PHILLIPS NIZER LLP
666 Fifth Avenue
New York, NY 10103
Tel: 212-977-9700
Fax: 212-262-5152
January 16, 2007
VIA EDGAR
Securities and Exchange Commission
Washington, DC 20549-7010
Attn: Ibolya Ignat, Staff Accountant
Mail Stop 6010
Re: Healthcare Technologies Ltd.
Annual Report on Form 20-F for Fiscal Year
Ended December 31, 2005
Filed on June 29, 2006
File No. 000-17799
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Ladies and Gentlemen:
On behalf of our client, Healthcare Technologies Ltd., an Israeli
corporation (the "Company"), we have set forth below the Company's response to a
verbal comment received by the undersigned from Ms. Ibolya Ignat of the Staff on
January 8, 2007, with respect to the Company's response letter dated October 4,
2006. The Staff's comment has been reproduced (in bold) below and is immediately
followed by the Company's response thereto.
PLEASE PROVIDE THE STAFF WITH A CALCULATION THAT SUBSTANTIATES THE
COMPANY'S POSITION THAT THE FIRST AND THIRD CONDITIONS OF RULE 1-02(W) OF
REGULATION S-X SUBSTITUTING 20 PERCENT FOR 10 PERCENT WAS NOT MET FOR FISCAL
2004 AND 2003 WITH RESPECT TO THE COMPANY'S INTEREST IN SAVYON DIAGNOSTICS LTD.
The requested calculation is attached to this letter as Exhibit A.
o The Company hereby acknowledges that: the Company is responsible
for the adequacy and accuracy of the disclosure in the filings;
Securities and Exchange Commission
January 16, 2007
Page 2
o Staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with respect to the filing; and
o The Company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
If you have any questions concerning the foregoing, please contact the
undersigned at 212-841-0700 or the Company's Chief Financial Officer, Mr. Eran
Rotem at 011 972-3-927-7232.
Very truly yours,
/s/ Brian Brodrick
Brian Brodrick
EXHIBIT A
The following Calculation substantiates the Company's position that the first
and third conditions of Rule 1-2(w) of Regulation S-X, substituting 20 percent
for 10 percent, were not met for fiscal 2004 and 2003 with respect to the
Company's interest in Savyon Diagnostics Ltd. The two conditions are as follows:
(1) THE REGISTRANT'S AND ITS OTHER SUBSIDIARIES' INVESTMENTS IN AND
ADVANCES TO THE SUBSIDIARY EXCEED 10 PERCENT OF THE TOTAL ASSETS OF THE
REGISTRANT AND ITS SUBSIDIARIES CONSOLIDATED AS OF THE END OF THE MOST
RECENTLY COMPLETED FISCAL YEAR (FOR A PROPOSED BUSINESS COMBINATION TO BE
ACCOUNTED FOR AS A POOLING OF INTERESTS, THIS CONDITION IS ALSO MET WHEN
THE NUMBER OF COMMON SHARES EXCHANGED OR TO BE EXCHANGED BY THE REGISTRANT
EXCEEDS 10 PERCENT OF ITS TOTAL COMMON SHARES OUTSTANDING AT THE DATE THE
COMBINATION IS INITIATED);
(2) THE REGISTRANT'S AND ITS OTHER SUBSIDIARIES' EQUITY IN THE INCOME
FROM CONTINUING OPERATIONS BEFORE INCOME TAXES, EXTRAORDINARY ITEMS AND
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE OF THE SUBSIDIARY
EXCEEDS 10 PERCENT OF SUCH INCOME OF THE REGISTRANT AND ITS SUBSIDIARIES
CONSOLIDATED FOR THE MOST RECENTLY COMPLETED FISCAL YEAR.
2005 TESTS:
Test (1): Investment in Savyon = 289 < 20%
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Healthcare's total assets 12,374
CONCLUSION FROM TEST 1: The investment in Savyon constitutes less than 20%
of the total assets - according to this test, Healthcare is not required to
file separate financial statements for Savyon.
Test (2): Equity in earnings from Savyon for the year 2005 = 167 > 20%
---------------------------------------------------- ---
Net income before equity in earnings of an affiliate 109
CONCLUSION FROM TEST 2- Equity in earnings from Savyon for the year 2005
exceeds 20% of the total income before equity in earnings of an affiliate -
according to this test, HEALTHCARE IS REQUIRED TO FILE SEPARATE FINANCIAL
STATEMENTS FOR SAVYON.
2004 TESTS:
Test (1): Investment in Savyon = -28 < 20%
------------------------- ------
Healthcare's total assets 11,988
CONCLUSION FROM TEST 1: The investment in Savyon constitutes less than 20%
of the total assets - according to this test, Healthcare is not required to
file separate financial statements for Savyon.
Test (2): Equity in earnings from Savyon for the year 2004 = 53 < 20%
-------------------------------------------------- -----
Net loss before equity in earnings of an affiliate (412)
IN A CASE OF LOSS:
WHEN A LOSS HAS BEEN INCURRED BY EITHER THE PARENT AND ITS SUBSIDIARIES
CONSOLIDATED OR THE TESTED SUBSIDIARY, BY NOT BOTH, THE EQUITY IN THE
INCOME OR LOSS OF THE TESTED SUBSIDIARY SHOULD BE EXCLUDED FROM THE INCOME
OF THE REGISTRANT AND ITS SUBSIDIARIES CONSOLIDATED FOR PURPOSES OF THE
COMPUTATION.
CONCLUSION FROM TEST 2- Equity in earnings from Savyon for the year 2004
constitutes less than 20% of the total loss before equity in earnings of an
affiliate - according to this test, Healthcare is not required to file
separate financial statements for Savyon.
2003 TESTS:
Test (1): Investment in Savyon = -82 < 20%
------------------------- ------
Healthcare's total assets 12,742
CONCLUSION FROM TEST 1: The investment in Savyon constitutes less than 20%
of the total assets - according to this test, Healthcare is not required to
file separate financial statements for Savyon.
Test (2): Equity in loss from Savyon for the year 2003 = (14) < 20%
-------------------------------------------------- -----
Net loss before equity in earnings of an affiliate (486)
CONCLUSION FROM TEST 2: Equity in losses from Savyon for the year 2003
constitutes less than 20% of the total loss before equity in earnings of an
affiliate - according to this test, Healthcare is not required to include
separate financial statements for Savyon.
Rule 3-09 states that the requirements regarding the filing of financial
statements for significant consolidated subsidiaries or 50%-or-less-owned
entities are the same as those required of a registrant and should meet the
form and content requirements of regulation S-X. Since Healthcare is
required to file financial statements which include the balance sheets of
the past two years, and income statements, cash flow statements and
statements of changes in shareholders' equity of the past three years, the
same filing requirements apply with respect to Savyon. However, since the
conditions of Rule 1-02 were not met in 2003 and 2004, the figures relating
to such years may be unaudited.