Filed with the Securities and Exchange Commission on June 20, 2003
Commission File No. 333-99601
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
TO
FORM F-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
--------------------------
HEALTHCARE TECHNOLOGIES LTD.
(Exact name of registrant as specified in its charter and
translation of Registrant's name into English)
--------------------------
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Israel 2835 Not Applicable
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
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--------------------------
3 Habosem Street
Kiryat Minrav, Ashdod, Israel 77610
011-972-8-8562920
(Address and telephone number of Registrant's principal executive offices)
--------------------------
Phillips Nizer LLP
666 Fifth Avenue
New York, New York 10103
(212) 977-9700
Attention: Brian Brodrick, Esq.
(Name, address and telephone number of agent for service)
--------------------------
Copies to:
Brian Brodrick, Esq.
Phillips Nizer LLP
666 Fifth Avenue
New York, New York 10103
(212) 841-0700
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box [_]
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If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box [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 delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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- ------------------------------- ---------------------- ------------------- -------------------- --------------------
Title of Each Class Proposed Maximum Proposed Maximum
of Securities to be Amount to Offering Price Aggregate Offering Amount of
Registered be Registered Per Share (1) Price Registration Fee
- ------------------------------- ---------------------- ------------------- -------------------- --------------------
Ordinary shares (2)........ 4,111,612 $0.36(3) $1,480,180.30 $137.00
- ------------------------------- ---------------------- ------------------- -------------------- --------------------
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(1) Included solely for the purpose of calculating the registration fee.
(2) These shares are being registered for sale on behalf of selling
shareholders.
(3) Computed on the basis of the average of the high and low sales prices of
the ordinary shares on the Nasdaq SmallCap Market of $0.36 on September
11, 2002 as prescribed by Rule 457(c).
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 Commission, acting pursuant to said Section 8(a),
may determine.
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, AND IT IS NOT SOLICITING AN OFFER TO BUY, THESE SECURITIES IN ANY STATE
WHERE THE OFFER OR SALE IS NOT PERMITTED.
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PROSPECTUS
SUBJECT TO COMPLETION, DATED JUNE 20, 2003
HEALTHCARE TECHNOLOGIES LTD.
4,111,612 ordinary shares
This prospectus relates to the registration by Healthcare Technologies
Ltd., an Israeli corporation, for the account of certain selling shareholders of
an aggregate of 4,111,612 ordinary shares. See "Selling Shareholders" beginning
on page 35 for information about the Selling Shareholders. We will not receive
any proceeds from the sale of these ordinary shares.
Our ordinary shares are currently listed for trading on the Nasdaq
SmallCap Market under the symbol "HCTL". On June 18, 2003, the closing price of
an ordinary share on Nasdaq was $0.66.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 4 OF
THIS PROSPECTUS BEFORE PURCHASING ANY OF THE SHARES OFFERED BY THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is _______, 2003
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TABLE OF CONTENTS
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PAGE NO.
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SUMMARY......................................................................................................1
RISK FACTORS.................................................................................................4
A Warning About Forward-Looking Statements..................................................................17
CAPITALIZATION..............................................................................................19
SELECTED FINANCIAL DATA.....................................................................................19
OPERATING AND FINANCIAL REVIEW AND PROSPECTS................................................................25
RECENT DEVELOPMENTS.........................................................................................26
ISRAELI TAX CONSIDERATIONS..................................................................................27
U.S. TAX CONSIDERATIONS.....................................................................................29
USE OF PROCEEDS.............................................................................................32
PRICE RANGE OF ORDINARY SHARES..............................................................................32
DIVIDENDS...................................................................................................34
DESCRIPTION OF SHARE CAPITAL................................................................................34
SELLING SHAREHOLDERS........................................................................................37
LEGAL MATTERS...............................................................................................40
EXPERTS.....................................................................................................40
WHERE YOU CAN FIND MORE INFORMATION.........................................................................40
INFORMATION INCORPORATED BY REFERENCE.......................................................................41
ENFORCEABILITY OF CIVIL LIABILITIES.........................................................................42
INDEX TO FINANCIAL STATEMENTS...............................................................................43
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SUMMARY
THIS SUMMARY HIGHLIGHTS WHAT WE BELIEVE TO BE THE MOST IMPORTANT
INFORMATION ABOUT OUR COMPANY, HEALTHCARE TECHNOLOGIES LTD. HOWEVER, WE URGE YOU
TO READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE "RISK FACTORS" SECTION
AND THE DOCUMENTS LISTED UNDER "IF YOU WOULD LIKE MORE INFORMATION" FOR A
COMPLETE UNDERSTANDING OF OUR COMPANY. " THROUGHOUT THIS PROSPECTUS, WE REFER TO
OURSELVES, HEALTHCARE TECHNOLOGIES LTD., AS "WE" OR "US" OR "HEALTHCARE."
Healthcare specializes in the development, manufacture and marketing of
clinical diagnostic test kits and provides services and tools to diagnostic and
biotech research professionals in laboratory and point of care sites in Israel
and worldwide. We are also engaged in the production and marketing of molecular
biology based gene screening tools for the detection of certain gene-associated
disorders in humans, including prenatal testing for diseases such as cystic
fibrosis, gaucher and other diseases that are prevalent in the Jewish
population, and testing for predisposition to diseases such as breast, ovarian
and colon cancer, thrombosis and certain cardiovascular diseases.
In addition, through our holdings in Procognia (Israel) Ltd., formerly
known as Glycodata, we have been involved in the design of glycobiology-based
tools for drug discovery and development and bioinformatics. See "Recent
Developments."
We operate as a holding company with currently four main active direct
subsidiaries and one additional indirect subsidiary, which together comprise the
Healthcare group of companies. Unless the context indicates otherwise, the terms
"we" or "us" as used herein refers to Healthcare and our subsidiaries.
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The following is a schematic presentation of the Healthcare group of companies
(as of JUNE 1, 2003):
[See Exhibit 99.5 -- Chart of Healthcare Companies]
Our business activities are organized into four main functional groups:
research and development; manufacturing and marketing worldwide of diagnostic
tools; marketing and distribution to biotechnology researchers in Israel; and
marketing and distribution to clinical diagnostics laboratories in Israel.
Our research, development and manufacturing activities have been
conducted primarily by Savyon, a leader in the serological diagnosis of
Chlamydial infections. Savyon has developed and manufactured immunoassays for
the diagnosis of infectious diseases, especially sophisticated microplate-based
enzyme immunoassays.
An immunoassay is an analytical test that uses antibodies to detect the
presence of a target compound in a sample matrix such as blood, urine or saliva.
A serological test utilizes blood as the sample matrix. Antibodies are proteins
made by cells within the body as part of the immune response to invasion by
antigens, which are foreign substances like bacteria and viruses such as
Chlamydia. An antibody physically binds only to the substance that elicited its
production. This characteristic of specific binding makes antibodies useful
tools for detecting substances in sample matrices. Our microplate-based enzyme
immunoassays are automated tests that utilize enzyme-based color changes to
demonstrate the presence of the target antigen in the sample.
Savyon has focused on specific segments of the clinical diagnostic
markets in order to identify ideas and turn them into marketable products.
Savyon has provided in vitro diagnostic kits and related products to laboratory
professionals for use in doctor's offices and other point of care, locations in
Israel and worldwide. An in vitro diagnostics kit is a test that is performed
outside of the subject's body on a test sample from the subject such as blood.
In addition, Savyon markets kits for the diagnosis of certain infectious
diseases in the over-the-counter market in the United States. As a product
developer, Savyon holds proprietary rights to certain products in the in vitro
diagnostics healthcare field.
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On December 31, 2002, we and Savyon entered into an agreement with Dr.
Martin Lee to establish Savyon 2003, a newly organized Israeli company, to
acquire Savyon's clinical laboratory diagnostics business. We and Dr. Lee each
own fifty percent of Savyon 2003, and Dr. Lee has been appointed as its chief
executive officer. In January 2003, Savyon changed its name to "Pronto
Diagnostics Ltd." and Savyon 2003 changed its name to "Savyon Diagnostics Ltd."
In order to avoid confusion in this prospectus, we will continue to refer to
Pronto and Savyon 2003 collectively as "Savyon", except where we describe the
transaction with Dr. Lee. See "Recent Developments."
Savyon is engaged in the production and marketing of molecular biology
based gene screening tools for the detection of certain gene-associated
disorders in humans using Pronto(TM), a molecular biology based technology for
genetic screening and testing of certain human genetic disorders, including
prenatal testing for diseases such as cystic fibrosis, gaucher and other
diseases that are prevalent in the Jewish population, and testing for
predisposition to diseases such as breast, ovarian and colon cancer, thrombosis
and certain cardiovascular diseases.
Our marketing and sales activities in Israel are conducted by Danyel in
the field of biotech research, and by the Gamidor Group (as defined below) in
the fields of clinical diagnostic laboratories and laboratories in general. Our
sales and marketing activities worldwide (other than in Israel) are conducted by
Savyon.
Danyel conducts our marketing and sales activities to biotechnology
researchers in Israel in the genomics field and also in the fields of proteomics
and proteins separation, operating with other technologies, such as sequencing
and microarray technologies. Danyel also imports and distributes a range of
specialized instruments, reagents and radioactively labeled compounds for
academic and biomedical research laboratories, as well as consumable products in
the fields of cell culture, molecular biology and immunology, including
analytical and laboratory systems such as spectrophotometers and fluorometers,
which are designed to read the results of specific types of tests,
electrophoresis equipment which is used to separate materials according to their
movement in electromagnetic fields and consumables.
The Gamidor Group consists of GamidaGen-Marketing and its wholly-owned
subsidiary Gamidor Diagnostics. The Gamidor Group conducts our marketing and
sales activities of systems, chemicals, reagents and services to clinical
diagnostic laboratories throughout Israel and provides doctors' offices with
near-patient testing systems.
Our principal executive offices, research and development and
manufacturing facilities are located at:
3 Habosem Street
Kiryat Minrav, Ashdod, Israel 77610
Our telephone number is (972)-8-8562920.
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We were incorporated in May 1988 under the name Istec Healthcare
Technologies Limited and we changed our name to Healthcare Technologies Ltd. in
December 1988.
RISK FACTORS
An investment in our securities involves a high degree of risk. You
should carefully consider the risks and uncertainties described below and the
other information in this prospectus before deciding whether to invest in our
ordinary shares. Additional risks and uncertainties not presently known to us or
that we currently deem immaterial may also impair our business operations. If
any of the following risks actually occur, our business, financial condition and
operating results could be materially adversely affected. In such case, the
trading price of our ordinary shares could decline and you may lose part or all
of your investment.
RISKS RELATED TO OUR BUSINESS
WE HAVE SUSTAINED OPERATING LOSSES IN THE PAST, WE HAVE AN ACCUMULATED DEFICIT
AND WE MAY NOT GENERATE PROFITS FROM OPERATIONS IN THE FUTURE.
For the year ended December 31, 2002, although we had net income of
$468 thousand, we had operating losses of approximately $729 thousand. For the
two fiscal years ended December 31, 2001, we had net losses of approximately $3
million and $491 thousand, respectively.
Such losses resulted principally from:
- expenses associated with the research, development, patenting and
testing of our products and technologies of approximately $912
thousand in fiscal 2002, $3.2 million in fiscal 2001 and $1.4
million in fiscal 2000 ; and
- amortization of goodwill of approximately $471 thousand in fiscal
2002, $246 thousand in fiscal 2001 and $196 thousand in fiscal
2000.
We may incur significant operating losses in the future as we continue
our research and development efforts, expand our marketing, sales and
distribution activities, develop strategies for competing with other
manufacturers, and scale up our research and development and manufacturing
capabilities. There can be no assurance that we will be able to generate profits
from operations in the future. As of December 31, 2002, our accumulated deficit
was approximately $12.0 million.
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IF WE CANNOT MAINTAIN ADEQUATE OPERATING CAPITAL, OUR BUSINESS WILL SUFFER.
At December 31, 2002, we had working capital of $1.9 million, including
cash of $1.2 million. We anticipate that these funds, together with funds from
operations, will be sufficient to meet our anticipated cash requirements over
the next 12 months. For the fiscal year ended December 31, 2002, we used net
cash flows in operations of $251 thousand. Although we currently believe that we
will generate positive cash flow from operations in fiscal 2003, it is possible
that we will not succeed in doing so.
Additional sources of liquidity for us in 2003 following the Savyon
transaction described under Recent Developments and thereafter are the $1.2
million loaned by Dr. Lee. Moreover, the remaining $0.7 million of the $1.9
million purchase price for Savyon's clinical diagnostics business are to be paid
to Pronto by Savyon 2003 in 35 consecutive monthly installments of $20 thousand
each. each.
However, on a longer term basis, our operations may not provide
sufficient internally generated cash flows to meet our projected requirements.
Our ability to continue to finance our operations, including the research,
development and introduction of new products and technologies, will depend on
our ability to achieve profitability by improving sales and margins, our ability
to reduce cash outflows and, if necessary, our ability to obtain other sources
of funding sufficient to support our operations. There can be no assurance that
such funding will be available on satisfactory terms or at all.
Other than as described in our fiscal 2002 Form 20-F under Item 4.
"Information on the Company - A. History and Development of the Company-Recent
Developments," and in the Recent Developments section of this prospectus, we
have not as yet explored whether any additional sources of capital will be
available. To the extent, if any, that we are able to obtain equity capital from
other sources, the issuance of more ordinary shares may dilute the economic
interest and will dilute the voting interests of current shareholders. To the
extent, if any, that we are able to obtain debt financing, the terms of such
financing may be expensive and may subject us to covenants that materially
restrict us.
THE SUCCESS OF COMPETITIVE PRODUCTS COULD HAVE AN ADVERSE EFFECT ON OUR
BUSINESS.
The medical products industry, including the medical diagnostic testing
industry, is rapidly evolving and intensely competitive and our customers have a
wide variety of products and technologies from which to choose.
Danyel Biotech's principal competitors in the distribution of reagents
and systems to the biotechnology market in Israel include: Biorad Israel,
Agentek and Sigma Israel in the field of chromatography; Pharmatec (Tecan) and
Lumitron (Packard) in the field of advanced laboratory instrumentation
(fluorometers, counters); DeGroot, Geter and Baktalab in the field of
bio-plastics; and Eldan (NEN), Ornat and Sigma (Israel) in the field of
molecular biology and radiochemical products. Although we are not aware of any
published industry market share statistics, we estimate, based upon our
knowledge of the industry, that in fiscal 2001, Danyel accounted for a
significant portion of the Israeli distribution market for chromatography
products, bio plastics, and advanced laboratory instrumentation and a lesser
portion of the Israeli market for Danyel's other products.
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The Gamidor Group's principal competitors in the distribution of
reagents and systems to clinical laboratories market in Israel include: Ilex
(Abbott) and Dover (J&J) for hematology products; Dyn Diagnostics (Roche) and
Pharmtop (Sorin) for immunology products; Ilex (Vitek) and Pharmtop (Sorin) for
microbiology products; Travenol (Nequas) for quality control products; and Dyn
Diagnostics (Roche) and Medtechnica (Olympus) for clinical chemistry products.
Although we are not aware of any published industry market share statistics, we
estimate, based upon our knowledge of the industry, that in fiscal 2001, the
Gamidor Group accounted for a significant portion of the Israeli hematology
products market and a lesser portion of the Israeli market for the Group's other
products.
Savyon's serology test kits for chlamydia compete with serology tests
produced by companies such as Medac in Germany, Orgenics in Israel, MRL in the
United States and LabSystems in Finland. Savyon's SeroMP (microplasma
pneumoniae) products compete in the field of serology testing with products
produced by companies such as Fujirebio in Japan. Although we are not aware of
any published industry market share statistics, we estimate, based upon our
knowledge and experience in the industry and feedback from our customers, that
in fiscal 2001, Savyon accounted for a significant portion of the worldwide
market for serology chlamydia test kits with Savyon's remaining kits
representing a much smaller portion of the overall market for such products. We
sold the Savyon serology test kit product line to Savyon 2003, now known as
Savyon, as of December 31, 2002, but we continue to be subject to the risks of
this business through our fifty percent ownership interest in Savyon 2003.
The success of any competing alternative products to those we provide
could have a material adverse effect on our business, financial condition and
results of operations. We believe that our competitors include companies that
have substantially greater financial capabilities for product development and
marketing than we do and can therefore market their products or procedures to
the medical community in a more effective manner. There is also a risk that our
competitors may succeed in developing safer or more effective products that
could render our products obsolete or noncompetitive.
OUR PATENTS MAY NOT PROTECT OUR PRODUCTS FROM COMPETITION.
In the genetic field, we have six granted patents that we utilize in
producing our products and four pending patent applications. The patents are
registered for methods of single nucleotide primer extension and kits therefore
and method of quick screening and identification of specific DNA sequences by
single nucleotide primer extension and kits therefore and of characterizing
GC-rich nucleic acid sequences. These methods related to our ProntoTM genetic
test products line. Three of the granted patents are registered in Israel, two
granted patents are registered in the United States and one granted patent is
registered in Europe (National phase). All of them expire during 2012 to 2014.
In addition, we have patent applications pending for these methods in the United
States (other than the methods for which patents have already been granted),
Japan and Canada (two pending applications).
In the serologic field, we have four pending patent applications
regarding chlamydia trachomatis, specific peptides and their use in diagnostic
assays. These patent applications are used in the production of our Sero CT
diagnostic test kit products. Three of the pending patent applications are
pending in the United States, Europe and Japan, respectively and one patent
application is in an International Procedure (PCT).
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In both the genetic and the serologic field, we have certain other
granted patents and applications for patents that are not utilized by us for our
products, and will probably not be used in the future and, therefore, will not
be renewed.
Although several patents have been issued to us, there can be no
assurance that any additional patents will be issued to us, or that any patents
that are issued to us will provide us with meaningful patent protection, or that
others will not successfully challenge the validity or enforceability of any
patent issued to us. The costs required to uphold the validity and prevent
infringement of any patent issued to us could be substantial, and we might not
have the resources available to defend our patent rights.
The risks and uncertainties that we face with respect to our patents
and other proprietary rights include the following:
- The pending patent applications we have filed or to which we have
exclusive rights may not result in issued patents or may take
longer than we expect to result in issued patents;
- The claims of any patents which are issued may be more limited than
those in our patent applications as filed and may not provide
meaningful protection;
- We may not be able to develop additional proprietary technologies
that are patentable;
- The patents licensed or issued to us may not provide a competitive
advantage;
- Other companies may challenge patents licensed or issued to us;
- Patents issued to other companies may substantially impair our
ability to conduct our business;
- Other companies may independently develop similar or alternative
technologies or duplicate our technologies; and
- Other companies may design around technologies we have licensed or
developed.
- Certain countries such as the Peoples Republic of China, in which
we may seek to sell our patented products in the future may not
protect our patent rights to the same extent as the United States
and Israel.
THE VALUE OF OUR PROPRIETARY TECHNOLOGY AND KNOW-HOW MAY DEPEND ON OUR ABILITY
TO PROTECT TRADE SECRETS.
We rely on trade secret protection for our confidential and proprietary
technology and know-how. We currently protect such technology and know-how as
trade secrets. We protect our trade secrets through recognized practices,
including access control, confidentiality agreements with employees,
consultants, collaborators, and customers, and other security measures. These
confidentiality agreements may be breached, however, and we may not have
adequate remedies for any such breach. In addition, our trade secrets may
otherwise become known or be independently developed by competitors.
WE MAY INFRINGE THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES AND MAY BECOME
INVOLVED IN EXPENSIVE INTELLECTUAL PROPERTY LITIGATION.
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The intellectual property rights of diagnostic and biotechnology
companies, including our company, are generally uncertain and involve complex
legal, scientific and factual questions. Our success in these fields may depend,
in part, on our ability to operate without infringing on the intellectual
property rights of others and to prevent others from infringing on our
intellectual property rights.
Although we are not currently involved in any litigation related to our
patents or intellectual property, we may become party to patent litigation or
proceedings at the U.S. Patent and Trademark Office or a foreign patent office
to determine our patent rights with respect to third parties. Interference
proceedings in the U.S. Patent Office or opposition proceedings in a foreign
patent office may be necessary to establish which party was the first to
discover such intellectual property. We may become involved in patent litigation
against third parties to enforce our patent rights, to invalidate patents held
by such third parties, or to defend against such claims. The cost to us of any
patent litigation or similar proceeding could be substantial, and it may absorb
significant management time. If infringement litigation against us is resolved
unfavorably to us, we may be enjoined from manufacturing or selling certain of
our products or services without a license from a third party. We may not be
able to obtain such a license on commercially acceptable terms, or at all.
IF A PRODUCT WE SELL RESULTS IN INJURY TO A USER, WE COULD BE SUBJECT TO PRODUCT
LIABILITY EXPOSURE.
We sell diagnostic products which may involve product liability risk.
While we carry product liability insurance, there can be no assurance that our
coverage will be adequate to protect us against future liability claims. In
addition, product liability insurance is expensive and there can be no assurance
that this insurance will be available to us in the future on terms satisfactory
to us, if at all. A successful product liability claim or series of claims
brought against us in excess of our insurance coverage could have a material
adverse effect on our business, financial condition and results of operations.
We currently maintain product liability insurance coverage in the maximum amount
of $2 million per occurrence with an aggregate maximum of $4 million per annum.
IF WE DO NOT RECEIVE FDA AND OTHER REGULATORY APPROVALS, WE WILL NOT BE
PERMITTED TO SELL OUR PRODUCTS.
Certain of the products that we develop cannot be sold in the United
States and other jurisdictions, including the countries of the European Union,
until the FDA and corresponding regulatory authorities approve the products for
medical use in their respective jurisdictions. This means that:
- We will incur the expense and delay inherent in seeking regulatory
approval of new products;
- A product that is approved may be subject to restrictions on use;
and
- Regulatory authorities can recall or withdraw approval of a product
if problems arise.
We are currently seeking European Union marketing approval for one new
serological test kit and we intend to apply for European Union marketing
approval for four new serological test kits as well as eight new genetic test
kits prior to the end of September 2003. We currently anticipate receiving such
marketing approvals for all of Savyon's products by the end of fiscal 2003, of
which there can be no assurance.
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Currently, we have no pending applications for approvals by the FDA,
but we have received FDA approval for several of our products and are subject to
the FDA's jurisdiction with respect to sales of such products in the United
States.
THE PRICE AND SALES OF OUR PRODUCTS MAY BE LIMITED BY HEALTH INSURANCE COVERAGE
AND GOVERNMENT REGULATION.
Our success in selling our products may depend in part on the extent to
which health insurance companies, health maintenance organizations and
government health administration authorities, will reimburse our end users for
the cost of the products that we provide. For example, in Israel, in which we
make approximately 80% of our sales, the reimbursement rates of third party
health care reimbursement organizations range widely from 100% of certain
products we offer such as the hematology kits: PT Innovin, PTT Calcium and PTT
Actin FS to nothing for other products we offer such as the genetic kits:
Gaucher 6MUT 24T or Bloom/Fanconi 48T. Although our customers are required to
pay us the full price of the products regardless of whether or not they are
reimbursed for such costs, the lack of reimbursement may reduce the demand for
our products. There can be no assurance that adequate health insurance, health
maintenance organization and government coverage will be available to permit our
products to be sold at prices high enough for us to generate a profit. In
certain countries, pricing or profitability of health care products is subject
to government control. In the United States, there have been a number of federal
and state proposals to implement similar government controls, and new proposals
are likely to be made in the future.
OUR BUSINESS COULD BE ADVERSELY AFFECTED IF WE LOSE THE SERVICES OF THE KEY
PERSONNEL UPON WHOM WE DEPEND.
We depend upon the efforts of our chairman, Mr. Daniel Kropf and upon
the efforts of other senior executives, including Mr. Moshe Reuveni, Mr. Yacob
Ofer, Mr. Luly Gurevich and Dr. Martin Lee. Mr. Kropf does not have an
employment agreement. Our agreement for Mr. Reuveni's services is from January
1, 2003 and thereafter, subject to termination with three months' prior written
notice served by either party. Mr. Ofer has an employment agreement which may be
terminated upon six months prior written notice by either party. Mr. Gurevich
has an employment agreement which terminates in December 2003. Dr. Lee has an
employment agreement with Savyon 2003, which provides for his termination as
President of Savyon 2003 if he should cease to be a substantial shareholder of
Savyon 2003 and under certain other circumstances. Except for Dr. Lee, these
executives are not covered by key man life insurance policies.
We also depend upon our research and development personnel. Although we
have been successful in attracting and retaining key management and technical
personnel in the past and we are not aware that any such personnel plan to leave
us in the near future, the loss of any such key personnel and our inability to
successfully recruit and retain additional highly skilled and experienced
management and technical personnel could have a material adverse effect on our
business, financial condition and results of operations.
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WE ARE DEPENDENT UPON INDEPENDENT SALES AGENTS, DISTRIBUTORS AND DEALERS
We market and sell our products in part through networks of independent
sales agents, distributors and dealers in foreign countries. As a result, in
fiscal 2001 and 2002, approximately 22% and 21%, respectively, of our revenues
were derived from the sales efforts of these sales agents, distributors and
dealers.
Sales to our distributor in France, BMD - Biomedical Diagnostics, and
our distributor in Germany, Hain Lifescience GMBH, accounted for approximately
4% and 6% respectively of annual sales in fiscal 2001 and 2002. We have written
distribution agreements with BMD and Hain that grant these companies the
exclusive right to distribute our products in France and Germany, respectively
for a period of one year, subject to automatic renewal unless either we or the
distributors elect to not renew the agreements. These distributors are not
required to purchase any minimum amounts of our products under these agreements.
We also rely on our distributors to assist us in obtaining
reimbursement and regulatory approvals in certain international markets. We
cannot assure you that our sales agents, distributors and dealers, some of which
operate relatively small businesses, have the financial stability to assure
their continuing presence in their markets. The inability of a sales agent,
distributor or dealer to perform its obligations, or the cessation of business
by a sales agent, distributor or dealer, could materially and adversely affect
our business, financial condition and results of operations. There can be no
assurance that we will be able to engage or retain qualified sales agents,
distributors or dealers in each territory that we target. The failure to engage
these sales agent, distributors or dealers in these territories would have a
material adverse effect on our business, financial condition and results of
operations.
A SIGNIFICANT PERCENTAGE OF TWO OF OUR SUBSIDIARIES' PRODUCTS ARE DEPENDENT ON
CERTAIN PRINCIPAL SUPPLIERS.
During 2001 and 2002, purchases from one of Danyel's suppliers,
Amersham Pharmacia Biotech AB, or Amersham, accounted for 24% and 26%,
respectively, of our annual cost of sales. In addition, during 2001 and 2002,
purchases from one of the Gamidor Group's suppliers, Dade Behring, accounted for
12% and 13%, respectively, of our annual cost of sales. A failure of such
suppliers to continue to supply products to us will adversely affect our
business and financial results.
In general, Danyel's agreement with Amersham appoints Danyel as the
exclusive distributor in Israel and certain related areas for Amersham's
products and services in the field of applied genomics, cell biology and
separation, subject to Danyel meeting certain minimum sales requirements. The
agreement has an initial five year term ending December 31, 2003, and is subject
to automatic renewal for successive three year periods unless either party
elects to terminate the agreement upon not less than 12 months notice prior to
the expiration of the current team. No such termination notice has been give by
either party. The Agreement may be terminated, for among other reasons, by
Amersham if Danyel fails to meet the minimum sales requirements. Effective as of
January 2002, Amersham assigned its rights and obligations under the agreement
to a third party subdistributor which has entered into an agreement with Danyel
pursuant to which the subdistributor has agreed to honor Amersham's obligations
to Danyel under the agreement for so long as the subdistributor continues to
serve as such for Amersham.
In general, Gamidor's agreement with Dade Behring appoints Gamidor as
the exclusive distributor in Israel and certain related areas for certain of
Dade Behring's diagnostic products, subject to Gamidor meeting certain minimum
sales requirements. The agreement has an initial four year term ending October
31, 2003 and has been renewed for a further term ending 31st October 2006. The
agreement may be terminated, for among other reasons, by Dade Behring if Gamidor
fails to meet the minimum sales requirements.
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In addition, certain other products distributed by us are obtained from
a limited group of suppliers, with certain of whom we have no written
agreements. Our reliance on a limited group of suppliers involves several risks,
including a potential inability to obtain adequate supplies of certain products
and reduced control over pricing and timely delivery of products. Although we
believe that additional sources of supply are available should one or more of
such suppliers be unable to meet our needs, there can be no assurance that
supplies will be available on terms acceptable to us, or at all, and there can
be no assurance as to the extent of delays which may be caused upon replacing
such suppliers. An inability to obtain or significant delay in obtaining such
components and subassemblies could have a material adverse effect on our
business.
SALES TO ONE CUSTOMER ACCOUNT FOR A SIGNIFICANT PORTION OF OUR SALES AND THE
LOSS OF THIS CUSTOMER COULD HAVE A MATERIAL ADVERSE AFFECT ON OUR BUSINESS AND
FINANCIAL RESULTS
Sales to the Maccabi Sick Fund ("Maccabi") in Israel accounted for 7%
of our annual sales in 2001, and for 6% of such sales in 2002. We have a number
of written agreements with Maccabi covering different products. Under these
agreements, we have undertaken to charge Maccabi a fixed price for various
products over a period of three to five years, provided that Maccabi purchases
certain minimum quantities of such products from us. These agreements may be
terminated by Maccabi at any time upon 30 days written notice to us. In
addition, we have agreed to supply Maccabi with certain laboratory
instrumentation that our products are used in, which becomes the property of
Maccabi at the end of a three or five year period as long as Maccabi has
purchased the minimum amount of products during this period.
WE MAY NEED STRATEGIC PARTNERS TO BE SUCCESSFUL.
We anticipate that it may be necessary to enter into arrangements with
corporate partners, licensees or others, in order to efficiently market, sell
and distribute our products. These strategic partners may also be called upon to
assist in the support of our products, including participation in certain
product development functions. As a result, our success may be dependent in part
upon the efforts of these third parties. There can be no assurance that we will
be able to negotiate additional acceptable arrangements with strategic partners
or that we will realize any meaningful revenues pursuant to these arrangements.
USE OF GENOMIC INFORMATION TO DEVELOP OR COMMERCIALIZE PRODUCTS IS UNPROVEN.
The development of new treatments and the diagnosis of disease based on
genomic information is unproven. The business strategy of Savyon is based in
part on the assumption that identifying and characterizing genes and sequencing
select human genes and the genomes of select pathogens may help scientists to
better understand complex disease processes and develop treatments for these
diseases. There is limited understanding of the roles of genes in diseases. Few
therapeutic vaccine or diagnostic products based on genomic information have
been developed or commercialized. If Savyon fails to identify genes useful for
the discovery and development of such products, or if strategic partners are
unable to use the genomic information that Savyon provides to them to develop
such products, Savyon's current and potential customers in the field may lose
confidence in its products and our business may suffer as a result.
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THE GENOMICS INDUSTRY IS INTENSELY COMPETITIVE AND EVOLVING.
There is intense competition among entities attempting to sequence
segments of the human genome and identify genes associated with specific
diseases and develop products and services based on these discoveries. Savyon
has developed a patented molecular biology-based technology that enables the
mass screening of genetic materials for mutations. Based on this technology,
Savyon has developed over 15 diagnostic kits for carrier screening, pre-natal
diagnosis, and predisposition screening of mutation carriers for a variety of
genetic defects.
Savyon's competitors in the field of genetic diagnostic tests have
developed competing technologies for the screening of genetic materials for
mutations. These competitors include many large and medium sized multi-national
corporations, including Innogenetics in Belgium, Third Waves Technologies,
Myriad Genetics, Affymetrix, Orchid BioSciences and Roche in the United States.
Savyon's indirect competitors in this field include numerous small scale
laboratories. Although we are not aware of any published industry market share
statistics, we estimate, based upon our knowledge of the industry, that Savyon's
market share in this field represents a very small portion of the total market
other than the Israeli market for genetic predisposition tests for gaucher and
cystic fibrosis for which Savyon has a significant share of the market.
Many of Savyon's competitors have substantially greater capital
resources, sequencing capabilities, research and developmental staffs,
facilities, manufacturing and marketing experience, distribution channels and
human resources than it. These competitors may discover, characterize or develop
important genes, drug targets or leads, drug discovery technologies or drugs
before Savyon or its customers or which are more effective than those developed
by Savyon or its customers, or may obtain regulatory approvals of their drugs
more rapidly than Savyon's customers do, or may develop techniques for
genomic-based drug discovery that are superior to those Savyon is developing and
render its technologies non-competitive or obsolete even before they generate
revenue, any of which could have a material adverse effect on any of our similar
programs. Moreover, these competitors may obtain patent protection or other
intellectual property rights that would limit Savyon's rights or our customers'
ability to use our products to commercialize therapeutic, diagnostic or vaccine
products.
Savyon faces rapid technological change in the Genomics-based
diagnostic industry. This could result in the development of technologies by
others for use in diagnostics and pharmacogenetics, which will be superior to
Savyon's existing or future technologies.
FUTURE ACQUISITIONS MAY ABSORB SIGNIFICANT RESOURCES AND MAY BE UNSUCCESSFUL.
As part of our strategy, we may pursue acquisitions, investments and
other relationships and alliances. Acquisitions may involve significant cash
expenditures, debt incurrence, additional operating losses, dilutive issuances
of equity securities, and expenses that could have a material adverse effect on
our financial condition and results of operations. For example, to the extent
that we elect to pay the purchase price for such acquisitions in ordinary
shares, the issuance of additional shares will be dilutive to our shareholders.
Acquisitions involve numerous other risks, including:
- Difficulties integrating acquired technologies and personnel into
our business;
- Diversion of management from daily operations;
- Inability to obtain required financing on favorable terms;
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- Entering new markets in which we have little or no previous
experience;
- Potential loss of key employees or customers of acquired companies;
- Assumption of the liabilities and exposure to unforeseen
liabilities of acquired companies; and
- Amortization of the intangible assets of the acquired companies.
It may be difficult for us to complete these types of transactions
quickly and to integrate the businesses efficiently into our current business.
Any acquisitions or investments by us may ultimately have a negative impact on
our business and financial condition.
RISKS RELATING TO OPERATIONS IN ISRAEL
WE HAVE IMPORTANT FACILITIES AND RESOURCES LOCATED IN ISRAEL, WHICH HAS
HISTORICALLY EXPERIENCED MILITARY AND POLITICAL UNREST
We are incorporated under the laws of the State of Israel. Our
principal research and development and manufacturing facilities are located in
Israel and approximately 78% of our revenues are derived from sales made in
Israel. As a result, we are directly influenced by the political, economic and
military conditions affecting Israel. Any major hostilities involving Israel, or
the interruption or curtailment of trade between Israel and its present trading
partners, could significantly harm our business, operating results and financial
condition.
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 since
October 2000, also involving certain of Israel's Arab population, and a state of
hostility, varying in degree and intensity, has led to security and economic
problems for Israel and for Israel-based companies. Acts of random terrorism
periodically occur which could affect our operations or personnel. In addition,
Israel and Israeli-based companies and companies doing business with Israel,
have been the subject of an economic boycott by members of the Arab League and
certain other predominantly Muslim countries, since Israel's establishment.
Although Israel has entered into various agreements with certain Arab countries
and the Palestinian Authority, and various declarations have been signed in
connection with efforts to resolve some of the economic and political problems
in the Middle East, we cannot predict whether or in what manner these problems
will be resolved. Also, since the end of September 2000, there has been a marked
increase in the level of terrorism in Israel, which has significantly damaged
both the Israeli economy and the levels of foreign and local investment.
In addition, certain of our officers and employees are currently
obligated to perform annual reserve duty in the Israel Defense Forces and are
subject to being called for active military duty at any time. All Israeli male
citizens who have served in the army are subject to the obligation to perform
reserve duty until they are between 45 and 54 years old, depending on the nature
of their military service. Healthcare Technologies has operated effectively
under these requirements since its inception. We cannot predict the effect of
these obligations on Healthcare in the future.
EXCHANGE RATE FLUCTUATIONS AND INFLATION IN ISRAEL COULD ADVERSELY IMPACT OUR
FINANCIAL RESULTS.
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Exchange rate fluctuations and inflation in Israel could adversely
impact our financial results. During the calendar years 2000, 2001 and 2002, the
annual rate of inflation in Israel was approximately 0%, 1.4% and 0.5%,
respectively, while the NIS was devalued (appreciated) against the dollar by
approximately (2.7%), 9.3% and 7.3%, respectively. Consequently, during the
calendar years 2000, 2001 and 2002, the annual rate of inflation as adjusted for
devaluation (appreciation) was approximately (2.7%), 10.7% and 13.8%,
respectively.
A substantial part of our third party product distribution activities
are conducted by our subsidiaries, the Gamidor Group and Danyel. The Gamidor
Group's and Danyel's sales are quoted in NIS; however, their selling prices are
based upon a price list, which is quoted in the suppliers' original currencies,
mainly Euros and dollars. The price is then converted into NIS at the relevant
exchange rate on the date of sale to the customer. This enables the Gamidor
Group and Danyel to reduce exposure to losses from devaluations of the NIS in
relation to such foreign currencies. The Gamidor Group's and Danyel's accounts
receivables are, however, quoted in non-linked NIS and, consequently, inflation
in Israel would have the effect of increasing their financial expenses.
In addition, the Gamidor Group's and Danyel's accounts payable are
mainly quoted in such foreign currencies and, consequently, any excess of a
devaluation rate in the NIS in relation to such currencies over the inflation
rate in Israel would have the effect of increasing our financial expenses.
Because the exchange rates between the NIS and the Yen, Euro, Swiss Franc and
the dollar fluctuate continuously, exchange rate fluctuations and especially
larger periodic devaluations have an impact on our profitability and
period-to-period comparisons of our results in dollars.
Our consolidated results of operations are, therefore, affected by
several interrelated factors, including the rate of inflation in Israel, the
devaluation of the NIS in relation to the primary foreign currencies relevant to
us, including the dollar, the devaluation of relevant foreign currencies in
relation to the dollar and, the extent to which we hold assets and liabilities
in foreign currencies. Similarly, the relationship between our monetary assets
and liabilities in dollars and NIS and whether these are linked to foreign
currency or price index also affect financial results.
ISRAELI COURTS MIGHT NOT ENFORCE JUDGMENTS RENDERED OUTSIDE OF ISRAEL AND IT
MIGHT THEREFORE BE DIFFICULT TO RECOVER ANY JUDGMENT AGAINST ANY OF OUR OFFICERS
OR DIRECTORS RESIDENT IN ISRAEL
We are organized under the laws of Israel, and we maintain significant
operations in Israel. All of our officers and directors named in this prospectus
reside outside of the United States. Therefore, you might not be able to enforce
any judgment obtained in the U.S. against us or any of such persons. You might
not be able to bring civil actions under U.S. securities laws if you file a
lawsuit in Israel. However, we have been advised by our Israeli counsel that,
subject to certain limitations, Israeli courts may enforce a final judgment of a
U.S. court for liquidated amounts in civil matters after a hearing in Israel. We
have appointed Phillips Nizer LLP, our U.S. counsel, as our agent to receive
service of process in any action against us arising hereunder. We have not given
our consent for our agent to accept service of process in connection with any
other claim and it may therefore be difficult to effect service of process
against us or any of our non-U.S. officers, directors and experts relating to
any other claims. If a foreign judgment is enforced by an Israeli court, it will
be payable in Israeli currency.
PROVISIONS OF ISRAELI LAW MAY DELAY, PREVENT OR MAKE DIFFICULT AN ACQUISITION OF
HEALTHCARE TECHNOLOGIES, WHICH COULD PREVENT A CHANGE OF CONTROL AND THEREFORE
DEPRESS THE PRICE OF OUR SHARES
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Certain provisions of Israeli corporate and tax law may have the effect
of delaying, preventing or making more difficult a merger or other acquisition
of Healthcare. The new Israeli Companies Law, which governs Israeli
corporations, does not contain provisions that deal specifically with a merger
that allows for the elimination of minority shareholders. Various provisions
that deal with "arrangements" between a company and its shareholders have been
used, however, to effect squeeze-out mergers. These generally require that the
merger be approved by at least 75 percent of the shareholders present and voting
on the proposed merger, at a shareholders meeting that has been called on at
least 21 days advance notice. In addition to shareholder approval, court
approval of the merger may be required, which entails further delay and the need
to obtain a discretionary approval. Further, a merger may not be completed
unless at least 70 days have passed from the time that the requisite approvals
of the merger by each of the merging entities have been filed with the Israeli
Registrar of Companies. Alternatively, the acquiror can cause minority
shareholders to sell their shares if it acquires at least 90 percent of all
outstanding shares (excluding shares held by the acquiror prior to the
acquisition) and none of the minority shareholders successfully seeks to block
the acquisition in court.
The Israeli Companies Law also provides that an acquisition of shares
in a public company must be made by means of a tender offer if as a result of
the acquisition the purchaser would become a 25% shareholder of the company.
This rule does not apply if there is already another 25% shareholder of the
company. Similarly, the Israeli Companies Law provides that an acquisition of
shares in a public company must be made by means of a tender offer if as a
result of the acquisition the purchaser would become a 45% shareholder of the
company. Here too there is an exception, if someone else is already a 50%
shareholder of the company. These rules do not apply if the acquisition is made
by way of a merger as opposed to a tender offer. Regulations promulgated under
the Companies Law provide that these tender offer requirements do not apply to
companies whose shares are listed for trading outside of Israel if, according to
the law in the country in which the shares are traded, including the rules and
regulations of the stock exchange on which the shares are traded, there is
either a limitation on acquisition of any level of control of the company, or
the acquisition of any level of control requires the purchaser to do so by means
of a tender offer to the public. However, under the Companies Law, if following
any acquisition of shares, the acquirer holds 90% or more of the company's
shares or of a class of shares, the acquisition must be made by means of a
tender offer for all of the target company's shares or all the shares of the
class, as applicable. An acquirer who wishes to eliminate all minority
shareholders must do so by way of a tender offer and acquire 95% of all shares
not held by or for the benefit of the acquirer prior to the acquisition. If,
however, the tender offer to acquire 95% is not successful, the acquiror may not
acquire shares tendered if by doing so the acquiror would own more than 90% of
the shares of the target company.
Finally, Israeli tax law treats certain acquisitions, particularly
share-for-share swaps between an Israeli company and a non-Israeli company, less
favorably than United States tax law. Israeli tax law may, for instance, subject
a shareholder who exchanges his Healthcare Technologies' shares for shares in a
non-Israeli corporation to immediate taxation.
RISKS RELATED TO OUR ORDINARY SHARES
OUR SHARE PRICE HAS BEEN AND MAY CONTINUE TO BE VOLATILE, WHICH COULD RESULT IN
SUBSTANTIAL LOSSES FOR INDIVIDUAL SHAREHOLDERS
The market price of our ordinary shares has been and may continue to be
highly volatile and subject to wide fluctuations. Since the beginning of 2000
through MAY, 2003, the price of our ordinary shares has ranged from $3.84 to
$0.20 per share. We believe that these fluctuations have been in response to a
number of factors including the following, some of which are beyond our control:
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actual or anticipated variations in our quarterly operating results;
announcements of technological innovations or new products or services or new
pricing practices by us or our competitors;
changing United States and other countries' government regulations relating to
approval of our products;
results of regulatory inspections;
the status of patents and proprietary rights related to our products that are
developed by us or our competitors;
increased market share penetration by our competitors;
announcements by us or our competitors of significant acquisitions, strategic
partnerships, joint ventures or capital commitments;
additions or departures of key personnel; and
sales of additional ordinary shares.
In addition, the stock market in general, and stocks of medical
technology companies in particular, have from time to time experienced extreme
price and volume fluctuations. This volatility is often unrelated or
disproportionate to the operating performance of these companies. These broad
market fluctuations may adversely affect the market price of our ordinary
shares, regardless of our actual operating performance.
AN INVESTOR SHOULD NOT RELY ON AN INVESTMENT IN OUR COMPANY IF SUCH INVESTOR
REQUIRES DIVIDEND INCOME; THE ONLY RETURN THAT SUCH INVESTOR MAY RECEIVE MAY
COME FROM THE APPRECIATION, IF ANY, IN THE VALUE OF OUR ORDINARY SHARES.
We have not paid cash dividends on our ordinary shares in the past and
we have no plans to pay such dividends in the future. However, we do not rule
out the possibility of paying such dividends in the future in the appropriate
circumstances. An investor should not rely on an investment in our company if
such investor requires dividend income; the only return that such investor may
receive may come from the appreciation, if any, in the value of our ordinary
shares. In determining whether to pay dividends, our Board of Directors will
consider many factors, including our earnings, capital requirements and
financial condition. In addition, under Israeli law, we may only pay cash
dividends in any fiscal year from our profits, if any, as calculated under
Israeli law.
CONTROLLING SHAREHOLDERS CAN LIMIT YOUR ABILITY TO INFLUENCE THE OUTCOME OF
MATTERS REQUIRING SHAREHOLDER APPROVAL AND COULD DISCOURAGE POTENTIAL
ACQUISITIONS OF OUR BUSINESS BY THIRD PARTIES; PLEDGE OF SHARES.
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Gamida for Life BV ("Gamida"), our principal shareholder, holds
3,891,259 shares or approximately 51% of our voting securities. As a result,
Gamida has a controlling interest over all matters, excluding related party
transactions, requiring approval by shareholders, including the election or
removal of directors and the approval of mergers or other business combination
transactions.
In May and June 2002, Gamida pledged its shares in Healthcare to United
Mizrahi Bank as security for a loan from the Bank to Gamida. In general, the
pledge agreement grants Gamida the right to direct the voting of the pledged
shares, except to the extent that the Bank determines in its reasonable
discretion that a matter to be voted on would impair the value of the pledged
shares. Upon the occurrence of a default, the Bank has the right to dispose of
the shares, subject to complying with the terms of the pledge agreement.
THE SALE OF RESTRICTED SHARES OR OF SHARES COVERED BY THIS PROSPECTUS COULD
CAUSE THE MARKET PRICE OF OUR ORDINARY SHARES TO DROP SIGNIFICANTLY.
Most of the ordinary shares beneficially owned by our management and
directors and their affiliates, aggregating approximately 5 million shares, are
restricted securities under federal law. They may be sold but are subject to
certain volume and other restrictions. Approximately 600,000 of these shares
could be sold pursuant to Rule 144 over the next 12 months. We cannot estimate
the number of these shares that may be sold in the future or the effect that
their sale may have on the market price of the ordinary shares. However, it
could drop significantly if the holders of these restricted shares sell them or
are perceived by the market as intending to sell them, even if our business is
doing well.
We have agreed to register for resale by Gamida pursuant to the
registration statement of which this prospectus forms a part the 3,891,259
ordinary shares owned by it. This registration will also cover resales of these
securities by United Mizrahi Bank in the event that the Bank exercises its right
to dispose of these shares following a default by Gamida on its loan. Once the
registration statement is effective, these shares may be resold without the
volume restriction to which they are currently subject. Sales of a significant
number of shares under this prospectus could have the effect of depressing the
market price for the ordinary shares.
THE MARKET PRICE OF OUR SHARES COULD DECLINE IF WE DO NOT MEET THE REQUIREMENTS
FOR CONTINUED LISTING ON NASDAQ.
Our ordinary shares are traded on the Nasdaq SmallCap Market, which has
adopted rules that establish criteria for initial and continued listing of
securities. We currently meet the criteria for continued listing of our
securities on the Nasdaq Small Cap Market. If our ordinary shares are delisted
from the Nasdaq SmallCap Market, trading in our ordinary shares could be
conducted on an electronic bulletin board established for securities that do not
meet the Nasdaq listing requirements. If our ordinary shares were delisted from
the Nasdaq SmallCap Market, they would be subject to the so-called penny stock
rules that impose restrictive sales practice requirements on broker-dealers who
sell those securities. Consequently, delisting, if it occurred, could affect the
ability of shareholders to sell their ordinary shares in the secondary market.
The restrictions applicable to shares that are de-listed, as well as the lack of
liquidity for shares that are traded on an electronic bulletin board, may
adversely affect the market price of such shares.
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A WARNING ABOUT FORWARD-LOOKING STATEMENTS
This prospectus contains and may incorporate by reference
"forward-looking" statements, including statements regarding our expectations,
beliefs, intentions or strategies regarding the future. Such statements can be
identified by the use of forward-looking terminology such as "may," "will,"
"believe," "intend," "expect," "anticipate," "estimate," "continue," or other
similar words. Variations on those or similar words, or the negatives of such
words, also may indicate forward-looking statements. Although we believe that
the expectations reflected in this prospectus are reasonable, we cannot assure
you that our expectations will be correct. We have included a discussion
entitled "Risk Factors" in this prospectus, highlighting important factors that
could cause our actual results to differ materially from our expectations. If in
the future you hear or read any forward-looking statements concerning us, you
should refer back to the discussion of Risk Factors. The forward-looking
statements in this prospectus are accurate only as of its date. If our
expectations change, or if new events, conditions or circumstances arise, we are
not required to, and may not, update or revise any forward-looking statement in
this prospectus.
These forward-looking statements include, but are not limited to, a
description of the steps management has taken to improve operating results and
reduce the amount of cash used by operations. Forward-looking statements are
inherently uncertain. Our actual performance and results of operations may
differ materially from those projected or suggested in the forward-looking
statements due to certain risks and uncertainties, including, but not limited
to, the following:
- our history of losses and accumulated deficit and the uncertainty
of future profitability;
- the uncertainty of market acceptance of our existing products or
of any products that we may introduce in the future;
- uncertainty as to whether we will be successful in
commercializing products in development;
- uncertainty as to whether we will be successful in developing new
products;
- uncertainty as to the success, timing and costs related to
product clearances by the U.S. Food and Drug Administration and
other regulatory agencies;
- uncertainty as to the performance of our direct sales persons,
independent sales agents, distributors and dealers;
- uncertainty as to the impact of unanticipated changes in U.S. and
foreign regulations applicable to our business;
- the intensity of competition in our industry;
- the rapid progress of technology in the diagnostics and
biotechnology fields;
- the level of protection over our licenses, trade secrets, patents
and proprietary rights; and
- risks associated with our location in Israel.
In addition to the risks and uncertainties discussed above under "Risk
Factors", you can find additional information concerning risks and uncertainties
that would cause actual results to differ materially from those projected or
suggested in the forward-looking statements in our filings with the Securities
and Exchange Commission and in our Annual Report on Form 20-F for the year ended
December 31, 2002, as amended. The forward-looking statements contained in this
prospectus represent our judgment as of the date of this prospectus, and you
should not unduly rely on such statements.
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CAPITALIZATION
The following table sets forth, at December 31, 2002 the actual
capitalization of Healthcare Technologies.
This table should be read in conjunction with financial statements of
Healthcare Technologies and related notes included elsewhere or incorporated by
reference in this prospectus.
<Table>
<Caption>
DECEMBER 31,
2002
(IN THOUSANDS)
Short-term credits, including current maturities of long-term bank
loans............................................................. $ 849
Long-term bank loans and convertible debentures................... $ 91
Shareholders' equity:
Ordinary shares NIS 0.04 par value:
Authorized: 40,000,000
Issued and outstanding: 7,643,727 .............................. $99
Additional paid-in capital........................................ $ 16,266
Cumulative foreign currency translation adjustments........... $ (118)
Accumulated deficit............................................... $(12,001)
Total shareholders' equity........................................ $ 4,246
Total capitalization.............................................. $ 5,186
</Table>
SELECTED FINANCIAL DATA
The following table shows, for the periods and dates indicated,
selected historical financial data of Healthcare, which is derived from our
consolidated financial statements. The financial data is only a summary and
should be read in conjunction with our historical financial statements and
related notes contained in the annual reports and other information that we have
filed with the SEC. See "Incorporation of Certain Documents by Reference."
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INCOME STATEMENT DATA:
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS OF U.S. DOLLARS EXCEPT LOSS PER SHARE)
<Table>
<Caption>
FISCAL YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
2002 2001 2000 1999 1998
-------------- ------------- -------------- ----------- --------------
SALES 16,676 16,013 15,456 16,583 18,562
COST OF SALES 10,386 9,984 10,006 10,286 11,937
GROSS PROFIT 6,290 6,029 5,450 6,297 6,625
RESEARCH AND DEVELOPMENT COSTS, NET 912 3,164 1,408 855 725
SELLING AND MARKETING EXPENSES 3,161 3,167 2,755 3,300 3,440
GENERAL AND ADMINISTRATIVE EXPENSES.......... 2,475 3,966 2,669 2,268 3,378
AMORTIZATION OF GOODWILL...................... 471 246 196 196 324
IMPAIRMENT OF PROPERTY AND EQUIPMENT.......... - - - - 190
OPERATING LOSS................................. (729) (4,514) (1,578) (322) (1,432)
FINANCIAL INCOME (EXPENSES), NET............... (491) (312) 129 156 (619)
OTHER INCOME (EXPENSES), NET.................. 1,482 897 754 36 (655)
LOSS BEFORE TAXES.............................. 262 (3,929) (695) (130) (2,706)
TAXES ON INCOME................................ - - - - 93
EARNINGS (LOSSES) AFTER TAXES ON INCOME........ (3,929) (695) (130) (2,799)
MINORITY INTEREST IN LOSSES (EARNING) OF
CONSOLIDATED SUBSIDIARIES.................... 206 916 204 (61) 119
NET EARNINGS (LOSSES) FOR YEAR................. 468 (3,013) (491) (191) (2,680)
============== ============= ============== =========== ==============
EARNINGS (LOSSES) PER NIS 1 PAR VALUE OF
SHARES(*).................................... 1.53 (12.6) (2.64) (1.03) (14.55)
============== ============= ============== =========== ==============
WEIGHTED AVERAGE NUMBER OF SHARES AND
EQUIVALENTS OUTSTANDING (IN THOUSANDS)(*).... 7,644 5,977 4,644 4,627 4,596
============== ============= ============== =========== ==============
LOSS FOR YEAR ACCORDING TO US GAAP (SEE NOTE 1) (1,827) (6,046) (2,045) (654) (3,143)
============== ============= ============== =========== ==============
LOSS PER SHARE ACCORDING TO US GAAP (*).........
(0.24) (1.01) (0.44) (0.14) (0.69)
============== ============= ============== =========== ==============
</Table>
(*) All share and per share amounts have been restated to retroactively reflect
the share consolidation.
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NOTE 1: EFFECT OF MATERIAL DIFFERENCES BETWEEN ISRAELI GAAP AND U.S. GAAP
<Table>
<Caption>
FISCAL YEAR ENDED DECEMBER 31,
==================================================================================
2002 2001 2000 1999 1998 1997
============== ============= ============== =========== ============== ===========
Net income (loss) as reported according to 468 (3,013) (491) (191) (2,680) (1,08\9)
Israeli GAAP.................................
============== ============= ============== =========== ============== ===========
Impairment of goodwill..........................
(1,594) -
Income from sale of production line in
subsidiary................................... - - - 1,280 -
Income from sale of production line in jointly
controlled entity............................ 70 -
Capital Gain from decrease in holdings IN
PROCOGNIA.................................... (1,349) - - - - -
Compensation expenses related to conversion of
convertible debentures....................... (313) - - - - -
Amortization of goodwill
and technology.............................. (387) (1,046) (463) (463) (463) (347)
Compensation expenses........................... (40) (72) - - -
Minority interest in losses of subsidiaries..... (206) (971) (214) - - -
Other income (expenses)......................... (903) (805) - (244) -
============== ============= ============== =========== ============== ===========
EARNINGS (LOSSES)
according to U.S. GAAP...................... (1,827) (6,046) (2,045) (654) (3,143) (1,436)
============== ============= ============== =========== ============== ===========
</Table>
21
<Page>
BALANCE SHEET DATA:
(IN THOUSANDS OF U.S. DOLLARS)
<Table>
<Caption>
FISCAL YEAR ENDED DECEMBER 31,
===========================================================================
2002 2001 2000 1999 1998 1997
---- ---- ---- ---- ---- ----
Working capital.................................. 1,870 655 2,821 2,362 2,775 3,168
Total assets..................................... 10,565 12,485 15,609 14,261 14,740 17,862
Short-term credit including current maturities... 849 1,160 1,837 700 1,278 1,327
Long-term liabilities, not including current
maturities.................................... 337 1,226 670 1,123 972 1,417
Shareholders equity.............................. 4,246 3,779 6,355 6,810 7,005 9,716
Shareholders' equity according to US GAAP........
(See Note 2).................................. 2,829 4,483 8,230 10,167 10,825 13,999
</Table>
NOTE 2: EFFECT OF MATERIAL DIFFERENCES BETWEEN
ISRAELI GAAP AND U.S. GAAP ON THE SHAREHOLDERS'
EQUITY
<Table>
<Caption>
FISCAL YEAR ENDED DECEMBER 31,
===========================================================================
2002 2001 2000 1999 1998 1997
---- ---- ---- ---- ---- ----
Shareholders' equity according to Israeli GAAP).. (4,246) (3,779) (6,355) (6,810) (7,005) 9,716
Goodwill and technology.......................... (3.344) (3,597) (2,894) (3,357) (3,820) (4,283)
Deferred capital gain............................ - - (903) - - -
Minority interest................................ - - (555) - - -
Convertible debentures........................... - 416 - - - -
Preferred shares in a subsidiary................. - 2,477 2,477 - - -
Investment in Procognia.......................... 4,761 - - - - -
Shareholders' equity according to US GAAP)....... (2,829) (4,483) (8,230) (10,167) (10,825) 13,999
</Table>
<Page>
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
For a discussion of our results of operations and liquidity and capital
resources for the three fiscal years ended December 31, 2002, see Item 5 of our
Annual Report on Form 20-F for the fiscal year ended December 31, 2002, which is
incorporated by reference in this Prospectus.
22
<Page>
RECENT DEVELOPMENTS
PROCOGNIA FINANCING
In April 2002, Procognia Israel (formerly known as Glycodata) secured
$14.3 million in a second round of financing, of which $1.25 million was through
the conversion of existing shareholders' loans. $0.75 million of this financing
was used to repay further such shareholders' loans.
For the purposes of this financing, a newly organized company
registered in England, Procognia Ltd., acquired 100% ownership of Procognia
(Israel), in consideration for which we, as well as another existing Procognia
(Israel) shareholder, received ordinary shares of Procognia in exchange for our
Procognia (Israel) shares, while the subsequent investors received preferred
shares caring certain dividend and liquidation preferences and veto rights.
Following the April 2002 financing, various funds managed by Apax Partners
Europe became the principal shareholders of Procognia owning in the aggregate
approximately 37% of Procognia's share capital. On January 15, 2002, Procognia
entered into an agreement to acquire another company, Sense Proteomic Ltd., in a
share exchange transaction. In connection with this acquisition, Procognia
completed a $4 million round of financing from certain of its shareholders other
than us. Following the completion of these transactions, our ownership interest
in Procognia decreased from 14.4% to 11.5%, on a fully diluted basis. We have
the right to nominate one of Procognia's seven directors.
As a result of this transaction, we recorded a capital gain for the
second quarter of fiscal 2002 of approximately $1.4 million.
Appointment of New Executive Officers
Mr. Moshe Reuveni was appointed as our Chief Executive Officer in
January 2003. Mr. Reuveni replaces Mr. Daniel Kropf who has served as our Chief
Executive Officer and Chairman for the past three years and who will continue as
our Chairman. Mr. Reuveni currently serves as one of our Directors and as the
Managing Director of Gamida Medequip Ltd. (a subsidiary of Gamida for Life BV,
our principal stockholder). Mr. Reuveni served as a director and Chief Financial
Officer of Rosebud Medical Ltd. from March 1996 to January 2000. From December
1990 to December 1999, he served as General Manager of Gamida for Life (Israel).
Mr. Reuveni also currently serves as a director of certain of our subsidiaries:
Savyon, Gamida-Gen Marketing, Gamidor Diagnostics and Danyel Biotech. Mr.
Reuveni is a Certified Public Accountant and received his B.A. in Accounting and
Economics from Tel-Aviv University.
Mr. Eran Rotem has since May 2002 served as the Company's Chief
Financial Officer. Mr. Rotem was previously a senior manager in Ernst & Young,
Certified Public Accountants. He is himself a CPA and received his B.A. in
Accounting and Finance from the Tel-Aviv College of management.
ESTABLISHMENT OF SAVYON 2003
23
<Page>
On December 31, 2002, we and Savyon entered into an agreement with Dr.
Martin Lee, to establish Savyon Diagnostic Products (2003) Ltd. or "Savyon
2003", a newly organized Israeli company, to acquire Savyon's clinical
laboratory diagnostics business for a purchase price of approximately $1.9
million. In January 2003, Savyon changed its name to "Pronto Diagnostics Ltd."
and Savyon 2003 changed its name to "Savyon Diagnostics Ltd." Pronto continues
to own and operate its clinical laboratory genetic diagnostics business.
We and Dr. Lee will each own fifty percent of the newly organized
company. Each of us has the right to appoint three members of the board of
directors of this company. Dr. Lee is the chief executive officer of this
company and Mr. Daniel Kropf is this company's chairman of the board.
The purchase price is payable as follows: $ 770,000 was paid during
January 2003, $430,000 was paid on April 15, 2003 and the remaining $700,000
will be paid in 35 monthly installments of $20,000 each.
In connection with the transaction, Dr. Lee agreed to loan Savyon 2003
$1.2 million to be used to pay a portion of the $1.9 million purchase price to
Savyon for its clinical laboratory diagnostics business. These funds were in
fact loaned to Savyon 2003 by Dr. Lee and have been received by Savyon in
partial payment of such purchase price. The loan bears interest at a floating
rate equal to libor plus 1.75% and has no fixed repayment date. Dr. Lee was not
a related party at the time of the transaction and therefore we have treated the
loan as a net cash flow from financial operations.
The agreement provides for certain buy and sell provisions, rights of
first refusal and co-sale rights with respect to the shares of the new company.
The agreement also provides that the new company will provide certain
manufacturing services to us.
Dr. Lee was a founder, Chief Executive Director and Laboratory Director
of Great Smokies Diagnostic Laboratory, with almost 300 employees and doing
business in over 30 countries. Dr. Lee has Ph.D. in biochemistry and
microbiology. His career has included senior clinical positions at Lakeview and
Meadowlands Clinical Lab Services, Rockland Medilabs, Corning Medical, Coulter
Electronics and Pharmacia Fine Chemicals.
Effective as of January 1, 2003, the results of Savyon 2003 are
included in our consolidated financial statements on a proportionate
consolidation basis. The excess of the purchase price over the book value of the
assets and know how that were transferred to Savyon 2003 amounted to
approximately $268 thousand and was recorded as additional paid in capital.
ISRAELI TAX CONSIDERATIONS
The following contains a discussion of the material Israeli tax
consequences to shareholders arising from the purchase, ownership and sale of
ordinary shares. This summary does not discuss all the acts of Israeli tax law
that may be relevant to a particular shareholder in light of his personal
shareholding or concerning certain shareholders subject to special treatment
under Israeli law (for example, traders in securities or shareholders conducting
businesses in Israel). To the extent that the discussion is based on new tax
legislation which has not been subject to judicial or administrative
interpretation, there can be no assurance that the views expressed in this
discussion will be accepted by the tax authorities. The discussion should not be
construed as legal or professional tax advice and is not exhaustive of all
possible tax considerations.
24
<Page>
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE ISRAELI OR
OTHER TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF ORDINARY
SHARES, INCLUDING, IN PARTICULAR, THE EFFECT OF ANY NON-ISRAELI, STATE OR LOCAL
TAXES.
ISRAELI TAXATION OF OWNERSHIP OF ORDINARY SHARES
Non-residents of Israel are generally subject to Israeli tax on income
accrued or derived from certain sources within Israel or received in Israel.
These sources of income include passive income such as capital gains, dividends,
royalties and interest, as well as non-passive income rendered in Israel. We are
generally required to withhold income tax at the rate of 25% (15% for dividends
generated by an Approved Enterprise) on all distributions of dividends other
than bonus shares (share dividends) unless, in the case of a non-resident
shareholder, a different tax rate is provided for in a tax treaty between Israel
and the shareholder's country of residence. Pursuant to a treaty between the
U.S. and Israel relating to relief of double taxation, which took effect on
January 1, 1995 and applies to distribution of dividends by Healthcare on or
after February 1, 1995, the maximum tax on dividends paid to shareholders which
are residents of the U.S. is 25%. The tax withheld at source is the final tax
imposed in Israel on dividends for non-resident individuals and corporations.
The treaty also provides that a resident of the U.S. who holds shares
in an Israeli corporation is exempt from the Israeli capital gains tax on gains
from sale, exchange, or other disposition of capital assets if the gain is
derived by a resident of the U.S. , but only if the U.S. resident owns either
directly or indirectly, at any time within the twelve-month period preceding the
date of sale, exchange, or other disposition, shares possessing less than 10% of
the voting power of the corporation. The treaty also provides that in accordance
with the provisions and subject to limitations of the law of the United States,
the U.S. shall allow a resident of the U.S. as a credit against the United
States tax the appropriate amount of taxes paid or accrued to Israel.
Under Israeli law, sales of securities of Israeli companies quoted on
the Nasdaq Stock Market or listed on any other recognized stock exchange in
Israel and outside of Israel by non-residents of Israel through a transaction on
a recognized stock exchange (other than certain Israeli corporations) are also
exempt from the Israeli capital gains tax; provided that, the issuer qualifies
as an "Industrial Company" under Israeli law. We currently do not qualify as an
Industrial Company.
PROPOSED ISRAELI TAX REFORM
In May 2000, a special committee of the Israeli Ministry of Finance
(known as the "Rabinovitz Committee") published a report recommending
substantial reforms to Israeli tax law. The Rabinovitz Committee recommended,
among other things, subject to applicable treaties for the prevention of double
taxation, applying a general tax rate of up to 25% on capital gains recognized
in Israel and eliminating the exemption available to Israeli residents on
capital gains derived from the sale of shares of Industrial Companies listed on
specified non-Israeli stock exchanges, including Nasdaq. There is no certainty
that the recommendations of the Rabinovitz Committee will be adopted in whole or
in part by the Israeli Parliament.
25
<Page>
EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
Non-residents of Israel who purchase our ordinary shares with
non-Israeli currency will be able to convert dividends (if any) thereon, and any
amounts payable upon the dissolution, liquidation or winding up of our affairs,
less any applicable taxes, as well as the proceeds of any sale of our ordinary
shares, into freely repatriable foreign currency at the rate of exchange
prevailing at the time of conversion, pursuant to the general permit (as
amended) issued by the Controller of Foreign Currency at the Bank of Israel (the
"Controller") under the Israel Currency Control Law, 1978 ("Currency Control
Law").
Non-residents of Israel may freely hold and trade our securities
pursuant to the general permit issued under Currency Control Law. Neither our
Memorandum of Association, our Articles of Association, nor the laws of the
State of Israel restrict in any way the ownership or voting of ordinary shares
by non-residents, except that such restrictions may exist with respect to
subjects of countries which are in a state of war with Israel.
U.S. TAX CONSIDERATIONS
The following discussion summarizes the material U.S. federal income
tax consequences arising from the purchase, ownership and sale of the ordinary
shares. This summary is based on the provisions of the Internal Revenue Code of
1986, as amended (the "Code"), final, temporary and proposed U.S. Treasury
Regulations promulgated thereunder, and administrative and judicial
interpretations thereof, in effect as of the date of this prospectus, all of
which are subject to change, possibly with retroactive effect. Healthcare will
not seek a ruling from the Internal Revenue Service with regard to the United
States federal income tax treatment relating to investment in the ordinary
shares and, therefor, no assurance exists that the Internal Revenue Service will
agree with the conclusions set forth below. The summary below does not purport
to address all federal income tax consequences that may be relevant to
particular investors.
This summary does not address the consequences that may be applicable
to particular classes of taxpayers, including investors that hold ordinary
shares as part of a hedge, straddle or conversion transaction, insurance
companies, banks or other financial institutions, broker-dealers, tax-exempt
organizations and investors who own (directly, indirectly or through
attribution) 10% or more of Healthcare's outstanding voting stock. Further, it
does not address the alternative minimum tax consequences of an investment in
ordinary shares or the indirect consequences to U.S. Holders, as defined below,
of equity interests in investors in ordinary shares. This summary is addressed
only to holders that hold ordinary shares as a capital asset within the meaning
of Section 1221 of the Code, are U.S. citizens, individuals resident in the
United States for purposes of U.S. federal income tax, domestic corporations or
partnerships and estates or trusts treated as "United States persons" under
Section 7701 of the Code ("U.S. Holders").
EACH INVESTOR SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR AS TO THE
PARTICULAR U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND
SALE OF ORDINARY SHARES, INCLUDING THE EFFECTS OF APPLICABLE STATE, LOCAL,
FOREIGN OR OTHER TAX LAWS AND POSSIBLE CHANGES IN THE TAX LAWS.
26
<Page>
TAX BASIS OF ORDINARY SHARES
A U.S. Holder's tax basis in his or her ordinary shares will be the
purchase price paid therefor by such U.S. Holder. The holding period of each
ordinary share owned by a U.S. Holder will commence on the day following the
date of the U.S. Holder's purchase of such ordinary share and will include the
day on which the ordinary share is sold by such U.S. Holder.
SALE OR EXCHANGE OF ORDINARY SHARES
A U.S. Holder's sale or exchange of ordinary shares will result in the
recognition of gain or loss by such U.S. Holder in an amount equal to the
difference between the amount realized and the U.S. Holder's basis in the
ordinary shares sold. Subject to the following discussion of the consequences of
Healthcare being treated as a passive foreign investment company, such gain or
loss will be capital gain or loss if such ordinary shares are a capital asset in
the hands of the U.S. Holder. Gain or loss realized on the sale of ordinary
shares will be long-term capital gain or loss it the ordinary shares sold had
been held for more than one year at the time of their sale. Long-term capital
gains recognized by certain taxpayers generally are subject to a reduced rate of
federal tax (currently a maximum of 15%). If the U.S. Holder's holding period on
the date of the sale or exchange was one year or less, such gain or loss will be
short-term capital gain or loss. Short-term capital gains generally are subject
to tax at the same rates as ordinary income. In general, any capital gain
recognized by a U.S. Holder upon the sale or exchange of ordinary shares will be
treated as U.S. source income for U.S. foreign tax credit purposes. Gain or loss
will be computed separately for each block of shares sold (shares acquired
separately at different times and prices). The deductibility of capital losses
is restricted and generally may only be used to reduce capital gains to the
extent thereof. However, individual taxpayers generally may deduct annually
$3,000 of capital losses in excess of their capital gains.
TREATMENT OF DIVIDEND DISTRIBUTIONS
For U.S. federal income tax purposes, gross dividends (including the
amount of any Israeli taxes withheld therefrom) paid to a U.S. Holder with
respect to his or her ordinary shares will be included in his or her ordinary
income to the extent made out of current or accumulated earnings and profits of
Healthcare, as determined based on U.S. tax principles, at the time the
dividends are received and will be treated as foreign source dividend income for
purposes of the foreign tax credit limitation described below. Such dividends
will not be eligible for the dividends received deduction allowed to U.S.
corporations under Section 243 of the Code. Dividend distributions in excess of
Healthcare's current and accumulated earnings and profits will be treated first
as a non-taxable return of the U.S. Holder's tax basis in his or her ordinary
shares to the extent thereof and then as a gain from the sale of ordinary
shares. Dividends paid in NIS will be includible in income in a U.S. dollar
amount based on the exchange rate at the time of their receipt, and any gain or
loss resulting from currency fluctuations during the period from the date a
dividend is paid to the date such payment is converted into U.S. dollars
generally will be treated as ordinary income or loss.
Any Israeli withholding tax imposed on dividends paid to a U.S. Holder
will be a foreign income tax eligible for credit against such U.S. Holder's U.S.
federal income tax liability subject to certain limitations. Alternatively, a
U.S. Holder may claim a deduction for such amount, but only for a year in which
a U.S. Holder elects to do so with respect to all foreign income taxes. The
overall limitation on foreign taxes eligible for credit is calculated separately
with respect to specific classes of income. Dividends distributed by Healthcare
with respect to ordinary shares will generally constitute "passive income".
Foreign income taxes exceeding the credit limitation for the year of payment
accrual may be carried back for two taxable years and forward for five taxable
years in order to reduce U.S. federal income taxes, subject to the credit
limitation applicable in each of such years. Other restrictions on the foreign
tax credit include a general prohibition on the use of the credit to reduce
liability for the U.S. individual and corporation alternative minimum taxes by
more than 90% and an allowance of foreign tax credits for alternative minimum
tax purposes only to the extent of foreign-source alternative minimum taxable
income.
27
<Page>
Under the Jobs and Growth Tax Relief Reconciliation Act of 2003,
qualified dividend income received by an individual U.S. Holder for taxable
years beginning after December 31, 2002 and beginning before January 1, 2009 are
taxed at reduced rates of either 5 or 15 percent, depending upon the amount of
such U.S. Holder's taxable income. If an individual U.S. Holder does not hold
ordinary shares for more than 60 days during the 120 day period beginning 60
days before an ex-dividend date, dividends received on ordinary shares are not
eligible for reduced rates. Dividends received from a foreign corporation that
was a passive foreign investment company (as further discussed below) in either
the taxable year of the distribution or the preceding taxable year are not
qualified dividend income. Qualified dividend income includes dividends received
from a "qualified foreign corporation." A "qualified foreign corporation"
includes a foreign corporation whose shares are readily tradable on an
established securities market in the United States as well as a foreign
corporation that is entitled to the benefits of a comprehensive income tax
treaty with the United States which includes an exchange of information program.
Israel and the United States are parties to a comprehensive income tax treaty
which includes an exchange of information program. It is expected that the
United States Treasury Department will issue guidance regarding which income tax
treaties will be satisfactory for treating a corporation as a "qualified foreign
corporation." In the event ordinary shares should not be readily tradable on an
established securities market in the United States, individual U.S. Holders
should consult their own tax advisors as to whether any distributions paid on
ordinary shares will be taxed for United States federal income tax purposes at
reduced tax rates.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Any dividends paid on, or proceeds derived from a sale of, the ordinary
shares to, or by, U.S. Holders may be subject to U.S. information reporting
requirements and the 30% U.S. backup withholding tax unless the holder (i) is a
corporation or other exempt recipient or (ii) provides a United States taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with any applicable withholding requirements.
Any amounts withheld under the U.S. backup withholding tax rules will be allowed
as a refund or a credit against the U.S. Holder's U.S. federal income tax,
provided the required information is furnished to the U.S. Internal Revenue
Service.
28
<Page>
TAX STATUS OF HEALTHCARE FOR U.S. FEDERAL INCOME TAX PURPOSES
A foreign corporation generally will be treated as a "passive foreign
investment company" ("PFIC") if, after applying certain "look-through" rules,
either(i) 75% or more of its gross income is passive income or (ii) 50% or more
of the average value of its assets is attributable to assets that produce or are
held to produce passive income. Passive income for this purpose generally
includes dividends, interest , rents, royalties and gains from securities and
commodities transactions. The look-through rules require a foreign corporation
that owns at least 25% by value, of the stock of another corporation to treat a
proportionate amount of assets and income as held or received directly by the
foreign corporation.
Healthcare is not considered to be a PFIC, nor does it anticipate that
it will be a PFIC in the future because it expects that less than 75% of its
annual gross income will be passive income and less than 50% of its assets will
be passive assets, based on the look-through rules, the current income and
assets of Healthcare and its subsidiaries, and the manner in which Healthcare
and its subsidiaries are anticipated to conduct their businesses in the future.
However, there can be no assurance that Healthcare ever will BE A PFIC in the
future . If Healthcare were to be treated as a PFIC, any gain recognized by a
U.S. Holder upon the sale (or certain other dispositions) of ordinary shares (or
the receipt of certain distributions) generally would be treated as ordinary
income, and a U.S. Holder may be required, in certain circumstances, to pay an
interest charge together with tax calculated at maximum rates on certain "excess
distributions," including any gain on the sale or certain dispositions of
ordinary shares. In order to avoid this tax consequence, a U.S. Holder (i) may
be permitted to make a "qualified electing fund" election, in which case, in
lieu of such treatment, such holder would be required to include in its taxable
income certain undistributed amounts of Healthcare's income or (ii) may elect to
mark-to-market the ordinary shares and recognize ordinary shares and recognize
ordinary income (or possible ordinary loss) each year with respect to such
investment and on the sale or other disposition of the ordinary shares.
Additionally, if Healthcare is deemed to be a PFIC, a U.S. Holder who acquires
ordinary shares in Healthcare from a decedent will be denied the normally
available step-up in tax basis to fair market value for the ordinary shares at
the date of the death and instead will have a tax basis equal to the decedent's
tax basis if lower than fair market value. Neither Healthcare nor its advisors
have the duty to or will undertake to inform U.S. Holders of changes in
circumstances that would cause Healthcare to become a PFIC. U.S. Holders should
consult their own tax advisors concerning the status of Healthcare as a PFIC at
any point in time after the date of this prospectus. Healthcare does not
currently intend to take the action necessary for a U.S. Holder to make a
"qualified electing fund" election in the event Healthcare is determined to be a
PFIC.
USE OF PROCEEDS
All of the proceeds from the sale of the ordinary shares offered under
this prospectus are for the account of the selling shareholders. Accordingly, we
will not receive any proceeds from the sales of these shares.
PRICE RANGE OF ORDINARY SHARES
Our ordinary shares are listed for quotation on the Nasdaq SmallCap
Market under the symbol "HCTL." The following table sets forth, for the periods
indicated, the intra-day high and low sales prices per share of our ordinary
shares on the Nasdaq SmallCap Market.
29
<Page>
(i) ANNUAL HIGH AND LOW MARKET PRICES FOR THE LAST FIVE FISCAL
YEARS:
<Table>
<Caption>
FISCAL YEAR HIGH(*) LOW(*)
----------- ------- ------
1998....................... 2.00 0.88
1999....................... 1.50 0.75
2000....................... 3.84 0.78
2001....................... 1.03 0.48
2002....................... 0.68 0.20
</Table>
(ii) HIGH AND LOW MARKET PRICES FOR EACH FULL FINANCIAL QUARTER FOR
THE TWO MOST RECENT FISCAL YEARS:
30
<Page>
<Table>
<Caption>
HIGH (*) LOW (*)
-------- -------
2001
----
First Quarter.............. $1.03 $0.62
Second Quarter............. 1.00 0.62
Third Quarter.............. 0.90 0.62
Fourth Quarter............. 0.85 0.48
</Table>
<Table>
<Caption>
HIGH (*) LOW (*)
-------- -------
2002
----
First Quarter.............. $0.60 $0.42
Second Quarter............. 0.68 0.38
Third Quarter.............. 0.51 0.34
Fourth Quarter............. 0.67 0.20
</Table>
(iii) HIGH AND LOW MARKET PRICES EACH MONTH FOR THE MOST RECENT SIX
MONTHS.
<Table>
<Caption>
MONTH HIGH LOW
----- ---- ---
DECEMBER, 2002............. 0.56 0.26
January 2003............... 0.54 0.34
February 2003.............. 0.40 0.25
MARCH 2003................. 0.36 0.25
APRIL 2003................. 0.55 0.34
MAY 2003................... 0.62 0.34
</Table>
- ----------
* Share prices have been adjusted to reflect a one-for-four share consideration
effected on February 6, 1998.
As of May 31, 2003, there were 7,643,727 ordinary shares outstanding
owned by 90 holders of record and approximately 300 beneficial holders. This
number includes approximately 70 holders of record with United States addresses
who own an aggregate of approximately 2.3 million, or 30% of our ordinary
shares.
31
<Page>
DIVIDENDS
We have never paid a cash dividend on our ordinary shares. In the
foreseeable future, we intend to retain earnings, if any, for use in our
business but do not rule out the possibility of paying dividends in appropriate
circumstances. Future dividend policy will be determined by our board of
directors, and will depend upon our earnings and financial condition, capital
requirements and other relevant factors, including the impact of the
distribution of dividends on those factors and the impact of the distribution of
dividends on our tax liabilities. Cash dividends may be paid by an Israeli
company only out of profits as determined under Israeli law. Our articles of
association provide that dividends will be paid in accordance with the
resolutions of a general meeting of our shareholders although, our board of
directors may declare interim dividends. Declarations of any final annual cash
dividends require shareholder approval, which may reduce but not increase such
dividend from the amount proposed by the Board.
DESCRIPTION OF SHARE CAPITAL
DESCRIPTION OF SHARES
Set forth below is a summary of the material provisions governing our
share capital. This summary is not complete and should be read together with our
Memorandum and Articles of Association, copies of which have been filed as
exhibits to the Registration Statement of which this prospectus forms a part,
subject to amendment of our Memorandum and Articles of Association from time to
time.
As of December 31, 2002, our authorized share capital consisted of
40,000,000 ordinary shares, NIS 0.04 nominal value.
DESCRIPTION OF ORDINARY SHARES
All issued and outstanding ordinary shares of Healthcare are duly
authorized and validly issued, fully paid and nonassessable. The ordinary shares
do not have preemptive rights. Neither our Memorandum , Articles of Association
nor the laws of the State of Israel restrict in any way the ownership or voting
of ordinary shares by non-residents of Israel, except with respect to subjects
of countries which are in a state of war with Israel.
DIVIDEND AND LIQUIDATION RIGHTS
Subject to the rights of the holders of shares with preferential or
other special rights that may be authorized, the holders of ordinary shares are
entitled to receive dividends in proportion to the sums paid up or credited as
paid up on account of the nominal value of their respective holdings of the
shares in respect of which the dividend is being paid (without taking into
account the premium paid up on the shares) out of assets legally available
therefor and, in the event of our winding up, to share ratably in all assets
remaining after payment of liabilities in proportion to the nominal value of
their respective holdings of the shares in respect of which such distribution is
being made, subject to applicable law. Our Board of Directors may declare
interim dividends and recommend a final annual dividend only out of profits and
in such amounts as the Board of Directors may determine. Declaration of the
final annual dividend requires shareholder approval at a general meeting, which
may reduce but not increase such dividend from the amount recommended by the
Board of Directors.
32
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In case of a share dividend, holders of shares can receive shares of a
class whether such class existed prior thereto or was created therefore or
shares of the same class that conferred upon the holders the right to receive
such dividend.
VOTING, SHAREHOLDER MEETINGS AND RESOLUTIONS
Holders of ordinary shares have one vote for each ordinary share held
on all matters submitted to a vote of shareholders. Such rights may be affected
by the future grant of any special voting rights to the holders of a class of
shares with preferential rights. Once the creation of a class of shares with
preference rights has been approved, the Board of Directors may issue preferred
shares, unless the Board is limited from doing so by the Articles of Association
or a contractual provision.
An annual general meeting must be held once every calendar year at such
time (not more than 15 months after the last preceding annual general meeting)
and at such place, either within or outside the State of Israel, as may be
determined by the Board of Directors. The quorum required for a general meeting
of shareholders consists of at least two shareholders present in person or by
proxy and holding, or representing, more than one-third of the total voting
rights in the Company on the record date for such meeting. A meeting adjourned
for lack of a quorum may be adjourned to the same day in the next week at the
same time and place, or to such time and place as the Board of Directors may
determine. At such reconvened meeting, if a quorum is not present within half an
hour from the appointed time, any two shareholders present in person or by proxy
(and not in default under the articles) will constitute a quorum. Shareholder
resolutions generally will be deemed adopted if approved by the holders of a
majority of the voting power represented at the meeting, in person or by proxy,
and voting thereon. Shareholder resolutions for amending our memorandum and/or
articles of association, including making changes in our capital structure,
approving mergers with or into our company and/or our liquidation will be deemed
adopted if approved by the holders of 75% of the voting power represented at the
meeting, in person or by proxy, entitled to vote and voting on the resolution.
In addition, the Companies Law provides for certain extraordinary majorities for
the approval of certain related party transactions, nomination of External
Directors, authorizing a chairman of a company's board of directors to also act
as its general manager as well as certain arrangements between a company and its
shareholders and/or creditors.
SHAREHOLDERS' DUTIES
Under the Companies Law, a shareholder has a duty to act in good faith
towards the company and other shareholders and to refrain from abusing his power
in the company, including, among other things, when voting at the general
meeting of shareholders on the following matters:
- any amendment to the articles of association;
- an increase of the authorized share capital of the company;
- a merger; or
- approval of certain acts and transactions which require
shareholder approval.
In addition, a shareholder has the general duty to refrain from
depriving other shareholders of their rights. Furthermore, any controlling
shareholder, any shareholder who knows that he possesses the power to determine
the outcome of a shareholder vote and any shareholder who, pursuant to the
articles of association, has the power to appoint an office holder is under a
duty to act in fairness towards the company. The Companies Law does not describe
the substance of this duty.
33
<Page>
ANTI-TAKEOVER PROVISIONS UNDER ISRAELI LAW
Under the Companies Law, a merger is generally required to be approved
by the shareholders and board of directors of each of the merging companies. If
the share capital of the company that will not be the surviving company is
divided into different classes of shares, the approval of each class is also
required. The Companies Law provides that the articles of association of
companies, such as ours, that were incorporated prior to February 1, 2000 are
deemed to include a provision whereby the approval of a merger requires a
majority of three quarters of those present and voting at a general meeting of
shareholders. In addition, a merger can be completed only after all approvals
have been submitted to the Israeli Registrar of Companies and at least seventy
days have passed from the time that a proposal for approval of the merger was
filed with the Registrar.
The Companies Law provides that an acquisition of shares in a public
company must be made by means of a tender offer if, as a result of the
acquisition the purchaser would become a 25% shareholder of the company. This
rule does not apply if there is already another 25% shareholder of the company.
Similarly, the Companies Law provides that an acquisition of shares in a public
company must be made by means of tender offer if as a result of the acquisition
the purchaser would become a 45% shareholder of the company, unless someone else
already holds 50% of the voting power of the company. These rules do not apply
if the acquisition is made by way of a merger. Regulations promulgated under the
Companies Law provide that these tender offer requirements do not apply to
companies whose shares are listed for trading outside of Israel if, according to
the law in the country in which the shares are traded, including the rules and
regulations of the stock exchange on which the shares are traded, either:
- there is a limitation on acquisition of any level of control of the
company; or
- the acquisition of any level of control requires the purchaser to
do so by means of a tender offer to the public.
However, under the Companies Law, if following any acquisition of shares the
acquirer holds 90% or more of the company's shares or of a class of shares, the
acquisition must be made by means of a tender offer for all of the target
company's shares or all the shares of the class, as applicable. An acquirer who
wishes to eliminate all minority shareholders must do so by way of a tender
offer and acquire 95% of all shares not held by or for the benefit of the
acquirer prior to the acquisition. If, however, the tender offer to acquire 95%
is not successful, the acquiror may not acquire shares tendered if, by doing so
the acquiror would own more than 90% of the shares of the target company.
Finally, Israeli tax law treats specified acquisitions, including a
share-for-share swap between an Israeli company and a non-Israeli company, less
favorably than does U.S. tax law. For example, Israeli tax law may subject a
shareholder who exchanges his ordinary shares for shares in a non-Israeli
corporation to immediate taxation, although the tax event can be postponed in
certain cases for 2 to 4 years upon approval of the tax authorities.
TRANSFER OF SHARES AND NOTICES
Fully paid ordinary shares are issued in registered form and may be
transferred freely. Each shareholder of record is entitled to receive at least
21 days prior notice of shareholders' meetings. For purposes of determining the
shareholders entitled to notice and to vote at such meetings, the Board of
Directors may fix the record date not exceeding 60 days prior to the date of any
general meeting.
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MODIFICATION OF CLASS RIGHTS
If at any time the share capital is divided into different classes of
shares, the rights attached to any class (unless otherwise provided by our
Articles of Association) may be modified or abrogated by Healthcare Technologies
by a special resolution subject to the consent in writing of the holders of the
issued shares of the class, or by the adoption of a special resolution passed at
a separate general meeting of the holders of the shares of such class.
ACCESS TO INFORMATION
We file reports with the Israeli Registrar of Companies regarding our
registered address, our registered capital, our shareholders and the number of
shares held by each, the identity of the directors and details regarding
security interests on our assets. In addition, Healthcare must file with the
Israeli Registrar of Companies its Articles of Association and a copy of any
special resolution adopted by a general meeting of shareholders. The information
filed with the Registrar of Companies is available to the public. In addition to
the information available to the public, our shareholders are entitled, upon
request, to review and receive copies of all minutes of meetings of our
shareholders.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our ordinary shares is Continental
Stock Transfer & Trust Company.
SELLING SHAREHOLDERS
The following table sets forth as of May 31, 2003 the number of
ordinary shares of Healthcare owned by each selling shareholder and the number
of such ordinary shares included for sale in this prospectus, which in each
case, except as set forth below, is equal to the number of ordinary shares owned
by such person.
The ordinary shares being offered by Gamida were acquired in various
private and open market transactions between 1997 and 2001. The most recent
acquisition of shares by Gamida was in 2001 in connection with our sale of
2,000,000 ordinary shares to Gamida in a private placement offering for an
aggregate purchase price of $1,600,000 or $0.80 per share.
The ordinary shares being offered by Diamed AG, DMI Investments and Nir
Navot were acquired by them from Healthcare in 2001 in connection with our
acquisition of the GamidaGen business.
35
<Page>
<Table>
<Caption>
Beneficial Ownership Beneficial Ownership
Prior to Offering After Offering
----------------- --------------
Percentage of Percentage of
Outstanding Ordinary Shares Outstanding
Selling Ordinary Ordinary being Ordinary Ordinary
Shareholders Shares Shares(1) Offered Shares Shares(1)
- -------------------------- -------------- --------------- --------------- -------------- -------------
Gamida for Life B.V. (2) (3) 3,891,259(1) 51% 3,891,259 - -
The Trust Company of
United Mizrahi Bank(3) (3) (3) (3) -
Diamed AG 89,927 (4) 89,927 - -
DMI Investments B.V. 89,477 (4) 89,477 - -
Nir Navot 40,949 (4) 40,949 - -
</Table>
- ----------
(1) Based upon 7,643,727 shares outstanding on May 31, 2003.
(2) Mr. Daniel Kropf who serves as the Chairman of the Board of Directors
of Healthcare is the controlling shareholder of the parent company of
Gamida.
(3) The ordinary shares owned by Gamida have been pledged to the Trust
Company of United Mizrahi Bank as security for a loan from the Bank. In
general, the pledge agreement grants Gamida the right to direct the
voting of the pledged shares, except to the extent that the Bank
determines in its reasonable discretion that a matter to be voted on
would impair the value of the pledged shares. Upon the occurrence of a
default, the Bank has the right to dispose of the shares, subject to
complying with the terms of the pledge agreement. The registration
statement of which this prospectus forms a part also covers the sale of
the pledged shares by the Bank following a default by Gamida.
(4) Less than 1%
PLAN OF DISTRIBUTION OF SELLING SHAREHOLDERS
The selling shareholders intends to distribute the ordinary shares from
time to time only as follows, if at all:
- to or through underwriters, brokers or dealers;
- directly to one or more other purchasers;
- through agents on a best-efforts basis; or
- otherwise through a combination of any such methods of sale.
If the selling shareholders sell the ordinary shares through
underwriters, dealers, brokers or agents, such underwriters, dealers, brokers or
agents may receive compensation in the form of discounts, concessions or
commissions from the selling shareholders and/or the purchasers of the ordinary
shares.
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The ordinary shares may be sold from time to time:
- in one or more transactions at a fixed price or prices, which may
be changed;
- at market prices prevailing at the time of sale;
- at prices related to such prevailing market prices;
- at varying prices determined at the time of sale; or
- at negotiated prices.
Such sales may be effected in transactions:
- on any national securities exchange or quotation service on which
Healthcare's ordinary shares may be listed or quoted at the time of
sale;
- in the over-the-counter market;
- in block transactions in which the broker or dealer so engaged will
attempt to sell the ordinary shares as agent but may position and
resell a portion of the block as principal to facilitate the
transaction, or in crosses, in which the same broker acts as an
agent on both sides of the trade;
- in transactions otherwise than on such exchanges or services or in
the over-the-counter market;
- through the writing of options; or
- through other types of transactions.
In connection with sales of the ordinary shares or otherwise, the
selling shareholders may enter into hedging transactions with brokers-dealers or
others, which may in turn engage in short sales of the ordinary shares in the
course of hedging the positions they assume. The selling shareholders may also
sell ordinary shares short and deliver ordinary shares to close out such short
positions, or loan or pledge ordinary shares to brokers-dealers or others that
in turn may sell such securities. The selling shareholders may pledge or grant a
security interest in some or all of the 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 Healthcare ordinary shares from time to
time pursuant to this prospectus. The selling shareholders also may transfer and
donate Healthcare ordinary shares in other circumstances, in which case the
transferees, donees, pledgees or other successors in interest will be the
selling shareholder for purposes of the prospectus. In addition, any ordinary
shares covered by this prospectus that qualify for sale pursuant to Rule 144,
Rule 144A or any other available exemption from registration under the
Securities Act may be sold under Rule 144, Rule 144A or such other available
exemption.
At the time a particular offering of ordinary shares is made, a
prospectus supplement, if required, will be distributed, which will set forth
the number of ordinary shares being offered and the terms of the offering,
including the name or names of any underwriters, dealers, brokers or agents, if
any, and any discounts, commissions or concessions allowed or reallowed to be
paid to brokers or dealers.
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The selling shareholders and any underwriters, dealers, brokers or
agents who participate in the distribution of the ordinary shares may be deemed
to be "underwriters" within the meaning of the Securities Act, and any profits
on the sale of the ordinary shares by them and any discounts, commissions or
concessions received by any such underwriters, dealers, brokers or agents may be
deemed to be underwriting discounts and commissions under the Securities Act.
The selling shareholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M, which may limit the timing of purchases and sales of the ordinary shares by
the selling shareholders and any other such person. Furthermore, Regulation M
under the Exchange Act may restrict the ability of any person engaged in a
distribution of the ordinary shares of to engage in market-making activities
with respect to the ordinary shares being distributed for a period of up to five
business days prior to the commencement of such distribution. 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.
We will pay all expenses of the shelf registration statement, except
that the selling shareholders will pay any broker's commission, agency fee or
underwriter's discount or commission.
LEGAL MATTERS
Certain legal matters with respect to United States law are being
passed upon for Healthcare by Phillips Nizer LLP, New York, New York. The
validity of the ordinary shares offered hereby is being passed upon for
Healthcare Technologies by Shinar, Shachor, Weissberger, Tel Aviv, Israel.
EXPERTS
Kost, Forer & Gabbay, a member of Ernst & Young International,
independent auditors, have audited our consolidated financial statements as of
December 31, 2002 and 2001 and for each of the three years in the period ended
December 31, 2002, as set forth in their report included in our Annual Report on
Form 20-F for the fiscal year ended December 31, 2002. We have incorporated by
reference our financial statements in the prospectus in reliance on Kost Forer &
Gabbay's report, given on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form F-3 with the SEC for the
shares we are offering by this prospectus. This prospectus does not include all
of the information contained in the registration statement. You should refer to
the registration statement and its exhibits for additional information. Whenever
we make reference in this prospectus to any of our contracts, agreements or
other documents, the references are not necessarily complete and you should
refer to the exhibits attached to the registration statement for copies of the
actual contract, agreement or other document. We are required to file annual and
special reports and other information with the SEC.
You can read and copy any document we file with the SEC at its public
reference facilities at 450 Fifth Street, NW, Washington, DC 20549. You may also
obtain copies of the documents at prescribed rates by writing to the Public
Reference Section of the SEC at 450 Fifth Street, NW, Washington, DC 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference facilities. Our SEC filings are also available at the
office of the Nasdaq SmallCap Market. For further information on obtaining
copies of our public filings at the Nasdaq SmallCap Market, you should call
(212) 656-5060. Information contained on the websites does not constitute part
of this prospectus.
38
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We are subject to certain of the informational requirements of the
Exchange Act. We, as a "foreign private issuer," are exempt from the rules under
the Exchange Act prescribing certain disclosure and procedural requirements for
proxy solicitations and our officers, directors and principal shareholders are
exempt from the reporting and "short-swing" profit recovery provisions contained
in Section 16 of the Exchange Act, with respect to their purchases and sales of
ordinary shares. In addition, we are not required to file quarterly reports or
to file annual and current reports and financial statements with the Securities
and Exchange Commission as frequently or as promptly as U.S. companies whose
securities are registered under the Exchange Act. However, we intend to file
with the Securities and Exchange Commission, within 180 days after the end of
each fiscal year, an annual report on Form 20-F containing financial statements
that will be examined and reported on, with an opinion expressed by an
independent accounting firm as well as quarterly reports on Form 6-K containing
unaudited financial information for the first three quarters of each fiscal year
after the end of each such quarter.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" information into this
prospectus. This means that we can disclose important information to you by
referring you to another document filed by us with the Commission. Information
incorporated by reference is deemed to be part of this prospectus.
The following documents are incorporated by reference:
(a) Our Annual Report on Form 20-F for the fiscal year ended December
31, 2002;
(b) Our Form 6-K Report for February, 2003 filed with the Securities
and Exchange Commission on March 17, 2003;
(c) Our Form 6-K Report for May 2003, filed with the Securities and
Exchange Commission on June 9, 2003;
(d) Our Form 6-K for June 2003, filed with the Securities and Exchange
Commission on June 20, 2003; and
(e) The description of our ordinary shares contained in the
registration statement under the Exchange Act on Form 8-A as filed
with the Commission on May 27, 1989, and any subsequent amendment
or report filed for the purpose of updating this description.
In addition, all subsequent annual reports filed on Form 20-F prior to
the termination of the offering are incorporated by reference into this
prospectus. Also, we may incorporate by reference our future reports on Form 6-K
by stating in those Forms that they are being incorporated by reference into
this prospectus.
We will provide without charge to any person (including any beneficial
owner) to whom this prospectus has been delivered, upon oral or written request,
a copy of any document incorporated by reference in this prospectus but not
delivered with the prospectus (except for exhibits to those documents unless a
document states that one of its exhibits is incorporated into the document
itself). Such requests should be directed to Healthcare Technologies Ltd.,
Kiryat Minrav, 3 Habosem Street, Ashdod Israel 77610, Attn: Merav Kalderon Tel.
No. (011) 972-8-856-2920 Ext. 230.
39
<Page>
ENFORCEABILITY OF CIVIL LIABILITIES
We are incorporated in Israel, and our directors and executive officers
and the Israeli experts named herein are not residents of the United States and
substantially all of their assets and our assets are located outside the United
States. Service of process upon our directors and executive officers or the
Israeli experts named herein and enforcement of judgments obtained in the United
States against us, and our directors and executive officers, or the Israeli
experts named herein, may be difficult to obtain within the United States.
Phillips Nizer LLP is the U.S. agent authorized to receive service of process in
any action against us arising out of this offering or any related purchase or
sale of securities. We have not given consent for this agent to accept service
of process in connection with any other claim.
We have been informed by Shinar, Shachor, Weissberger, that there is
doubt as to the enforceability of civil liabilities under the Securities Act or
the Exchange Act in original actions instituted in Israel. However, subject to
certain time limitations, an Israeli court may declare a non-Israeli civil
judgment enforceable if it finds that:
- the judgment was rendered by a court which was, according to the
laws of the state of the court, competent to render the judgment,
- the judgment is no longer appealable,
- the obligation imposed by the judgment is enforceable according to
the rules relating to the enforceability of judgments in Israel
and the substance of the judgment is not contrary to Israeli law
and/or public policy, and
- the judgment is enforceable in the state in which it was given.
Even if the above conditions are satisfied, an Israeli court will not enforce a
non-Israeli judgment if it was given in a state whose laws do not provide for
the enforcement of judgments of Israeli courts (subject to exceptional cases) or
if its enforcement is likely to prejudice the sovereignty or security of the
State of Israel. An Israeli court also will not declare a non-Israeli judgment
enforceable if (i) the judgment was obtained by fraud, (ii) there was no due
process (adequate service of process and a reasonable opportunity for defendant
to present his arguments and evidence), (iii) the judgment was rendered by a
court not competent to render it according to the laws of private international
law in Israel, (iv) the judgment is at variance with another judgment that was
given in the same matter between the same parties and which is still valid, or
(v) at the time the action was brought in the non-Israeli court a suit in the
same matter and between the same parties was pending before a court or tribunal
in Israel. Judgments rendered or enforced by Israeli courts will generally be
payable in Israeli currency. Judgment debtors bear the risk associated with
converting their awards into foreign currency, including the risk of unfavorable
exchange rates.
40
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INDEX TO FINANCIAL STATEMENTS
HEALTHCARE TECHNOLOGIES LIMITED
[Incorporated by reference to the Company's
Annual Report on Form 20-F for the fiscal year ended December 31, 2002.]
Report of Independent Public Accountants
Consolidated Balance Sheets at December 31, 2001 and 2002 (Audited) Consolidated
Statements of Operations for the three years ended December 31,
2000, 2001 and 2002 (Audited)
Consolidated Statement of Shareholders' Equity for the three years ended
December 31, 2000, 2001 and 2002
Consolidated Statements of Cash Flows for the three years ended December 31,
2000, 2001 and 2002 (Audited) Notes to Consolidated Financial Statements
(Audited)
[Incorporated by reference to the Company's Report on Form 6-K dated June 20,
2003.]
Unaudited pro forma condensed financial information
41
<Page>
================================================================================
PROSPECTUS
You may rely on the information contained in this prospectus. We have
not authorized anyone to provide information different from that contained in
this prospectus. Neither the delivery of this prospectus nor sale of ordinary
shares means that information contained in this prospectus is correct after the
date of this prospectus. This prospectus is not an offer to sell or a
solicitation of an offer to buy these ordinary shares in any circumstances under
which the offer or solicitation is unlawful.
____________, 2003
================================================================================
II
<Page>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<Table>
Securities and Exchange Commission........................................... $ 137.00
Fees of Transfer Agent and Registrar......................................... 2,000.00
Accounting................................................................... 30,000.00
Legal Fees (US Counsel & Israeli Counsel, in the aggregate).................. 40,000.00
Blue Sky Fees and Expenses................................................... 2,000.00
Printing and Engraving....................................................... 1,000.00
Insurance.................................................................... 30,000.00
Miscellaneous................................................................ 1,000.00
-----------
Total $106,137.00
============
</Table>
All fees are estimated.
Item 15. INDEMNITY AND INSURANCE OF DIRECTORS AND OFFICERS.
Under the Companies Law, an Israeli company may not exempt an office
holder from liability with respect to a breach of his duty of
loyalty, but may exempt in advance an office holder from his
liability to the company, in whole or in part, with respect to a
breach of his duty of care. Under the Companies Law, a company may
not (1) indemnify an office holder or absolve him from liability
towards the company for, or (2) enter into an insurance contract
which would provide coverage for any monetary liability incurred as a
result of any one of the following:
- a breach by the office holder of his duty of loyalty unless the
office holder acted in good faith and had a reasonable basis to
believe that the act would not be detrimental to the benefit of
the company;
- an intentional or reckless breach by the office holder of his duty
of care;
- any act or omission intended to confer on the office holder an
illegal personal gain; or
- any fine levied against the office holder.
Article 109 of the Articles of Association of the Registrant contains
provisions which relate to the indemnity and insurance of officers
and directors. Subject to the provisions of the Companies Law, the
Registrant's Articles of Association provide that it may enter into a
contract for the insurance of the liability of any of its office
holders with respect to:
(i) a breach of his duty of care to the Company or to any other
person;
(ii) a breach of fiduciary duty to the Company provided that the
Officer has acted in good faith and that he had reasonable
grounds to assume that the act would not harm the good of the
Company;
II-1
<Page>
(iii) a financial liability which shall be imposed on such Officer in
favor of any other person, in respect of an act performed by
him by virtue of his being an officer of the Company;
Subject to the provisions of the Companies Law, the Registrant's
Articles of Association provide that it may indemnify an officer
holder with respect to any of the following:
(i) a financial liability imposed on him in favor of any other
person by any judgment, including a judgment given as a result
of a settlement or an arbitrator's award which has been
confirmed by a court, in respect of an act performed by him by
virtue of his being an Officer of the Company.
(ii) reasonable litigation costs, including lawyer's fees, expended
by an Officer or which were imposed on an Officer by a court in
proceedings filed against him by the Company or in its name or
by any other person or in a criminal charge on which he was
acquitted, in respect of an act performed by him by virtue of
his being an Officer of the Company.
In addition, under the Companies Law, indemnification of, and
procurement of insurance coverage for, the Registrant's office
holders must be approved by its audit committee and its board of
directors and, in specified circumstances, by its shareholders.
Registrant has obtained directors' and officers' liability insurance
and resolved to indemnify its office holders pursuant to the
Companies Law.
Item 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS
<Table>
<Caption>
Incorp. Exhibit
by Ref. to. No.
- ----------- ---
** 5 Opinion of Shinar, Shachor, Weissberger
** 23(a) Consent of Shinar, Shachor, Weissberger contained in
their opinion filed as Exhibit 5.
* 23(b) Consent of Kost Forer & Gabbay
** 23(c) Consent of Phillips Nizer LLP
** 99.1 Distribution Agreement between Dade Behring Marburg
GmbH and Gamidor Diagnostics
** 99.2 Distribution Agreement between Amersham Pharmacia
Biotech AB and Danyel Biotech Ltd.
** 99.3 Deal Structure Document for Savyon 2003 Transaction.
* 99.4 Assignment of Amersham Agreement.
* 99.5 Chart of Healthcare Companies
</Table>
- ----------
* Filed herewith.
** Previously filed
All schedules have been omitted from this Registration Statement, since
the required information is either not applicable, or is not present in amounts
sufficient to require submission of the schedules, or because the information is
included in the Financial Statements or notes thereto.
II-2
<Page>
Item 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(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;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the 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 the
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 the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new Registration Statement 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which 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
ss.3-19 of Regulation S-X (ss.210.3-19 of this chapter) at the
sort of any delayed offering or throughout a continuous
offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act"), may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registration has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the 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 Act and
will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to which the prospectus is sent or
given, the registrant's latest filing on Form 20-F.
II-3
<Page>
The undersigned registrant hereby undertakes 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 Section 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
and that time shall be deemed to be the initial bona fide offering thereof.
II-4
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets 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 Tel-Aviv, State of Israel, on the 20th day of June,
2003.
HEALTHCARE TECHNOLOGIES LIMITED
By: /s/ DANIEL KROPF
-----------------------------------
Daniel Kropf,
Chairman of the Board of Directors
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Brian Brodrick and Eran Rotem, and each
of them, as his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign this Registration Statement and any or all
amendments (including post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
- --------- ----- ----
/s/ Daniel Kropf
- ----------------------
Mr. Daniel Kropf Chairman of the Board of Directors June 20, 2003
and Director
/s/ Moshe Reuveni
- ----------------------
Mr. Moshe Reuveni Chief Executive Officer June 20, 2003
and Director
(Principal Executive Officer)
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<Page>
/s/ Eran Rotem
- ----------------------
Mr. Eran Rotem, CPA Chief Financial Officer (Principal June 20, 2003
Financial and Accounting Officer)
*/s/ Yacob Ofer
- ----------------------
Mr. Yacob Ofer Director June 20, 2003
/s/ Rolando Eisen
- ----------------------
Mr. Rolando Eisen Director June 20, 2003
*/s/ Eliezer Helfan
- ----------------------
Mr. Eliezer Helfan Director June 20, 2003
*/s/ Israel Amir
- ----------------------
Mr. Israel Amir Director June 20, 2003
*/s/ Ethan Rubinstein
- ----------------------
Prof. Ethan Rubinstein Director June 20, 2003
/s/ Varda Rotter
- ----------------------
Prof. Varda Rotter Director June 20, 2003
Authorized Representative in the
United States:
Phillips Nizer LLP
By: /s/ Brian Brodrick
----------------------
Brian Brodrick, Esq.,
Partner
June 20, 2003
/s/ Eran Rotem
- --------------
*Eran Rotem, as attorney-in-fact
June 20, 2003
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<Page>
EXHIBIT LIST
<Table>
<Caption>
Incorp. Exhibit
by Ref. to. No.
- ----------- ---
** 5 Opinion of Shinar, Shachor, Weissberger
** 23(a) Consent of Shinar, Shachor, Weissberger contained in
their opinion filed as Exhibit 5.
* 23(b) Consent of Kost Forer & Gabbay
** 23(c) Consent of Phillips Nizer LLP
** 99.1 Distribution Agreement between Dade Behring Marburg
GmbH and Gamidor Diagnostics
** 99.2 Distribution Agreement between Amersham Pharmacia
Biotech AB and Danyel Biotech Ltd.
** 99.3 Deal Structure Document for Savyon 2003 Transaction
* 99.4 Assignment of Amersham Agreement
* 99.5 Chart of Healthcare Companies
</Table>
- ---------------------
* Filed herewith
** Previously filed
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