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                                                                    Exhibit 11.1

                        ELRON ELECTRONIC INDUSTRIES LTD.

                       Code of Ethics and Business Conduct

INTRODUCTION
HOW TO REPORT YOUR CONCERNS
OUR COMMITMENT TO STOCKHOLDERS
OUR COMMITMENT TO CUSTOMERS AND BUSINESS PARTNERS
OUR COMMITMENT TO EACH OTHER
COMPETITION
CONFLICT OF INTERESTS
LEGAL COMPLIANCE GENERALLY
OUR COMMUNITIES
WAIVERS REQUESTED BY OUR OFFICERS AND DIRECTORS

Introduction

This Code of Ethics & Business Conduct applies to Elron Electronic Industries
Ltd. and its consolidated substantially wholly owned- subsidiaries, together
referred to below as "our company" and sets forth our company's policies
regarding ethical business conduct and principles guiding the activities of our
employees and representatives.

We all have important roles to play in maintaining high levels of legal and
ethical compliance and the long term viability of our company. The purpose of
this code of conduct is to promote a culture of honesty, integrity, respect for
Law and the people with whom we work.

We expect each employee to use sound judgment to help us maintain appropriate
compliance procedures and to carry out our business in compliance with laws and
high ethical standards. Each employee of our company is expected to read this
code and demonstrate personal commitment to the standards set forth in this code
of conduct.

Our officers and other supervising employees are expected to be leaders in
demonstrating this personal commitment to the standards outlined in this code
and recognizing indications of illegal or improper conduct.

All employees are expected to report appropriately any indications of illegal or
improper conduct.

An employee who does not comply with the standards set forth in this code may be
subject to discipline in light of the nature of the violation, including
termination of employment.

The Code of Ethics & Business Conduct is not a contract and is not intended as a
detailed guide for all situations you may face or to detract from the importance
of applicable laws and regulations not detailed herein.

How to Report Your Concerns




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     o    Where to Direct Questions. If you have questions about this code or
          concerns about any of the matters listed here, please first consider
          speaking with your immediate manager or supervisor if that person was
          not involved in the matter giving rise to your questions. If you do
          not wish to communicate with that person on the matter, please feel
          free to contact any member of our management or legal departments.

     o    Good Faith Concerns Are Protected. We encourage each of our employees
          to report any concerns that others in our company may have engaged in
          illegal or unethical conduct relating to our business. We do not
          discriminate against employees who report their good faith concerns to
          us. In addition, our company may not discharge or otherwise
          discriminate in any manner against, or threaten or harass, an employee
          for any lawful act by the employee to provide information or assist in
          an investigation by us or any other governmental authority or agency,
          of violations of applicable securities laws or any applicable law
          relating to fraud against shareholders.

     o    False Claims Are Prohibited. However, it is a violation of our
          standards for any employee to communicate a report claiming illegal or
          unethical conduct which the employee knows to be false.

     o    Where to Report Your Concerns. If you wish to report or discuss any
          problem concerning our company or the matters outlined below, please
          promptly inform your supervising manager, or report the matter to our
          General Counsel. If you wish to communicate any matter anonymously,
          you are free to do so, and we will maintain the confidentiality of
          your communication to the extent possible under applicable laws.
          Communications intended to be confidential should be mailed in writing
          without indicating your name or address to the Chairman of the Audit
          Committee whose contact information can be found on our web site.

     o    Audit Committee Available to Hear About Accounting Matters. In
          addition to the above, if you have concerns about accounting, internal
          accounting controls, or auditing matters relating to our company, you
          are also free to contact the audit committee of our board of directors
          directly. Inquiries or communications intended to be anonymous should
          be mailed in writing without indicating your name or address to the
          Chairman of the audit committee, whose contact information can be
          found on our web site. Also, If you wish to speak to the Chairman of
          our Audit Committee, in person, please see the contact information
          posted on our web site.

Our Commitment to Stockholders

          We expect our employees to share a commitment to protect our assets
and manage our business in the best interests of our stockholders.

     o    Accuracy of our records and reporting: All financial and other
          business information pertaining to our company must be accurately
          recorded, all financial records and transactions must adhere to our
          system of internal controls and accounting requirements, and no one
          shall enter any false or artificial information in our records or
          reporting systems. All company information must be reported honestly
          and accurately, whether in internal personnel, safety, or other
          records or in information we release to the public or file with
          government agencies.

     o    Disclosure Controls and Procedures. We are required by SEC rules to
          maintain effective "disclosure controls and procedures" so that
          financial and non-financial information we are required to report in
          our SEC filings is timely and accurately reported both to our senior
          management and in the filings we make. All employees are expected,
          within the scope of their


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          employment duties, to support the effectiveness of our disclosure
          controls and procedures and to comply with disclosure requirements in
          accordance with local and foreign applicable laws.

     o    Stock Trading and Confidential Information Policy. The company's stock
          trading policy prohibits any employee who is aware of material
          nonpublic information concerning the company, its affiliates or
          concerning third parties with whom the company does business, from
          buying or selling securities of our company, its affiliates or of
          those third parties (until after the material information has been
          fully disclosed to the public). Employees must not disclose or "tip"
          any of this material nonpublic information to family, friends or
          others outside the company. (However, the trading restriction on our
          company securities or those of its affiliates or such third parties
          would not apply to sales or purchases in accordance with a "trading
          plan" validly adopted in compliance with applicable SEC rules.)

          o    No Selective Disclosure. In addition, applicable securities rules
               also prohibit selective disclosure of material nonpublic
               information to those outside the company in most circumstances.
               Therefore, all employees are expected to assist the company in
               keeping all material nonpublic information about the company
               strictly confidential unless and until the company makes an
               authorized press release or other authorized public communication
               or filing.

          o    Information to the Public. Our policy is to provide public
               dissemination of material information about our business only
               through our employees authorized for this purpose. Employees are
               not under any circumstance to discuss the company's financial,
               business or other information with the press (except for those
               employees expressly authorized for this purpose) or on any
               internet or other "discussion board," "chat room," or similar
               forum. Requests from the media, analysts or stockholders about
               our company must be forwarded to our Chief Executive Officer or
               Chief Financial Officer or General Counsel for review by our
               professional staff having responsibility for these matters.

     o    Protection of Company Assets. Each employee is personally responsible
          to use our company's assets only for our lawful, corporate purposes
          approved by management. All employees should help our company protect
          its assets from misuse, theft, damage or other loss. Improper or
          unauthorized personal use of company assets is prohibited.

     o    Intellectual Property. Employees should help our company maintain the
          value of its intellectual property by using care to keep our trade
          secrets and other nonpublic information confidential, and limit access
          to nonpublic information to those authorized to use it in their duties
          for the company. If customers or suppliers provide nonpublic
          information to us in their dealings with us, our employees are
          expected to protect that information in the same manner as our
          company's property.

     o    Communications. Employees are expected to use appropriate judgment and
          discretion in their email, memos, notes, and other formal and informal
          communications relating to our business. Communications relating to
          our business must avoid inappropriate or derogatory comments about
          other individuals or companies, unprofessional language, and
          unauthorized financial, legal or business statements.

     o    Retention of Records. Employees are expected to follow the records
          retention and destruction policies that we implement and communicate
          from time to time. Our company's records shall be properly preserved
          for at least 7 years. It is our company's policy not to destroy or
          alter our records or documents (whether in paper form, emails, or
          otherwise) in response to or in


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          anticipation of any legal proceeding or government inquiry or
          investigation. Criminal liability may be imposed on any person who:

          o    corruptly alters, destroys, mutilates or conceals a record,
               document or other object, or attempts to do so, with the intent
               to impair its availability for use in an official proceeding, or

          o    knowingly alters, covers up, falsifies or makes a false entry in
               any record, document or tangible object with the intent to impede
               or obstruct the investigation or administration of any matter by
               a federal government agency or bankruptcy court.

Our Commitment to Customers and Business Partners

          We are committed to excellence in service and performance for our
customers, and building mutually advantageous alliances with our business
partners.

          o    Customer Relationships. Our policy is to build lasting
               relationships with our customers through superior delivery and
               execution, and honest sales and marketing. We will comply with
               applicable advertising laws and standards. Our policy also
               prohibits making false or deceptive statements about our
               competitors, and giving or accepting kickbacks, bribes,
               inappropriate gifts and other matters prohibited under the
               conflict of interest topic in this code.

          o    Protecting Information about Others. We are committed to treating
               confidential information of our customers and business partners
               with at least the care we use to protect our own proprietary or
               confidential information. All employees are expected to use sound
               judgment in limiting access to confidential information about our
               customers and business partners to those individuals in our
               company who need to know this information to carry out their
               jobs.

          o    Commitment to Quality. Our long term reputation and business
               viability depend upon our continued maintenance of high quality
               in the products and services we provide. We are committed to
               deliver our products and services only in accordance with the
               documentation, safety, quality control, and other procedures we
               maintain from time to time.

          o    Special Concerns with Government Customers. Special legal and
               contracting rules usually apply to the dealings of our company
               with domestic and foreign government agencies. Many national,
               state or other local government agencies impose bidding or
               procurement requirements, special billing and accounting rules,
               and restrictions on subcontractors or agents we may engage.
               Domestic or foreign laws or regulations may also impose strict
               limits on any kind of benefits or gifts offered to officials,
               including limitations on hiring former government officials or
               their family members. Our employees who deal with domestic or
               foreign government agencies are expected to know the laws
               applicable to these business activities, and to use sound
               judgment to avoid any violations of the letter or spirit of the
               laws prohibiting corrupt practices in connection with government
               contracting.

          o    Suppliers. Our contracts with suppliers of products and services
               to us are to be based exclusively on the best interests of our
               company and its business, reflect a fair price for the
               deliverables provided to us, and documented in accordance with
               appropriate approval, contracting and internal control
               procedures.

          o    Business with Third Parties. We expect that our consultants,
               agents, resellers, distributors, subcontractors, and other
               business partners will adhere to lawful and ethical business


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               practices. It is important to our company's reputation that we
               avoid doing business with companies which violate applicable laws
               or have reputations which could harm our business. Our policy
               prohibits engaging agents or other third parties to do indirectly
               what we as a company should not do under our own policies
               outlined in this code.

Our Commitment to Each Other

          We expect each employee to promote a positive working environment for
all.

     o    Respect for Our Employees. Our company's employment decisions will be
          based on reasons related to our business, such as job performance,
          individual skills and talents, and other business-related factors. Our
          company policy requires adherence to all national, state or other
          local employment laws. Our company policy prohibits discrimination in
          any aspect of employment based on race, color, religion, sex, sexual
          preference, marital status, national origin, disability or age, within
          the meaning of applicable laws.

     o    Abusive or Harassing Conduct Prohibited. Our company policy prohibits
          abusive or harassing conduct by our employees toward others, such as
          unwelcome sexual advances, comments based on ethnic, religious or
          racial aspects, or other non-business, personal comments or conduct
          which make others uncomfortable in their employment with us. Our
          company's policy is to provide to its employees of both genders with a
          protective and pleasant work environment free from harassment, sexual
          or otherwise and to prevent harmful exploitation of authority and to
          promote gender equality at work. We encourage employees to report
          harassment or other inappropriate conduct as soon as it occurs. Sexual
          Harassment impinges upon a person's dignity, privacy, equality between
          the sexes, the work relationship and its environment and contradicts
          our company's policy. In addition to harm caused to the work
          environment, sexual harassment is a criminal offense. Employees are
          required to adhere to our company's policy in this matter as
          prescribed by the prevailing laws and regulations.

     o    Health and Safety. We expect all employees to help us to maintain a
          healthy, hygienic and safe working environment and to report promptly
          any unsafe or hazardous conditions or materials, injuries, and
          accidents connected with our business. Our company is committed to
          adhering to safety laws and regulations including fire protection and
          laws and regulations which promote cleanliness and hygiene in the
          workplace. Employees must not work under the influence of any
          substances that would impair the safety of others. All threats or acts
          of physical violence or intimidation are prohibited.

Competition

          We are committed to compete effectively, but lawfully, in our business
markets.

     o    Compliance with Antitrust Laws. Our company and its employees must
          comply with the antitrust and unfair competition laws of the countries
          in which our company engages in business. These laws vary by country
          and can be complex. Employees having roles which may implicate
          antitrust laws are responsible for knowing the laws that apply to
          their business activities, and should speak to our General Counsel if
          any questions arise. Generally, these laws prohibit or regulate merger
          and acquisitions, attempts to monopolize or otherwise restrain trade,
          selling products below cost, price fixing or other agreements with
          competitors that would divide or allocate customers or otherwise harm
          customers, "tying" arrangements that require a customer who wishes to
          buy a


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          given product to buy other products or services, artificially
          maintaining prices, and certain other restrictive agreements or
          arrangements. Our employees must not exchange nonpublic sales
          information with competitors.

     o    Fair Methods of Competition. Our company is committed to competition
          on a lawful and ethical basis. Our employees must not use improper or
          illegal means of gaining competitive information that is confidential
          or proprietary information owned by others. Our employees must not use
          or disclose confidential or proprietary information which they may
          have from past employment with other employers.

Conflicts of Interest

          We expect all of our employees to avoid allowing their private
interests to interfere, or appear to interfere, with the interests of our
company as a whole.

     o    Generally. Employees are expected to make or participate in business
          decisions and actions in the course of their employment with us based
          on the best interests of our company as a whole, and not based on
          personal relationships or benefits. Although some general guidelines
          are provided in this code, our employees are expected to apply sound
          judgment to avoid conflicts of interest that could negatively affect
          our company or its business, whether or not we have specific rules for
          that particular situation. Employees are expected to disclose to us
          any situations that may involve inappropriate or improper conflicts of
          interests affecting them personally or affecting other employees or
          those with whom we do business, as described under "How to Report Your
          Concerns."

     o    Business Referrals. No employee of our company may personally attempt
          to give or steer our company's business transactions to companies in
          which a family relative or personal friend has a financial or other
          interest unless such transaction has been disclosed to our General
          Counsel and the appropriate approvals of our company have been
          obtained.

     o    Personal Investments. Generally, our employees must avoid investments
          in our company's affiliates or other companies with which our company
          does business if these investments could create the fact or appearance
          of a conflict of interest unless such investments received the
          appropriate approvals of our company. Investing in relatively small
          positions of publicly traded securities of other companies is
          generally not prohibited so long as there is no violation of our
          company policy relating to trading while in possession of material
          nonpublic information about other companies. Any proposed personal
          investments by employees in our company's affiliates or other
          companies with which our company does business should be notified in
          advance to our General Counsel who shall advise on the appropriate
          approvals, if any, required in such circumstances.

     o    Corporate Opportunities. Employees must also refrain from purchasing
          property or otherwise taking for themselves personally a business
          opportunity that they learn about through their employment with us or
          use of our company's information.

     o    Prohibited Competition. Employees may not compete with us during the
          term of their employment, and may not initiate any steps to compete
          with us while still employed by our company.

     o    Outside Compensation and Activities. While employed by us, our
          employees must not work for or seek or accept personal payments from
          any customer, supplier, competitor, distributor, reseller,


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          or other business partner of our company, except as approved in
          writing by an authorized officer or manager of our company. Trade
          secrets and other nonpublic know-how and information learned at our
          company must not be used in activities outside our company or in other
          ways that could harm our business.

     o    Outside Board Service. Employees are required to obtain prior written
          authorization from our company for service as a director, general
          partner, manager, officer or similar position with any privately-held
          or public business entity or as an appointee to any kind of
          governmental or quasi-governmental agency or body. Service solely as a
          director or trustee of nonprofit corporations engaged in charitable
          activities does not require approval unless that activity could
          involve improper conflicts of interest.

     o    Gifts and Gratuities. Our employees must not seek or accept gifts or
          gratuities in the form of services or other items of value from our
          customers, other business partners or other parties with whom our
          company contracts. Our employees must not offer or give anything of
          value that could be or appear to be a bribe or otherwise illegal
          payment. These prohibitions do not apply to items of truly nominal
          value such as generally free promotional items, assuming these items
          are not otherwise prohibited by applicable law or custom. Employees
          should never accept anything that would appear to create a conflict of
          interest. In the unusual situation where refusal to accept a true gift
          might hurt our business, be sure to consult the appropriate officer or
          manager of our company concerning the proper means of resolving the
          situation.

     o    Business Entertainment. Employees shall adhere to our company's
          policies with respect to costs of entertainment issued from time to
          time. Extending or accepting invitations to reasonable meal, public
          event and similar business activities incurred for bona fide business
          purposes is generally acceptable, assuming the costs are not
          disproportionate to the business purpose and otherwise do not create
          the fact or appearance of a conflict of interest. Attending
          entertainment events which may appear contrary to professional
          standards of conduct should be avoided.

     o    Travel. Employees are expected to comply with our company's travel
          policies in effect from time to time. We expect that all
          travel-related expenses must be used, accurately reported and recorded
          in compliance with these policies. If these expenses are to be paid by
          a customer or other business partner of ours, or if you wish to pay
          the expenses of your customer or other business contact, or any
          representative of a government agency, travelling to our location,
          your manager or a company officer must approve these in advance.

     o    Other Corporate Policies. In addition to the above, employees are
          expected to comply with our company's other corporate policies in
          effect from time.

Legal Compliance Generally

          We expect our employees to be committed to pro-active compliance with
all applicable laws and regulations affecting our company and its business. In
addition to the laws referred to elsewhere in this code:

     o    General Standard of Compliance. Our employees must comply with all
          applicable laws and regulations and national and local governmental
          authority rules and procedures in every location in which we conduct
          our business. Competitive factors, personal goals, and pressure from
          supervisors, customers or others shall never be an acceptable excuse
          for violating applicable laws.


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     o    Prohibited Corrupt Practices. Our company must comply with
          anti-corruption laws that apply wherever we do business. Our employees
          and agents must not directly or indirectly offer or make a corrupt
          payment to any domestic or foreign government officials or employees
          of enterprises owned or controlled by a government agency. Our
          employees must not engage in any form of fraud, including but not
          limited to embezzlement, theft, hiding or misuse of company assets, or
          falsification of records.

     o    Prohibited Political Contributions. None of our employees shall
          contribute in our company's name or on our company's behalf, any cash,
          services or property of any kind for or in support of any political
          candidate, committee, initiative, or activity. No lobbying efforts or
          contracts shall be undertaken in our company's name or on our
          company's behalf without the prior approval of our Board of Directors.

     o    Prohibited Loans to Executive Officers and Directors. It is unlawful
          for our company, directly or indirectly, to extend or maintain credit,
          to arrange for the extension of credit, or to renew an extension of
          credit, in the form of a personal loan to or for any director or
          executive officer of our company. However, an extension of credit
          maintained by us on July 30, 2002, is not prohibited provided that
          there is no material modification, or any renewal, of the extension of
          credit after that date.

     o    Import and Export Restrictions. Our company and its employees must
          comply with applicable restrictions under domestic and foreign laws
          relating to importing or exporting technology, products, services, or
          regulated information. Employees who travel on company business to
          foreign countries are expected to know and abide by applicable
          import/export and similar restrictions.

     o    Environmental Laws. Our company is committed to protect the quality of
          the environment. We respect the policies and requirements of domestic
          and foreign laws aimed at protecting the environment. We expect a
          commitment from our employees to report appropriately any violations
          of environmental laws and any exposure to hazardous materials or
          substances which are not being handled or disposed of properly.

     o    Intellectual Property Laws. Our company is committed to protect rights
          to intellectual property, Our company is further committed to
          preventing unlicensed copying of software and to honor and protect
          copyrights. We expect our employees to conduct our business and use
          our business systems and facilities in ways which avoid any violations
          of copyright, trademark, service mark, patent, trade secret or other
          intellectual property rights held by third parties.

Our Communities

          We respect our employees' involvement in the community, charity and
political activities and causes they may choose, so long as these activities do
not interfere with job responsibilities to us. No employee may represent that
the employee's views or activities represent our company. Our employees must not
engage in any unwanted solicitations or pressure toward other employees relating
to charitable, religious or political causes.

Waivers Requested by Our Officers and Directors

          This code applies to our officers as well as to our employees
generally. Our directors are also expected to abide by the principles of this
code, within the scope of their duties as directors, as if they were employees
of our company provided that the subsections entitled "Outside Compensation and


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Activities" and "Outside Board Service" under the section "Conflicts of
Interest" shall not apply to directors who are not employees of our company. Any
waiver of this code of conduct for any individual officer or director of our
company must be approved, if at all, in advance by a majority of the independent
directors serving on our board of directors. Any such waivers granted which are
required to be disclosed by applicable law will be publicly disclosed by
appropriate means.


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