NOTE 1:-	GENERAL

	a.	Prolor Biotech, Inc. (the “Company”) was incorporated on August 22, 2003 under the laws of the State of Nevada. The Company is a development stage biopharmaceutical company utilizing exclusive license from Washington University to patented technology in the development of longer-acting versions of already-approved therapeutic proteins, through its Israeli subsidiary, Prolor BioTech Ltd. (“Prolor Ltd.”), formerly named ModigeneTech Ltd.

	b.	The Company devotes substantially all of its efforts toward research and development activities. In the course of such activities, the Company has sustained operating losses and expects such losses to continue for the foreseeable future. The Company has not generated any revenues or product sales and has not achieved profitable operations or positive cash flow from operations. The Company’s deficit accumulated during the development stage aggregated $49,647,011 through December 31, 2011. There is no assurance that profitable operations, if ever achieved, could be sustained on a continuing basis. The Company is entitled to receive R&D grants from the Israeli government on approved projects during the year 2012. The Company believes that its current cash sources with the anticipated R&D grants will enable the continuance of the Company’s activities for at least a year with no need for additional fundraising.

	c.	On May 9, 2007, Modigene Inc., a Delaware corporation, Modigene Acquisition Corp., a wholly-owned subsidiary of the Company (the “Acquisition Subsidiary”), and the Company entered into a merger agreement (the “Merger Agreement”). Pursuant to the Merger Agreement, the Acquisition Subsidiary merged (the “Merger”) with and into Modigene Inc. with Modigene Inc. remaining as the surviving entity and a wholly-owned subsidiary of the Company. The Merger was accounted for as a recapitalization. The Company has continued the business operations of Modigene Inc. as a publicly-traded company under the name Prolor Biotech, Inc. In the Merger, the stockholders of Modigene Inc. received a total of 13,588,552 shares of the Company’s common stock, par value $0.00001 per share (“Common Stock”), in exchange for all of their shares of common stock of Modigene Inc. Pursuant to the Merger Agreement, the Company became the holding company of Modigene Inc. and Prolor Ltd. Contemporaneously with the closing of the Merger, the Company split off its wholly-owned subsidiary, Liaison Design Group, LLC., through the sale of all of the membership interests of the subsidiary.

In December 2005, Modigene Inc. acquired all of the outstanding shares of Prolor Ltd., an Israeli-based corporation, in consideration for shares of common stock of Modigene Inc. The fair value of the common stock issued and the options granted for the acquisition was $2,628,566.

In connection with the transaction, Modigene Inc. also issued shares of common stock, valued at $3,514,426, to Modigene Inc.’s founders for their services as the agents in the transaction.

The acquisition was accounted for as an acquisition of a group of assets that does not constitute a business and no goodwill was recognized.

The know-how purchased in the amount of $3,222,831 has not yet reached technological feasibility and had no alternative future use other than the technological indications for which it was in development. Accordingly, the entire amount representing the know-how was recorded as in-process research and development and accordingly was immediately expensed in the consolidated statement of operations on the acquisition date. Following the acquisition of Prolor Ltd., Prolor Ltd. became a wholly-owned subsidiary of Modigene Inc. The financial statements of Prolor Ltd. were consolidated with the accounts of Modigene Inc, commencing December 14, 2005.