As filed with the Securities and Exchange Commission on December __, 2009 Registration Statement No. 333-163223

 

AMENDMENT NO. 1 TO

Israel

(State or Other Jurisdiction of Incorporation or Organization)

5141

(Primary Standard Industrial Classification Code Number)

N/A

(I.R.S. Employer Identification Number)

(Address, Including Zip Code, and Telephone Number, Including

Area Code, of Registrant’s Principal Executive Office)

(Name, Address, Including Zip Code, and Telephone Number,

Including Area Code, of Agent for Service)

 

 

Erick Richardson, Esq.	Gregory Sichenzia, Esq.
Richardson & Patel LLP	Thomas A. Rose, Esq.
10900 Wilshire Boulevard, Suite 500	Sichenzia Ross Friedman Ference LLP
Los Angeles, California 90211	61 Broadway, 32nd Floor New York, NY 10006

 

Approximate date of commencement of proposed sale to the public:  As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.  o
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If this Form is a registration statement pursuant to General Instruction I.C. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box.  o

If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.C. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box.  o

Title of Each Class of Securities to be Registered		Proposed Maximum Aggregate Offering Price (1)(2)				Amount of Registration Fee (3)
Ordinary Shares, NIS 0.10 par value		$	23,000,000			$	1,640

(1)

Includes all ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of the distribution or within 40 days after the later of the effective date of this registration statement and the date the securities are first bona fide offered to the public.

 

(2)	Includes shares to be sold upon exercise of the underwriter’s over-allotment option. See "Underwriting."

 

(3)	Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.

 

 

 

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PRELIMINARY PROSPECTUSSUBJECT TO COMPLETION, DATED DECEMBER __, 2009

 

 

We are offering up to $20,000,000 of ordinary shares. The number of shares that we will offer will be determined based on the public offering price per ordinary share. Our ordinary shares are listed on the Nasdaq Capital Market under the symbol “WILC”. On December 23, 2009, the last reported market price of our ordinary shares was US $5.33.

 

 

 

 

		Per ordinary share				Total
Public offering price			US$				US$[     ]
Underwriting discount			US$				US$[     ]
Proceeds, before expenses, to us			US$				US$[     ]

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

	Page
Presentation of Information	vi
Presentation of Financial and Share Information	vi
Prospectus Summary	1
Risk Factors	6
Forward Looking Statements	17
Use of Proceeds	18
Price Range of Ordinary Shares	18
Capitalization	19
Dilution	19
Exchange Rate Information	21
Enforcement of Civil Liabilities	22
Selected Consolidated Financial and Operating Data	23
Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Our Business	37
Regulation	50
Management	51
Principal Shareholders	51
Related Party Transactions	52
Description of Securities	52
Shares Eligible For Future Sale	52
Underwriting	53
Expenses of The Offering	60
Incorporation of Certain Documents by Reference	61
Legal Matters	62
Experts	62
Where You Can Find More Information	62
Index To Consolidated Financial Statements	F-1

 

 

 

 

 

 

 

 

 

Unless otherwise indicated, the share information in this prospectus is based on 10,267,893 ordinary shares outstanding as of December 23, 2009.

 

 

 

 

 

 

 

 

 

As of December 23, 2009, our principal shareholder, Willi-Food Investments Ltd (“Willi-Food”), holds approximately 69.85% of our outstanding share capital.  Willi Food’s securities are traded on the Tel Aviv Stock Exchange.

 

 

 

 

 

 

 

Ordinary Shares in the Offering:
Ordinary Shares outstanding after the Offering:
Nasdaq symbol:		WILC
Option to purchase additional ordinary shares		We have granted to the underwriter an option, exercisable within 45 days from the date of this prospectus, to purchase up to an additional _______ ordinary shares solely to cover over-allotments.
Timing and settlement for ordinary shares		The ordinary shares are expected to be delivered against payment on ___________, 2009.
Use of proceeds:		We estimate that we will receive net proceeds from this offering of approximately US$18.5 million, after deducting underwriting discounts and the estimated offering expenses payable by us and based upon an assumed initial offering price of US $   per ordinary share (the mid-point of the estimated public offering price range shown on the front cover of this prospectus).  We currently intend to use the net proceeds to fund working capital and for other general corporate purposes.

 

 

 

 

		For the nine months ended September 30,												For the year ended December 31,
		2009				2009				2008				2008				2007
		USD				NIS				NIS				NIS				NIS
		(in thousands except per share)
Summary statement of operation data:
Sales			59,527				223,704				218,122				289,068				201,617
Gross profit			15,883				59,689				55,064				60,229				45,555
Operating income			7,186				27,005				15,469				9,720				13,127
Net income			6,265				23,545				8,855				267				4,639
Net income (loss) attributable to shareholders			6,020				22,624				6,697				(786	)			2,342
Net income (loss) attributable per ordinary share, basic			0.59				2.20				0.65				(0.08	)			0.23
Net income (loss) attributable per ordinary share, diluted			0.59				2.20				0.65				(0.08	)			0.23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of the date of this Registration Statement, Willi-Food owned approximately 69.85% of our ordinary shares. Mr. Joseph Williger, who serves as Chief Executive Officer and director of our company, and serves as Chairman of the Board of Willi-Food, holds approximately 20.99% of the outstanding shares of Willi-Food (approximately 20.85% on a fully-diluted basis). Mr. Zwi Williger, who serves as Chief Operating Officer and Chairman of the Board of our company, and serves as a director and Chief Executive Officer of Willi-Food, holds approximately 33.26% of the outstanding shares of Willi-Food (approximately 32.24% on a fully-diluted basis).

 

 

 

In 2008, Mr. Arcadi Gaydamak ("Gaydamak") borrowed approximately NIS 76 million (US $20 million) from companies owned by Messrs. Zwi Williger and Joseph Williger (the "Williger Brothers"). These loans were secured by Gaydamak’s equity securities of Willi-Food, the parent company to G. Willi Food (“Parent”). The loans included a provision whereby the Williger Brothers had a call option to acquire the Parent equity if Gaydamak defaulted under the loans.  On September 2008 Gaydamak defaulted under these loans and accordingly the Williger Brothers increased their ownership of Parent by exercising their call option to acquire such interests ; Zwi Williger by 21.65% and Joseph Williger by 21.65%.

 

 

 

However, in the event the lawsuit is ruled against the Williger Brothers, their ownership interest in Willi-Food would be reduced (Zwi Williger from approximately 33.26% to approximately 15.46% and Joseph Williger from approximately 20.99% to approximately 3.19%) and Gaydamak would own a significant indirect interest in our company.

 

 

Willi-Food, Mr. Zwi Williger, a 33.26% shareholder of Willi-Food, the Chairman of our Board of Directors and our Chief Operating Officer and a director and Chief Executive Officer in Willi-Food, and Mr. Joseph Williger, a 20.99% shareholder of Willi-Food, a director and our Chief Executive Officer and the chairman of the Board of Directors of Willi-Food, have been and continue in certain cases to be party to certain agreements and arrangements relating to our operations.  Such transactions include service and employment arrangements between each of Messrs. Joseph and Zwi Williger together with us, and a service agreement we have with Willi-Food.  All such transactions include consideration.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·

varying regulatory restrictions on sales of our products to certain markets and unexpected changes in regulatory requirements;

 

·

tariffs, customs, duties, quotas and other trade barriers;

 

·

difficulties in managing foreign operations and foreign distribution partners;

 

·

longer payment cycles and problems in collecting accounts receivable;

 

·

fluctuations in currency exchange rates;

 

·

political risks;

 

·

foreign exchange controls which may restrict or prohibit repatriation of funds;

 

·

export and import restrictions or prohibitions, and delays from customs brokers or government agencies;

 

·

seasonal reductions in business activity in certain parts of the world; and

 

·

potentially adverse tax consequences.

 

 

 

 

 

—

changes affecting currency exchange rates, including the NIS/U.S. Dollar exchange rate;

—

the loss of one of more of our key personnel;

—

changes in laws and regulations, including those relating to the food distribution industry, and inability to meet and maintain regulatory qualifications and approvals for our products;

—

termination of arrangements with our suppliers, in particular Arla Foods amba;

—

payment default by, or loss of, one or more of our principal clients;

—

increasing levels of competition in Israel and other markets in which we do business;

—

our inability to accurately predict consumption of our products;

—

product liability claims and other litigation matters;

—

our inability to meet the Nasdaq listing requirements;

—

changes in political, economic and military conditions in Israel, including, in particular; economic conditions in our core markets;

—

increase or decrease in global purchase prices of food products;

—

inability to successfully integrate our prior acquisitions;

—

interruption to our storage facilities;

—

our insurance coverage may not be sufficient;

—

variations from quarter to quarter;

—

inability to maintain an effective system of internal controls;

—

our inability to protect our intellectual property rights;

—

initiation and enforcement of legal action in Israel;

—

significant concentration of our shares are held by one shareholder;

—

we are controlled by and have business relations with Willi-Food and its management;

—

all of our assets are pledged to creditors;

—

our international operations may be adversely affected by risks associated with international business; and

—

our ordinary share price may be volatile.

 

 

 

The last reported sale price of our ordinary shares on the Nasdaq Capital Market on December 23, 2009 was $5.33 per share. As of December 23, 2009, we had 20 holders of record of our ordinary shares.

 

 

 

 

·

on an actual basis; and

 

·

on an as adjusted basis to reflect the public offering of  _____ ordinary shares at a price of $_____ per share.

 

 

 

 

 

		NIS		US$
	Assumed public offering price per ordinary share
	Net tangible book value per ordinary share at NIS    (US $ )
	Increase in net tangible book value per ordinary share attributable to this offering
	Net tangible book value per ordinary share as of June 30, 2009 after giving effect to the offering
	Dilution in net tangible book value per ordinary share to new investors in the offering

 

	Shares Held				Total Investment
	Number		Percentage of the Company		Percentage of  Voting Rights		Amount		Percentage of Investment		Average Cost  Per Share
	(In millions, except percentages and per share amounts)
Existing Shareholders
New Investors
Total

 

 

 

 

 

		NIS per U.S. Dollar representative exchange rate
		Average(1)				High				Low				Period-End
2009
November			3.779				3.826				3.741				3.792
October			3.726				3.780				3.690				3.746
September			3.766				3.807				3.729				3.758
August			3.832				3.931				3.743				3.811
July			3.892				3.987				3.781				3.790
June			3.943				4.005				3.887				3.919
May			4.092				4.169				3.958				3.958
April			4.196				4.256				4.125				4.163
March			4.159				4.245				4.024				4.188
February			4.103				4.191				4.012				4.162
January			3.913				4.065				3.783				4.065
Year ended December 31, 2008			3.568				4.022				3.230				3.802
Year ended December 31, 2007			4.085				4.342				3.830				3.846

(1)

Annual averages are calculated from month-end rates. Monthly and interim period averages are calculated using the average of the daily rates during the relevant period.

 

 

 

 

 

 

 

		For the nine months ended September 30								For the year ended December 31
		2009				2009				2008				2007
		NIS				USD				NIS				NIS
Cash and securities			110,461				29,394				88,116				92,916
Total assets			272,780				72,587				273,342				239,452
Retained earnings			134,071				35,676				111,447				112,233
Shareholders' equity			198,518				52,826				185,582				190,607
Working capital			140,157				37,296				122,523				142,645
Equity to total assets attributable to shareholders			72	%			72	%			63	%			72	%
Current ratio			2.9				2.9				2.4				4.0
Quick ratio			2.5				2.5				2.0				3.3

 

 

 

 

 

 

 

Critical Accounting Policies

Management’s discussion and analysis is based upon the consolidated financial statements, which have been prepared in accordance with IFRS as issued by the IASB for all reporting periods presented. The use of these International Financial Reporting Standards requires the 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 accounting periods presented.  These estimates include, among other things, assessing the collectibility of accounts receivable and the use of recoverability of inventory. Actual results could differ from those estimates. The markets of the Company’s products are characterized by intense competition and a rapid turnover of products and frequent new introductions of products, all of which may impact future ability to value the Company’s assets.

 

The following critical accounting policies may affect significant judgments and estimates used in the preparation of the consolidated financial statements.

 

1.	Revenue Recognition – Revenue is measured at the fair value of the consideration received or receivable. Management estimates is required to determine the amounts to be reduced for estimated customer returns, rebates and other credits.

Allowance for customer returns

In determining the accrual for customer returns, management considers past experience for the each specific type of the products as well as the Company's ability to utilise the product returned.

 

 

Allowance for Rebates and other credits

Allowance for rebates is determined based on expected level of revenues volumes applied to the rebate percentage agreed with the customer. Other credits relates mainly to disagreement with customers over prices and quantities. The determination of the allowance for other credits is highly subjective and management can exercise great deal of discretion over it. For our primary customers, allowance for other credits is determined based on past experience of collecting such differences, the aging of the balance and the Company's familiarity of the customer. Changes in these assumptions could affect our future results of operations.

 

2.	Inventories – Inventories are assets held for sale in the ordinary course of business, in the process of production for such sale or in the form of materials or supplies to be consumed in the production process or in the rendering of services.

 

We value our Inventories at the lower of cost and net realizable value.

 

Cost is determined as follows:

 

	Raw material, components and packaging	-	by the "first-in, first-out" method;
	Processing goods	-	cost of materials plus labor
	finished products	-	on the basis of standard cost which approximates actual production cost (materials, labor and indirect manufacturing costs).
	Products	-	weighted average method

 

The Company's management is required to make certain judgments and estimates that may significantly impact the ending inventory valuation at cost as well as the amount of gross profit recognized. Judgments made, include recording markdowns used to sell through inventory and shrinkage. When management determines the salability of inventory has decreased, markdowns for clearance activity and the related cost impact are recorded at the time the price change decision is made. Factors considered in the determination of markdowns include current and anticipated demand, customer preferences and age of merchandise.

3.  Useful lives of property, plant and equipment - the management of the Company reviews the estimated useful lives of property, plant and equipment at the end of each annual reporting period in order to determine the amount of depreciation expense to be recorded. The useful life of an asset is estimated at the time the asset is acquired based on historical experience, the expected usage, wear and tear of the asset. Changes in industry conditions may cause the estimated period of use or the value of these assets to change. We perform periodic reviews to confirm the appropriateness of estimated economic useful lives for each class of fixed assets. These factors could cause management to conclude that impairment indicators exist and require that impairment tests be performed, which could result in management determining that the value of long-lived assets is impaired, resulting in a write-down of the long-lived assets. For the two years ended December 31, 2008, no changes in assets useful lives have been recorded.

 

 

4.  Impairment of goodwill - Goodwill is not amortized, but is evaluated for impairment annually or whenever events or changes in circumstances indicate that the value of the goodwill may be impaired. This evaluation requires management to make judgments relating to future cash flows, growth rates, and economic and market conditions. These evaluations are based on determining the fair value of a cash generating unit using a valuation method discounted cash flow or a relative. During 2008 and 2007, the management of the Company assessed the recoverability of goodwill, and determined that goodwill associated with the Company's overseas marketing of refrigerated products activity and with the Company's export activity (WF) was not recoverable and was written off in the amount of NIS 1,067 thousands and NIS 3,054 thousands, accordingly. The primary factor leading to the decisions that goodwill was not recoverable in both subsidiaries, was the substantial adverse difference between management's expectations regarding results of operation as predicted at the purchase deliberations and the actual amounts. The operations of both entities were eventually discontinued as part of the discontinuation of the export segment.

5.  Deferred taxes- Deferred tax is provided for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. We recognise a deferred tax asset in our balance sheet only where we determine that it is probable that it will be recovered. A portion of the deferred tax asset recorded in our balance sheet relates to current or prior period tax losses where management considers that it is more likely than not that we will recover the benefit of those tax losses in future periods through the generation of sufficient future taxable profits. Our assumptions in relation to the generation of sufficient future taxable profits depend on our estimates of future taxable profits from the Company's regular course of business. These estimates are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter the projections, which may impact the recoverability of the deferred tax asset recorded in our balance sheet and those tax losses currently provided as not recoverable. In such circumstances, some or all of the carrying value of the deferred tax asset may require provisioning and we would charge the expense to the profit and loss account, and conversely, some or all of the amounts provided as not recoverable may be reversed and we would credit the benefit to the profit and loss account.

6.  Severance pay- The current value of the Company's obligation in respect of severance pay is based on actuarial assumptions, including discount rate (which is based on the discount rate of government bonds), market conditions, etc. The actuarial assumptions are based on the information provided by the management of the Company regarding expected rate of termination, employees insurance policies payments, probability for compensation payments. Any change of the assumptions given by the management of the Company may change the book value of the Company's obligation in respect of severance pay and could affect our future results of operations.