|
UNITED
STATES
|
|
|
1.
|
Chapter
A – Description of the Company's Business for the year ending December 31,
2009.
|
|
2.
|
Chapter
B – Board of Directors' Report on the Corporation's Business Position As
of December 31, 2009.
|
|
3.
|
Chapter
C – Consolidated Financial Statements for the year ending December 31,
2009.
|
|
4.
|
Chapter
D – Further Particulars of
Corporation.
|
|
5.
|
Chapter
E – Separate financial information for 2009 being presented pursuant to
Regulation 9.C. of the Securities Regulations (Immediate and Periodic
Reports).
|
|
1.
|
Chapter
A – Description of the Company's Business for the year ending December 31,
2009.
|
|
2.
|
Chapter
B – Board of Directors' Report on the Corporation's Business Position As
of December 31, 2009.
|
|
3.
|
Chapter
C – Consolidated Financial Statements for the year ending December 31,
2009.
|
|
4.
|
Chapter
D – Further Particulars of
Corporation
|
|
5.
|
Chapter
E – Separate financial information for 2009 being presented pursuant to
Regulation 9.C. of the Securities Regulations (Immediate and Periodic
Reports) 5730–1970.
|
|
1.
|
Description of the
General Development of the Company's
Business
|
|
As
of the date of this report, the Company is not engaged in any development
activity. The following data was extracted from the Company's
financial statements:
|
Year Ended December 31
|
||||||||
2009
|
2008
|
|||||||
US$ Thousands
|
||||||||
Total
Assets
|
715 | 3,402 | ||||||
Total
Liabilities
|
708 | 1,928 | ||||||
Equity
|
7 | 1,474 |
Year Ended December 31
|
||||||||
2009
|
2008
|
|||||||
US$ Thousands
|
||||||||
Revenues
|
- | 5,940 | ||||||
Gross
profit
|
- | 4,099 | ||||||
Research
and development costs
|
- | 11,722 | ||||||
General
and administration costs
|
*) (2,429 | ) | 3,937 | |||||
Impairment
of intangible asset
|
- | 7,500 | ||||||
Other gains (losses), net
|
139 | 288 | ||||||
Profit
(loss) of operations
|
2,568 | (18,772 | ) |
2.
|
The Company's
Agreement with Bio-Gal Ltd.
|
|
In
March 2009, the Company entered into an asset purchase agreement with
Bio-Gal Ltd. (hereinafter - "Bio-Gal"), a private
company, for the rights to a use patent on Recombinant Erythropoietin for
the prolongation of multiple myeloma (type of blood cancer) patients'
survival and improvement of their quality of life. (For further
information see the Company's immediate report of March 19, 2009
(reference no. 2009-01-061491)). On September 30, 2009,
the Company and Bio-Gal Ltd. signed an extension of the closing date of
the transaction to November 30, 2009 (see reference no.
2009-01-244809). On November 30, 2009, the parties signed a
further extension date of the transaction until February 28, 2010, which
was extended once again up to April 30, 2010, to enable its completion
(see reference no.
2009-01-305211).
|
|
On
December 31, 2009 the Board approved the Company's engagement under an
agreement to acquire 100% of the shares of Xtepo Ltd. ("Xtepo"), a new Israeli
company established by Bio-Gal's shareholders for purposes of the
transaction and which Bio-Gal shall transfer to the use patent for
Recombinant Erythropoietin ("EPO").. Furthermore, the amount of
USD $1.5 million was to be invested by private investors (through the
exercise of options granted to
them).
|
|
For
the purposes of the acquisition, the Company will issue approximately 133
million ordinary shares of the Company to Xtepo's shareholders, against
obtaining 100% of their shares in Xtepo by way of issuing ordinary shares
of the Company in an extraordinary private placement to Xtepo's
shareholders, in accordance with the Securities Regulations (Private
Offering Securities in a Listed Company - 2000) (hereinafter: “Share Swap Agreement).
The said Share Swap Agreement was approved at an Extraordinary
General Meeting of Shareholders on March 2, 2010, such that after
completing the share swap, Xtepo's shareholders will hold (together with
their holdings of the Company's shares prior to the share swap)
approximately 70.64% of the Company's issued and outstanding share
capital, while the balance, in the amount of 29.36%, will be held by the
Company's shareholders.
|
|
It
should be noted that the Share Swap Agreement stipulates, inter alia, that
its execution is conditional on a number of prerequisites, which the
primary ones are: a) publishing an allocation report offering an
extraordinary private placement for the allocation of the shares; b)
obtaining the approval of the Company's Extraordinary Meeting of
Shareholders for the Share Swap Agreement; c) exercising the options by
Xtepo's investors, such that on the transaction date, Xtepo will have
approximately $1.5 million available at hand; d) the Israel Tax
Authority's approval; e) the Tel Aviv Stock Exchange approval to register
the allocated shares for Xtepo's shareholders; f) any other approval that
may be required for executing the Share Swap Agreement according to law
(hereinafter collectively: "the
Prerequisites").
|
|
As
of the date of this report, a considerable part of the Prerequisites
referred to above have been fulfilled, including the approval of the
Company's shareholders (obtained on March 2, 2010). The Company
did not receive the Tax Authority's approval for the share swap and
transfer of the intangible assets. According to the Management and its
advisers, the transaction is expected to be completed in the second
quarter of 2010.
|
|
The
Company's projections on obtaining the Tax Authority's approval and other
Prerequisites as outlined above is forward-looking information based
solely on the evaluation of Management and its advisers. The
foregoing might not be realized as the Management's evaluations are not
certain.
|
|
Should
the transaction and the fund raising involved not be achieved in the
upcoming weeks, there are substantial doubts as to the Company's ability
to continue operating as a going concern. The auditors, in the
Company's financial statements, have drawn attention to the Company's
financial position and its inability to pursue its activities without
completing the transaction and/or raising funds from other external
sources. (See Note 1.D of the financial
statements).
|
|
Notwithstanding
the aforesaid, and on the assumption that the Company does obtain the
necessary approvals for complying with the Prerequisites and closing the
transaction, the Company will act, whether by itself or through Xtepo (the
Company, its subsidiaries including Xtepo, and a second tier company,
shall hereinafter be referred to as "the Group"), in order to
commercialize a new indication for the use of the EPO drug in the
treatment of patients suffering from multiple myeloma, as detailed
below:
|
3.
|
The Group’s activity
and description of its business
development
|
3.1
|
Terminology
|
Multiple
myeloma
|
Multiple
myeloma is a hematological cancer accounting for about 10% of all
hematological cancers and about 1% of all malignant diseases. This disease
is characterized by uncontrolled proliferation of plasma cells, a type of
white blood cells, in the bone marrow, thus leading to the formation of
malignant cell foci causing damage and partial bone
destruction This disease has a multi-focal (multiple) nature,
reflected by formation of multiple malignant cell foci. The malignant
cells and the proteins secreted by them are responsible for a series of
clinical manifestations and complications, including damage to the bones,
accompanied by pain and fractures, damage to the bone marrow and anemia,
susceptibility to infections, weakening of the immune system, nervous
system impairment, renal insufficiency, coagulation defects,
etc. Multiple myeloma is an incurable disease, with mean life
expectancy of the patients being about 3-5
years.
|
Plasma
cells
|
A
group of cells constituting about 2-5% of all white blood cells in the
human body. Plasma cells produce immunoglobulins, which are immune system
proteins serving as antibodies.
|
|
Erythropoietin-
EPO
|
A
hormone produced by the kidneys, the known function of which is
stimulation of red blood cell production in the bone
marrow.
|
|
Recombinant
Erythropoietin (Recombinant EPO)
|
A
genetically – engineered hormone usually designed for treatment of various
types of anemia, mainly anemia affecting patients suffering from renal
insufficiency (and treated with hemodialysis), as well as patients with
various types of malignant diseases accompanied by
anemia.
|
|
Autologous
stem cells
|
Stem
cells are undifferentiated cells, out of which the three types of blood
cells are formed. Most stem cells reside in the bone marrow; however, some
of them- called peripheral blood stem cells (PBSC)- are collected from the
bloodstream.
Autologous
transplantation – the patient receives stem cells from his own bone marrow
or peripheral blood.
|
|
Neuropathy/
Peripheral neuropathy
|
Functional
impairment of the nerves responsible for transmitting sensation from the
tips of the hands and feet. In mild cases, peripheral neuropathy may cause
tingling in hands and feet, while in severe cases, it may cause pain and
pricking sensation in all parts of the body, up to difficulties in limb
function and movement.
|
|
T-
Lymphocytes
|
White
blood cells, which are an important component of the immune system. These
cells act in various ways, and are responsible for assisting the body in
its fight against infections, malignant cells, etc.
|
|
Anti-
cancer effect
|
Anti-
cancer effect is any effect causing the cancer cells to stop dividing and
multiplying, destroying the cells or “freezing” their growth and
spread.
|
|
Helsinki
committee
|
A
committee acting in accordance with People’s Health Regulations (Clinical
trials in human subjects), 1980, responsible for approving and supervising
clinical trials - for more information, see paragraph 2.10.1
below.
|
|
IRB
|
Institutional
Review Board – A committee equivalent to the Helsinki committee in the US
and other world countries.
|
|
FDA
|
Food
and Drug Administration – The US authority responsible for control and
regulation of drug development and registration in the
US.
|
|
EMEA
|
European
Medicines Agency – The European authority responsible for control and
regulation of drug development and registration in European Union
countries. EMEA currently includes about 30 member - countries.2
|
Serious
Adverse Events (SEA) or Serious Adverse Drug Reaction
|
Any
disturbing medical event, at any dose, which is either life threatening or
fatal, or requiring hospitalization or extension of current
hospitalization, or causing permanent disability or permanent functional
impairment.
|
|
Activity
|
Laboratory
or clinical results indicating clinical efficacy of the
drug.
|
|
Efficacy
|
Proof
of clinical effect of a drug in a human clinical trial.
|
|
Orphan
drug
|
A
special pathway for approval and marketing of medicinal agents by the FDA.
This pathway is designed to fulfill the need for the development of drugs
for unique populations, as well as for the treatment of relatively rare
and incurable diseases (in the US – diseases affecting 200,000 patients
(maximal number), in the European Union - diseases with an incidence of up
to 5 per 10,000 people). Recognition of a certain drug as an orphan drug
grants the manufacturer regulatory marketing exclusivity for a period of 7
years in the US and 10 years in the European Union.
|
|
Ethical
drug
|
A
patented drug; only its developer is authorized to manufacture and sell
it.
|
3.2
|
General
|
3.3
|
The Group’s
drugs
|
3.4
|
Drug development
procedure – General
description
|
(a)
|
Pre-clinical
phase – This phase includes animal studies designed to demonstrate
efficacy of the drug in animal models of the disease for which the drug is
indicated. The pre-clinical phase also includes experiments, performed
under stringent conditions, designed to examine whether the drug exerts
toxic side effects, and to evaluate its various features in animals. In
addition, the pre-clinical phase includes development of Good
Manufacturing Practice methods (GMP- a set of manufacturing requirements
with which the drug has to comply in order to be approved for future
administration to the
patients).
|
(b)
|
Phase I – This
is the first clinical phase of drug development, during which a
preliminary examination is performed in human subjects, with the aim of
evaluating the safety and the maximal safe dosage of the drug. Tests of
drug distribution and duration of its retention in the bloodstream may
also be performed during this phase; these tests enable evaluation of the
bioavailability of the drug and other parameters. Phase I studies may be
carried out in either healthy volunteers or in
patients.
|
(c)
|
Phase II – This
phase involves preliminary examination of drug efficacy in patients. In
addition, one of the aims of this phase is to determine the optimal
therapeutic dose of the drug. Its safety evaluations are ongoing
simultaneously. In many cases, several Phase II studies are performed:
Phase IIa study, the objective of which is proof of concept, and a more
extensive Phase IIb study, including a larger number of patients and study
centers, as compared to Phase IIa
study.
|
(d)
|
Phase III – The
most important phase of multinational, multicenter, randomized, placebo-
controlled and double- blind studies. This phase involves a larger number
of subjects (hundreds and even thousands), and is carried out in a large
number of medical centers worldwide, using a single dosage. The objective
of this phase is to prove the safety and efficacy of the drug in a large
number of patients in order to enable a more accurate simulation (compared
to earlier phases) of its use by physicians in clinical practice.
Following successful completion of this phase, applications for approval
of drug registration may be submitted to the relevant health
authorities.
|
4.
|
The Group’s field of
activity
|
5.
|
Financial information
with respect to the Group’s field of
activity
|
6.
|
General environment
and effect of external factors on the Group’s
activity
|
7.
|
General information on
the field of activity
|
|
7.1
|
Introduction
|
|
7.1.1
|
Prof. Mittelman’s
research study
|
|
7.2
|
Structure of the
Group’s field of activity and the changes occurring within
it
|
7.3
|
Restrictions,
legislation and special constraints in the field of
activity
|
7.4
|
Drug development
processes
|
7.5
|
Critical success
determinants in this field of
activity
|
7.6
|
Barriers at the
entrance to the field of
activity
|
7.7
|
Alternatives to the
development product and changes occurring in
them
|
7.8
|
Structure of the
competition in the field of activity and changes occurring in
it
|
7.8.1
|
General
|
7.8.2
|
Competition in the
cancer market
|
7.8.3
|
Ways of coping with
competition
|
8.
|
Intangible
assets
|
8.1
|
In
December, 20099,
the Group, through Xtepo, entered into an agreement with Bio-
Gal Limited (hereafter: Bio – Gal) to acquire a patent license for using
recombinant EPO to treat terminal multiple myeloma patients and to improve
their quality of life. For further details on the license agreement, see
paragraph 10.1 below.
|
8.2
|
In
August 2005, the Group entered into an agreement to acquire rights and
assets from Vivaquest - a private company incorporated in the State of
Delaware ("Vivoquest"). Pursuant
to the agreement, the Group acquired the usage rights to the development
of novel pre-clinical library of compounds for the treatment of Hepatitis
C ("DOS"),
laboratory equipment and the lease rights to a laboratory used by
Vivoquest. In accordance with the agreement, and as of the date
of this report, the Group possesses only the usage and development rights
concerning which it is obligated to pay up to US$34 million on the basis
of the milestones, Out of this, the amount of $25 million will be paid by
the Group subject to regulatory approval and the actual sale of
products. It should be noted that, according to the agreement,
the Group has been granted the choice of settling the said amounts either
in cash or through the allocation of
shares.
|
9.
|
Restrictions, valid
legislation and special constraints relevant to the field of
activity
|
9.1
|
Helsinki
committee
|
a)
|
The
expected advantages, for the subject and the company, justify the risk and
discomfort associated with the trial for the
subject;
|
b)
|
The
existing scientific and medical information justify performance of the
requested clinical trial;
|
c)
|
The
clinical study design is scientifically valid, enabling it to provide
answers to the question under investigation; it is presented in a clear,
detailed and accurate manner in the study
protocol;
|
d)
|
The
risk for the study subject is minimal, due to the use of correct methods,
and use of procedures already performed in humans or tested in animals, as
much as possible;
|
e)
|
The
study subjects will be chosen in accordance with inclusion/ exclusion
criteria specified in the study
protocol;
|
f)
|
Informed
consent form for the study including all the required information, as
specified in the procedure;
|
g)
|
Study
design including instructions with respect to patient’s privacy protection
and confidentiality of the data
collected;
|
h)
|
The
study design includes a proper mechanism of study
monitoring;
|
i)
|
The
sponsored has ensured proper insurance coverage for the study
subjects;
|
j)
|
The
sponsor and the investigator are capable of allocating the resources
required for adequate performance of the study, including qualified
personnel and the necessary
equipment;
|
k)
|
Adequate
performance of the study will not be harmed by the nature of commercial
agreement with the investigator and the institution in which the study is
performed;
|
l)
|
If
the study subjects, some or all, may be exposed to inadequate pressure or
influence in order to convince them to participate in the study –
appropriate measures were taken in order to prevent the above pressure or
to minimize the above
influence.
|
9.2
|
Approval by FDA and
EMEA
|
10.
|
Essential
agreements
|
10.1
|
License agreement with
Bio- Gal
|
1.
|
Annual
license fee of one percent (1%) of the net sales of the Group and its
subcontractors.
|
2.
|
A
single payment upon the following conditions: (1) Sale of 50% or more of
Xtepo’s shares to a third party (2) Merging of Xtepo with a third party
(3) Sale or transfer of Xtepo’s strategic assets (hereafter: "realization event"),
with a value of USD$250,000 or 2.5% of the gross profit of Xtepo from this
event (the lowest of the
two).
|
3.
|
In
spite of the above, the parties have decided to agree that although
performance of the transaction according to this report is a realization
event, the appropriate payments will be postponed until the successful
completion of Phase II clinical trial, following which the Group, via
Xtepo will pay Yeda a single sum of USD $250,000, and additional USD
$100,000 in case of raising at least USD $2 million, and subject to
successful completion of Phase II clinical
trial.
|
10.2
|
Out-licensing
agreement to Presidio
|
|
On
March 19, 2008 the Group entered into an agreement to out-license the DOS
program to Presidio Pharmaceuticals, Inc. - a company incorporated in the
State of Delaware and engaged in drug research and development
(hereinafter respectively - "the Agreement" and "Presidio"). On August
4, 2008 the Group signed an amendment to the Agreement ("Amendment to the
Agreement") whereby Presidio took it upon itself to carry out all
the development and commercialization activities, including all the costs
involved therein, in connection with the DOS. In consideration
for this, XTL would receive a down payment of USD $5.94 million. and a
future payment of up to USD $59 million in accordance with milestones,
such as filing an application for registering an IND (Investigational New
Drug) with the FDA , filing an application with the FDA or other
corresponding authority, for commercializing and marketing the drug, as
well as variable payment based on annual sales by Presidio. In
addition to the foregoing payments, the Group is entitled to receive
royalties of 1% - 10%, according to Presidio's
income. Furthermore, the Group is entitled to receive a
variable rate of the amounts paid to Presidio, should the latter
out-license the DOS to a third
party.
|
11.
|
Human
resources
|
11.1
|
Organizational
structure
|
12.
|
Taxation
|
12.1
|
Tax rates applicable
to the Group by law: The Company's revenue in Israel is liable to
corporate tax at the ordinary rate. According to the provisions
of the Amendment Law to the Income Tax Ordinance (2005) from August 2005,
the corporate tax will be progressively reduced, as a consequence of which
the tax rates applicable from the 2007 fiscal years onward are as follows:
year 2007 – 29%, year 2008 – 27%, year 2009 – 26%, year 2010 onward –
25%.
|
13.
|
Legal
Proceedings
|
14.
|
Objectives and
business strategy
|
15.
|
Expected development
over the next year
|
16.
|
Discussion of risk
factors
|
16.1
|
Risks of the
field
|
|
16.1.1
|
Exposure to the
effects of regulation
|
|
16.1.2
|
Dependence on external
funding
|
|
16.1.3
|
Dependence on highly
professional and skilled
personnel
|
|
16.1.4
|
Dependence on
volunteers for the trial
|
|
16.1.5
|
Exposure to
lawsuits
|
|
16.1.6
|
Competitors
|
16.2
|
Risks unique to the
Group
|
|
16.2.1
|
Development
failure
|
|
16.2.2
|
Relative dependence on
a key person
|
|
16.2.3
|
Protection of
intellectual property
|
|
16.2.4
|
Marketing and
sales
|
16.3
|
The
following table summarizes the risk factors, which may affect the Group’s
business activity and business outcomes, and the Group’s estimate of the
extent of effect for each risk
factor
|
Type
of risk
|
Brief
description
|
Extent
of effect on Xtepo’s business
activity
|
||||||
High
|
Moderate
|
Low
|
||||||
Risks
of the field
|
Being
subjected to law and regulation
|
V
|
||||||
Dependence
on external funding
|
V
|
|||||||
Dependence
on professional and skilled personnel
|
V
|
|||||||
Dependence
on recruitment of study subjects
|
V
|
|||||||
Possible
side effects of the drug, certainly during development – potential
lawsuits.
|
V
|
|||||||
Development
of competing drugs
|
|
V
|
||||||
Risks
unique to the company
|
Numerous
elements of uncertainty – insufficient results, delay or failure of the
drug – no guarantee of successful trial or absence of side
effects
|
V
|
||||||
Due
to the high dependence on patents and maintenance of intellectual
property, there may be potential violation of existing
patents.
|
V
|
|||||||
In
the future, when the Group’s drugs reach the stage of manufacture, if at
all the Group will be dependent on manufacturing facilities of other
companies, since it has no capacity of mass production of the
drug.
|
V
|
|
1.
|
Part
I
- Board's Explanations for
the
Corporation's Business
Position
|
|
·
|
At
the Company's Board meeting held on February 11, 2009 the election of
Messrs. David Grossman and Boaz Shweiger as Company directors was
approved, and so was the appointment of Mr. David Grossman as
co-CEO.
|
|
·
|
At
the Extraordinary General Meeting held on March 18, 2009, it was resolved
to elect Messrs. Marc Allouche, David Grossman, Boaz Shweiger and Amit
Yonay to serve as Company directors. It was also resolved at
that meeting to elect Mr. Jaron Diament and Ms. Dafna Cohen to serve as
external directors of the Company until March 18,
2012. Furthermore, a resolution was adopted by the General
Meeting to consolidate the Company's authorized share capital and revise
the ADR ratio traded in the U.S.
|
|
·
|
In
March 2009, the Company entered into an asset purchase agreement with
Bio-Gal Ltd. (hereinafter - "Bio-Gal"), a private
company, for the rights to a use patent on Recombinant Erythropoietin for
the prolongation of multiple myeloma (type of blood cancer) patients'
survival and improvement of their quality of life. The transaction is
subject to fulfillment of a number of conditions precedent, including
funding terms. On September 30, 2009 and November 30, 2009 the
parties signed an agreement extending the date for concluding the
transaction to February 28, 2010. On December 31, 2009 the
parties signed an amendment to the agreement (see
below).
|
|
·
|
In
April, 2009 pursuant to the reorganization plan, Mr. Ron Bensur resigned
from his position with the Company as co-CEO, and as of that date, Mr.
David Grossman has been serving as
CEO.
|
|
·
|
On
May 7, 2009 Mr. Bill Kessler ceased his employment as the Company's
CFO.
|
|
·
|
In
June, 2009 the Company implemented a 1:5 consolidation of capital approved
at the Company's Shareholders' Meeting of March 18, 2009, subsequent to
which the par value of the Company's shares was NIS 0.1
each. In parallel, the ratio of shares (after the share
consolidation) to the ADR quoted on the Pink Sheets was adjusted, and it
now stands at 1:2 (the ADR price has remained
unchanged).
|
|
·
|
In
July 2009 the NASDAQ authorities implemented the delisting of the
Company's ADR from trade, and since then, they have been quoted on the
Pink Sheets under the symbol
XTLBY.PK.
|
|
·
|
On
July 29, 2009 Mr. Ronen Twito was appointed to serve as the Company's
CFO.
|
|
·
|
In
July 2009, the Board approved the allocation of 1,400,000 (unregistered)
share options to the CFO of the Company. The share options are
exercisable into ordinary shares of NIS 0.1 p.v. each, plus an exercise
price of NIS 0.075 per option. As of the date of the Board's
resolution, the fair value of all the share options, based on the
"B&S" model, is NIS 0.42079 each, and altogether NIS
589,106. The exercise period is a maximum of 120 months from
allocation date, such that 33.33% of the said options will become
exercisable immediately upon allocation, provided that five months will
have elapsed from the date of being granted. The balance of
66.67% will become exercisable in equal installments each month from the
effective date, over a 3 year
period.
|
|
·
|
On
August 27, 2009 the Board resolved that the ADR issued in the U.S. would
be maintained at a ratio of 2 ordinary shares of NIS 0.1 p.v. each per
ADR.
|
|
·
|
On
December 31, 2009 the Company signed (after obtaining the Board's
approval) an amendment to agreement with Bio-Gal Ltd., pursuant
to which it entered into an agreement to acquire 100% of the shares of
Xtepo Ltd. ("Xtepo") (Xtepo is a new Israeli company
established for purposes of the transaction, to which Bio-Gal shall
transfer a license to a use patent of Recombinant Erythropoietin for the
treatment of multiple myeloma patients) and its shareholders. Under
the above amendment, the original agreement from March 2009 would be
revised such that the Company would acquire from Xtepo's shareholders
their shares in Xtepo, in consideration of an allocation of 133,063,688
ordinary shares of the Company to the said
shareholders. Consequently, after the share swap, the Company
will hold 100% of Xtepo's issued and outstanding share capital, while
Xtepo's shareholders will hold 69.44% of the Company's issued and
outstanding share capital (excluding their holdings in the Companyprior to
the transaction) (hereinafter: “Share Swap Transaction”). The said Share
Swap Transaction is contingent on obtaining the following: approval of the
Share Swap Agreement by the Company's shareholders (obtained at the
Extraordinary General Meeting of March 2, 2010); approval of
the transaction by the Israeli Tax Authorities (pursuant to Sections 103
and 104 of the Income Tax Ordinance), approval that the option warrants had
been exercised by Xtepo such that at the time of the Share Swap, Xtepo
will have an amount of approximately US$1.5 million available at hand. as
well as other conditions (for further information, see Significant Events
After the Balance Sheet Date
Chapter)
|
|
1.
|
A
successful fundraising by XTL or Xtepo of at least $2 million, after the
successful completion of phase 2 clinical
trial.
|
|
2.
|
Six
months from the successful completion of phase 2 clinical
trial.
|
|
1.2
|
Financial
Position, Liquidity and Funding
Sources
|
Data
as of
|
Data
as of
|
|||||||||||||||
December 31,
2009
|
December 31,
2008
|
|||||||||||||||
Item
|
Amount
|
% of
Balance
Sheet
|
Amount
|
% of
Balance
Sheet
|
||||||||||||
Total
balance sheet
|
715 | 100 | % | 3,402 | 100 | % | ||||||||||
Equity
|
7 | 1 | % | 1,474 | 43 | % | ||||||||||
Current
assets
|
557 | 78 | % | 3,361 | 99 | % | ||||||||||
Fixed
assets
|
23 | 3 | % | 41 | 1 | % | ||||||||||
Other
investments
|
135 | 19 | % | - | - | |||||||||||
Short
term liabilities
|
708 | 99 | % | 1,928 | 57 | % |
|
As
of December 31, 2009, shareholders' equity amounts to $ 7 thousand -
a decrease of $ 1,467thousand from 2008, reflecting 1% from
the total balance sheet, compared to 43% in 2008. The
decrease in equity derives mainly from losses incurred in 2009 (after
neutralizing the effect of reversal of option compensation expenses
relating to the former Chairman and CEO of the Company as a result of
forfeiture) (for further details, see Note 16.B. of the financial
statements) and conversely, classifying the stock appreciation rights
("SAR") (issued to
service providers during 2007) to a capital reserve of
$ 126 thousand, in accordance with IFRS 2 provisions
(share-based payment) and following
Management's evaluation of the settlement method based on the
Company's liquidity situation as of the date of the report (see Note 1d
and 14 of the financial statements). The Company has no obligation to
settle the SAR in cash.
|
1.2.3
|
Assets
|
|
As
of December 31, 2009 current assets decreased by $ 2,804thousand to a
total of $ 557thousand - reflecting a decrease of 83% compared to
current assets as of December 31, 2008. Below are the principal
changes:
|
|
As
of December 31, 2009 cash balances totaled $ 412 thousand - a
decrease of $ 2,512 thousand compared to December 31, 2008 -
$ 2,924 thousand. The decrease derives primarily from
a negative cash flow in current
operations.
|
|
The
balance of accounts receivable as of December 31, 2009 totaled $ 33
thousand compared to $ 305thousand as of December 31,
2008. The decrease derives from a reduction in prepaid expenses
and institutions section.
|
|
Total
fixed assets as of December 31, 2009 amounted to $ 23, thousand
compared to $ 41 thousand as of December 31,
2008. The decrease derives primarily from depreciation
costs.
|
|
Other
long-term investments: the balance of other investments as of December 31,
2009 totaled $ 135 thousand, due to capitalization of costs
connected with the Bio-Gal transaction accumulated during the year
(see Note 1b of the financial statements). There were no other
investments in 2008.
|
1.2.4
|
Liabilities
|
|
Outstanding
liabilities to trade payables in the balance sheet as of December 31, 2009
totaled $ 192 thousand, compared to $ 416thousand as of
December 31, 2008. The decrease derives primarily from the fact
that the Company, in November 2008, announced that the Phase 2b Clinical
Trial had failed to meet its primary endpoints, as a result of which
development of the Bicifadine drug was ceased.
Consequently, the Company ceased activity with the relevant suppliers and
repaid debts in the course of 2009.
|
|
As
of December 31, 2009 the balance of other accounts payable totaled
$ 516 thousand, compared to $ 1,058thousand as of December
31, 2008. The reduction derives primarily from the decrease in
accrued expenses to service providers in connection with the Bicifadine
clinical trial which was ceased in November
2008.
|
1.3
|
Results of Business
Operations
|
1.3.1
|
Summary Statement of
Operations (U.S. $
thousands):
|
Year Ended December 31
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
Revenues
from the sale of patent rights
|
- | 5,940 | 907 | |||||||||
Cost
of revenue
|
- | (1,841 | ) | (110 | ) | |||||||
Gross
profit
|
- | 4,099 | 797 | |||||||||
R&D
expenses
|
- | 11,722 | 11,500 | |||||||||
Expenses
(income) from general and administrative expenses
|
(2,429 | ) | 3,937 | 7,596 | ||||||||
Other
expenses (income) (inc. capital gain)
|
(139 | ) | 7,212 | 8 | ||||||||
Operating
profit (loss)
|
2,568 | (18,772 | ) | (18,307 | ) | |||||||
Net
financial income (expenses)
|
(4 | ) | 314 | 638 | ||||||||
Income
tax (tax benefit)
|
(23 | ) | (31 | ) | (206 | ) | ||||||
Profit
(loss) for the period
|
2,587 | (18,427 | ) | (17,463 | ) |
1.4
|
Analysis of Results of
Operations
|
1.4.1
|
Sales Turnover
|
|
The
Company did not produce any sales revenue for the year
2009. Its sales turnover in 2008 amounted to $
5,940 thousand, deriving from the sale of DOS (Diversity Oriented
Synthesis) rights which it had out-licensed to Presidio Pharmaceuticals,
Inc., after a revision of the original transaction terms (see Note 1 of
the financial statements).
|
1.4.2
|
Gross
Profit
|
|
No
gross profits were generated for the Company in 2009. Gross profits in
2008 amounted to $ 4,099 thousand, deriving from the sale of DOS
patent usage rights as explained above under "Sales
Turnover".
|
1.4.3
|
Research and
Development Costs
|
|
The
Company did not have any research and development activity during 2009 and
therefore no research and development costs were recorded. This was due to
the failure of the Bicifadine clinical trial in November, 2008 (see also
Note 1 of the financial statements). Research and
Development Costs costs in 2008 totaled
$ 11,722 thousand, including primarily expenses related to Phase
2 Clinical Trial of the Bicifadine drug until the Company's announcement
that the clinical trial was ceased due to the failure to meet its clinical
endpoints(November 2008).
|
1.4.4
|
General and
Administrative Expenses
|
|
General
and administrative expenses (negative)
totaled $ 2,494 thousand for the year ended December 31, 2009,
compared to $ 3,937thousand for the year ended December 31, 2008. The
decrease was due primarily to a reversal of option compensation expenses
related to the former Chairman and CEO of the Company, amounting to
approximately $ 4.1 million, as well as a reduction in the number of
employees and general efficiency in the Company's expenditures, following
the Restructuring Plan implemented immediately after the notice of failure
of the Bicifadine clinical trials in November 2008, as described in Note 1
of the financial statements.
|
1.4.5
|
Other gains (losses),
net
|
|
Other
gains in the amount of $ 139thousand was produced for the Company in
2009, resulting mainly from the settlement agreements that were signed
with various suppliers, generating an income of $ 144 thousand,
offset against losses from realization of fixed assets resulting in a loss
of $ 5 thousand (see Notes 15.B, 15.C and 20 of the
financial statements), compared to other expenses of $ 7,212thousand
in 2008, primarily due to impairment of intangible asset (patent) which
failed in Phase 2b Clinical Trial, producing a loss of $7.5 million, and
offset by $ 288thousand capital gains on the sale of fixed assets
(see Notes 10.A and 20 of the financial
statements).
|
1.4.6
|
Financial
Expenses
|
|
Financial
expenses for the year ended December 31, 2009, amounted to
$ 4thousand compared to net financial income of
$ 314 thousand for 2008. The decrease in the net financial
expenses was due primarily to interest income on short-term bank
deposits.
|
1.4.7
|
Income
Taxes
|
|
Income
tax income amounted to $ 23thousand for the year ended December
31, 2009, due to the following reasons: the Company recorded a tax benefit
of $ 23 thousand, resulting from new IRS regulations published
in the U.S. in November 2009, whereby the U.S. subsidiary is allowed to
extend the carryback tax period to five years for utilization from current
net operating losses. The Company incurred no current tax expenses in
2009, as its net profit for the period derived from a reversal of expenses
in respect of options from previous years which are not recognized as
income for tax purposes.
|
|
Furthermore,
the Company did not recognize deferred taxes in respect of past losses and
current expenses during the year, because there is no certainty of
revenues and profit as this is a Research and
Development Company.
|
|
In
2008 the income tax expenses amounted to $ 31 thousand, also
deriving from carryback losses offset against tax paid in previous
years.
|
1.4.8
|
Overall Net Profit
(Loss) for the Period
|
The
net profit for the year ended December 31, 2009 amounted to
$ 2,587 thousand, compared to a loss of $ 18,427 thousand
in 2008. The decrease in loss (increase in profit) in 2009 compared to
2008 is due to: the reversal of option compensation expenses in
respect of previous years amounting to approximately $ 4.1 million,
reducing general and administrative expenses (see explanation under
General and Administrative Expenses): cessation of the Bicifadine
clinical trial in 2008 after failure to meet endpoints in the Phase 2b
Clinical Trial, resulting in a reduction of Research and
Development expenditures; and general efficiency in current general
and administrative expenses following the Restructuring Plan implemented
by the Company, as outlined
above.
|
|
Basic
and diluted profit per
share for the year 2009 amounted to $0.044 per share, compared to a basic
and diluted loss per share
of $0.315 in 2008. The transition from loss to profit per share
derives from profit in 2009, due to the reversal of option compensation
expenses related to the former Chairman and CEO, who terminated their
position with the Company and whose options of $4.1 million were forfeited
and expired (See Note 16.B of the financial
statements).
|
1.4.9
|
Cash
Flows
|
|
The
cash flows used for operating activity for the year 2009 amounted to a
total of $ 2,488 thousand. Compared to $ 10,578
thousand in 2008, the principal decrease in the negative cash flow was due
to cessation of the Bicifadine phase 2b clinical trial, as outlined
above, which led to a reduction and cessation of the research and
development costs and a reduction in management and general expenses
following the Restructuring Plan.
|
|
The
cash flows used in investment activity in 2009 amounted to
$ 24 thousand, compared to cash flow provided by investment
activity of $ 10,915 thousand in 2008, mainly due to the
disposal of short-term bank
deposits.
|
|
The
Company had no financing operations for the year 2009. The cash
flows provided by financing activity in 2008 amounted to
$ 210 thousand, mainly due to a refund of stamping fees paid in
2004 for the issuance of shares.
|
2.
|
Part II - Market Risk
Exposures and their
Management
|
2.1
|
Market Risk
Exposures and their
Management
|
|
The
Company is a biotechnology company and therefore not expected to generate
any significant revenue. Accordingly, the market risks to which the
Company is exposed are less significant at this stage. Despite
the foregoing, most of the Company's expenses are denominated in U.S.
dollars, hence its exposure to the NIS exchange rate against the U.S.
dollar. The Company is acting to diminish the currency risk by
way of maintaining its liquid resources in or linked to the U.S.
dollar.
|
|
To
protect itself against economic exposure, which does not contradict the
accounting exposure, the Company maintains most of its current assets in
or linked to foreign currency
balances.
|
|
Financial
risk management is executed by the Company subject to the policy approved
by the Board of Directors and the
Management.
|
|
The
Company identifies and evaluates the major risks facing it on the basis of
the Management's considerations.
|
|
Until
May 7, 2009, Mr. Bill Kessler, the Company's former CFO, was in charge of
the Company's market risk management. As of August 27, 2009,
Mr. Ronen Twito, the current CFO, is in charge of the Company's market
risk management.
|
U.S.$
|
NIS
|
Other
Currencies
|
Total
|
|||||||||||||
U.S. $ thousands
|
||||||||||||||||
Assets
|
||||||||||||||||
Cash
and cash equivalents
|
331 | 81 | 0 | 412 | ||||||||||||
Accounts
receivable
|
4 | 8 | 0 | 12 | ||||||||||||
Income
tax receivable
|
72 | 0 | 0 | 72 | ||||||||||||
Short
term deposits
|
40 | 0 | 0 | 40 | ||||||||||||
447 | 89 | 0 | 536 | |||||||||||||
Liabilities
|
||||||||||||||||
Liabilities
to suppliers and service providers
|
156 | 36 | 0 | 192 | ||||||||||||
Accounts
payable
|
384 | 132 | 0 | 516 | ||||||||||||
540 | 168 | 0 | 708 | |||||||||||||
Assets
net of liabilities
|
-93 | -79 | 0 | -172 |
U.S.$
|
NIS
|
Other
Currencies
|
Total
|
|||||||||||||
U.S. $ thousands
|
||||||||||||||||
Assets
|
||||||||||||||||
Cash
and cash equivalents
|
2,897 | 24 | 3 | 2,924 | ||||||||||||
Accounts
receivable
|
92 | 2 | 0 | 94 | ||||||||||||
Income
tax receivable
|
49 | 0 | 0 | 49 | ||||||||||||
Short
term deposits
|
71 | 0 | 0 | 71 | ||||||||||||
3,109 | 26 | 3 | 3,138 | |||||||||||||
Liabilities
|
||||||||||||||||
Liabilities
to suppliers and service providers
|
400 | 16 | 0 | 416 | ||||||||||||
Accounts
payable
|
971 | 87 | 0 | 1,058 | ||||||||||||
1,371 | 103 | 0 | 1,474 | |||||||||||||
Assets
net of liabilities
|
1,738 | -77 | 3 | 1,664 |
Profit (Loss) from
Changes
|
Profit (Loss) from
Changes
|
|||||||||||||||||||
+10%
|
+5%
|
Fair Value
as of
31.12.09
|
-5%
|
-10%
|
||||||||||||||||
U.S. $ thousands
|
||||||||||||||||||||
Cash
and cash equivalents
|
8 | 4 | 81 | (4 | ) | (8 | ) | |||||||||||||
Accounts
receivable
|
1 | 0 | 8 | 0 | (1 | ) | ||||||||||||||
Liabilities
to suppliers and service providers
|
(4 | ) | (2 | ) | (36 | ) | 2 | 4 | ||||||||||||
Accounts
payable
|
(13 | ) | (7 | ) | (132 | ) | 7 | 13 | ||||||||||||
Balance
sheet exposure - linkage
|
(8 | ) | (5 | ) | (79 | ) | 5 | 8 |
2.4
|
Effectiveness of
Internal Control on Financial Reporting and
Disclosure
|
2.4.1
|
The
Company's Board of directors and Management will submit a report on the
effectiveness of financial reporting and disclosure controls, in order to
reinforce the Company's internal controls
system.
|
2.4.2
|
The
CEO and CFO will submit personal statements on the Company's finances,
whereby, inter alia, according to their knowledge, the financial
statements and other financial information contained therein do not
include any misstatements of a material fact nor omit any presentation of
a material fact required, so that the statements included therein would
not be misleading. Also, in their opinion, the financial
statements and other information contained therein adequately reflect,
from all material respects, the financial position, results of operations
and cash flows of the Company, and they have evaluated the effectiveness
of internal controls over financial reporting and disclosure, to the
extent it refers to the financial statements and other financial
information included therein.
|
2.4.3
|
The
periodic report will be accompanied by the auditor's opinion on the
effectiveness of internal controls over the Company's financial reporting
and any material weakness he may have identified in such
controls.
|
a.
|
ELC-Entity
Level Controls
|
b.
|
Closing
the financial statements
|
c.
|
ITGC
(Information Technology General
Controls)
|
d.
|
Company
Treasurer
|
e.
|
Equity
|
2.5
|
Adoption of
International Financial Reporting Standards
(IFRS)
|
3.
|
Part III - Corporate
Governance Aspects
|
3.1
|
Corporate Donations
Policy
|
3.2
|
Internal
Auditor
|
3.2.1
|
The
Company's internal auditor is Mr. Daniel Shapira, an independent Certified
Public Accountant who owns an independent firm that specializes in
providing internal audit services to companies traded in Israel and
abroad. The firm has some 17 years experience in performing internal
audits at public companies and specializes in diverse fields of
operations. The auditor does not work at the Company and has been
providing the service as an external entity since December 26,
2000.
|
3.2.2
|
As
far as the Company is aware, the internal auditor complies with the
provisions prescribed in Section 146(b) of the Companies Law-1999 and in
Sections 3(a) and 8 of the Internal Audit
Law-1992.
|
3.2.3
|
Based
on the internal auditor's statement, the professional standards according
to which he performs the audits are the customary professional standards
prescribed in the above Law.
|
3.2.4
|
The
organizational officer overseeing the internal auditor is the chairman of
the Audit Committee.
|
3.2.5
|
To
the best of Management's knowledge, the nature and continuity of the
internal auditor's work plan are reasonable in the circumstances, and
capable of attaining the audit's objectives within the
organization. As set forth in Section 9 of the Internal Audit
Law, the internal auditor has free, constant and direct access, as
required, to the Company's data system, including financial
data.
|
3.2.6
|
In
2009, an internal audit was performed, addressing the following
topics: approval of resolutions at the Company's institutions
and monitoring them; the method of reporting to the authorities on
resolutions adopted by the Company's
institutions.
|
3.2.7
|
The
topics covered by the annual work plan are approved each year by the Audit
Committee and/or the Board of
Directors.
|
3.2.8
|
The
work plan grants the internal auditor discretion to deviate from it. In
accordance with the Company's customary procedures, the auditor should
report and give reasons for the deviations from the work
plan.
|
3.2.9
|
The
audit's overall budget for the year 2009: In view of the fact that the
Company was not engaged in development activity during 2009, the audit
budget amounted to approximately 40
hours.
|
3.2.10
|
Professional
Standards: The internal auditor, upon his notification,
performs the audit according to the customary professional standards
prescribed in Section 146(b) of the Companies Law-1999, and Section 8 of
the Internal Audit Law (hereinafter - "the Internal Audit Law"),
including, inter alia, Attribute and Performance
Standards. In conformity with the professional guidelines
issued by the Institute of Internal Auditors in Israel, the internal
auditor executes a quality assurance plan including a self assessment
internal review.
|
3.2.11
|
In
the Board's opinion, the audit work is carried out in conformity with the
customary professional standards applicable to internal
audits.
|
3.2.12
|
The
Board and the Audit Committee on its behalf have approved the internal
auditor's appointment, while paying due consideration to his professional
qualifications, experience and familiarity with the Company's
business.
|
3.2.13
|
In
2009, a single audit was performed, due to the fact that the Company had
no development activity in the reported year. The internal
audit report was discussed at the Audit Committee meeting held in
February, 2010, when the members decided to accept the auditor's
recommendations. The latter submits his reports to the chairman
of the Board and to the chairman of the Audit Committee. In
2008, 4 Audit Committee meetings were held at the Company, to discuss the
reports. All the documents and information required by the auditor are
furnished to him, as referred to in Section 9 of the Internal Audit Law,
and he is also given free access to information, including constant and
direct access to the Company's data systems and financial
data.
|
3.2.14
|
Since
the Company was not engaged in active development operations as of the
date of the report, and also because the Company is currently in the
advanced stages of completing the merger with Bio-Gal, it was resolved,
jointly with the internal auditor, that the topics to be included in the
2010 audit would be determined promptly upon finalizing the said
transaction.
|
3.2.15
|
The
internal auditor's remuneration for the services provided in 2009 amounted
to NIS 9 thousand.
|
3.2.16
|
In
the Board's opinion, the said remuneration is reasonable in the
circumstances and has no effect on the internal auditor's professional
discretion, and this inter alia, while bearing in mind the Board's overall
impression from the manner in which he performs the internal audit task at
the Company.
|
3.3
|
Directors
Possessing Accounting and Financial
Expertise
|
|
1.
|
During
the reported period, 14 Board meetings and 4 Audit Committee meetings were
held.
|
|
2.
|
Particulars of
Directors Possessing Accounting and Financial
Expertise
|
|
3.3.1
|
Amit
Yonay - received a BS in Electrical Engineering from Binghamton University
and an MBA from Tel-Aviv University in Finance and International Business.
He is involved in independent investments in the real estate in the
U.S.
|
3.3.2
|
Jaron
Diament - Holds B.A. in Economics and Accounting, Tel Aviv
University. Serves as CEO of Tagor Capital Ltd. and currently
serves as an external director
of Mega Or Holdings
Ltd.
|
|
3.3.3
|
Dafna
Cohen - Holds B.A. in Economics and Political Science and an MBA in
Finance and Accounting from the Hebrew University, Jerusalem. Serves as a
director of Formula Systems (1985)
Ltd.
|
|
3.3.4
|
Boaz
Shweiger - received an LL.B, magna cum laude, from the College of
Management and an MBA in Finance and Auditing from Tel - Aviv University.
He manages a private holding
company.
|
|
3,3,5
|
Marc
Allouche - received a MBA with major in Corporate Finance and Accounting
and a BA in Economics and Management from Dauphine University, Paris. He
is also a Chartered Public Accountant in France. Serves as an advisor to
private equity funds and
entrepreneur.
|
3.4
|
Independent
Directors
|
3.5
|
Auditor's
Remuneration
|
Audit-related fees and
Tax Fees
|
Other Services
|
|||||||||||||||
Amount
($ Thous.)
|
No. of Hours
|
Amount
($ Thous.)
|
No. of Hours
|
|||||||||||||
2008
|
137 |
1,995
|
6 |
60
|
||||||||||||
2009
|
62 |
1,107
|
8 |
143
|
4.
|
Part IV - Corporate
Financial Reporting
|
4.1
|
Significant Events
After Balance Sheet Date
|
4.1.1
|
On
January 27, 2010 the Company's Board authorized the allocation of 100,000
share options (unregistered) to a Company employee. The share
options may be exercised into 100,000 ordinary shares par value NIS 0. 1
each, with an exercise price of NIS 0.1 per option warrant. The fair value
of all the share options, based on the "B&S" Model, as of the date of
the Board's resolution, is NIS 0.2765 each, and altogether NIS
27,654. The exercise period for the options is a maximum of 120
months from allocation date, such that 8.33% of the amount thereof is
exercisable in installments at the end of each calendar quarter from their
allocation date, over a period of 3
years.
|
4.1.2
|
On
February 28, 2010 the Company and Bio-Gal signed an agreement extending
the transaction until April 30, 2010, in order to enable its completion.
Management estimates that the Tax Authorities shall approve the Share
Swap transaction during the second quarter of 2010. The closing
of the transaction is expected in the second quarter of 2010. However,
there is no certainty for the completion of the transaction (see note 1d
for the company financial
statements).
|
4.1.3
|
On
March 2, 2010, at an Extraordinary Meeting of Shareholders, the Company's
shareholders approved the Bio-Gal transaction and the Share Swap, in
accordance with the transaction outline signed between the parties on
December 31, 2009 and made public on January 14,
2010.
|
4.1.4
|
On
March 2, 2010 the Annual General Meeting of Shareholders convened and
approved the following:
|
4.1.4.1
|
Re-appointment
of Kesselman and Kessleman, C.P.A., as the Company's independent auditors
for the year 2009. The Board was authorized to determine its
fees.
|
4.1.4.2
|
Re-election
of directors - to approve the re-election of Messrs. Marc Allouche, Amit
Yonay, Boaz Shweiger, and David Grossman as Company directors until the
next Annual Meeting, including the grant of 150,000 share options to each
director (excluding David Grossman who also serves as the Company's
CEO). The options are registered, non-marketable and
exercisable into Company shares. The share options may be
exercised into 150,000 ordinary shares, par value NIS 0.1 each with an
exercise price of NIS 0.298 per option. The fair value of all
the share options, based on the "B&S" Model, as of the date of the
Board's resolution, is NIS 0.2347 each, and altogether NIS 105,615. The
maximum exercise period is 120 months from the allocation date, such that
33.33% of the amount thereof may be exercised immediately upon allocation,
while the remaining 66.67% may be exercised in equal installments each
month, from the effective date, over a 24-month
period.
|
4.1.4.3
|
Subject
to closing of the Bio-Gal transaction, the terms of employment of Mr.
David Grossman, the Company's CEO and director, were approved, including
the grant of 1,610,000 registered non-marketable share options,
exercisable into Company shares. The share options may be exercised into
1,610,000 ordinary shares, par value NIS 0.1 each, with an exercise price
of NIS 0.075 per option. The fair value of all the share
options, based on the "B&S" Model, as of the date of the Board's
resolution, is NIS 0.2849 per option and altogether NIS
458,744. The maximum exercise period of the options is 120
months from the allocation date, such that 33.33% of the amount thereof
may be exercised immediately upon allocation, while the remaining 66.67%
may be exercised in equal installments each month from the effective date,
over a 24-month period.
|
4.1.5
|
In
March, 2010 the Company terminated the agreement with DOV concerning the
Bicifadine drug research, and all the rights under the agreement were
returned to DOV in coordination with
them.
|
4.2
|
Office Holders'
Remuneration
|
4.3
|
Critical Accounting
Estimates
|
4.4
|
Colleague
Survey
|
4.5
|
Authorized
Signatories
|
4.6
|
Disclosure
of Proceedings for Approval of Financial Statements
|
March 24, 2010
|
||||
Date
|
Amit Yonay, Chairman
|
David Grossman, Director
and CEO
|
Page
|
|
Auditors'
Report
|
C-2
|
Consolidated
Financial Statements - in U.S. dollars:
|
|
Statements
of Financial Position
|
C-3
|
Statements
of Comprehensive Income
|
C-4
|
Statement
of Changes in Equity
|
C-5
|
Statement
of Cash Flows
|
C-6
- C-7
|
Notes
to Consolidated Financial Statements
|
C-8
- C-61
|
Kesselman
& Kesselman
Certified
Public Accountants
Trade
Tower, 25 Hamered Street
Tel
Aviv 68125 Israel
P.O
Box 452 Tel Aviv 61003
Telephone
+972-3-7954555
Facsimile
+972-3-7954556
|
December
31,
|
January
1,
|
||||||||||||||||||
2009
|
2008
|
2007
|
2007
|
||||||||||||||||
Note
|
U.S.
dollars in thousands
|
||||||||||||||||||
ASSETS
|
|||||||||||||||||||
CURRENT
ASSETS:
|
|||||||||||||||||||
Cash
and cash equivalents
|
5
|
412 | 2,924 | 2,377 | 4,400 | ||||||||||||||
Short-term
deposits
|
6
|
- | - | 10,600 | 20,845 | ||||||||||||||
Financial
assets at fair value through profit or loss
|
- | - | - | 102 | |||||||||||||||
Assets
held for sale
|
- | - | - | 18 | |||||||||||||||
Employee
benefit assets
|
13
|
- | 12 | - | - | ||||||||||||||
Accounts
receivable
|
7
|
33 | 305 | 654 | 609 | ||||||||||||||
Income
taxes receivable
|
72 | 49 | 270 | - | |||||||||||||||
Restricted
deposits
|
40 | 71 | - | - | |||||||||||||||
557 | 3,361 | 13,901 | 25,974 | ||||||||||||||||
NON-CURRENT
ASSETS:
|
|||||||||||||||||||
Restricted
deposits
|
- | - | 61 | 172 | |||||||||||||||
Employee
benefit assets
|
13
|
- | - | 16 | - | ||||||||||||||
Fixed
assets
|
9
|
23 | 41 | 106 | 490 | ||||||||||||||
Intangible
assets
|
10
|
- | - | 9,294 | 1,808 | ||||||||||||||
Other
investments
|
1b
|
135 | - | - | - | ||||||||||||||
Deferred
tax assets
|
- | - | - | 48 | |||||||||||||||
|
|||||||||||||||||||
158 | 41 | 9,477 | 2,518 | ||||||||||||||||
Total assets
|
715 | 3,402 | 23,378 | 28,492 | |||||||||||||||
LIABILITIES
AND EQUITY
|
|||||||||||||||||||
CURRENT
LIABILITIES:
|
|||||||||||||||||||
Trade
payables
|
11
|
192 | 416 | 2,144 | 941 | ||||||||||||||
Other
accounts payable
|
12
|
516 | 1,058 | 1,665 | 1,834 | ||||||||||||||
Income
taxes payable
|
- | - | - | 143 | |||||||||||||||
Deferred
revenue
|
- | - | - | 399 | |||||||||||||||
Retirement
benefit obligation
|
13
|
- | 447 | - | - | ||||||||||||||
Liability
for share appreciation rights
|
14
|
- | 7 | 1,560 | - | ||||||||||||||
|
|||||||||||||||||||
708 | 1,928 | 5,369 | 3,317 | ||||||||||||||||
NON-CURRENT
LIABILITIES:
|
|||||||||||||||||||
Retirement
benefit obligation
|
- | - | 131 | 223 | |||||||||||||||
Deferred
revenue
|
- | - | - | 398 | |||||||||||||||
- | - | 131 | 621 | ||||||||||||||||
EQUITY
ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT:
|
16
|
||||||||||||||||||
Share
capital
|
1,445 | 1,445 | 1,444 | 1,072 | |||||||||||||||
Share
premium
|
139,786 | 139,786 | 139,577 | 131,153 | |||||||||||||||
Accumulated
deficit
|
(141,224 | ) | (139,757 | ) | (123,143 | ) | (107,671 | ) | |||||||||||
|
|||||||||||||||||||
Total
equity
|
7 | 1,474 | 17,878 | 24,554 | |||||||||||||||
Total
liabilities and equity
|
715 | 3,402 | 23,378 | 28,492 |
|
|
|
||
Amit
Yonay
|
David
Grossman
|
Ronen
Twito
|
||
Chairman
of the Board
|
Director
and CEO
|
CFO
|
Year
ended December 31,
|
|||||||||||||||
2009
|
2008
|
2007
|
|||||||||||||
Note
|
U.S.
dollars in thousands (except per share data)
|
||||||||||||||
Revenues
|
17
|
- | 5,940 | 907 | |||||||||||
Cost
of revenues
|
17
|
- | 1,841 | 110 | |||||||||||
Gross
profit
|
- | 4,099 | 797 | ||||||||||||
Research
and development costs
|
18
|
- | 11,722 | 11,500 | |||||||||||
General
and administrative expenses
|
19
|
(2,429 | )*) | 3,937 | 7,596 | ||||||||||
Impairment
loss of intangible asset
|
10
|
- | 7,500 | - | |||||||||||
Other
gains (losses), net
|
20
|
139 | 288 | (8 | ) | ||||||||||
Operating
income (loss)
|
2,568 | (18,772 | ) | (18,307 | ) | ||||||||||
Finance
income
|
21
|
6 | 331 | 668 | |||||||||||
Finance
costs
|
21
|
10 | 17 | 30 | |||||||||||
Financial
income (costs), net
|
(4 | ) | 314 | 638 | |||||||||||
Income
(loss) before taxes on income
|
2,564
|
(18,458
|
) |
(17,669
|
) | ||||||||||
tax
benefit
|
22
|
(23 | ) | (31 | ) | (206 | ) | ||||||||
|
|||||||||||||||
Net
income (loss) for the year attributable to equity holders of the
parent
|
2,587 | (18,427 | ) | (17,463 | ) | ||||||||||
Basic
and diluted earnings (loss) per share
(in U.S. dollars) **)
|
23
|
0.044 | (0.315 | ) | (0.382 | ) |
*)
|
Including
reduced expenses which result from forfeiture of shares that were
contingent on the performance of the former chairman and CEO, see also
Note 16b.
|
**)
|
After
taking into account capital consolidation effected on June 22, 2009,
see Note 16a(2).
|
Year ended December 31, 2009
|
|||||||||||||||||||
Share
capital
|
Share
premium
|
Accumulated
deficit
|
Total
|
||||||||||||||||
Note
|
U.S. dollars in thousands
|
||||||||||||||||||
Balance
at January 1, 2009
|
1,445 | 139,786 | (139,757 | ) | 1,474 | ||||||||||||||
Net
income for the year
|
- | - | 2,587 | 2,587 | |||||||||||||||
Share-based
payment to employees and others
|
16
|
- | - | (4,180 | ) | (4,180 | ) | ||||||||||||
Transfer
to equity for liability for share appreciation rights
|
14
|
- | - | 126 | 126 | ||||||||||||||
Balance
at December 31, 2009
|
1,445 | 139,786 | (141,224 | ) | 7 |
Year ended December 31, 2008
|
|||||||||||||||||||
Share
capital
|
Share
premium
|
Accumulated
deficit
|
Total
|
||||||||||||||||
Note
|
U.S. dollars in thousands
|
||||||||||||||||||
Balance
at January 1, 2008
|
1,444 | 139,577 | (123,143 | ) | 17,878 | ||||||||||||||
Loss
for the year
|
- | - | (18,427 | ) | (18,427 | ) | |||||||||||||
Share-based
payment to employees and others
|
16
|
- | - | 1,813 | 1,813 | ||||||||||||||
Exercise
of options
|
16
|
1 | 32 | - | 33 | ||||||||||||||
Refund
of stamp duty on share issuance
|
- | 177 | - | 177 | |||||||||||||||
Balance
at December 31, 2008
|
1,445 | 139,786 | (139,757 | ) | 1,474 |
Year ended December 31, 2007
|
|||||||||||||||||||
Share
capital
|
Share
premium
|
Accumulated
deficit
|
Total
|
||||||||||||||||
Note
|
U.S. dollars in thousands
|
||||||||||||||||||
Balance
at January 1, 2007
|
1,072 | 131,153 | (107,671 | ) | 24,554 | ||||||||||||||
Loss
for the year
|
- | - | (17,463 | ) | (17,463 | ) | |||||||||||||
Issue
of shares
|
16
|
372 | 8,420 | - | 8,792 | ||||||||||||||
Share-based
payment to employees and others
|
16
|
- | - | 1,991 | 1,991 | ||||||||||||||
Exercise
of options
|
16
|
- | *) | 4 | - | 4 | |||||||||||||
Balance
at December 31, 2007
|
1,444 | 139,577 | (123,143 | ) | 17,878 |
*)
|
Less
than $ 1,000.
|
Year ended December 31,
|
|||||||||||||||
2009
|
2008
|
2007
|
|||||||||||||
Note
|
U.S. dollars in thousands
|
||||||||||||||
Cash flows from operating
activities:
|
|||||||||||||||
Net
income (loss) for the year attributable to equity holders of the
parent
|
2,587 | (18,427 | ) | (17,463 | ) | ||||||||||
Adjustments
to reconcile net income (loss) to net cash used in operating
activities (a)
|
(5,075 | ) | 7,849 | 3,543 | |||||||||||
Net
cash used in operating activities
|
(2,488 | ) | (10,578 | ) | (13,920 | ) | |||||||||
Cash flows from investing
activities:
|
|||||||||||||||
Decrease
(increase) in restricted deposit
|
6
|
31 | (10 | ) | 113 | ||||||||||
Decrease
in short-term bank deposits
|
10
|
- | 10,600 | 10,245 | |||||||||||
Purchase
of intangible assets
|
9
|
- | - | (7,500 | ) | ||||||||||
Purchase
of fixed assets
|
9,
20
|
- | (2 | ) | (65 | ) | |||||||||
Proceeds
from sale of fixed assets and held for sale assets
|
- | 327 | 308 | ||||||||||||
Other
investments
|
1b
|
(55 | ) | - | - | ||||||||||
Net
cash provided by (used in) investing activities
|
(24 | ) | 10,915 | 3,101 | |||||||||||
Cash flows from financing
activities:
|
|||||||||||||||
Proceeds
from issue of shares
|
16
|
- | - | 8,792 | |||||||||||
Refund
of stamp duty paid in 2004 for share issuance
|
- | 177 | - | ||||||||||||
Exercise
of options
|
16
|
- | 33 | 4 | |||||||||||
Net
cash provided by financing activities
|
- | 210 | 8,796 | ||||||||||||
|
|||||||||||||||
Increase
(decrease) in cash and cash equivalents
|
(2,512 | ) | 547 | (2,023 | ) | ||||||||||
Cash
and cash equivalents at the beginning of the year
|
2,924 | 2,377 | 4,400 | ||||||||||||
Cash
and cash equivalents at the end of the year
|
412 | 2,924 | 2,377 |
Year ended December 31,
|
||||||||||||||||
2009
|
2008
|
2007
|
||||||||||||||
Note
|
U.S. dollars in thousands
|
|||||||||||||||
(a)
|
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
|
|||||||||||||||
Income
and expenses not involving cash flows:
|
||||||||||||||||
Depreciation
and amortization
|
9,10
|
13 | 39 | 108 | ||||||||||||
Loss
(gain) on sale of fixed assets
|
20
|
5 | (288 | ) | (40 | ) | ||||||||||
Share
options granted to directors, employees and service
providers
|
16
|
(4,180 | ) | 1,813 | 1,991 | |||||||||||
Impairment
of intangible assets
|
10
|
- | 7,500 | - | ||||||||||||
Impairment
of fixed assets
|
9
|
- | - | 105 | ||||||||||||
Change
in intangible assets
|
10
|
- | 1,783 | - | ||||||||||||
Change
in retirement benefit obligation, net
|
13
|
(435 | ) | 320 | (108 | ) | ||||||||||
Change
in liability for share appreciation rights
|
14
|
119 | (1,553 | ) | 1,560 | |||||||||||
Change
in deferred taxes
|
22
|
- | - | 48 | ||||||||||||
Proceeds
from sale of securities at fair value through profit or loss,
net
|
- | - | 54 | |||||||||||||
Change
in fair value of financial assets at fair value through profit or
loss
|
- | - | 48 | |||||||||||||
Finance
costs on restricted deposit
|
- | - | (2 | ) | ||||||||||||
(4,478 | ) | 9,614 | 3,764 | |||||||||||||
Changes
in operating asset and liability items:
|
||||||||||||||||
Change
in deferred revenues
|
- | - | (797 | ) | ||||||||||||
Decrease
(increase) in accounts receivable
|
7
|
249 | 570 | (315 | ) | |||||||||||
Decrease
in other accounts payable
|
12
|
(542 | ) | (607 | ) | (312 | ) | |||||||||
Increase
(decrease) in trade payables
|
11
|
(304 | ) | (1,728 | ) | 1,203 | ||||||||||
(597 | ) | (1,765 | ) | (221 | ) | |||||||||||
(5,075 | ) | 7,849 | 3,543 | |||||||||||||
(b)
|
Additional information on cash flows from
operating activities:
|
|||||||||||||||
Interest
received
|
3 | 390 | 921 | |||||||||||||
Interest
paid
|
- | 3 | 4 | |||||||||||||
Refund
of taxes on income
|
- | 262 | - | |||||||||||||
Payment
of taxes on income
|
- | 2 | 165 |
(c)
|
Non-cash
investing activities for the year ended December 31, 2009 total at
approximately $ 80 thousand and it derives from deferred charges in
connection with Bio-Gal (Xtepo) transaction which were recorded in the
line item "other investments" (see Note 1b
below).
|
NOTE
1:-
|
GENERAL
|
a.
|
A
general description of the Company and its
activity:
|
b.
|
In
furtherance to the restructuring plan, in March 2009, the Company entered
into an asset purchase agreement with Bio-Gal Ltd. for the rights to use a
patent on Recombinant Erythropoietin ("EPO") for the prolongation of
multiple myeloma patients' survival and improvement of their quality of
life. In accordance with agreement, the Company will issue Bio-Gal
Ordinary shares representing just under 50% of the issued share capital of
the Company at closing date. In addition, the Company will make milestone
payments of $ 10 million in cash upon the successful
completion of a Phase 2b clinical trial. The Company's Board may, in its
sole discretion, issue additional shares to Bio-Gal in lieu of such cash
payment. The Company is also obligated to pay 1% royalties on net sales of
the product.
|
NOTE
1:-
|
GENERAL
(cont)
|
|
1.
|
The
completion of a successful fundraising by the Company or Xtepo at any time
after the successful completion of the phase 2 of an amount of minimum $ 2
million.
|
|
2.
|
Six
months from the successful completion of phase
2.
|
c.
|
In
2005, the Company acquired patent rights and other assets of VivoQuest
Inc. ("VivoQuest"), covering a compound library, which includes certain
compounds for the development of the DOS. Part of these rights was sold
during 2008 to Presidio.
|
d.
|
As
of December 31, 2009, the Company has accumulated losses in the amount of
approximately $ 141.2 million and equity in the amount of $ 7
thousand. The continuation of the Company's operations is dependent on
closing the Bio-Gal transaction and obtaining its funds or raising funds
from alternative sources.
|
NOTE
2:-
|
SIGNIFICANT
ACCOUNTING POLICIES
|
a.
|
Basis
of presentation of the financial
statements:
|
1.
|
Until
December 31, 2008, the consolidated financial statements of the Company
have been prepared in accordance with U.S.
GAAP.
|
1.
|
International
Financial Reporting Standards
(IFRS),
|
2.
|
International
Accounting Standards (IAS), and
|
3.
|
Interpretations
originated by the International Financial Reporting Interpretations
Committee (IFRIC) or the former Standing Interpretations Committee
(SIC).
|
2.
|
The
Company's financial statements as of December 31, 2009, 2008 and 2007
and January 1, 2007 and for each of the three years in the period
ended December 31, 2009 have been prepared in accordance with IFRS
and Interpretations originated by the International Financial Reporting
Interpretations Committee (IFRIC) and include the additional disclosure in
accordance with the Israeli Securities Regulations (Annual Financial
Statements), 2010.
|
NOTE
2:-
|
SIGNIFICANT
ACCOUNTING POLICIES (Cont.)
|
3.
|
The
Group's operating cycle is 12
months.
|
4.
|
The
Company analyses the expenses recognized in the statement of comprehensive
income by classification based on the function of
expense.
|
b.
|
Consolidated
financial statements:
|
c.
|
Foreign
currency translation of transactions and
balances:
|
1.
|
Functional
and presentation currency:
|
Change in the
|
||||
exchange rate
|
||||
Year ended
|
of U.S. $ 1
|
|||
%
|
||||
December
31, 2009
|
(0.71 | ) | ||
December
31, 2008
|
(1.14 | ) | ||
December
31, 2007
|
(8.97 | ) | ||
December
31, 2006
|
(8.21 | ) | ||
Exchange rate
|
||||
As of
|
of U.S. $ 1
|
|||
NIS
|
||||
December
31, 2009
|
3.775 | |||
December
31, 2008
|
3.802 | |||
December
31, 2007
|
3.846 | |||
December
31, 2006
|
4.225 |
NOTE
2:-
|
SIGNIFICANT
ACCOUNTING POLICIES (Cont.)
|
2.
|
Transactions
and balances:
|
d.
|
Fixed
assets:
|
%
|
|||
Laboratory
equipment
|
10
- 20
|
||
Computers
|
33
|
||
Office
furniture and equipment
|
6 -
16
|
e.
|
Financial
assets:
|
1.
|
Classification:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING
POLICIES (Cont.)
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING
POLICIES (Cont.)
|
3.
|
Offsetting
financial instruments:
|
4.
|
Impairment
of financial assets:
|
f.
|
Intangible
assets:
|
-
|
it
is technically feasible to complete the intangible asset so that it will
be available for use;
|
-
|
management
intends to complete the intangible asset and use or sell
it;
|
-
|
there
is an ability to use or sell the intangible
asset;
|
-
|
it
can be demonstrated how the intangible asset will generate probable future
economic benefits;
|
-
|
adequate
technical, financial and other resources to complete the development and
to use or sell the intangible asset are available;
and
|
-
|
the
expenditure attributable to the intangible asset during its development
can be reliably measured.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING
POLICIES (Cont.)
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING
POLICIES (Cont.)
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING
POLICIES (Cont.)
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING
POLICIES (Cont.)
|
1.
|
Revenues
from transfer of rights to use development which include the Group's
involvement during the development period, are recognized on a
straight-line basis over the expected term of the
agreement.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING
POLICIES (Cont.)
|
2.
|
Revenues
from sale of DOS development rights to Presidio and rendering of ongoing
services by the Company are recognized as
follows:
|
a)
|
The
fair value of labor services by the Group's employees is recognized over
the service term.
|
b)
|
The
difference between the sale consideration and the fair value of labor
services is recognized at the date of transaction as revenues from sale of
DOS development rights.
|
3.
|
Interest
income are recognized on a periodic basis using the effective interest
method.
|
1.
|
Basic
earnings per share is calculated by dividing income or loss attributable
to equity holders of the parent by the weighted average number of Ordinary
shares outstanding during the
period.
|
2.
|
For
the purpose of calculating diluted earnings or loss per share, the number
of Ordinary shares shall be the average Ordinary shares calculated in
basic earnings per share plus the weighted average number of shares that
would be issued on the conversion of all the dilutive potential shares
into shares. Potential Ordinary shares are taken into account as above
only when their conversion is dilutive (decreases the earnings or
increases the loss per
share).
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING
POLICIES (Cont.)
|
s.
|
New
and amended IFRS standards and IFRIC
interpretations:
|
a)
|
IAS
27 (revised), "Consolidated and Separate Financial Statements" ("IAS 27R")
(effective for annual periods beginning on or after July 1, 2009).
IAS 27R requires the effects of all transactions with non-controlling
interests to be recorded in equity if there is no change in control and
these transactions will no longer result in goodwill or gains and losses.
IAS 27R also specifies the accounting when control of the entity is lost.
Any remaining interest in the entity is remeasured to fair value, and a
gain or loss is recognized in profit or loss. The Company/Group will apply
IAS 27R prospectively to all transactions with non-controlling interests
from January 1, 2010.
|
b)
|
IFRS
3 (revised), "Business Combinations" ("IFRS 3") (effective for annual
periods beginning on or after July 1, 2009). The revised standard
continues to apply the acquisition method to business combinations, with
some significant changes. For example, all payments to purchase a business
are to be recorded at fair value at the acquisition date, with contingent
payments classified as debt subsequently remeasured through the statement
of income. There is a choice on an acquisition-by-acquisition basis to
measure the non-controlling interest in the acquiree at fair value or at
the non-controlling interest's proportionate share of the acquiree's net
assets. All acquisition-related costs should be expensed. The Company will
apply IFRS 3R prospectively to all business combinations from
January 1, 2010.
|
c)
|
IFRS
9, "Financial Instruments" ("IFRS 9"). IFRS 9 was issued in November 2009
and it represents the first milestone in the three stages planned
replacement of IAS 39, "Financial Instruments: Recognition and
Measurement" ("IAS 39"). The first issued part replaces the sections
of IAS 39 which deal with the classification and measurement of financial
assets. Below are summarized principles of IFRS
9:
|
-
|
Financial
assets are classified into one of the two following categories: fair value
and amortized cost. The decision to which category a financial asset
should be classified is made on initial recognition. This classification
is driven by the entity's business model for managing financial
instruments and the contractual characteristics of the cash flows from the
instrument.
|
-
|
A
hybrid contract with a financial asset host is classified in its entirety
into one of the above categories without separating the embedded
derivative from a host
contract.
|
-
|
A
financial asset is measured after initial recognition at amortized cost
only if two criteria are met: (a) the objective of the business model is
to hold the financial asset for the collection of the contractual cash
flows; and (b) the contractual cash flows under the instrument solely
represent payments of principal and interest (in other words, the
instrument has only basic features of a
loan).
|
-
|
Financial
assets that are debt instruments not meeting the above criteria are
measured at fair value through profit or
loss.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING
POLICIES (Cont.)
|
-
|
Financial
assets that are equity instruments should be measured at fair value, as
follows:
|
i.
|
Equity
instruments held-for-trading should be measured at fair
value.
|
ii.
|
As
for other equity instruments, an entity has an option to choose on initial
recognition (irrevocable designation) to recognize subsequent changes in
fair value in other comprehensive income. If the above is chosen, there is
no recycling of fair value gains and losses to profit or loss even if the
instrument is disposed. However, dividends from such instruments will be
recognized in profit or loss. Such designation is on an
instrument-by-instrument basis. Equity instruments which were not
designated as above, should be measured at fair value through profit or
loss.
|
d)
|
Amendment
to IAS 7, "Cash Flows Statements" ("the amendment to IAS 7"). This
amendment is part of the IASB's annual improvements project published in
April 2009. This amendment requires that only expenditures that result in
a recognized asset in the statement of financial position can be
classified as investing activities. The amendment to IAS 7 is applied
retrospectively for annual periods beginning on or after January 1,
2010. Earlier application is permitted. The Group will apply this
amendment from January 1, 2010 and it is not expected to have a material
impact on the financial
statements.
|
e)
|
Amendment
to IAS 38, "Intangible Assets" ("the amendment to IAS 38"). This amendment
is part of the IASB's annual improvements project published in April 2009.
The amendment to IAS 38 clarifies, among others, the requirements in IFRS
3 (revised), "Business Combinations" ("IFRS 3R") regarding the accounting
treatment of intangible assets acquired in a business combination. This
amendment permits the grouping of intangible assets as a single asset if
each asset has similar useful economic lives. The amendment to IAS 38 is
applied prospectively for annual periods beginning on or after
January 1, 2010. Earlier application is permitted. If an entity
applies IFRS 3 for an earlier period, the amendment to IAS 38 shall be
applied for that earlier period. The Group will apply the amendment to IAS
38 from January 1, 2010. At this stage, the impact, if any, on the
financial statements can not be
assessed.
|
f)
|
Amendment
to IAS 38, "Intangible Assets" ("the amendment to IAS 38"). This amendment
is part of the IASB's annual improvements project published in April 2009.
This amendment clarifies, among others, the description of valuation
techniques used when measuring the fair value of intangible assets
acquired in a business combination that are not traded in active markets.
The amendment to IAS 38 is applied prospectively for annual periods
beginning on or after January 1, 2010. Earlier application is
permitted. The Group will apply the amendment to IAS 38 from January 1,
2010. At this stage, the impact, if any, on the financial statements can
not be assessed.
|
NOTE
3:-
|
CRITICAL
ACCOUNTING ESTIMATES AND JUDGMENTS
|
a.
|
Share-based
payments as well as liability for share appreciation rights (see
Note 2n) - in evaluating the fair value and the recognition method of
share-based payment, the Company's management is to estimate, among
others, different parameters included in the computation of the fair value
of the options and the Company's results and the number of options that
will vest. Actual results and estimates to be made in the future may
significantly differ from current
estimates.
|
b.
|
Intangible
assets - in testing impairment of intangible assets of research and
development, the Company's management is to estimate, among others, the
probable endpoints of trials conducted by the Company, the commercial
technical feasibility of the development and the resulting economic
benefits. Actual results and estimates to be made in the future may
significantly differ from current
estimates.
|
c.
|
Taxes
on income and deferred taxes - the Group is subject to taxes in Israel and
in the U.S. Significant judgment is required by the Company's management
in determining the provision for income taxes. There are many transactions
and calculations in the ordinary course of the Group for which the
ultimate tax determination is uncertain. Where the final tax outcome of
these matters is different from the amounts that were initially recorded,
such differences will impact the current and deferred income taxes in the
period in which such determination is
made.
|
NOTE
4:-
|
FINANCIAL
INSTRUMENTS AND FINANCIAL RISK
MANAGEMENT
|
a.
|
Financial
risk management:
|
1.
|
Financial
risk factors:
|
NOTE
4:-
|
FINANCIAL
INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
(Cont.)
|
a)
|
Market
risk:
|
b)
|
Credit
risk:
|
NOTE
4:-
|
FINANCIAL
INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
(Cont.)
|
c)
|
Liquidity
risk:
|
2.
|
Capital
risk management:
|
b.
|
Financial
instruments:
|
1.
|
Financial
instruments by category:
|
2.
|
Credit
quality of financial assets:
|
December 31,
|
January 1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
U.S. dollars in thousands
|
||||||||||||||||
Cash
at banks, short-term deposits and restricted deposits:
|
||||||||||||||||
AAA
|
- | 1,305 | 6,187 | 11,319 | ||||||||||||
AA+
|
440 | - | - | - | ||||||||||||
AA
|
- | 1,056 | 6,505 | - | ||||||||||||
AA-
|
10 | 632 | 341 | 14,088 | ||||||||||||
Cash
not in banks
|
2 | 2 | 5 | 10 | ||||||||||||
452 | 2,995 | 13,038 | 25,417 |
NOTE
5:-
|
CASH
AND CASH EQUIVALENTS
|
December 31,
|
January 1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
U.S. dollars in thousands
|
||||||||||||||||
Cash
at bank and on hand
|
358 | 2,700 | 2,314 | 473 | ||||||||||||
Short-term
bank deposits
|
54 | 224 | 63 | 3,927 | ||||||||||||
412 | 2,924 | 2,377 | 4,400 |
December 31,
|
January 1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
U.S. dollars in thousands
|
||||||||||||||||
NIS
|
81 | 24 | 55 | 228 | ||||||||||||
U.S.
dollar
|
331 | 2,897 | 2,316 | 4,172 | ||||||||||||
U.K.
Pound
|
- | 3 | 6 | - | ||||||||||||
412 | 2,924 | 2,377 | 4,400 |
NOTE
6:-
|
SHORT-TERM
DEPOSITS
|
NOTE
7:-
|
ACCOUNTS
RECEIVABLE
|
a.
|
Composition:
|
December 31,
|
January 1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
U.S. dollars in thousands
|
||||||||||||||||
Accrued
income
|
- | - | 61 | 317 | ||||||||||||
Government
authorities
|
8 | 69 | 21 | 8 | ||||||||||||
Prepaid
expenses
|
21 | 211 | 553 | 259 | ||||||||||||
Other
receivables
|
4 | 25 | 19 | 25 | ||||||||||||
33 | 305 | 654 | 609 |
b.
|
The
carrying amount of other accounts receivable which represent monetary
items is denominated in the following
currencies:
|
December 31,
|
January 1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
U.S. dollars in thousands
|
||||||||||||||||
NIS
|
8 | 2 | 40 | 12 | ||||||||||||
U.S.
dollar
|
4 | 92 | 61 | 338 | ||||||||||||
Total
|
12 | 94 | 101 | 350 |
NOTE
8:-
|
ADDITIONAL
INFORMATION ABOUT INVESTMENT IN
SUBSIDIARY
|
Name and country of
incorporation
|
% interest
held
|
Scope of investments
|
Dividends
received or
receivable
|
||||
XTL
Biopharmaceuticals Inc.,
|
100%
equity
|
31.12.2009
- $ (1,728) thousand
|
-
|
||||
incorporated
in Delaware
|
interest
and
|
31.12.2008 - $ (11,106) thousand
|
-
|
||||
voting
rights
|
31.12.2007
- $ 5,116 thousand
|
-
|
|||||
1.1.2007
- $ 702 thousand
|
-
|
NOTE
9:-
|
FIXED
ASSETS
|
a.
|
Composition
of fixed assets and accumulated depreciation, by major classes, and the
movement therein in 2009 are:
|
Cost
|
Accumulated depreciation
|
|||||||||||||||||||||||||||||||||||||||
Opening
|
Additions
|
Disposals
|
Closing
|
Opening
|
Additions
|
Disposals
|
Closing
|
Depreciated cost
|
||||||||||||||||||||||||||||||||
book
|
during the
|
during the
|
book
|
book
|
during the
|
during the
|
book
|
December 31,
|
||||||||||||||||||||||||||||||||
amount
|
year
|
year
|
amount
|
amount
|
year
|
year
|
amount
|
2009
|
2008
|
|||||||||||||||||||||||||||||||
U.S.
dollars in thousands
|
||||||||||||||||||||||||||||||||||||||||
Office
furniture and equipment (including computers)
|
162 | - | (24 | ) | 138 | 121 | 13 | (19 | ) | 115 | 23 | 41 | ||||||||||||||||||||||||||||
Leasehold
improvements
|
141 | - | (141 | ) | - | 141 | - | (141 | ) | - | - | - | ||||||||||||||||||||||||||||
303 | - | (165 | ) | 138 | 262 | 13 | (160 | ) | 115 | 23 | 41 |
Cost
|
Accumulated depreciation
|
|||||||||||||||||||||||||||||||||||||||
Opening
|
Additions
|
Disposals
|
Closing
|
Opening
|
Additions
|
Disposals
|
Closing
|
Depreciated cost
|
||||||||||||||||||||||||||||||||
book
|
during the
|
during the
|
book
|
book
|
during the
|
during the
|
book
|
December 31,
|
||||||||||||||||||||||||||||||||
amount
|
year
|
year
|
amount
|
amount
|
year
|
year
|
amount
|
2008
|
2007
|
|||||||||||||||||||||||||||||||
U.S.
dollars in thousands
|
||||||||||||||||||||||||||||||||||||||||
Office
furniture and equipment (including computers)
|
318 | 2 | (158 | ) | 162 | 216 | 28 | (123 | ) | 121 | 41 | 102 | ||||||||||||||||||||||||||||
Leasehold
improvements
|
141 | - | - | 141 | 141 | - | - | 141 | - | - | ||||||||||||||||||||||||||||||
Laboratory
equipment
|
119 | - | (119 | ) | - | 115 | - | (115 | ) | - | - | 4 | ||||||||||||||||||||||||||||
578 | 2 | (277 | ) | 303 | 472 | 28 | (238 | ) | 262 | 41 | 106 |
NOTE
9:-
|
FIXED
ASSETS (Cont.)
|
Cost
|
Accumulated depreciation
|
|||||||||||||||||||||||||||||||||||||||||||
Opening
|
Additions
|
Disposals
|
Closing
|
Opening
|
Additions
|
Disposals
|
Closing
|
Depreciated cost
|
||||||||||||||||||||||||||||||||||||
book
|
during the
|
during the
|
book
|
book
|
during the
|
during the
|
book
|
December 31,
|
January 1,
|
|||||||||||||||||||||||||||||||||||
amount
|
year
|
year
|
amount
|
amount
|
year
|
Impairment
|
year
|
amount
|
2007
|
2007
|
||||||||||||||||||||||||||||||||||
U.S.
dollars in
thousands
|
||||||||||||||||||||||||||||||||||||||||||||
Office
furniture and equipment (including computers)
|
383 | 65 | (130 | ) | 318 | 279 | 33 | - | (96 | ) | 216 | 102 | 104 | |||||||||||||||||||||||||||||||
Leasehold
improvements
|
572 | - | (431 | ) | 141 | 572 | - | - | (431 | ) | 141 | - | - | |||||||||||||||||||||||||||||||
Laboratory
equipment
|
1,281 | - | (1,162 | ) | 119 | 895 | 61 | 105 | (946 | ) | 115 | 4 | 386 | |||||||||||||||||||||||||||||||
2,236 | 65 | (1,723 | ) | 578 | 1,746 | 94 | 105 | (1,473 | ) | 472 | 106 | 490 |
b.
|
Additional
information:
|
1.
|
In
2007, the Group's management examined the recoverable amount of fixed
assets and recorded an impairment of laboratory equipment of
$ 105 thousand. The impairment has been charged in research and
development costs.
|
2.
|
In
2009, depreciation of fixed assets of $ 13 thousand has been charged
in general and administrative expenses (2008 - $ 28 thousand and 2007
- $ 28 thousand) and no depreciation has been charged in research and
development costs (2008 - $ 0 thousand and 2007 - $ 66
thousand).
|
NOTE
10:-
|
INTANGIBLE
ASSETS
|
a.
|
On
November 18, 2008, the Company published the results of Phase 2b
clinical trial of Bicifadine for diabetic neuropathic pain which testified
that the therapeutic did not meet its endpoints and, therefore, the
development activity was ceased. On this date, an intangible asset of
$ 7.5 million representing the acquired development rights was
impaired, see also
Note 26d(4).
|
b.
|
As
part of the Company's license agreement with VivoQuest (see
Note 15a(3)), the Company allocated the acquisition cost to fixed
assets and intangible assets, based on the fair value at the date of
acquisition.
|
U.S. dollars
in thousands
|
||||
Fair
value of Company's shares issued upon acquisition
|
1,391 | |||
Cash
paid
|
400 | |||
Direct
acquisition costs
|
148 | |||
Total
acquisition cost
|
1,939 | |||
Assets
arising on acquisition:
|
||||
Fixed
assets
|
113 | |||
Intangible
assets:
|
||||
In-process
research and development assets
|
1,783 | |||
Employment
contracts with professional staff
|
43 | |||
Total
intangible assets
|
1,826 | |||
Total
assets arising on acquisition
|
1,939 |
NOTE
11:-
|
TRADE
PAYABLES
|
a.
|
Composition:
|
December 31,
|
January 1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
U.S. dollars in thousands
|
||||||||||||||||
Open
accounts
|
170 | 416 | 2,144 | 941 | ||||||||||||
Checks
payable
|
22 | - | - | - | ||||||||||||
Total
|
192 | 416 | 2,144 | 941 |
b.
|
The
carrying amount of other trade payables is denominated in the following
currencies:
|
December 31,
|
January 1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
U.S. dollars in thousands
|
||||||||||||||||
NIS
|
36 | 16 | 143 | 135 | ||||||||||||
U.S.
dollar
|
156 | 400 | 2,001 | 806 | ||||||||||||
Total
|
192 | 416 | 2,144 | 941 |
NOTE
12:-
|
OTHER
ACCOUNTS PAYABLE
|
a.
|
Composition:
|
December 31,
|
January 1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
U.S. dollars in thousands
|
||||||||||||||||
Employees
and payroll accruals
|
122 | 39 | 44 | 52 | ||||||||||||
Government
authorities
|
- | 8 | 23 | 33 | ||||||||||||
Accrued
expenses
|
394 | 1,003 | 1,570 | 1,683 | ||||||||||||
Other
|
- | 8 | 28 | 66 | ||||||||||||
Total
|
516 | 1,058 | 1,665 | 1,834 |
b.
|
The
carrying amount of other accounts payable is denominated in the following
currencies:
|
December 31,
|
January 1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
U.S. dollars in thousands
|
||||||||||||||||
NIS
|
132 | 87 | 109 | 381 | ||||||||||||
U.S.
dollar
|
384 | 971 | 1,556 | 1,453 | ||||||||||||
Total
|
516 | 1,058 | 1,665 | 1,834 |
NOTE 13:-
|
RETIREMENT
BENEFIT OBLIGATION
|
|
a.
|
According
to the effective labor laws and employment contracts in Israel and
overseas, the Company and the subsidiaries are obligated to pay
compensation and/or pension to employees who are dismissed and, under
certain circumstances, to employees who
retire.
|
|
b.
|
The
Company's obligation for pension payment in Israel and the Company's
obligation for compensation payments to employees in Israel for whom the
applicable obligation is pursuant to section 14 to the Severance Pay Law,
are covered by fixed contributions in defined contribution plans. The
amounts contributed as above are not reflected in the statements of
financial position. During 2009, all company's employees were covered
pursuant to section 14 to the severance pay
law.
|
|
c.
|
The
Company has an obligation to pay compensation to employees which is a
defined benefit plan for which compensation reserves and managers'
policies exist and the Group companies make contributions. The net amount
of compensation obligations included in the statement of financial
position as of December 31, 2009, 2008, 2007 and January 1, 2007 reflect
the difference between the pension obligation and the plan assets, as
outlined below.
|
December
31,
|
January
1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
U.S.
dollars in thousands
|
||||||||||||||||
Present
value of fully or partially funded obligations
|
- | 27 | 33 | 219 | ||||||||||||
Fair
value of plan assets
|
- | (39 | ) | (49 | ) | (191 | ) | |||||||||
Present
value of unfunded obligations
|
- | (12 | ) | (16 | ) | 28 |
Year
ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
U.S.
dollars in thousands
|
||||||||||||
Balance
at the beginning of the year
|
27 | 33 | 219 | |||||||||
Current
service cost
|
- | - | 46 | |||||||||
Interest
cost
|
- | 2 | 8 | |||||||||
Benefits
paid
|
(39 | ) | (10 | ) | (165 | ) | ||||||
Actuarial
losses (gains)
|
12 | 2 | (75 | ) | ||||||||
Balance
at the end of the year
|
- | 27 | 33 |
NOTE 13:-
|
RETIREMENT
BENEFIT OBLIGATION (Cont.)
|
Year
ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
U.S.
dollars in thousands
|
||||||||||||
Balance
at the beginning of the year
|
39 | 49 | 191 | |||||||||
Expected
return on plan assets
|
- | 2 | 6 | |||||||||
Actuarial
gains (losses)
|
- | (2 | ) | 1 | ||||||||
Employer
contributions
|
- | - | 16 | |||||||||
Benefits
paid
|
(39 | ) | (10 | ) | (165 | ) | ||||||
Balance
at the end of the year
|
- | 39 | 49 |
Year
ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
U.S.
dollars in thousands
|
||||||||||||
Current
service cost
|
- | - | 46 | |||||||||
Interest
cost
|
- | 2 | 8 | |||||||||
Actuarial
losses (gains)
|
12 | 4 | (76 | ) | ||||||||
Expected
return on plan assets
|
- | (2 | ) | (6 | ) | |||||||
12 | 4 | (28 | ) |
December
31,
|
January
1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
U.S.
dollars in thousands
|
||||||||||||||||
Discount
rate
|
- | 2.884 | 5.276 | 5.111 | ||||||||||||
Israeli
CPI rate
|
- | (0.4 | ) | 2.5 | 1.29 | |||||||||||
Expected
return on plan assets
|
- | 2.884 | 5.276 | 5.111 | ||||||||||||
Expected
employee turnover
|
- | 47.17 | 47.17 | 47.17 | ||||||||||||
Future
salary increases
|
- | (0.4 | ) | 2.5 | 1.29 |
NOTE 13:-
|
RETIREMENT
BENEFIT OBLIGATION (Cont.)
|
|
d.
|
The
group records a provision in its books relates to retirement agreements
signed with executive officers and employees. As of December 31, 2008 and
2007, the liability related to these agreements totaled $ 447 thousand and
$ 131 thousand, respectively. As of December 31 2009 the group has no
liability for retirement agreements other than the defined contribution
plans as aforementioned in b.
|
NOTE 14:-
|
LIABILITY
FOR SHARE APPRECIATION RIGHTS
|
NOTE 14:-
|
LIABILITY
FOR SHARE APPRECIATION RIGHTS
(Cont.)
|
NOTE 15:-
|
COMMITMENTS
AND CONTINGENT LIABILITIES
|
|
1.
|
The
Company acquired patent rights from others. These license agreements
require the Company to make contingent milestone payments to its
licensors. In addition, under these agreements, the Company must pay
royalties on sales of products resulting from licensed
technologies.
|
|
2.
|
The
subsidiary is committed to pay an advisory fee (in cash or by issuance of
shares) to a third party in connection with the DOV transaction (see also
Note 14 above).
|
|
3.
|
During
September 2005, the Company licensed from VivoQuest perpetual, exclusive,
and worldwide rights to VivoQuest's intellectual property and technology,
covering a proprietary compound library, which includes VivoQuest's lead
hepatitis C compounds (the Diversity Oriented Synthesis, or DOS program).
In addition, the Company acquired from VivoQuest certain assets, including
VivoQuest's laboratory equipment, assumed VivoQuest's lease of its
laboratory space and certain research and development employees. The
Company executed this transaction in order to broaden its pipeline and
strengthen its franchise in infectious
diseases.
|
|
a)
|
the
Company issued the fair value equivalent of $1,391,000 of its Ordinary
shares (1,314,420 Ordinary shares (262,884 after the capital
consolidation), calculated based upon the average of the closing prices
per share for the period commencing two days before, and ending two days
after the closing of the transaction), made cash payments of approximately
$ 400,000 to cover VivoQuest's operating expenses prior to the
closing of the Transaction, and incurred $ 148,000 in direct expenses
associated with the
Transaction;
|
NOTE 15:-
|
COMMITMENTS
AND CONTINGENT LIABILITIES (Cont.)
|
|
b)
|
the
Company agreed to make additional contingent milestone payments triggered
by certain regulatory and sales targets, totaling up to $ 34 million,
$ 25 million of which will be due upon or following regulatory
approval or actual product sales, and payable in cash or Ordinary shares
at the Company's election. No contingent consideration has been paid
pursuant to the license agreement as of the balance sheet date, because
none of the milestones have been achieved;
and
|
|
c)
|
the
Company agreed to make royalty payments on future product
sales.
|
NOTE 15:-
|
COMMITMENTS
AND CONTINGENT LIABILITIES (Cont.)
|
NOTE 16:-
|
SHARE
CAPITAL, RESERVES AND RETAINED
EARNINGS
|
Number
of shares
|
Amount
|
|||||||||||||||||||||||||||||||
Authorized
|
Issued
and
outstanding
|
Authorized
|
Issued
and
outstanding
|
|||||||||||||||||||||||||||||
December
31,
|
December
31,
|
December
31,
|
December
31,
|
|||||||||||||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||||||||||||||
Thousand
|
U.S.
dollars in thousands
|
|||||||||||||||||||||||||||||||
Ordinary
shares of NIS 0.1 *)
|
700,000 | - | 58,561 | - | 18,543 | - | 1,445 | - | ||||||||||||||||||||||||
Ordinary
shares of NIS 0.02
|
- | 500,000 | - | 292,805 | - | 2,630 | - | 1,445 |
Number
of shares
|
Amount
|
||||||||||||||
Authorized
|
Issued
and
outstanding
|
Authorized
|
Issued
and
outstanding
|
||||||||||||
December
31,
|
January
1,
|
December
31,
|
January
1,
|
December
31,
|
January
1,
|
December
31,
|
January
1,
|
||||||||
2007
|
2007
|
2007
|
2007
|
2007
|
2007
|
2007
|
2007
|
||||||||
Thousand
|
U.S.
dollars in thousands
|
||||||||||||||
Ordinary
shares of NIS 0.02
|
500,000
|
300,000
|
292,655
|
220,124
|
2,630
|
1,420
|
1,444
|
1,072
|
*)
|
Traded
on the Tel-Aviv Stock Exchange. As of December 31, 2009, Ordinary share of
NIS 0.1 was traded at
NIS 0.272.
|
|
2.
|
Ordinary
shares confer upon their holders voting rights and right to participate in
the shareholders' meeting, right to receive earnings and the right to
participate in the excess of assets upon liquidation of the
Company.
|
a)
|
that
the share capital of the Company be consolidated so that each 5 shares of
NIS 0.02 par value shall be consolidated into one (1) share of NIS
0.1 par value.
|
b)
|
that
the authorized share capital of the Company be increased from NIS
10,000,000 par value divided into 100,000,000 Ordinary shares of NIS 0.1
par value to NIS 70,000,000 divided into 700,000,000 Ordinary shares
of NIS 0.1 par value.
|
c)
|
that
the ADR ratio be amended from one (1) ADR representing two (2) Ordinary
shares of NIS 0.1 par value to one (1) ADR representing twenty (20)
Ordinary shares of NIS 0.1 par
value.
|
NOTE 16:-
|
SHARE
CAPITAL, RESERVES AND RETAINED EARNINGS
(Cont.)
|
d)
|
due
to the capital consolidation, the amount of share options granted before
the capital consolidation and the exercise price were adjusted
accordingly.
|
3.
|
In
November 2007, the Company completed a private placement of 72,485,020
Ordinary shares of NIS 0.02 par value (14,497,004 Ordinary shares of
NIS 0.1 par value after the capital consolidation) each at $ 0.135
per share. Total proceeds to the Company from this private placement were
approximately $ 8.8 million, net of offering expenses of
approximately $ 1
million.
|
b.
|
Share-based
payment:
|
1.
|
In
April 2007, the Company's Board granted 70,000 share options to employees
in the Group to purchase 70,000 Ordinary shares of NIS 0.1 each at an
exercise price equal to $ 1.87 per share. The fair value of all share
options using the Black-Scholes model was $ 1.0 per option on the
grant date and a total of $ 70 thousand for all options. The option
term is for a period of 10 years from the grant date. The options are
exercisable on a straight-line basis every anniversary of the grant date
over a four-year period.
|
2.
|
In
August 2007, the Company granted 4,000 share options to a director to
purchase 4,000 Ordinary shares of NIS 0.1 each at an exercise price
equal to $ 1.02 per share. The fair value of all share options using
the Black-Scholes model was $ 0.55 per option on the grant date and a
total of $ 2.2 thousand for all options. The option term is for a
period of 10 years from the grant date. The options are exercisable on a
straight-line basis every quarter of the grant date over a three-year
period.
|
NOTE 16:-
|
SHARE
CAPITAL, RESERVES AND RETAINED EARNINGS
(Cont.)
|
3.
|
In
January 2008, the Company's Board granted 859,060 share options to
employees in the Company to purchase 859,060 Ordinary shares of
NIS 0.1 each at an exercise price equal to $ 1.575 per share.
The fair value of all share options using the Black-Scholes model was
$ 0.9 per option on the grant date and a total of $ 770 thousand
for all options. The option term is for a period of 10 years from the
grant date.
|
a)
|
799,300
options of which one-quarter is exercisable immediately and the balance is
exercisable on a straight-line basis every anniversary of the grant date
over three years
|
b)
|
24,000
options are exercisable
immediately
|
c)
|
35,760
options are exercisable on a straight-line basis every anniversary of the
grant date over four years
|
4.
|
In
December 2007, the Company canceled 1,850,000 options (with
performance-related conditions) that were granted to the Chairman in
August 2005 to purchase 1,850,000 shares of NIS 0.1 each at an
exercise price equal to $ 1.77 per share and granted to the Chairman
1,850,000 new options to purchase 1,850,000 shares of NIS 0.1 each at
an exercise price equal to $ 1.8 per share. All other exercise terms
remained exactly the same as those of the cancelled options. The fair
value of all share options was between $ 2.315 and $ 2.98 per
option and a total of $ 4,916 thousand for all
options.
|
NOTE 16:-
|
SHARE
CAPITAL, RESERVES AND RETAINED EARNINGS
(Cont.)
|
5.
|
In
March 2008, the Company's Board granted 50,000 share options to employees
in the Company to purchase 50,000 Ordinary shares of NIS 0.1 each at
an exercise price equal to $ 1.595 per share. The fair value of all
share options using the Black-Scholes model was $ 0.95 per option on
the grant date and a total of $ 48 thousand for all options. The
option term is for a period of 10 years from the grant date. The options
are exercisable on a straight-line basis every anniversary of the grant
date over a four-year period.
|
6.
|
In
May 2008, the Company granted 8,000 share options to service providers of
the Company to purchase 8,000 Ordinary shares of NIS 0.1 each at an
exercise price equal to $ 1.55 per share. The fair value of all share
options using the Black-Scholes model was $ 0.75 per option on the
grant date and a total of $ 6 thousand for all options. The option
term is for a period of 10 years from the grant date. The options are
exercisable on a straight-line basis every anniversary of the grant date
over a two-year period.
|
7.
|
In
July 2008, the Company granted 60,000 share options to a director in the
Company to purchase 60,000 Ordinary shares of NIS 0.1 each at an
exercise price equal to $ 1.75 per share. The fair value of all share
options using the Black-Scholes model was $ 1.1 per option on the
grant date and a total of $ 65 thousand for all options. The option
term is for a period of 10 years from the grant date. The options are
exercisable on a straight-line basis every month of the grant date over a
three-year period.
|
8.
|
In
August 2008, the Company granted 4,000 share options to a director in the
Company to purchase 4,000 Ordinary shares of NIS 0.1 each at an
exercise price equal to $ 1.84 per share. The fair value of all share
options using the Black-Scholes model was $ 1.15 per option on the
grant date and a total of $ 4.5 thousand for all options. The option
term is for a period of 10 years from the grant date. The options are
exercisable on a straight-line basis every quarter of the grant date over
a three-year period.
|
NOTE 16:-
|
SHARE
CAPITAL, RESERVES AND RETAINED EARNINGS
(Cont.)
|
9.
|
In
October 2008, the Company granted 940,000 share options to directors in
the Company to purchase 940,000 Ordinary shares of NIS 0.1 each at an
exercise price equal to $ 0.99 per share (of which 700,000 share
options were granted to the Chairman). The fair value of all share options
using the Black-Scholes model was $ 0.32 per option to the Chairman
and $ 0.62 per option to other directors on the grant date and a
total of $ 376 thousand for all options. The option term is for a
period of 10 years from the grant
date.
|
a)
|
583,334
options are exercisable
immediately
|
b)
|
116,666
options are exercisable on a straight-line basis every month of the grant
date over six months
|
10.
|
In
July 2009, the Company's Board granted 1,400,000 share options (unlisted)
to s senior officer in the Company to purchase 1,400,000 Ordinary shares
of NIS 0.1 each at an exercise price equal to NIS 0.075 per
share. The fair value of all share options using the Black-Scholes model
was NIS 0.42079 per option on the grant date and a total of
NIS 589,106 for all options. The option term is for a period of 120
months from the grant date, such that 33.33% of the share options are
exercisable immediately after five months from the grant date and the
remaining 66.67% share options are exercisable on a straight-line basis
every month of the grant date over a three-year
period.
|
NOTE 16:-
|
SHARE
CAPITAL, RESERVES AND RETAINED EARNINGS
(Cont.)
|
Year ended December 31,
|
||||||||||||||||||||||||
2009
|
2008
|
2007
|
||||||||||||||||||||||
Options
|
Weighted
average
exercise
price
|
Options
|
Weighted
average
exercise
price
|
Options
|
Weighted
average
exercise
price
|
|||||||||||||||||||
Outstanding
at beginning of year
|
6,165,036 | 2.63 | 5,833,531 | 3.07 | 6,647,048 | 3.11 | ||||||||||||||||||
Granted
|
1,400,000 | 0.02 | 1,985,060 | 1.31 | 1,954,000 | 1.80 | ||||||||||||||||||
Exercised
*)
|
- | - | (30,108 | ) | 1.10 | (9,083 | ) | 0.53 | ||||||||||||||||
Cancelled
|
- | - | - | - | (1,850,000 | ) | 1.75 | |||||||||||||||||
Expired
|
(2,607,217 | ) | 2.18 | (934,764 | ) | 3.03 | (789,507 | ) | 3.50 | |||||||||||||||
Forfeited
|
(2,817,105 | ) | 2.44 | (688,683 | ) | 2.03 | (118,927 | ) | 2.40 | |||||||||||||||
Outstanding
at end of year
|
2,140,714 | 1.70 | 6,165,036 | 2.63 | 5,833,531 | 3.07 | ||||||||||||||||||
Exercisable
at end of year
|
1,338,121 | 2.65 | 2,900,192 | 2.93 | 2,597,004 | 3.53 |
|
*)
|
Total
proceeds received from these exercises aggregated $ 33 thousand and
$ 4 thousand for the years ended December 31, 2008 and 2007,
respectively.
|
NOTE 16:-
|
SHARE
CAPITAL, RESERVES AND RETAINED EARNINGS
(Cont.)
|
Year ended December 31, 2009
|
Year ended December 31, 2008
|
|||||||||||||||||||||
Options
outstanding at
end of year
|
Range of
exercise prices
|
Weighted
average
remaining
contractual
life
|
Options
outstanding at
end of year
|
Range of
exercise prices
|
Weighted
average
remaining
contractual
life
|
|||||||||||||||||
1,400,000 | 0-0.500 | 9.6 | - | 0-0.500 | 10 | |||||||||||||||||
18,150 | 0.500-1.499 | 0.1 | 987,075 | 0.500-1.499 | 10 | |||||||||||||||||
200,425 | 1.500-1.995 | 2.5 | 2,916,903 | 1.500-1.995 | 1.7 | |||||||||||||||||
10,840 | 2.000-2.495 | 0.3 | 10,840 | 2.000-2.495 | 2.3 | |||||||||||||||||
220,459 | 2.500-3.495 | 0.2 | 473,058 | 2.500-3.495 | 2.7 | |||||||||||||||||
2,880 | 3.500-4.495 | 0.1 | 1,439,880 | 3.500-4.495 | 7.1 | |||||||||||||||||
77,960 | 4.500-5.500 | 0.1 | 82,280 | 4.500-5.500 | 0.9 | |||||||||||||||||
210,000 | 5.500-10.55 | 0.7 | 255,000 | 10.55-5.500 | 1.7 | |||||||||||||||||
2,140,714 | 6.6 | 6,165,036 | 4.3 |
Year ended December 31, 2007
|
Year ended December 31, 2006
|
|||||||||||||||||||||
Options
outstanding at
end of year
|
Range of
exercise prices
|
Weighted
average
remaining
contractual
life
|
Options
outstanding at
end of year
|
Range of
exercise prices
|
Weighted
average
remaining
contractual
life
|
|||||||||||||||||
116,702 | 0.500-1.499 | 5.5 | 163,555 | 0.500-1.499 | 5.9 | |||||||||||||||||
2,362,000 | 1.500-1.995 | 2.8 | 2,262,000 | 1.500-1.995 | 3.6 | |||||||||||||||||
681,164 | 2.000-2.495 | 0.2 | 1,160,520 | 2.000-2.495 | 1.1 | |||||||||||||||||
680,532 | 2.500-3.495 | 8.3 | 764,000 | 2.500-3.495 | 9.5 | |||||||||||||||||
1,439,880 | 3.500-4.495 | 8.1 | 1,454,760 | 3.500-4.495 | 9 | |||||||||||||||||
298,253 | 4.500-5.500 | 0.9 | 587,213 | 4.500-5.500 | 1.5 | |||||||||||||||||
255,000 | 10.55-5.500 | 2.7 | 255,000 | 10.55-5.500 | 3.7 | |||||||||||||||||
5,833,531 | 4.4 | 6,647,048 | 4.9 |
NOTE 17:-
|
REVENUES
AND COST OF REVENUES
|
a.
|
The
Company entered into a licensing agreement with Cubist Pharmaceuticals,
Inc. in June 2004, and as amended in August 2005, under which the Company
granted Cubist a license to commercialize clinical against hepatitis B. In
July 2007, Cubist terminated the
agreement.
|
b.
|
As
for revenues and cost of revenues in 2008 arising on the sale of the
development rights of DOS, see Notes 10b and
15a(3).
|
NOTE 18:-
|
RESEARCH
AND DEVELOPMENT COSTS
|
Year ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
U.S. dollars in thousands
|
||||||||||||
Salaries
and payroll accruals
|
- | 1,583 | 2,788 | |||||||||
Expenses
relating to options to employees and service providers
|
- | 54 | 149 | |||||||||
Laboratory
materials and production works
|
- | 602 | 1,525 | |||||||||
Clinical
trials
|
- | 8,473 | 3,610 | |||||||||
Subcontracted
work
|
- | - | 632 | |||||||||
Professional
services
|
- | 227 | 456 | |||||||||
Rent
and laboratory maintenance
|
- | 661 | 1,140 | |||||||||
Depreciation
and amortization
|
- | 11 | 80 | |||||||||
Impairment
of laboratory equipment
|
- | - | 105 | |||||||||
Other
|
- | 111 | 1,071 | |||||||||
- | 11,722 | 11,556 | ||||||||||
Less
- grants and participations
|
- | - | 56 | |||||||||
- | 11,722 | 11,500 |
NOTE 19:-
|
GENERAL
AND ADMINISTRATIVE EXPENSES
|
Year
ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
U.S.
dollars in thousands
|
||||||||||||
Salaries
and payroll accruals
|
428 | 1,307 | 1,198 | |||||||||
Expenses
relating to options to employees and service providers *)
|
(4,180 | ) | 1,759 | 1,842 | ||||||||
Patents
|
14 | 235 | 440 | |||||||||
Expenses
(income) relating to share appreciation rights
|
119 | (1,553 | ) | 1,560 | ||||||||
Directors'
fees
|
98 | 356 | 280 | |||||||||
Travel
abroad
|
8 | 17 | 85 | |||||||||
Foreign
services, public relation and travel
|
13 | 145 | 296 | |||||||||
Rent
and office maintenance
|
355 | 183 | 77 | |||||||||
Vehicle
maintenance
|
25 | 16 | 14 | |||||||||
Insurance
|
198 | 203 | 203 | |||||||||
Professional
services
|
378 | 1,029 | 1,233 | |||||||||
Depreciation
and amortization
|
13 | 28 | 28 | |||||||||
Other
|
102 | 212 | 340 | |||||||||
(2,429 | ) | 3,937 | 7,596 |
*)
|
Include
reduced expenses which result from forfeiture of share options that were
contingent on the performance of the former chairman and CEO, see also
Note 16b.
|
NOTE 20:-
|
OTHER
GAINS (LOSSES), NET
|
Year
ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
U.S.
dollars in thousands
|
||||||||||||
Gain
(loss) on sale of fixed assets
|
(5 | ) | 288 | 40 | ||||||||
Change
in fair value of financial assets at fair value through profit or
loss
|
- | - | (48 | ) | ||||||||
Other
income
|
144 | - | - | |||||||||
139 | 288 | (8 | ) |
NOTE 21:-
|
FINANCE
COSTS (INCOME), NET
|
Year
ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
U.S.
dollars in thousands
|
||||||||||||
Finance
costs:
|
||||||||||||
Interest
charge
|
2 | 3 | 4 | |||||||||
Exchange
differences
|
- | - | 9 | |||||||||
Management
fees and commissions
|
8 | 14 | 16 | |||||||||
Other
|
- | - | 1 | |||||||||
Total
finance costs
|
10 | 17 | 30 | |||||||||
Finance
income:
|
||||||||||||
Interest
income on bank deposits
|
3 | 251 | 668 | |||||||||
Exchange
differences
|
3 | 14 | - | |||||||||
Other
|
- | 66 | - | |||||||||
Total
finance income
|
6 | 331 | 668 | |||||||||
Finance
income (costs), net
|
(4 | ) | 314 | 638 |
NOTE 22:-
|
TAXES
ON INCOME
|
a.
|
Taxation
in Israel:
|
1.
|
Since
the 2008 tax year, the results for tax purposes of the Company are
measured in nominal values. Until the end of the 2007 tax year, the
results for tax purposes of the Company were adjusted for the changes in
the Israeli CPI pursuant to the Income Tax (Inflationary Adjustments) Law,
1985 ("the inflationary adjustments
law").
|
2.
|
Tax
rates:
|
NOTE 22:-
|
TAXES
ON INCOME (Cont.)
|
b.
|
Foreign
subsidiaries:
|
c.
|
Carryforward
tax losses and real loss on sale of marketable
securities:
|
NOTE 22:-
|
TAXES
ON INCOME (Cont.)
|
d.
|
Taxes
on income included in the statements of income for the years
presented:
|
1.
|
As
follows:
|
Year
ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
U.S.
dollars in thousands
|
||||||||||||
Current
taxes:
|
||||||||||||
Current
taxes on income for the year
|
- | 10 | - | |||||||||
Adjustments
in respect of prior years
|
(23 | ) | (41 | ) | (254 | ) | ||||||
(23 | ) | (31 | ) | (254 | ) | |||||||
Deferred
taxes
|
- | - | 48 | |||||||||
Tax
benefit
|
(23 | ) | (31 | ) | (206 | ) |
2.
|
Below
is a reconciliation between the "theoretical" tax expense, assuming that
all the income were taxed at the regular tax rate applicable to companies
in Israel (see a(2) above) and the taxes recorded in the statement of
comprehensive income in the reported
year:
|
2009
|
2008
|
2007
|
||||||||||
$
thousand
|
$
thousand
|
$
thousand
|
||||||||||
Income
(loss) before taxes on income, as reported in the statements of
income
|
2,564 | (18,458 | ) | (17,669 | ) | |||||||
Theoretical
tax (tax saving) on this income (loss)
|
667 | (4,984 | ) | (5,124 | ) | |||||||
Increase
(decrease) in taxes resulting from different tax rates for foreign
subsidiaries
|
85 | (1,138 | ) | (365 | ) | |||||||
Expenses
not deductible for tax purposes
|
2 | 405 | 761 | |||||||||
Tax
exempt income
|
(1,087 | ) | - | - | ||||||||
Increase
in taxes resulting from taxable losses in the reported year for which no
deferred taxes were recognized
|
333 | 5,727 | 4,776 | |||||||||
Taxes
in respect of prior year
|
(23 | ) | (41 | ) | (254 | ) | ||||||
Taxes
on income
|
(23 | ) | (31 | ) | (206 | ) |
NOTE 22:-
|
TAXES
ON INCOME (Cont.)
|
|
3.
|
Since
the balance of carryforward tax losses exceeds other temporary differences
(net), and considering that the Company can not assess with certainty that
it will have sufficient income in the future to allow the losses to be
used in the foreseeable future, in 2009, the Company did not record
deferred taxes on these losses.
|
f.
|
Tax
assessments:
|
NOTE 23:-
|
EARNINGS
PER SHARE
|
a.
|
Basic:
|
Year
ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
Income
(loss) attributable to equity holders of the parent (U.S. dollars in
thousands)
|
2,587 | (18,427 | ) | (17,463 | ) | |||||||
Weighted
average number of issued Ordinary shares
|
58,561,065 | 58,553,864 | 45,698,564 | |||||||||
Basic
earnings (loss) per share (in U.S. dollars)
|
0.044 | (0.315 | ) | (0.382 | ) |
Year
ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
U.S.
dollars in thousands
|
||||||||||||
Total
income (loss) for the year attributable to equity holders of the parent
according to the statement of income used to determine basic earnings
(loss) per share
|
2,587 | (18,427 | ) | (17,463 | ) | |||||||
Total
net income (loss) used to determine diluted earnings (loss) per
share
|
2,587 | (18,427 | ) | (17,463 | ) |
Number
of shares
|
||||||||||||
Weighted
average number of shares used to determine basic earnings (loss) per
share
|
58,561,065 | 58,553,864 | 45,698,564 | |||||||||
Adjustment
for incremental shares due to exercise of share options
|
209,102 | - | - | |||||||||
Weighted
average number of shares used to determine diluted earnings (loss) per
share
|
58,770,167 | 58,553,864 | 45,698,564 | |||||||||
Diluted
earnings (loss) per share (in U.S. dollars)
|
0.044 | (0.315 | ) | (0.382 | ) |
NOTE 24:-
|
TRANSACTIONS
AND BALANCES WITH RELATED PARTIES
|
a.
|
Compensation
to interested parties:
|
Year
ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
U.S.
dollars in thousands
|
||||||||||||
Wages
and salaries to interested parties employed by the Group
*)
|
(1,219 | ) | 1,169 | 1,041 | ||||||||
Number
of individuals to whom the benefit relates
|
2 | 1 | 1 | |||||||||
Management
fees and commissions to interested parties employed by the
Group
|
- | - | - | |||||||||
Number
of individuals to whom the benefit relates
|
- | - | - | |||||||||
Compensation
to directors not employed by the Group **)
|
(2,569 | ) | 944 | 1,222 | ||||||||
Number
of individuals to whom the benefit relates
|
12 | 6 | 6 | |||||||||
Rentals
to other interested parties not employed by the Group
|
- | - | - | |||||||||
Number
of individuals to whom the benefit relates
|
- | - | - |
*)
|
Includes
reduced expenses in 2009 which result from forfeiture of shares that were
contingent on the performance of the former CEO, in amount of $ 1.45
million. The fair value of the benefit recorded due to Options granted to
the CEO for the years 2008 and 2007 was approximately $ 919 and $ 816,
respectively.
|
**)
|
Includes
reduced expenses in 2009 which result from forfeiture of shares that were
contingent on the performance of the former chairman, in amount of $ 2.65
million. The fair value of the benefit recorded due to Options granted to
the chairman for the years 2008 and 2007 was approximately $ 643 and $
946, respectively.
|
NOTE 24:-
|
TRANSACTIONS
AND BALANCES WITH RELATED PARTIES
(Cont.)
|
b.
|
Compensation
to key management personnel:
|
Year
ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
U.S.
dollars in thousands
|
||||||||||||
Salaries
and other short-term benefits
|
424 | 1,122 | 1,066 | |||||||||
Increased
termination benefits
|
- | - | - | |||||||||
Post-employment
benefits
|
76 | 410 | - | |||||||||
Other
long-term benefits
|
- | - | - | |||||||||
Share-based
payments
|
(4,059 | )*) | 1,769 | 1,865 | ||||||||
(3,559 | ) | 3,301 | 2,931 |
*)
|
Includes
reduced expenses which result from forfeiture of shares that were
contingent on the performance of the former chairman and CEO, see also
Note 16b.
|
NOTE 25:
|
EVENTS
AFTER THE BALANCE SHEET DATE
|
a.
|
Below
is information about the Company's engagement with
Bio-Gal:
|
1.
|
Following
the Board's approval of the engagement of the Company with Bio-Gal on
December 31, 2009, the Company published on January 14, 2010 an
extraordinary private placement , to acquire 100% of the issued and
outstanding shares of Xtepo Ltd. (a private company that was established
for the purpose of this transaction, and which the Bio Gal intellectual
property will be transferred into), by allocating 133,063,688 ordinary
shares of NIS 0.1 par value each of the Company representing after
their allocation 69.44% of the Company's issued and outstanding share
capital of the Company. On March 2, 2010 the extraordinary shareholders
meeting approved the Bio-Gal transaction (see also note 1b' regarding the
contingent conditions for the transaction
closing).
|
2.
|
On
February 28, 2010, the Company and Bio-Gal have extended the term for the
closing of the Bio-Gal transaction to April 30, 2010. The rest of the
terms for the closing remained
unchanged.
|
NOTE 25:
|
EVENTS
AFTER THE BALANCE SHEET DATE
(Cont.)
|
b.
|
Below
is information about share-based payments granted after the balance sheet
date to directors in the Group, the CEO (who also acts as a director in
the Company) and to another
employee:
|
1.
|
On
January 18, 2010, the Company's Board granted 1,610,000 share options
to the Company's CEO to purchase 1,610,000 Ordinary shares of NIS 0.1
each at an exercise price equal to NIS 0.75 per share. The fair value
of all share options using the Black-Scholes model was NIS 0.2849 per
option on the grant date and a total of NIS 458,744 for all options.
33% of the options are exercisable immediately and the remaining options
are exercisable in 24 tranches every month over a two-year
period.
|
2.
|
On
January 18, 2010, the Company's Board granted 450,000 share options
to directors in the Company to purchase 450,000 Ordinary shares of
NIS 0.1 each at an exercise price equal to NIS 0.298 per share.
The fair value of all share options using the Black-Scholes model was
NIS 0.2347 per option on the grant date and a total of
NIS 105,615 for all options. 33% of the options are exercisable
immediately and the remaining options are exercisable in 24 tranches every
month over a two-year period.
|
3.
|
On
January 26, 2010, the Company's Board granted 100,000 share options
to an employee in the Company to purchase 100,000 Ordinary shares of
NIS 0.1 each at an exercise price equal to NIS 0.1 per share.
The fair value of all share options using the Black-Scholes model was
NIS 0.36 per option on the grant date and a total of NIS 36
thousand for all options. The option term is for a period of 10 years from
the grant date. The options are exercisable in 24 tranches every quarter
over a three-year period.
|
c.
|
On
March 2, 2010, the shareholders annual general meeting of the Company
approved the terms of employment of Mr. David Grossman, the Company’s CEO
and Director. However, the terms of employment shall become effective only
upon the closing of the Bio-Gal
transaction.
|
d.
|
In
March 2010, the Company formally terminated the license agreement with
DOV, regarding the Bicifadine, and all rights under this agreement were
reverted to DOV, in coordination with
DOV.
|
NOTE 26:-
|
RECONCILIATION
BETWEEN U.S. GAAP AND IFRS
|
|
a.
|
Reconciliations
of the consolidated statements of financial position as of January 1,
2007 ("opening balance sheet"), December 31, 2007 and December 31,
2008.
|
|
b.
|
Reconciliations
of the consolidated statements of comprehensive income for the years ended
December 31, 2007 and 2008.
|
|
c.
|
Reconciliations
of certain equity items as of January 1, 2007, December 31, 2007
and December 31, 2008.
|
|
d.
|
Giving
explanations of the reconciliations carried out, as above, including a
description of the exemptions elected by the Company in the transition to
IFRS, in accordance with IFRS
1.
|
NOTE
26:-
|
RECONCILIATION
BETWEEN U.S. GAAP AND IFRS (Cont.)
|
|
a.
|
The
effect of the transition on the consolidated statements of financial
position:
|
January 1, 2007
|
December 31, 2007
|
December 31, 2008
|
||||||||||||||||||||||||||||||
US
GAAP
|
Effect of
transition
to IFRS
|
IFRS
|
US
GAAP
|
Effect of
transition
to IFRS
|
IFRS
|
US
GAAP
|
Effect of
transition
to IFRS
|
IFRS
|
||||||||||||||||||||||||
Item
|
|
U.S.
dollars in thousands
|
||||||||||||||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||||||||||
CURRENT
ASSETS:
|
||||||||||||||||||||||||||||||||
Cash
and cash equivalents
|
4,400
|
-
|
4,400
|
2,377
|
-
|
2,377
|
2,924
|
-
|
2,924
|
|||||||||||||||||||||||
Short-term
deposits
|
20,845
|
-
|
20,845
|
10,600
|
-
|
10,600
|
-
|
-
|
-
|
|||||||||||||||||||||||
Employee
benefit assets
|
1
|
-
|
-
|
-
|
-
|
-
|
-
|
40
|
(28
|
)
|
12
|
|||||||||||||||||||||
Financial
assets at fair value through profit or loss
|
102
|
-
|
102
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Assets
held for sale
|
18
|
-
|
18
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Accounts
receivable
|
1,9
|
702
|
(93
|
)
|
609
|
924
|
(270
|
)
|
654
|
354
|
(49
|
)
|
305
|
|||||||||||||||||||
Income
taxes receivable
|
9
|
-
|
-
|
-
|
-
|
270
|
270
|
-
|
49
|
49
|
||||||||||||||||||||||
Deferred
taxes
|
8
|
29
|
(29
|
)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Restricted
deposits
|
-
|
-
|
-
|
-
|
-
|
-
|
71
|
-
|
71
|
|||||||||||||||||||||||
26,096
|
(122
|
)
|
25,974
|
13,901
|
-
|
13,901
|
3,389
|
(28
|
)
|
3,361
|
||||||||||||||||||||||
NON-CURRENT
ASSETS:
|
||||||||||||||||||||||||||||||||
Employee
benefit assets
|
1
|
98
|
(98
|
)
|
-
|
48
|
(32
|
)
|
16
|
-
|
-
|
-
|
||||||||||||||||||||
Restricted
deposits
|
172
|
-
|
172
|
61
|
-
|
61
|
-
|
-
|
-
|
|||||||||||||||||||||||
Fixed
assets
|
490
|
-
|
490
|
106
|
-
|
106
|
41
|
-
|
41
|
|||||||||||||||||||||||
Intangible
assets
|
4,5
|
25
|
1,783
|
1,808
|
11
|
9,283
|
9,294
|
-
|
-
|
-
|
||||||||||||||||||||||
Deferred
taxes
|
8
|
19
|
29
|
48
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||
804
|
1,714
|
2,518
|
226
|
9,251
|
9,477
|
41
|
-
|
41
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Total assets
|
26,900
|
1,592
|
28,492
|
14,127
|
9,251
|
23,378
|
3,430
|
(28
|
) |
3,402
|
NOTE
26:-
|
RECONCILIATION
BETWEEN U.S. GAAP AND IFRS (Cont.)
|
January
1, 2007
|
December
31, 2007
|
December
31, 2008
|
||||||||||||||||||||||||||||||||||||||
US
GAAP
|
Effect
of
transition
to
IFRS
|
IFRS
|
US
GAAP
|
Effect
of
transition
to
IFRS
|
IFRS
|
US
GAAP
|
Effect
of
transition
to
IFRS
|
IFRS
|
||||||||||||||||||||||||||||||||
Item
|
U.S.
dollars in thousands
|
|||||||||||||||||||||||||||||||||||||||
LIABILITIES
AND EQUITY
|
||||||||||||||||||||||||||||||||||||||||
CURRENT
LIABILITIES:
|
||||||||||||||||||||||||||||||||||||||||
Trade
payables
|
941 | - | 941 | 2,144 | - | 2,144 | 416 | - | 416 | |||||||||||||||||||||||||||||||
Other
accounts payable
|
1,9
|
2,062 | (228 | ) | 1,834 | 1,665 | - | 1,665 | 1,058 | - | 1,058 | |||||||||||||||||||||||||||||
Income
taxes payable
|
9
|
- | 143 | 143 | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
Employee
benefit liabilities
|
1
|
- | - | - | - | - | - | 523 | (76 | ) | 447 | |||||||||||||||||||||||||||||
Liability
for share appreciation rights
|
- | - | - | 1,560 | - | 1,560 | 7 | - | 7 | |||||||||||||||||||||||||||||||
Deferred
revenue
|
399 | - | 399 | - | - | - | - | - | - | |||||||||||||||||||||||||||||||
3,402 | (85 | ) | 3,317 | 5,369 | - | 5,369 | 2,004 | (76 | ) | 1,928 | ||||||||||||||||||||||||||||||
NON-CURRENT
LIABILITIES:
|
||||||||||||||||||||||||||||||||||||||||
Employee
benefit liabilities
|
1
|
340 | (117 | ) | 223 | 194 | (63 | ) | 131 | - | - | - | ||||||||||||||||||||||||||||
Deferred
revenue
|
398 | - | 398 | - | - | - | - | - | - | |||||||||||||||||||||||||||||||
738 | (117 | ) | 621 | 194 | (63 | ) | 131 | - | - | - | ||||||||||||||||||||||||||||||
Total
liabilities
|
4,140 | (202 | ) | 3,938 | 5,563 | (63 | ) | 5,500 | 2,004 | (76 | ) | 1,928 | ||||||||||||||||||||||||||||
EQUITY:
|
||||||||||||||||||||||||||||||||||||||||
Share
capital
|
1,072 | - | 1,072 | 1,444 | - | 1,444 | 1,445 | - | 1,445 | |||||||||||||||||||||||||||||||
Share
premium
|
136,611 | (5,458 | ) | 131,153 | 146,982 | (7,405 | ) | 139,577 | 149,089 | (9,303 | ) | 139,786 | ||||||||||||||||||||||||||||
Accumulated
deficit
|
(114,923 | ) | 7,252 | (107,671 | ) | (139,862 | ) | 16,719 | (123,143 | ) | (149,108 | ) | 9,351 | (139,757 | ) | |||||||||||||||||||||||||
Total
equity
|
22,760 | 1,794 | 24,554 | 8,564 | 9,314 | 17,878 | 1,426 | 48 | 1,474 | |||||||||||||||||||||||||||||||
Total
liabilities and equity
|
26,900 | 1,592 | 28,492 | 14,127 | 9,251 | 23,378 | 3,430 | (28 | ) | 3,402 |
NOTE
26:-
|
RECONCILIATION
BETWEEN U.S. GAAP AND IFRS (Cont.)
|
|
b.
|
The
effect of the transition on the consolidated statements of comprehensive
income:
|
Year ended
December 31, 2007
|
Year ended
December 31, 2008
|
|||||||||||||||||||||||||||
US
GAAP
|
Effect of
transition
to IFRS
|
IFRS
|
US
GAAP
|
Effect of
transition
to IFRS
|
IFRS
|
|||||||||||||||||||||||
Par.
|
U.S. dollars in thousands (except per share data)
|
|||||||||||||||||||||||||||
Revenues
|
5
|
907 | - | 907 | 5,940 | - | 5,940 | |||||||||||||||||||||
Cost
of revenues
|
4
|
110 | - | 110 | 58 | 1,783 | 1,841 | |||||||||||||||||||||
Gross
profit
|
797 | - | 797 | 5,882 | (1,783 | ) | 4,099 | |||||||||||||||||||||
Research
and development costs
|
1,2,4
|
19,007 | (7,507 | ) | 11,500 | 11,748 | (26 | ) | 11,722 | |||||||||||||||||||
General
and administrative expenses
|
1,2,6
|
5,557 | 2,039 | 7,596 | 5,115 | (1,178 | ) | 3,937 | ||||||||||||||||||||
Business
development expenses (income)
|
6
|
2,008 | (2,008 | ) | - | (1,102 | ) | 1,102 | - | |||||||||||||||||||
Impairment
loss of intangible asset
|
4
|
- | - | - | - | (7,500 | ) | (7,500 | ) | |||||||||||||||||||
Other
gains (losses), net
|
40 | (48 | ) | (8 | ) | 288 | - | 288 | ||||||||||||||||||||
Operating
loss
|
(25,735 | ) | 7,476 | (18,307 | ) | (9,591 | ) | (9,181 | ) | (18,772 | ) | |||||||||||||||||
Finance
income
|
3
|
- | 668 | 668 | - | 331 | 331 | |||||||||||||||||||||
Finance
cost
|
3
|
- | 30 | 30 | - | 17 | 17 | |||||||||||||||||||||
Finance
income, net
|
3
|
590 | 48 | 638 | 314 | - | 314 | |||||||||||||||||||||
Loss
before taxes on income
|
(25,145 | ) | 7,476 | (17,669 | ) | (9,277 | ) | (9,181 | ) | (18,458 | ) | |||||||||||||||||
Tax
benefit
|
(206 | ) | - | (206 | ) | (31 | ) | - | (31 | ) | ||||||||||||||||||
Comprehensive
loss for the year
|
(24,939 | ) | 7,476 | (17,463 | ) | (9,246 | ) | (9,181 | ) | (18,427 | ) | |||||||||||||||||
Basic
and diluted loss per share (in U.S. dollars) *)
|
(0.546 | ) | 0.164 | (0.382 | ) | (0.158 | ) | (0.157 | ) | (0.315 | ) |
|
*)
|
After
taking into account consolidation of shares effected on June 22,
2009, see Note 16a.
|
NOTE
26:-
|
RECONCILIATION
BETWEEN U.S. GAAP AND IFRS (Cont.)
|
|
c.
|
The
effect of the above reconciliations on the consolidated statements of
changes in equity:
|
Share
capital
|
Share
premium
|
Accumulated
deficit
|
Total
|
|||||||||||||||||
Par.
|
U.S. dollars in thousands
|
|||||||||||||||||||
Balance
at January 1, 2007, U.S. GAAP
|
1,072 | 136,611 | (114,923 | ) | 22,760 | |||||||||||||||
Share-based
payment to employees and others
|
2
|
- | (5,458 | ) | 5,458 | - | ||||||||||||||
Adjustments
of employee benefit liabilities
|
1
|
- | - | 11 | 11 | |||||||||||||||
Intangible
asset
|
4
|
- | - | 1,783 | 1,783 | |||||||||||||||
Balance
at January 1, 2007, IFRS
|
1,072 | 131,153 | (107,671 | ) | 24,554 |
Share
capital
|
Share
premium
|
Accumulated
deficit
|
Total
|
|||||||||||||||||
Par.
|
U.S.
dollars in thousands
|
|||||||||||||||||||
Balance
at December 31, 2007, U.S. GAAP
|
1,444 | 146,982 | (139,862 | ) | 8,564 | |||||||||||||||
Share-based
payment to employees and others
|
2
|
- | (7,405 | ) | 7,405 | - | ||||||||||||||
Adjustments
of employee benefit liabilities
|
1
|
- | - | 31 | 31 | |||||||||||||||
Intangible
asset
|
4
|
- | - | 9,283 | 9,283 | |||||||||||||||
Balance
at December 31, 2007, IFRS
|
1,444 | 139,577 | (123,143 | ) | 17,878 |
Share
capital
|
Share
premium
|
Accumulated
deficit
|
Total
|
|||||||||||||||||
Par.
|
U.S.
dollars in thousands
|
|||||||||||||||||||
Balance
at December 31, 2008, U.S. GAAP
|
1,445 | 149,089 | (149,108 | ) | 1,426 | |||||||||||||||
Share-based
payment to employees and others
|
2
|
- | (9,303 | ) | 9,303 | - | ||||||||||||||
Adjustments
of employee benefit liabilities
|
1
|
- | - | 48 | 48 | |||||||||||||||
Balance
at December 31, 2008, IFRS
|
1,445 | 139,786 | (139,757 | ) | 1,474 |
NOTE
26:-
|
RECONCILIATION
BETWEEN U.S. GAAP AND IFRS (Cont.)
|
d.
|
Explanations
of the transition to reporting under
IFRS:
|
1.
|
Retirement
benefit obligation:
|
NOTE
26:-
|
RECONCILIATION
BETWEEN U.S. GAAP AND IFRS (Cont.)
|
2.
|
Share-based
payments:
|
3.
|
Finance
income and costs:
|
NOTE
26:-
|
RECONCILIATION
BETWEEN U.S. GAAP AND IFRS (Cont.)
|
4.
|
Research
and development expenses:
|
5.
|
Revenue
recognition on disposal of intangible
assets:
|
NOTE
26:-
|
RECONCILIATION
BETWEEN U.S. GAAP AND IFRS (Cont.)
|
Name:
|
XTL
Biopharmaceuticlas Ltd. ("the Company")
|
|
Company
Number
|
520039470
|
|
Address:
|
3
Hasapir St., 76100, P.O.B. 370, Rehovot, Israel
|
|
(Article
25A)
|
||
Telephone:
|
+972
3 612 7011
|
|
(Article
25A)
|
||
Facsimile:
|
+972
8 930 0659
|
|
(Article
25A)
|
||
E-mail:
|
ir@xtlbio.com
|
|
Date
of Balance Sheet:
|
||
(Article
9)
|
||
Date
of Report:
|
March
24, 2010
|
|
(Article
7)
|
||
(Article
10A)
|
|
Summary
of Quarterly Statements of
Operations
|
|
Q1
|
Q2
|
Q3
|
Q4
|
||||||||||||||||
Item
|
2009
|
2009
|
2009
|
2009
|
2009
|
|||||||||||||||
U.S.$
Thousands
|
||||||||||||||||||||
Revenue
|
- | - | - | - | - | |||||||||||||||
Sales
cost
|
- | - | - | - | - | |||||||||||||||
Gross
Profit
|
- | - | - | - | - | |||||||||||||||
Research
& development
|
- | - | - | - | - | |||||||||||||||
Sales
and marketing
|
- | - | - | - | - | |||||||||||||||
Administrative
and general
|
(1,646 | ) | (1,213 | ) | 130 | 300 | (2,429 | ) | ||||||||||||
Other
profits (losses), net
|
- | - | 144 | (5 | ) | 139 | ||||||||||||||
Operating
profit (loss)
|
1,646 | 1,213 | 14 | (305 | ) | 2,568 | ||||||||||||||
Financial
income
|
12 | 1 | - | (7 | ) | 6 | ||||||||||||||
Financial
expenses
|
5 | 1 | 5 | (1 | ) | 10 | ||||||||||||||
Tax
benefit
|
- | - | - | 23 | 23 | |||||||||||||||
Profit
(loss) for the period
|
1,653 | 1,213 | 9 | (288 | ) | 2,587 |
Article
10
|
Use of Consideration from
Securities While Addressing Goals According to the
Prospectus
|
Article
11
|
List of Investments in
Subsidiaries and Related Companies as of Balance |Sheet
Date
|
Company Name
|
Share
No.
|
Type of
Shares
|
No. of
Shares
|
P.V.
each $
|
Cost
|
Equity Value
|
|||||||||||||||
U.S.$
Thousands
|
|||||||||||||||||||||
XTL
Biopharmaceuticals Inc.
(U.S.)
|
- |
Ordinary
|
1,000 | 0.01 | 19,793 | (1,728 | ) | ||||||||||||||
XTL
Development Inc.
(U.S.)
|
- |
Ordinary
|
1,000 | - | 7,500 | (17,023 | ) |
Company Name
|
Issued Share
Capital
|
Voting
|
Authority to Elect
Directors
|
|||||||||
XTL
Biopharmaceuticals Inc.
(U.S.)
|
100 | % | 100 | % | 100 | % | ||||||
XTL
Development Inc.
(U.S.)
|
100 | % | 100 | % | 100 | % |
Article 12
|
Changes in Investments
in Subsidiaries
and Related Companies During Reported
Period
|
Article 13
|
Revenues of Subsidiaries and
Related Companies and the Company's Income from Them as of balance sheet
date
|
Company Name
|
Profit(Loss)
before tax
|
Profit(Loss)
after tax
|
Divid.
|
Management
fee
|
Interest
|
|||||||||||||||
U.S.$
Thousands
|
||||||||||||||||||||
XTL
Biopharmaceuticals Inc.
(U.S.)
|
1,024 | 1,085 | - | - | - | |||||||||||||||
XTL
Development Inc.
(U.S.)
|
38 | 38 | - | - | - |
Article
14
|
List of Groups of Outstanding
Loans Extended as of balance sheet date, if Extending Loans was a Major
Company Business
|
Article
20
|
Trade on the Stock Exchange -
Securities listed for trade or where trade was discontinued during the
reported year
|
Details of recipient
|
Compensation for services ($ in thousands)
|
Other compensation
|
|||||||||||||||||||||||||||||||||||||||||||||
Name
|
Position
|
Scope of
position
|
% of
holding in
equity
|
Salary
($ in
,000)
|
Grant
|
Share-
based payment
|
Management
fees
|
Consulting
fees
|
Commission
|
Other
|
Interest
|
Lease
fees
|
Total
|
||||||||||||||||||||||||||||||||||
David Grossman1
|
Director
and CEO (as of Feb 09)
|
100 | % | 128 | - | - | - | - | - | - | - | - | 128 | ||||||||||||||||||||||||||||||||||
Ron Bentsur2
|
Former
CEO (until Apr 09)
|
100 | % | 67 | - | 156 | * | - | - | - | - | - | - | 223 | |||||||||||||||||||||||||||||||||
Ronen
Twito
|
CFO
(as of Jul 09)
|
100 | % | 58 | - | 93 | - | - | - | - | - | - | 151 | ||||||||||||||||||||||||||||||||||
Bill Kessler3
|
Former
CFO (until May 09)
|
100 | % | 73 | - | 13 | - | - | - | - | - | - | 86 | ||||||||||||||||||||||||||||||||||
Christian
Mayorga4
|
Subsidiaries
Controller (until Apr 09)
|
100 | % | 30 | - | 2 | - | 5 | - | - | - | - | 37 |
|
1.
|
Employment Agreement
with the Company's CEO – Mr. David
Grossman
|
1.1
|
Employment
Period - Mr. Grossman's employment is not limited in time
("Employment Period") and may be terminated by either party on a four
month prior written notice.
|
1.2
|
Salary
- Mr. Grossman will be currently entitled to an annual gross base
salary of NIS 336,000. Upon the successful completion of cash fund raising
in any stock exchange of $3 million and up to $10 million and thereafter
the execution of another significant transaction, Mr. Grossman's annual
salary shall be raised up to NIS 630,000, proportionally to the amount
raised. In the event that a fund raising does not occur until July 1,
2010, Mr. Grossman's annual salary shall be raised to NIS 480,000. In
addition, Mr. Grossman will be entitled to social benefits as customary
for executive officers.
|
1.3
|
Options
- In consideration of his position as the Company's CEO, Mr. Grossman
shall be entitled to an allocation of 1,610,000 non-marketable option
warrants, free of charge, exercisable into 1,610,000 ordinary shares of
the Company, p.v. NIS 0.1 each, with an exercise price of NIS 0.075 per
option. 33% of the options shall be fully vested on the grant date, and
the remaining 67% shall vest on a monthly basis, commencing from the grant
date and for a duration of two years, for as long as Mr. Grossman's
employment with the Company is not
terminated.
|
|
Based
on the B&S Model, the economic value of all the option warrants
allocated to the CEO is NIS 458,744 as of the grant date5.
|
1.4
|
Remuneration
for 2009
|
|
As
part of his employment terms, and due to the fact that Mr. Grossman has
been serving as CEO from February 11, 2009 without remuneration, he is
entitled to receive a one-time payment of NIS
430,000.
|
1.5
|
Conditional
Bonus
|
|
In
the event that within 24 months from his employment, the Company completes
a fund raising in an amount exceeding US$3 million., the Company shall pay
Mr. Grossman a one time bonus equal to 1% of the fund raising, but limited
to a maximum amount of US$150,00. In addition, Mr. Grossman will be
entitled to an annual bonus according to the Board of Directors
discretion, the formula for such bonus has not been determined
yet.
|
2.
|
Employment
Agreement with the Company's CFO - Mr. Ronen
Twito
|
|
On
July 29, 2009 Mr. Ronen Twito was appointed as the Company's Chief
Financial Officer (hereinafter - "CFO"). Accordingly, a
personal employment agreement was signed with Mr. Twito, effective as of
June 24, 2009 ("the Effective Date"), the gist of which is as
follows:
|
2.1
|
Employment
Period - Mr. Twito's employment is not limited in time ("Agreement Period") and
may be terminated by either party on a three month prior written notice
("Prior
Notice").
|
2.2
|
Salary
- Effective as of June 24, 2009, Mr. Twito is entitled to an annual
base gross salary of NIS 318,000. Upon the successful completion of cash
fund raising in any stock exchange of $3 million and up to $10 million and
thereafter execution of another significant transaction, Mr. Twito's
annual salary shall be raised up to NIS 600,000, proportionally to the
amount raised. In the event that a fund raising does not occur within the
first 12 months from the Effective Date, then Mr. Twito's annual salary
shall be raised to NIS 456,000. In addition, Mr. Twito is entitled to
social benefits as customary with executive
officers.
|
2.3
|
Options
- In consideration of his position as the Company's CFO, Mr. Twito is
entitled to an allocation of 1,400,000 non-marketable option warrants,
free of charge, exercisable into 1,400,000 ordinary shares p.v. NIS 0.1
each, subject to the adjustments specified in the Company's share option
plan. The exercise price of an option into shares is NIS
0.075. The options shall vest over a three-year period, with 33% having
vested on the grant date, and the remaining 67% shall vest on a monthly
basis commencing from the effective date, for as long as Mr. Twito serves
in this position. Based on the "B&S" Model, the economic value of all
of the options as of the grant date6 is NIS
589,106.
|
2.4
|
Conditional
Bonus
|
|
In
the event that the Company completes a fund raising of $ 3 million and up
to $ 10 million, Mr. Twito will be entitled to receive a one-time bonus
proportionally to the amount raised and up to $US
200,000. In addition, Mr. Twito will be entitled to an annual
bonus according to the Board of Directors discretion, the formula for such
bonus has not been determined yet.
|
Article
22
|
Particulars of transactions
with a controlling shareholder in which, as far as the Company knows, the
controlling shareholder has a personal interest in the approval
thereof.
|
Article
24
|
Convertible shares and
securities which, as far as the Company knows, are held on the reported
date by interested parties.
|
Article
24A
|
Authorized and Paid-Up Capital,
and Convertible Securities as of March 24,
2010
|
Corporate Directors
|
||
Article
26
|
||
(1):
|
||
Director's
name:
|
Jaron
Diament
|
|
ID
Card No.:
|
22963789
|
|
Date
of birth:
|
02/07/1967
|
|
Address
for service of process:
|
14
Abba Hillel Silver Rd.
Ramat-Gan
52506, Israel
|
|
Nationality:
|
Israeli
|
|
Membership
in Board Committee(s):
|
Audit
Committee, Nominations Committee, Compensation
Committee
|
|
External
director:
|
Yes
|
|
Accounting
and financial expertise or professional qualification
|
Yes
|
|
Employee
of the Company, subsidiary, related company or interested party in the
Company:
|
No
|
|
Start
of office as director:
|
18/03/2009
|
|
Education:
|
B.Sc.
Economics & Accounting - Tel Aviv Univ.
CPA
(Israel).
|
|
Employment
over the past 5 years:
|
CEO
of Tagor Capital Ltd.; CFO Tagor Capital Ltd.; independent financial
adviser.
|
|
Other
corporations where he serves as director:
|
External
director at Mega Or Holdings Ltd.
|
|
Relative
of an interested party:
|
No
|
|
(2):
|
||
Director's
name:
|
Amit
Yonay
|
|
ID
Card No.:
|
024907743
|
|
Date
of birth:
|
28/03/1970
|
|
Address
for service of process:
|
14
Abba Hillel Silver Rd.
Ramat-Gan
52506, Israel
|
|
Nationality:
|
Israeli
and American
|
|
Membership
in Board Committee(s):
|
Nominations
Committee
|
|
External
director:
|
No
|
|
Accounting
and financial expertise or professional qualification
|
Yes
|
|
Employee
of the Company, subsidiary, related company or of interested party in the
Company:
|
No
|
|
Start
of office as director:
|
18/03/2009
|
|
Education:
|
B.Sc.
in Electrical Engineering from Binghamton University and an MBA from Tel
Aviv University.
|
Employment
over the past 5 years:
|
Chairman
of the Board of Directors. Businessman in the real estate and capital
markets in the U.S. Chief Analyst (Israel) with ING Group.
Portfolio Manager at Meretz Investments Ltd.
|
|
Other
corporations where he serves as director:
|
None
|
|
Relative
of an interested party:
|
No
|
|
(3):
|
||
Director's
name:
|
Boaz
Shweiger
|
|
ID
Card No.:
|
032182586
|
|
Date
of birth:
|
20/05/1975
|
|
Address
for service of process:
|
14
Abba Hillel Silver Rd.
Ramat-Gan
52506, Israel
|
|
Nationality:
|
Israeli
|
|
Membership
in Board Committee(s):
|
Audit
Committee
|
|
External
director:
|
No
|
|
Accounting
and financial expertise or professional qualification
|
Yes
|
|
Employee
of the Company, subsidiary, related company or of interested party in the
Company:
|
No
|
|
Start
of office as director:
|
11/02/2009
|
|
Education:
|
LL.B,
from the College of Management, MBA from Tel- Aviv
University.
|
|
Employment
over the past 5 years:
|
Managing
Director of a private holding company.; Attorney with S. Horowitz &
Co.
Director
of Isal Amlat Investments (1993) Ltd.
|
|
Other
corporations where he serves as director:
|
None
|
|
Relative
of an interested party:
|
No
|
|
(4):
|
||
Director's
name:
|
Marc
Allouche
|
|
ID
Card No.:
|
319512562
|
|
Date
of birth:
|
23/10/1973
|
|
Address
for service of process:
|
14
Abba Hillel Silver Rd.
Ramat-Gan
52506, Israel
|
|
Nationality:
|
Israeli
and French
|
|
Membership
in Board Committee(s):
|
Compensation
Committee
|
|
External
director:
|
No
|
|
Accounting
and financial expertise or professional qualification
|
Yes
|
|
Employee
of the Company, subsidiary, related company or of interested party in the
Company:
|
No
|
|
Start
of office as director:
|
18/03/2009
|
Education:
|
BA
in Economics and Management and MBA from Dauphine University,
Paris. Chartered CPA (France).
|
|
Employment
over the past 5 years:
|
Financial
advisor and entrepreneur.
Head
of the Alternative Investments Division of Harel Insurance
Investments.
Vice
President of investments and strategic development of SGPA
Ltd.
Senior
Manager - Bedford International
|
|
Other
corporations where he serves as director:
|
None
|
|
Relative
of an interested party:
|
No
|
|
(5):
|
||
Director's
name:
|
Dafna
Cohen
|
|
ID
Card No.:
|
24812943
|
|
Date
of birth:
|
23/02/1970
|
|
Address
for service of process:
|
14
Abba Hillel Silver Rd.
Ramat-Gan
52506, Israel
|
|
Nationality:
|
Israeli
|
|
Membership
in Board Committee(s):
|
Audit
Committee, Nominations Committee, Compensation
Committee
|
|
External
director:
|
Yes
|
|
Accounting
and financial expertise or professional qualification
|
Yes
|
|
Employee
of the Company, subsidiary, related company or of interested party in the
Company:
|
No
|
|
Start
of office as director:
|
18/03/2009
|
|
Education:
|
BA
in Economics and Political Science; MBA from Hebrew University,
Jerusalem.
|
|
Employment
over the past 5 years:
|
Treasurer
and Investment Manager - Emblaze Ltd.
|
|
Other
corporations where she serves as director:
|
Director
- Formula Systems (1985) Ltd.
|
|
Relative
of an interested party:
|
No
|
(6):
|
||
Director's
name:
|
David
Grossman
|
|
ID
Card No.:
|
011202793
|
|
Date
of birth:
|
26/02/1975
|
|
Address
for service of process:
|
14
Abba Hillel Silver Rd.
Ramat-Gan
52506, Israel
|
|
Nationality:
|
Israeli
and British
|
|
Membership
in Board Committee(s):
|
None
|
|
External
director:
|
No
|
|
Accounting
and financial expertise or professional qualification
|
No
|
|
Employee
of the Company, a subsidiary, related company or of interested party in
the Company:
|
Director,
CEO of the Company and office holder in the U.S.
subsidiaries
|
Start
of office as director:
|
11/02/2009
|
|
Education:
|
BA
in business administration from the Interdisciplinary Center,
Herzliya.
|
|
Employment
over the past 5 years:
|
VP
Eurocom Investments, VP Sahar Investments,
Director
and member of Audit Committee of Gilat Satcom, Senior Analyst at Israel
Health Care Ventures (IHCV).
|
|
Other
corporations where he serves as director:
|
Bio
Light Israeli Life Science Investments Ltd.
|
|
Relative
of an interested party:
|
No
|
Article
26A
|
Senior
Office Holders in the Company (not listed under Article 26
above)
|
|
(1):
|
||
Director's
name:
|
Ronen
Twito
|
|
ID
Card No.:
|
032161655
|
|
Date
of birth:
|
20/02/1975
|
|
Start
of office as director:
|
29/07/2009
|
|
Position
with the Company, subsidiary, related company or interested
party in the Company:
|
CFO
|
|
Interested
party in the Company or relative of other senior office holder or
interested party in the Company:
|
No
|
|
Education:
|
C.P.A.
(Israel).
B.Sc.
in Business Management majoring in Accounting - the College of
Management;
B.Ed
in Accounting.
|
|
Business
experience over the past 5 years:
|
Corporate
Finance Director, Leadcom Integrated Solutions
Audit
Manager, Ernst &Young, Israel
|
|
Article
26B
|
Independent
Authorized Signatories.
There
is no single independent authorized signatory in the
Company.
|
|
Article
27
|
Company
Auditors
Kesselman
& Kesselman & Co. (PWC Israel).
Hasahar
Tower, 25 Hamered St., Tel Aviv, Israel
|
|
Article
28
|
Revision
of Memorandum or Articles of Incorporation
No
revision was made during the reported
year.
|
Article
29
|
Recommendations
& Resolutions of the Directors and the General Meeting during the
reported year.
|
2.6
|
Directors' Recommendations to
the General Meeting and Directors'Resolutions not Requiring the
General Meeting's approval.
|
2.7
|
Resolutions
not Conforming to the Directors' Recommendations Adopted at the General
Meeting.
|
2.8
|
Resolutions Adopted by an
Extraordinary General
Meeting
|
|
1.
|
On
March 18, 2009 an Extraordinary General Meeting of the Company
was held, with the following resolutions on its
agenda:
|
|
1.2
|
Approving
the election of Ms. Dafna Cohen and Mr. Jaron Diament as external
directors in the Company.
|
|
1.3
|
Approval
of the consolidation of the Company's share capital, such that every 5
ordinary shares p.v. NIS 0.02 each will be consolidated into one ordinary
share p.v. NIS 0.1 each.
|
|
1.4
|
Increasing
the Company's authorized share capital from NIS 10,000,000, divided into
100,000,000 ordinary shares of the Company p.v. NIS 0.1 each, to NIS
70,000,000, divided into 700,000,000 ordinary shares of the Company p.v.
NIS 0.1 each.
|
|
1.5
|
Revising
the ADR ratio of the Company such that instead of each ADR representing
two shares p.v. NIS 0.1 each, every ADR will represent 20 ordinary shares
p.v. NIS 0.1 each.7
|
|
2.
|
Subsequent
to the balance sheet date and prior to signing the financial report, the
following resolution was adopted by the Extraordinary General Meeting of
the Company:
|
|
2.1
|
Approval
of the Company's engagement in an agreement to acquire 100% of
the shares of Xtepo Ltd. (hereinafter - "Xtepo"), a private company
incorporated in Israel on November 9, 2009, which will hold an exclusive
license to use a patent for the Erythropoietin drug (hereinafter - "EPO"),
by way of issuing new shares of the Company in an
extraordinary private placement pursuant to the Israeli
Securities Regulations (Private Placement of Securities in a Listed
Company) (hereinafter - "the Regulations") - 2000, to the shareholders of
Xtepo, (hereinafter - "the Share Swap Agreement"), such that after
consummating the Share Swap Agreement, Xtepo's shareholders (together with
their stake in the Company prior to the share swap) will hold about 70.64%
of the Company's issued and paid-up share capital and the balance of about
29.36% will be held by the Company's shareholders (excluding Xtepo
shareholders) (see Note 1B. to the Financial
Statements).
|
Article
29A
|
The
Company's Resolutions in the Reported
Year:
|
|
At
the meeting of the Audit Committee of the Company's Board of Directors,
held on January 18, 2010, and at the Annual General Meeting held on March
2, 2010, the Management resolved to grant directors and office holders a
prior exemption in respect of damage caused to the Company as a result of
a breach of the officer holder's duty of care, subject to the provisions
of the Companies Law. The Company further resolved that letters
of indemnification would be sent to the directors and office holders.
Accordingly, a letter of indemnification was sent to the Company's
directors and office holders, the main points of which are as
follows:
|
|
a.
|
The
Company undertook to indemnify each office holder for any obligation or
expense imposed on him, in connection with an act or omission by such
person in his capacity as a director and/or office holder and/or by virtue
of his position on behalf of the Company in a subsidiary and/or related
companies as follows:
|
|
a) a monetary liability
imposed upon the director and/or office holder in favor of a third party
by a judgment, including a settlement or an arbitral award confirmed by
the court; b) reasonable litigation expenses, including attorneys’ fees,
actually incurred by the director and/or office holder or imposed upon him
by a court, in a proceeding brought against him by or on behalf of the
company or by a third party, or in a criminal action in which he or she
was acquitted, or in a criminal action which does not require criminal
intent.
|
|
b.
|
The
Company's undertaking to grant such indemnification is limited to the
types of events set forth in the annex to the letter of indemnification,
all or part of which, in the Board's opinion, may be anticipated, provided
that the maximum amount of indemnification shall not exceed the amount
mentioned in Item (c) below.
|
|
c.
|
The
maximum aggregate amount of the indemnification for all directors and
office holders in the Company shall not exceed US$4 million. (hereinafter
- "maximum indemnification amount"). Should
all indemnification amounts which the Company is required to pay, plus any
such amounts paid by that date according to the letters of
indemnification, exceed the maximum indemnification amount, the maximum
indemnification amount or the balance thereof, as the case may be, shall
be divided among the directors and office holders who are entitled to it
as above and which has not yet been paid to them by that date, such that
the amount which each director and/or office holder actually receives will
be calculated according to the ratio between the amount due to each
director and/or office holder and the aggregate amount which shall be due
to all the said office holders on that date in respect of demands for
indemnification received by the
Company.
|
|
d.
|
Pursuant
to its undertaking in the letter of indemnification, the Company may, at
the director and/or office holder's request, consider giving preliminary
amounts for reasonable litigation expenses provided that the total, plus
any amounts which the director and/or office holder receives under the
letter of indemnification, does not exceed the amounts specified in Item
(c) above.
|
Date:
|
March
24, 2010
|
Names of
|
||||
Signatories:
|
Position
|
Signature
|
||
Amit
Yonay
|
Chairman
of the Board
|
__________
|
||
David
Grossman
|
CEO
|
____________
|
Page
|
||
Auditors'
Report
|
E-3
|
|
Financial
Data - in USD:
|
||
Assets
and liabilities included in the consolidated financial statements that are
attributed to the Company itself as a parent
company
|
E-4
|
|
Income
and expenses included in the consolidated financial statements that are
attributed to the Company itself as a parent
company
|
E-5
|
|
Cash
flows included in the statements that are attributed to the Company itself
as a parent company
|
E-6-E-7
|
|
Notes
and supplementary information to the financial data
|
E-8 - E-14
|
|
Kesselman & Kesselman
Certified Public Accountants
Trade Tower, 25 Hamered Street
Tel Aviv 68125 Israel
P.O Box 452 Tel Aviv 61003
Telephone +972-3-7954555
Facsimile
+972-3-7954556
|
December 31,
|
January 1,
|
|||||||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||||||
Note
|
USD in thousands
|
|||||||||||||||||||
CURRENT ASSETS
|
||||||||||||||||||||
Cash
and cash equivalents
|
3
|
406 | 2,307 | 2,123 | 3,980 | |||||||||||||||
Short-term
deposits
|
- | - | 10,600 | 20,845 | ||||||||||||||||
Financial
assets at fair value through profit or loss
|
- | - | - | 102 | ||||||||||||||||
Available-for-sale
assets
|
- | - | - | 18 | ||||||||||||||||
Assets
in respect of employee benefits
|
- | 12 | - | - | ||||||||||||||||
Other
receivables
|
4
|
29 | 140 | 212 | 492 | |||||||||||||||
Balances
with investees
|
1,634 | 10,403 | - | - | ||||||||||||||||
Restricted
deposits
|
40 | 71 | - | - | ||||||||||||||||
2,109 | 12,933 | 12,935 | 25,437 | |||||||||||||||||
NON-CURRENT
ASSETS
|
||||||||||||||||||||
Restricted
deposits
|
- | - | 61 | 172 | ||||||||||||||||
Assets
in respect of employee benefits
|
- | - | 16 | - | ||||||||||||||||
Fixed
assets
|
20 | 32 | 49 | 297 | ||||||||||||||||
Intangible
assets
|
- | - | 1,794 | 1,808 | ||||||||||||||||
Other
investments
|
135 | - | - | - | ||||||||||||||||
155 | 32 | 1,920 | 2,277 | |||||||||||||||||
Net
sum which relates to the owners of the parent company, of the total assets
less the liabilities, which present financial information in respect of
investees in the consolidated statements of financial
position
|
- | - | 5,116 | 702 | ||||||||||||||||
TOTAL
ASSETS
|
2,264 | 12,965 | 19,971 | 28,416 | ||||||||||||||||
CURRENT
LIABILITIES
|
||||||||||||||||||||
Trade
payables
|
5
|
88 | 62 | 517 | 677 | |||||||||||||||
Other
payables
|
6
|
441 | 323 | 667 | 1,098 | |||||||||||||||
Balances
with investees
|
- | - | 778 | 1,067 | ||||||||||||||||
Deferred
income
|
- | - | - | 399 | ||||||||||||||||
529 | 385 | 1,962 | 3,241 | |||||||||||||||||
NON-CURRENT
LIABILITIES
|
||||||||||||||||||||
Accrued
severance pay
|
- | - | 131 | 223 | ||||||||||||||||
Deferred
income
|
- | - | - | 398 | ||||||||||||||||
- | - | 131 | 621 | |||||||||||||||||
Net
sum which relates to the owners of the parent company, of the total assets
less the liabilities, which present financial information in respect of
investees in the consolidated statements of financial
position
|
1,728 | 11,106 | - | - | ||||||||||||||||
TOTAL
LIABILITIES
|
2,257 | 11,491 | 2,093 | 3,862 | ||||||||||||||||
Equity
attributable to equity holders of the parent
|
||||||||||||||||||||
Ordinary
share capital
|
1,445 | 1,445 | 1,444 | 1,072 | ||||||||||||||||
Share
premium
|
139,786 | 139,786 | 139,577 | 131,153 | ||||||||||||||||
Accumulated
deficit
|
(141,224 | ) | (139,757 | ) | (123,143 | ) | (107,671 | ) | ||||||||||||
TOTAL
EQUITY
|
7 | 1,474 | 17,878 | 24,554 | ||||||||||||||||
Total
liabilities and equity attributable to equity holders of the
parent
|
2,264 | 12,965 | 19,971 | 28,416 |
Amit
Yonay
|
David
Grossman
|
Ronen
Twito
|
||
Chairman
of the Board
|
Director
and CEO
|
CFO
|
For the year ended December 31,
|
||||||||||||||
2009
|
2008
|
2007
|
||||||||||||
Note
|
USD in thousands
|
|||||||||||||
Revenues
|
- | 6,217 | 948 | |||||||||||
Cost
of the revenues
|
- | 1,841 | 110 | |||||||||||
Gross
profit
|
- | 4,376 | 838 | |||||||||||
Research
and development expenses
|
- | 1,438 | 5,818 | |||||||||||
General
and administrative expenses
|
(1,363 | ) | 5,442 | 6,025 | ||||||||||
Other
gains (losses), net
|
140 | (9 | ) | (8 | ) | |||||||||
Operating
income (loss)
|
1,503 | (2,513 | ) | (11,013 | ) | |||||||||
Financial
income
|
6 | 332 | 658 | |||||||||||
Financial
expenses
|
7 | 13 | 22 | |||||||||||
Financial
income (expenses), net
|
(1 | ) | 319 | 636 | ||||||||||
Income
(loss) before taxes on income
|
1,502 | (2,194 | ) | (10,377 | ) | |||||||||
Taxes
on income
|
8
|
- | 11 | - | ||||||||||
Equity
in earnings (losses) of investees
|
1,085 | (16,222 | ) | (7,086 | ) | |||||||||
Income
(loss) for the year attributable to equity holders of the
parent
|
2,587 | (18,427 | ) | (17,463 | ) |
For the year ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
USD in thousands
|
||||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income (loss) for the year
|
2,587 | (18,427 | ) | (17,463 | ) | |||||||
Adjustments
required to reconcile net income (loss) to net cash used in operating
activities (a)
|
(4,947 | ) | 18,994 | 8,072 | ||||||||
Net
cash flows from operating activities in respect of transactions with
investees
|
483 | (11,181 | ) | (289 | ) | |||||||
Net
cash used in operating activities
|
(1,877 | ) | (10,614 | ) | (9,680 | ) | ||||||
Cash
flows from investing activities:
|
||||||||||||
Increase
(decrease) in restricted deposit
|
31 | (10 | ) | 113 | ||||||||
Decrease
in short-term bank deposits
|
- | 10,600 | 10,245 | |||||||||
Purchase
of fixed assets
|
- | (2 | ) | (12 | ) | |||||||
Proceeds
from the disposal of fixed assets
|
- | - | 181 | |||||||||
Other
investments
|
(55 | ) | - | - | ||||||||
Net
cash flows from investments activities in respect of transactions with
investees
|
- | - | (11,500 | ) | ||||||||
Net
cash provided by (used in) investing activities
|
(24 | ) | 10,588 | (973 | ) | |||||||
Cash
flows from financing activities:
|
||||||||||||
Proceeds
from issuance of shares
|
- | - | 8,792 | |||||||||
Refund
of stamp duty paid in 2004 in respect of issuance of
shares
|
- | 177 | - | |||||||||
Exercise
of options
|
- | 33 | 4 | |||||||||
Net
cash provided by financing activities
|
- | 210 | 8,796 | |||||||||
Increase
(decrease) in cash and cash equivalents
|
(1,901 | ) | 184 | (1,857 | ) | |||||||
Balance
of cash and cash equivalents at the beginning of the year
|
2,307 | 2,123 | 3,980 | |||||||||
Balance
of cash and cash equivalents at the end of the year
|
406 | 2,307 | 2,123 |
For the year ended December 31,
|
|||||||||||||
2009
|
2008
|
2007
|
|||||||||||
USD in thousands
|
|||||||||||||
(a)
|
Adjustments required to reconcile net income
(loss) to net cash used in operating activities:
|
||||||||||||
Income
and expenses not involving cash flows:
|
|||||||||||||
Depreciation
and amortization
|
8 | 21 | 46 | ||||||||||
Loss
(gain) from disposal of fixed assets
|
4 | 9 | (40 | ) | |||||||||
Share-based
payment transactions
|
(4,180 | ) | 1,813 | 1,991 | |||||||||
Impairment
of fixed assets
|
- | - | 105 | ||||||||||
Change
in intangible assets
|
- | 1,783 | - | ||||||||||
Change
in accrued severance pay
|
12 | (127 | ) | (108 | ) | ||||||||
Equity
in losses (earnings) of investees
|
(1,085 | ) | 16,222 | 7,086 | |||||||||
Change
in liability in respect of share appreciation rights
|
119 | - | - | ||||||||||
Proceeds
from realization of securities measured at fair value through profit or
loss, net
|
- | - | 54 | ||||||||||
Change
in fair value of financial assets at fair value through profit or
loss
|
- | - | 48 | ||||||||||
Revaluation
of restricted deposit
|
- | - | (2 | ) | |||||||||
(5,122 | ) | 19,721 | 9,180 | ||||||||||
Changes
in operating asset and liability items:
|
|||||||||||||
Change
in deferred income
|
- | - | (797 | ) | |||||||||
Decrease
in other receivables
|
111 | 72 | 280 | ||||||||||
Decrease
in trade payables
|
(54 | ) | (455 | ) | (160 | ) | |||||||
Increase
(decrease) in other payables
|
118 | (344 | ) | (431 | ) | ||||||||
175 | (727 | ) | (1,108 | ) | |||||||||
(4,947 | ) | 18,994 | 8,072 |
a.
|
Definitions:
|
b.
|
Following
are the principles and method of preparation of the separate financial
information:
|
NOTE
1: -
|
METHOD
OF PREPARING THE SEPARATED FINANCIAL INFORMATION PRESENTED PURSUANT TO
REGULATION 9C OF THE SECURITIES REGULATIONS (IMMEDIATE AND PERIODIC
REPORTS) 5730 –
1970 (Cont.)
|
|
b.
|
Following
are the principles and method of preparation of the separate financial
information (Cont.):
|
1.
|
Assets
and liabilities included in the consolidated financial statements that
relate to the Company itself as a parent
company:
|
2.
|
Income
and expenses included in the consolidated financial statements that are
attributed to the Company itself as a parent
company:
|
NOTE
1: -
|
METHOD
OF PREPARING THE SEPARATED FINANCIAL INFORMATION PRESENTED PURSUANT TO
REGULATION 9C OF THE SECURITIES REGULATIONS (IMMEDIATE AND PERIODIC
REPORTS) 5730 –
1970 (Cont.)
|
b.
|
Following
are the principles and method of preparation of the separate financial
information (Cont.):
|
2.
|
Income
and expenses included in the consolidated financial statements that are
attributed to the Company itself as a parent company
(Cont.):
|
3.
|
Cash
flows included in the consolidated financial statements that are
attributed to the Company itself as a parent
company:
|
4.
|
As
for the going concern issue, see note 1d in the consolidated financial
statements
|
NOTE
2: -
|
CLASSIFICATION
OF INSTRUMENTS BY GROUPS, IN CONFORMITY WITH IAS 39, "FINANCIAL
INSTRUMENTS: - RECOGNITION AND
MEASUREMENT"
|
NOTE
3: -
|
CASH
AND CASH EQUIVALENTS INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS
ATTRIBUTED TO THE COMPANY ITSELF AS A PARENT
COMPANY
|
December 31,
|
January 1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
USD in thousands
|
||||||||||||||||
Cash
in bank and on hand
|
352 | 2,283 | 2,064 | 280 | ||||||||||||
Short-term
bank deposits
|
54 | 24 | 59 | 3,700 | ||||||||||||
406 | 2,307 | 2,123 | 3,980 |
NOTE
3: -
|
CASH
AND CASH EQUIVALENTS INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS
ATTRIBUTED TO THE COMPANY ITSELF AS A PARENT COMPANY
(Cont.)
|
December 31,
|
January
1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
USD in thousands
|
||||||||||||||||
USD
(the Company's functional currency)
|
325 | 2,280 | 2,062 | 3,748 | ||||||||||||
ILS
|
81 | 24 | 55 | 228 | ||||||||||||
GBP
|
- | 3 | 6 | 4 | ||||||||||||
406 | 2,307 | 2,123 | 3,980 |
NOTE
4: -
|
OTHER
RECEIVABLES
|
|
a.
|
Composition:
|
December 31,
|
January
1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
USD in thousands
|
||||||||||||||||
Institutions
|
8 | 2 | 21 | 8 | ||||||||||||
Income
receivables
|
- | - | 61 | 317 | ||||||||||||
Prepaid
expenses
|
21 | 138 | 111 | 142 | ||||||||||||
Other
receivables
|
- | - | 19 | 25 | ||||||||||||
29 | 140 | 212 | 492 |
|
b.
|
The
carrying amounts of other receivables constituting monetary items are
denominated in the following
currencies:
|
December 31,
|
January
1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
USD in thousands
|
||||||||||||||||
USD
|
- | - | 61 | 338 | ||||||||||||
ILS
|
8 | 2 | 40 | 12 | ||||||||||||
8 | 2 | 101 | 350 |
NOTE
5: -
|
TRADE
PAYABLES
|
|
a.
|
Composition:
|
December 31,
|
January
1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
USD in thousands
|
||||||||||||||||
Open
debts
|
66 | 62 | 517 | 677 | ||||||||||||
Checks
payable
|
22 | - | - | - | ||||||||||||
88 | 62 | 517 | 677 |
|
b.
|
The
carrying amounts of trade payables are denominated in the following
currencies:
|
December 31,
|
January
1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
USD in thousands
|
||||||||||||||||
ILS
|
36 | 16 | 143 | 135 | ||||||||||||
USD
|
52 | 46 | 374 | 542 | ||||||||||||
Total
|
88 | 62 | 517 | 677 |
NOTE
6: -
|
OTHER
PAYABLES
|
|
a.
|
Composition:
|
December 31,
|
January
1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
USD in thousands
|
||||||||||||||||
Employees
and payroll accruals
|
122 | 39 | 44 | 117 | ||||||||||||
Institutions
|
- | 8 | 23 | 33 | ||||||||||||
Expenses
payable
|
319 | 268 | 574 | 948 | ||||||||||||
Others
|
- | 8 | 26 | - | ||||||||||||
441 | 323 | 667 | 1,098 |
NOTE
6: -
|
OTHER
PAYABLES (Cont.)
|
|
b.
|
The
carrying amounts of other payables are denominated in the following
currencies:
|
December 31,
|
January
1,
|
|||||||||||||||
2009
|
2008
|
2007
|
2007
|
|||||||||||||
USD in thousands
|
||||||||||||||||
ILS
|
132 | 87 | 109 | 381 | ||||||||||||
USD
|
309 | 236 | 558 | 717 | ||||||||||||
Total
|
441 | 323 | 667 | 1,098 |
NOTE
7: -
|
DISCLOSURE
OF THE LIQUIDITY RISK DERIVING FROM FINANCIAL LIABILITIES ATTRIBUTED TO
THE COMPANY ITSELF AS A PARENT
COMPANY
|
NOTE
8: -
|
TAXES
ON INCOME
|
a.
|
Taxation
of the Company in Israel, the tax rates, encouragement laws applicable to
the Company and its tax
assessments:
|
b.
|
Carry-forward
losses and a real loss from realization of marketable securities for tax
purposes of the Company
itself:
|
NOTE
8: -
|
TAXES
ON INCOME (Cont.)
|
c.
|
Taxes
on income included in the statements of income and attributed to the
Company itself as a parent company for the periods
presented:
|
Year ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
USD in thousands
|
||||||||||||
Current
taxes:
|
||||||||||||
Current
taxes in respect of income for the reported year
|
- | 11 | - | |||||||||
Income
tax expenses
|
- | 11 | - |
NOTE
9: -
|
RELATIONS,
ENGAGEMENTS, LOANS, MATERIAL INVESTMENTS AND TRANSACTIONS BETWEEN THE
COMPANY AND ITS INVESTEES
|
a.
|
Investments
and holding rates in
investees:
|
b.
|
Transactions
with the subsidiary:
|
XTL
BIOPHARMACEUTICALS LTD.
|
||
Date:
March 26, 2010
|
By:
|
/s/ David Grossman
|
David
Grossman
|
||
Chief
Executive Officer
|