AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 30, 2007
REGISTRATION NO. 333-117954
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
TO FORM F-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
RADA ELECTRONIC INDUSTRIES LTD.
(Exact name of Registrant as specified in its charter)
ISRAEL NOT APPLICABLE
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
RADA ELECTRONIC INDUSTRIES LTD.
7 GIBOREI ISRAEL STREET
NETANYA 42504, ISRAEL
TEL: (972)(9) 892-1111
(Address and telephone number of Registrant's principal executive offices)
---------------------------
PUGLISI & ASSOCIATES
850 LIBRARY AVENUE, SUITE 204
P.O. BOX 885
NEWARK, DELAWARE 19715
TEL. (302) 738-6680
(Name of agent for service)
---------------------------
COPIES OF ALL COMMUNICATIONS, INCLUDING COMMUNICATIONS SENT TO
AGENT FOR SERVICE, SHOULD BE SENT TO:
STEVEN J. GLUSBAND, ESQ. SARIT MOLCHO, ADV.
CARTER LEDYARD & MILBURN LLP S. FRIEDMAN & CO., ADVOCATES
2 WALL STREET EUROPE-ISRAEL TOWER
NEW YORK, NY 10005 2 WEITZMAN STREET, POB 3123
TEL: 212-238-8605 TEL-AVIV, ISRAEL, 64239
FAX: 212-732-3232 TEL: (972)(3) 796-1500
FAX: (972)(3) 796 1501
effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [_]
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, please check the following box. [X]
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. [_]
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. [_]
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. [_]
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. [_]
-----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
2
EXPLANATORY NOTE
The purpose of this Post-Effective Amendment No. 1 to the Registration
Statement on Form F-3 of RADA Electronic Industries Ltd. (Registration No.
333-117954) is to amend the table under the caption "Selling Shareholders" in
the prospectus to add the names of certain selling shareholders and to update
certain other disclosure in the prospectus.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MARCH 30, 2007
PROSPECTUS
RADA ELECTRONIC INDUSTRIES LTD.
1,110,214 ORDINARY SHARES
This prospectus relates to up to 1,110,214 ordinary shares of RADA
Electronic Industries Ltd. that the selling shareholders named in this
prospectus or their transferees may offer from time to time. Of the ordinary
shares offered hereby, 84,916 ordinary shares were issued to the selling
shareholders and up to: (i) 619,047 ordinary shares are issuable upon conversion
of $3 million of convertible notes; and (ii) 406,250 ordinary shares are
issuable upon exercise of warrants. Such convertible notes and warrants were
issued pursuant to a securities purchase agreement, dated as of July 9, 2004.
The registration of the ordinary shares does not necessarily mean that the
selling shareholders or their transferees will offer or sell their shares.
We are not offering or selling any of our ordinary shares pursuant to this
prospectus. We will not receive any of the proceeds from the sale by the selling
shareholders of the ordinary shares offered by this prospectus. We will bear all
expenses in connection with the preparation of this prospectus.
Our ordinary shares are listed for trading on the NASDAQ Capital Market
under the symbol "RADI." On March 29, 2007, the closing price of our ordinary
shares on the NASDAQ Capital Market was $2.45.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON
PAGE 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
2007
TABLE OF CONTENTS
Page
----
NOTICE REGARDING FORWARD-LOOKING STATEMENTS 2
PROSPECTUS SUMMARY 3
RADA ELECTRONIC INDUSTRIES LTD 3
THE OFFERING 3
CAPITALIZATION AND INDEBTEDNESS 15
REASONS FOR THE OFFER AND USE OF PROCEEDS 15
MARKET PRICE DATA 16
SELLING SHAREHOLDERS 17
OFFER STATISTICS, EXPECTED TIME TABLE AND PLAN OF DISTRIBUTION 20
EXPENSES ASSOCIATED WITH THE REGISTRATION 22
FOREIGN EXCHANGE CONTROLS AND OTHER LIMITATIONS 22
EXPERTS 22
LEGAL MATTERS 23
WHERE YOU CAN BEST FIND MORE INFORMATION; INCORPORATION OF
CERTAIN INFORMATION BY REFERENCE 23
ENFORCEABILITY OF CIVIL LIABILITIES 24
When you are deciding whether to purchase the ordinary shares being offered
by this prospectus, you should rely only on the information incorporated by
reference or provided in this prospectus or any supplement. We have not
authorized anyone to provide you with different information. We are not making
any offer of the ordinary shares in any state where the offer is not permitted.
You should not assume that the information in this prospectus or any supplement
is accurate as of any date other than the date on the front of those documents.
In this prospectus, "we," "us," "our," the "Company" and "RADA" refer to
RADA Electronic Industries Ltd., an Israeli company, and our Chinese subsidiary.
We are a "foreign private issuer" as defined in Rule 3b-4 under the
Securities Exchange Act of 1934, or the Exchange Act. As a result, 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 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 United States companies
whose securities are registered under the Exchange Act.
We publish annually an annual report on our website containing financial
statements that have been examined and reported on, with an opinion expressed
by, a qualified independent auditor or certified public accountant. We prepare
our financial statements in U.S. dollars and in accordance with accounting
principles generally accepted in the United States. All references to "dollars"
or "$" in this prospectus are to U.S. dollars, and all references to "shekels"
or "NIS" are to New Israeli Shekels.
1
NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated in it by reference contain
forward-looking statements which involve known and unknown risks and
uncertainties. We include this notice for the express purpose of permitting us
to obtain the protections of the safe harbor provided by the Private Securities
Litigation Reform Act of 1995 with respect to all such forward-looking
statements. Examples of forward-looking statements include: projections of
capital expenditures, competitive pressures, revenues, growth prospects, product
development, financial resources and other financial matters. You can identify
these and other forward-looking statements by the use of words such as "may,"
"should," "plans," "anticipates," "believes," "estimates," "predicts,"
"intends," "potential" or the negative of such terms, or other comparable
terminology.
Our ability to predict the results of our operations or the effects of
various events on our operating results is inherently uncertain. Therefore, we
caution you to consider carefully the matters described under the caption "Risk
Factors" and certain other matters discussed in this prospectus, the documents
incorporated by reference in this prospectus, and other publicly available
sources. Such factors and many other factors beyond the control of our
management could cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements that
may be expressed or implied by the forward-looking statements.
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PROSPECTUS SUMMARY
YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION ABOUT US, THE ORDINARY SHARES THAT MAY BE SOLD FROM TIME TO TIME,
AND OUR FINANCIAL STATEMENTS AND THE NOTES TO THEM, ALL OF WHICH APPEAR
ELSEWHERE IN THIS PROSPECTUS OR IN THE DOCUMENTS INCORPORATED BY REFERENCE IN
THIS PROSPECTUS.
RADA ELECTRONIC INDUSTRIES LTD.
We develop, manufacture and sell automated test equipment, avionics
products and ground debriefing systems and provide manufacturing services for
military and commercial use, mainly in Israel, the U.S. and Europe. We also
provide test and repair services using our CATS(TM) testers and test program
sets through our Chinese subsidiary.
We were incorporated in Israel on December 8, 1970 and have one majority
owned subsidiary in China. Our registered offices and principal place of
business are located at 7 Giborei Israel Street, Netanya 42504, Israel, and our
telephone number is 972-9-892-1111. Our address on the internet is www.rada.com.
Our agent for service of process in the U.S. is Puglisi & Associates.
THE OFFERING
Ordinary shares offered 1,110,214 shares, including 1,110,214
ordinary shares that were issued to the
selling shareholders and up to: (i) 619,047
shares issuable upon conversion of
convertible notes; and (ii) 406,250 shares
issuable upon exercise of outstanding
warrants.
NASDAQ Capital Market Symbol "RADA"
Use of proceeds We will not receive any proceeds from the
sale of the ordinary shares offered
hereby. We will, however, receive the
proceeds from the exercise of the warrants
if and when they are exercised.
Ordinary shares outstanding 8,728,509 shares
Risk Factors Prospective investors should carefully
consider the Risk Factors beginning on
Page 4 before buying the ordinary shares
offered hereby.
3
RISK FACTORS
INVESTING IN OUR ORDINARY SHARES INVOLVES A HIGH DEGREE OF RISK AND
UNCERTAINTY. YOU SHOULD CAREFULLY CONSIDER THE RISKS AND UNCERTAINTIES DESCRIBED
BELOW BEFORE INVESTING IN OUR ORDINARY SHARES. OUR BUSINESS, PROSPECTS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED DUE TO
ANY OF THE FOLLOWING RISKS. IN THAT CASE, THE VALUE OF OUR ORDINARY SHARES COULD
DECLINE, AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT.
RISKS RELATED TO OUR BUSINESS AND OUR INDUSTRY
WE HAVE A HISTORY OF LOSSES, AND MAY NOT BE ABLE TO ACHIEVE OR SUSTAIN
PROFITABILITY IN THE FUTURE.
In the year ended December 31, 2006 we recorded a net loss of $2 million.
We have incurred losses in three out of the last five years and as of December
31, 2006 our accumulated deficit was $61 million. We may not be able to achieve
or sustain profitability in the future.
WE MAY NOT BE ABLE TO SERVICE OUR DEBT, INCLUDING THE $3 MILLION
CONVERTIBLE NOTES DUE JULY 12, 2007.
Our ability to pay or to refinance our indebtedness, including the $3
million convertible notes due July 12, 2007, will depend upon our future
operating performance. Our business may not generate sufficient cash flow from
operations and future borrowings may not be available to us in amounts
sufficient to enable us to pay our indebtedness or to fund our other liquidity
needs. If we are unable to meet our debt service obligations or fund our other
liquidity needs, we would attempt to restructure or refinance our indebtedness
or seek additional equity capital. It may be challenging for us to accomplish
such actions on satisfactory terms.
WE MAY NEED TO RAISE ADDITIONAL CAPITAL IN THE FUTURE, WHICH MAY NOT BE
AVAILABLE TO US.
Our working capital requirements and the cash flow provided by our
operating activities are likely to vary greatly from quarter to quarter,
depending on the timing of orders and deliveries, the build-up of inventories,
and the payment terms offered to our customers. As a consequence of our
significant losses, we incurred significant bank debt and sold equity and debt
securities in private placements in the years 1997 through 2006. We may need to
raise additional funds for a number of uses, including:
o Working capital and operating activities;
o Implementing marketing and sales activities for our products;
o Maintaining and expanding research and development programs;
o Hiring additional qualified personnel; and
o Supporting an increased level of operations.
We may not be able to obtain additional funds in the most favorable terms.
If we cannot raise needed funds on favorable terms, we may be required to delay,
scale back or eliminate some aspects of our operations and we may not be able
to:
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o Develop new products;
o Enhance our existing products;
o Remain current with evolving industry standards;
o Fulfill our contractual obligations;
o Take advantage of future opportunities;
o Respond to competitive pressures or unanticipated requirements; or
o Retain our listing on the NASDAQ Capital Market.
If adequate funds are not available to us, our business, results of
operations and financial condition will be materially and adversely affected.
Any equity or debt financings may cause dilution to our then-existing
shareholders and may increase our financing expenses. If additional funds are
raised through the issuance of equity securities, the net tangible book value
per share of our ordinary shares would decrease and the percentage ownership of
then current shareholders would be diluted.
WE MAY NOT BE ABLE TO IMPLEMENT OUR GROWTH STRATEGY.
In line with our growth strategy, we have entered into teaming agreements
and other co-operation agreements with Smiths Aerospace Electronic Systems, or
Smiths, and Lockheed Martin Aerospace to increase our penetration into the
aviation market. We are currently investing and intend to continue to invest
significant resources to develop these relationships. Should our relationships
fail to materialize into significant agreements or should we fail to work
efficiently with such parties, we may lose sales and marketing opportunities and
our business, results of operations and financial condition could be adversely
affected.
As part of our growth strategy, we seek to acquire or invest in
complementary, including competitive, businesses, products and technologies. We
acquired certain assets and assumed certain liabilities related to the
operations of Vectop Ltd., or Vectop, in the first quarter of 2005, and are
seeking additional potential acquisition candidates. We currently have no
commitments or agreements with respect to any future acquisitions or investments
and we may not be able to consummate any acquisition or investment. Even if we
do acquire or invest in these businesses, products or technology, the process of
integrating acquired assets into our operations may result in unforeseen
operating difficulties and expenditures and may absorb significant management
attention that would otherwise be available for the ongoing development of our
business.
In addition, we have limited experience in managing acquisitions and
growth. Therefore, the anticipated benefits of any acquisition may not be
realized. Furthermore, future acquisitions by us could result in potentially
dilutive issuances of our equity securities, the incurrence of debt and
contingent liabilities and impairment related to goodwill and other intangible
assets, any of which could materially adversely affect our operating results and
financial position. Acquisitions also involve other risks, including risks
inherent in entering markets in which we have no or limited prior experience and
the potential loss of key employees and the risk that we may experience
difficulty or delays in obtaining necessary permits.
5
COMPETITION IN THE MARKET FOR AUTOMATED TEST EQUIPMENT AND AVIONICS
EQUIPMENT IS INTENSE AND WE MAY BE UNABLE TO ACHIEVE PROFITABILITY.
The market for our products is highly competitive, and we may not be able
to compete effectively in our market. Our principal competitors in the automated
test equipment market are Zaban in Israel, and Aerospatiale Avionique and Avtron
abroad. Our principal competitors in the avionics market are Harris, Rockwell
Collins, Honeywell, Elbit Systems Ltd., or Elbit, Israel Aircraft Industries
Ltd., or IAI, R.S.L. Ltd., TEAC and Elisra Systems Ltd. We expect to continue to
face competition from these and other competitors. Most, if not all, of our
competitors are far larger, have substantially greater resources including
financial, technological, marketing and distribution capabilities, and enjoy
greater market recognition than we have. These competitors may be able to
achieve greater economies of scale and may be less vulnerable to price
competition than us. We may not be able to offer our products as part of
integrated systems to the same extent as our competitors or successfully develop
or introduce new products that are more cost effective or offer better
performance than those of our competitors. Failure to do so could adversely
affect our business, financial condition and results of operations.
OUR INITIATIVE OF PROVIDING MANUFACTURING SERVICES MAY NOT SUCCEED, AND AS
A RESULT, WE MAY BE UNABLE TO ACHIEVE PROFITABILITY IN OUR BEIT-SHE'AN
PRODUCTION FACILITY AND MAY BE FORCED TO SHUT DOWN ITS OPERATIONS.
In June 2000, we began to provide manufacturing services to original
equipment manufacturers in Israel and the United States, using the manufacturing
capabilities of our Beit-She'an plant. The market for our manufacturing services
is highly competitive and we may not be able to compete effectively in this
market. The cost of labor and the efficiency of the production equipment and
production processes are crucial to our success in this market. Consequently,
should we fail to maintain low labor costs, enhance our production equipment and
develop new and more efficient production methods, we may have to shut down the
operations of our Beit-She'an plant, which may harm our competitiveness and
could adversely affect our business, results of operations and financial
condition.
REDUCTION IN MILITARY BUDGETS WORLDWIDE MAY CAUSE A REDUCTION IN OUR
REVENUES, WHICH WOULD ADVERSELY AFFECT OUR BUSINESS, OPERATING RESULTS AND
FINANCIAL CONDITION.
A significant portion of our revenues is derived from the sale of products
with military applications. These revenues, on a consolidated basis, totaled
approximately $11.6 million, or 89% of revenue in 2006, $11.8 million, or 88% of
revenues in 2005 and $11.8 million, or 83 % of revenues in 2004. The military
budgets of a number of countries may be reduced in the future. Declines in
military budgets may result in reduced demand for our products and manufacturing
services. This would result in reduction in our core business' revenues and
adversely affect our business, results of operations and financial condition.
SALES OF OUR PRODUCTS ARE SUBJECT TO GOVERNMENTAL PROCUREMENT PROCEDURES
AND PRACTICES; TERMINATION, REDUCTION OR MODIFICATION OF CONTRACTS WITH OUR
CUSTOMERS, AND ESPECIALLY WITH THE GOVERNMENT OF ISRAEL, OR A SUBSTANTIAL
DECREASE IN OUR CUSTOMERS' BUDGETS MAY ADVERSELY AFFECT OUR BUSINESS, OPERATING
RESULTS AND FINANCIAL CONDITION.
Our military aviation products are sold primarily to government agencies
and authorities and government-owned companies, many of which have complex and
time-consuming procurement procedures. A long period of time often elapses from
the time we begin marketing a product until we actually sell that product to a
particular customer. In addition, our sales to government agencies, authorities
and companies are directly affected by these customers' budgetary constraints
and the priority given in their budgets to the procurement of our products.
6
Further, our business with the State of Israel and other governmental
entities is, in general, subject to delays in funding and performance of
contracts and the termination of contracts or subcontracts for convenience,
among others. The termination, reduction or modification of our contracts or
subcontracts with the Government of Israel in the event of change in
requirements, policies or budgetary constraints would have an adverse effect on
our business, operating results and financial condition.
IF WE DO NOT RECEIVE THE GOVERNMENTAL APPROVALS NECESSARY FOR THE EXPORT OF
OUR PRODUCTS, OUR REVENUES MAY DECREASE. SIMILARLY IF OUR SUPPLIERS AND PARTNERS
DO NOT RECEIVE THEIR GOVERNMENT APPROVALS NECESSARY TO EXPORT THEIR PRODUCTS OR
DESIGNS TO US, OUR REVENUES MIGHT DECREASE AND WE MAY FAIL TO IMPLEMENT OUR
GROWTH STRATEGY.
Under Israeli law, the export of certain of our products and know-how is
subject to approval by the Israeli Ministry of Defense. To initiate sales
proposals with regard to exports of our products and know-how and to export such
products or know-how, we must obtain permits from the Ministry of Defense. We
may not be able to receive in a timely manner all the required permits for which
we may apply in the future.
Similarly, under foreign laws the export of certain military products,
technical designs and spare parts require the prior approval of, or export
license from, such foreign governments. In order to maintain our third party
production, certain co-development activities and procurements required for the
performance of certain contracts, we must receive detailed technical designs,
products or products' parts samples from our strategic partners or suppliers. We
may not be able to receive all the required permits and/or licenses in a timely
manner. Consequently, our revenues may decrease and we may fail to implement our
growth strategy.
WE DEPEND ON SALES TO KEY CUSTOMERS AND THE LOSS OF ONE OR MORE OF OUR KEY
CUSTOMERS WOULD RESULT IN A LOSS OF A SIGNIFICANT AMOUNT OF OUR REVENUES.
A significant portion of our revenues is derived from a small number of
customers. Our major customers during the three years ended December 31, 2006,
were as follows:
Percentage of Revenues
--------------------------------------
2004 2005 2006
-------- -------- --------
Smiths Electronic Systems 5% 21% 38%
The Boeing Company 10% 3% -
Israeli Ministry of Defense 19% 12% 5%
Israel Aviation Industries 6% 14% 20%
Portuguese Air Force 17% - 2%
U.S.Navy 11% - -
Lockheed Martin 5% 12% 9%
Hindustan Aeronautics - 5% 3%
We anticipate that a significant portion of our future revenues will
continue to be derived from sales to a small number of customers. If our
principal customers do not continue to purchase products from us at current
levels or if such customers are not retained and we are not able to derive
sufficient revenues from sales to new customers to compensate for their loss,
our revenues would be reduced and adversely affect our business, financial
condition and results of operations.
7
WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS OF COMPONENTS FOR OUR PRODUCTS
AND IF WE ARE UNABLE TO OBTAIN THESE COMPONENTS WHEN NEEDED, WE WOULD EXPERIENCE
DELAYS IN MANUFACTURING OUR PRODUCTS AND OUR FINANCIAL RESULTS COULD BE
ADVERSELY AFFECTED.
We acquire most of the components for the manufacturing of our products
from a limited number of suppliers and subcontractors, most of whom are located
in Israel and the United States. Certain of these suppliers are currently the
sole source of one or more components upon which we are dependent. Suppliers of
some of the components for manufacturing require us to place orders with
significant lead-time to assure supply in accordance with our manufacturing
requirements. Inadequacy of operating funds may cause us to delays placement of
such orders and may result in delays in supply. Delays in supply may
significantly hurt our ability to fulfill our contractual obligations and may
significantly hurt our business and result of operations. We may not be able to
continue to obtain such components from these suppliers on satisfactory
commercial terms. Temporary disruptions of our manufacturing operations would
ensue if we were required to obtain components from alternative sources, which
may have an adverse effect on our financial results.
WE RELY ON THE AIRLINE INDUSTRY AND THE CONTINUED FINANCIAL CRISES IN THIS
INDUSTRY ADVERSELY AFFECTS OUR SALES.
The airline industry is an important market for our automated test
equipment products and product support services. Our ability to achieve growth
and profitability in this market depends in great measure on the economic
condition of the commercial aviation industry. Since 2001, and especially
following the tragic events of September 11, 2001, the airline industry has
suffered from economic decline that caused the bankruptcy of several airlines
and imposed financial constraints on the entire industry. As a result of these
conditions, the sales of our automated test equipment products have materially
decreased. The continuance of the crisis in the commercial aviation industry
will adversely affect our business, financial condition and results of
operations.
RAPID TECHNOLOGICAL CHANGES MAY ADVERSELY AFFECT THE MARKET ACCEPTANCE OF
OUR PRODUCTS.
The avionics market in which we compete is subject to technological
changes, introduction of new products, change in customer demands and evolving
industry standards. Our future success will depend upon our ability to keep pace
with technological developments and to timely address the increasingly
sophisticated needs of our customers by supporting existing and new technologies
and by developing and introducing enhancements to our current products and new
products. We may not be successful in developing and marketing enhancements to
our products that will respond to technological change, evolving industry
standards or customer requirements. In addition, we may experience difficulties
that could delay or prevent the successful development, introduction and sale of
such enhancements, and such enhancements may not adequately meet the
requirements of the market and may not achieve any significant degrees of market
acceptance. If release dates of our new products or enhancements are delayed or,
if when released, they fail to achieve market acceptance, our business,
operating results and financial condition would be materially adversely
affected.
8
WE MAY ENCOUNTER DIFFICULTIES WITH OUR INTERNATIONAL OPERATIONS AND SALES.
While our principal executive offices are located in Israel, exports
accounted for 67% of our sales in 2006, 59% of our sales in 2005, and 65% of our
sales in 2004. This subjects us to many risks inherent in engaging in export
international business, including:
o Limitations and disruptions resulting from the imposition of government
controls;
o Changes in regulatory requirements;
o Export license requirements;
o Economic or political instability;
o Trade restrictions;
o Changes in tariffs;
o Currency fluctuations;
o Longer receivable collection periods and greater difficulty in accounts
receivable collection;
o Greater difficulty in safeguarding intellectual property;
o Difficulties in managing overseas subsidiaries and international
operations; and
o Potential adverse tax consequences.
We may not be able to sustain or increase revenues from international
operations and may encounter significant difficulties in connection with the
sale of our products in international markets. Any of those events will have a
material adverse affect on our business, operating results and financial
condition.
CURRENCY EXCHANGE RATE FLUCTUATIONS IN THE WORLD MARKETS IN WHICH WE
CONDUCT BUSINESS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, RESULTS
OF OPERATIONS AND FINANCIAL CONDITION.
We may be adversely affected by fluctuations in currency exchange rates.
While our revenues are generally denominated in U.S. dollars, a significant
portion of our expenses is incurred in NIS. We do not currently engage in any
currency hedging transactions intended to reduce the effect of fluctuations in
foreign currency exchange rates on our results of operations. If we were to
determine that it was in our best interests to enter into any hedging
transactions in the future, we may not be able to do so. Furthermore, such
transactions, if entered into, may not materially reduce the effect of
fluctuations in foreign currency exchange rates on our results of operations. In
addition, if for any reason exchange or price controls or other restrictions on
the conversion of foreign currencies into NIS were imposed, our business could
be adversely affected. In the future, such fluctuations may have a material
adverse effect on revenues from international sales, operating expenses and
consequently, on our business, operating results and financial condition.
9
WE ARE DEPENDENT ON OUR SENIOR MANAGEMENT AND KEY PERSONNEL, IN PARTICULAR
HERZLE BODINGER, OUR CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, WHOSE LOSS COULD ADVERSELY AFFECT OUR BUSINESS.
Our future success depends in large part on the continued services of our
senior management and key personnel. In particular, we are dependent on the
services of Herzle Bodinger, our chairman, president and Chief Executive
Officer. We do not carry key person life insurance on our senior management or
key personnel. Any loss of the services of Herzle Bodinger, other members of
senior management or other key personnel could negatively and materially effect
our business.
OUR PROPRIETARY TECHNOLOGY IS DIFFICULT TO PROTECT AND UNAUTHORIZED USE OF
OUR PROPRIETARY TECHNOLOGY BY THIRD PARTIES MAY IMPAIR OUR ABILITY TO COMPETE
EFFECTIVELY.
Our success and ability to compete largely depends upon protecting our
proprietary technology. We rely on a combination of trade secrets, copyright law
and confidentiality, non-disclosure and assignment-of-inventions agreements to
protect our proprietary technology. Except for a patent that relates to our
ACE(TM) system, we do not have any patents.
OUR PRODUCTS MAY INFRINGE ON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.
Third parties may assert infringement claims against us or claims that we
have violated a patent or infringed on a copyright, trademark or other
proprietary right belonging to them. In addition, any infringement claim, even
one without merit, could result in the expenditure of significant financial and
managerial resources to defend.
THE STATUS OF OUR CHINESE SUBSIDIARY AND ITS JOINT VENTURE WITH BEIJING
TIANZU FORESTRY COMPANY IS UNCERTAIN AND WE MAY BE REQUIRED TO INITIATE
LITIGATION IN ORDER TO ENFORCE OUR RIGHTS.
Beijing Huarui Aircraft Components Maintenance and Services Co., Ltd. or
CACS, our Chinese subsidiary, conducts its business in an approximately 16,000
square foot facility in Beijing that includes offices and test and repair
facilities. The land for this facility was leased by Beijing Tianzu Forestry
Company or Tianzu, the minority shareholder in CACS, from the Chinese government
for 30 years. Under a joint venture agreement, and in consideration for its
equity investment in CACS, Tianzu granted CACS usage rights in the land,
constructed the buildings and granted CACS the ownership of these buildings.
However, the transfer of the title to the land and the buildings has not been
completed. Although Tianzu is legally obligated to complete such transfer of
title to the land and the buildings, such transfer may not be completed and we
may be required to initiate litigation in order to enforce our rights to receive
title to the land and buildings.
IF WE ARE UNABLE TO SATISFY THE REQUIREMENTS OF SECTION 404 OF THE
SARBANES-OXLEY ACT, OR OUR INTERNAL CONTROLS OVER FINANCIAL REPORTING ARE NOT
EFFECTIVE, THE RELIABILITY OF OUR FINANCIAL STATEMENTS MAY BE QUESTIONED AND OUR
SHARE PRICE MAY SUFFER.
Section 404 of the Sarbanes-Oxley Act requires any company subject to the
reporting requirements of the U.S. securities laws to do a comprehensive
evaluation of its and its combined subsidiaries' internal controls over
financial reporting. To comply with this statute, we will be required to
document and test our internal control procedures and our management will be
required to assess and issue a report concerning our internal controls over
financial reporting for our annual report on Form 20-F for the fiscal year
ending December 31, 2007. Our independent auditors will be required to issue an
opinion on management's assessment of those matters for our annual report on
Form 20-F for the fiscal year ending December 31, 2008. Our compliance with
Section 404 of the Sarbanes-Oxley Act will first be tested in connection with
the filing of our annual report on Form 20-F for the fiscal year ending December
31, 2007. The rules governing the standards that must be met for management to
assess our internal controls over financial reporting are relatively new and
complex and require significant documentation, testing and possible remediation
to meet the detailed standards under the rules. During the course of its
testing, our management may identify material weaknesses or significant
deficiencies, which may not be remedied in time to meet the deadline imposed by
the Sarbanes-Oxley Act. If our management cannot favorably assess the
effectiveness of our internal controls over financial reporting or our auditors
identify material weaknesses in our internal controls, investor confidence in
our financial results may weaken, and our share price may suffer.
10
RISK FACTORS RELATED TO OUR ORDINARY SHARES
OUR SHARE PRICE HAS BEEN VOLATILE IN THE PAST AND MAY DECLINE IN THE
FUTURE.
Our ordinary shares have experienced significant market price and volume
fluctuations in the past and may experience significant market price and volume
fluctuations in the future in response to factors such as the following, some of
which are beyond our control:
o Quarterly variations in our operating results;
o Operating results that vary from the expectations of securities analysts
and investors;
o Changes in expectations as to our future financial performance, including
financial estimates by securities analysts and investors;
o Announcements of technological innovations or new products by us or our
competitors;
o Announcements by us or our competitors of significant contracts,
acquisitions, strategic partnerships, joint ventures or capital
commitments;
o Changes in the status of our intellectual property rights;
o Announcements by third parties of significant claims or proceedings against
us;
o Additions or departures of key personnel;
o Future sales of our ordinary shares;
o De-listing of our shares from the NASDAQ Capital Market; and
o Stock market price and volume fluctuations.
Domestic and international stock markets often experience extreme price and
volume fluctuations. Market fluctuations, as well as general political and
economic conditions, such as a recession or interest rate or currency rate
fluctuations or political events or hostilities in or surrounding Israel, could
adversely affect the market price of our ordinary shares.
In the past, securities class action litigation has often been brought
against companies following periods of volatility in the market price of its
securities. We may in the future be the target of similar litigation. Securities
litigation could result in substantial costs and divert management's attention
and resources both of which could have a material adverse effect on our business
and results of operations.
11
SUBSTANTIAL FUTURE SALES OF OUR ORDINARY SHARES MAY DEPRESS OUR SHARE
PRICE.
If our shareholders sell substantial amounts of our ordinary shares,
including shares registered under effective registration statements and shares
issuable upon the exercise of outstanding warrants, or convertible notes, or if
the perception exists that our shareholders may sell a substantial number of our
ordinary shares, the market price of our ordinary shares may fall. Any
substantial sales of our shares in the public market also might make it more
difficult for us to sell equity or equity related securities in the future at a
time, in a place and on terms we deem appropriate.
WE DO NOT INTEND TO PAY DIVIDENDS.
We have never declared or paid cash dividends on our ordinary shares and do
not expect to do so in the foreseeable future. The declaration of dividends is
subject to the discretion of our board of directors and will depend on various
factors, including our operating results, financial condition, future prospects
and any other factors deemed relevant by our board of directors. You should not
rely on an investment in our company if you require dividend income from your
investment in our company. The success of your investment will likely depend
entirely upon any future appreciation of the market price of our ordinary
shares, which is uncertain and unpredictable. There is no guarantee that our
ordinary shares will appreciate in value or even maintain the price at which you
purchased your ordinary shares.
RISK FACTORS RELATED TO LOCATION IN ISRAEL
CONDUCTING BUSINESS IN ISRAEL ENTAILS SPECIAL RISKS.
We are incorporated under the laws of, and our executive offices,
manufacturing plant and research and development facilities are located in, the
State of Israel. Although a large portion of our sales are made to customers
outside Israel, we are nonetheless directly affected by the political, economic
and military conditions affecting Israel. Specifically, we could be adversely
affected by any major hostilities involving Israel, a full or partial
mobilization of the reserve forces of the Israeli army, the interruption or
curtailment of trade between Israel and its present trading partners, or a
significant downturn in the economic or financial condition of Israel.
Since the establishment of the State of Israel in 1948, a number of armed
conflicts have taken place between Israel and its Arab neighbors, and a state of
hostility, varying from time to time in intensity and degree, has led to
security and economic problems for Israel. Although Israel has entered into
various agreements with Egypt, Jordan and the Palestinian Authority, there has
been an increase in unrest and terrorist activity in Israel, which began in
September 2000 and which has continued with varying levels of severity through
2006. In July 2006, an armed conflict began between Israel and Hezbollah forces
in Lebanon, which involved rocket attacks on populated areas in the northern
parts of Israel. On August 14, 2006, a cease-fire between Hezbollah and Israel
took effect. This situation has had an adverse effect on Israel's economy,
primarily in the geographical areas directly harmed by this conflict. Any future
armed conflict, political instability or violence in the region may have a
negative effect on those research and development activities that we conduct in
Israel and may adversely affect our share price.
12
Some of our employees in Israel are obligated to perform annual reserve
duty in the Israeli Defense Forces and may be called for active duty under
emergency circumstances at any time. If a military conflict or war arises, these
individuals could be required to serve in the military for extended periods of
time. Our operations could be disrupted by the absence for a significant period
of key employees or a significant number of other employees due to military
service. Any disruption in our operations could adversely affect our business.
OUR RESULTS OF OPERATIONS MAY BE NEGATIVELY AFFECTED BY THE OBLIGATION OF
OUR PERSONNEL TO PERFORM MILITARY SERVICE.
Many of our executive officers and employees in Israel are obligated to
perform annual military reserve duty and are subject to being called for active
duty under emergency circumstances. If a military conflict or war arises, these
individuals could be required to serve in the military for extended periods of
time. Our operations could be disrupted by the absence for a significant period
of one or more of our executive officers or key employees or a significant
number of other employees due to military service. Any disruption in our
operations could adversely affect our business.
WE MAY BE ADVERSELY AFFECTED IF THE RATE OF INFLATION IN ISRAEL EXCEEDS THE
RATE OF DEVALUATION OF THE NIS AGAINST THE U.S. DOLLAR.
In 2006, approximately 31% of our expenses were in U.S. dollar of U.S.
dollar-linked NIS, in 2005 approximately 38% of our expenses were in U.S.
dollars or U.S. dollar-linked, in 2004 approximately 34% of our expenses were in
U.S. dollars or U.S. dollar-linked NIS. In each of these years, virtually all
our remaining expenses were in unlinked NIS. Our expenses that are denominated
in U.S. dollars or paid in Israeli currency linked to the U.S. dollar-NIS
exchange rate are influenced by the extent to which any inflation in Israel is
not offset (or is offset on a lagging basis) by the devaluation of the NIS in
relation to the U.S. dollar. In 2002, the rate of devaluation of the NIS against
the dollar exceeded the rate of inflation in Israel, which benefited us. In
2004, 2005 and 2006, the rate of inflation was 1.2%, 2.4% and 0.9% respectively,
and the NIS was reevaluated vis-a-vis the dollar. These changes, as well as the
recent world-wide devaluation of the U.S. dollar, have affected our operations,
financial condition and results of operations by decreasing the NIS equivalents
of our U.S. denominated revenues and increasing the U.S. dollar equivalents of
our NIS denominated expenses. We may be adversely affected in the future if the
rate of inflation in Israel exceeds the devaluation of the NIS against the U.S.
dollar or if the timing of this devaluation lags behind increases in inflation
in Israel.
SERVICE AND ENFORCEMENT OF LEGAL PROCESS ON US AND OUR DIRECTORS AND
OFFICERS MAY BE DIFFICULT TO OBTAIN.
Service of process upon our directors and officers and the Israeli experts
named herein, most of whom reside outside the United States, may be difficult to
obtain within the United States. Furthermore, since substantially all of our
assets, most of our directors and officers and the Israeli experts named in this
annual report are located outside the United States, any judgment obtained in
the United States against us or these individuals or entities may not be
collectible within the United States.
There is doubt as to the enforceability of civil liabilities under the
Securities Act and the Securities Exchange Act in original actions instituted in
Israel. However, subject to certain time limitations and other conditions,
Israeli courts may enforce final judgments of United States courts for
liquidated amounts in civil matters, including judgments based upon the civil
liability provisions of those Acts.
13
PROVISIONS OF ISRAELI LAW MAY DELAY, PREVENT OR MAKE THE ACQUISITION OF OUR
COMPANY DIFFICULT, WHICH COULD PREVENT A CHANGE OF CONTROL AND THEREFORE DEPRESS
THE PRICE OF OUR SHARES.
Provisions of Israeli corporate and tax law may have the effect of
delaying, preventing or making more difficult a merger with, or other
acquisition of, us. This 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.
YOUR RIGHTS AND RESPONSIBILITIES AS A SHAREHOLDER WILL BE GOVERNED BY
ISRAELI LAW AND DIFFER IN SOME RESPECTS FROM THE RIGHTS AND RESPONSIBILITIES OF
SHAREHOLDERS UNDER U.S. LAW.
We are incorporated under Israeli law. The rights and responsibilities of
holders of our ordinary shares are governed by our memorandum of association,
our articles of association and by Israeli law. These rights and
responsibilities differ in some respects from the rights and responsibilities of
shareholders in typical U.S. 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 his power in the company, including,
among other things, in voting at the general meeting of shareholders on certain
matters. Israeli law provides that these duties are applicable in shareholder
votes on, among other things, amendments to a company's articles of association,
increases in a company's authorized share capital, mergers 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. However, Israeli law does
not define the substance of this duty of fairness. Because Israeli corporate law
has undergone extensive revision in recent years, there is little case law
available to assist in understanding the implications of these provisions that
govern shareholder behavior.
AS A FOREIGN PRIVATE ISSUER WHOSE SHARES ARE LISTED ON THE NASDAQ CAPITAL
MARKET, WE MAY FOLLOW CERTAIN HOME COUNTRY CORPORATE GOVERNANCE PRACTICES
INSTEAD OF CERTAIN NASDAQ REQUIREMENTS.
As a foreign private issuer whose shares are listed on the NASDAQ Capital
Market, we are permitted to follow certain home country corporate governance
practices instead of certain requirements of the NASDAQ Marketplace Rules,
including the composition of our board of directors, director nomination
procedure, compensation of officers and quorum at shareholders meetings. In
addition, we may follow Israeli law instead of the NASDAQ Marketplace Rules that
require that we obtain shareholder approval for certain dilutive events, such as
for the establishment or amendment of certain equity based compensation plans,
an issuance that will result in a change of control of our company, certain
transactions other than a public offering involving issuances of a 19.9% or more
interest in our company and certain acquisitions of the stock or assets of
another company.
14
CAPITALIZATION AND INDEBTEDNESS
The table below sets forth the capitalization of our company as of December
31, 2006.
DECEMBER 31,
2006
----------
(in thousands)
Ordinary shares of NIS 0.015 par value, 16,333,333 shares
authorized; 8,723,509 shares issued and outstanding 116
Additional paid-in capital 67,239
Accumulated deficit (61,281)
Total shareholders' equity $ 6,074
---------------
(*) The fair value of the warrants was calculated based on the Black-Scholes
pricing model.
REASONS FOR THE OFFER AND USE OF PROCEEDS
We will not receive any of the proceeds from the sale by the selling
shareholders of our ordinary shares. We will, however, receive the proceeds from
the exercise of the warrants issued to selling shareholders if and when they are
exercised. We have agreed to bear all expenses relating to the registration of
the ordinary shares registered pursuant to the registration statements of which
this prospectus is a part.
15
MARKET PRICE DATA
Our ordinary shares trade on the NASDAQ Capital Market under the symbol
RADI. The following table sets forth, for each of the full financial quarters in
the years indicated, the high ask and low bid prices of our ordinary shares, as
quoted on the NASDAQ Capital Market, as applicable. In order to regain
compliance with the NASDAQ Marketplace requirement that the minimum bid price of
our ordinary shares exceed $1.00 per share for 30 consecutive days, our
shareholders approved an one share for three shares reverse split on January 29,
2007. The reverse split took effect on February 14, 2007. On March 28 , 2007 the
closing price of an ordinary share on the NASDAQ Capital Market was $2.55 and we
are presently in compliance with the NASDAQ listing requirements. The following
tables reflect the reverse stock split as if it took place prior to periods
reflected in the tables.
HIGH LOW
----------- -----------
2004
First Quarter $ 6.24 $ 3.93
Second Quarter 14.34 3.90
Third Quarter 7.80 3.30
Fourth Quarter 5.31 3.45
2005
First Quarter $ 5.64 $ 4.38
Second Quarter 5.22 3.87
Third Quarter 4.56 3.75
Fourth Quarter 3.99 3.18
2006
First Quarter $ 3.90 $ 2.79
Second Quarter 2.85 1.95
Third Quarter 3.03 2.16
Fourth Quarter 2.67 1.98
2007
First Quarter (through March 28) $ 3.45 $ 1.92
MONTHLY STOCK INFORMATION
The following table sets forth, for each of the most recent six months, the
high ask and low bid prices of our ordinary shares, as quoted on the NASDAQ
Capital Market.
MONTH HIGH LOW
----- ---------- -----------
October 2006 $ 2.67 $ 2.34
November 2006 2.43 2.10
December 2006 2.19 1.98
January 2007 3.00 1.95
February 2007 2.55 1.98
March 2007 (through March 28) 2.94 2.01
16
SELLING SHAREHOLDERS
The ordinary shares being offered by the selling shareholders were issued
pursuant to a securities purchase agreement, dated as of July 9, 2004, and are
issuable upon conversion of the convertible notes and upon exercise of the
warrants. We are registering the ordinary shares in order to permit the selling
shareholders to offer the shares for resale from time to time. Except for the
ownership of the ordinary shares, the convertible notes and the warrants issued
pursuant to the securities purchase agreement, the selling shareholders have not
had any material relationship with us within the past three years.
The table below lists the selling shareholders and other information
regarding the beneficial ownership of the ordinary shares by each of the selling
shareholders. The second column lists the number of ordinary shares beneficially
owned by each selling shareholder, based on its ownership of the ordinary
shares, convertible notes and warrants, as of the date of this prospectus,
assuming conversion of all convertible notes and exercise of the warrants held
by the selling shareholders on that date, without regard to any limitations on
conversions or exercise.
The third column lists the ordinary shares being offered by this prospectus
by the selling shareholders.
In accordance with the terms of registration rights agreements with the
selling shareholders, this prospectus generally covers the resale of at least
sum of (i) the number of ordinary shares initially issued pursuant to the
securities purchase agreement and (ii) 130% of the sum of (x) the number of
ordinary shares issuable upon conversion of the convertible notes as of the
trading day immediately preceding the date the registration statement is
initially filed with the SEC, (y) the number of ordinary shares issuable upon
exercise of the related warrants as of the trading day immediately preceding the
date the registration statement is initially filed with the SEC. Because the
conversion price of the convertible notes and the exercise price of the warrants
may be adjusted, the number of shares that will actually be issued may be more
or less than the number of shares being offered by this prospectus. The fourth
column assumes the sale of all of the shares offered by the selling shareholders
pursuant to this prospectus.
Under the terms of the convertible notes and the warrants, a selling
shareholder may not convert the convertible notes, or exercise the warrants, to
the extent such conversion or exercise would cause such selling shareholder,
together with its affiliates, to beneficially own a number of ordinary shares
which would exceed 4.99% of our then outstanding ordinary shares following such
conversion or exercise, excluding for purposes of such determination ordinary
shares issuable upon conversion of the convertible notes which have not been
converted and upon exercise of the warrants which have not been exercised. The
number of shares in the second column does not reflect this limitation. The
selling shareholders may sell all, some or none of their shares in this
offering. See "Plan of Distribution."
17
NUMBER OF MAXIMUM NUMBER NUMBER OF
ORDINARY OF ORDINARY ORDINARY
SHARES SHARES TO BE SHARES
BENEFICIALLY SOLD PURSUANT BENEFICIALLY
OWNED PRIOR TO THIS OWNED AFTER
NAME OF SELLING SHAREHOLDER TO OFFERING PROSPECTUS OFFERING
------------------------------- ------------ ------------- -------------
Smithfield Fiduciary LLC (1)(6) 642,246 437,460 204,786
Omicron Master Trust (2)(6) 161,450 47,185 114,264
Iroquois Master Fund Ltd.(3)(6) 620,743 239,236 381,507
Portside Growth and Opportunity
Fund (4)(6) 413,443 246,202 167,241
Rockmore Investment Master Fund
Ltd. (5)(6) 108,189 55,212 52,976
Scot J. Cohen 12,000 12,000 -
BL Cubed LLC (7) 41,666 41,666 -
Frederick Berdon 20,833 20,833 -
John Kaufman 10,416 10,416 -
----------------
(1) Highbridge Capital Management, LLC ("Highbridge"), is the trading manager
of Smithfield Fiduciary LLC ("Smithfield") and consequently has voting
control and investment discretion over the ordinary shares held by
Smithfield. Glenn Dubin and Henry Swieca control Highbridge. Each of
Highbridge and Messrs. Dubin and Swieca disclaims beneficial ownership of
the shares held by Smithfield.
(2) Omicron Capital, L.P., a Delaware limited partnership, ("Omicron Capital"),
serves as investment manager to Omicron Master Trust, a trust formed under
the laws of Bermuda ("Omicron"), Omicron Capital, Inc., a Delaware
corporation ("OCI"), serves as general partner of Omicron Capital, and
Winchester Global Trust Company Limited ("Winchester") serves as the
trustee of Omicron. By reason of such relationships, Omicron Capital and
OCI may be deemed to share dispositive power over the ordinary shares owned
by Omicron, and Winchester may be deemed to share voting and dispositive
power over the ordinary shares owned by Omicron. Omicron Capital, OCI and
Winchester disclaim beneficial ownership of such ordinary shares. As of the
date of this prospectus, Mr. Olivier H. Morali, an officer of OCI, and Mr.
Bruce T. Bernstein, a consultant to OCI, have delegated authority from the
board of directors of OCI regarding the portfolio management decisions with
respect to the ordinary shares owned by Omicron. By reason of such
delegated authority, Messrs. Morali and Bernstein may be deemed to share
dispositive power over the ordinary shares owned by Omicron. Messrs. Morali
and Bernstein disclaim beneficial ownership of such ordinary shares and
neither of such persons has any legal right to maintain such delegated
authority. No other person has sole or shared voting or dispositive power
with respect to the ordinary shares being offered by Omicron, as those
terms are used for purposes under Regulation 13D-G of the Securities
Exchange Act of 1934, as amended. Omicron and Winchester are not
"affiliates" of one another, as that term is used for purposes of the
Exchange Act or of any other person named in this prospectus as a selling
stockholder. No person or "group" (as that term is used in Section 13(d) of
the Exchange Act or the SEC's Regulation 13D-G) controls Omicron and
Winchester.
(3) Joshua Silverman has voting control and investment discretion over
securities held by Iroquois Master Fund Ltd. Mr. Silverman disclaims
beneficial ownership of the ordinary shares held by Iroquois Master Fund
Ltd.
18
(4) Ramius Capital Group, LLC ("Ramius Capital") is the investment adviser of
Portside Growth & Opportunity Fund ("Portside") and consequently has voting
control and investment discretion over securities held by Portside. Ramius
Capital disclaims beneficial ownership of the shares held by Portside.
Peter A. Cohen, Morgan B. Stark, Thomas W. Strauss and Jeffrey M. Solomon
are the sole managing members of C4S & Co., LLC, the sole managing member
of Ramius Capital. As a result, Messrs. Cohen, Stark, Strauss and Solomon
may be considered beneficial owners of any ordinary shares deemed to be
beneficially owned by Ramius Capital. Messrs. Cohen, Stark, Strauss and
Solomon disclaim beneficial ownership of these ordinary shares. Ramius
Capital has informed us in writing that it is an affiliate of a registered
broker-dealer. Ramius Capital has further informed us in writing that it
acquired its ordinary shares, and its securities exercisable or convertible
into ordinary shares, that are being registered under the registration
statement of which this prospectus forms a part, in the ordinary course of
business and that at the time it purchased such shares and securities it
did not have any agreements, plans or understandings, directly or
indirectly, with any person to distribute the shares or securities.
(5) Rockmore Capital, LLC ("Rockmore Capital") and Rockmore Partners, LLC
("Rockmore Partners"), each a limited liability company formed under the
laws of the State of Delaware, serve as the investment manager and general
partner, respectively, to Rockmore Investments (US) LP, a Delaware limited
partnership, which invests all of its assets through Rockmore Investment
Master Fund Ltd., an exempted company formed under the laws of Bermuda
("Rockmore Master Fund"). By reason of such relationships, Rockmore Capital
and Rockmore Partners may be deemed to share dispositive power over the
ordinary shares owned by Rockmore Master Fund. Rockmore Capital and
Rockmore Partners disclaim beneficial ownership of such ordinary shares.
Rockmore Partners has delegated authority to Rockmore Capital regarding the
portfolio management decisions with respect to the ordinary shares owned by
Rockmore Master Fund and, as of the date of this prospectus, Mr. Bruce T.
Bernstein and Mr. Brian Daly, as officers of Rockmore Capital, are
responsible for the portfolio management decisions of the ordinary shares
owned by Rockmore Master Fund. By reason of such authority, Messrs.
Bernstein and Daly may be deemed to share dispositive power over the
ordinary shares owned by Rockmore Master Fund. Messrs. Bernstein and Daly
disclaim beneficial ownership of such ordinary shares and neither of such
persons has any legal right to maintain such authority. No other person has
sole or shared voting or dispositive power with respect to the ordinary
shares as those terms are used for purposes under Regulation 13D-G of the
Securities Exchange Act of 1934, as amended. No person or "group" (as that
term is used in Section 13(d) of the Securities Exchange Act of 1934, as
amended, or the SEC's Regulation 13D-G) controls Rockmore Master Fund.
(6) The total number of shares does not include one share that was excluded due
to rounding.
(7) Mel C. Lifshitz, a member of BL Cubed LLC has voting control and investment
discretion over securities held by BL Cubed LLC. Mr. Lifshitz disclaims
beneficial ownership of the ordinary shares held by BL Cubed LLC.
19
OFFER STATISTICS, EXPECTED TIME TABLE
AND PLAN OF DISTRIBUTION
We are registering the ordinary shares issued and issuable upon conversion
of the convertible notes and upon exercise of the warrants to permit the resale
of these ordinary shares by the holders of the ordinary shares, convertible
notes and warrants from time to time after the date of this prospectus. We will
not receive any of the proceeds from the sale by the selling shareholders of the
ordinary shares. We will bear all fees and expenses incident to our obligation
to register the ordinary shares.
The selling shareholders may sell all or a portion of the ordinary shares
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the ordinary
shares are sold through underwriters or broker-dealers, the selling shareholders
will be responsible for underwriting discounts or commissions or agent's
commissions. The ordinary shares may be sold in one or more transactions at
fixed prices, at prevailing market prices at the time of the sale, at varying
prices determined at the time of sale, or at negotiated prices. These sales may
be effected in transactions, which may involve crosses or block transactions,
o on any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of sale;
o in the over-the-counter market;
o in transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
o through the writing of options, whether such options are listed on an
options exchange or otherwise;
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o short sales;
o sales pursuant to Rule 144;
o broker-dealers may agree with the selling securityholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
20
If the selling shareholders effect such transactions by selling ordinary
shares to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling shareholders or commissions from
purchasers of the ordinary shares for whom they may act as agent or to whom they
may sell as principal (which discounts, concessions or commissions as to
particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved). In connection with sales of
the ordinary shares or otherwise, the selling shareholders may enter into
hedging transactions with broker-dealers, which may in turn engage in short
sales of the ordinary shares in the course of hedging in positions they assume.
The selling shareholders may also sell ordinary shares short and deliver
ordinary shares covered by this prospectus to close out short positions. The
selling shareholders may also loan or pledge ordinary shares to broker-dealers
that in turn may sell such shares.
The selling shareholders may pledge or grant a security interest in some or
all of the convertible notes, warrants or ordinary shares owned by them and, if
they default in the performance of their secured obligations, the pledgees or
secured parties may offer and sell the ordinary shares from time to time
pursuant to this prospectus or any amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933, as
amended, amending, if necessary, the list of selling shareholders to include the
pledgee, transferee or other successors in interest as selling shareholders
under this prospectus. The selling shareholders also may transfer and donate the
ordinary shares in other circumstances in which case the transferees, donees,
pledgees or other successors in interest will be the selling beneficial owners
for purposes of this prospectus.
The selling shareholders and any broker-dealer participating in the
distribution of the ordinary shares may be deemed to be "underwriters" within
the meaning of the Securities Act, and any commission paid, or any discounts or
concessions allowed to, any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act. At the time a particular
offering of the ordinary shares is made, a prospectus supplement, if required,
will be distributed which will set forth the aggregate amount of ordinary shares
being offered and the terms of the offering, including the name or names of any
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling shareholders and any discounts,
commissions or concessions allowed or reallowed or paid to broker-dealers.
Under the securities laws of some states, the ordinary shares may be sold
in such states only through registered or licensed brokers or dealers. In
addition, in some states the ordinary shares may not be sold unless such shares
have been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
There can be no assurance that any selling shareholder will sell any or all
of the ordinary shares registered pursuant to the shelf registration statement,
of which this prospectus forms a part.
The selling shareholders and any other person participating in such
distribution will be subject to applicable provisions of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder, including,
without limitation, Regulation M of the Exchange Act, which may limit the timing
of purchases and sales of any of the ordinary shares by the selling shareholders
and any other participating person. Regulation M may also restrict the ability
of any person engaged in the distribution of the ordinary shares to engage in
market-making activities with respect to the ordinary shares. All of the
foregoing may affect the marketability of the ordinary shares and the ability of
any person or entity to engage in market-making activities with respect to the
ordinary shares.
21
We will pay all expenses of the registration of the ordinary shares
pursuant to the registration rights agreement; provided, however, that a selling
shareholder will pay all underwriting discounts and selling commissions, if any.
We will indemnify the selling shareholders against liabilities, including some
liabilities under the Securities Act, in accordance with the registration rights
agreements, or the selling shareholders will be entitled to contribution. We may
be indemnified by the selling shareholders against civil liabilities, including
liabilities under the Securities Act, that may arise from any written
information furnished to us by the selling shareholder specifically for use in
this prospectus, in accordance with the related registration rights agreements,
or we may be entitled to contribution.
Once sold under the shelf registration statement, of which this prospectus
forms a part, the ordinary shares will be freely tradable in the hands of
persons other than our affiliates.
EXPENSES ASSOCIATED WITH THE REGISTRATION
We have agreed to bear all expenses relating to the registration of our
ordinary shares registered pursuant to the registration statement of which this
prospectus is a part. We estimate these aggregate expenses to be approximately
$5,000.
FOREIGN EXCHANGE CONTROLS AND OTHER LIMITATIONS
The Israeli Currency Control Law, 1978 imposes certain limitations
concerning foreign currency transactions and transactions between Israeli and
non-Israeli residents, which limitations may be regulated or waived by the
Controller of Foreign Exchange at the Bank of Israel, through "general" and
"special" permits. In May 1998, a new "general permit" was issued pursuant to
which substantially all transactions in foreign currency are permitted. Any
dividends or other distributions paid in respect of ordinary shares and any
amounts payable upon the dissolution, liquidation or winding up of the affairs
of RADA, as well as the proceeds of any sale in Israel of RADA'S securities to
an Israeli resident are freely repatriable into non-Israeli currencies at the
rate of exchange prevailing at the time of conversion, provided that Israeli
income tax has been paid on (or withheld from) such payments. Because exchange
rates between the NIS and the U.S. dollar fluctuate continuously, U.S.
shareholders will be subject to any such currency fluctuation during the period
from when such dividend is declared through the date payment is made in U.S.
dollars.
The State of Israel does not restrict in any way the ownership or voting of
ordinary shares by non-residents of Israel, except with respect to subjects of
countries that are in a state of war with Israel.
EXPERTS
The consolidated financial statements of Rada Electronic Industries Ltd.
appearing in the Company's Annual Report on Form 20-F for the year ended
December 31, 2006, have been audited by Kost Forer Gabbay & Kasierer, a member
of Ernst & Young Global, independent registered public accounting firm, as set
forth in their report thereon and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
22
LEGAL MATTERS
Certain legal matters in connection with the registration of the ordinary
shares hereunder with respect to Israeli law will be passed upon for us by S.
Friedman & Co., Advocates, Tel Aviv, Israel, our Israeli counsel.
MATERIAL CHANGES
Except as otherwise described our Annual Report on Form 20-F for the fiscal
year ended December 31, 2006 and incorporated by reference herein, no reportable
material changes have occurred since December 31, 2006.
WHERE YOU CAN BEST FIND MORE INFORMATION; INCORPORATION OF
CERTAIN INFORMATION BY REFERENCE
This prospectus is a part of a registration statement on Form F-3,
Registration No. 333- 117954, which we filed with the Securities and Exchange
Commission under the Securities Act of 1933. As permitted by the rules and
regulations of the SEC, this prospectus does not contain all of the information
contained in the registration statement and the exhibits and schedules thereto.
As such we make reference in this prospectus to the registration statement and
to the exhibits and schedules thereto. For further information about us and
about the securities we hereby offer, you should consult the registration
statement and the exhibits and schedules thereto. You should be aware that
statements contained in this prospectus concerning the provisions of any
documents filed as an exhibit to the registration statement or otherwise filed
with the SEC are not necessarily complete, and in each instance reference is
made to the copy of such document so filed. Each such statement is qualified in
its entirety by such reference.
We file annual and special reports and other information with the
Securities and Exchange Commission (Commission File Number 0-15375). These
filings contain important information which does not appear in this prospectus.
For further information about us, you may read and copy these filings at the
SEC's public reference room at 100 F Street, N.E., Room 1580, Washington, D.C.
20549. You may obtain information on the operation of the public reference room
by calling the SEC at 1-800-SEC-0330, or by visiting the Securities and Exchange
Commission's website at http://www.sec.gov, and may obtain copies of our filings
from the public reference room by calling (202) 942-8090.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to other documents which we have filed or will file with the SEC.
We are incorporating by reference in this prospectus the documents listed below
and all amendments or supplements we may file to such documents, as well as any
future filings we may make with the SEC on Form 20-F under the Exchange Act
before the time that all of the securities offered by this prospectus have been
sold or de-registered.
o Our Annual Report on Form 20-F for the fiscal year ended December 31, 2006;
o The description of our Ordinary Shares contained in our Registration
Statement on Form 8-A, including any amendment or reports for the purpose
of updating such description.
23
In addition, we may incorporate by reference into this prospectus our
reports on Form 6-K filed after the date of this prospectus (and before the time
that all of the securities offered by this prospectus have been sold or
de-registered) if we identify in the report that it is being incorporated by
reference in this prospectus.
Certain statements in and portions of this prospectus update and replace
information in the above listed documents incorporated by reference. Likewise,
statements in or portions of a future document incorporated by reference in this
prospectus may update and replace statements in and portions of this prospectus
or the above listed documents.
We shall provide you without charge, upon your written or oral request, a
copy of any of the documents incorporated by reference in this prospectus, other
than exhibits to such documents which are not specifically incorporated by
reference into such documents. Please direct your written or telephone requests
to RADA Electronic Industries Ltd. 7 Giborei Israel Street, Netanya 42504,
Israel. Attn: Elan Sigal, Chief Financial Officer, telephone number (972)(9)
892-1129. You may also obtain information about us by visiting our website at
www.rada.com. Information contained in our website is not part of this
prospectus.
We are an Israeli company and are a "foreign private issuer" as defined in
Rule 3b-4 under the Securities Exchange Act of 1934. As a result, (i) our proxy
solicitations are not subject to the disclosure and procedural requirements of
Regulation 14A under the Exchange Act, (ii) transactions in our equity
securities by our officers and directors are exempt from Section 16 of the
Exchange Act, and (iii) until November 4, 2002, we were not required to make,
and did not make, our SEC filings electronically, so that those filings are not
available on the SEC's Web site. However, since that date, we have been making
all required filings with the SEC electronically, and these filings are
available over the Internet at the SEC's Web site at http://www.sec.gov.
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.
We make available annually to our shareholders an annual report containing
financial statements that have been examined and reported on, with an opinion
expressed by, an independent registered public accounting firm. We prepare our
financial statements in U.S. dollars and in accordance with accounting
principles generally accepted in the U.S.
ENFORCEABILITY OF CIVIL LIABILITIES
Service of process upon us and upon our directors and officers and the
Israeli experts named in this prospectus, most of whom reside outside the United
States, may be difficult to obtain within the United States. Furthermore,
because substantially all of our assets and substantially all of our directors
and officers are located outside the United States, any judgment obtained in the
United States against us or any of our directors and officers may not be
collectible within the United States.
We have been informed by our legal counsel in Israel, S. Friedman & Co.
Advocates, that there is doubt as to the enforceability of civil liabilities
under the Securities Act and the Exchange Act in original actions instituted in
Israel. However, subject to specified time limitations, Israeli courts may
enforce a United States final executory judgment in a civil matter including a
monetary or compensatory judgment in a non-civil matter, obtained after due
process before a court of competent jurisdiction according to the laws of the
state in which the judgment is given and the rules of private international law
currently prevailing in Israel, the laws of which do not prohibit the
enforcement of judgment of Israeli courts, provided that:
24
o the judgment is enforceable in the state in which it was given;
o adequate service of process has been effected and the defendant has had a
reasonable opportunity to present his arguments and evidence;
o the judgment and the enforcement thereof are not contrary to the law,
public policy, security or sovereignty of the State of Israel;
o 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
o an action between the same parties in the same matter is not pending in any
Israeli court at the time the lawsuit is instituted in the foreign court
and the judgment is no longer appealable and the judgment is executory in
the country in which it was given.
We have irrevocably appointed Puglisi & Associates as our agent to receive
service of process in any action against us in the state and federal courts
sitting in the City of New York, Borough of Manhattan arising out of this
offering or any purchase or sale of securities in connection therewith.
If a foreign judgment is enforced by an Israeli court, it generally will be
payable in Israeli currency, which can then be converted into non-Israeli
currency and transferred out of Israel. The usual practice in an action before
an Israeli court to recover an amount in a non-Israeli currency is for the
Israeli court to render judgment for the equivalent amount in Israeli currency
at the rate of exchange in force on the date thereof, but the judgment debtor
may make payment in foreign currency. Pending collection, the amount of the
judgment of an Israeli court stated in Israeli currency ordinarily will be
linked to the Israeli consumer price index plus interest at the annual statutory
rate set by Israeli regulations prevailing at such time. Judgment creditors must
bear the risk of unfavorable exchange rates.
25
RADA ELECTRONIC INDUSTRIES LTD.
1,110,214 ORDINARY SHARES
---------------------------
PROSPECTUS
---------------------------
You should rely only on the information incorporated by reference
or provided in this prospectus. We have not authorized anyone to
provide you with different information. We are not making any
offer to sell or buy any of the securities in any state where the
offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other
than the date that appears below.
2007
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 8. INDEMNIFICATION OF DIRECTORS AND OFFICERS
EXCULPATION OF OFFICE HOLDERS
The Israeli Companies Law, 5759 1999, or the `Israeli Companies Law',
provides that an Israeli company may not exculpate an office holder from
liability with respect to a breach of his or her duty of loyalty, but may, if
permitted by its Articles of Association, exculpate in advance an office holder
from his or her liability to the company, in whole or in part, with respect to a
breach of his or her duty of care except with respect to a breach of his or her
duty of care in connection with distributions.
INSURANCE OF OFFICE HOLDERS
The Israeli Companies Law provides that a company may, if permitted by its
Articles of Association, enter into a contract for the insurance of the
liability of any of its office holders with respect to an act performed by him
or her in his or her capacity as an office holder, with respect to:
o a breach of his or her duty of care to the company or to another
person;
o the breach of his or her duty of loyalty to the company, provided that
the office holder acted in good faith and had reasonable cause to
assume that such act would not prejudice the company's interests; and
o a financial liability imposed upon him or her in favor of another
person.
INDEMNIFICATION OF OFFICE HOLDERS
The Israeli Companies Law provides that a company may, if permitted by its
Articles of Association, indemnify an office holder with respect to an act
performed by him or her in his or her capacity as an office holder, against:
o a financial liability imposed on him or her in favor of another person
by any judgment, including a settlement or an arbitrator's award
approved by a court;
o reasonable litigation expenses, including attorneys' fees, incurred 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 the office holder or the imposition of any
financial liability in lieu of criminal proceedings, or concluded
without the filing of an indictment against the office holder and a
financial liability was imposed on him or her in lieu of criminal
proceedings with respect to a criminal offense that does not require
proof of criminal intent; and
II - 1
o reasonable litigation expenses, including attorneys' fees, incurred by
the office holder or charged to him by a court, in proceedings
instituted against him by the company or on its behalf or by another
person, or in a criminal charge from which he was acquitted, or a
criminal charge in which he was convicted for an offense that does not
require proof of criminal intent.
Under the Israeli Companies Law, a provision in a company's Articles of
Association regarding indemnification of office holders may authorize the
company to: undertake in advance to indemnify an office holder, provided that
the undertaking with respect to a financial liability imposed on the director by
any judgment is limited to types of occurrences, which, in the opinion of the
company's board of directors, are, at the time of the undertaking, foreseeable
due to the company's activities and to an amount or standard that the board of
directors has determined is reasonable under the circumstances.
LIMITATIONS ON EXCULPATION, INSURANCE AND INDEMNIFICATION
The Israeli Companies Law provides that a company may not enter into a
contract for the insurance of the liability of an officer holder nor indemnify
an office holder nor exculpate an office holder from his or her liability to the
company for any of the following:
o a breach by the office holder of his or her duty of loyalty unless,
with respect to indemnification and insurance coverage, the office
holder acted in good faith and had a reasonable basis to believe that
the act would not prejudice the company;
o a breach by the office holder of his or her duty of care if the breach
was committed intentionally or recklessly, unless it was committed
only negligently;
o any act or omission committed with the intent to yield an unlawful
personal benefit; or
o any fine or monetary composition imposed on the office holder.
In addition, under the Israeli Companies Law, indemnification of, and
procurement of insurance coverage for, an office holder must be approved by the
company's audit committee and board of directors and, in the event that such
office holder is a director, also by the company's shareholders.
The term "office holder" of a company includes any person who, either
formally or in substance, serves as a director, general manager or chief
executive officer, or other executive officer who reports directly to the
general manager or chief executive officer of a company.
The foregoing provisions are specifically limited in their scope by the
Israeli Companies Law, which provides that a company may not indemnify an office
holder, nor exculpate an office holder, nor enter into an insurance contract
which would provide coverage for any monetary liability of an office holder,
incurred as a result of certain improper actions.
II - 2
Pursuant to the Israeli Companies Law, exculpation of, procurement of
insurance coverage for, and an undertaking to indemnify or indemnification of,
our office holders must be approved by our audit committee and our board of
directors and, if the office holder is a director, also by our shareholders.
Our Articles of Association allow us to insure and indemnify our office
holders to the fullest extent permitted by law, provided such insurance or
indemnification is approved as required by law. We acquired directors' and
officers' liability insurance covering our officers and directors and the
officers and directors of our subsidiaries for certain claims. In addition, we
have undertaken to indemnify Herzle Bodinger, our chiarman of the board of
directors and chief executive offficer, with respect to claims submitted against
him in connection to an act performed by him in his capacity as an office holder
of our company. This undertaking has been ratified by our audit committee, board
of directors and shareholders.
We have indemnified our office holders to the fullest extent permitted by
law. We currently maintain a directors and officers liability insurance policy
with a per claim and aggregate coverage limit of $7.5 million.
ITEM 9. EXHIBITS
(a) EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
-------- ----------------------
4.1 Memorandum of Association of the Registrant (1)
4.2 Articles of Association of the Registrant (1)
4.3 Specimen of Ordinary Share Certificate (1)
4.4 Stock Purchase Agreement dated July 9, 2004 (2)
4.5 Registration Rights Agreement dated July 9, 2004 (3)
4.6 Form of Convertibale Note issued on July 12, 2004 (4)
4.7 Form of Additional Investment Right issued on July 12, 2004 (5)
4.8 Form of Warrant issued on July 12, 2004 (6)
5.1* Opinion of S. Friedman & Co., Advocates regarding legality of
the securities being registered
23.1 Consent of Kost Forer Gabbay & Kasierer, a Member of
Ernst & Young Global
23.3* Consent of S. Friedman & Co., Advocates
(included in Exhibit 5 hereto)
----------------
* Previously filed.
(1) Previously filed as an exhibit to the Annual Report on Form 20-F for the
year ended December 31, 2000 and incorporated herein by reference.
(2) Incorporated by reference to Item 1 of the Registrant's Report on Form 6-K
for the month of July 2004 filed July 13, 2004.
II - 3
(3) Incorporated by reference to Item 2 of the Registrant's Report on Form 6-K
for the month of July 2004 filed July 13, 2004.
(4) Incorporated by reference to Item 3 of the Registrant's Report on Form 6-K
for the month of July 2004 filed July 13, 2004.
(5) Incorporated by reference to Item 4 of the Registrant's Report on Form 6-K
for the month of July 2004 filed July 13, 2004.
(6) Incorporated by reference to Item 5 of the Registrant's Report on Form 6-K
for the month of July 2004 filed July 13, 2004.
ITEM 10. UNDERTAKINGS
The undersigned Registrant hereby undertakes as follows:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in this Registration Statement.
Provided, however, that paragraphs (i), (ii) and (iii) above do not apply
if the Registration Statement is on Form F-3 and the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed or furnished to the Securities and Exchange Commission by
the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that
are incorporated by reference in this Registration Statement or is contained in
a form of prospectus filed pursuant to Rule 424(b) that is part of the
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II - 4
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered that remain unsold at the termination of the
offering.
(4) To file a post-effective amendment to the registration statement to
include any financial statements required by Item 8.A of Form 20-F at the start
of any delayed offering or throughout a continuous offering. Provided, however,
that financial statements and information otherwise required by Section 10(a)(3)
of the Securities Act need not be furnished, if the Registrant includes in the
prospectus, by means of a post-effective amendment, financial statements
required pursuant to this paragraph and other information necessary to ensure
that all other information in the prospectus is at least as current as the date
of those financial statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment need not be
filed to include financial statements and information required by Section
10(a)(3) of the Act or Rule 3-19 of Regulation S-K if such financial statements
and information are contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Form F-3.
(6) (A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3)
shall be deemed to be part of the Registration Statement as of the date the
filed prospectus was deemed part of and included in the Registration Statement;
and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for
the purpose of providing the information required by section 10(a) of the
Securities Act of 1933 shall be deemed to be part of and included in the
registration statement as of the earlier of the date such form of prospectus is
first used after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As provided in Rule
430B, for liability purposes of the issuer and any person that is at that date
an underwriter, such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the registration statement
to which that prospectus relates, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof. Provided,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such effective date, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such effective date;
II - 5
(5) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(6) Insofar as indemnification for liabilities arising under the Securities
Act, may be permitted to directors, officers and controlling persons of the
Registrant, pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II - 6
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it complies with all of
the requirements for filing on Form F-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Netanya, Israel, on March 29, 2007.
By: /s/ Herzle Bodinger
-----------------------
Herzle Bodinger
Chairman of the Board and President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act, this registration
statement has been signed below by the following persons in the capacities
indicated on March 29, 2007.
SIGNATURE TITLE
/s/ Herzle Bodinger Chairman of the Board and President and
------------------- Chief Executive Officer
Herzle Bodinger
/s/ Elan Sigal Chief Financial Officer
-------------------
Elan Sigal
* Director
-------------------
Adrian Berg
* Director
-------------------
Roy Kui Chuen Chan
* Director
-------------------
Ben Zion Gruber
* Director
-------------------
Michael Letchinger
Outside Director
-------------------
Eli Akavia
Outside Director
-------------------
Nurit Mor
Puglisi & Associates
By: /s/ Gregory F. Lavelle
--------------------------
Name: Gregory F. Lavelle Authorized Representative in the
Title: Managing Director United States
*By: /s/ Elan Sigal
------------------
Elan Sigal
Attorney-in-Fact