Unassociated Document
As
filed with the Securities and Exchange Commission on November 20,
2007
Registration
No. 333-147024
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
F-3
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
XTL
BIOPHARMACEUTICALS LTD.
(Exact
Name of Registrant as Specified in Its Charter)
Israel
|
98-0487467
|
(State
or other jurisdiction
of
incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
711
Executive Blvd., Suite Q
Valley
Cottage, NY 10989
(845)
267-0707
(Address
and Telephone Number of Registrant’s Principal Executive Offices)
Ron
Bentsur
Chief
Executive Officer
XTL
Biopharmaceuticals Ltd.
711
Executive Blvd., Suite Q
Valley
Cottage, NY 10989
Telephone:
(845)
267-0707
(Name,
address, and telephone number, of agent for service)
Copies
to:
Mark
F. McElreath
Alston
& Bird LLP
90
Park Avenue
New
York, New York 10016
Telephone:
(212) 210-9595
Facsimile:
(212) 210-9444
|
Ronen
Kantor
Kantor
& Co.
Oz
House
14
Abba Hilel Silver (12th
Floor)
Ramat
Gan 52506, Israel
(011)
+ 972 3 613 3371
|
Approximate
date of commencement of proposed sale to the public: From
time
to time after the effective date of this registration statement.
If
the
only securities being registered on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box.
o
If
any of
the securities being registered on this Form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. x
If
this
Form is filed to register additional securities for an offering pursuant to
Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. o
If
this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
If
this
Form is a registration statement pursuant to General Instruction I.C. or a
post-effective amendment thereto that shall become effective upon filing with
the SEC pursuant to Rule 462(e) under the Securities Act, check the following
box. o
If
this
Form is a post-effective amendment to a registration statement filed pursuant
to
General Instruction I.C. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check
the following box. o
CALCULATION
OF REGISTRATION FEE(1)
Title
of each class of
securities
to be registered
|
|
Amount
to be registered
|
|
Proposed
maximum aggregate price per unit
|
|
Proposed
maximum aggregate offering price
|
|
Amount
of registration fee
|
|
Ordinary
Shares, par value NIS 0.02
|
|
|
72,485,020
|
|
$
|
0.178
|
(2)
|
$
|
12,902,334
|
|
$
|
397
|
(3)
|
(1)
|
A
separate registration statement on Form F-6 (Registration No. 333-12696)
has been filed for the registration of American Depositary Shares
evidenced by American Depositary Receipts issuable upon the deposit
of
ordinary shares registered hereby. Each American Depositary Share
represents ten ordinary shares.
|
(2) |
Estimated
solely for the purposes of computing the amount of the registration
fee
pursuant to Rule 457(c) under the Securities Act based on the average
of
the high and low prices of the American Depositary Shares, divided
by the
ten ordinary shares represented thereby, reported on the Nasdaq Global
Market on October 29, 2007.
|
The
registrant hereby amends this Registration Statement on such date or dates
as
may be necessary to delay its effective date until the registrant shall file
a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
PROSPECTUS
7,248,502 American
Depositary Shares
Each
Representing Ten Ordinary Shares
XTL
Biopharmaceuticals Ltd.
This
prospectus relates to the offer and sale by the Selling Shareholders named
herein of up to an aggregate of 72,485,020
ordinary
shares in the form of American Depositary Shares, or ADSs, which we refer to
herein as “Shares,” of XTL Biopharmaceuticals Ltd., an Israeli public limited
liability company. Each ADS represents ten ordinary shares. The ADSs are
evidenced by American Depositary Receipts, or ADRs. The Selling Shareholders
may, from time to time, sell any or all of their ADRs on the Nasdaq Global
Market or in private transactions using any of the methods described in the
section of this prospectus entitled “Plan of Distribution.” We will not receive
any proceeds from the sale of ADRs by the Selling Shareholders. We issued these
ordinary shares to the Selling Shareholders in a private transaction.
ADRs
representing our ordinary shares are quoted on the Nasdaq Global Market under
the symbol “XTLB.” Our ordinary shares are traded on the Tel Aviv Stock Exchange
under the symbol “XTL.” On November 19, 2007, the closing price of our ADRs on
the Nasdaq Global Market was $1.97 per ADR and the closing price of our ordinary
shares on the Tel Aviv Stock Exchange was NIS 7.25 per share.
Investing
in these securities involves certain risks. You should refer to the “Risk
Factors” included in our annual report on Form 20-F for the year ended December
31, 2006, which is incorporated by reference herein, and carefully consider
that
information before buying our securities.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
The
date
of this prospectus is November 20, 2007.
Important
Information About This Prospectus
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|
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3
|
|
Where
You Can Find More Information
|
|
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3
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|
Cautionary
Note Regarding Forward Looking Statements
|
|
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4
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|
Prospectus
Summary
|
|
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5
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The
Offering
|
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6
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Capitalization
|
|
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7
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Use
of Proceeds
|
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7
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Selling
Shareholders
|
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8
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Plan
of Distribution
|
|
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12
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Expenses
of the Issue
|
|
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13
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Description
of Share Capital
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13
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Description
of American Depositary Receipts
|
|
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14
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Indemnification
for Liabilities
|
|
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20
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Legal
Matters
|
|
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20
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Experts
|
|
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20
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Financial
Statements as of June 30, 2007
|
|
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21
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IMPORTANT
INFORMATION ABOUT THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the Securities
and Exchange Commission, or SEC, on Form F-3 on October 30, 2007. We incorporate
by reference herein certain filings with the SEC. You should rely only on the
information contained in this prospectus and any filings incorporated by
reference herein. We have not authorized anyone to provide you with information
different from that contained in this prospectus. This prospectus may be used
only where it is legal to sell these securities. You should not assume that
the
information contained in this prospectus or information incorporated by
reference herein or therein, is current as of any date other than the date
of
such information. Our business, financial condition, results of operations
and
prospects may have changed since that date.
We
urge you to read this prospectus and other offering material together with
the
additional information described under the heading “Where You Can Find More
Information.”
The
terms “we,” “our,” “ours” and “us” refer to XTL Biopharmaceuticals Ltd. and our
consolidated subsidiaries.
WHERE
YOU CAN FIND MORE INFORMATION
We
have
filed with the SEC a registration statement on Form F-3 under the Securities
Act
of 1933, as amended, or the Securities Act, with respect to our ADRs offered
hereby. This prospectus, which forms part of the registration statement, does
not contain all of the information set forth in the registration statement
and
the exhibits and schedules to the registration statement. Some items are omitted
in accordance with the rules and regulations of the SEC. For further information
about us and our ordinary shares and our ADRs, we refer you to the registration
statement and the exhibits and schedules to the registration statement filed
as
part of the registration statement. Statements contained in this prospectus
as
to the contents of any contract or other document filed as an exhibit are
qualified in all respects by reference to the actual text of the exhibit. You
may read and copy the registration statement, including the exhibits and
schedules to the registration statement, along with any other reports we have
filed with the SEC, including our annual reports on Form 20-F and periodic
reports on Form 6-K, at the SEC’s Public Reference Room at 100 F Street, N.E.,
Washington, D.C. 20549. You can obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the
SEC
maintains an Internet site at www.sec.gov,
from
which you can electronically access the registration statement, including the
exhibits and schedules to the registration statement.
We
are
“incorporating by reference” into this prospectus certain documents we file with
the SEC, which means that we can disclose important information to you by
referring you to these documents. The information in the documents incorporated
by reference is considered to be part of this prospectus. We incorporate by
reference:
· |
our
annual report on Form 20-F for the fiscal year ended December 31,
2006,
filed with the SEC on March 23,
2007;
|
· |
our
current reports on Form 6-K filed with the SEC on March 29, 2007
(Film No.
07728344), June 11, 2007, August 15, 2007, August 28, 2007, September
10,
2007, September 17, 2007, September 26, 2007, October 2, 2007, October
25,
2007 and October 31, 2007;
|
· |
all
future annual reports on Form 20-F;
and
|
· |
any
future reports on Form 6-K that we so indicate are incorporated by
reference, that we may file with or furnish to the SEC under Sections
13(a), 13(c) or 15(d) of the Securities Exchange Act of 1934, as
amended,
or the Exchange Act,
|
until
all
the securities offered by this prospectus are sold.
Information
contained in this prospectus updates, modifies or supersedes, as applicable,
the
information contained in earlier-dated documents incorporated by reference.
Information in documents that we file with the SEC after the date of this
prospectus will automatically update and supersede information in this
prospectus or in earlier-dated documents incorporated by reference.
Upon
written or oral request, we will provide a copy of the documents we incorporate
by reference (including any exhibits specifically incorporated by reference
in
such documents), at no cost, to any person to whom this prospectus is delivered.
To request a copy of any or all of these documents, you should write or
telephone us at: 711
Executive Blvd., Suite Q,
Valley
Cottage, New York 10989
(telephone: 845-267-0707). Our primary internet address is www.xtlbio.com.
None
of the information on our website is incorporated by reference into this
prospectus.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain
matters discussed in this prospectus may constitute forward-looking statements
for purposes of the Securities Act, and the Exchange Act, and involve known
and
unknown risks, uncertainties and other factors that may cause our actual
results, performance or achievements to be materially different from the future
results, performance or achievements expressed or implied by such
forward-looking statements. The words “expect,” “anticipate,” “intend,” “plan,”
“believe,” “seek,” “estimate,” and similar expressions are intended to identify
such forward-looking statements. Our actual results may differ materially from
the results anticipated in these forward-looking statements due to a variety
of
factors, including, without limitation, those discussed under “Risks Factors” in
our Annual Report on Form 20-F, as well as factors which may be identified
from
time to time in our other filings with the SEC, or in the documents where such
forward-looking statements appear. All written or oral forward-looking
statements attributable to us are expressly qualified in their entirety by
these
cautionary statements.
The
forward-looking statements contained in this report reflect our views and
assumptions only as of the date this report is signed. Except as required by
law, we assume no responsibility for updating any forward-looking statements.
PROSPECTUS
SUMMARY
The
following is a summary of selected information contained elsewhere in this
prospectus. It does not contain all of the information that you should consider
before deciding to invest in our ordinary shares or ADRs. You should read this
entire prospectus carefully, especially the section entitled “Risk Factors” and
the financial statements and the notes to the financial statements at the end
of
the prospectus. Unless the context requires otherwise, references in this
prospectus to “XTLbio,” the “Company,” “we,” “us” and “our” refer to XTL
Biopharmaceuticals Ltd. and our wholly-owned subsidiaries, XTL
Biopharmaceuticals, Inc. and XTL Development, Inc. We have prepared our
consolidated financial statements in United States dollars and in accordance
with United States generally accepted accounting principles, or U.S. GAAP.
All
references herein to “dollars” or “$” are to United States dollars, and all
references to “Shekels” or “NIS” are to New Israeli
Shekels.
XTL
BIOPHARMACEUTICALS LTD.
We
are a
biopharmaceutical company engaged in the development of therapeutics for the
treatment of neuropathic pain and hepatitis C. We are developing Bicifadine,
a
serotonin and norepinephrine reuptake inhibitor, for the treatment of diabetic
neuropathic pain. We are also developing several novel pre-clinical hepatitis
C
small molecule inhibitors. We also have an active in-licensing and acquisition
program designed to identify and acquire additional drug candidates.
Our
ADRs
are quoted on the Nasdaq Global Market under the symbol “XTLB.”
Our
ordinary shares are traded on the Tel Aviv Stock Exchange under the symbol
“XTL.” We operate under the laws of the State of Israel, under the Israeli
Companies Act, and in the US, we operate subject to the Securities Act, the
Exchange Act and the regulations of the Nasdaq Global Market.
Our
principal offices are located at 711
Executive Blvd., Suite Q,
Valley
Cottage, New York 10989,
and our
telephone number is 845-267-0707. The principal offices of XTL
Biopharmaceuticals, Inc., our wholly-owned US subsidiary and agent for service
of process in the US, are located at 711
Executive Blvd., Suite Q,
Valley
Cottage, New York 10989,
and its
telephone number is 845-267-0707. Our primary internet address is
www.xtlbio.com. None of the information on our website is incorporated by
reference into this prospectus.
THE
OFFERING
Securities
offered hereby
|
|
72,485,020
ordinary shares, par value NIS 0.02 per share, in the form of
ADRs.
|
|
|
|
Use
of proceeds
|
|
We
will not receive any proceeds from the sale of ADRs by the Selling
Shareholders.
|
|
|
|
ADRs
|
|
Each
ADR represents the right to receive ten ordinary shares. See “Description
of American Depositary Shares.”
|
|
|
|
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· The
depositary will hold the shares underlying your ADRs. You will have
rights
as provided in the deposit agreement.
· We
do not expect to pay dividends in the foreseeable future. If, however,
we
declare dividends on our ordinary shares, the depositary will pay
you the
cash dividends and other distributions it receives on our ordinary
shares,
after deducting its fees and expenses.
· You
may turn in your ADRs to the depositary in exchange for our ordinary
shares. The depositary will charge you fees for any such
exchange.
· We
may amend or terminate the deposit agreement without your consent.
If you
continue to hold your ADRs, you agree to be bound by the deposit
agreement, as amended.
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Depositary
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The
Bank of New York
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|
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Timing
and Settlement for ADRs
|
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The
ADRs will be deposited with a custodian for, and registered in the
name of
a nominee of, The Depository Trust Company, or DTC, in New York,
New York.
DTC and its direct and indirect participants will maintain records
that
will show the beneficial interests in the ADRs and facilitate any
transfer
of the beneficial interests.
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Nasdaq
Stock Market symbol for ADRs
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“XTLB”
|
CAPITALIZATION
The
following table sets forth our capitalization as of June 30, 2007 as adjusted
to
reflect this offering of ordinary shares.
You
should read this table in conjunction with “Selected Financial Data” and our
consolidated financial statements and related notes included in our most recent
annual report and in conjunction with our most recent interim report, included
herewith.
(In
thousands, except per share amounts)
|
|
As
of
June
30, 2007
(unaudited)
|
|
Private
Placement November 2007(1)
|
|
Pro
forma
As
Adjusted
|
|
Cash,
cash equivalents and short-term bank deposits
|
|
$
|
12,636
|
|
$
|
9,025
|
|
$
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21,661
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|
Shareholders’
equity:
|
|
|
|
|
|
|
|
|
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Ordinary
shares of NIS 0.02 par value (300,000,000 authorized as of June 30,
2007; 500,000,000 authorized pro forma as adjusted; 220,154,349 issued
and
outstanding as of June 30, 2007; 292,639,369 issued and outstanding
pro
forma as adjusted)
|
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1,072
|
|
|
363
|
|
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1,435
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Additional
paid in capital
|
|
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137,583
|
|
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8,662
|
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146,245
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Deficit
accumulated during development stage
|
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(129,572
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)
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-
|
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|
(129,572
|
)
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Total
shareholders’ equity
|
|
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9,083
|
|
|
9,025
|
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18,108
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Total
capitalization
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$
|
9,083
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$
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9,025
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$
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18,108
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|
(1)
Selling
Shareholders received ADRs representing our ordinary shares as the result of
a
private placement of our ordinary shares pursuant to a securities purchase
agreement dated as of October 25, 2007. Following the effectiveness of the
registration statement of which this prospectus is a part, the ADRs will be
issued to the Selling Shareholders.
USE
OF PROCEEDS
We
will
not receive any proceeds from the sale of ADRs by the Selling
Shareholders.
SELLING
SHAREHOLDERS
The
Selling Shareholders received ADRs representing our ordinary shares as the
result of a private placement of our ordinary shares pursuant to a securities
purchase agreement dated as of October 25, 2007. Following the effectiveness
of
the registration statement of which this prospectus is a part, the ADRs will
be
issued to the Selling Shareholders. Selling Shareholders, including any non-sale
transferees, pledges or donees or their successors, may from time to time offer
and sell any or all of the ADRs representing ordinary shares pursuant to this
prospectus.
The
Selling Shareholders may offer all, some or none of the ADRs. Because the
Selling Shareholders may offer all or some portion of the ADRs, no estimate
can
be given as to the amount of ADRs that will be held by the Selling Shareholders
upon termination of any sales.
The
information in the following table was provided at the time of the signing
of
the securities purchase agreement dated as of October 25, 2007. We make no
representation as to its accuracy as of the date of this prospectus, as some
of
these Selling Shareholders may have sold their ADRs without notifying
us.
Name
and Address of Selling Shareholder
|
|
Number
of ADRs representing ordinary shares obtained as the result of the
private
placement and registered hereby
|
|
Number
of ADRs representing ordinary shares obtained as the result of the
private
placement and registered hereby beneficially owned as of the date
hereof
(1)
|
|
Gadi
Ben Ari
6
Hashaked Street
Caesarea,
Israel
|
|
|
60,000
|
|
|
0
|
|
Cat
Trail Private Equity, LLC
8
Wells Hill Road
Weston,
Connecticut 06883
|
|
|
370,371
|
|
|
0
|
|
Clearwater
Fund, I L.P.
611
Druid Road East, Suite 200
Clearwater,
Florida 33756
|
|
|
185,185
|
|
|
0
|
|
Clearwater
Offshore Fund, Ltd.
c/o
GTC Corporate Services, Ltd.
Sassoon
House
Shirley
Street & Victoria Avenue
P.O.
Box 55-5383
Nassau,
Bahamas
|
|
|
185,185
|
|
|
0
|
|
Delaware
Charter Guarantee and Trust
Steven
Oliviera (Trustee)
18
Fieldstone Ct.
New
City, New York 10956
|
|
|
375,000
|
|
|
0
|
|
Kenneth
Hoberman
28
Avenue at Port Imperial #327
West
New York, NJ 07657
|
|
|
55,556
|
|
|
0
|
|
Iroquois
Master Fund Ltd.
641
Lexington Avenue 26th
Floor
New
York, New York 10022
|
|
|
111,112
|
|
|
0
|
|
The
Israel Aircraft Industries
Worker
Provident Fund
Ben
Gurion International Airport,
70100
Israel
|
|
|
750,000
|
|
|
0
|
|
Name
and Address of Selling Shareholder
|
|
Number
of ADRs representing ordinary shares obtained as the result of the
private
placement and registered hereby
|
|
Number
of ADRs representing ordinary shares obtained as the result of the
private
placement and registered hereby beneficially owned as of the date
hereof
(1)
|
|
Gregory
Kiernan
191
King Street
Chappaqua,
New York 10514
|
|
|
185,186
|
|
|
0
|
|
James
D. Kuhn
125
Park Avenue, 11th
Floor
New
York, New York 10017
|
|
|
250,000
|
|
|
0
|
|
Meitav
Gemel Ltd.: The Managing Company of the Provident Fund Meitav Tagmulim
Clali
Museum
Tower
4
Berkowitz N Street
Tel
Aviv, Israel
|
|
|
73,037
|
|
|
0
|
|
Meitav
Gemel Ltd.: The Managing Company of the Provident Fund Meitav Histalmut
Clali
Museum
Tower
4
Berkowitz N Street
Tel
Aviv, Israel
|
|
|
48,148
|
|
|
0
|
|
Meitav
Gemel Ltd.: The Managing Company of the Provident Fund Meitav Pizuim
Clali
Museum
Tower
4
Berkowitz N Street
Tel
Aviv, Israel
|
|
|
14,815
|
|
|
0
|
|
Meitav
Gemel Ltd.: The Managing Company of the Provident Fund Meitav Tagmulim
Shares
Museum
Tower
4
Berkowitz N Street
Tel
Aviv, Israel
|
|
|
1,481
|
|
|
0
|
|
Meitav
Gemel Ltd.: The Managing Company of the Provident Fund Meitav Histalmut
Shares
Museum
Tower
4
Berkowitz N Street
Tel
Aviv, Israel
|
|
|
741
|
|
|
0
|
|
Meitav
Gemel Ltd.: The Managing Company of the Provident Fund Meitav Chisachon
Gemel
Museum
Tower
4
Berkowitz N Street
Tel
Aviv, Israel
|
|
|
11,852
|
|
|
0
|
|
Meitav
Gemel Ltd.: The Managing Company of the Provident Fund Meitav Chisachon
Histalmut
Museum
Tower
4
Berkowitz N Street
Tel
Aviv, Israel
|
|
|
8,889
|
|
|
0
|
|
Meitav
Gemel Ltd.: The Managing Company of the Provident Fund Meitav Chisachon
Pizuim
Museum
Tower
4
Berkowitz N Street
Tel
Aviv, Israel
|
|
|
1,852
|
|
|
0
|
|
Name
and Address of Selling Shareholder
|
|
Number
of ADRs representing ordinary shares obtained as the result of the
private
placement and registered hereby
|
|
Number
of ADRs representing ordinary shares obtained as the result of the
private
placement and registered hereby beneficially owned as of the date
hereof
(1)
|
|
Meitav
Gemel Ltd.: The Managing Company of the Provident Fund Yerushalayim
Gemel
Zahav
Museum
Tower
4
Berkowitz N Street
Tel
Aviv, Israel
|
|
|
1,852
|
|
|
0
|
|
Meitav
Gemel Ltd.: The Managing Company of the Provident Fund Yerushalayim
Histalmut Zahav
Museum
Tower
4
Berkowitz N Street
Tel
Aviv, Israel
|
|
|
296
|
|
|
0
|
|
Meitav
Mishan Ltd.: The Managing Company of the Provident Fund Meitav
Mishan
Gemel
Museum
Tower
4
Berkowitz N Street
Tel
Aviv, Israel
|
|
|
15,185
|
|
|
0
|
|
Meitav
Mishan Ltd.: The Managing Company of the Provident Fund Meitav
Mishan
Histalmut
Museum
Tower
4
Berkowitz N Street
Tel
Aviv, Israel
|
|
|
3,704
|
|
|
0
|
|
Meitav
Mishan Ltd.: The Managing Company of the Provident Fund Meitav
Mishan
Pizuim
Museum
Tower
4
Berkowitz N Street
Tel
Aviv, Israel
|
|
|
1,111
|
|
|
0
|
|
Meitav
Pension Ltd.
Museum
Tower
4
Berkowitz N Street
Tel
Aviv, Israel
|
|
|
2,223
|
|
|
0
|
|
Meitav
Underwriting Ltd.
Provident
Funds Management
Museum
Tower
4
Berkowitz N Street
Tel
Aviv, Israel
|
|
|
111,112
|
|
|
0
|
|
James
F. Oliviero III
220
Riverside Blvd., Apt 6A
New
York, New York 10069
|
|
|
5,500
|
|
|
0
|
|
Perceptive
Life Sciences Master Fund Ltd.
499
Park Avenue 25th
Floor
New
York, New York 10022
|
|
|
925,926
|
|
|
0
|
|
ProMed
Offshore Fund, Ltd.
c/o
ProMed Management, Inc.
237
Park Avenue, 9th
Floor
New
York, New York 10017
|
|
|
52,500
|
|
|
0
|
|
Name
and Address of Selling Shareholder
|
|
Number
of ADRs representing ordinary shares obtained as the result of the
private
placement and registered hereby
|
|
Number
of ADRs representing ordinary shares obtained as the result of the
private
placement and registered hereby beneficially owned as of the date
hereof
(1)
|
|
ProMed
Partners, L.P.
c/o
ProMed Management, Inc.
237
Park Avenue, 9th
Floor
New
York, New York 10017
|
|
|
317,900
|
|
|
0
|
|
Punk
Ziegel & Co.
520
Madison Avenue
New
York, New York 10022
|
|
|
370,
371
|
|
|
0
|
|
Quogue
Capital LLC
1285
Avenue of Americans, 35th
Floor
New
York, New York 10019
|
|
|
925,000
|
|
|
0
|
|
SCO
Capital Partners, L.P.
1285
Avenue of the Americas, 35th
Floor
New
York, New York 10019
|
|
|
370,371
|
|
|
0
|
|
Senvest
Israel Partners LP
110
East 55th
Street, Suite 1600
New
York, NY 10022
|
|
|
111,112
|
|
|
0
|
|
Senvest
Master Fund LP
110
East 55th
Street Suite 1600
New
York, New York 10022
|
|
|
111,112
|
|
|
0
|
|
Sonostar
Capital Partners LLC
191
King Street
Chappaqua,
NY 10514
|
|
|
148,149
|
|
|
0
|
|
TMW
Capital, LLC
48
Route 25A, Suite 305
Smithtown,
New York 11787
|
|
|
296,297
|
|
|
0
|
|
David
TuBoul
Gilboa
Street #4
Reut,
Israel
|
|
|
75,000
|
|
|
0
|
|
Antecip
Capital LLC
630
Fifth Avenue, Suite 2074
New
York, New York 10111
|
|
|
370,371
|
|
|
0
|
|
Brian
S. Waterman
2
East End Avenue
New
York, New York 10075
|
|
|
105,000
|
|
|
0
|
|
Maniv
(Brunstein) Business Promotion and Development Ltd.
Habanim
40 St.
Ramat-Hasharon,
Israel 47223
|
|
|
75,000
|
|
|
0
|
|
M.D.K.
Inc.
101
Central Park West, Apt. PHC
New
York, New York 10023
|
|
|
75,000
|
|
|
0
|
|
Eyal
Carmon
POB
6122
Ramat-Hasharon
U7284
Israel
|
|
|
90,000
|
|
|
0
|
|
Total
|
|
|
7,248,502
|
|
|
0
|
|
(1) |
Assumes
sale of all of the ADRs representing ordinary shares obtained as
a result
of the private placement, registered and offered
hereby.
|
PLAN
OF DISTRIBUTION
The
Selling Shareholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their ADRs
on
any stock exchange, market or trading facility on which the ADRs are traded
or
in private transactions. These sales may be at fixed or negotiated prices.
The
Selling Shareholders may use any one or more of the following methods when
selling ADRs:
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the ADRs as
agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
|
·
|
privately
negotiated transactions;
|
|
|
·
|
settlement
of short sales created after the date of the private
placement;
|
|
|
·
|
broker-dealers
may agree with the Selling Shareholders to sell a specified number
of such
ADRs at a stipulated price per ADR;
|
|
|
·
|
a
combination of any such methods of sale; and
|
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
The
Selling Shareholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus. Broker-dealers engaged
by
the Selling Shareholders may arrange for other brokers dealers to participate
in
sales. Broker-dealers may receive commissions or discounts from the Selling
Shareholders (or, if any broker-dealer acts as agent for the purchaser of ADRs,
from the purchaser) in amounts to be negotiated. The Selling Shareholders do
not
expect these commissions and discounts to exceed what is customary in the types
of transactions involved.
The
Selling Shareholders may from time to time pledge or grant a security interest
in some or all of the ADRs owned by them and, if they default in the performance
of their secured obligations, the pledgees or secured parties may offer and
sell
the ADRS from time to time under this prospectus, or under an amendment to
this
prospectus under Rule 424(b)(3) or other applicable provision of the Securities
Act amending the list of Selling Shareholders to include the pledgee, transferee
or other successors in interest as Selling Shareholders under this
prospectus.
The
Selling Shareholders also may transfer the ADRs in other circumstances, in
which
case the transferees, pledgees or other successors in interest will be the
selling beneficial owners for purposes of this prospectus.
The
Selling Shareholders and any broker-dealers or agents that are involved in
selling the ADRs may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
ADRs purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. The Selling Shareholders have informed us that none
of
them have any agreement or understanding, directly or indirectly, with any
person to distribute the ADRs.
We
are
required to pay all fees and expenses that we incur incident to the registration
of the ADRs. We have agreed to indemnify the Selling Shareholders against
certain losses, claims, damages and liabilities, including liabilities under
the
Securities Act.
EXPENSES
OF THE ISSUE
The
table
below itemizes the expenses paid by us in connection with the registration
and
issuance of the securities being registered by this prospectus.
Placement
Agents
|
|
$
|
685,000
|
|
|
|
|
|
|
Securities
and Exchange Commission Registration Fee
|
|
$
|
397
|
|
|
|
|
|
|
Legal
Fees and Expenses
|
|
$
|
40,000
|
|
|
|
|
|
|
Accountants’
Fees and Expenses
|
|
$
|
20,000
|
|
|
|
|
|
|
Printing
and Duplicating Expenses
|
|
$
|
5,000
|
|
|
|
|
|
|
Miscellaneous
Expenses
|
|
$
|
9,603
|
|
|
|
|
|
|
Total
|
|
$
|
760,000
|
|
DESCRIPTION
OF SHARE CAPITAL
Share
Capital
As
of
June 30, 2007 and as of September 30, 2007, we had 300,000,000 ordinary shares,
par value NIS 0.02, authorized and 220,154,349 and 220,156,932 ordinary
shares issued and outstanding, respectively. On
October 2, 2007, our shareholders approved an increase in the authorized capital
stock of XTL, and we now have, as of the date hereof, authorized capital stock
of the company consisting of 500,000,000 ordinary shares. All
of
the outstanding shares are issued and fully paid.
As
of
September 30, 2007 an additional 55,516,243 options
and warrants were issuable upon the exercise of outstanding options and warrants
to purchase our ordinary shares. The exercise price of the options and warrants
outstanding is between $0.106 and $2.110 per share.
As
of
December 31, 2002, we had 300,000,000 ordinary shares, par value NIS 0.02,
authorized and 111,165,364 ordinary shares issued and outstanding. Since such
date and through September 30, 2007, we have issued an aggregate of 5,000,746
ordinary shares upon the exercise of options. In addition, in August 2004, we
issued 56,009,732 ordinary shares pursuant to a placing and open offer for
new
ordinary shares on the London Stock Exchange, in September 2005, we issued
1,314,420 ordinary shares pursuant to a license agreement and an asset purchase
agreement with VivoQuest Inc., and in May 2006, we issued 46,666,670 ordinary
shares pursuant to a private placement.
DESCRIPTION
OF AMERICAN DEPOSITARY RECEIPTS
American
Depository Shares
On
the
effective date of the registration statement of which this prospectus is a
part,
we issued and deposited the ordinary shares registered hereby with Bank Hapoalim
B.M., The Bank of New York’s custodian in Tel Aviv, Israel. The Bank of New York
in turn issued to the Selling Shareholders American Depositary Receipts, or
ADRs, representing American Depositary Shares, or ADSs. One ADR represents
an
ownership interest in ten of our ordinary shares. Each ADR also represents
securities, cash or other property deposited with The Bank of New York but
not
distributed to ADR holders. The Bank of New York’s Corporate Trust Office is
located at 101 Barclay Street, New York, NY 10286, U.S.A. Their principal
executive office is located at One Wall Street, New York, NY 10286,
U.S.A.
You
may
hold ADRs either directly or indirectly through your broker or other financial
institution. If you hold ADRs directly, you are an ADR holder. This description
assumes you hold your ADRs directly. If you hold the ADRs indirectly, you must
rely on the procedures of your broker or other financial institution to assert
the rights of ADR holders described in this section. You should consult with
your broker or financial institution to find out what those procedures are.
Because
The Bank of New York will actually hold the ordinary shares, you must rely
on it
to exercise the rights of a shareholder. The obligations of The Bank of New
York
are set out in a deposit agreement among us, The Bank of New York and you,
as an
ADR holder. The agreement and the ADRs are generally governed by New York
law.
The
following is a summary of the agreement. Because it is a summary, it does not
contain all the information that may be important to you. For more complete
information, you should read the entire agreement and the ADR. Directions on
how
to obtain copies of these are provided in the section entitled “Where You Can
Find More Information.”
Share
Dividends and Other Distributions
The
Bank
of New York has agreed to pay to you the cash dividends or other distributions
it or the custodian receives on shares or other deposited securities after
deducting its fees and expenses. You will receive these distributions in
proportion to the number of shares your ADRs represent.
Cash.
The Bank
of New York will convert any cash dividend or other cash distribution we pay
on
the shares into U.S. dollars, if it can do so on a reasonable basis and can
transfer the U.S. dollars to the U.S. If that is not possible or if any approval
from any government or agency thereof is needed and cannot be obtained, the
agreement allows The Bank of New York to distribute the foreign currency only
to
those ADR holders to whom it is possible to do so. It will hold the foreign
currency it cannot convert for the account of the ADR holders who have not
been
paid. It will not invest the foreign currency and it will not be liable for
the
interest.
Before
making a distribution, any withholding taxes that must be paid under U.S. law
will be deducted. See “Taxation—United States Federal Income Tax
Considerations—Taxation of Dividends Paid On Ordinary Shares.” The Bank of New
York will distribute only whole U.S. dollars and cents and will round fractional
cents to the nearest whole cent. If the exchange rates fluctuate during a time
when The Bank of New York cannot convert the foreign currency, you may lose
some
or all of the value of the distribution.
Shares.
The
Bank
of New York may distribute new ADRs representing any shares we may distribute
as
a dividend or free distribution, if we furnish it promptly with satisfactory
evidence that it is legal to do so. The Bank of New York will only distribute
whole ADRs. It will sell shares which would require it to use a fractional
ADR
and distribute the net proceeds in the same way as it does with cash. If The
Bank of New York does not distribute additional ADRs, each ADR will also
represent the new shares.
Rights
to receive additional shares.
If we
offer holders of our ordinary shares any rights to subscribe for additional
shares or any other rights, The Bank of New York may make these rights available
to you. We must first instruct The Bank of New York to do so and furnish it
with
satisfactory evidence that it is legal to do so. If we do not furnish this
evidence and/or give these instructions, and The Bank of New York decides it
is
practical to sell the rights, The Bank of New York will sell the rights and
distribute the proceeds, in the same way as it does with cash. The Bank of
New
York may allow rights that are not distributed or sold to lapse. In that case,
you will receive no value for them. If The Bank of New York makes rights
available to you, upon instruction from you, it will exercise the rights and
purchase the shares on your behalf. The Bank of New York will then deposit
the
shares and issue ADRs to you. It will only exercise rights if you pay it the
exercise price and any other charges the rights require you to pay.
U.S.
securities laws may restrict the sale, deposit, cancellation and transfer of
the
ADRs issued after exercise of rights. For example, you may not be able to trade
the ADRs freely in the U.S. In this case, The Bank of New York may issue the
ADRs under a separate restricted deposit agreement which will contain the same
provisions as the agreement, except for the changes needed to put the
restrictions in place.
Other
Distributions.
The
Bank of New York will send to you anything else we distribute on deposited
securities by any means it thinks is legal, fair and practical. If it cannot
make the distribution in that way, The Bank of New York has a choice. It may
decide to sell what we distributed and distribute the net proceeds in the same
way as it does with cash or it may decide to hold what we distributed, in which
case the ADRs will also represent the newly distributed property.
The
Bank
of New York is not responsible if it decides that it is unlawful or impractical
to make a distribution available to any ADR holders. We have no obligation
to
register ADRs, shares, rights or other securities under the Securities Act.
We
also have no obligation to take any other action to permit the distribution
of
ADRs, shares, rights or anything else to ADR holders. This means that you may
not receive the distribution we make on our shares or any value for them if
it
is illegal or impractical for us to make them available to you.
Deposit,
Withdrawal and Cancellation
The
Bank
of New York will issue ADRs if you or your broker deposit shares or evidence
of
rights to receive shares with the custodian upon payment of its fees and
expenses and of any taxes or charges, such as stamp taxes or stock transfer
taxes or fees. The Bank of New York will register the appropriate number of
ADRs
in the names you request and will deliver the ADRs at its office to the persons
you request.
You
may
turn in your ADRs at The Bank of New York’s office. Upon payment of its fees and
expenses and of any taxes or charges, such as stamp taxes or stock transfer
taxes or fees, The Bank of New York will deliver (1) the underlying shares
to an
account designated by you and (2) any other deposited securities underlying
the
ADR at the office of the custodian; or, at your request, risk and expense,
The
Bank of New York will deliver the deposited securities at its
office.
Voting
Rights
You
may
instruct The Bank of New York to vote the shares underlying your ADRs but only
if we ask The Bank of New York to ask for your instructions. Otherwise, you
won’t be able to exercise your right to vote unless you withdraw the shares.
However, you may not know about the meeting enough in advance to withdraw the
shares.
If
we ask
for your instructions, The Bank of New York will notify you of the upcoming
vote
and arrange to deliver our voting materials to you. The materials will (1)
describe the matters to be voted on and (2) explain how you, on a certain date,
may instruct The Bank of New York to vote the shares or other deposited
securities underlying your ADRs as you direct. For instructions to be valid,
The
Bank of New York must receive them on or before the date specified. The Bank
of
New York will try, as far as practical, subject to Israeli law and the
provisions of our Articles of Association, to vote or to have its agents vote
the shares or other deposited securities as you instruct. The Bank of New York
will only vote or attempt to vote as you instruct. However, if The Bank of
New
York does not receive your voting instructions, it will deem you to have
instructed it to give a discretionary proxy to vote the shares underlying your
ADRs to a person designated by us provided that no such instruction shall be
deemed given and no such discretionary proxy shall be given with respect to
any
matter as to which we inform The Bank of New York that (x) we do not wish such
proxy given, (y) substantial opposition exists, (z) such matter materially
affects the rights of the holders of the shares underlying the
ADRs.
We
cannot
assure you that you will receive the voting materials in time to ensure that
you
can instruct The Bank of New York to vote your shares. In addition, The Bank
of
New York and its agents are not responsible for failing to carry out voting
instructions or for the manner of carrying out voting instructions. This means
that you may not be able to exercise your right to vote and there may be nothing
you can do if your shares are not voted as you requested.
Rights
of Non-Israeli Shareholders to Vote
Our
ADSs
may be freely held and traded pursuant to the General Permit and the Currency
Control Law. The ownership or voting of ADSs by non-residents of Israel are
not
restricted in any way by our Articles of Association or by the laws of the
State
of Israel.
Fees
and Expenses
ADR
holders must pay:
|
|
For:
|
|
|
|
$5.00
(or less) per 100 ADSs
(or
portion thereof)
|
|
Each
issuance of an ADS, including as a result of a distribution of shares
or
rights or other property.
Each
cancellation of an ADS, including if the agreement
terminates.
|
|
|
|
$0.02
(or less) per ADS
|
|
Any
cash payment.
|
|
|
|
Registration
or Transfer Fees
|
|
Transfer
and registration of shares on the share register of the Foreign Registrar
from your name to the name of The Bank of New York or its agent when
you
deposit or withdraw shares.
|
|
|
|
Expenses
of The Bank of New York
|
|
Conversion
of foreign currency to U.S. dollars.
Cable,
telex and facsimile transmission expenses.
Servicing
of shares or deposited securities.
|
|
|
|
$0.02
(or less) per ADS per calendar year (if the depositary has not collected
any cash distribution fee during that year)
|
|
Depositary
services.
|
|
|
|
Taxes
and other governmental charges
|
|
As
necessary The Bank of New York or the Custodian have to pay on any
ADR or
share underlying an ADR, for example, stock transfer taxes, stamp
duty or
withholding taxes.
|
|
|
|
A
fee equivalent to the fee that would be payable if securities distributed
to you had been ordinary shares and the ordinary shares had been
deposited
for issuance of ADSs
|
|
Distribution
of securities distributed to holders of deposited securities which
are
distributed by the depositary to ADR
holders.
|
Payment
of Taxes
You
will
be responsible for any taxes or other governmental charges payable on your
ADRs
or on the deposited securities underlying your ADRs. The Bank of New York may
refuse to transfer your ADRs or allow you to withdraw the deposited securities
underlying your ADRs until such taxes or other charges are paid. It may apply
payments owed to you or sell deposited securities underlying your ADRs to pay
any taxes owed and you will remain liable for any deficiency. If it sells
deposited securities, it will, if appropriate, reduce the number of ADRs to
reflect the sale and pay to you any proceeds, or send to you any property,
remaining after it has paid the taxes.
If
we:
|
|
Then:
|
Change
the nominal or par value of our shares;
Reclassify,
split up or consolidate any of the deposited securities;
|
|
The
cash, shares or other securities received by The Bank of New York
will
become deposited securities. Each ADR will automatically represent
its
equal share of the new deposited securities. The Bank of New York
may, and
will if we ask it to, distribute some or all of the cash, shares
or other
securities it received. It may also issue new ADRs or ask you to
surrender
your outstanding ADRs in exchange for new ADRs, identifying the
new
deposited securities.
|
|
|
|
Distribute
securities on the shares that are not distributed to you;
or
|
|
|
|
|
|
Recapitalize,
reorganize, merge, liquidate, sell all or substantially all of
our
assets, or takes any similar action.
|
|
|
Amendment
and Termination
We
may
agree with The Bank of New York to amend the agreement and the ADRs without
your
consent for any reason. If the amendment adds or increases fees or charges,
except for taxes and other governmental charges or registration fees, cable,
telex or facsimile transmission costs, delivery costs or other such expenses,
or
prejudices an important right of ADR holders, it will only become effective
thirty days after The Bank of New York notifies you of the amendment. At the
time an amendment becomes effective, you are considered, by continuing to hold
your ADR, to agree to the amendment and to be bound by the ADRs and the
agreement is amended.
The
Bank
of New York will terminate the agreement if we ask it to do so. The Bank of
New
York may also terminate the agreement if The Bank of New York has told us that
it would like to resign and we have not appointed a new depositary bank within
ninety days. In both cases, The Bank of New York must notify you at least ninety
days before termination.
After
termination, The Bank of New York and its agents will be required to do only
the
following under the agreement: (1) advise you that the agreement is terminated,
and (2) collect distributions on the deposited securities and deliver shares
and
other deposited securities upon cancellation of ADRs. After termination, The
Bank of New York will, if practical, sell any remaining deposited securities
by
public or private sale. After that, The Bank of New York will hold the proceeds
of the sale, as well as any other cash it is holding under the agreement for
the
pro rata benefit of the ADR holders that have not surrendered their ADRs. It
will not invest the money and will have no liability for interest. The Bank
of
New York’s only obligations will be to account for the proceeds of the sale and
other cash. After termination our only obligations will be with respect to
indemnification and to pay certain amounts to The Bank of New York.
Limitations
on Obligations and Liability to ADR Holders
The
agreement expressly limits our obligations and the obligations of The Bank
of
New York, and it limits our liability and the liability of The Bank of New
York.
We and The Bank of New York:
· |
are
only obligated to take the actions specifically set forth in the
agreement
without negligence or bad faith;
|
· |
are
not liable if either is prevented or delayed by law or circumstances
beyond their control from performing their obligations under the
agreement;
|
· |
are
not liable if either exercises discretion permitted under the
agreement;
|
· |
have
no obligation to become involved in a lawsuit or other proceeding
related
to the ADRs or the agreement on your behalf or on behalf of any other
party; and
|
· |
may
rely upon any documents they believe in good faith to be genuine
and to
have been signed or presented by the proper
party.
|
In
the
agreement, we and The Bank of New York agree to indemnify each other under
certain circumstances.
Requirements
for Depositary Actions
Before
The Bank of New York will issue or register transfer of an ADR, make a
distribution on an ADR, or make a withdrawal of shares, The Bank of New York
may
require payment of stock transfer or other taxes or other governmental charges
and transfer or registration fees charged by third parties for the:
· |
transfer
of any shares or other deposited
securities;
|
· |
production
of satisfactory proof of the identity and genuineness of any signature
or
other information it deems necessary,
and
|
· |
compliance
with regulations it may establish, from time to time, consistent
with the
agreement, including presentation of transfer
documents.
|
The
Bank
of New York may refuse to deliver, transfer, or register transfers of ADRs
generally when the books of The Bank of New York or our books are closed, or
at
any time if The Bank of New York or we think it advisable to do so. You have
the
right to cancel your ADRs and withdraw the underlying shares at any time
except:
· |
when
temporary delays arise because: (1) The Bank of New York or we have
closed
its transfer books; (2) the transfer of shares is blocked to permit
voting
at a shareholders’ meeting; or (3) we are paying a dividend on the shares;
or
|
· |
when
it is necessary to prohibit withdrawals in order to comply with any
laws
or governmental regulations that apply to ADRs or to the withdrawal
of
shares or other deposited
securities.
|
This
right of withdrawal may not be limited by any other provision of the
agreement.
Pre-Release
of ADRs
In
certain circumstances, subject to the provisions of the agreement, The Bank
of
New York may issue ADRs before deposit of the underlying shares. This is called
a pre-release of the ADR. The Bank of New York may also deliver shares upon
cancellation of pre-released ADRs (even if the ADRs are cancelled before the
pre-release transaction has been closed out). A pre-release is closed out as
soon as the underlying shares are delivered to The Bank of New York. The Bank
of
New York may receive ADRs instead of shares to close out a pre-release. The
Bank
of New York may pre-release ADRs only under the following conditions: (1) before
or at the time of the pre-release, the person to whom the pre-release is being
made must represent to The Bank of New York in writing that it or its customer
owns the shares or ADRs to be deposited; (2) the pre-release must be fully
collateralized with cash or other collateral that The Bank of New York considers
appropriate; and (3) The Bank of New York must be able to close out the
pre-release on not more than five business days’ notice. In addition, The Bank
of New York will limit the number of ADRs that may be outstanding at any time
as
a result of prerelease, although The Bank of New York may disregard the limit
from time to time, if it thinks it is appropriate to do so.
Inspection
of Books of the Depositary
Under
the
terms of the agreement, holders of ADRs may inspect the transfer books of the
depositary at any reasonable time, provided that such inspection shall not
be
for the purpose of communicating with holders of ADRs in the interest of a
business or object other than either our business or a matter related to the
deposit agreement or ADRs.
Book-Entry
Only Issuance - The Depository Trust Company
The
Depository Trust Company, or DTC, New York, New York, will act as securities
depository for the ADRs. The ADRs will be represented by one global security
that will be deposited with and registered in the name of Cede & Co. (DTC’s
partnership nominee), or such other name as may be requested by an authorized
representative of DTC. This means that we will not issue certificates to you
for
the ADRs. One global security will be issued to DTC, which will keep a
computerized record of its participants (for example, your broker) whose clients
have purchased the ADRs. Each participant will then keep a record of its
clients. Unless it is exchanged in whole or in part for a certificated security,
a global security may not be transferred. However, DTC, its nominees, and their
successors may transfer a global security as a whole to one another. Beneficial
interests in the global security will be shown on, and transfers of the global
security will be made only through, records maintained by DTC and its
participants.
DTC
is a
limited-purpose trust company organized under the New York Banking Law, a
“banking organization” within the meaning of the New York Banking Law, a member
of the United States Federal Reserve System, a “clearing corporation” within the
meaning of the New York Uniform Commercial Code and a “clearing agency”
registered under the provisions of Section 17A of the Exchange Act . DTC
holds securities that its participants (direct participants) deposit with DTC.
DTC also records the settlement among direct participants of securities
transactions, such as transfers and pledges, in deposited securities through
computerized records for direct participant’s accounts. This eliminates the need
to exchange certificates. Direct participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations.
DTC’s
book-entry system is also used by other organizations such as securities brokers
and dealers, banks and trust companies that work through a direct participant.
The rules that apply to DTC and its participants are on file with the
SEC.
DTC
is a
wholly-owned subsidiary of The Depository Trust & Clearing Corporation, or
DTCC. DTCC is, in turn, owned by a number of DTC’s direct participants and by
the New York Stock Exchange, Inc., the American Stock Exchange, Inc.
and the National Association of Securities Dealers, Inc.
When
you
purchase ADRs through the DTC system, the purchases must be made by or through
a
direct participant, who will receive credit for the ADRs on DTC’s records. Since
you actually own the ADRs, you are the beneficial owner and your ownership
interest will only be recorded on the direct (or indirect) participants’
records. DTC has no knowledge of your individual ownership of the ADRs. DTC’s
records only show the identity of the direct participants and the amount of
ADRs
held by or through them. You will not receive a written confirmation of your
purchase or sale or any periodic account statement directly from DTC. You will
receive these from your direct (or indirect) participant. Thus the direct (or
indirect) participants are responsible for keeping accurate account of the
holdings of their customers like you.
We
will
wire dividend payments to DTC’s nominee, and we will treat DTC’s nominee as the
owner of the global security for all purposes. Accordingly, we will have no
direct responsibility or liability to pay amounts due on the global security
to
you or any other beneficial owners in the global security.
Any
redemption notices will be sent by us directly to DTC, who will in turn inform
the direct participants, who will then contact you as a beneficial
holder.
It
is
DTC’s current practice, upon receipt of any payment of dividends or liquidation
amount, to credit direct participants’ accounts on the payment date based on
their holdings of beneficial interests in the global securities as shown on
DTC’s records. In addition, it is DTC’s current practice to assign any
consenting or voting rights to direct participants whose accounts are credited
with preferred securities on a record date, by using an omnibus proxy. Payments
by participants to owners of beneficial interests in the global securities,
and
voting by participants, will be based on the customary practices between the
participants and owners of beneficial interests, as is the case with the ADRs
held for the account of customers registered in “street name.” However, payments
will be the responsibility of the participants and not of DTC or
us.
ADRs
represented by a global security will be exchangeable for certificated
securities with the same terms in authorized denominations only if:
· |
DTC
is unwilling or unable to continue as depositary or if DTC ceases
to be a
clearing agency registered under applicable law and a successor depositary
is not appointed by us within 90 days;
or
|
· |
we
determine not to require all of the ADRs to be represented by a global
security.
|
If
the
book-entry only system is discontinued, the transfer agent will keep the
registration books for the ADRs at its corporate office.
The
information in this section concerning DTC and DTC’s book-entry system has been
obtained from sources we believe to be reliable, but we take no responsibility
for the accuracy thereof.
INDEMNIFICATION
FOR LIABILITIES
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers, or persons controlling the registrant pursuant
to the foregoing provisions, the registrant has been informed that in the
opinion of the SEC such indemnification is against public policy as expressed
in
the Securities Act and is therefore unenforceable.
LEGAL
MATTERS
Our
legal
advisers are Alston & Bird LLP, 90 Park Avenue, New York, New York 10016,
United States of America, and Kantor & Co., Oz House, 14 Abba Hilel Silver
(12th Floor), Ramat Gan 52506, State of Israel.
EXPERTS
The
financial statements of XTL Biopharmaceuticals Ltd. as of December 31, 2006
and
2005, and for each of the years in the three-year period ended December 31,
2006, and for the period from March 9, 1993 (inception) to December 31, 2006
included in this prospectus on Form F−3 have been so included in reliance on the
report of Kesselman & Kesselman, a member of PricewaterhouseCoopers
International Ltd., an independent registered public accounting firm, Trade
Tower, 25 Hamered Street, Tel Aviv 68125, Israel, except with respect to the
period from March 9, 1993 to December 31, 2000 which is included in reliance
on
the report of Somekh Chaikin a member firm of KPMG International, an independent
registered public accounting firm, KPMG Millennium Tower, 17 Ha’arba’a Street,
Tel Aviv, 64739, Israel, which reports are incorporated by reference herein
and
upon the authority of said firms as experts in auditing and accounting.
With
respect to the unaudited financial information of XTL Biopharmaceuticals Ltd.
for the six month periods ended June 30, 2007 and 2006 included with this
prospectus, Kesselman & Kesselman, a member of PricewaterhouseCoopers
International Ltd., reported that they have applied limited procedures in
accordance with professional standards for a review of such information.
However, their separate report dated August 14, 2007, included herewith, states
that they did not audit and they do not express an opinion on that unaudited
financial information. Accordingly, the degree of reliance on their report
on
such information should be restricted in light of the limited nature of the
review procedures applied. Kesselman & Kesselman, a member of
PricewaterhouseCoopers International Ltd., is not subject to the liability
provisions of Section 11 of the Securities Act of 1933 for their report on
the
unaudited financial information because that report is not a “report” or a
“part” of the registration statement prepared or certified by Kesselman &
Kesselman, a member of PricewaterhouseCoopers International Ltd., within the
meanings of Sections 7 and 11 of the Act.
|
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
|
August
14, 2007
The
Board
of Directors of
XTL
Biopharmaceuticals Ltd.
Re:
|
Review
of unaudited interim consolidated financial statements for
the six months ended June 30,
2007
|
At
your
request, we have reviewed the interim consolidated balance sheet of XTL
Biopharmaceuticals Ltd. (hereafter - the Company) and its subsidiaries at
June 30, 2007 and the interim consolidated statements of operations,
changes in shareholders’ equity and cash flows for the six month period then
ended. We have also reviewed the consolidated statements of operations and
cash
flows for the period from March 9, 1993 (incorporation date) to June 30,
2007 (the amounts included therein, which relate to the period through December
31, 2000, are based on the financial statements for 2000, which were audited
by
another accounting firm). These interim condensed consolidated financial
statements are the
responsibility of the Company’s management.
Our
review was performed in accordance with the standards of the Public Company
Accounting Oversight Board (United
States). A review of interim financial information consists principally of
applying analytical procedures and making inquiries of persons responsible
for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
In
performing our review, nothing came to our attention that indicated that
material adjustments should be made to the interim condensed consolidated
financial statements referred to above in order for them to be considered as
having been prepared in accordance with the accounting principles generally
accepted in the United States.
The
condensed interim consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to
the
condensed interim consolidated financial statements, the Company incurred
significant losses from operations and has an accumulated deficit at June 30,
2007 which raise substantial doubt about the Company’s ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of these uncertainties.
Sincerely
yours,
/s/
Kesselman & Kesselman
Kesselman
& Kesselman
Certified
Public Accountants (Israel)
A
Member
of PricewaterhouseCoopers International Limited
Tel-Aviv,
Israel
XTL
BIOPHARMACEUTICALS LTD.
(A
Development Stage Company)
Consolidated
Balance Sheets as of June 30, 2007 and 2006 (unaudited), and December 31, 2006
(audited)
(in
thousands of US dollars, except share amounts)
|
|
June
30,
|
|
December
31,
|
|
|
|
2007
|
|
2006
|
|
2006
|
|
Assets
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
2,451
|
|
|
32,172
|
|
|
4,400
|
|
Short-term
bank deposits
|
|
|
10,185
|
|
|
—
|
|
|
20,845
|
|
Trading
securities
|
|
|
—
|
|
|
—
|
|
|
102
|
|
Property
and equipment (held for sale) — net
|
|
|
35
|
|
|
43
|
|
|
18
|
|
Deferred
tax asset
|
|
|
—
|
|
|
—
|
|
|
29
|
|
Other
receivables and prepaid expenses
|
|
|
651
|
|
|
644
|
|
|
702
|
|
Total
current assets
|
|
|
13,322
|
|
|
32,859
|
|
|
26,096
|
|
EMPLOYEE
SEVERANCE PAY FUNDS
|
|
|
42
|
|
|
173
|
|
|
98
|
|
RESTRICTED
LONG-TERM DEPOSITS
|
|
|
53
|
|
|
119
|
|
|
172
|
|
PROPERTY
AND EQUIPMENT — net
|
|
|
128
|
|
|
620
|
|
|
490
|
|
INTANGIBLE
ASSETS — net
|
|
|
18
|
|
|
32
|
|
|
25
|
|
DEFERRED
TAX ASSET
|
|
|
—
|
|
|
—
|
|
|
19
|
|
Total
assets
|
|
|
13,563
|
|
|
33,803
|
|
|
26,900
|
|
Liabilities
and shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
|
3,130
|
|
|
2,705
|
|
|
3,003
|
|
Deferred
gain
|
|
|
399
|
|
|
399
|
|
|
399
|
|
Other
current liabilities
|
|
|
565
|
|
|
—
|
|
|
—
|
|
Total
current liabilities
|
|
|
4,094
|
|
|
3,104
|
|
|
3,402
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITY
IN RESPECT OF EMPLOYEE
SEVERANCE
OBLIGATIONS
|
|
|
188
|
|
|
444
|
|
|
340
|
|
DEFERRED
GAIN
|
|
|
198
|
|
|
598
|
|
|
398
|
|
COMMITMENTS
AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
4,480
|
|
|
4,146
|
|
|
4,140
|
|
SHAREHOLDERS’
EQUITY:
|
|
|
|
|
|
|
|
|
|
|
Ordinary
shares of NIS 0.02 par value (authorized 300,000,000 as of
June 30, 2007, June 30, 2006 and December 31, 2006, issued and
outstanding 220,154,349, 220,069,801 and 220,124,349
as
of
June 30, 2007, June 30, 2006 and December 31, 2006, respectively)
|
|
|
1,072
|
|
|
1,072
|
|
|
1,072
|
|
Additional
paid in capital
|
|
|
137,583
|
|
|
135,667
|
|
|
136,611
|
|
Deficit
accumulated during the development stage
|
|
|
(129,572
|
)
|
|
(107,082
|
)
|
|
(114,923
|
)
|
Total
shareholders’ equity
|
|
|
9,083
|
|
|
29,657
|
|
|
22,760
|
|
Total
liabilities and shareholders’ equity
|
|
|
13,563
|
|
|
33,803
|
|
|
26,900
|
|
Date
of
approval of the interim financial statements: August 14, 2007.
/s/
Michael Weiss
|
|
/s/
Ron Bentsur
|
Michael
Weiss
|
|
Ron
Bentsur
|
Chairman
of the
|
|
Chief
Executive Officer
|
Board
of Directors
|
|
|
The
accompanying notes are an integral part of the condensed financial
statements.
XTL
BIOPHARMACEUTICALS LTD.
(A
Development Stage Company)
Interim
Consolidated Statements
of Operations
for
the
Six Months Ended June 30, 2007 and 2006 (unaudited)
(in
thousands of US dollars, except share and per share amounts)
|
|
|
|
Period
from
|
|
|
|
Six
months ended
|
|
March
9, 1993*
|
|
|
|
June
30,
|
|
to
June 30,
|
|
|
|
2007
|
|
2006
|
|
2007
|
|
REVENUES:
|
|
|
|
|
|
|
|
Reimbursed
out-of-pocket expenses
|
|
|
—
|
|
|
—
|
|
|
6,012
|
|
License
|
|
|
227
|
|
|
227
|
|
|
1,320
|
|
|
|
|
227
|
|
|
227
|
|
|
7,332
|
|
COST
OF REVENUES:
|
|
|
|
|
|
|
|
|
|
|
Reimbursed
out-of-pocket expenses
|
|
|
—
|
|
|
—
|
|
|
6,012
|
|
License
(with respect to royalties)
|
|
|
27
|
|
|
27
|
|
|
167
|
|
|
|
|
27
|
|
|
27
|
|
|
6,179
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS
MARGIN
|
|
|
200
|
|
|
200
|
|
|
1,153
|
|
RESEARCH
AND DEVELOPMENT COSTS
|
|
|
|
|
|
|
|
|
|
|
(includes
non-cash stock option compensation of $66
and
$107, for the six months ended June 30, 2007 and
2006,
respectively)
|
|
|
12,118
|
|
|
5,008
|
|
|
105,237
|
|
LESS
-
PARTICIPATIONS
|
|
|
56
|
|
|
—
|
|
|
11,006
|
|
|
|
|
12,062
|
|
|
5,008
|
|
|
94,231
|
|
IN-PROCESS
RESEARCH AND
DEVELOPMENT
COSTS
|
|
|
—
|
|
|
—
|
|
|
1,783
|
|
GENERAL
AND ADMINISTRATIVE EXPENSES
|
|
|
|
|
|
|
|
|
|
|
(includes
non-cash stock option compensation of $892
and
$1,105, for the six months ended June 30, 2007 and
2006,
respectively)
|
|
|
2,523
|
|
|
2,532
|
|
|
37,111
|
|
BUSINESS
DEVELOPMENT COSTS
(includes
non-cash stock option compensation of $11
and
$1, for the six months ended June 30, 2007 and
2006,
respectively, and also includes stock appreciation
rights
compensation of $565 for the six months ended
June
30, 2007)
|
|
|
828
|
|
|
168
|
|
|
5,982
|
|
OPERATING
LOSS
|
|
|
15,213
|
|
|
7,508
|
|
|
137,954
|
|
FINANCIAL
AND OTHER INCOME, net
|
|
|
351
|
|
|
323
|
|
|
8,635
|
|
LOSS
BEFORE INCOME TAXES
|
|
|
14,862
|
|
|
7,185
|
|
|
129,319
|
|
INCOME
TAXES
|
|
|
(213
|
)
|
|
106
|
|
|
253
|
|
LOSS
FOR THE PERIOD
|
|
|
14,649
|
|
|
7,291
|
|
|
129,572
|
|
BASIC
AND DILUTED LOSS PER ORDINARY SHARE
|
|
$
|
0.07 |
|
$ |
0.04 |
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF SHARES USED
IN
COMPUTING BASIC AND DILUTED LOSS PER
ORDINARY
SHARE
|
|
|
220,145,233
|
|
|
183,085,938
|
|
|
|
|
* Incorporation
date see Note 1.
The
accompanying notes are an integral part of the condensed financial
statements.
XTL
BIOPHARMACEUTICALS LTD.
(A
Development Stage Company)
Interim
Consolidated Statements of Changes in Shareholders’ Equity
for
the
Six Months Ended June 30, 2007 (unaudited)
(in
thousands of US dollars, except share amounts)
|
|
Ordinary
shares
|
|
Additional
|
|
|
|
Number
of
|
|
|
|
paid
in
|
|
|
|
shares
|
|
Amount
|
|
capital
|
|
BALANCE
AT DECEMBER 31, 2006
|
|
|
220,124,349
|
|
|
1,072
|
|
|
136,611
|
|
CHANGES
DURING THE SIX MONTHS ENDED
JUNE 30, 2007:
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss - loss for the period
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Non-employee
stock option compensation expenses
|
|
|
—
|
|
|
—
|
|
|
5
|
|
Employee
stock option compensation expenses
|
|
|
—
|
|
|
—
|
|
|
964
|
|
Exercise
of stock options
|
|
|
30,000
|
|
|
**
|
|
|
3
|
|
BALANCE
AT JUNE 30, 2007
|
|
|
220,154,349
|
|
|
1,072
|
|
|
137,583
|
|
|
|
Deficit
|
|
|
|
|
|
accumulated
|
|
|
|
|
|
during
the
|
|
|
|
|
|
development
|
|
|
|
|
|
stage
|
|
Total
|
|
BALANCE
AT DECEMBER 31, 2006
|
|
|
(114,923
|
)
|
|
22,760
|
|
CHANGES
DURING THE SIX MONTHS ENDED
JUNE 30, 2007:
|
|
|
|
|
|
|
|
Comprehensive
loss - loss for the period
|
|
|
(14,649
|
)
|
|
(14,649
|
)
|
Non-employee
stock option compensation expenses
|
|
|
—
|
|
|
5
|
|
Employee
stock option compensation expenses
|
|
|
—
|
|
|
964
|
|
Exercise
of stock options
|
|
|
—
|
|
|
3
|
|
BALANCE
AT JUNE 30, 2007
|
|
|
(129,572
|
)
|
|
9,083
|
|
**
Represents an amount less than $1,000.
The
accompanying notes are an integral part of the financial
statements.
XTL
BIOPHARMACEUTICALS LTD.
(A
Development Stage Company)
Interim
Consolidated Statements of Cash Flows
for
the
Six Months Ended June 30, 2007 and 2006 (unaudited)
(in
thousands of US dollars)
|
|
|
|
Period
from
|
|
|
|
Six
months
|
|
March
9, 1993*
|
|
|
|
ended
June 30,
|
|
to
June 30,
|
|
|
|
2007
|
|
2006
|
|
2007
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Loss
for the period
|
|
|
(14,649
|
)
|
|
(7,291
|
)
|
|
(129,572
|
)
|
Adjustments
to reconcile loss to net cash used
in
operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
69
|
|
|
114
|
|
|
3,141
|
|
Linkage
difference on restricted long-term deposits
|
|
|
(2
|
)
|
|
(4
|
)
|
|
(9
|
)
|
Acquisition
of in process research and development
|
|
|
—
|
|
|
—
|
|
|
1,783
|
|
Gain
on disposal of property and equipment
|
|
|
(53
|
)
|
|
(25
|
)
|
|
(92
|
)
|
Increase
(decrease) in liability in respect of employee
severance
obligations
|
|
|
(49
|
)
|
|
35
|
|
|
1,187
|
|
Impairment
charges
|
|
|
95
|
|
|
—
|
|
|
475
|
|
Gain
from sales of investment securities
|
|
|
—
|
|
|
—
|
|
|
(410
|
)
|
Other
income related to exchange of shares
|
|
|
—
|
|
|
—
|
|
|
(100
|
)
|
Loss
from trading securities
|
|
|
48
|
|
|
—
|
|
|
46
|
|
Stock
option based compensation expenses
|
|
|
969
|
|
|
1,213
|
|
|
6,427
|
|
Stock
appreciation rights compensation expenses
|
|
|
565
|
|
|
—
|
|
|
565
|
|
Gain
on amounts funded in respect of employee
severance
pay funds
|
|
|
—
|
|
|
—
|
|
|
(92
|
)
|
Deferred
tax asset
|
|
|
48
|
|
|
—
|
|
|
—
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Decrease
(increase) in other receivables
and
prepaid expenses
|
|
|
5
|
|
|
38
|
|
|
(604
|
)
|
Increase
in accounts payable and accrued expenses
|
|
|
132
|
|
|
449
|
|
|
3,049
|
|
Increase
(decrease) in deferred gain
|
|
|
(200
|
)
|
|
(200
|
)
|
|
597
|
|
Net
cash used in operating activities
|
|
|
(13,022
|
)
|
|
(5,671
|
)
|
|
(113,609
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Decrease
(increase) in short-term deposits
|
|
|
10,660
|
|
|
—
|
|
|
(10,185
|
)
|
Decrease
(increase) in restricted deposits
|
|
|
121
|
|
|
(5
|
)
|
|
(44
|
)
|
Investment
in investment securities
|
|
|
—
|
|
|
—
|
|
|
(3,363
|
)
|
Proceeds
from sales of investment securities
|
|
|
—
|
|
|
—
|
|
|
3,773
|
|
Proceeds
from sales of trading securities
|
|
|
54
|
|
|
—
|
|
|
54
|
|
Employee
severance pay funds
|
|
|
(6
|
)
|
|
(12
|
)
|
|
(915
|
)
|
Purchase
of property and equipment
|
|
|
(47
|
)
|
|
(16
|
)
|
|
(4,089
|
)
|
Proceeds
from disposals of property and equipment
|
|
|
288
|
|
|
33
|
|
|
540
|
|
Acquisition
in respect of license and purchase of assets
|
|
|
—
|
|
|
—
|
|
|
(548
|
)
|
Net
cash provided by (used in) investing activities
|
|
|
11,070
|
|
|
—
|
|
|
(14,777
|
)
|
XTL
BIOPHARMACEUTICALS LTD.
(A
Development Stage Company)
Interim
Consolidated Statements of Cash Flows
for
the
Six Months Ended June 30, 2007 and 2006 (unaudited) (continued)
(in
thousands of US dollars)
|
|
|
|
Period
from
|
|
|
|
Six
months
|
|
March
9, 1993*
|
|
|
|
ended
June 30,
|
|
to
June 30,
|
|
|
|
2007
|
|
2006
|
|
2007
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Issuance
of share capital - net of share issuance expenses
|
|
|
—
|
|
|
24,391
|
|
|
128,734
|
|
Exercise
of share warrants and stock options
|
|
|
3
|
|
|
92
|
|
|
2,103
|
|
Proceeds
from long-term debt
|
|
|
—
|
|
|
—
|
|
|
399
|
|
Proceeds
from short-term debt
|
|
|
—
|
|
|
—
|
|
|
50
|
|
Repayment
of long-term debt
|
|
|
—
|
|
|
—
|
|
|
(399
|
)
|
Repayment
of short-term debt
|
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
Net
cash provided by financing activities
|
|
|
3
|
|
|
24,483
|
|
|
130,837
|
|
NET
INCREASE (DECREASE) IN CASH AND
CASH
EQUIVALENTS
|
|
|
(1,949
|
)
|
|
18,812
|
|
|
2,451
|
|
BALANCE
OF CASH AND CASH EQUIVALENTS AT
BEGINNING
OF PERIOD
|
|
|
4,400
|
|
|
13,360
|
|
|
—
|
|
BALANCE
OF CASH AND CASH EQUIVALENTS AT
END
OF PERIOD
|
|
|
2,451
|
|
|
32,172
|
|
|
2,451
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary
information on investing and financing
|
|
|
|
|
|
|
|
|
|
|
activities
not involving cash flows -
|
|
|
|
|
|
|
|
|
|
|
Issuance
of ordinary shares in respect of license, and
purchase
of assets
|
|
|
—
|
|
|
—
|
|
|
1,391
|
|
Conversion
of convertible subordinated debenture into shares
|
|
|
—
|
|
|
—
|
|
|
1,700
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
Income
taxes paid
|
|
|
166
|
|
|
63
|
|
|
623
|
|
Interest
paid
|
|
|
—
|
|
|
—
|
|
|
350
|
|
*
Incorporation
date see Note 1.
The
accompanying notes are an integral part of the condensed financial
statements.
XTL
BIOPHARMACEUTICALS LTD.
(A
Development Stage Company)
Notes
to
Interim Consolidated Financial Statements as of June 30, 2007 (unaudited)
Note
1 - General
BASIS
OF
PRESENTATION
XTL
Biopharmaceuticals Ltd. (the “Company”) is
a
biopharmaceutical company engaged in the acquisition, development and
commercialization of therapeutics for the treatment of unmet medical needs,
particularly neuropathic pain and hepatitis C. The
Company was incorporated under the Israel Companies Ordinance on March 9, 1993.
The Company is a development stage company in accordance with Statement of
Financial Accounting Standards (“SFAS”) No. 7 “Accounting and Reporting by
Development Stage Enterprises.”
In
September 2005, the Company licensed from VivoQuest Inc. (“VivoQuest”), a United
States (“US”) privately-held company, perpetual, exclusive, and worldwide rights
to VivoQuest’s intellectual property and technology, covering a proprietary
compound library, which includes VivoQuest’s lead hepatitis C compounds. In
addition, the Company also acquired from VivoQuest certain assets.
The
Company has a wholly-owned subsidiary in the US, XTL Biopharmaceuticals, Inc.
(“Subsidiary”), which was incorporated in 1999 under the laws of the State of
Delaware. Subsidiary is primarily engaged in development activities and business
development. Subsidiary also has a wholly-owned subsidiary, XTL Development,
Inc. (“XTL Development”), which was incorporated in 2007 under the laws of the
State of Delaware and is engaged in development activities. See Note 4 in
regards to XTL Development’s agreement with DOV Pharmaceutical, Inc.
(“DOV”).
Through
June 30, 2007, the Company has incurred losses in an aggregate amount of US
$129.6 million. Such losses have resulted from the Company’s activities as a
development stage company. It is expected that the Company will be able to
finance its operations from its current reserves through 2007. Continuation
of
the Company’s current operations after utilizing its current cash reserves is
dependent upon the generation of additional financial resources either through
agreements for the commercialization of its product portfolio or through
external financing.
These
matters raise substantial doubt about the Company’s ability to continue as a
going concern.
The
Company has not generated any revenues from its planned principal operations
and
is dependent upon significant financing to provide the working capital necessary
to execute its business plan. If the Company determines that it is necessary
to
seek additional funding, there can be no assurance that the Company will be
able
to obtain any such funding on terms that are acceptable to it, if at
all.
The
interim financial statements at June 30, 2007 (“the interim statements”) were
drawn up in condensed form, in accordance with US generally accepted accounting
principles (“GAAP”) for
interim financial information.
Thus,
the accounting principles applied in preparation of the interim statements
are
consistent with those applied in the preparation of annual financial statements.
Nevertheless, the interim statements do not include all the information and
explanations required for annual financial statements. Certain
comparative figures have been reclassified to conform to the current period
presentation.
STOCK
-
BASED COMPENSATION
The
Company accounts for equity instruments issued to employees and directors in
accordance with Statement of Financial Accounting Standards (“SFAS”)
No. 123R “Share - Based Payment” (“SFAS 123R”). SFAS
123R
addresses the accounting for share-based payment transactions in which a company
obtains employee services in exchange for (a) equity instruments of a company
or
(b) liabilities that are based on the fair value of a company’s equity
instruments or that may be settled by the issuance of such equity instruments.
SFAS 123R requires instead that such transactions be accounted for using the
grant-date fair value based method.
The
Company accounts for equity instruments issued to third party service providers
(non-employees) in accordance with the fair value method prescribed by SFAS
123R, and the provisions of Emerging Issues Task Force Issue (“EITF”) No. 96-18,
“Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling Goods or Services” (“EITF
96-18”).
The
Company accounts for the transaction advisory fee in the form of stock
appreciation rights (see Note 5) in accordance with the provisions of EITF
96-18
and by the provisions of EITF No. 00-19, “Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock”
(“EITF 00-19”).
RESEARCH
AND DEVELOPMENT COSTS
Research
and development costs are expensed as they are incurred and consist primarily
of
salaries and related personnel costs, fees paid to consultants and other
third-parties for clinical and laboratory development, license and milestone
fees, and facilities-related and other expenses relating to the design,
development, testing, and enhancement of product candidates.
In
connection with the purchase of assets, amounts assigned to intangible assets
to
be used in a particular research and development project that have not reached
technological feasibility and have no alternative future use are charged to
in-process research and development costs at the purchase date.
REVENUE
RECOGNITION
The
Company recognizes the revenue from its licensing agreement with Cubist
Pharmaceuticals, Inc. (“Cubist”) under the provisions of the EITF No. 00-21
“Revenue Arrangements with Multiple Deliverables” and Staff Accounting Bulletin
(“SAB”) No. 104 “Revenue Recognition.” Under those pronouncements, companies are
required to allocate revenues from multiple-element arrangements to the
different elements based on sufficient objective and reliable evidence of fair
value. Since the Company does not have the ability to determine the fair value
of each unit of accounting, the agreement was accounted for as one unit of
accounting, after failing the separation criteria, and the Company recognizes
each payment on the abovementioned agreement ratably over the expected life
of
the arrangement. See also Note 6 - Subsequent Events.
INCOME
TAXES
On
January 1, 2007, the Company adopted FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes” (“FIN 48”). FIN 48 clarifies the criteria for
recognizing tax benefits related to uncertain tax positions under SFAS No.
109,
“Accounting for Income Taxes,” and requires additional financial statement
disclosure. In
summary, FIN 48 prescribes a new recognition threshold and measurement attribute
for financial statement recognition and measurement of a tax position taken
or
expected to be taken in a tax return.
The
adoption of FIN 48 has had no impact on the Company’s consolidated results of
operations and financial position, since the Company has had no uncertain tax
positions that fall within FIN 48.
In
addition, the Company’s practice will be to recognize interest and penalties
related to tax contingencies as income tax expense. As of January 1, 2007,
tax
contingencies include an immaterial amount related to interest and penalties
none of which related to the adoption of FIN 48.
The
Company files income tax returns in Israel. The Company received tax assessments
for the years up to and including the 1998 tax year. The Company’s tax returns
until 2002 are considered final.
The
Company and Subsidiary file income tax returns in the US federal jurisdiction
and in various states. The Company files US income tax returns since it had
a
permanent establishment in the US, which began in 2005. For those returns,
the
statute of limitations has expired for years prior to 2003. Tax years 2003
through 2006 are subject to examination by the federal and state taxing
authorities, respectively. There are no income tax examinations currently in
process, and the Subsidiary has not been audited for tax purposes since
incorporation.
RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS IN THE UNITED STATES
In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
157”), which provides guidance for using fair value to measure assets and
liabilities. The standard also responds to investors’ requests for more
information about (1) the extent to which companies measure assets and
liabilities at fair value, (2) the information used to measure fair value,
and
(3) the effect that fair value measurements have on earnings. SFAS 157 will
apply whenever another standard requires (or permits) assets or liabilities
to
be measured at fair value. The standard does not expand the use of fair value
to
any new circumstances. SFAS 157 is effective for financial statements issued
for
fiscal years beginning after November 15, 2007 (January 1, 2008 for the
Company), and interim periods within those fiscal years. The Company is
evaluating the potential impact of the new standard on its consolidated
financial statements and disclosures.
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits
entities to choose to measure many financial assets and financial liabilities
at
fair value. The objective of SFAS 159 is to improve financial reporting by
providing entities with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities differently without
having to apply complex hedge accounting provisions. SFAS 159 is effective
for
fiscal years beginning after November 15, 2007 (January 1, 2008 for the
Company). The Company is evaluating the potential impact of the new standard
on
its consolidated financial statements and disclosures.
FUNCTIONAL
CURRENCY
The
currency of the primary economic environment in which the operations of the
Company are conducted is the US dollar (“$” or “dollar”). Most of the Company’s
expenses and revenues are incurred in dollars. A significant part of the
Company’s capital expenditures and most of its external financing is in dollars.
The Company holds most of its cash, cash equivalents and bank deposits in
dollars. Thus, the functional currency of the Company is the
dollar.
Since
the
dollar is the primary currency in the economic environment in which the Company
operates, monetary accounts maintained in currencies other than the dollar
(principally “cash and cash equivalents” and “accounts payable and accrued
expenses”) are remeasured using the representative foreign exchange rate at the
balance sheet date. Operational accounts and nonmonetary balance sheet accounts
are measured and recorded at the rate in effect at the date of the transaction.
The effects of foreign currency remeasurement are reported in current operations
(as “financial and other income - net”) and have not been material to date. At
June 30, 2007, the exchange rate of one dollar was New Israeli Shekel (“NIS”)
4.249 (NIS 4.225 at December 31, 2006 and NIS 4.44 at June 30,
2006).
Note
2 - Shareholders’ Equity
On
April
26, 2007, the Company’s board of directors granted options to its employees and
consultants to purchase a total of 500,000 ordinary shares at an exercise price
equal to $0.374 per share (a price equal to the closing price of the Company’s
American Depositary Receipts (“ADRs”), representing American Depositary Shares
(“ADSs”), on the grant date, divided by ten). These options are exercisable for
a period of ten years from the date of issuance, and granted under the Company’s
2001 Share Option Plan. The options vest annually over a period of one to four
years.
Note
3 - Property and Equipment
The
Company leased an aggregate of approximately 1,776 square meters of office
and
laboratory facilities in Rehovot, Israel, pursuant to a lease agreement that
was
set to expire in April 2007. On February 28, 2007, the Company exercised an
option to renew the lease and to downsize the facilities to 414 square meters
of
office space; the renewed lease expires in April 2008, with an option to extend
for an additional year through April 2009.
Subsequent
to renewing the lease, the Company determined to dispose of certain unused
assets (primarily lab equipment). Under the provisions of SFAS No. 144
“Accounting for the Impairment or Disposal of Long-Lived Assets”
(“SFAS 144”), the Company’s management reviewed the carrying value of
certain property and equipment (primarily laboratory equipment), and recorded
an
impairment charge in an amount of $95,000 for the six months ended June 30,
2007.
As
of
June 30, 2007, the Company’s unused assets (primarily lab equipment) which are
held-for-sale were classified as current assets at their net book value of
$35,000. The Company expects to dispose of these assets during the remainder
of
2007.
Note
4 - License Agreement with DOV Pharmaceutical, Inc.
In
January 2007, XTL Development signed an agreement with DOV to in-license the
worldwide rights for Bicifadine, a serotonin and norepinephrine reuptake
inhibitor (SNRI) (the “DOV Transaction”). XTL Development intends to develop
Bicifadine for the treatment of neuropathic pain - a chronic condition resulting
from damage to peripheral nerves.
In
accordance with the terms of the license agreement, XTL Development made an
initial up-front payment of $7.5 million in cash, which was expensed in
“Research Development Costs” in the Company’s consolidated statements of
operations for the six month period ended June 30, 2007. In addition, XTL
Development will make milestone payments of up to $126.5 million, in cash and/or
ordinary shares of the Company over the life of the license, of which up to
$115
million will be due upon or after regulatory approval of the product. XTL
Development is also obligated to pay royalties to DOV on net sales of
Bicifadine.
Note
5 - Transaction Advisory Fee Structured in the Form of Stock Appreciation
Rights
In
January 2007, XTL Development committed to pay a transaction advisory fee to
third party intermediaries in regards to the DOV Transaction. The transaction
advisory fee was structured in the form of stock appreciation rights (“SARs”) in
the amount equivalent to (i) 3% of the Company’s fully diluted ordinary shares
at the close of the transaction (representing 8,299,723 ordinary shares),
vesting one year after the close of the transaction, and (ii) 7% of the
Company’s fully diluted ordinary shares at the close of the transaction
(representing 19,366,019 ordinary shares), vesting following successful Phase
III clinical trial results or the acquisition of the Company. Payment of the
SARs by XTL Development can be satisfied, at the Company’s discretion, in cash
and/or by issuance of the Company’s registered ordinary shares. Upon the
exercise of a SAR, the amount paid by the Company will be an amount equal to
the
amount by which the fair market value of one ordinary share of the Company
on
the exercise date exceeds the $0.34 grant price for such SAR (fair market value
equals (i) the greater of the closing price of an ADR on the exercise date
or
(ii) the preceding five day ADR closing price average, divided by ten). The
SARs
expire on January 15, 2017. In the event of the termination of the license
agreement under the DOV Transaction, any unvested SARs shall expire. In
accordance with EITF 96-18 and EITF 00-19, the Company records SAR compensation
expense which is included in Business Development Costs based on the fair value
of the SAR at the reporting date, and the liability has been recorded as “other
current liabilities” on its Consolidated Balance Sheet. The SAR compensation
will be revalued, based on the then current fair value, at each subsequent
reporting date, until payment of the stock appreciation rights have been
satisfied.
Note
6 - Subsequent Events
On
July
19, 2007, Cubist terminated the HepeX-B license agreement with the Company.
As a
result, during the subsequent reporting period, the Company will write-off
the
deferred gain of $597,000 and record license revenues of $680,000 and cost
of
revenues of $83,000.
In
July
2007, the Company entered into an agreement with a clinical research
organization regarding its planned Phase IIb study for Bicifadine in diabetic
neuropathic pain.
On
August
14, 2007, the Company’s Board of Directors, convened a shareholders meeting for
September 25, 2007 in order for shareholders to approve that: (i) the registered
share capital of the Company be increased from 300,000,000 Ordinary Shares
to
500,000,000 Ordinary Shares, NIS 0.02 nominal value each, and (ii) the listing
of the Company’s Ordinary Shares on the Official List of the United Kingdom
Listing Authority be cancelled.
PROSPECTUS
7,248,502
American Depositary Shares
Each
Representing Ten Ordinary Shares
XTL
Biopharmaceuticals Ltd.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
8. Indemnification
of Directors and Officers
Israeli
law permits a company to insure an office holder in respect of liabilities
incurred by him or her as a result of an act or omission in the capacity of
an
office holder for:
|
·
|
a
breach of the office holder’s duty of care to the company or to another
person;
|
|
|
|
|
·
|
a
breach of the office holder’s fiduciary duty to the company, provided that
he or she acted in good faith and had reasonable cause to believe
that the
act would not prejudice the company; and
|
|
|
|
|
·
|
a
financial liability imposed upon the office holder in favor of another
person.
|
Moreover,
a company can indemnify an office holder for any of the following obligations
or
expenses incurred in connection with the acts or omissions of such person in
his
or her capacity as an office holder:
|
·
|
monetary
liability imposed upon him or her in favor of a third party by a
judgment,
including a settlement or an arbitral award confirmed by the court;
and
|
|
|
|
|
·
|
reasonable
litigation expenses, including attorneys’ fees, actually incurred by the
office holder or imposed upon him or her by a court, in a proceeding
brought against him or her by or on behalf of the company or by a
third
party, or in a criminal action in which he or she was acquitted,
or in a
criminal action which does not require criminal intent in which he
or she
was convicted; furthermore, a company can, with a limited exception,
exculpate an office holder in advance, in whole or in part, from
liability
for damages sustained by a breach of duty of care to the
company.
|
The
Registrant’s Articles of Association allow for insurance, exculpation and
indemnification of office holders to the fullest extent permitted by law. The
Registrant has entered into indemnification, insurance and exculpation
agreements with its directors and executive officers, following shareholder
approval of these agreements. The Registrant has directors’ and officers’
liability insurance covering its officers and directors for a claim imposed
upon
them as a result of an action carried out while serving as an officer or
director, for (a) the breach of duty of care towards the Registrant or towards
another person, (b) the breach of fiduciary duty towards the Registrant,
provided that the officer or director acted in good faith and had reasonable
grounds to assume that the action would not harm the Registrant’s interests, and
(c) a monetary liability imposed upon him in favor of a third party.
Item
9. Exhibits
Exhibit
Number
|
|
Description
|
1.1
|
|
**Form
of Securities Purchase Agreement, dated October 25, 2007, by and
among XTL
Biopharmaceuticals Ltd., and the purchasers named therein
|
|
|
|
1.2
|
|
**Form
of Registration Rights Agreement, dated October 25, 2007, by and
among XTL
Biopharmaceuticals Ltd. and the purchasers named
therein
|
|
|
|
1.3
|
|
**Escrow
Agreement, dated October 25, 2007, by and among XTL Biopharmaceuticals
Ltd., the Placement Agents named therein, and Wilmington Trust
Company as escrow agent
|
|
|
|
4.1
|
|
Form
of Share Certificate (including both Hebrew and English translations)
†
|
|
|
|
4.2
|
|
Form
of American Depositary Receipt (included as Exhibit A in Exhibit
4.3)*
|
|
|
|
4.3
|
|
Form
of Deposit Agreement, by and between XTL Biopharmaceuticals Ltd.,
The Bank
of New York, as Depositary, and each holder and beneficial owner
of
American Depositary Receipts issued thereunder *
|
|
|
|
5.1
|
|
**Opinion
of Kantor & Co. regarding legality of the
ADRs
|
23.1
|
|
**Consent
of Kantor & Co. (included in Exhibit 5.1)
|
|
|
|
23.2
|
|
**Consent
of Kesselman & Kesselman, a member of PricewaterhouseCoopers
International Ltd, dated October 30, 2007
|
|
|
|
23.3
|
|
**Letter
dated October 30, 2007, from Kesselman & Kesselman, a member of
PricewaterhouseCoopers International Ltd., related to Financial
Information.
|
|
|
|
23.4
|
|
**Consent
of Somekh Chaikin, a member firm of KPMG International, dated October
30,
2007
|
|
|
|
24.1
|
|
**Power
of Attorney (included in the signature page
hereto)
|
*
Incorporated by reference from Amendment No. 1 to the registration statement
on
Form 20-F filed by XTL Biopharmaceuticals Ltd. with the Securities and Exchange
Commission on August 10, 2005, as it may be amended or restated.
†
Incorporated by reference from the annual report on Form 20-F filed by XTL
Biopharmaceuticals Ltd. with the Securities and Exchange Commission on March
23,
2007.
**
Previously filed.
Item
10.
Undertakings
A.
Rule
415 Offering
The
undersigned registrant hereby undertakes:
(1)
To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) |
To
include any prospectus required by Section 10(a)(3) of the Securities
Act
of 1933;
|
(ii) |
To
reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent
a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease
in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation
from
the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant
to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate
offering
price set forth in the “Calculation of Registration Fee” table in the
effective registration statement;
and
|
(iii) |
To
include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to such information in the registration
statement.
|
(2)
That,
for the purpose of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3)
To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4)
To
file a post-effective amendment to the registration statement to include any
financial statements required by Item 8.A. of Form 20-F at the start of any
delayed offering or throughout a continuous offering.
B.
Subsequent
Documents Incorporated By Reference
The
undersigned registrant hereby undertakes that, for purposes of determining
any
liability under the Securities Act of 1933, each filing of the registrant’s
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act
of 1934 (and, where applicable, each filing of an employee benefit plan’s annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that
is
incorporated by reference in the registration statement shall be deemed to
be a
new registration statement relating to the Securities offered therein, and
the
offering of such Securities at that time shall be deemed to be the initial
bona
fide offering thereof.
C.
Indemnification
of Officers, Directors and Controlling Persons
Insofar
as indemnification for liabilities arising under the Securities Act of 1933
may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In
the
event that a claim for indemnification against such liabilities (other than
the
payment by the registrant of expenses incurred or paid by a director, officer
or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and
will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, the registrant
certifies that it has reasonable grounds to believe that it meets all of
the
requirements for filing on Form F-3, has duly caused this Amendment No. 2
to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York, on November
20,
2007.
|
|
|
|
XTL BIOPHARMACEUTICALS
LTD. |
|
|
|
|
By: |
/s/ Ron Bentsur |
|
Name: Ron
Bentsur |
|
Title: Chief
Executive Officer |
POWER
OF ATTORNEY
Pursuant
to the requirements of the Securities Act of 1933, as amended, this Amendment
No. 2 to the Registration Statement has been signed by the following persons
in
the capacities indicated as of November 20, 2007.
Signatures
|
|
Title
|
|
|
|
*
Michael
S. Weiss
|
|
Chairman
of the Board of Directors
|
|
|
|
/s/
Ron Bentsur
Ron
Bentsur
|
|
Chief
Executive Officer
|
|
|
|
/s/
Bill Kessler
Bill
Kessler
|
|
Director
of Finance
(principal
financial and accounting officer)
|
|
|
|
*
William
J. Kennedy, Ph.D
|
|
Non-executive
Director
|
|
|
|
*
Ido
Seltenreich
|
|
Non-executive
Director and External Director
|
|
|
|
*
Vered
Shany, D.M.D.
|
|
Non-executive
Director and External Director
|
|
|
|
*
Ben
Zion Weiner, Ph.D
|
|
Non-executive
Director
|
|
|
|
/s/
Ron Bentsur
Ron
Bentsur
|
|
Authorized
U.S. Representative
|
*
By:
/s/
Ron
Bentsur
Ron
Bentsur
Attorney-in-fact