Willi Food Inte (WILC) Risk Analysis

We do not have long term purchase contracts with our clients, including our major clients like Shufersal, and our sales arrangements do not have minimum purchase requirements. We cannot assure that our major clients will continue to buy our products at all or in the same volumes or on the same terms as they have in the past. Losing one or more of them may adversely affect our business results. In addition, we cannot assure that we will be able to attract new customers. Our failure to do so may significantly reduce our sales.

We sell food products for human consumption, which involves risks such as product contamination or spoilage, misbranding, product tampering, and other adulteration. Consumption of contaminated, spoiled, misbranded, tampered with or adulterated products may result in personal illness or injury. We could be subject to claims or lawsuits relating to an actual or alleged illness or injury, and we could incur liabilities that are not insured or that exceed our insurance coverage. Even if product liability claims against us are not successful or fully pursued, these claims could be costly and time consuming and may require management to spend significant time defending the claims rather than operating our business. In addition, a product that has been actually or allegedly misbranded or becomes adulterated could result in product withdrawals, product recalls, destruction of product inventory, negative publicity, temporary plant closings, and substantial costs of compliance or remediation. Any of these events, including a significant product liability judgment against us, could result in a loss of confidence in our food products, which could have an adverse effect on our financial condition, results of operations or cash flows.

The Company participates in tenders for the importation into Israel of certain food products on a duty free basis which are published from time to time by the Ministry of Finance. Our competitors also participate in these tenders and may offer better bids than those of the Company, thereby resulting in the Company losing the competitive processes to acquire the quotas. The winners of these tax exempt import quotas commit to selling preset quantities of the products at a relatively low price to the final consumer. Violation of the terms of the tenders may cause forfeiture of bank guarantees granted against compliance with the tender terms, and non-issuance of tax exempt import quotas in the competitive proceeding for up to five years. Our inability to win such tenders or any Company violation of the terms of the tenders could negatively impact our business and harm our financial condition.

We purchase food products from over 135 suppliers located in Israel and around the world, including the Far East (China, India, the Philippines and Thailand and more), Eastern Europe (Poland, Lithuania and Latvia and more), South America (Ecuador), the United States, Canada, Western and Central Europe (the Netherlands, Belgium, Monaco, Germany, Sweden, Switzerland, Denmark, and France) and Southern Europe (Spain, Portugal, Italy, Turkey and Greece) and more. Therefore, we are subject to certain risks that are inherent in an international business. These include the adverse effects on our operations from: War, such as the current war between Russia and Ukraine, terrorism and public health crises, such as pandemics and epidemics, including the COVID-19 pandemic;varying regulatory restrictions on sales of our products to certain markets and unexpected changes in regulatory requirements;tariffs, customs, duties, quotas and other trade barriers;global or regional economic crises;difficulties in managing foreign operations and foreign distribution partners;longer payment cycles and problems in collecting trade receivable;fluctuations in currency exchange rates;political risks;foreign exchange controls which may restrict or prohibit repatriation of funds;export and import restrictions or prohibitions, and delays from customs brokers or government agencies;seasonal reductions in business activity in certain parts of the world; and potentially adverse tax consequences. Depending on the countries involved, any or all of the foregoing factors could materially harm our business, financial condition and results of operations. - The ongoing COVID-19 pandemic may adversely affect our business, revenues, results of operations and financial condition. COVID 19 - In the first quarter of 2020, the corona virus began to spread around the world, an event declared by the World Health Organization as a global pandemic (the "crisis"). As part of dealing with the crisis, many countries around the world, including Israel, have imposed restrictions on various activities in the economy, including movement and gatherings restrictions. The crisis and the restrictions imposed and still pose challenges that were reflected in an unprecedented decline in business activity, both in terms of its intensity and in terms of the speed with which it occurred. In December 2020, the US Food and Drug   Administration approved, for the first time, the use of the vaccine to prevent the corona pandemic. In mid-December, an extensive vaccination campaign began in Israel, and as of   the date of the report, a significant proportion of the population has been immunized. The year 2021 was still marked by the corona crisis and steps to emerge from it taken by the world and Israeli economies - both in the medical aspect, which is reflected in vaccinations and disease reduction, and in the economic aspect, which is reflected, among other things, in opening the economy and helping victims of the crisis. Most of the restrictions in Israel have been removed, but the Israeli economy and the world economy are still in the process of recovery, with epidemiological developments and various waves of illness slowing down from time to time. The various guidelines and restrictions in Israel are updated from time to time, in accordance with changes in the level of morbidity and infection.   The Company purchases its goods from about 135 suppliers around the world, including the Far East, Europe, the United States, South America and Israel. The rate of exit from the crisis varies from country to country so that different restrictions on the production of products by some of the company's suppliers may apply, which may make it difficult for it to import goods in sufficient quantities from those suppliers. The company is also facing an increase in the prices of the raw materials it purchases, the unavailability of containers in the world and significant increases in sea freight costs, which, in the company's estimation, are due to the corona crisis in the world. The company works to the best of its ability to maintain the rate of receipt of goods on a regular basis in order to reduce the effects of the situation on sales to its customers. At this stage the company is unable to estimate when this situation will change due to the recurring waves of illness, so the current time is still characterized by uncertainty. This is a variable event whose scope and period of duration are not under the control of the Company and therefore it is unable to assess the full extent of the economic effects on its activity.   13 - The ongoing Russia-Ukraine war may adversely affect our business, revenues, results of operations and financial condition. In February 2022, a military confrontation began between Russia and Ukraine (the "confrontation"), which led, among other things, to the imposition of sanctions on Russia and various reactions in the capital markets in Israel and around the world. At this stage it is difficult to estimate all the effects of the conflict - global and local, in the short and long term. Russia is one of the three largest oil producers in the world and Europe's main source of gas, and as a result of this situation, oil prices have risen to over $ 100 per barrel. The Company anticipates that the conflict will not have a direct impact on it in the short future but is unable to assess the nature and extent of future impacts, in any event, on the environment in which it and its suppliers operate.   General Risk Factors

We purchase most of our inventory from countries outside the State of Israel. This inventory is transported through shipping companies and other forwarders until the inventory arrives to the various port in the State of Israel.  We are dependent on shipping companies and other forwarders, and we are exposed to changes in inventory transportation prices and the ability of the shipping companies and forwarders to move the volume of inventory required by our business in a timely manner. During the last year, as a result of the COVID-19 crisis, the global supply chain has been adversely affected due to quarantines, shelter-in-place and similar government orders, travel restrictions and health impacts of the COVID-19 pandemic and the shortage of available containers and ships that used for sea transport. These events cause delays in the transport of ships and the release of containers at world ports, including Israel, as well as a significant increase in world shipping prices.  If we are unable to obtain the inventory needed for our business on a timely and cost-effective basis, we will not have sufficient products to sell and may be required to increase the price of our products, which may have a material adverse effect on our business. The COVID-19 pandemic may also adversely affect our business, revenues, results of operations and financial condition in other ways. The precautionary measures taken by the United States, Israel and other affected countries around the world have and may continue to have an adverse effect on the global markets and its economy and could impact the availability and/or pricing of our employees, resources, materials, manufacturing and delivery efforts. For example, COVID-19 may restrict the ability of our suppliers to manufacture our products in sufficient quantities or at all. The COVID-19 outbreak continues to rapidly evolve, and its ultimate scope, duration and effects are unknown. The extent of the impact of the disruptions to our business, including our manufacturing capabilities and commercial sales, as a result of the pandemic, will depend on future developments, which are highly uncertain and cannot be predicted with confidence. The continuation of the COVID-19 pandemic could materially disrupt our business and operations, hamper our ability to raise additional funds or sell our securities, slow down the overall economy, curtail consumer spending and make it hard to adequately staff our operations,

We store most of our products to be distributed to customers in one main location – a logistics center warehouse situated in Yavne, Israel. Any interruption to this storage facility, whether by power failure, flooding or otherwise, would have a material impact on our ability to trade in the ordinary course of our business.

Although no one company supplies the majority of any of our products, we work with a limited number of key suppliers. If one or more of our key suppliers raises their prices, our operating results may be adversely affected. See risk factor below - "Increases or decreases in global product prices have in the past, and in the future, may continue to have a material adverse effect on our profitability". We believe that there are alternative suppliers for purchasing our products; however, we cannot assure that the products of the alternative suppliers will become immediately available and that the terms of purchase will be similar to those provided by current suppliers.

The cost of food commodities and other food products is cyclical and subject to other market factors and may fluctuate significantly. As a result, our cost in securing these products is subject to substantial increases over which we have no control. In addition, fuel costs, which represent the most significant factor affecting both utility costs at our facilities and our transportation costs, are subject to wide fluctuations. Although we are making best efforts, we cannot assure that we will be able to pass on to customers any increased costs associated with the procurement of these products. Moreover, there has been in the past, and there may be in the future, a time lag between the occurrence of such increased costs and the transfer of such increases to customers. To the extent that increases in the prices of our products cannot be passed on to customers or there is a delay in doing so, we are likely to experience an increase in our costs which may materially reduce our margin of profitability. Further, there is an additional lag time from the date we purchase inventory from our suppliers situated outside of Israel (or commit to purchase inventory from such suppliers) and the date we sell the inventory to our customers in Israel. To the extent that the price we are able to sell such inventory to customers decreases from the time that we purchase it (or commit to purchase it), our margin of profitability may be materially reduced. Increases or decreases in global product prices in the future may have a material adverse effect on our profitability.

We market certain products under the trademarks "Willi-Food", "Euro European Dairies", "Donna Rozza", "Manchow", "Gold Frost", "Tifeeret", "The Chef Dish", "Art Coffe", "Mr Chang", "Muchi", "Euro Butter", "Euro Spread", "Euro Cheese", Euro Cream", "Euro Dessert", "Euro Veg", "Ha-Bulgaria ", "Gelato", "Pinukim", "Emma" and "TenBo". Although we have registered trademarks for these brands, we cannot assure that the degree of protection from this registration will be sufficient to protect our rights in these trademarks.

Suspension or malfunction of internal or third-party information systems, or unauthorized access, misuse, computer viruses and cyber-attacks affecting such systems, could impact our results of operations. Our businesses rely on secure processing, storage, transmission and reception of personal, confidential and proprietary information on our systems. We may become the target of attempted unauthorized access, computer viruses or malware, and other cyber-attacks designed to access and obtain information on our systems or to disrupt and cause other damage to our services. Although these threats may originate from human error or technological failure, they may also originate from the malice or fraud of internal parties, such as employees, or third parties, including foreign state actors and extremist parties. Additionally, we could also be adversely impacted if any of the third-party vendors, exchanges, clearing houses or other financial institutions to which we are interconnected are subject to cyber-attacks or other informational security breaches. Such events could cause interruptions to our systems, reputational damage, client dissatisfaction, legal liability, enforcement actions or additional costs, any and all of which could adversely affect our financial condition and operations. While we continue to devote significant resources to monitor and update our systems and implement information security measures to protect our systems, there can be no assurance that any controls and procedures we have in place will be sufficient to protect us from future security breaches. As cyber threats are continually evolving, our controls and procedures may become inadequate and we may be required to devote additional resources to modify or enhance our systems in the future.