SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
6-K
Report
of Foreign Private Issuer
Pursuant
to Rule 13a-16 or 15d-16
of
the Securities Exchange Act of 1934
For the
month of September, 2010
Commission
File Number: 000-51310
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XTL
Biopharmaceuticals Ltd.
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(Translation
of registrant’s name into
English)
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85
Medinat Hayehudim St., Herzliya
Pituach,
PO Box 4033,
Herzliya
46140, Israel.
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(Address
of principal executive
offices)
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Indicate
by check mark whether the registrant files or will file annual reports under
cover Form 20-F or Form 40-F.
Form
20-F x Form
40-F o
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(1): ____
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(7): ____
Indicate
by check mark whether by furnishing the information contained in this Form, the
registrant is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes o No x
If “Yes”
is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82- N/A
Incorporation
by Reference: This Form 6-K of XTL Biopharmaceuticals Ltd. dated November 24,
2010 is hereby incorporated by reference into the registration statements on
Form F-3 (File No. 333-141529, File No. 333-147024 and File No. 333-153055)
filed by XTL Biopharmaceuticals Ltd. with the Securities and Exchange Commission
on March 23, 2007, October 30, 2007 and August 15, 2008, respectively, and the
registration statements on Form S-8 (File No. 333-148085, File No. 333-148754
and File No. 333-154795) filed by XTL Biopharmaceuticals Ltd. with the
Securities and Exchange Commission on December 14, 2007, January 18, 2008, and
October 28, 2008, respectively.
XTL
Biopharmaceuticals Presents Its Translated From Hebrew Financial Statements as
of September 30, 2010
Attached
hereto is an English translation (from Hebrew) of our interim financial
statements and additional information as submitted on Tel Aviv Stock Exchange.
The following documents are included:
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A.
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Board
of Directors' Report on the Corporation's Business Position as of
September 30, 2010.
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B.
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Interim
consolidated Financial Statements as of September 30,
2010.
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C.
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Separate
Financial Information as of September 30, 2010, in Accordance With
Regulation 38d To The Israeli Securities Regulations (Periodic and
Immediate Reports), 1970.
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XTL
BIOPHARMACEUTICALS LTD.
DIRECTORS'
REPORT ON THE COMPANY'S STATE OF AFFAIRS
AS
OF SEPTEMBER 30, 2010
The board
of directors of XTL Biopharmaceuticals Ltd. ("the Company") hereby presents
the Company directors' report for the nine and three months ended September 30,
2010.
The data
presented in this report relate to the Company and its subsidiaries on a
consolidated basis ("the
Group"), unless explicitly stated otherwise.
The
directors' report contains, among other things, a brief description of the
Company's business, its financial position, an analysis of operating results and
their effect of events during the reported period on the data in the
consolidated financial statements of the Company as of September 30, 2010 ("the
financial statements"). The directors' report was prepared based on the
assumption that the directors' report for the year ended December 31, 2009
is also available to the reader. It should be noted that the financial
statements include a "going concern" warning as detailed in paragraph 1.3.4
below.
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1.
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PART
1 - THE BOARD OF DIRECTORS' EXPLANATIONS FOR THE STATE OF THE
CORPORATION'S BUSINESS
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1.1
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A
brief description of the Company's
business
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The
Company develops drugs, among other things, for the treatment of unmet of unmet
medical needs as well as improvement of existing medical treatment and business
ventures in the medical realm. The Company was incorporated under the Israeli
Companies Law on March 9, 1993. The Company owns 100% of the share capital of
Xtepo Ltd. ("Xtepo") as well as 100% of the share capital of an American
company, XTL Biopharmaceuticals Inc. ("XTL Inc.") which was incorporated
pursuant to the laws of the State of Delaware, U.S. in 1999.
As of the
date of the approval of these financial statements, the Company has commenced
the preparations for adopting the EPO drug Phase 2 clinical trial development
plan for treating cancer patients with multiple myeloma.
The
Company also has certain rights based on milestones in the development of
treatment for hepatitis C ("DOS") from Presidio Pharmaceuticals Inc.
("Presidio"). Presidio is a U.S. private biotech company.
The
Company's subsidiaries are as follows:
Xtepo -
an Israeli privately-held company incorporated in Israel in November 2009 by
Bio-Gal Ltd.'s shareholders for the execution of the Bio-Gal transaction (see
1.2 below) and which holds the exclusive license to use a patent of the
recombinant EPO drug for treating cancer patients with multiple
myeloma.
XTL Inc.
was engaged in drug development and business ventures in the medical realm. XTL
Inc. has a wholly-owned subsidiary, XTL Development Inc. ("XTL Development"),
which was incorporated under the laws of the State of Delaware, U.S. in 2007 and
was engaged in the development of a drug for the treatment of diabetic
neuropathic pain ("Bicifadine") until November 18, 2008, on which date the Group
announced that the endpoints of the Phase 2b clinical trial of Bicifadine had
not been achieved and therefore it was discontinuing the drug's
development.
The Group
has one operating segment.
The
Company is publicly traded on the Tel-Aviv Stock Exchange and in the regulatory
framework of the Pink Sheets in the U.S. using the Company's American Depositary
Receipts ("ADRs").
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1.2
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Significant
events during the reported period
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·
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In
furtherance to the discussed in the Directors' Report as of
December 31, 2009, on August 3, 2010, the Bio-Gal transaction
was completed according to the outline signed by the parties to the
agreement on December 31, 2009, after all the prerequisites had been met,
including, among other things, signing an agreement with the Israeli Tax
Authority regarding the tax exemption granted to the share swap
transaction pursuant to Articles 104b(f), 103c and 103t to the Income Tax
Ordinance (Revised), 1961.
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The
agreement with the Israeli Tax Authority was signed on July 15, 2010, based
on understandings reached with the Israeli Tax Authority which was approved by
the Company, Xtepo, Bio-Gal and their shareholders (see also Note 1b to the
financial statements).
Following
the closing of the transaction, the Company recognized in its accounts for the
third quarter of 2010 an intangible asset representing the exclusive license to
use a patent of recombinant EPO drug for the treatment of multiple myeloma as
well as all the research and accumulated know-how underlying the patent in a
total of approximately $ 2.3 million, based on its fair value upon the date
of initial recognition on August 3, 2010, and this based on an independent
external valuation. Further, after closing, Xtepo received an amount of
approximately $ 1.5 million in its account.
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·
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On
January 26, 2010, the Company's board of directors approved to
allocate 100,000 stock options to an employee of the Company. The stock
options are exercisable into 100,000 Ordinary shares of NIS 0.1 par
value each for an exercise increment of NIS 0.1 per stock option.
Pursuant to the guidance of IFRS 2 and using the Black & Scholes
model, the fair value of all stock options on the date when the board of
directors accepted its decision was approximately $ 10 thousand. The
option exercise term is for a maximum period of 10 years from the grant
date. The options are exercisable in equal installments at the end of
every calendar quarter from the date of allocation over a three-year
period.
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·
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On
March 2, 2010, an extraordinary meeting of the shareholders approved
the Bio-Gal transaction and the share swap according to the transaction
outline signed between the parties on December 31, 2009 and issued to
the public on January 14, 2010. As for the completion of the transaction,
see later in this chapter "significant events during the period",
below.
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·
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On
March 2, 2010, the annual general meeting of the Company's shareholders
was convened and approved the following
issues:
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1.
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Reappoint
auditors - approved to reappoint the accounting firm Kesselman &
Kesselman (PwC Israel) as the Company's auditors for 2009 and authorized
the Company's board of directors to determine their
fees.
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2.
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Reappoint
directors - approved to reappoint Messrs. Mark Allouche, Amit Yonay, Boaz
Shweiger and David Grossman as directors in the Company until the next
annual meeting, as well as to grant each of the directors 150,000
registered unquoted options (except Mr. David Grossman who also acts as
the Company's CEO) exercisable into 150,000 Ordinary shares of
NIS 0.1 par value each for an exercise increment of NIS 0.298
per stock option. Pursuant to the guidance of IFRS 2 and using the Black
& Scholes model, the fair value of all stock options on the date of
the approval of the Company's general meeting was approximately $ 36
thousand. The option exercise term is for a maximum period of 10 years
from the grant date in such a manner that 33.33% of the stock options
become exercisable immediately upon grant and the remaining 66.67% of the
stock options are exercisable in equal monthly installments from the date
of allocation over a period of 24 months. On November 22, 2010, Mr.
Shweiger ceased his directorship in the Company, 63,699 of the total
options that were granted to him as mentioned-above, were forfeited in
accordance.
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3.
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Subject
to the completion of the Bio-Gal transaction, which was closed on
August 3, 2010, the employment terms of Mr. David Grossman as the
Company's CEO and director were approved as well as the grant of 1,610,000
registered unquoted options exercisable into 1,610,000 Ordinary shares of
NIS 0.1 par value each for an exercise increment of NIS 0.075
per stock option. Pursuant to the guidance of IFRS 2 and using the Black
& Scholes model, the fair value of all stock options on the date of
the approval of the Company's general meeting was approximately $ 133
thousand. The option exercise term is for a maximum period of 10 years
from the grant date in such a manner that 33.33% of the stock options
become exercisable immediately upon grant and the remaining 66.67% of the
stock options are exercisable in equal monthly installments from the date
of the approval of the Board (January 18, 2010) over a period of 24
months.
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The
Company also committed to supplement for the difference between the par value of
the share and the exercise price under this plan on the actual date of exercise
by transferring amounts from share premium to share capital.
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·
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In
March 2010, the Company terminated the license agreement with DOV
Pharmaceutical Inc. in the issue of the Bicifadine drug and all the rights
under the agreement were reverted to DOV Pharmaceutical Inc. in
coordination with it.
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·
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On
August 27, 2010, the Company's board of directors approved the employment
agreement of Prof. Moshe Mittelman as a senior officer - Medical Director
of the development plan of the recombinant EPO for treating multiple
myeloma. It also approved to allocate 640,000 (unregistered) stock options
exercisable into 640,000 Ordinary shares of NIS 0.1 par value each
for an exercise increment of NIS 0.1 per stock option. According to
the Black & Scholes model, the fair value of all stock options on the
date when the board of directors accepted its decision was approximately
$ 50 thousand. The option exercise term is for a maximum period of 10
years from the grant date in such a manner that the stock options are
exercisable in equal monthly installments from the record date over a
period of 24 months. Upon the commencement of a Phase 2 clinical trial
(first-in-man), Prof. Moshe Mittelman will be entitled to exercise 50% of
the unvested options on that date and, in addition, upon the termination
by the Company with no cause, he will be entitled to exercise 25% of the
unvested options until the date of the said
termination.
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·
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On
September 1, 2010, the Company and Yeda Research and Development Co. Ltd.
("Yeda") entered into a purchase agreement of an exclusive right to
examine a medical technology in the field of the immune system. Under the
agreement, the Company purchased this right to examine the medical
technology for a 15-month period in consideration of $ 120 thousand
payable at the Company's sole discretion in cash or by issuance of options
with equivalent value in lieu of that payment 12 months after the date of
the closing of the agreement and up to 2% of the issued and outstanding
share capital of the Company on a fully diluted basis at the date of such
allocation. In the event of raising by a prospectus to the public of more
than $ 2 million, the Company is obligated to settle the payment in cash.
Yeda is entitled to cancel this agreement 12 months after its closing
should the Company not raise funds in a minimal amount of $ 1.5
million from any source whatsoever. Upon the Company's decision to
exercise its right to attain such medical technology, it should give
notice to Yeda and thereafter the Company and Yeda shall sign a license
agreement according to the customary terms at Yeda less 15% of the market
price for such license as customary at
Yeda.
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·
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On
September 19, 2010, the Company received from its patent attorney a
notice that the Canadian Patent Office approved the Company a patent which
grants exclusive right to use the recombinant EPO drug for treating cancer
patients with multiple myeloma until 2019 and this besides the existing
patents that are registered in the territories and states of the U.S.,
Europe, Israel, Hong-Kong and
Japan.
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This
approval is the last one in the Company's list of requests for patents in
connection with this drug.
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1.3
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The
financial position, operating results, liquidity and financing
resources
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1.3.1
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Financial
position
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Balance
sheet highlights (U.S. dollars in thousands)
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September
30, 2010
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December
31, 2009
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|||||||||||||||
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Line
item
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Amount
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%
of total balance sheet
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Amount
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%
of total balance sheet
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||||||||||||
| $ | 000 | $ | 000 | |||||||||||||
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Total
balance sheet
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3,995 | 100 | % | 715 | 100 | % | ||||||||||
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Equity
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3,108 | 78 | % | 7 | 1 | % | ||||||||||
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Current
assets
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1,396 | 35 | % | 557 | 78 | % | ||||||||||
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Restricted
deposits (long term)
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20 | 1 | % | - | 0 | % | ||||||||||
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Fixed
assets
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15 | 0 | % | 23 | 3 | % | ||||||||||
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Intangible
assets
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2,564 | 64 | % | - | 0 | % | ||||||||||
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Other
investments
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- | 0 | % | 135 | 19 | % | ||||||||||
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Short-term
liabilities
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887 | 22 | % | 708 | 99 | % | ||||||||||
Equity
The
Company's equity as of September 30, 2010 was approximately $ 3,108
thousand, an increase of approximately $ 3,101 thousand from December 31,
2009, representing 78% of total balance sheet compared to 1% of total balance
sheet as of December 31, 2009. The increase in equity was primarily a result of
issuance of 133,063,688 shares on August 3, 2010, under the Bio-Gal
transaction less the loss in that period.
Assets
Total
current assets as of September 30, 2010 was approximately $ 1,396
thousand, an increase of approximately $ 839 thousand (151%), compared to
approximately $ 557 thousand as of December 31, 2009. The change was
primarily a result of increase in the Group's balances of cash and cash
equivalents after raising $ 1.5 million under the Bio-Gal transaction less
negative cash flows from operating activities.
The
Group's balance of cash and cash equivalents as of September 30, 2010 was
approximately $ 1,377 thousand, an increase of approximately $ 965
thousand (234%), compared to cash balance of approximately $ 412 thousand
as of December 31, 2009.
Total
fixed assets as of September 30, 2010 was approximately $ 15 thousand
compared to approximately $ 23 thousand as of December 31, 2009, with no
material changes.
The
balance of intangible assets as of September 30, 2010, which was approximately
$ 2,564 thousand is mainly composed of the acquisition of the exclusive
license to use a patent of recombinant EPO drug for treating multiple myeloma
under the Bio-Gal transaction, which was closed on August 3, 2010, as
above, including costs involved in the Bio-Gal transaction of approximately
$ 187 thousand which were capitalized upon closing, compared to other
investments of approximately $ 135 thousand as of December 31, 2009,
originating from the capitalization of costs involved in the Bio-Gal
transaction.
Liabilities
The
carrying amount of trade payables as of September 30, 2010 totaled
approximately $ 200 thousand, compared to approximately $ 192 thousand
as of December 31, 2009, an increase of about 4%, with no material
changes.
The
carrying amount of accounts payable as of September 30, 2010 totaled
approximately $ 687 thousand compared to approximately $ 516 thousand
as of December 31, 2009, an increase of 33%. The growth in liability is mainly a
result of increase in accrued expenses to service providers in connection with
the Bio-Gal transaction and increase in the liability to pay to the Company's
CEO his salary for the last nine months (his employment was dependent upon the
completion of the Bio-Gal transaction which was closed on August 3,
2010).
Total
current liabilities to suppliers, service providers and other accounts payable
to September 30, 2010, totaled at approximately $ 887 thousand.
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1.3.2
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Analysis
of operating results
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Condensed
statements of income (U.S. dollars in thousands)
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Nine
months ended
September
30,
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Three
months ended September 30,
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Year
ended December 31,
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||||||||
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2010
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2009
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2010
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2009
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2009
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||||||
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$000
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||||||||||
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General
and administrative expenses
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948
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*)
(2,729)
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296
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130
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*)
(2,429)
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|||||
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Other
gains (losses), net
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-
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144
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-
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144
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139
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Operating
income (loss)
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(948)
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2,873
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(296)
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14
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2,568
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|||||
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Financial
income (expenses), net
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6
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2
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6
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(5)
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(4)
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|||||
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Income
(loss) before taxes on income
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(942)
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2,875
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(290)
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9
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2,564
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|||||
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Tax
benefit
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-
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-
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-
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-
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23
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|||||
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Net
income (loss) for the period attributable to equity holders of the
Company
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(942)
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2,875
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(290)
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9
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2,587
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*)
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During
2009, the expenses recognized were lower by approximately $ 4.1
million due to forfeiture of performance-based options of the former
chairman and former CEO of the
Company.
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It is
indicated that on August 3, 2010, the Company closed the Bio-Gal
transaction and commenced preparation to implement the development program of
Phase 2 clinical trial in the EPO drug for treating cancer patients with
multiple myeloma.
General
and administrative expenses
General
and administrative expenses in the nine and three months ended
September 30, 2010 totaled approximately $ 948 thousand and $ 296
thousand, respectively compared to negative expenses (income) of $ 2,729
thousand and expenses of $ 130 thousand in the corresponding periods last
year.
The
increase in expenses was due mainly to the following reasons:
In the
first half of 2009, the Company recorded a decrease in general and
administrative expenses following a reversal of expenses from previous years in
respect of options of the former chairman and former CEO of the Company because
the terms of the options were not met. The effect of the options which were
forfeited immediately after their departure amounted to approximately $ 4.1
million. General and administrative expenses in the nine months ended
September 30, 2009 less the effect of the reverse of expenses in respect of
options of the former chairman and former CEO of the Company totaled
approximately $ 1,372 thousand, compared to approximately $ 948
thousand in the current period of nine months, a decrease of approximately
$ 424 thousand (31%) which mainly arises from the decrease in salary
expenses following downsizing steps in the Company, decrease in office rent
expenses (termination of the U.S. office lease contract and reduction of the
Company's offices in Israel) and decrease in the Company's operating expenses as
part of the reorganization plan performed by the Company immediately after
announcing the failure to achieve the Bicifadine drug clinical trial endpoints
at the end of 2008, as described in Note 1 to the financial
statements.
Other
gains (losses), net
The
Company did not derive (incur) any other gains (losses) in the nine and three
months ended September 30, 2010. In the nine and three months ended
September 30, 2009, the Company derived other income of approximately
$ 144 thousand which originated from a compromise settlement entered into
with different suppliers regarding past debts.
Financial
income
Financial
income in the nine and three months ended September 30, 2010 totaled
approximately $ 6 thousand for both periods compared to financial income of
approximately $ 2 thousand and financial expenses of approximately $ 5
thousand in the corresponding periods of last year, respectively, with no
material changes. Financial income for 2009 and 2010 derived mainly from
interest on bank deposits less bank expenses and commissions.
Taxes
on income
The
Company had no tax expenses (income) in the nine and three months ended
September 30, 2010 nor in the corresponding periods of last
year.
Net
income (loss) for the period
Loss in
the nine and three months ended September 30, 2010 totaled approximately
$ 942 thousand and $ 290 thousand, respectively, compared to net
income of approximately $ 2,875 thousand and $ 9 thousand in the
corresponding periods of last year. The change is basically explained by reverse
of expenses (decrease of expenses) from previous years in a total of
approximately $ 4.1 million, which was recorded in the first half of 2009
in respect of the options of the former chairman and former CEO of the Company
following the non-fulfillment of the option terms and their forfeiture after
their departure, which led to offsetting current general and administrative
expenses and recording a gain (see also explanation in the item on general and
administrative expenses above). The operating results in the first nine months
of 2009 after the neutralization of the effect of the reversal of the options
amount to a loss of approximately $ 1,226 thousand compared to a loss of
approximately $ 942 thousand in the first nine months of 2010. The change
arises from reducing current expenses and general streamlining measures
expressed by downsizing in keeping with the reorganization plan effected by the
Company at the end of 2008, as explained above.
Basic and
diluted loss per share
in the nine and three months ended September 30, 2010 amounted to
$ 0.011 and $ 0.002, respectively, compared to basic and diluted earnings per share of
approximately $ 0.049 and less than $ 0.001 in the corresponding
periods of last year, respectively (see also the item on general and
administrative expenses above regarding the reversal of option expenses that
increased net income last year).
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1.3.3
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Cash
flows
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Cash
flows used in operating activities in the nine and three months ended
September 30, 2010 totaled approximately $ 453 thousand and $ 209
thousand, respectively, compared to cash flows used in operating activities of
approximately $ 2,260 thousand and $ 235 thousand in the corresponding
periods of last year, respectively. The main decrease in the negative flow is a
result of discontinuing the development activity of the Bicifadine drug (see
section 1.3.2 above), cutting down operating expenses and downsizing personnel
and facilities in keeping with the reorganization plan effected by the Company
at the end of 2008, immediately after announcing the failure to achieve the
Bicifadine drug clinical trial endpoints (see Note 1 to the financial
statements).
Cash
flows used in investing activities in the nine and three months ended
September 30, 2010 totaled approximately $ 55 thousand and $ 24
thousand, respectively, compared to cash flows used in investing activities of
approximately $ 24 thousand in the corresponding periods of last year. The
decrease in cash from investing activities in the period derived from costs in
connection with the Bio-Gal transaction less decrease in restricted deposits.
Cash used in investing activities of approximately $ 24 thousand in the
corresponding periods of last year also derived from costs in connection with
the Bio-Gal transaction less decrease in restricted deposits.
Cash
flows provided from financing activities in the nine and three months ended
September 30, 2010 totaled approximately $ 1,473 thousand in both
periods and they derived from the closing of the Bio-Gal transaction under which
the Group received that amount. The Company did not use/provide cash flows from
financing activities in the corresponding periods of last year.
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1.3.4
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Going
concern warning
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The
financial statements as of September 30, 2010 include the following going
concern warning:
”Without
qualifying our conclusion above, we draw your attention to note 1(c) of the
financial statements which discusses the Bio-Gal transaction that was completed
on August 3, under which the group received approximately 1.5 million dollars.
Upon completion of the transaction, the company commenced preparations to
implement the development program of the recombinant EPO drug for the treatment
of Multiple Myeloma cancer patients. However, since the Company has no revenues
from operations, the Company’s ability to continue operating will require
obtaining additional financial resources. Since there is no certainty regarding
such fundraising, there is substantial doubt regarding the Company's ability to
continue operating as a “going concern”. These financial statements include no
adjustments of the values of assets and liabilities and the classification
thereof, if any, that will apply if the Company is unable to continue operating
as a “going concern””.
For more
details, see Note 1c to the financial statements.
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1.3.5
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Financing
resources
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The Group
finances its activity using shareholders' equity and suppliers' credit. As of
September 30, 2010, the Group's balance of cash and cash equivalents amounted to
approximately $ 1,377 thousand and balances of long-term deposits amounted
to approximately $ 20 thousand.
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2.
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PART
2 - EXPOSURE TO MARKET RISKS AND THEIR
MANAGEMENT
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2.1
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Exposure
to market risks and their
management
|
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a.
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Responsibility for market risk
management of the Group - the officer responsible for market risk
management of the Group is Mr. Ronen Twito, the CFO of the
Company.
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b.
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Description of the market risks
the Company is exposed to – the Group is exposed to a variety of
market risks in its way of doing business, including exchange rates of the
NIS compared to the US dollar as the functional currency of the Company is
US dollar and most of the expenses of the Company are in US dollar; and
the effect of the crisis in the financial
markets.
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c.
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The Company's market risk
management policy – on November 24, 2010, the Group's Board has
adopted a resolution that the market risk management will be conducted so
that at any given time the Company's currency will be in US dollar, except
the amount required for NIS payments in the next three
months.
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d.
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The supervision on risk
management policy – the Group identifies and assesses its main
risks. Financial risk management is done by the Group in accordance to the
approved policy by the Board and management of the
Company.
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2.1.1
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Exchange
rate risk
|
The
majority of the Company's expenses are denominated in U.S. dollars against which
the Company holds its available cash in U.S. dollars or linked thereto.
Nevertheless, some of the Company's expenses are denominated in NIS, which
exposes the Company to changes in the exchange rate of the NIS in relation to
the U.S. dollar. The Company acts to minimize the currency risk by holding part
of its available cash in NIS up to the amount of NIS liabilities in accordance
with the Company's management estimate as to the expected NIS liabilities in the
three coming months.
In order
to hedge itself against economic exposure, which does not contradict the
accounting exposure, the Company holds substantially all of its current assets
in foreign currency balances or linked thereto.
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2.1.2
|
Risks
arising from changes in the economic environment and the global financial
crisis
|
The
Company's management estimates that the global financial crisis may have a
negative impact on the Group's ability to raise funds in order to continue its
activity as required (see Note 1c to the financial
statements).
The
Company's investment policy is to invest only in bank deposits and, accordingly,
it is not exposed to changes in the market prices of quoted
securities.
Currently
the Company has no sales and it does not expect sales in the foreseeable future.
Likewise, the Company's management estimates that the future market for the
products being developed by it is in relatively fixed demand level since an
incurable disease is being dealt with and, accordingly, the future exposure to
changes in the economic environment is low compared to other medical
products.
|
2.2
|
Linkage
basis report
|
Linkage
basis of balance sheet items as of September 30, 2010:
|
U.S.$
|
NIS
|
Other
currencies
|
Non-monetary
|
Total
|
||||||||||||||||
|
Assets:
|
$000
|
|||||||||||||||||||
|
Cash
and cash equivalents
|
1,170 | 204 | 3 | - | 1,377 | |||||||||||||||
|
Accounts
receivable
|
- | 13 | - | 6 | 19 | |||||||||||||||
|
Restricted
deposits (long-term)
|
- | 20 | - | - | 20 | |||||||||||||||
| 1,170 | 237 | 3 | 6 | 1,416 | ||||||||||||||||
|
Liabilities:
|
||||||||||||||||||||
|
Trade
payables
|
168 | 32 | - | - | 200 | |||||||||||||||
|
Other
accounts payable
|
391 | 296 | - | - | 687 | |||||||||||||||
| 559 | 328 | - | - | 887 | ||||||||||||||||
|
Monetary
assets less monetary liabilities
|
611 | (91 | ) | 3 | 6 | 529 | ||||||||||||||
Linkage
basis of balance sheet items as of September 30, 2009:
|
U.S.$
|
NIS
|
Other
currencies
|
Non-monetary
|
Total
|
||||||||||||||||
|
Assets:
|
$000
|
|||||||||||||||||||
|
Cash
and cash equivalents
|
609 | 29 | 2 | - | 640 | |||||||||||||||
|
Accounts
receivable
|
6 | 14 | - | - | 20 | |||||||||||||||
|
Income
taxes receivable
|
49 | - | - | - | 49 | |||||||||||||||
|
Restricted
deposits
|
40 | - | - | - | 40 | |||||||||||||||
| 704 | 43 | 2 | - | 749 | ||||||||||||||||
|
Liabilities:
|
||||||||||||||||||||
|
Trade
payables
|
176 | 45 | 7 | - | 228 | |||||||||||||||
|
Other
accounts payable
|
405 | - | - | - | 405 | |||||||||||||||
| 581 | 45 | 7 | - | 633 | ||||||||||||||||
|
Monetary
assets less monetary liabilities
|
123 | (2 | ) | (5 | ) | - | 116 | |||||||||||||
|
2.3
|
Sensitivity
analysis
|
Reporting
on the exposure to financial risks:
Sensitivity
to changes in the exchange rate of the U.S. dollar in relation to the
NIS:
|
Gain
(loss) from changes
|
Fair
value
at
|
Gain
(loss) from changes
|
||||||||||||||||||
|
+
10%
|
+
5%
|
30.9.2010
|
-
5%
|
-
10%
|
||||||||||||||||
|
Cash
and cash equivalents
|
20 | 10 | 204 | (10 | ) | (20 | ) | |||||||||||||
|
Accounts
receivable
|
1 | 1 | 13 | (1 | ) | (1 | ) | |||||||||||||
|
Restricted
deposits (long-term)
|
2 | 1 | 20 | (1 | ) | (2 | ) | |||||||||||||
|
Trade
payables
|
(3 | ) | (2 | ) | (32 | ) | 2 | 3 | ||||||||||||
|
Other
accounts payable
|
(30 | ) | (15 | ) | (296 | ) | 15 | 30 | ||||||||||||
|
Exposure
in the linkage balance sheet
|
(10 | ) | (5 | ) | (91 | ) | 5 | 10 | ||||||||||||
|
2.4
|
Effectiveness
of internal control over financial reporting and
disclosure
|
On
November 24, 2009, the Israeli Parliament's Finance Committee approved the
proposal of the Israeli Securities Authority to adopt regulations dealing with a
corporation's system of internal control over financial reporting and disclosure
that will provide reasonable assurance that the financial statements are
adequate and comply with the provisions of the law (Israeli Securities
Regulations (Periodic and Immediate Reports) (Amendment No. 3), 2009 ("the
Amendment")). The Amendment was published in the records in December
2009.
Said
provisions are effective from the periodic report as of December 31, 2010 ("the
Effective Date"). Despite the aforesaid, in accordance with the provisions of
the Amendment, in the period from the date of the publication of the Amendment
through the Effective Date, a directors' report will include details of the
company's preparation stages and progress in adopting the Amendment's provisions
("the project adoption").
Disclosure
of steps taken by the Company in preparing for the project adoption from the
date of the publication of the Amendment through the date of this
report:
|
a.
|
As
part of the preparation, Mr. Ronen Twito, the Company's CFO, was appointed
as the person in charge of the project adoption in the
Company.
|
|
b.
|
In
the context of the screening process and in order to determine the
processes and identify the material business risks in the Company, the
Company prepared an evaluation weighting both quantitative and qualitative
factors. Quantitative considerations included assigning a relative weight
to each monetary balance and movement in the financial statements as
issued by the Company in relation to total relevant balances or movements
in the financial statements. The qualitative considerations consisted,
among other things, of the complexity of the accounting process involving
the financial reporting, the complexity of the IT systems supporting the
business process, entity-wide risks, the effects of outside factors, the
Company's activity or inactivity in certain areas
etc.
|
With the
completion of the Bio-Gal transaction on August 3, 2010, the Company
conducted an additional examination of the significant items and identified five
control processes that are material to financial reporting and disclosure as
follows:
|
|
1.
|
Entity-level
controls (ELC)
|
|
|
2.
|
Financial
statement close process
|
|
|
3.
|
IT
general controls (ITGCs)
|
|
|
4.
|
Other
assets
|
|
|
5.
|
Equity
|
The steps
taken by the Company through the date of these financial
statements:
|
a.
|
Internal
control risk assessment process consisting of documenting the business
processes and existing internal controls over financial reporting and
disclosure.
|
|
b.
|
Analyzing
existing gaps in the planning of internal control over financial reporting
and disclosure.
|
The
Company is pursuing these measures in order to prepare for compliance with the
2010 milestones as defined in the regulations.
|
3.
|
PART
3 - CORPORATE GOVERNANCE ASPECTS
|
|
3.1
|
The
Company's board of directors
|
|
1.
|
In
the reported period, ten meetings of the board of directors were held and
five meetings of the audit
committee.
|
|
2.
|
The
Company did not adopt in its articles of association the provisions
regarding the service of independent
directors.
|
|
4.
|
PART
4 - THE CORPORATION'S FINANCIAL
REPORTING
|
|
4.1
|
Disclosure
of the financial statement approval
process
|
The
Company's board of directors is the agent responsible for the entity-level
controls in the Company and it is the agent that discusses the financial
statements and approves them, after members of the board of directors receive
the draft financial statements several days before the meeting. The Company's
practice is to discuss the financial statements by the audit committee and to
transfer its recommendation to the board of directors.
At the
board of directors' meeting, Mr. David Grossman, the CEO, and Mr. Ronen Twito,
the CFO, review in a detailed manner the key points of the financial statements,
including significant transactions that were or will be carried out and all the
changes that occurred in the Company during the reported period compared to
corresponding periods. In this framework, a discussion is held, attended by the
CEO, the CFO and the auditors during which the members of the board of directors
raise questions regarding to the financial statements.
At the
end of the discussion, after it was made clear that the financial statements
reflect properly the financial condition of the Company and its operating
results, the board of directors approves the financial statements.
On
November 24, 2010, the Company's board of directors approved the Company's
financial statements as of September 30, 2010 in the presence of the following
directors: Mr. Amit Yonay (chairman of the board of directors), Ms. Dafna Cohen,
Mr. Jaron Diament, Mr. Marc Allouche and Mr. David Grossman after the audit
committee has reviewed the financial statements and submitted its
recommendations to the board of directors' plenum prior to said
meeting.
*) Mr.
Amit Yonay attended the meeting by a telephone conversation.
|
November
24, 2010
|
||||
|
Date
|
Amit
Yonay, Chairman of the Board
|
David
Grossman, CEO and Director
|
||
XTL
BIOPHARMACEUTICALS LTD.
INTERIM
FINANCIAL INFORMATION
AS
OF SEPTEMBER 30, 2010
UNAUDITED
INDEX
|
Page
|
|
|
Auditors'
Review Report
|
2
|
|
Condensed
Consolidated Financial Statements - in U.S. dollars:
|
|
|
Statements
of Financial Position
|
3
|
|
Statements
of Comprehensive Income (Loss)
|
4
|
|
Statements
of Changes in Equity (Equity deficit)
|
5-6
|
|
Statements
of Cash Flows
|
7
- 8
|
|
Notes
to the Condensed Consolidated Financial Statements
|
9
- 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
|
Auditors' review report to
the shareholders of XTL Biopharmaceuticals Ltd.
Introduction
We have
reviewed the accompanying financial information of XTL Biopharmaceuticals
Ltd and its subsidiaries (hereafter - the group), which includes
the condensed consolidated statement of financial position as of
September 30, 2010 and the related condensed consolidated statement of
comprehensive income (loss), changes in shareholders' equity, and cash flows for
the nine and three-month periods then ended. The Board of Directors and
management are responsible for the preparation and fair presentation of this
interim financial information in accordance with IAS 34 "Interim Financial
Reporting", and they are also responsible to draw up interim financial
information based on Chapter D to the Israel Securities Regulations (Periodic
and Immediate Reports), 1970. Our responsibility is to express a conclusion on
this interim financial information based on our review.
Scope
of Review
We
conducted our review in accordance with Israeli Review Standard No. 1, issued by
the Israeli Institute of Certified Public Accountants, "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity." A
review of interim financial information consists of making inquiries, primarily
of persons responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially less in scope
than an audit conducted in accordance with auditing standards generally accepted
in Israel and consequently does not enable us to obtain
assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on
our review, nothing has come to our attention that causes us to believe that the
accompanying interim financial information is not prepared, in all material
respects, in accordance with IAS 34.
In
addition to what is said in the previous paragraph, based on our review, nothing
has come to our attention that causes us to believe that the accompanying
interim financial information does not comply, in all material respects, with
the disclosure provisions of Chapter D of the Israel Securities Regulations
(Periodic and Immediate Reports), 1970.
Without
qualifying our conclusion above, we draw your attention to note 1(c) of the
financial statements which discusses the Bio-Gal transaction that was completed
on August 3, under which the group received approximately 1.5 million dollars.
Upon completion of the transaction, the company commenced preparations to
implement the development program of the recombinant EPO drug for the treatment
of Multiple Myeloma cancer patients. However, since the Company has no revenues
from operations, the Company’s ability to continue operating will require
obtaining additional financial resources. Since there is no certainty regarding
such fundraising, there is substantial doubt regarding the Company's ability to
continue operating as a “going concern”. These financial statements include no
adjustments of the values of assets and liabilities and the classification
thereof, if any, that will apply if the Company is unable to continue operating
as a “going concern”.
|
Tel-Aviv,
Israel
|
Kesselman
& Kesselman
|
|
November
24, 2010
|
Certified
Public Accountants (Isr.)
|
|
A
member of PricewaterhouseCoopers
|
|
|
International
Limited
|
- 2
-
XTL
BIOPHARMACEUTICALS LTD.
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
September 30,
|
December 31,
|
|||||||||||
|
2010
|
2009
|
2009
|
||||||||||
|
Unaudited
|
Audited
|
|||||||||||
|
U.S. dollars in thousands
|
||||||||||||
|
ASSETS
|
||||||||||||
|
CURRENT
ASSETS:
|
||||||||||||
|
Cash
and cash equivalents
|
1,377 | 640 | 412 | |||||||||
|
Accounts
receivable
|
19 | 20 | 33 | |||||||||
|
Income
taxes receivable
|
- | 49 | 72 | |||||||||
|
Restricted
deposits
|
- | 40 | 40 | |||||||||
| 1,396 | 749 | 557 | ||||||||||
|
NON-CURRENT
ASSETS:
|
||||||||||||
|
Restricted
deposits
|
20 | - | - | |||||||||
|
Fixed
assets, net
|
15 | 29 | 23 | |||||||||
|
Intangible
assets
|
2,564 | - | - | |||||||||
|
Other
investments
|
- | 95 | 135 | |||||||||
| 2,599 | 124 | 158 | ||||||||||
|
Total
assets
|
3,995 | 873 | 715 | |||||||||
|
LIABILITIES
AND EQUITY
|
||||||||||||
|
CURRENT
LIABILITIES:
|
||||||||||||
|
Trade
payables
|
200 | 228 | 192 | |||||||||
|
Other
accounts payable
|
687 | 405 | 516 | |||||||||
| 887 | 633 | 708 | ||||||||||
|
EQUITY
ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY:
|
||||||||||||
|
Ordinary
share capital
|
4,990 | 1,445 | 1,445 | |||||||||
|
Share
premium
|
139,979 | 139,786 | 139,786 | |||||||||
|
Accumulated
deficit
|
(141,861 | ) | (140,991 | ) | (141,224 | ) | ||||||
|
Total
equity
|
3,108 | 240 | 7 | |||||||||
|
Total
liabilities and equity
|
3,995 | 873 | 715 | |||||||||
|
Amit
Yonay
|
David
Grossman
|
Ronen
Twito
|
||
|
Chairman
of the Board
|
Director
and CEO
|
CFO
|
Date of
approval of the financial statements by the Company's Board: November 24,
2010.
The
accompanying notes are an integral part of the condensed financial
statements.
- 3
-
XTL
BIOPHARMACEUTICALS LTD.
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
Year ended
December
31,
|
||||||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
2009
|
||||||||||||||||
|
Unaudited
|
Unaudited
|
Audited
|
||||||||||||||||||
|
U.S. dollars in thousands
(except per share data)
|
||||||||||||||||||||
|
General
and administrative expenses (income)
|
948 | *(2,729 | ) | 296 | 130 | *(2,429 | ) | |||||||||||||
|
Other
gains (losses), net
|
- | 144 | - | 144 | 139 | |||||||||||||||
|
Operating
income (loss)
|
(948 | ) | 2,873 | (296 | ) | 14 | 2,568 | |||||||||||||
|
Finance
income
|
11 | 10 | 9 | - | 6 | |||||||||||||||
|
Finance
costs
|
5 | 8 | 3 | 5 | 10 | |||||||||||||||
|
Finance
income (costs), net
|
6 | 2 | 6 | (5 | ) | (4 | ) | |||||||||||||
|
Income
(loss) before taxes on income
|
(942 | ) | 2,875 | (290 | ) | 9 | 2,564 | |||||||||||||
|
Tax
benefit
|
- | - | - | - | 23 | |||||||||||||||
|
Net
income (loss) for the period
|
(942 | ) | 2,875 | (290 | ) | 9 | 2,587 | |||||||||||||
|
Basic
and diluted earnings (loss) per share
(in U.S. dollars)
|
(0.011 | ) | 0.049 | (0.002 | ) | ** | ) | 0.044 | ||||||||||||
* During
2009 a deduction of general and administrative expenses in amount of
approximately $4.1 million was recorded due to forfeiture of performance-related
options that were granted to the former chairman of the board and the former
CEO.
** Less
than USD 0.001
The
accompanying notes are an integral part of the condensed financial
statements.
- 4
-
XTL
BIOPHARMACEUTICALS LTD.
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIENCY)
|
Nine months ended September 30, 2010
|
||||||||||||||||
|
Attributable to equity holders of the Company
|
||||||||||||||||
|
Share
capital
|
Share
premium
|
Accumulated
deficit
|
Total
|
|||||||||||||
|
U.S. dollars in thousands
|
||||||||||||||||
|
Balance
at January 1, 2010 (audited)
|
1,445 | 139,786 | (141,224 | ) | 7 | |||||||||||
|
Loss
for the period
|
- | - | (942 | ) | (942 | ) | ||||||||||
|
Issue
of ordinary shares (see note 1b)
|
3,545 | 193 | - | 3,738 | ||||||||||||
|
Share-based
payment to employees and others
|
- | - | 305 | 305 | ||||||||||||
|
Balance
at September 30, 2010 (unaudited)
|
4,990 | 139,979 | (141,861 | ) | 3,108 | |||||||||||
|
Nine months ended September 30, 2009
|
||||||||||||||||
|
Attributable to equity holders of the Company
|
||||||||||||||||
|
Share
capital
|
Share
premium
|
Accumulated
deficit
|
Total
|
|||||||||||||
|
U.S. dollars in thousands
|
||||||||||||||||
|
Balance
at January 1, 2009 (audited)
|
1,445 | 139,786 | (139,757 | ) | 1,474 | |||||||||||
|
Income
for the period
|
- | - | 2,875 | 2,875 | ||||||||||||
|
Share-based
payment to employees and others
|
- | - | (4,235 | ) | (4,235 | ) | ||||||||||
|
Transfer
to equity for liability for share appreciation rights
|
126 | 126 | ||||||||||||||
|
Balance
at June 30, 2009 (unaudited)
|
1,445 | 139,786 | (140,991 | ) | 240 | |||||||||||
|
Three months ended September 30, 2010
|
||||||||||||||||
|
Attributable to equity holders of the Company
|
||||||||||||||||
|
Share
capital
|
Share
premium
|
Accumulated
deficit
|
Total
|
|||||||||||||
|
U.S. dollars in thousands
|
||||||||||||||||
|
Balance
at July 1, 2010 (unaudited)
|
1,445 | 139,786 | (141,721 | ) | (490 | ) | ||||||||||
|
Loss
for the period
|
- | - | (290 | ) | (290 | ) | ||||||||||
|
Issue
of ordinary shares (see note 1b)
|
3,545 | 193 | - | 3,738 | ||||||||||||
|
Share-based
payment to employees and others
|
- | - | 150 | 150 | ||||||||||||
|
Balance
at September 30, 2010 (unaudited)
|
4,990 | 139,979 | (141,861 | ) | 3,108 | |||||||||||
The
accompanying notes are an integral part of the condensed financial
statements.
- 5
-
XTL
BIOPHARMACEUTICALS LTD.
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIENCY)
|
Three months ended September 30, 2009
|
||||||||||||||||
|
Attributable to equity holders of the Company
|
||||||||||||||||
|
Share
capital
|
Share
premium
|
Accumulated
deficit
|
Total
|
|||||||||||||
|
U.S. dollars in thousands
|
||||||||||||||||
|
Balance
at July 1, 2009 (unaudited)
|
1,445 | 139,786 | (141,170 | ) | 61 | |||||||||||
|
Income
for the period
|
- | - | 9 | 9 | ||||||||||||
|
Share-based
payment to employees and others
|
- | - | 44 | 44 | ||||||||||||
|
Transfer
to equity for liability for share appreciation rights
|
- | - | 126 | 126 | ||||||||||||
|
Balance
at September 30, 2009 (unaudited)
|
1,445 | 139,786 | (140,991 | ) | 240 | |||||||||||
|
Year ended December 31, 2009
|
||||||||||||||||
|
Attributable to equity holders of the Company
|
||||||||||||||||
|
Share
capital
|
Share
premium
|
Accumulated
deficit
|
Total
|
|||||||||||||
|
U.S. dollars in thousands
|
||||||||||||||||
|
Balance
at January 1, 2009 (audited)
|
1,445 | 139,786 | (139,757 | ) | 1,474 | |||||||||||
|
Income
for the year
|
- | - | 2,587 | 2,587 | ||||||||||||
|
Share-based
payment to employees and others
|
- | - | (4,180 | ) | (4,180 | ) | ||||||||||
|
Transfer
to equity for liability for share appreciation rights
|
- | - | 126 | 126 | ||||||||||||
|
Balance
at December 31, 2009 (audited)
|
1,445 | 139,786 | (141,224 | ) | 7 | |||||||||||
The
accompanying notes are an integral part of the condensed financial
statements.
- 6
-
XTL
BIOPHARMACEUTICALS LTD.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
Year ended
December
31,
|
||||||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
2009
|
||||||||||||||||
|
Unaudited
|
Unaudited
|
Audited
|
||||||||||||||||||
|
U.S. dollars in thousands
|
||||||||||||||||||||
|
Cash flows from operating
activities:
|
||||||||||||||||||||
|
Net
income (loss) for the period
|
(942 | ) | 2,875 | (290 | ) | 9 | 2,587 | |||||||||||||
|
Adjustments
to reconcile net income (loss) to net cash used in operating
activities (a)
|
489 | (5,135 | ) | 81 | (244 | ) | (5,075 | ) | ||||||||||||
|
Net
cash used in operating activities
|
(453 | ) | (2,260 | ) | (209 | ) | (235 | ) | (2,488 | ) | ||||||||||
|
Cash flows from investing
activities:
|
||||||||||||||||||||
|
Decrease
in restricted deposit
|
20 | 31 | 20 | 31 | 31 | |||||||||||||||
|
Other
investments
|
(75 | ) | (55 | ) | (44 | ) | (55 | ) | (55 | ) | ||||||||||
|
Net
cash used in investing activities
|
(55 | ) | (24 | ) | (24 | ) | (24 | ) | (24 | ) | ||||||||||
|
Cash flows from financing
activities:
|
||||||||||||||||||||
|
Issue
of ordinary shares in Bio-Gal transaction (see note 1b)
|
1,473 | - | 1,473 | - | - | |||||||||||||||
|
Net
cash provided by financing activity
|
1,473 | - | 1,473 | - | - | |||||||||||||||
|
Increase
(decrease) in cash and cash equivalents
|
965 | (2,284 | ) | 1,240 | (259 | ) | (2,512 | ) | ||||||||||||
|
Cash
and cash equivalents at the beginning of the period
|
412 | 2,924 | 137 | 899 | 2,924 | |||||||||||||||
|
Cash
and cash equivalents at the end of the period
|
1,377 | 640 | 1,377 | 640 | 412 | |||||||||||||||
The
accompanying notes are an integral part of the condensed financial
statements.
- 7
-
XTL
BIOPHARMACEUTICALS LTD.
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
Year ended
December
31,
|
|||||||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
2009
|
|||||||||||||||||
|
Unaudited
|
Unaudited
|
Audited
|
|||||||||||||||||||
|
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
|
16 | 12 | 10 | 3 | 13 | ||||||||||||||||
|
Loss
on sale of fixed assets
|
- | - | - | - | 5 | ||||||||||||||||
|
Amounts
recognized for options granted to employees and others
|
185 | (4,235 | ) | 30 | 44 | (4,180 | ) | ||||||||||||||
|
Change
in employee benefit liabilities, net
|
- | (435 | ) | - | - | (435 | ) | ||||||||||||||
|
Change
in liability for share appreciation rights
|
- | 119 | - | (52 | ) | 119 | |||||||||||||||
| 201 | (4,539 | ) | 40 | (5 | ) | (4,478 | ) | ||||||||||||||
|
Changes
in operating asset and liability items:
|
|||||||||||||||||||||
|
Decrease
in accounts receivable and income taxes receivable
|
86 | 285 | - | 114 | 249 | ||||||||||||||||
|
Increase
(decrease) in other accounts payable
|
194 | (653 | ) | (2 | ) | (372 | ) | (542 | ) | ||||||||||||
|
Increase
(decrease) in trade payables
|
8 | (228 | ) | 43 | 19 | (304 | ) | ||||||||||||||
| 288 | (596 | ) | 41 | (239 | ) | (597 | ) | ||||||||||||||
| 489 | (5,135 | ) | 81 | (244 | ) | (5,075 | ) | ||||||||||||||
|
(b)
|
Additional information on cash flows from
operating activities:
|
||||||||||||||||||||
|
Interest
received
|
1 | 3 | 1 | - | 3 | ||||||||||||||||
|
Refund
of taxes on income
|
72 | - | - | - | - | ||||||||||||||||
|
(c)
|
Non-cash transactions:
|
||||||||||||||||||||
|
|
1.
|
Investment
in deferred charges in connection with the Bio-Gal transaction (see
Note 1b) for the nine and three months ended September 30, 2010
in the amount of approximately $ 44 thousand and $ 8 thousand,
respectively, were recorded in "other investments" and "intangible
assets".
|
|
|
2.
|
Purchase
of an intangible asset with total fair value of $ 2,265 thousand as
consideration for the issuance of the Company's shares under the Bio-Gal
transaction (see Note 1b).
|
|
|
3.
|
Purchase
of an exclusive right to examine a medical technology in the field of the
immune system for a 15-month period with value of $ 120 thousand
against equity (see Note 4d).
|
The
accompanying notes are an integral part of the condensed financial
statements.
- 8
-
XTL
BIOPHARMACEUTICALS LTD.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2010 (UNAUDITED)
|
NOTE
1:-
|
GENERAL
|
|
|
a.
|
A
general description of the Company and its
activity:
|
XTL
Biopharmaceuticals Ltd. ("the Company") is engaged in the development of
therapeutics, among others, for the treatment of unmet medical needs,
improvement of existing therapies and business entrepreneurship in the medical
realm. The Company was incorporated under the Israeli Companies Ordinance on
March 9, 1993. The Company owns 100% of Xtepo Ltd. ("Xtepo") and owns 100%
of a U.S. company, XTL Biopharmaceuticals Inc. ("XTL Inc."), which was
incorporated in 1999 under the laws of the State of Delaware.
As of the
date of the approval of these financial statements, the Company has commenced
the preparations for adopting the recombinant EPO drug Phase 2 clinical trial
development plan designed to treat cancer patients with multiple myeloma (see
also b).
Further,
the Company has certain milestone rights in the development of treatment for
hepatitis C ("DOS") from Presidio Pharmaceuticals Inc. ("Presidio"), a U.S.
privately-held biotechnology company.
The
following are the Company's subsidiaries:
Xtepo -
an Israeli privately-held company incorporated in November 2009 by Bio-Gal
Ltd.'s shareholders for the execution of the Bio-Gal transaction and which holds
the exclusive license to use a patent of recombinant EPO drug for multiple
myeloma (see Note 1b).
XTL Inc.
was engaged in development of therapeutics and business development in the
medical realm. XTL Inc. has a wholly-owned subsidiary, XTL Development Inc.
("XTL Development"), which was incorporated in 2007 under the laws of the State
of Delaware and was engaged in development of therapeutics for the treatment of
diabetic neuropathic pain ("Bicifadine"). On November 18, 2008, the Group
announced that the Phase 2b clinical trial of Bicifadine failed to meet its
endpoints and, as a result, the Group ceased its development.
The
Company and the subsidiaries ("the Group") operate in one business
segment.
The
Company is a public company traded on the Tel-Aviv Stock Exchange and our
American Depositary Receipts (ADRs) are quoted on the Pink Sheets under the
symbol "XTLBY.PK", with each ADR representing two NIS 0.1 par value ordinary
shares.
|
|
b.
|
On
December 31, 2009, the Company amended the original Bio-Gal agreement
from March 18, 2009 to acquire 100% of the shares of Xtepo whom the
license for the use of the patent for recombinant EPO drug for Multiple
Myeloma will be assigned and who will have an amount of approximately
$ 1.5 million in its account, 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. In addition, an amendment to the agreement determines that
Bio-Gal will not be entitled to the additional payment of $ 10
million, as determined in the original transaction
outline.
|
- 9
-
XTL
BIOPHARMACEUTICALS LTD.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2010 (UNAUDITED)
|
NOTE
1:-
|
GENERAL
(Cont.)
|
The
Company is also obligated to pay 1% royalties on net sales of the product and
$ 350 thousand upon the successful completion of a Phase 2 clinical trial.
The payment conditions for the above amount are at the earlier of occurrence of
either events:
|
|
(i)
|
Raising
at least $ 2 million by the Company or Xtepo after a successful
completion of a Phase 2 clinical
trial
|
|
|
(ii)
|
Six
months after the completion of a Phase 2 clinical
trial.
|
On August
3, 2010, the Bio-Gal transaction was completed according to the outline signed
by the parties to the agreement on December 31, 2009, after all the
prerequisites had been met, including, among other things, the signing of an
agreement with the Israeli Tax Authority regarding the tax exemption granted to
the share swap transaction pursuant to Articles 104b(f), 103c and 103t to the
Income Tax Ordinance (Revised), 1961.
The
agreement with the Tax Authority was signed on July 15, 2010, based on
understandings reached with the Tax Authority which was approved by the Company,
Xtepo, Bio-Gal and their shareholders. Below is a summary of the principal
conditions for the transfer of the asset and the share swap:
|
|
1.
|
The
balance of the Company's business losses and capital losses for tax
purposes was reduced to approximately NIS 80 million (approximately
$ 22 million) and approximately NIS 0.7 million (approximately
$ 0.19 million), respectively. This item is not to derogate from the
Tax Assessing Officer's authority to establish that the balance of losses
is actually lower than the abovementioned
amounts.
|
|
|
2.
|
Any
losses incurred to the Company prior to the share swap, after their
reduction as discussed in paragraph 1 above, will not be offset against
any income originating from Xtepo (the transferred company) or against a
capital gain from the sale of shares of
Xtepo.
|
|
|
3.
|
Xtepo
shareholders will not be allowed to sell their shares in the Company for a
period of two years from the end of the year of completion of the
transaction ("the capping period"), subject to any changes in
legislation.
|
|
|
4.
|
The
Company and Xtepo both undertake to maintain their main economic activity
as it was prior to the transaction during the capping
period.
|
|
|
5.
|
The
Company will not be permitted to sell its holdings in Xtepo for the
duration of the capping period.
|
Following
the closing of the transaction, the Company recognized in its accounts an
intangible asset representing the exclusive license to use a patent of
recombinant EPO drug for multiple myeloma as well as all the research and
accumulated know-how underlying the patent in a total of approximately
$ 2,265 thousand (excluding transaction costs), based on its fair value as
of the date of closing of the transaction and this based on an independent
external valuation.
- 10
-
XTL
BIOPHARMACEUTICALS LTD.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2010 (UNAUDITED)
|
NOTE
1:-
|
GENERAL
(Cont.)
|
According
to IAS 38, this asset is not systematically amortized and the Company reviews
the asset for impairment once a year or more frequently if indicators show that
the asset may be impaired.
In
addition, following the completion of the Bio-Gal transaction, the Company’s
management estimates that the Company's carryforward tax losses of the
subsidiaries in the US, approximately $ 14 million as of September 30, 2010, may
be limited or decreased according to local legislation dealing with change of
control in a company. As mentioned in the financial statements of 2009, the
Company does not recognize deferred taxes incurred by losses for tax purposes as
there is no certainty of their utilization in the foreseeable
future.
|
|
c.
|
As
of September 30, 2010, the Company had accumulated losses in the amount of
approximately $ 142 million. On August 3, 2010, the Company
closed the Bio-Gal transaction under which the Group received
approximately $ 1.5 million. As stated in a above, the Company
commenced preparation to implement the development program of Phase 2
clinical trial in the recombinant EPO drug for the treatment of multiple
myeloma cancer patients. However, since currently the Company has no
revenues from operations, the Company's ability to continue to operate is
dependent upon obtaining additional financing sources in order to
implement the development plan in its entirety and to continue its
operations. Since such fund raising are subject to uncertainty, there are
substantial doubts about the Company's ability to continue to operate as a
"going concern". The financial statements do not include any adjustments
to the carrying amounts and classifications of assets and liabilities that
would result if the Company was unable to continue as a "going
concern".
|
|
NOTE
2:-
|
BASIS
OF PRESENTATION OF THE CONDENSED FINANCIAL
STATEMENTS
|
The
condensed consolidated financial information of the Group as of September 30,
2010 and for the interim periods of six and three months then ended ("interim
financial information") has been prepared in accordance with IAS 34, "Interim
Financial Reporting" ("IAS 34") and includes the additional disclosure
requirements of the Securities Regulations (Periodic and Immediate Reports),
1970. This interim financial information should be read in conjunction with the
annual financial statements for 2009 and the accompanying notes which have been
prepared in accordance with International Financial Reporting Standards ("IFRS")
and included the additional disclosure requirements of the Israeli Securities
Regulations (Annual Financial Statements), 2010.
The
interim financial information is reviewed but not audited.
|
NOTE
3:-
|
SIGNIFICANT
ACCOUNTING POLICIES
|
The
significant accounting policies and methods of computation adopted in the
preparation of the interim financial information are consistent with those
followed in the preparation of the annual financial statements for 2009, subject
to the following:
- 11
-
XTL
BIOPHARMACEUTICALS LTD.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2010 (UNAUDITED)
|
NOTE
3:-
|
SIGNIFICANT
ACCOUNTING POLICIES (Cont.)
|
|
|
a.
|
The
following standards, amendments to standards or interpretations are
mandatory for the accounting periods beginning January 1,
2010:
|
|
|
1.
|
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 Group will apply IAS 27R
prospectively to all transactions with non-controlling interests from
January 1, 2010. The application of IAS 27R has no impact on the
financial statements for the nine and three months periods ended September
30, 2010.
|
|
|
2.
|
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 Group will
apply IFRS 3R prospectively to all business combinations from
January 1, 2010. The application of IFRS 3R has no impact on the
financial statements for the nine and three months periods ended September
30, 2010.
|
|
|
b.
|
The
new standards and amendments to existing standards that are not yet
effective and have not been early adopted by the Group have been disclosed
in the annual financial statements of the Group for 2009. In addition to
the standards and amendments mentioned above, in May 2010, the Annual IFRS
Improvements for 2010 were issued, consisting of additional amendments to
existing IFRSs, most of which will become compulsory for annual periods
commencing on January 1, 2011 or thereafter. Further, in October 2010, an
amendment to IFRS 7, "Financial Instruments: Disclosure" was published
which enhances the derecognition disclosure requirements for transfer
transactions of financial assets ("the amendment to IFRS 7") and which is
effective for annual reporting periods beginning on or after July 1, 2011.
Also an amendment to IFRS 9, "Financial Instruments" ("the amendment to
IFRS 9") which is effective for annual reporting periods beginning on or
after January 1, 2013 was published. The Group did not choose to early
adopt the amendments to the improvements and the amendment to IFRS 7 and
IFRS 9.
|
- 12
-
XTL
BIOPHARMACEUTICALS LTD.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2010 (UNAUDITED)
|
NOTE
4:-
|
EVENTS
DURING THE PERIOD
|
|
|
a.
|
In
furtherance to the approval of the Company's engagement with Bio-Gal by
the Company's Board on December 31, 2009, on January 14, 2010,
the Company published an extraordinary private placement report for the
acquisition of 100% of the shares of Xtepo Ltd. In addition, the Company
convened an extraordinary general meeting of shareholders which approved
said engagement on March 2, 2010 (see also Note 1b regarding
completion of the transaction).
|
|
|
b.
|
Below
is information about share-based payments granted during the period to
directors, senior officers and to another
employee:
|
|
|
1.
|
On
January 18, 2010, the Company's Board approved to grant 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.
On March 2, 2010, the annual meeting of shareholders approved to
grant options to the directors. Pursuant to the guidance of IFRS 2, the
fair value of all share options at the date of the annual meeting of
shareholders, using the Black-Scholes model was approximately $ 36
thousand. The option term is for a period of 10 years from the grant date.
33% of the options are exercisable immediately and the remaining options
are exercisable in 24 tranches every month over a two-year period. After
the balance sheet date, on November 22, 2010, one of the directors ceased
his directorship and therefore 63,699 options that were granted to him
were forfeited.
|
|
|
2.
|
On
January 18, 2010, the Company's Board approved to grant 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 0.075 per
share. On March 2, 2010, the annual meeting of shareholders approved
to grant options to the Company's CEO with approval of his employment
terms, subject to the closing of Bio-Gal transaction (see 1b). Pursuant to
the guidance of IFRS 2, the fair value of all share options at the date of
the annual meeting of shareholders, using the Black-Scholes model was
approximately $ 133 thousand. The option term is for a period of 10
years from the grant date. 33% of the options are exercisable immediately
and the remaining options are exercisable in 24 tranches every month over
a two-year period from the grant
date.
|
|
|
3.
|
On
January 26, 2010, the Company's Board approved to grant 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.
Pursuant to the guidance of IFRS 2, the fair value of all share options
using the Black-Scholes model was approximately $ 10 thousand. The
option term is for a period of 10 years from the grant date. The options
are exercisable in twelve equal quarterly tranches over a three-year
period from the grant date.
|
- 13
-
XTL
BIOPHARMACEUTICALS LTD.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2010 (UNAUDITED)
|
NOTE
4:-
|
EVENTS
DURING THE PERIOD (Cont.)
|
|
|
4.
|
On
August 27, 2010, the Company's board of directors approved the employment
agreement of Professor Moshe Mittelman as a senior officer - Medical
Director of the development plan of the recombinant EPO drug to treat
multiple myeloma. It also approved the allocation of 640,000
(unregistered) stock options that are exercisable into 640,000 Ordinary
shares of NIS 0.1 par value each for an exercise price of
NIS 0.1 per stock option. The fair value of all the stock options
based on the Black & Scholes model on the date of the board's decision
is approximately $ 50 thousand. The options may be exercised during a
maximum period of ten years from the date of their allocation in equal
monthly installments from the record date for a period of 24 months. Upon
the commencement of a Phase 2 clinical trial (first-in-man), 50% of the
unvested options (until the date of the commencement of the said trial) of
Prof. Mittelman shall vest immediately. In addition, upon the termination
by the Company (with no cause) of the Prof. Mittelman's employment
agreement, 25% of Prof. Mittelman's unvested options (until the date of
the said termination) shall vest
immediately.
|
The value
of each option in the above grants is based on the following inputs: expected
dividend of 0%, expected standard deviation of 160%-175%, risk-free interest
rate of 3.5%-4.3% and expected life of five to six years.
Based on
the track elected by the Company and on said rules, the Company is not entitled
to claim as tax deductible expenses amounts carried to employee benefits,
including amounts carried as salary bonuses in the Company's accounts, in
respect of options granted to employees in the context of the plan, excluding
any yield-based bonus component determined on the allocation date.
|
|
c.
|
In
March 2010, the Company terminated the license agreement with DOV
Pharmaceutical Inc., the patent holders of the Bicifadine drug, and all
the rights under the agreement were reverted to DOV Pharmaceutical Inc. in
coordination with it.
|
|
|
d.
|
On
September 1, 2010, the Company and Yeda Research and Development Co. Ltd.
("Yeda") entered into a purchase agreement of an exclusive right to
examine a medical technology in the field of the immune system. Under the
agreement, the Company purchased this right to examine the medical
technology for a 15-month period in consideration of $ 120 thousand
payable at the Company's sole discretion in cash or by issuance of options
with equivalent value in lieu of that payment 12 months after the date of
the closing of the agreement and in any case limited to 2% of the issued
and outstanding share capital of the Company on a fully diluted basis at
the date of such allocation. In the event of raising by way of a
prospectus to the public for more than $ 2 million, the Company is
obligated to settle the payment in cash. Yeda is entitled to cancel this
agreement 12 months after its closing should the Company not raise funds
in a minimal amount of $ 1.5 million from any source whatsoever. Upon
the Company's decision to exercise its right to attain such medical
technology, it should give notice to Yeda and thereafter the Company and
Yeda shall sign a license agreement according to the customary terms at
Yeda less 15% of the market price for such license as customary at
Yeda.
|
|
|
e.
|
On
September 19, 2010, the Company received from its patent attorney a
notice that the Canadian Patent Office approved the Company a patent which
grants exclusive right to use the recombinant EPO drug for the treatment
of multiple myeloma cancer patients until 2019 and this besides the
existing patents that are registered in the territories and states of the
U.S., Europe, Israel, Hong-Kong and
Japan.
|
- - - - -
- - - - - - - - - - -
- 14
-
XTL
BIOPHARMACEUTICALS LTD.
INTERIM
FINANCIAL REPORTING
AS
OF SEPTEMBER 30, 2010
SEPARATE
FINANCIAL INFORMATION IN ACCORDANCE WITH REGULATION 38D TO THE
ISRAELI
SECURITIES REGULATIONS (PERIODIC AND IMMEDIATE REPORTS), 1970
UNAUDITED
INDEX
|
Page
|
|
|
Auditors'
Review Report
|
2
|
|
Financial
Data - in U.S. dollars:
|
|
|
Assets
and Liabilities Included in the Interim Consolidated Financial Information
Attributable to the Company as a Parent
|
3
|
|
Revenues
and Expenditures Included in the Interim Consolidated Financial
Information Attributable to the Company as a Parent
|
4
|
|
Cash
Flows Included in the Interim Consolidated Financial Information
Attributable to the Company as a Parent
|
5
- 6
|
|
Selected
Notes and Additional Information to the Separate Interim Financial
Information
|
7
- 8
|
-
- - - - - - - - - - -
|
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
|
Special
review report of the separate financial information according to
regulation
38d’
of the Israeli Securities Regulations (Periodic and Immediate Reports) -
1970
Introduction
We have
reviewed the accompanying interim separate financial information set forth in
regulation 38d' of the Israeli Securities Regulations (Periodic and Immediate
Reports) - 1970 of XTL Biopharmaceuticals Ltd (hereafter - the "Company"), as of
September 30, 2010 and for the nine and three-month periods then ended. The
Board of Directors and management are responsible for the preparation and fair
presentation of this interim financial information. Our responsibility is to
express a conclusion on this interim financial information based on our
review.
Scope
of Review
We
conducted our review in accordance with Israeli Review Standard No. 1, issued by
the Israeli Institute of Certified Public Accountants, "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity." A
review of interim financial information consists of making inquiries, primarily
of persons responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially less in scope
than an audit conducted in accordance with auditing standards generally accepted
in Israel and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Conclusion
Based on
our review, nothing has come to our attention that causes us to believe that the
accompanying interim separate financial information is not prepared, in all
material respects, in accordance with regulation 38d' of the Israeli Securities
Regulations (Periodic and Immediate Reports) - 1970.
Without
qualifying our conclusion above, we draw your attention to note 1(c) of the
consolidated financial statements which discusses the Bio-Gal transaction that
was completed on August 3, under which the group received approximately 1.5
million dollars. Upon completion of the transaction, the company commenced
preparations to implement the development program of the recombinant EPO drug
for the treatment of Multiple Myeloma cancer patients. However, since the
Company has no revenues from operations, the Company’s ability to continue
operating will require obtaining additional financial resources. Since there is
no certainty regarding such fundraising, there is substantial doubt regarding
the Company's ability to continue operating as a “going concern”. These
financial statements include no adjustments of the values of assets and
liabilities and the classification thereof, if any, that will apply if the
Company is unable to continue operating as a “going concern”.
|
Tel-Aviv,
Israel
|
Kesselman
& Kesselman
|
|
November
24, 2010
|
Certified
Public Accountants (Isr.)
|
|
A
member of PricewaterhouseCoopers
|
|
|
International
Limited
|
- 2
-
XTL
BIOPHARMACEUTICALS LTD.
Separate
Interim Financial Information in accordance with Regulation 38D
to
the Israeli Securities Regulations (Periodic and Immediate Reports),
1970
Assets
and Liabilities Included in the Interim Consolidated Financial
Information
Attributable
to the Company as a Parent
|
September 30,
|
December
31,
|
|||||||||||
|
2010
|
2009
|
2009
|
||||||||||
|
Unaudited
|
Audited
|
|||||||||||
|
U.S. dollars in thousands
|
||||||||||||
|
ASSETS
|
||||||||||||
|
CURRENT
ASSETS:
|
||||||||||||
|
Cash
and cash equivalents
|
167 | 635 | 406 | |||||||||
|
Accounts
receivable
|
19 | 14 | 29 | |||||||||
|
Receivables
for investees
|
87 | 1,634 | 1,634 | |||||||||
|
Restricted
deposits
|
- | 40 | 40 | |||||||||
| 273 | 2,323 | 2,109 | ||||||||||
|
NON-CURRENT
ASSETS:
|
||||||||||||
|
Restricted
deposits
|
20 | - | - | |||||||||
|
Fixed
assets, net
|
15 | 24 | 20 | |||||||||
|
Intangible
assets
|
112 | - | - | |||||||||
|
Other
investments
|
- | 95 | 135 | |||||||||
| 147 | 119 | 155 | ||||||||||
|
Net
amount attributable to the owners of the parent of total assets less total
liabilities reflecting in the consolidated financial statements financial
information about investees
|
3,716 | (1,761 | ) | (1,728 | ) | |||||||
|
Total
assets attributable to the Company as a parent
|
4,136 | 681 | 536 | |||||||||
|
LIABILITIES
AND EQUITY
|
||||||||||||
|
CURRENT
LIABILITIES:
|
||||||||||||
|
Trade
payables
|
133 | 93 | 88 | |||||||||
|
Payables
for investees
|
255 | - | - | |||||||||
|
Other
accounts payable
|
640 | 348 | 441 | |||||||||
| 1,028 | 441 | 529 | ||||||||||
|
EQUITY
ATTRIBUTABLE OWNERS OF THE COMPANY:
|
||||||||||||
|
Ordinary
share capital
|
4,990 | 1,445 | 1,445 | |||||||||
|
Share
premium
|
139,979 | 139,786 | 139,786 | |||||||||
|
Accumulated
deficit
|
(141,861 | ) | (140,991 | ) | (141,224 | ) | ||||||
|
Total
equity
|
3,108 | 240 | 7 | |||||||||
|
Total
liabilities and equity attributable to the Company as a
parent
|
4,136 | 681 | 536 | |||||||||
|
Amit Yonay
|
David Grossman
|
Ronen Twito
|
||
|
Chairman of the Board
|
Director and CEO
|
CFO
|
Date of
approval of the financial statements by the Company's Board: November 24,
2010.
The
accompanying notes and additional information are an integral part of the
condensed financial data.
- 3
-
XTL
BIOPHARMACEUTICALS LTD.
Separate
Interim Financial Information in accordance with Regulation 38D
to
the Israeli Securities Regulations (Periodic and Immediate Reports),
1970
Revenues
and Expenditures Included in the Interim Consolidated Financial
Information
Attributable
to the Company as a Parent
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
Year ended
December
31,
|
||||||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
2009
|
||||||||||||||||
|
Unaudited
|
Unaudited
|
Audited
|
||||||||||||||||||
|
U.S. dollars in thousands
(except per share data)
|
||||||||||||||||||||
|
General
and administrative expenses
|
933 | (1,675 | ) | 251 | 212 | (1,363 | ) | |||||||||||||
|
Other
gains, net
|
- | 144 | - | 144 | 140 | |||||||||||||||
|
Operating
income (loss)
|
(933 | ) | 1,819 | (251 | ) | (68 | ) | 1,503 | ||||||||||||
|
Finance
income
|
2 | 10 | - | (4 | ) | 6 | ||||||||||||||
|
Finance
costs
|
5 | 6 | 3 | 2 | 7 | |||||||||||||||
|
Finance
income (costs), net
|
(3 | ) | 4 | (3 | ) | (6 | ) | (1 | ) | |||||||||||
|
Income
(loss) after finance income (costs)
|
(936 | ) | 1,823 | (254 | ) | (74 | ) | 1,502 | ||||||||||||
|
Net
amount attributable to equity holders of the parent of total revenues less
total expenditures that reflect operating results of investees in the
condensed consolidated statements
|
(6 | ) | 1,052 | (36 | ) | 83 | 1,085 | |||||||||||||
|
Income (loss) for the period attributable to the
Company as a parent
|
(942 | ) | 2,875 | (290 | ) | 9 | 2,587 | |||||||||||||
The
accompanying notes and additional information are an integral part of the
condensed financial data.
- 4
-
XTL
BIOPHARMACEUTICALS LTD.
Separate
Interim Financial Information in accordance with Regulation 38D
to
the Israeli Securities Regulations (Periodic and Immediate Reports),
1970
Cash
Flows Included in the Interim Consolidated Financial Information
Attributable
to the Company as a Parent
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
Year ended
December
31,
|
||||||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
2009
|
||||||||||||||||
|
Unaudited
|
Unaudited
|
Audited
|
||||||||||||||||||
|
U.S. dollars in thousands
|
||||||||||||||||||||
|
Cash flows from operating
activities:
|
||||||||||||||||||||
|
Net
income (loss) for the period attributable to equity holders of the
Company
|
(942 | ) | 2,875 | (290 | ) | 9 | 2,587 | |||||||||||||
|
Adjustments
to reconcile net income (loss) to net cash used in operating
activities (a)
|
481 | (5,006 | ) | 112 | (218 | ) | (4,947 | ) | ||||||||||||
|
Net
cash flows from operating activities relating to transactions with
investees
|
277 | 483 | 235 | - | 483 | |||||||||||||||
|
Net
cash generated from (used in) operating activities
|
(184 | ) | (1,648 | ) | 57 | (209 | ) | (1,877 | ) | |||||||||||
|
Cash flows from investing
activities:
|
||||||||||||||||||||
|
Decrease
in restricted deposit
|
20 | 31 | 20 | 31 | 31 | |||||||||||||||
|
Other
investments
|
(75 | ) | (55 | ) | (44 | ) | (55 | ) | (55 | ) | ||||||||||
|
Net
cash used in investing activities
|
(55 | ) | (24 | ) | (24 | ) | (24 | ) | (24 | ) | ||||||||||
|
Increase
(decrease) in cash and cash equivalents
|
(239 | ) | (1,672 | ) | 33 | (233 | ) | (1,901 | ) | |||||||||||
|
Cash
and cash equivalents at the beginning of the period
|
406 | 2,307 | 134 | 868 | 2,307 | |||||||||||||||
|
Cash
and cash equivalents at the end of the period
|
167 | 635 | 167 | 635 | 406 | |||||||||||||||
The
accompanying notes and additional information are an integral part of the
condensed financial data.
- 5
-
XTL
BIOPHARMACEUTICALS LTD.
Separate
Interim Financial Information in accordance with Regulation 38D
to
the Israeli Securities Regulations (Periodic and Immediate Reports),
1970
Cash
Flows Included in the Interim Consolidated Financial Information
Attributable
to the Company as a Parent
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
Year ended
December
31,
|
|||||||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
2009
|
|||||||||||||||||
|
Unaudited
|
Unaudited
|
Audited
|
|||||||||||||||||||
|
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
|
13 | 8 | 9 | 2 | 8 | ||||||||||||||||
|
Loss
on sale of fixed assets
|
- | - | - | - | 4 | ||||||||||||||||
|
Share-based
payment transactions
|
185 | (4,235 | ) | 30 | 44 | (4,180 | ) | ||||||||||||||
|
Change
in employee benefit liabilities, net
|
- | 12 | - | - | 12 | ||||||||||||||||
|
Net
amount attributable to equity holders of the parent of total revenues less
total expenditures that reflect operating results of investees in the
condensed consolidated statements
|
6 | (1,052 | ) | 36 | (83 | ) | (1,085 | ) | |||||||||||||
|
Change
in liability for share appreciation rights
|
- | 119 | - | (52 | ) | 119 | |||||||||||||||
| 204 | (5,148 | ) | 75 | (89 | ) | (5,122 | ) | ||||||||||||||
|
Changes
in operating asset and liability items:
|
|||||||||||||||||||||
|
Decrease
in accounts receivable and income taxes receivable
|
10 | 126 | - | 45 | 111 | ||||||||||||||||
|
Increase
(decrease) in trade payables
|
45 | (9 | ) | 43 | (65 | ) | (54 | ) | |||||||||||||
|
Increase
(decrease) in other accounts payable
|
222 | 25 | (6 | ) | (109 | ) | 118 | ||||||||||||||
| 277 | 142 | 37 | (129 | ) | 175 | ||||||||||||||||
| 481 | (5,006 | ) | 112 | (218 | ) | (4,947 | ) | ||||||||||||||
|
(b)
|
Non-cash transactions:
|
||||||||||||||||||||
|
|
1.
|
Investment
in deferred charges in connection with the Bio-Gal transaction (see
Note 1b) for the nine and three months ended September 30, 2010
in the amount of approximately $ 44 thousand and $ 8 thousand,
respectively, were recorded in "other investments" and "intangible
assets".
|
|
|
2.
|
Purchase
of Xtepo Ltd. ("Xtepo") with value of $ 3,738 thousand as
consideration for the issuance of the Company's shares under the Bio-Gal
transaction (see Note 1b to the consolidated financial
statements).
|
|
|
3.
|
Purchase
of an exclusive right to examine a medical technology in the field of the
immune system for a 15-month period with value of $ 120 thousand
against equity (see Note 4d to the consolidated financial
statements).
|
The
accompanying notes and additional information are an integral part of the
condensed financial data.
- 6
-
XTL
BIOPHARMACEUTICALS LTD.
Selected
Notes and Additional Information to the Separate Interim Financial Information
in accordance
with
Regulation 38D to the Israeli Securities Regulations (Periodic and Immediate
Reports), 1970
|
NOTE
1:-
|
BASIS
OF PREPARATION OF THE SEPARATE FINANCIAL INFORMATION IN ACCORDANCE WITH
REGULATION 38D TO THE ISRAELI SECURITIES REGULATIONS (PERIODIC AND
IMMEDIATE REPORTS), 1970
|
|
|
a.
|
Definitions:
|
|
The
Company
|
-
|
XTL
Biopharmaceuticals Ltd.
|
|
The
separate financial information
|
-
|
separate
interim financial information in accordance with Regulation 38D to the
Israeli Securities Regulations (Periodic and Immediate Reports),
1970
|
Unless
stated otherwise, all the terms used within the scope of the separate financial
information are as these terms are defined in the condensed consolidated
financial information of the Company as of September 30, 2010 and for the nine
and three months periods then ended ("condensed interim consolidated
statements").
|
Investee
|
-
|
subsidiary
|
|
Intragroup
transaction
|
-
|
transactions
of the Company and subsidiaries
|
|
Intragroup
balances, income and expenses and cash flows
|
-
|
balances,
income and expenses and cash flows, as the case may be, resulting from
intragroup transactions that have been eliminated in the consolidated
statements
|
|
b.
|
The
principles of preparation of the separate financial
information:
|
The
separate interim financial information has been prepared in accordance with
Regulation 38D to the Israeli Securities Regulations (Periodic and Immediate
Reports), 1970 ("Periodic Report Regulations"). Accordingly, financial data of
the interim consolidated statements of the corporation as stated in Regulation
9C to the Periodic Report Regulations ("Regulation 9C"), with the obligated
changes, will be disclosed in the interim statement along with the auditors'
review report.
Accordingly,
the separate interim financial information comprises financial data of the
condensed consolidated financial information of the Company as of September 30,
2010 and for the nine and three months periods then ended ("condensed interim
consolidated financial information") attributable to the Company as the
parent.
This
separate interim financial information should be read in conjunction with the
separate financial information of the Company as of December 31, 2009 and for
each of the three years in the period then ended ("the Company's separate
financial information for 2009") and the accompanying notes which have been
prepared in accordance with Regulation 9C to the Periodic Report Regulations, as
well as particulars specified in the Tenth Addendum to these Regulations and
subject to the clarifications specified in the "Clarification Regarding the
Separate Financial Statement of the Corporation" which was published on the
website of the Israeli Securities Authority on January 24, 2010 and which
address how to apply said Regulation and Addendum ("IAS Staff
Clarification").
The
significant accounting policies and methods of computation adopted in the
preparation of the separate interim financial information are consistent with
those followed in the preparation of the Company's separate financial
information for 2009 as elaborated therein.
- 7
-
XTL
BIOPHARMACEUTICALS LTD.
Selected
Notes and Additional Information to the Separate Interim Financial Information
in accordance
with
Regulation 38D to the Israeli Securities Regulations (Periodic and Immediate
Reports), 1970
|
NOTE
1:-
|
BASIS
OF PREPARATION OF THE SEPARATE INTERIM FINANCIAL INFORMATION IN ACCORDANCE
WITH REGULATION 38D TO THE ISRAELI SECURITIES REGULATIONS (PERIODIC AND
IMMEDIATE REPORTS), 1970
|
The
interim financial information is reviewed but not audited.
The
separate interim financial information does not constitute financial statements,
including separate financial statements, which are prepared and presented in
accordance with International Financial Reporting Standards ("IFRS") in general,
and the provisions of International Accounting Standard 27, "Consolidated and
Separate Financial Statements" in particular and it does not constitute interim
financial information prepared in accordance with IAS 34, "Interim Financial
Reporting".
Nonetheless,
the accounting policy specified in Note 3 to the condensed interim consolidated
financial information regarding the significant accounting policies and the
method by which the financial data were classified in the condensed interim
consolidated financial statements were applied for the purpose of presenting the
separate interim financial information and this with the obligated changes
resulting from the above regarding the significant accounting policies and
methods of computation adopted in the preparation of the separate interim
financial information.
|
c.
|
As
for the issue of going concern - see Note 1c to the condensed
consolidated financial information for interim period as of
September 30, 2010.
|
|
NOTE
2:-
|
RELATIONS,
ENGAGEMENTS, LOANS, MATERIAL INVESTMENTS AND TRANSACTIONS BETWEEN THE
COMPANY AND ITS INVESTEES
|
In May
2010, the Company invested, by way of contribution to capital, a current
intercompany balance in amount of approximately $ 1.5 million with XTL Inc., a
fully owned subsidiary.
- - - - -
- - - - - - - - - - -
- 8
-