Delaware
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25-1411971
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(State or other jurisdiction of incorporation or
organization)
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(I.R.S. Employer Identification
No.)
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PAGE
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Forward
Looking Statements
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(ii
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) |
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Item
1 - Financial Statements
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Unaudited
Consolidated Balance Sheet September 30, 2007
|
1
|
|
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|
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Unaudited
Consolidated Statements of Operations for the nine and three months
ended
September 30, 2007 and 2006
|
2
|
|
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|
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Unaudited
Statements of Changes in Stockholders' Deficiency
|
3
|
|
|
|
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Unaudited
Consolidated Statements of Cash Flows for the nine and three months
ended
September 30, 2007 and 2006
|
5
|
|
|
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Notes
to Consolidated Financial Statements
|
6
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|
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Item
2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
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8
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||
Item
3 - Controls and Procedures
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11
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PART
II — OTHER INFORMATION
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Item
1 - Legal Proceedings
|
11
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|
|
|
|
Item
2 - Unregistered Sales of Equity Securities and Use of
Proceeds
|
11
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|
|
|
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Item
3 - Defaults upon Senior Securities
|
12
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|
|
|
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Item
4 - Submission of Matters to a Vote of Security Holders
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12
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|
|
|
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Item
5 - Other Information
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12
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Item
6 - Exhibits
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12
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SIGNATURES
|
13
|
SPO
MEDICAL INC.
|
AND
ITS SUBSIDIARY
|
CONDENSED
INTERIM CONSOLIDATED BALANCE SHEET
|
U.S.
dollars in thousands
|
September 30,
2007
|
||||
Unaudited
|
||||
ASSETS
|
||||
CURRENT
ASSETS
|
||||
Cash
and cash equivalents
|
$
|
1,623
|
||
Trade
receivables
|
1,010
|
|||
Other
accounts receivable and prepaid expenses
|
180
|
|||
Inventories
|
993
|
|||
3,806
|
||||
LONG-TERM
INVESTMENTS
|
||||
Deposits
|
12
|
|||
Severance
pay fund
|
283
|
|||
295
|
||||
PROPERTY
AND EQUIPMENT, NET
|
120
|
|||
Total
assets
|
$
|
4,221
|
||
LIABILITIES
AND STOCKHOLDERS' DEFICIENCY
|
||||
Current
Liabilities
|
||||
Short-term
loans
|
$
|
1,875
|
||
Trade
payables
|
484
|
|||
Employees
and payroll accruals
|
263
|
|||
Deferred
revenues
|
485
|
|||
Other
payables and accrued expenses
|
730
|
|||
3,837
|
||||
Long-Term
Liabilities
|
||||
Accrued
severance pay
|
407
|
|||
STOCKHOLDERS’
DEFICIENCY
|
||||
Stock
capital
|
209
|
|||
Receipts
on account of stock capital
|
369
|
|||
Additional
paid-in capital
|
11,347
|
|||
Accumulated
deficit
|
(11,948
|
)
|
||
(23
|
)
|
|||
Total
liabilities and stockholders’ deficiency
|
$
|
4,221
|
SPO
MEDICAL INC.
AND
ITS SUBSIDIARY
|
CONDENSED
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
|
U.S.
dollars in thousands except share
data
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
||||||||||||
Unaudited
|
Unaudited
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Revenues
|
$
|
4,174
|
$
|
2,520
|
$
|
1,408
|
$
|
929
|
|||||
Cost
of revenues
|
1,938
|
1,264
|
673
|
435
|
|||||||||
Gross
profit
|
2,236
|
1,256
|
735
|
494
|
|||||||||
Operating
expenses
|
|||||||||||||
Research
and development
|
799
|
549
|
256
|
204
|
|||||||||
Selling
and marketing
|
552
|
463
|
162
|
161
|
|||||||||
General
and administrative
|
1,030
|
716
|
438
|
197
|
|||||||||
Total
operating expenses
|
2,381
|
1,728
|
856
|
562
|
|||||||||
Operating
loss
|
145
|
472
|
121
|
68
|
|||||||||
Financial
expenses, net
|
754
|
4,044
|
315
|
2,742
|
|||||||||
Loss
for the period
|
$
|
899
|
$
|
4,516
|
$
|
436
|
$
|
2,810
|
|||||
Basic
and diluted loss per ordinary share
|
$
|
(0.04
|
)
|
$
|
(0.24
|
)
|
$
|
(0.02
|
)
|
$
|
(0.15
|
)
|
|
Weighted
average number of shares
|
|||||||||||||
outstanding
used in computation of basic
|
|||||||||||||
and
diluted loss per share
|
20,731,725
|
18,690,751
|
21,769,785
|
19,239,858
|
SPO
MEDICAL INC.
AND
ITS SUBSIDIARY
|
CONDENSED
STATEMENTS OF CHANGES IN STOCKHOLDERS
DEFICIENCY
|
U.S.
dollars in thousands
|
Stock
capital
|
Additional
paid-in
capital
|
Receipts
on
account
for stock
capital
|
Deferred
compensation
|
Accumulated
deficit
|
Total
|
||||||||||||||
Balance
as of January 1, 2005
|
$
|
600
|
$
|
2,675
|
$
|
-
|
$
|
-
|
$
|
(4,048
|
)
|
$
|
(773
|
)
|
|||||
Issuance
of ordinary shares upon conversion of loans
|
35
|
224
|
259
|
||||||||||||||||
Warrants
issued in private placements
|
949
|
949
|
|||||||||||||||||
Warrants
issued in connection with loans
|
22
|
22
|
|||||||||||||||||
Deferred
stock-based compensation related to options granted to employees
and
consultants
|
762
|
(762
|
)
|
-
|
|||||||||||||||
Amortization
of deferred Stock-based compensation related to options granted to
employees
|
187
|
187
|
|||||||||||||||||
Amortization
of deferred Stock-based compensation related to options granted to
consultant
|
348
|
348
|
|||||||||||||||||
Reverse
merger transaction and forward split of issued share
capital
|
(465
|
)
|
201
|
(264
|
)
|
||||||||||||||
Net
Loss
|
(2,038
|
)
|
(2,038
|
)
|
|||||||||||||||
Balance
as of December 31, 2005
|
170
|
4,833
|
-
|
(227
|
)
|
(6,086
|
)
|
(1,310
|
)
|
||||||||||
Deferred
compensation reclassified due to FAS 123R implementation for the
first
time
|
(227
|
)
|
227
|
-
|
|||||||||||||||
Warrants
issued in connection with loans
|
530
|
530
|
|||||||||||||||||
Amortization
of deferred stock-based compensation related to options granted to
consultants
|
893
|
893
|
|||||||||||||||||
Exercise
of warrants by external consultant
|
5
|
5
|
|||||||||||||||||
Benefit
resulting from changes to warrant terms
|
2,534
|
2,534
|
|||||||||||||||||
Exercise
of convertible notes
|
9
|
560
|
569
|
||||||||||||||||
amortization
of deferred Stock-based compensation related to options granted to
employees and directors
|
260
|
260
|
|||||||||||||||||
Issuance
of stock capital
|
9
|
571
|
580
|
||||||||||||||||
Net
Loss
|
(4,963
|
)
|
(4,963
|
)
|
|||||||||||||||
Balance
as of December 31, 2006
|
$
|
193
|
$
|
9,954
|
$
|
-
|
$
|
-
|
$
|
(11,049
|
)
|
$
|
(902
|
)
|
SPO
MEDICAL INC.
AND
ITS SUBSIDIARY
|
|||||||||||||||||||
CONDENSED
STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIENCY
|
|||||||||||||||||||
U.S.
dollars in thousands
|
Stock
capital
|
Additional
paid-in
capital
|
Receipts
on
account
for stock
capital
|
Deferred
compensation
|
Accumulated
deficit
|
Total
|
||||||||||||||
Balance
as of December 31, 2006
|
$
|
193
|
$
|
9,954
|
$
|
-
|
$
|
-
|
$
|
(11,049
|
)
|
$
|
(902
|
)
|
|||||
Exercise
of stock options
|
2
|
8
|
10
|
||||||||||||||||
Issuance
of stock capital, net
|
14
|
1,169
|
1,183
|
||||||||||||||||
Warrants
issued in connection with credit line
|
19
|
19
|
|||||||||||||||||
Receipts
on account for stock capital from conversion of loan Notes
|
|
257
|
257
|
||||||||||||||||
Benefit related to conversion of loan Notes |
112
|
112
|
|||||||||||||||||
Amortization
of deferred Stock-based compensation related to options granted to
employees, consultants and directors
|
197
|
197
|
|||||||||||||||||
Net
Loss
|
(899
|
)
|
(899
|
)
|
|||||||||||||||
Balance
as of September 30, 2007, (Unaudited)
|
$
|
209
|
$
|
11,347
|
$
|
369
|
$
|
-
|
$
|
(11,948
|
)
|
$
|
(23
|
)
|
SPO
MEDICAL INC.
AND
ITS SUBSIDIARY
|
CONDENSED
INTERIM STATEMENTS OF CASH FLOWS
|
U.S.
dollars in thousands
|
Nine
months ended
September
30,
|
Three
months ended
September
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Cash
Flows from Operating Activities
|
|||||||||||||
Loss
for the period
|
$
|
(899
|
)
|
$
|
(4,516
|
)
|
$
|
(436
|
)
|
$
|
(2,810
|
)
|
|
Adjustments
to reconcile loss to net cash used in operating
activities:
|
|||||||||||||
Depreciation
|
21
|
17
|
8
|
5
|
|||||||||
Stock-based
compensation expenses
|
286
|
952
|
147
|
50
|
|||||||||
Amortization
of loan discounts, net
|
440
|
625
|
107
|
148
|
|||||||||
Benefit
resulting from changes to warrant terms
|
42
|
2,534
|
42
|
2,534
|
|||||||||
Increase
(decrease) in accrued severance pay, net
|
2
|
(13
|
)
|
(5
|
)
|
(7
|
)
|
||||||
Increase
in accrued interest payable on loans
|
121
|
114
|
38
|
45
|
|||||||||
Changes
in assets and liabilities:
|
|||||||||||||
Increase
in trade receivables
|
(442
|
)
|
(335
|
)
|
(260
|
)
|
(83
|
)
|
|||||
Decrease
(increase) in other receivables
|
70
|
(47
|
)
|
115
|
(41
|
)
|
|||||||
Decrease
(Increase) in inventories
|
(182
|
)
|
(202
|
)
|
53
|
(160
|
)
|
||||||
Increase
(decrease) in trade payable
|
(4
|
)
|
93
|
(173
|
)
|
1
|
|||||||
Increase
in other payables and accrued
expenses
|
297
|
331
|
62
|
228
|
|||||||||
Net
cash used in operating activities
|
(248
|
)
|
(447
|
)
|
(302
|
)
|
(90
|
)
|
|||||
Cash
Flows from Investing Activities
|
|||||||||||||
Decrease
(Increase) in deposits
|
(1
|
)
|
(1
|
)
|
1
|
-
|
|||||||
Sale
of property and equipment
|
1
|
-
|
1
|
-
|
|||||||||
Purchase
of property and equipment
|
(36
|
)
|
(55
|
)
|
(12
|
)
|
(21
|
)
|
|||||
Net
cash used in investing activities
|
(36
|
)
|
(56
|
)
|
(10
|
)
|
(21
|
)
|
|||||
Cash
Flows from Financing Activities
|
|||||||||||||
Issuance
of stock capital
|
1,183
|
580
|
1,183
|
-
|
|||||||||
Exercise
of warrants by consultant
|
-
|
5
|
-
|
-
|
|||||||||
Receipt
of short-term loan
|
-
|
152
|
-
|
68
|
|||||||||
Proceeds
on grant of exercisable warrants
|
-
|
428
|
-
|
362
|
|||||||||
Exercise
of stock options
|
10
|
-
|
-
|
-
|
|||||||||
Repayment
of short-term loans
|
(122
|
)
|
(301
|
)
|
(81
|
)
|
(40
|
)
|
|||||
Net
cash provided by financing activities
|
1,071
|
864
|
1,102
|
390
|
|||||||||
Increase
in cash and cash equivalents
|
787
|
361
|
790
|
279
|
|||||||||
Cash
and cash equivalents at the beginning of the period
|
836
|
493
|
833
|
575
|
|||||||||
Cash
and cash equivalents at the end of the period
|
$
|
1,623
|
$
|
854
|
$
|
1,623
|
$
|
854
|
|||||
Non
cash transactions:
|
|||||||||||||
conversion
of convertible notes
|
$
|
-
|
$
|
569
|
$
|
-
|
$
|
569
|
|||||
Receipts
on account for stock capital from conversion of loan Notes
|
$
|
257
|
$
|
-
|
$
|
257
|
$
|
-
|
SPO
MEDICAL INC.
AND
ITS SUBSIDIARY
|
NOTES
TO FINANCIAL STATEMENT
|
U.S.
dollars in thousands
except share data
|
SPO
MEDICAL INC.
AND
ITS SUBSIDIARY
|
NOTES
TO FINANCIAL STATEMENT
|
U.S.
dollars in thousands
except share data
|
Confidential
Private Placement Subscription Agreement dated as of July 7, 2007
by and
between SPO Medical Inc. and Rig III.
|
|
10.2
|
Form
of Agreement Relating to the Conversion of outstanding Debt
Instruments
|
31.1
|
Rule
13a - 14(a) Certification of Principal Executive
Officer
|
31.2
|
Rule
13a - 14(a) Certification of Principal Financial
Officer
|
32.1
|
Section
1350 Certification of Principal Executive Officer
|
Section
1350 Certification of Principal Financial
Officer
|
|
|
|
DATE:
November 5, 2007
|
SPO
MEDICAL INC.
|
|
|
|
|
|
/s/
MICHAEL BRAUNOLD
|
|
|
MICHAEL
BRAUNOLD
PRESIDENT AND CHIEF EXECUTIVE OFFICER
|
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER
|
|
|
|
|
|
DATE:
November 5, 2007
|
||
|
|
|
BY
|
/s/
JEFF FEUER
|
|
|
JEFF
FEUER,
CHIEF
FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
|