In the past, Valtech received Israeli government grants for certain of its research and
development activities. The terms of those grants may require Valtech to satisfy specified conditions in order to manufacture products and transfer technologies outside of Israel. Valtech may be required to pay penalties in addition to repayment of
Valtechs research and development efforts were financed in part, through grants that Valtech received from the
OCS. Notwithstanding the full repayment of these OCS grants, Valtech nevertheless must continue to comply with the requirements of the Israeli Law for the Encouragement of Industrial Research and Development, 1984, and related regulations. When a
company develops know-how, technology or products using OCS grants, the transfer of such know-how, and the transfer of manufacturing or manufacturing rights of such products, technologies or know-how outside of Israel is restricted without the prior
approval of the OCS. Therefore, if aspects of Valtechs technologies are deemed to have been developed with OCS funding, the discretionary approval of an OCS committee would be required for any transfer to third parties outside of Israel of
know-how or manufacturing rights related to those aspects of such technologies. Furthermore, the OCS may impose certain conditions on any arrangement under which it permits Valtech to transfer technology or development out of Israel. Valtech may not
receive those approvals or Valtech may find these conditions unfavorable.
Valtech is subject to risks arising from currency
exchange rates, which could increase its costs and may have a negative effect on its results of operations.
Inflation in Israel or
Europe or a weakening of the U.S. dollar against other currencies may have the effect of increasing the U.S. dollar cost of Valtechs operations in that jurisdiction, which may have a material adverse impact on its results of
operations. If the U.S. dollar declines in value in relation to one or more currencies, it may become more expensive to fund Valtechs operations in the jurisdictions that use those other currencies.
In the future, Valtech expects that a substantial portion of its revenues will be generated in U.S. Dollars and Euros. Valtechs
financial records are maintained in New Israel Shekels (NIS), which is the functional currency of Valtech. As a result, Valtechs financial results might be affected by fluctuations in the exchange rates of currencies in the
countries in which Valtechs products may be sold.
Currency exchange controls may restrict Valtechs ability to utilize
our cash flows.
Valtech intends to receive proceeds from sales of any prospective product Valtech may develop and also to pay its
operational costs and expenses in U.S. Dollars, Euros and other foreign currencies. However, Valtech may be subject to existing or future rules and regulations on currency conversion. In 1998, the Israeli currency control regulations were
liberalized significantly, and there are currently no currency controls in place. Legislation remains in effect, however, pursuant to which such currency controls could be imposed in Israel by administrative action at any time. Valtech cannot assure
you that such controls will not be reinstated, and if reinstated, would not have an adverse effect on Valtechs operations.
may be difficult to enforce a U.S. judgment against Valtech, Valtech executive officers and directors and some of the experts named in this proxy statement/prospectus, or assert U.S. securities law claims in Israel.
It may be difficult to effect service of process on some or all of Valtechs executive officers, directors and the experts named in this
proxy statement/prospectus. Furthermore, much of Valtechs assets and some of the assets of Valtechs executive officers and directors and some of the experts named in this proxy statement/prospectus are located outside the United States.
Therefore, a judgment obtained against Valtech or any of Valtechs executive officers or directors in the United States, including one based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the
United States and may not be enforced by an Israeli court. It also may be difficult to assert U.S. securities law claims in original actions instituted in Israel.