applicable to U.S. expatriates.

Payments to Non-U.S. holders of distributions on, or proceeds from the disposition of ordinary shares or warrants are generally exempt from information reporting and backup withholding. However, a Non-U.S. holder may be required to establish that exemption by providing certification of non-U.S. status on an appropriate IRS Form W-8.

Backup withholding is not an additional tax.

The amount of any backup withholding from a payment to a non-U.S. holder will be allowed as a credit against such holder’s U.S. federal income tax liability, provided that the required information is furnished to the Internal Revenue Service.

The above discussion is not intended to constitute a complete analysis of all tax consequences relating to the ownership and disposition of our ordinary shares or warrants. Investors should consult their tax advisors concerning the tax consequences relating to the purchase, ownership and disposition of ordinary shares or warrants applicable to their particular situation.

10.F. Dividends and Paying Agents

Not applicable.

10.G Statement by Experts

Not applicable.

10.H. Documents on Display

We are subject to the reporting requirements of the United States Securities Exchange Act of 1934, as amended, or the Exchange Act, as applicable to “foreign private issuers” as defined in Rule 3b-4 under the Exchange Act, and in accordance therewith, we file annual and interim reports and other information with the SEC.

As a foreign private issuer, we are exempt from certain provisions of the Exchange Act. Accordingly, our proxy solicitations are not subject to the disclosure and procedural requirements of Regulation 14A under the Exchange Act and transactions in our equity securities by our officers and directors are exempt from reporting and the “short-swing” profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.

Notwithstanding the foregoing, we furnish reports with the SEC on Form 6-K containing unaudited financial information for the first three quarters of each fiscal year and we solicit proxies and furnish proxy statements for all meetings of shareholders, a copy of which proxy statement is furnished promptly thereafter with the SEC under the cover of a Current Report on Form 6-K.

This annual report and the exhibits thereto and any other document we file pursuant to the Exchange Act may be inspected without charge and copied at prescribed rates at the following SEC public reference rooms: 100 F Street, N.E., Washington, D.C. 20549; and on the SEC Internet site (http://www.sec.gov) and on our website http://www.rittech.com. The content of our website is not incorporated by reference into this annual report.

You may obtain information on the operation of the SEC’s public reference room in Washington, D.C. by calling the SEC at 1-800-SEC-0330 or by visiting the SEC’s website at http://www.sec.gov. The Exchange Act file number for our SEC filings is 0-29360.

The documents concerning our company, which are referred to in this annual report may also be inspected at our offices located at 24 Raoul Wallenberg Street, Tel Aviv 69719, Israel.

10.I. Subsidiary Information

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk, including movements in interest rates and foreign currency exchange rates. Our primary market risk exposure occurs because we generate most of our revenues in U.S. dollars and Euros and incur a significant portion of our expenses in NIS. To date, we are not engaged in any hedging transactions and/or derivative financial instruments. If we were to determine that it was in our best interests to enter into any hedging transactions in the future, there can be no assurance that we will be able to do so or that such transactions, if entered into, will materially reduce the effect of fluctuations in foreign currency exchange rates on our results of operations.

Impact of Inflation and Currency Fluctuations

Most of our revenues are denominated in U.S. dollars or are U.S. dollar-linked. We collect a portion of our revenues in Europe in Euros while most purchases of materials and components, and most marketing costs, are denominated in U.S. dollars or U.S. dollar-linked. The currency of the primary economic environment in which our operations are conducted is, therefore, the U.S. dollar, which is our functional currency.

Since we pay the salaries of our Israeli employees in NIS, the U.S. dollar cost of our operations is influenced mainly by the extent to which inflation in Israel is (or is not) offset (or is offset on a lagging basis) by a devaluation of the NIS in relation to the U.S. dollar. Inflation in Israel will have a negative effect on our profits from contracts under which we are to receive payment in U.S. dollars or are U.S. dollar-linked NIS while incurring expenses in NIS, unless such inflation is offset on a timely basis by a devaluation of the NIS in relation to the U.S. dollar.

In addition, our profits and cash flow will be negatively affected by the devaluation of the U.S. dollar in relation to the NIS since certain portion of our expenses, as discussed above, is denominated in NIS and such devaluation may increase it significantly (e.g., devaluation of the U.S. dollar against the NIS of 7% in 2013).

We cannot assure you that we will not be materially affected in the future from currency exchange rate fluctuations or the rate of inflation in Israel. If the value of the NIS or the Euro starts to rise in value relative to the U.S dollar, our business and financial condition could be negatively impacted.

The following table sets forth, for the periods indicated, (1) devaluation or appreciation of the U.S. dollar against the most significant currencies for our business, i.e., the NIS and the Euro; and (2) inflation as reflected in changes in the Israeli consumer price index.

	Year Ended December 31,
	2010			2011			2012			2013			2014
NIS		6.4	%		(7.7	)%		(2.1	)%		(7.0	)%		12.0	%
Euro		7.4	%		4.2	%		(1.8	)%		4.5	%		(11.8	) %
Israeli Consumer Price Index		2.7	%		2.2	%		1.6	%		1.81	%		(0.2	) %

The effects of foreign currency re-measurements are reported in our financial statements as financial income or expense.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our cash and cash equivalents. Our cash and cash equivalents are held substantially in New Israeli Shekels and in U.S. dollars with some minor cash balances held in Euro. We place our cash and cash equivalents with major financial banks.

Our exposure to market risk for changes in interest rates is immaterial primarily because our cash and cash equivalents are mostly deposited in short-term deposits and are used to satisfy our working capital requirements and our debt is mainly comprised of the ability to draw credit under the Convertible Loan, as described above in “- Liquidity and Capital Resources – Principal Financing Activities”. For purposes of specific risk analysis, we use a sensitivity analysis to determine the impact that market risk exposure may have on the financial income derived from our cash and cash equivalents. The potential loss to us over one year that would result from a hypothetical change of 10% in the LIBOR or other prime interest rates would be immaterial, as we do not have any borrowings linked to variable interest rates.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

ITEM 15. CONTROLS AND PROCEDURES

Disclosure controls and procedures

Our management, including our chief executive officer, or CEO, and our Vice President of Finance, or VP Finance, who is our principal financial officer, are responsible for establishing and maintaining our disclosure controls and procedures (within the meaning of Rule 13a-15(e) of the Exchange Act). These controls and procedures were designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our CEO and VP Finance, as appropriate, to allow timely decisions regarding required disclosure. We evaluated these disclosure controls and procedures under the supervision of our CEO and VP Finance as of December 31, 2014. Based upon that evaluation, our management, including our CEO and VP Finance, concluded that our disclosure controls and procedures as of December 31, 2014 are effective.

Management's annual report on internal control over financial reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. We performed an evaluation of the effectiveness of our internal control over financial reporting that was designed by, or under the supervision of, our CEO and VP Finance and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that:

·	pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

·	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Our management recognizes that there are inherent limitations in the effectiveness of any system of internal control over financial reporting, including the possibility of human error and the circumvention or override of internal control. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation, and may not prevent or detect all misstatements. Further, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time.

Under the supervision and with the participation of our management, including our CEO and VP Finance, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2014 based on the 1992 framework for Internal Control-Integrated Framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on such evaluation, our management, including the CEO and VP Finance, has concluded that our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended) as of December 31, 2014 is effective.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting that occurred during the year ended December 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 16. [RESERVED]

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

Our board of directors has determined that Israel Frieder is an audit committee financial expert, as defined by applicable SEC regulations. Mr. Frieder qualified as an "independent director," as that term is defined under NASDAQ rules.

ITEM 16B. CODE OF ETHICS

We have adopted a code of ethics applicable to our directors, officers and all other employees. In December 2014, in connection with our internal auditor's routine review of corporate policies, we amended our Code of Ethics and Business Conduct by including specific reference to the provisions of The Foreign Corrupt Practices Act of 1977, as amended. Our Code of Ethics and Business Conduct (as amended) is publicly available on our website at www.rittech.com. If we make any additional amendment to the Code of Ethics and Business Conduct or grant any waivers, including any implicit waiver, from a provision of the code of ethics, which applies to our chief executive officer, chief financial officer, chief accounting officer or controller, or persons performing similar functions, we will disclose the nature of such amendment or waiver on our website or otherwise.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

In the annual meeting held on June 25, 2014, our shareholders re-appointed Somekh Chaikin, Certified Public Accountants (Isr.), a member of KPMG International, or KPMG, to serve as our independent registered public accounting firm until the next annual meeting. The following table sets forth, for each of the years indicated, the fees paid or payable to KPMG for the period indicated.

	2014		2013
Audit Fees (1)	$	105,000	$	185,000
Audit-Related Fees		-		-
Tax Fees (2)	$	10,350	$	5,000
All Other Fees(3)	$	10,722	$	8,500
Total	$	126,072	$	198,500

(1)

Audit fees consist of services that have been provided in connection with statutory and regulatory filings or engagements, including services that generally only the independent accountant can reasonably provide.

(2)

Tax fees relate to tax compliance and advisory services.

(3)

All other fees relate to services performed relating to conflict minerals regulations and to the submission of a marketing grant application.

Pre-approval Policies and Procedures

The audit committee of our board of directors approves, in advance, all audit, audit-related, tax and other services to be provided by KPMG. None of the services provided by KPMG in 2014 or 2013 was approved under the de minims exception provision described in paragraph (c)(7)(i)(C) of Rule 2-01 of SEC Regulation S-X.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEE

Not applicable.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

None.

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

None.

ITEM 16G. CORPORATE GOVERNANCE

We are a foreign private issuer whose ordinary shares are listed on the NASDAQ Capital Market. As such, we are required to comply with U.S. federal securities laws, including the Sarbanes-Oxley Act, and the NASDAQ rules, including the NASDAQ corporate governance requirements. The NASDAQ rules provide that foreign private issuers may follow home country practice in lieu of certain qualitative listing requirements subject to certain exceptions and except to the extent that such exemptions would be contrary to U.S. federal securities laws, so long as the foreign issuer discloses that it does not follow such listing requirement and describes the home country practice followed in its reports filed with the SEC. Below is a concise summary of the significant ways in which our corporate governance practices differ from the corporate governance requirements of NASDAQ applicable to domestic U.S. listed companies:

The NASDAQ rules require that an issuer have a quorum requirement for shareholders meetings of at least one-third of the outstanding shares of the issuer’s common voting stock. We have chosen to follow home country practice with respect to the quorum requirements of an adjourned shareholders meeting. Our articles of association, as permitted under the Israeli Companies Law and Israeli practice, provide that the quorum requirements for an adjourned meeting are the presence of a minimum of two shareholders present in person.

We have chosen to follow our home country practice in lieu of the requirements of NASDAQ Rule 5250(d)(1), relating to an issuer’s furnishing of its annual report to shareholders. However, we post our Annual Report on Form 20-F on our web site (www. rittech.com) as soon as practicable following the filing of the Annual Report on Form 20-F with the SEC.

We have chosen to follow our home country practice in lieu of the requirements of NASDAQ Rule 5635(c) (relating to shareholder approval required prior to the issuance of securities when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees or consultants) and Rule 5635(d) (relating to shareholder approval required prior to the issuance of securities in connection with a transaction other than a public offering involving the issuance or potential issuance by us of ordinary shares equal to 20% or more of the ordinary shares or 20% or more of the voting power outstanding before the issuance). We follow the provisions of the Israeli Companies Law with regard to transactions with our affiliates, i.e., our controlling shareholder and our directors and officers, including private placement transactions, as described in more detail in Item 10.B. – "Memorandum and Articles of Association – Approval of Specified Related Party Transactions under Israeli Law – Private Placements."

ITEM 16H. MINE SAFETY DISCLOSURE

Not applicable.

PART III

ITEM 17. FINANCIAL STATEMENTS

The Company has elected to furnish financial statements and related information specified in Item 18.

ITEM 18. FINANCIAL STATEMENTS

Index to Financial Statements

	Page

Report of Independent Registered Public Accounting Firm	F-2

Consolidated Balance Sheets as of December 31, 2014 and 2013	F-3

Consolidated Statements of Operations for the Years
ended December 31, 2014, 2013 and 2012	F-4

Consolidated Statements of Shareholders’ Equity for the Years ended December 31, 2014, 2013 and 2012	F-5

Consolidated Statements of Cash Flows for the Years
ended December 31, 2014, 2013 and 2012	F-6

Notes to the Consolidated Financial Statements	F-7

ITEM 19. EXHIBITS

List of Exhibits

1.1

Amended and Restated Memorandum of Association (1)

1.2

Amended and Restated Articles of Association (2)

2.1

Specimen Form of Ordinary Share Certificate (3)

2.2

Form of Public Warrant (4)

4.1 Amended RiT Technologies Ltd. 2003 Share Option Plan (5)

4.2

Form of Indemnification Agreement (6)

4.3

MOU between the Registrant and Invencom (former name Quartz Ltd.), dated July 1, 2010 and Addendum to the MOU dated May 12, 2011(7)

4.4

MOU between the Registrant and Invencom, dated December 11, 2012 (8)

4.5

Product Alliance Agreement, between the Registrant and STINS COMAN, dated February 19, 2010 (9) and Services Agreement between the Registrant and STINS COMAN, dated July 28, 2011 (10)

4.6

Convertible Loan Agreement, between the Registrant and STINS COMAN, dated June 11, 2009 (11)

4.7

Addendum to the Convertible Loan Agreement, dated February 17, 2010 (12), Addendum to the Convertible Loan Agreement, dated April 14, 2011 (13), Amendment to the Convertible Loan Agreement, dated December 8, 2011(14), Amendment to the Convertible Loan Agreement, dated April 17, 2012 (15), Amendment to the Convertible Loan Agreement, dated August 6, 2012 (16), Amendment to the Convertible Loan Agreement, dated October 23, 2012 (17) and Amendment to the Convertible Loan Agreement, dated August 12, 2014 (18)

4.8

Securities Purchase Agreement, between the Registrant and STINS COMAN, dated May 17, 2010 (19)

4.9

Securities Purchase Agreement, between the Registrant and STINS COMAN, dated September 13, 2010 (20)

4.10

Securities Purchase Agreement, between the Registrant and STINS COMAN, dated March 15, 2011 (21)

4.11

Securities Purchase Agreement, between the Registrant and STINS COMAN, dated June 15, 2011 (22)

4.12

Securities Purchase Agreement, between the Registrant and STINS COMAN, dated December 8, 2011 (23)

4.13

Securities Purchase Agreement, between the Registrant and STINS COMAN, dated June 26, 2012 (24)

4.14

Securities Purchase Agreement, between the Registrant and STINS COMAN, dated December 5, 2012 (25)

4.15

Securities Purchase Agreement, between the Registrant and STINS COMAN, dated March 14, 2013 (26)

4.16

Securities Purchase Agreement, between the Registrant and STINS COMAN, dated June 17, 2013 (27)

4.17

Securities Purchase Agreement, between the Registrant and STINS COMAN, dated September 12, 2013 (28)

4.18

Securities Purchase Agreement, between the Registrant and STINS COMAN, dated September 10, 2014 (29)

4.19

Technology Purchase Agreement, between the Registrant and Invencom, dated June 26, 2012 (30)

4.20

Securities Purchase Agreement, between the Registrant and Invencom, dated September 10, 2012 (31)

4.21

Form of Underwriter Warrant (32)

4.22

Compensation Policy for Executive Officers and Directors (33)

4.23

Equity Distribution Agreement, between the Registrant and Maxim Group LLC, dated May 21, 2013 (34)

4.24

Form of Warrant Agency Agreement of Public Warrants (35)

4.25

International Distributor Agreement, between the Registrant and Stins Corp., dated May 1, 2005 (36) as amended by Addendum dated as of December 23, 2013 (37)

4.26

International Distributor Agreement, between the Registrant and RiT CIS Ltd., dated January 6, 2015 (38)

4.27

International Distributor Agreement, between the Registrant and Stins Engineering Pte Ltd., dated February 16, 2015 (39)

8.1

List of Subsidiaries (40)

12.1

Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

12.2

Certification of the VP Finance pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

13.1

Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

13.2

Certification of the VP Finance pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

15.1

Consent of Somekh Chaikin, Member Firm of KPMG International, Independent Registered Public Accounting Firm.*

101

The following financial information from the Registrant's Annual Report on Form 20-F for the year ended December 31, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statement of Comprehensive Income; (iv) Consolidated Statements of Changes in Shareholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and in detail*

_____________________

(1)	Incorporated by reference to Exhibit 3.1 to the Registrant's Registration Statement on Form F-1 , filed with the SEC on August 7, 2013.

(2)	Incorporated by reference to Exhibit 3.2 to the Registrant's Registration Statement on Form F-1, filed with the SEC on August 7, 2013.

(3)	Incorporated by reference to Exhibit 2.1 to the Registrant's Annual Report on Form 20-F for the Year ended December 31, 2010, filed with the SEC on June 30, 2011.

(4)	Incorporated by reference to Exhibit 4.2 to the Registrant's Registration Statement on Form F-1/A, filed with the SEC on November 18, 2013.

(5)	Incorporated by reference to Exhibit 10.1 to the Registrant's Registration Statement on Form F-1, filed with the SEC on August 7, 2013.

(6)	Incorporated by reference to Annex A to the Registrant’s Proxy Statement filed as Exhibit 99.3 to the Registrant’s Report of Foreign Private Issuer on Form 6-K filed with the SEC on August 11, 2009.

(7)	Incorporated by reference to Exhibit 4.3 to the Registrant's Annual Report on Form 20-F for the Year ended December 31, 2011, filed with the SEC on May 11, 2012.

(8)	Incorporated by reference to Exhibit 4.4 to the Registrant's Annual Report on Form 20-F for the year ended December 31, 2012, filed with the SEC on April 30, 2013.

(9)	Incorporated by reference to Annex A to the Registrant’s Proxy Statement filed as Exhibit 99.3 to the Company’s Form 6-K filed with the SEC on May 17, 2010.

(10)	Incorporated by reference to Exhibit 99.1 to the Registrant's Form 6-K filed with the SEC on August 25, 2011.

(11)	Incorporated by reference to Annex B of Exhibit 99.3 to the Registrant's Form 6-K filed with the SEC on August 11, 2009.

(12) Incorporated by reference to Exhibit 99.2 to the Registrant's Form 6-K filed with the SEC on April 29, 2010.

(13) Incorporated by reference to Exhibit 99.2 to the Registrant's Form 6-K filed with the SEC on April 18, 2011.

(14) Incorporated by reference to Exhibit 99.1 to the Registrant's Form 6-K filed with the SEC on December 19, 2011.

(15)	Incorporated by reference to Exhibit 99.2 to the Registrant's Form 6-K filed with the SEC on April 24, 2012.

(16) Incorporated by reference to Exhibit 99.1 to the Registrant's Form 6-K filed with the SEC on August 14, 2012.

(17) Incorporated by reference to Exhibit 99.1 to the Registrant's Form 6-K filed with the SEC on October 30, 2012.

(18)	Incorporated by reference to Exhibit 99.1 to the Registrant's Form 6-K filed with the SEC on August 18, 2014.

(19) Incorporated by reference to Exhibit 4.6 to the Registrant's Annual Report on Form 20-F for the year ended December 31, 2009, filed with the SEC on June 29, 2010.

(20) Incorporated by reference to Exhibit 10.5 to the Registrant's Annual Report on Form 20-F for the Year ended December 31, 2010, filed with the SEC on June 30, 2011.

(21) Incorporated by reference to Exhibit 10.6 to the Registrant's Annual Report on Form 20-F for the Year ended December 31, 2010, filed with the SEC on June 30, 2011.

(22) Incorporated by reference to Exhibit 4.10 to the Registrant's Annual Report on Form 20-F for the Year ended December 31, 2011, filed with the SEC on May 11, 2012.

(23) Incorporated by reference to Exhibit 4.11 to the Registrant's Annual Report on Form 20-F for the Year ended December 31, 2011, filed with the SEC on May 11, 2012.

(24)	Incorporated by reference to Exhibit 4.13 to the Registrant's Annual Report on Form 20-F for the year ended December 31, 2012, filed with the SEC on April 30, 2013.

(25)	Incorporated by reference to Exhibit 4.14 to the Registrant's Annual Report on Form 20-F for the year ended December 31, 2012, filed with the SEC on April 30, 2013.

(26)	Incorporated by reference to Exhibit 4.15 to the Registrant's Annual Report on Form 20-F for the year ended December 31, 2012, filed with the SEC on April 30, 2013.

(27)	Incorporated by reference to Exhibit 99.3 to the Registrant’s Form 6-K filed with the SEC on June 19, 2013.

(28)	Incorporated by reference to Exhibit 10.21 to the Registrant's Registration Statement on Form F-1/A, filed with the SEC on November 18, 2013.

(29)	Incorporated by reference to Exhibit 2 to the Schedule 13D/A filed with the SEC on October 29, 2014.

(30)	Incorporated by reference to Annex A to the Registrant’s Proxy Statement filed as Exhibit 99.2 to the Registrant’s Form 6-K filed with the SEC on July 3, 2012.

(31)	Incorporated by reference to Exhibit 99.1 to the Registrant's Form 6-K filed with the SEC on September 12, 2012.

(32)	Incorporated by reference to Exhibit 4.3 to the Registrant's Registration Statement on Form F-1/A, filed with the SEC on November 18, 2013.

(33)	Incorporated by reference to Annex B of Exhibit 99.2 to the Registrant’s Form 6-K filed with the SEC on May 9, 2013.

(34)	Incorporated by reference to Exhibit 99.1 to the Registrant’s Form 6-K filed with the SEC on May 21, 2013.

(35)	Incorporated by reference to Exhibit 10.22 to the Registrant's Registration Statement on Form F-1/A, filed with the SEC on November 19, 2013.

(36)	Incorporated by reference to Exhibit (e)(3) to the Schedule 14D-9 filed by the Registrant with the SEC on May 15, 2008.

(37)	Incorporated by reference to Annex B of Exhibit 99.1 to the Registrant’s Form 6-K filed with the SEC on January 21, 2014.

(38)	Incorporated by reference to Exhibit 99.1 to the Registrant's Form 6-K filed with the SEC on March 3, 2015.

(39)	Incorporated by reference to Exhibit 99.2 to the Registrant's Form 6-K filed with the SEC on March 3, 2015.

(40)	Incorporated by reference to Exhibit 8.1 to the Registrant's Annual Report on Form 20-F for the Year ended December 31, 2004, filed with the SEC on March 31, 2005.

*	Filed herewith.

**	Furnished herewith.

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	RiT TECHNOLOGIES LTD.

	By:	/s/ Motti Hania
		Name: Motti Hania
		Title: President and Chief Executive Officer

April 21, 2015

RiT Technologies Ltd.

and Subsidiaries

Consolidated Financial Statements

As of and for the year ended

December 31, 2014

RiT Technologies Ltd.

and Subsidiaries

Consolidated Financial Statements as of December 31, 2014

Contents

Page

Report of Independent Registered Public Accounting Firm	F - 2

Consolidated Balance Sheets	F - 3

Consolidated Statements of Operations	F - 4

Consolidated Statements of Shareholders’ Equity	F - 5

Consolidated Statements of Cash Flows	F - 6

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

RiT Technologies Ltd.

We have audited the accompanying consolidated balance sheets of RiT Technologies Ltd. and subsidiaries (the “Company”) as of December 31, 2014 and 2013 and the related consolidated statements of operations, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 2014. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2014 and 2013, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles.

/s/ Somekh Chaikin

Certified Public Accountants (Isr.)

Member firm of KPMG International

Tel-Aviv, Israel

April 20, 2015

F - 2

RiT Technologies Ltd. and Subsidiaries

Consolidated Balance Sheets

			December 31
			2014			2013
	Notes		US$ thousands			US$ thousands
Assets
Current Assets:		8
Cash and cash equivalents				1,604			5,194
Trade receivables, net *				1,680			3,839
Other current assets				335			237
Inventories				3,617			3,647
Total Current Assets				7,236			12,917

Assets held for severance benefits		4		967			1,161
Property and equipment, net		3		471			500
Total Non-Current Assets				1,438			1,661

Total Assets				8,674			14,578

Liabilities and Shareholders' Equity
Current Liabilities:
Trade payables				967			1,878
Other payables and accrued liabilities		8		1,554			1,933
Total Current Liabilities				2,521			3,811

Principal shareholder convertible loan		6		1,000			2,000
Liability in respect of employees' severance benefits		4		1,224			1,338
Total Non-Current Liabilities				2,224			3,338
Total Liabilities				4,745			7,149

Commitments and Contingencies		5

Shareholders' Equity:		6
Ordinary shares NIS 0.8 par value each (50,000,000
shares authorized as of December 31, 2014
and 2013; 15,541,306 and 12,763,218 shares issued and
fully paid as of December 31, 2014 and 2013, respectively)				3,384			2,782
Treasury stock				(27	)		(27	)
Additional paid-in capital				72,239			66,942
Accumulated deficit				(71,667	)		(62,268	)
Total Shareholders' Equity				3,929			7,429

Total Liabilities and Shareholders' Equity				8,674			14,578

*	Includes balances in the amounts of $287 thousand and $398 thousand with related parties as of December 31, 2014 and 2013, respectively (see also Note 9).

/s/ Israel Frieder		/s/ Motti Hania
Director		President and Chief Executive Officer

The accompanying notes are an integral part of the consolidated financial statements.

F - 3

RiT Technologies Ltd. and Subsidiaries

Consolidated Statements of Operations

			For the year ended December 31
			2014			2013			2012
	Notes		US$ thousands			US$ thousands			US$ thousands
Sales*		8		6,619			11,179			8,436

Cost of sales		8		5,196			7,864			7,065

Gross profit				1,423			3,315			1,371

Operating expenses

Research and development, gross				3,003			4,683			3,922
Less – Government Grants		5		(234	)		(558	)		-

Research and development, net				2,769			4,125			3,922
Sales and marketing				3,948			4,786			5,465
General and administrative				4,021			3,803			3,043

Total operating expenses				10,738			12,714			12,430

Operating loss				(9,315	)		(9,399	)		(11,059	)

Financing expenses, net		8		(77	)		(129	)		(48	)

Other expenses, net				(7	)		-			-

Loss before income tax				(9,399	)		(9,528	)		(11,107	)

Taxes on income		7		-			-			-

Net Loss				(9,399	)		(9,528	)		(11,107	)

Net Loss Per Share - Basic and Diluted
(in US$)		2		(0.70	)		(1.04	)		(1.91	)

Weighted Average Number of Ordinary
Shares Outstanding - Basic and Diluted				13,471,060			9,138,947			5,802,803

*See Note 9 for transactions with related parties.

For the years ended December 31, 2014, 2013 and 2012, comprehensive income equals net income.

The accompanying notes are an integral part of the consolidated financial statements.

F - 4

RiT Technologies Ltd. and Subsidiaries

Consolidated Statements of Shareholders’ Equity

														Additional
			Deferred		Ordinary		Treasury		Ordinary		Treasury			Paid-In			Accumulated
			Shares *		Shares *		Stock *		Shares		Stock			Capital			Deficit			Total
	Note		Number of Shares						US $ In Thousands
Balance as of January 1, 2011				17,030		5,209,122		2,125		1,126		(27	)		45,569			(41,633	)		5,035

Conversion of convertible loan from principal shareholder		6		-		2,265,857		-		474		-			7,587			-			8,061
Transaction with related party		6		-		-		-		-		-			(584	)		-			(584	)
Issuance of shares to related party		6		-		218,813		-		44		-			540			-			584
Stock compensation expense				-		-		-		-		-			301			-			301
Net loss for the year				-		-		-		-		-			-			(11,107	)		(11,107	)
Balance as of December 31, 2012				17,030		7,693,792		2,125		1,644		(27	)		53,413			(52,740	)		2,290

Conversion of convertible loan from principal shareholder		6		-		2,053,398		-		454		-			8,092			-			8,546
Issuance of shares		6		-		3,000,000		-		681		-			4,248			-			4,929
Issuance of Warrants		6		-		-		-		-		-			17			-			17
Issuance of shares At-The-Market				-		16,028		-		3		-			-			-			3
Stock compensation expense				-		-		-		-		-			1,172			-			1,172
Net loss for the year				-		-		-		-		-			-			(9,528	)		(9,528	)
Balance as of December 31, 2013				17,030		12,763,218		2,125		2,782		(27	)		66,942			(62,268	)		7,429

Conversion of convertible loan from principal shareholder		6		-		2,778,088		-		602		-			4,456			-			5,058
Stock compensation expense				-		-		-		-		-			841			-			841
Net loss for the year				-		-		-		-		-			-			(9,399	)		(9,399	)
Balance as of December 31, 2014				17,030		15,541,306		2,125		3,384		(27	)		72,239			(71,667	)		3,929

Ordinary Shares – NIS 0.8 par value

Authorized shares: 50,000,000 Ordinary Shares as of December 31, 2014 and 2013, issued and outstanding Ordinary Shares 15,453,431 and 12,765,343 as of December 31, 2014 and 2013, respectively, (including 2,125 shares are held by a subsidiary) and 15,541,306 and 12,763,218 issued and outstanding as of December 31, 2014 and 2013, respectively, (not including 2,125 held by a subsidiary).

Deferred Shares – NIS 0.1 par value

Authorized shares:20,230 Deferred Shares as of December 31, 2014 and 2013; issued and outstanding 17,030 as of December 31, 2014 and 2013.

The accompanying notes are an integral part of the consolidated financial statements.

F - 5

RiT Technologies Ltd. and Subsidiaries

Consolidated Statements of Cash Flows

	For the year ended December 31
	2014			2013			2012
	US$ thousands			US$ thousands			US$ thousands
Cash flows from operating activities
Net loss for the year		(9,399	)		(9,528	)		(11,107	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Severance pay benefits, net		80			(77	)		76
Depreciation of property and equipment		178			174			190
Stock compensation expense		841			1,172			301
Loss on sale of fixed assets		1			-			5
Interest on principal shareholder convertible loan		57			46			73
Changes in operating assets and liabilities:
Decrease (increase) in trade receivables, net		2,159			(1,841	)		1,923
Decrease (increase) in other current assets		(98	)		(18	)		347
Decrease (increase) in inventories		30			(288	)		420
Increase (decrease) in trade payables		(943	)		599			(1,236	)
Increase (decrease) in other payables and accrued expenses		(379	)		581			197
Net cash used in operating activities		(7,473	)		(9,180	)		(8,811	)

Investing activities:
Purchase of property and equipment		(117	)		(84	)		(501	)
Net cash used in investing activities		(117	)		(84	)		(501	)

Financing activities:
Proceeds from short term loans		-			218			1,151
Repayment of short term loans		-			(392	)		(1,139	)
Proceeds from issuance of shares and warrants, net of
issuance expenses		-			4,949			-
Proceeds from principal shareholder convertible loan		4,000			7,500			10,599
Net cash provided by financing activities		4,000			12,275			10,611

Net increase (decrease) in cash and cash equivalents		(3,590	)		3,011			1,299
Cash and cash equivalents, beginning of year		5,194			2,183			884
Cash and cash equivalents, end of year		1,604			5,194			2,183
Non cash investing activities:
Purchase of property and equipment		77			45			-

Non cash financing activities:
Conversion of loans		5,058			8,546			8,645

Cash paid during the year for:
Interest		-			4			19

The accompanying notes are an integral part of the consolidated financial statements.

F - 6

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 1 - General

RiT Technologies Ltd., an Israeli company, which was incorporated and commenced operations in 1989, pioneered the development of intelligent physical layer solutions, designed to provide superior control, utilization and maintenance of networks. The Company is a leading provider of intelligent infrastructure management (IIM) solutions and a developer of an innovative indoor optical wireless technology solution.

The Company’s IIM products provide and enhance security and network utilization for data centers, communication rooms and work space environments. The products help companies plan and provide, monitor and troubleshoot their communications networks, maximizing utilization, reliability and physical security of the network while minimizing unplanned downtime. The IIM solutions are deployed around the world, in a broad range of organizations, including data centers in the private sector, government agencies, financial institutions, airport authorities, healthcare and education institutions.

The Company Beamcaster™ product is the first of the Company’s indoor optical wireless technology solutions. It is designed to help customers streamline deployment, reduce infrastructure design, installation and maintenance complexity and enhance security in a cost effective way.

RiT Technologies Ltd. has a wholly-owned subsidiary in the United States, RiT Technologies Inc. (the “US subsidiary”), which was incorporated in 1993 under the laws of the State of New Jersey. The US subsidiary is primarily engaged in the selling and marketing in the United States of RiT Technologies Ltd’s products.

In this document the terms the “Company” or “RiT” refer to RiT Technologies Ltd. together with its wholly-owned subsidiary RiT Technologies Inc.

The Company has significant losses attributable to its operations. To Date, the Company has managed its liquidity through a series of cost reduction initiatives, expansion of its sales into new markets, private placement transactions, raising capital through sales and issuance of its stock to the public and line of credit from its principal shareholder.

Based on the most current sales and spending projections, the Company anticipates that its existing capital resources, including, as necessary, the line of credit available under the Convertible Loan Agreement from its principal shareholder (as described in Note 6), will be adequate to satisfy its working capital and capital expenditure requirements for at least the next 12 months. The Company may need to raise additional funds to support the execution of its long-term growth strategy through the line of credit from its principal shareholder or additional capital raises. There is no assurance that the Company will be able to raise additional capital.

F - 7

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 2 - Summary of Significant Accounting Policies

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

The significant accounting policies followed in the preparation of the financial statements, applied on a consistent basis, are as follows:

A. Financial Statements in US dollars (“dollars”)

Most of the Company’s sales are made outside Israel. Most sales outside Israel are denominated in dollars. Most purchases of materials and components, and most marketing costs, are denominated in dollars or are dollar-linked. Therefore, the currency of the primary economic environment in which the operations of the Company are conducted is the dollar, which is the functional currency of the Company.

Transactions and balances originally denominated in dollars are presented at their original amounts. Transactions and balances in other currencies have been remeasured as follows:

- Monetary items – at the current exchange rate at balance sheet date.

- Non–monetary items – at historical exchange rates.

Income and expenditure items – at the current exchange rate as of date of recognition of those items (excluding depreciation and other items deriving from non-monetary items).

All exchange gains and losses from remeasurement of monetary balance sheet items denominated in non-dollar currencies are reflected in the statements of operations when they arise.

B. Estimates and assumptions in the financial statements

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. These are management's best estimates based on experience and historical data. Actual results, however, may vary from these estimates. Significant items subject to such estimates and assumptions include inventory, share-based compensation, assumptions underlying assumed continuation as a going concern and other contingencies.

C. Principles of consolidation

These consolidated financial statements include RiT Technologies Ltd. and its wholly-owned subsidiary in the United States. All intercompany transactions and balances were eliminated in consolidation.

D. Cash equivalents

The Company considers all highly liquid investments with a maturity of three months or less at the time of investment to be cash equivalents.

F - 8

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 2 - Summary of Significant Accounting Policies (cont’d)

E. Allowance for doubtful accounts

Accounts receivable are recorded at cost, less related allowance for doubtful accounts receivable. Management considers current information and events regarding customers’ ability to repay their obligations and judges its accounts receivable to be impaired when it is probable that the Company will not be able to collect all amounts due.

The balance sheet allowance for doubtful accounts for all periods through December 31, 2014 is determined as a specific amount for those accounts, collection of which is not probable.

F. Inventories

Inventories are valued at the lower of cost or market value. Cost of inventory is determined on the "Weighted Average Cost Method" basis.

Costs of work in process and finished products include direct materials, labor and overhead incurred. Labor and overhead incurred is calculated on the basis of actual manufacturing costs based on the normal capacity of the production facility.

Inventory write-downs are provided to cover technological obsolescence, excess inventories, discontinued products and market prices lower than cost.

G. Assets held for severance benefits

Assets held for employees’ severance benefits represent cash surrender of managers' insurance policies that are recorded at their current redemption value.

H. Property and equipment

Property and equipment are stated at cost less accumulated depreciation. Maintenance and repair expenses are charged to operations as incurred.

Depreciation is recorded using the straight-line method based on the estimated useful lives of the assets, and commences once the assets are ready for their intended use.

Annual rates of depreciation are as follows:

	%
Research and development equipment		25
Manufacturing equipment		15 – 20
Office furniture and equipment		7 – 33

Leasehold improvements depreciated over the shorter of the relevant lease period or their useful lives (mainly at 25%)

F - 9

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 2 - Summary of Significant Accounting Policies (cont’d)

I. Revenue recognition

The Company recognizes revenue when products are shipped and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable. Shipping and other transportation costs charged to buyers are recorded in both sales and cost of sales.

Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from revenues in the consolidated statements of operations.

Most of the Company’s sales are sold through distributors, OEM partners, as well as through value added resellers, system integrators and installers. These distribution channels are the Company’s end users and therefore sales occur when products are sold to these channels.

When the sale arrangement includes customer acceptance provisions, revenue is not recognized before it is demonstrated that the criteria specified in the acceptance provisions have been satisfied.

The Company does not, in the normal course of business, provide a right of return to any of its customers.

J. Research and development costs

Research and development costs are expensed to the statement of operations as incurred.

K. Government grants

When the Government of Israel approves a grant for research and development (see Note 5) the grants are recognized as receivables when the related research and development costs are incurred.

The grants are generally reflected as a reduction of research and development expenses. If the royalty payments for such grants are expected to be repaid in the foreseeable future then the grant is classified as a loan. Royalty expenses in respect of such grants are classified as part of cost of sales when the related sales are recognized.

L. Allowance for product warranty

It is the Company's policy to grant a warranty for certain products. The balance sheet provision for warranties for all periods through December 31, 2014 is determined based upon the Company’s experience regarding the relationship between sales and warranty expenses. The liability for product warranty at December 31, 2014 and 2013 was $100 thousand.

F - 10

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 2 - Summary of Significant Accounting Policies (cont’d)

M. Stock option plans

The Company recognizes compensation expense based on estimated grant date fair value in accordance with ASC Topic 718, Compensation -Stock Compensation as follows: When portions of an award vest in increments during the requisite service period (graded-vesting award), the Company recognizes compensation cost on a straight-line basis over the requisite service period for the entire award.

N. Impairment of Long-Lived Assets

In accordance with Impairment or Disposal of Long-Lived Assets Subsections of FASB ASC Subtopic 360-10, Property, Plant, and Equipment - Overall long-lived assets, such as property, equipment and purchase intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or an asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third party independent appraisals, as considered necessary. No impairment charges were recorded during 2014, 2013 and 2012.

O. Deferred income taxes

Deferred tax asset and liability account balances are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statement of operations in the period that includes the enactment date. The Company provides a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized.

P. Income tax uncertainties

The Company accounts for income tax uncertainties based on a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon settlement. Interest and penalties related to unrecognized tax benefits are classified as a component of income tax expense.

F - 11

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 2 - Summary of Significant Accounting Policies (cont’d)

Q. Net loss per share

Basic net loss per share is computed based on the weighted average number of Ordinary shares outstanding during each year. Diluted net loss per share is computed based on the weighted average number of Ordinary shares outstanding during each year, plus dilutive potential Ordinary shares considered outstanding during the year.

The total number of shares related to the outstanding options and warrants excluded from the calculations of diluted net loss per share due to their anti-dilutive effect was 2,855,240 stock options and warrants for the year ended December 31, 2014 (for the year ended December 31, 2013 – 2,746,071 stock options and warrants ; for the year ended December 31, 2012 – 552,386 stock options).

R. Treasury Shares

Holdings of the Company’s shares by a consolidated subsidiary are presented as treasury stock, and are excluded from the calculation of loss per share.

Fair value measurements

The Company's financial instruments consist mainly of cash and cash equivalents, accounts receivable, accounts payable and long-term loans.

Fair value for the measurement of financial assets and liabilities is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The Company utilizes a valuation hierarchy for disclosure of the inputs for fair value measurement. This hierarchy prioritizes the inputs into three broad levels as follows:

Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 inputs are quoted prices for identical or similar assets or liabilities in less active markets or model-derived valuations in which significant inputs are observable for the asset or liability, either directly or indirectly through market corroboration.

Level 3 inputs are unobservable inputs based on the Company's assumptions used to measure assets and liabilities at fair value.

By distinguishing between inputs that are observable in the market place, and therefore more objective, and those that are unobservable and therefore more subjective, the hierarchy is designed to indicate the relative reliability of the fair value measurements. A financial asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

F - 12

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 2 - Summary of Significant Accounting Policies (cont’d)

T. Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. The amendments in ASU 2014-09 are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and early adoption is not permitted. The standard can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern. ASU 2014-15 describes how an entity’s management should assess whether there are conditions and events that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management should consider both quantitative and qualitative factors in making its assessment. If after considering management’s plans, substantial doubt about an entity’s going concern is alleviated, an entity shall disclose information in the footnotes that enables the users of the financial statements to understand the events that raised the going concern and how management’s plan alleviated this concern. If after considering management’s plans, substantial doubt about an entity’s going concern is not alleviated, the entity shall disclose in the footnotes indicating that a substantial doubt about the entity’s going concern exists within one year of the date of the issued financial statements. Additionally, the entity shall disclose the events that led to this going concern and management’s plans to mitigate them. The new standard applies to all entities for the first annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company has not yet determined the effect of the standard on its ongoing financial reporting.

Note 3 - Property and Equipment, Net

Property and equipment, net, consist of the following:

	December 31
	2014		2013
	US$ thousands		US$ thousands
Cost
Research and development equipment		1,720		1,661
Manufacturing equipment		614		614
Office furniture and equipment		1,494		1,449
Leasehold improvements		227		242
		4,055		3,966
Accumulated depreciation		3,584		3,466

Property and equipment, net		471		500

Depreciation expense for the years ended December 31, 2014, 2013 and 2012 was US$178 thousand, US$174 thousand and US$190 thousand respectively.

F - 13

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 4 - Liability In Respect of Employees’ Severance Benefits

Under Israeli law and labor agreements, the Company is required to make severance payments to dismissed employees and those leaving the Company in certain other circumstances. The Company's severance pay liability to its employees, which is calculated on the basis of the salary of each employee for the last month of the reported period multiplied by the years of such employee's employment, is reflected in the balance sheet and classified as Other Payables and Accrued Liabilities if short-term or as a long-term liability according to the information held by the Company. The Company partially funds this liability by the purchase of managers' insurance policies. The current redemption value of such insurance policies is included in the balance sheet as Assets Held for Severance Benefits, or as Other Current Assets, if short term.

According to Section 14 to the Severance Pay Law ("Section 14") the payments of monthly deposits by a company into recognized severance and pension funds or insurance policies, releases it from any additional severance obligation to the employees that have entered into agreements with the company pursuant to such Section 14. Commencing from July 2010, the Company has entered into agreements with a majority of its employees in order to implement Section 14. Therefore, beginning at that date, the payment of monthly deposits by the Company into recognized severance and pension funds or insurance policies releases it from any additional severance obligation to those employees that have entered into such agreements and therefore the Company incurs no additional liability since that date with respect to such employees subject to certain salary and other adjustments. Amounts accumulated in the pension funds or insurance policies pursuant to Section 14 are not supervised or administrated by the Company and therefore neither such amounts nor the corresponding accrual are reflected in the balance sheet.

Severance pay expense for the years ended December 31, 2014, 2013 and 2012 was $431 thousand , $369 thousand and $431 thousand, respectively.

F - 14

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 5 - Commitments and Contingencies

A. Royalty commitments

The Company is obligated to pay royalties to the Office of the Chief Scientist of the Israeli Ministry of Industry and Trade (the "OCS") on revenues from certain product sales, where the research and development in respect of these products was undertaken with royalty bearing participations (“grants”) from the OCS.

In general, the Company’s obligation to pay royalties is as follows:

Projects approved prior to January 1999: 3.5% of the net sales until the cumulative amount of royalties paid equals 100% of the dollar-linked amount of grants received.

Projects approved after January 1999: 3.5% of the net sales until the cumulative amount of royalties paid equals 100% of the dollar-linked amounts of grants received, plus interest at the LIBOR rate.

Royalties are payable from the commencement of sales of each of these products.

As of December 31, 2014, total commitment payable to the OCS, excluding interest to date, amounted to approximately US$0.5 million for the Beamcaster solution products and approximately US$0.9 million for the Company’s IIM products.

Royalties expenses to the OCS are classified as part of cost of sales (see Note 8).

B. Lease commitments

Premises occupied by the Company are rented under various operating leases.

Minimum future rental payments due under the above leases, at rates in effect on December 31, 2014, are US$404 thousand and US$359 to be payable through 2015 and 2016 respectively.

Part of the lease agreements in Israel is secured by a bank guarantee in the amount of approximately US$22 thousand.

Lease expense was US$551 thousand, US$487 thousand and US$524 thousand for the years ended December 31, 2014, 2013 and 2012, respectively.

F - 15

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 5 - Commitments and Contingencies (cont’d)

B. Lease commitments (cont’d)

The Company has several operating leases in respect of motor vehicles. These lease agreements expire on various dates up to 2017. Minimum future lease payments due under the above leases on December 31, 2014:

Year ending December 31	US$ thousands
2015		171
2016		55
2017		10

		236

Lease expense was US$208 thousand, US$233 thousand and US$184 thousand for the years ended December 31, 2014, 2013 and 2012, respectively.

C. Other commitments

As of December 31, 2014, bank guarantees in the amount of approximately US$16 thousand have been issued, for VAT commitments and customs duty on importation.

D. Concentration of credit risk

Financial instruments that may subject the Company to significant concentrations of credit risk consist principally of cash investments and trade accounts receivable.

Cash and cash equivalents are deposited with major financial institutions in Israel and in the United States.

The Company grants credit to customers without generally requiring collateral or security. The Company performs ongoing credit evaluations of the financial condition of its customers. The risk of collection associated with certain trade receivables is reduced by The Israeli Credit Insurance Company (ICIC) and the large number and geographical dispersion of the Company's customer base.

On significant sales and on sales in areas where there is a risk of collection, the Company secures the payment by a customer bank guarantee (L.C.) as applicable.

F - 16

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 5 - Commitments and Contingencies (cont’d)

E. Concentrations of business risk

Although the Company generally uses standard parts and components for products, certain key components used in the products are currently available from only one source, and others are available from a limited number of sources. Based on the Company’s past history and its relationships with its suppliers, the Company believes that it will not experience delays in the supply of critical components in the future. If the Company experiences such delays and there is an insufficient inventory of critical components at that time, the Company's operations and financial results would be adversely affected.

F. Indemnification agreement

The Company undertakes to enter into an indemnification agreement with each of the Company's present and future serving directors and officers. The indemnification covers certain events and shall be no greater than the amount of coverage available to the Company's applicable liability insurance policy in effect at the time.

Note 6 - Shareholders’ Equity

A. Share Capital

As of December 31, 2014, the number of the ordinary shares outstanding is 15,541,306.

On June 11, 2009 the Company entered into a Loan Agreement with STINS COMAN, the Company's controlling shareholder. On June 17, 2009, the Company entered into an Addendum to the Loan Agreement (the Loan agreement and the Addendum together, the "Convertible Loan Agreement"). On June 17, 2009, the Company’s Audit Committee and Board of Directors approved the Loan Agreement and the Addendum thereto, which were approved by the Company’s shareholders at the Company’s annual general meeting held on September 14, 2009.

Pursuant to the Convertible Loan Agreement, STINS COMAN agreed to extend to the Company an unsecured loan, originally of up to US$10 million (the “Maximum Amount”) at an annual interest rate of 2.47%. The Maximum Amount was increased several times via additional addendums signed on February 17, 2010, April 14, 2011, December 8, 2011, April 17, 2012, August 6, 2012, October 23, 2012 and August 12, 2014 and currently is US$45 million. At any time commencing October 1, 2009 through December 31, 2016, the Company may call and receive any portion of the loan from STINS COMAN, but no more than US$5 million at a time (up to the said Maximum Amount of US$45 million) and at intervals of at least 30 days between each call request.

F - 17

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 6 - Shareholders’ Equity (cont’d)

A. Share Capital (cont’d)

2. (cont’d)

Under the Convertible Loan Agreement, the Company is required to repay the outstanding principal amount and the interest accrued thereon after 36 months from receipt of each part of the funds respectively. STINS COMAN has the right to convert any outstanding principal amount of the loan and the interest accrued thereon, in whole or in part, into the Company’s ordinary shares at a conversion price per share equal to the market price of the Company’s ordinary shares on NASDAQ on the day the Company received the funds from STINS COMAN, plus a premium of 10% thereon. The conversion is subject to 30 days prior notice and to the execution of a definitive purchase agreement to be substantially similar to the Securities Purchase Agreement entered between the parties on September 11, 2008.

During 2014 and 2013 the Company drew approximately $4.0 million and $7.5 million, respectively, under the Convertible Loan Agreement and STINS COMAN has converted approximately $5.1 million and $8.5 million (principal and interest) into 2,778,088 and 2,053,398 ordinary shares, respectively.

As of December 31, 2014, the Company had drawn cumulatively approximately $30.9 million principal loan under the Convertible Loan Agreement and STINS COMAN has converted approximately $29.9 million (principal and interest) into 9,622,622 ordinary shares.

As of December 31, 2014, the balance of the loans the Company can call through December 31, 2016 amounted to approximately $14.1 million. See also Note 10 regarding additional loans received after the balance sheet date.

On June 26, 2012 the Company purchased its indoor wireless optical network technology from a related party under common control, by exercising its purchase option, in accordance with the terms of a Technology Purchase Agreement, by and between RiT and the related party (the “Purchase Agreement”). Total purchase price for the sale and transfer of the technology and all rights thereto from the related party to RiT was $583 thousand plus revenue sharing equal to 3% of the proceeds actually received by RiT in return for any future sale of the Technology and/or for any future sale of products using the Technology.

It was agreed that the Purchase Price ($583 thousand) be recorded as a loan amount provided by the related party to RiT bearing an interest rate of 2.47% per annum and was to be repaid not later than eighteen (18) months following the closing date. The related party was granted with a right to convert the loan amount or any part thereof (together with interest accrued thereon), into RiT’s Shares with a conversion price per share equal to the NASDAQ closing price of RiT’s shares on the day RiT receives a written notice from the related party notifying its election of conversion.

The Company recorded the transfer of the technology at historical cost (net book value at the time of transfer). Any difference between the convertible loan amount of $583 thousand assumed and the historical cost of the net assets acquired was accounted as an equity transaction. The historical cost (net book value at the time of transfer and sale) of the technology at the time of the transfer of the technology on the related party books was deemed zero.

In September 2012, the related party converted the loan amount and interest accrued thereon into 218,813 ordinary shares pursuant to a Securities Purchase Agreement, dated as of September 10, 2012, reflecting a conversion price of $2.67 per share.

F - 18

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 6 - Shareholders’ Equity (cont’d)

A. Share Capital (cont’d)

During the year ended December 31, 2013 the Company issued 16,028 shares and raised approximately US$55 thousand in an at-the-market offering of securities. After deducting the expenses related to the offering, the Company recorded US$3 thousand , net of expenses, in the statement of shareholders’ equity via the at-the-market offering.

On November 27, 2013 the Company closed a US$6 million underwritten public offering of 3,000,000 ordinary shares and warrants to purchase up to 1,500,000 ordinary shares at an offering price of $2.00 per share and $0.01 per warrant. In addition, the underwriter exercised its over-allotment option to purchase warrants to acquire an additional 225,000 ordinary shares at an offering price of $0.01 per warrant. The warrants have a per share exercise price of $2.50, are exercisable immediately, and expire 5 years from the date of issuance. In addition, the Company issued the underwriters warrants to purchase up to an aggregate of five percent (5%) of the ordinary shares sold in the offering (150,000 warrants). These warrants are exercisable commencing 12 months after the closing of the public offering and are exercisable in whole or in part for four years thereafter and have an exercise price equal to 125% of the offering price of the ordinary shares sold ($2.50). The warrants began trading on The NASDAQ Capital Market on November 22, 2013 under the symbol “RITTW.” A registration statement on Form F-1 relating to the offering was filed with the Securities and Exchange Commission. The net amount received by the Company from the offering, after deducting all offering expenses was $4,946 thousand. As of December 31, 2014, no warrants have been exercised and accordingly, 1,875,000 warrants with an exercise price of $2.50 are outstanding.

B. Share options

At December 31, 2014, the Company has several employee compensation plans. The Company recognizes all employee stock based compensation as a cost in the financial statements at fair value.

The Company’s option awards are primarily subject to graded vesting over a service period. In those cases, the Company recognizes compensation cost on a straight-line basis over the requisite service period for the entire award.

The fair value of each option grant is estimated on the measurement date using the Black-Scholes option pricing model with the following assumptions:

The current price of the share is the market value of such shares at the date of issuance.

2. Dividend yield of zero percent for all relevant periods.

Average risk free interest rates are as follows:

Year ended December 31	%
2014		1.29
2013		0.60
2012		0.50

F - 19

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 6 - Shareholders’ Equity (cont’d)

B. Share options (cont’d)

Expected term of 1-4 years for each option granted, (mainly 4), represents the Company’s best estimate for the period of time that options granted are expected to be outstanding.

Volatility ranged between 88.0% - 114.9%, 130.7% - 133.6% and 130.3% - 134.4% for options granted during the years ended December 31, 2014, 2013 and 2012, respectively.

The exercise price for options granted to employees are equal the fair value of the Company’s ordinary shares at the date of grant.

RiT Technologies Ltd. 2003 Option Plan

In July 2003, the Board of Directors of the Company adopted the RiT Technologies Ltd. 2003 Share Option Plan, or the 2003 Plan, which is currently administered by the Board of Directors (or the Share Incentive Committee appointed by the Board to administer the 2003 Share Option Plan). The purpose of the 2003 Plan is to provide incentives to employees, directors, consultants and contractors, or any subsidiary thereof. The exercise price and vesting schedule of options granted under the 2003 Plan are approved by the Board of Directors, as specified in the grant letter issued to the grantee. The contractual life of options granted under the plan is six years. Unless otherwise determined by the Board of Directors, the options fully vest on the third anniversary following their grant, vesting in three equal annual installments.

As of December 31, 2014, the number of options granted under the 2003 Plan is 1,643,336 options and the number of options outstanding under the 2003 Plan is 976,690 options. As of December 31, 2014, 910,262 options are available for future grant (following an increase of 1,000,000 options to the options- reserve under the 2003 Option plan, approved by the Company’s Board of Directors in July 2013).

2. RiT Technologies Inc. Employee Stock Option Plan

In May 1999, the Board of Directors of the Company adopted the RiT Technologies, Inc. Employee Stock Option Plan, or the RiT Inc. Plan, pursuant to which options to purchase the Company’s ordinary shares may be granted to the employees of RiT Technologies, Inc. The RiT Inc. Plan is administered by the Board of Directors which designates the optionees, dates of grant and the exercise price of the options. Unless otherwise determined by the board of directors, the contractual life of options granted under the plan is six years.

As of December 31, 2014, the number of options granted under the RiT Inc. Plan is 27,242 options and the number of options outstanding under the RiT Inc. Plan is 3,550 options. The RiT Inc. Plan expired during May 2009.

F - 20

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 6 - Shareholders’ Equity (cont’d)

B. Share options (cont’d)

Stock Options granted under the Share Option Plans are as follows:

				Weighted Average		Weighted average grant date
	Number of			Weighted Average		Weighted average grant date
	options			exercise price		fair value
				US$		US$
Options unexercised as of January 1, 2012		261,320

Granted		338,038			3.77		3.69
Exercised		-			-		-
Expired		(6,240	)		10.20		11.46
Forfeited		(40,732	)		4.01		15.77

Options unexercised as of December 31, 2012		552,386

Granted		557,000			3.86		3.86
Exercised		-			-		-
Expired		(4,563	)		9.71		12.82
Forfeited		(83,752	)		3.81		3.81

Options unexercised as of December 31, 2013		1,021,071

Granted		132,608			1.31		0.91
Exercised		-			-		-
Expired		(29,564	)		12.47		1.52
Forfeited		(143,875	)		7.15		3.04

Options unexercised as of December 31, 2014		980,240

At December 31, 2014, total compensation cost related to option awards not yet recognized amount to $444 thousand and will be recognized in the statements of operations during fiscal years 2015 – 2017.

F - 21

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 6 - Shareholders’ Equity (cont’d)

B. Share options (cont’d)

The following table summarizes information about stock options outstanding as of December 31, 2014:

	Options outstanding						Options exercisable
	Number of		Weighted				Number of
	shares		average				exercisable
	unexercised as of		remaining		Average		shares as of		Average
	December 31		contractual		exercise		December 31		exercise
Rates of exercise	2014		life		price		2014		price
prices in US$			In years		US$				US$
1.00-2.99		132,608		5.70		1.31		-		-
3.00-3.80		502,600		1.89		3.56		441,987		3.59
4.00-5.44		337,192		3.12		4.28		193,894		4.25
7.50-9.84		1,500		1.86		9.60		1,500		9.60
10.24-14.88		6,340		1.26		14.88		6,340		14.88

		980,240						643,721

At December 31, 2014, options with an average exercise price of $3.91 were exercisable for 643,721 shares. At December 31, 2013, options with an average exercise price of $5.48 were exercisable for 462,660 shares.

Weighted average exercise prices for the options outstanding at December 31, 2014 and 2013 were $3.59 and $4.64, respectively.

Weighted average remaining contractual life of outstanding options at December 31, 2014 and 2013 was 2.82 and 4.27 years.

The Company recorded stock option expense of $841 thousand, $1,172 thousand and $301 thousand for the years ended December 31, 2014, 2013 and 2012, respectively, in relation to grants under its' share option plans.

C. Dividends

Dividends may be paid by the Company only out of the Israeli Company’s earnings and other surpluses as calculated in Israeli currency and as defined in the Israeli Companies Law as at the end of the most recent fiscal year or as accrued over a period of the last two years whichever is higher. Such dividends will be declared and paid in NIS. There are no restrictions on the ability of the US subsidiary to transfer funds to its parent, and there are no restrictions on the transfer of funds to foreign shareholders for the payment of dividends. To date the Company has never declared or paid any cash dividends on its ordinary shares. The Company currently intends to retain any future earnings to finance operations and to expand its business and, therefore, does not expect to pay any cash dividends in the foreseeable future

F - 22

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 7 - Taxes on Income

Israel tax reform

Presented hereunder are the tax rates relevant to the Company in the years 2012-2014:

2012 – 25%

2013 – 25%

2014 – 26.5%

On August 5, 2013 the Knesset passed the Law for Changes in National Priorities (Legislative Amendments for Achieving Budget Objectives in the Years 2013 and 2014) – 2013, by which, inter alia, the corporate tax rate would be raised by 1.5% to a rate of 26.5% as from 2014.

B. Tax benefits under the Law for Encouragement of Industry (Taxation), 1969

The Company believes that it currently qualifies as an "Industrial Company" under the above law. As such it is entitled to certain tax benefits, mainly the right to deduct share issuance costs over three years for tax purposes in the event of a public offering, and to amortize know-how acquired from a third party over eight years for tax purposes. The Company utilizes certain such provisions in its tax filings.

C. Tax assessment and tax loss carry forwards

The Company has not received final tax assessments since its incorporation. In accordance with the provisions of the Income Tax Ordinance, tax returns submitted up to and including the 2010 tax year can be regarded as final. The Company's Israeli tax loss carry forward are denominated in NIS and approximates US$64.1 million as of December 31, 2014, and can be carried forward indefinitely against future taxable business income.

The U.S. subsidiary is taxed under the U.S. Federal and State income tax rules. As of December 31, 2014, the U.S. subsidiary has Federal tax loss carry forwards of approximately US$6.9 million, which will expire between 2017 and 2034. Following the change in control which occurred in the parent company in June 2008, the U.S. subsidiary might be exposed to an ownership change as defined in the Internal Revenue Code Section 382. An ownership change occurs when the ownership percentage of 5% or greater stockholders changes by more than 50% over a three-year period. As a result, the utilization of approximately US$1.5 million of the tax loss carry forwards in the U.S. subsidiary might be severely limited.

F - 23

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 7 - Taxes on Income (cont’d)

D. Deferred tax assets

Deferred tax assets and liabilities reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and such amounts for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:

	December 31
	2014			2013
	US$ thousands			US$ thousands
Deferred tax assets:
Allowance for doubtful accounts		211			163
Severance pay		68			47
Vacation pay		106			95
Research and development		701			1,023
Tax loss carry forwards		18,881			18,497
Total gross deferred tax assets		19,967			19,825

Valuation allowance		(19,967	)		(19,825	)

Net deferred tax assets		-			-

The net change in valuation allowance for the year ended December 31, 2014 was an increase of US$0.1 million (increase of US$4.3 million in 2013).

Deferred tax assets for future benefits are included where their realization is more likely than not.

Because of history of taxable losses, management believes that it is more likely than not that the results of future operations will not generate sufficient taxable income to realize the deferred tax assets. As such, the Company has recorded a full valuation allowance in regard of all its tax loss carry forwards as well as for other deductible temporary differences at December 31, 2014 and 2013.

Loss before income tax expense and reconciliation of the theoretical income tax expense and the actual income tax expense

The components of loss before income tax expense are as follows:

	Year ended December 31
	2014			2013			2012
Israel		(8,995	)		(9,013	)		(10,583	)
United States		(404	)		(515	)		(524	)

Loss before income tax expense		(9,399	)		(9,528	)		(11,107	)

F - 24

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 7 - Taxes on Income (cont’d)

Loss before income tax expense and reconciliation of the theoretical income tax expense and the actual income tax expense (cont’d)

A reconciliation of the theoretical income tax expense, assuming all loss is taxed at the Israeli statutory income tax rate of 26.5% for the year ended December 31, 2014, 25% for the year ended December 31, 2013 and 2012, and the actual income tax expense, is as follows:

	Year ended December 31
	2014			2013			2012
	US$ thousands			US$ thousands			US$ thousands

Loss before income tax expense		(9,399	)		(9,528	)		(11,107	)

Theoretical income tax benefit at Israeli
statutory tax rates		(2,491	)		(2,382	)		(2,777	)
Non-deductible expense		27			28			15
Issuance of shares related expenses		(91	)		(97	)		-
Stock compensation expense		205			305			75
Change in valuation allowance		142			4,349			2,587
Adjustments arising from differences on the tax rate		(34	)		(53	)		(19	)
Tax rate change		-			(1,023	)		-
Difference in basis measurement between book
and tax		2,232			(1,201	)		-
Others		10			74			119

Income tax expense for the reported year		-			-			-

F. Accounting for uncertainty in income taxes

ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This standard prescribes a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. ASC 740-10 requires significant judgment in determining what constitutes an individual tax position as well as assessing the outcome of each tax position.

During 2014, 2013 and 2012 the Company and its subsidiary did not have any unrecognized tax benefits and thus, no related interest and penalties were accrued.

In addition, the Company and its subsidiary do not expect that the amount of unrecognized tax benefits will change significantly within the next twelve months.

F - 25

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 8 - Supplementary Financial Statements Information

A. Balance Sheets

1. Cash and cash equivalents

Comprised of:

	December 31
	2014		2013
	US$ thousands		US$ thousands

Cash and deposits *		1,604		5,194

As of December 31, 2014, US$50 thousand (2013: US$56 thousand) is deposited in NIS bearing an average annual interest of 0.02% (2013: 0.15%). US$42 thousand (2013: US$42 thousand) was pledged against the Company's bank guarantees and the Company maintains balances in the account to cover this guarantee.

2. Trade receivables, net

Trade receivables, net, consist of the following:

	December 31
	2014			2013
	US$ thousands			US$ thousands

Trade receivables		2,477			4,454
Less allowance for doubtful accounts (*)		(797	)		(615	)

		1,680			3,839

* The following are the changes in the allowance for doubtful accounts:

Changes in the allowance for doubtful accounts

	US$ thousands

Balance as of December 31, 2012		544
Additions		252
Deductions		(181	)

Balance as of December 31, 2013		615
Additions		215
Deductions		(33	)

Balance as of December 31, 2014		797

F - 26

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 8 - Supplementary Financial Statements Information (cont’d)

A. Balance Sheets (cont’d)

3. Other current assets

Other current assets consist of the following:

	December 31
	2014		2013
	US$ thousands		US$ thousands
Receivables from the Government of Israel:
Value added tax authorities		61		93
Prepaid expenses		274		144

		335		237

Inventories

Inventories consist of the following:

	December 31
	2014		2013
	US$ thousands		US$ thousands
Raw materials and subassemblies		2,051		2,252
Work in process		44		123
Finished products		1,522		1,272

		3,617		3,647

Other payables and accrued liabilities

Other payables and accrued liabilities consist of the following:

	December 31
	2014		2013
	US$ thousands		US$ thousands
Employees and employee institutions		828		976
Accrued expenses		394		653
Provision for product warranty		100		100
Other		232		204

		1,554		1,933

F - 27

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 8 - Supplementary Financial Statements Information (cont’d)

A. Balance Sheets (cont’d)

6. Fair value measurements

The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair values of the financial instruments as of December 31, 2014 and 2013 represent management’s best estimates of the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. Those fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Company based on the best information available in the circumstances.

The carrying amounts of cash and cash equivalents, trade receivables, other current assets, trade payables and other payables approximate the fair value because of the short maturity of these instruments.

B. Statements of operations

1. Sales (1)

(a) Classification of sales by geographical destination:

	Year ended December 31
	2014		2013		2012
	US$ thousands		US$ thousands		US$ thousands
United States		103		110		91
Europe		2,756		3,841		3,194
Israel		2,341		2,467		2,118
South and Latin America		711		1,817		1,184
Asia Pacific		598		2,717		1,677
Rest of the world		110		227		172

		6,619		11,179		8,436

(1) Sales are attributed to geographical areas based on location of customers.

The Company’s property and equipment is primarily located in Israel.

F - 28

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 8 - Supplementary Financial Statements Information (cont’d)

B. Statements of operations (cont’d)

(b) Sales by major product lines:

	Year ended December 31
	2014		2013		2012
	US$ thousands		US$ thousands		US$ thousands
Enterprise Solution		6,619		11,090		8,430
Carrier Solution		-		89		6

		6,619		11,179		8,436

As of December 31,2014, the Company operates in one operating segment.

(c)

Principal customers:

During the fiscal year ended December 31, 2014 there were three customers that represented 20%, 14%, and 12% of total sales. During fiscal year 2013 there were three customers that represented 16%, 10%, and 10% of total sales. During 2012 there were four customers that represented 14%, 12%, 10% and 10% of total sales.

2. Cost of sales

Cost of sales consists of the following:

	Year ended December 31
	2014			2013			2012
	US$ thousands			US$ thousands			US$ thousands
Payroll and related benefits		832			886			723
Materials purchased		2,059			4,261			3,233
Subcontracted work		1,281			2,469			2,218
Royalties to the OCS		18			37			-
Write-down of inventories		584			581			818
Other production costs		452			499			471

		5,226			8,733			7,463
Decrease in inventories		(30	)		(869	)		(398	)

		5,196			7,864			7,065

In December 2012 the Company declared end-of-life of Carrier products and as a result the Company recorded an inventory write-off totaling approximately US$701 thousand.

F - 29

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 8 - Supplementary Financial Statements Information (cont’d)

B. Statements of operations (cont’d)

Financing expense, net

Financing income, net, consists of the following:

	Year ended December 31
	2014			2013			2012
	US$ thousands			US$ thousands			US$ thousands
Expenses:
Interest on short-term credits and bank charges		(20	)		(26	)		(50	)
Interest on long-term principle shareholder loan		(50	)		(45	)		(73	)
Exchange translation income (expenses), net		(7	)		(60	)		71
		(77	)		(131	)		(52	)
Income:
Interest from banks and others		-			2			4

Financing expense, net		(77	)		(129	)		(48	)

Note 9 - Related Parties Balances and Transactions

The Company is a party to many related party agreements and transactions. These agreements and transactions have all been approved by the appropriate bodies in accordance with the Israeli Companies Law – 1999 (as amended) and regulations promulgated thereunder based on the belief that the terms are beneficial to the Company and no less favorable to the Company than terms which might be available to the Company from unaffiliated third parties.

All transactions with related parties were at terms comparable to those applied to transactions with other customers or suppliers and other than the purchase of the Company’s indoor wireless optical network technology, were in the ordinary course of business and are mainly sales of the Company's products and purchases from related parties.

See Note 6 regarding the Company’s purchased indoor wireless optical network technology from a related party under common control and the issuance of shares to a controlling shareholder and to a related party.

See Note 10 regarding new distributor agreements signed with related parties and the receipt of additional convertible loans after the balance sheet date.

F - 30

RiT Technologies Ltd. and Subsidiaries

Notes to the Consolidated Financial Statements

Note 9 - Related Parties Balances and Transactions (cont’d)

A. Balances with related parties

The following related party balances are included in the balance sheets:

	December 31
	2014		2013
	US$ thousands		US$ thousands
Principal/controlling:
Trade receivables		287		398
Principle shareholder convertible loan		1,000		2,000

B. Income from or expenses to related parties

The following related parties transactions are included in the statements of operations.

	Year ended December 31
	2014		2013		2012
	US$ thousands		US$ thousands		US$ thousands
Sales		433		1,120		329

Financing expense		50		45		73

Note 10 - Subsequent Events

1.	During January and February 2015 the Company entered into the following distributor agreements:

New Distributor Agreement with RiT CIS. In efforts to realign and improve the Company’s sales in the CIS market, the Company entered into a Distributor Agreement dated January 6, 2015, with 'RiT CIS Ltd., a Russian company affiliated with Stins Coman ("RiT CIS"), whereby the Company designated RiT CIS as its additional and non-exclusive distributor in said territory.

New Distributor Agreement with Stins Engineering. In efforts to increase the Company’s sales in Singapore and South Asia, the Company entered into a Distributor Agreement dated February 16, 2015 with Stins Engineering Pte Ltd. ("Stins Engineering"), a Singaporean company affiliated with Stins Coman, whereby the Company designated Stins Engineering as its non-exclusive distributor in said territory (excluding China and India).

2.	During January and March, 2015, the Company received additional loans in the amount of $1 million and $1 million, respectively, under the Convertible Loan Agreement as described in Note 6.

F - 31

Exhibit 12.1

CERTIFICATION

I, Motti Hania, certify that:

1.	I have reviewed this annual report on Form 20-F of RiT Technologies Ltd. (the "registrant");

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and

disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 21, 2015

BY: /s/ Motti Hania

Name: Motti Hania

Title: President and Chief Executive Officer

Exhibit 12.2

CERTIFICATION

I, Eran Erov, certify that:

1.	I have reviewed this annual report on Form 20-F of RiT Technologies Ltd. (the "registrant");

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 21, 2015

BY: /s/ Eran Erov

Name: Eran Erov

Title: VP Finance (principal financial officer)

Exhibit 13.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of RiT Technologies Ltd. (the "Company") on Form 20-F for the period ending December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Motti Hania, President and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 21, 2015

By: /s/ Motti Hania

Name: Motti Hania

Title: President and Chief Executive Officer

Exhibit 13.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of RiT Technologies Ltd. (the "Company") on Form 20-F for the period ending December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Eran Erov, VP Finance of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 21, 2015

By: /s/ Eran Erov

Name: Eran Erov

Title: VP Finance (principal financial officer)

Exhibit 15.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

RiT Technologies Ltd.:

We consent to the incorporation by reference in the Registration Statements of RiT Technologies Ltd. on Form S-8 (File No., 333-90750, 333-117646, 333-141680,333-169241 and 333-200999) and Form F-3 (File No. 333-183566 and 333-190443) of our report dated April 20, 2015, with respect to the consolidated balance sheets of RiT Technologies Ltd. and its subsidiaries as of December 31, 2014 and 2013 and the related consolidated statements of operations, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 2014, which report appears in the December 31, 2014 annual report on Form 20-F of RiT Technologies Ltd.

/s/ Somekh Chaikin

Certified Public Accountants (Isr.)

A Member Firm of KPMG International

Tel Aviv, Israel

April 21, 2015

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