Características del terreno:

a. On March 1, 2016, the board of directors has resolved to distribute an extra-ordinary

gross dividend of $0.75 per share which will be paid on March 22, 2016.

b. In February 2016, one of our customers in the United States, filed a lawsuitagainst

our wholly-owned subsidiary AVT Advanced Vision technology Inc. claiming for breach of contract and consequential damages. The Company’s management believes that the complaint is without merit and intends to contest it vigorously. However, since the lawsuit is in the early stages, the Company is unable to predict the final outcome of this lawsuit. No provision has been made in respect to this claim. - - - - - - - - - - - - - - - - - - -

Report of the Board of Directors

Dear Shareholders,

In 2015, we saw continued indications for increasing demand for our products. We finished 2015 with record order bookings and backlog. Having said that, 2015 results were heavily impacted by the exchange rate effects of the Euro against the US Dollar. The weakness of the Euro vs. U.S. Dollar exchange rate was the main reason for the updated projections for the 2015 calendar year we announced during Q2 2015.

In the beginning of July 2015 we signed an agreement with Erhardt & Leimer (“E+L”) establishing our strategic alliance with E+L which also entail the acquisition of its print inspection assets. We are very excited about this alliance which will strengthen our offerings to our customers and the breadth of our solutions. We expect this deal to positively impact revenues and profits as of 2016.

On the Digital front, we signed a number of new OEMs for our unique Jet-IQ solution and are continuing to work on expanding that base.

During 2015 the Board of Directors performed its duties as outlined by the law and according to corporate governance prevailing in the State of Israel. As part of our duties, we have supervised the ongoing conduct of the Company’s management and were informed, at the Board of Directors’ meetings, of business developments and material corporate issues related to the Company and its subsidiaries.

In light of the Company’s level of cash reserves, the board of directors has resolved on March 1, 2016, to distribute an extra-ordinary gross dividend of $0.75 per share.

For 2016 we have a plan that will generate further top line growth while putting more emphasis on executing our strategic plan with respect to both expansion of our print application coverage and extension of the breath of our solutions.

As of December 31, 2015, the Board of Directors consisted of 6 members, including 2 external Directors. Board meetings focus, among other things, on overseeing the activities of management, setting business priorities, strategies for profitable organic and non-organic growth (such as the E+L transaction), corporate governance, financial oversight and reporting and business development.

In compliance with the Israel Companies Law, the Board of Directors has an Audit Committee, which consists of 3 Board members, the 2 external Directors and an additional Director who meets the independence criteria under the Israel Companies Law. The Audit Committee is responsible, among other things, for(a) identifying flaws in the management of the Company’s business, making recommendations to the Board as to how to correct them and providing for arrangements regarding employee complaints with respect thereto; (b) reviewing and considering certain related party transactions and certain actions involving conflicts of interest; (c) reviewing the internal auditor’s performance and approving the internal auditor’s work plan and examining the Company’s internal control structure and processes; (d) examining the external auditor’s scope of work as well as the external auditor’s fees and providing its recommendations to the appropriate corporate organ; and (e) overseeing the accounting and financial reporting processes of the Company. In addition, the Board of Directors has a Compensation Committee of three Directors, including both External Directors. The responsibilities of the Compensation Committee include periodically reviewing the implementation of the Company’s compensation policy and providing the Board of Directors with recommendations with respect to any amendments or updates thereto, and reviewing and resolving whether

or not to approve arrangements with respect to the terms of office and employment of officers and directors, including with respect to bonuses, equity-based awards and other forms of compensation.

During 2015, we held 12 Board of Directors meetings, 4 Audit Committee meetings and 9 Compensation Committee meetings. All Board of Directors meetings consisted of a legal quorum of more than four attendees and the Audit and Compensation Committee meetings were attended by at least 2 Directors, as required by Israeli Law.

The management of the Company prepared the annual consolidated Financial Statements in accordance with US GAAP. The consolidated balance sheets of the Company and its subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of income, changes in shareholders’ equity and cash flow for each of the three years ended December 31, 2015, were audited by Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global.

At the Audit Committee meeting held on February 28, 2016 and at the Board of Directors meeting held on March 1, 2016, both of which were attended by the Company’s auditors and legal counsel, we discussed the 2015 Financial Statements and resolved to approve the Annual Report.

I would like to thank our customers for their business and for their continued confidence in AVT and to our management team, employees, partners and suppliers for their hard work and contribution to our growth and success.

Hod Hasharon, March 1, 2016

Very truly yours,

Dan Falk

Chairman of the Board of Directors Advanced Vision Technology (AVT) Ltd.