-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 FF96ZCpbGN3GaJWzC76uKk89tMqVMyWswTR8Hxs+Y/RZA90KlXBSR2mvOkjPKbyW
 Nbn7HPVMtNiyzzazDZmFgA==

<SEC-DOCUMENT>0001178913-09-002013.txt : 20090825
<SEC-HEADER>0001178913-09-002013.hdr.sgml : 20090825
<ACCEPTANCE-DATETIME>20090825090745
ACCESSION NUMBER:		0001178913-09-002013
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20090825
FILED AS OF DATE:		20090825
DATE AS OF CHANGE:		20090825

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SILICOM LTD
		CENTRAL INDEX KEY:			0000916793
		STANDARD INDUSTRIAL CLASSIFICATION:	COMPUTER COMMUNICATIONS EQUIPMENT [3576]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-23288
		FILM NUMBER:		091032804

	BUSINESS ADDRESS:	
		STREET 1:		08 HANAGAR ST
		CITY:			KFAR-SAVA ISRAEL
		STATE:			L3
		ZIP:			44000
		BUSINESS PHONE:		97297644555

	MAIL ADDRESS:	
		STREET 1:		P.O.BOX 2164
		CITY:			KFAR-SAVA
		STATE:			L3
		ZIP:			44000
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>zk97169.htm
<TEXT>
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\edgar filing\Silicom Ltd\97169\a97169.eep               -->
     <!-- Control Number: 97169                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    Silicom Ltd                                                      -->
     <!-- Project Name:   6-K                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>6-K</TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Scotch Rule Top-TNR" FSL="Workstation" -->
<Hr Align=LEFT Width=100% Size=4 Noshade Style="margin-top: -5px">
<hr Align=LEFT Width=100% Size=1 Noshade Style="margin-top: -10px">

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=4>SECURITIES AND
EXCHANGE COMMISSION </font></h1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=3>WASHINGTON, D.C. 20549 </font></h1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=4>FORM 6-K </font></h1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=3>REPORT OF FOREIGN
PRIVATE ISSUER </font></h1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=3>PURSUANT TO RULE
13a-16 OR 15d-16 OF </font></h1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=3>THE SECURITIES
EXCHANGE ACT OF 1934 </font></h1>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<P Align=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>For the month of
August, 2009</I></B> </FONT> </p>

<!-- MARKER FORMAT-SHEET="Footnote Rule-TNR" FSL="Workstation" -->
<Hr Size=1 Noshade Width=20% Align=center>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=5>SILICOM LTD. </font></h1>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<P Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>(Translation of
Registrant&#146;s name into English) </font></p>

<!-- MARKER FORMAT-SHEET="Footnote Rule-TNR" FSL="Workstation" -->
<Hr Size=1 Noshade Width=20% Align=center>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=3>8 Hanagar St., P.O.Box
2164, Kfar-Sava 44425, Israel </font></h1>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<P Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>(Address of Principal
Executive Offices) </font></p>

<!-- MARKER FORMAT-SHEET="Footnote Rule-TNR" FSL="Workstation" -->
<Hr Size=1 Noshade Width=20% Align=center>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Indicate by check mark whether the
registrant files or will file annual reports under cover of Form 20-F or Form 40-F: </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P align=center><Font Face="Times New Roman, Times, Serif" Size=2><B>Form 20-F </b> <FONT size="3" face="Wingdings">x
</font><B>Form 40-F </b><FONT size="3" face="Wingdings">o
</font></font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Indicate by check mark whether the
registrant by furnishing the information contained in this form is also thereby furnishing
the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange
Act of 1934: </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Yes</B> </FONT><FONT FACE="Wingdings" SIZE="3"> o </FONT>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>No</B> </FONT><FONT FACE="Wingdings" SIZE="3">x
</FONT>
</p>

<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<Page>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>On August 25, 2009 the Registrant
issued condensed interim consolidated financial statements as of June 30, 2009 and for the
six months then ended. Attached hereto are the following exhibits: </font></p>

<!-- MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation" -->
<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=3%><Font Face="Times New Roman, Times, Serif" Size=2></font></td>
<td Width=9%><Font Face="Times New Roman, Times, Serif" Size=2>Exhibit  99.1</font></td>
<td Width=88%><Font Face="Times New Roman, Times, Serif" Size=2>
Registrant&#146;s condensed interim consolidated financial statements as of June 30,
2009 and for the six months then ended.  </font></td>
</tr>
</table>
<br>

<!-- MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation" -->
<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=3%><Font Face="Times New Roman, Times, Serif" Size=2></font></td>
<td Width=9%><Font Face="Times New Roman, Times, Serif" Size=2>       Exhibit  99.2</font></td>
<td Width=88%><Font Face="Times New Roman, Times, Serif" Size=2>
  Management's Discussion and Analysis of Financial Condition and Results of
             Operations </font></td>
</tr>
</table>
<br>

<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<Page>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>This report on Form 6-K is
incorporated by reference into the Registrant&#146;s Registration Statement on Form F-3,
Registration Statement No. 333-143565. This report on Form 6-K is also incorporated by
reference into all other effective registration statements filed by the Registrant under
the Securities Act of 1933. </font></p>


<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<Page>


<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<P Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>Signature </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Pursuant to the requirements of the
Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized. </font></p>

<!-- MARKER FORMAT-SHEET="Signature (Single)" FSL="Workstation" -->
<Table Width=100% Cellspacing=0 Cellpadding=0 Border=0>
<tr Valign=TOP>
<td Width=40%><Font Face="Times New Roman, Times, Serif" Size=2></font></td>
<td Width=10%><Font Face="Times New Roman, Times, Serif" Size=2></font></td>
<td Width=50%><Font Face="Times New Roman, Times, Serif" Size=2>SILICOM  Ltd.<Br>(Registrant)<Br><Br>
<br>By: /s/ Eran Gilad<br>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
Eran Gilad<br>CFO</font></td>
</tr>
</table>
<br>


<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Dated: August 25th, 2009 </font></p>

<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">

</body>
</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>exhibit_99-1.htm
<TEXT>
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\EDGAR Filing\Silicom Ltd\97169\a97169.eep               -->
     <!-- Control Number: 97169                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    Silicom Ltd                                                      -->
     <!-- Project Name:   6-K                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>6-K</TITLE>
</HEAD>
<BODY>


<!-- MARKER FORMAT-SHEET="Scotch Rule Top-TNR" FSL="Workstation" -->
<Hr Align=LEFT Width=100% Size=4 Noshade Style="margin-top: -5px">
<hr Align=LEFT Width=100% Size=1 Noshade Style="margin-top: -10px">

<P align=right><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 99.1</B></U> </FONT> </P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>Silicom Ltd.
<Br>
<Br>(An Israeli Corporation)
<Br>
<Br>and its Consolidated Subsidiary
<Br>
<Br>Condensed Interim Consolidated
<Br>Financial Statements
<Br>
<Br>June 30, 2009</B> </FONT></P>


<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<Page>



<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Silicom Ltd. (An Israeli
Corporation) and its Consolidated Subsidiary </font></p>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Workstation" -->
<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=100%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>
Condensed
Interim Consolidated Financial Statements as of June 30, 2009</B> </FONT> </td>
</tr>
</table>

<!-- MARKER FORMAT-SHEET="Footnote Rule-TNR" FSL="Workstation" -->
<Hr Size=1 Noshade Width=100% Align=LEFT>


<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Default" -->
<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Contents </font></h1>






<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman" SIZE=1>Page</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=91% ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Condensed Interim Consolidated Financial Statements:</B> </FONT></TD>
     <TD WIDTH=9% ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2><A href="#zk101">Condensed Interim Consolidated Balance Sheets</A></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>2-3&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2><A href="#zk102">Condensed Interim Consolidated Statements of Income</A></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>4&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2><A href="#zk103">Condensed Interim Consolidated Statements of Changes in Shareholders' Equity</A></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>5&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2><A href="#zk104">Condensed Interim Consolidated Statements of Cash Flows</A></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>6&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2><A href="#zk105">Notes to the Condensed Interim Consolidated Financial Statements</A></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>7-11&nbsp;</FONT></TD></TR>
<TR>
     <TD></TD>
     <TD></TD></TR>
</TABLE>
<Br>

<p align=center>
<font size=2>1</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<Page>

<A name=zk101></A>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Silicom Ltd. (An Israeli Corporation)
and its Consolidated Subsidiary </font></p>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Workstation" -->
<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=100%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>
Condensed
Interim Consolidated Balance Sheets</B> </FONT> </td>
</tr>
</table>

<!-- MARKER FORMAT-SHEET="Footnote Rule-TNR" FSL="Workstation" -->
<Hr Size=1 Noshade Width=100% Align=LEFT>

<Br>







<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>June 30<BR>
2009 </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>December 31<Br> 2008 </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>U.S. dollars<BR>
in thousands </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>U.S. dollars<BR>
in thousands </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="70%" Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Assets</B> </FONT></TD>
     <Td Width="1%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="3%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B></B> </FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Current assets</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Cash and cash equivalents</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>13,641</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>14,568</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Marketable Securities</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>8,908</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>8,426</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT" colspan=7><FONT FACE="Times New Roman" SIZE=2>Accounts receivables:</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;Trade, net</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>4,063</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>4,849</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;Other</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>250</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>353</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Inventories</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>4,880</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>5,269</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Deferred tax assets</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>192</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>210</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Total Current Assets</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>31,934</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>33,675</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Marketable Securities</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>18,597</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>16,204</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Assets held for employees' severance benefits</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>1,043</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>1,066</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Deferred tax assets</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>169</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>234</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Property, plant and equipment, net</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>673</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>795</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Total assets</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>52,416</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>51,974</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD></TR>
</TABLE>
<Br>

<!-- MARKER FORMAT-SHEET="Footnote Rule-TNR" FSL="Workstation" -->
<Hr Size=1 Noshade Width=100% Align=LEFT>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Workstation" -->
<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=100% align=center><Font Face="Times New Roman, Times, Serif" Size=2>
The
accompanying notes are an integrated part of these condensed interim consolidated
financial statements  </font></td>
</tr>
</table>
<br>

<p align=center>
<font size=2>2</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<Page>



<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Silicom Ltd. (An Israeli
Corporation) and its Consolidated Subsidiary </font></p>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Workstation" -->
<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=100%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>
Condensed
Interim Consolidated Balance Sheets (Continued)</B> </FONT> </td>
</tr>
</table>

<!-- MARKER FORMAT-SHEET="Footnote Rule-TNR" FSL="Workstation" -->
<Hr Size=1 Noshade Width=100% Align=LEFT>

 <Br>








<Table Cellpadding="0" Cellspacing="0" Width="100%">
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>June 30<BR>
2009 </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>December 31<Br> 2008 </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>U.S. dollars<BR>
in thousands </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>U.S. dollars<BR>
in thousands </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="70%" Align="Left"><FONT FACE="Times New Roman" SIZE="2"><B>Liabilities and shareholder's equity</B> </FONT></TD>
     <Td Width="1%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="3%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE="2"><B></B> </FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Current liabilities</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Trade accounts payable</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>1,586</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>2,681</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Other accounts payable and accrued expenses</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>2,255</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>2,054</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Total current liabilities</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>3,841</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>4,735</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Long-term liability</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Liability for employees' severance benefits</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>1,892</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,905</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Total liabilities</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>5,733</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>6,640</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT" colspan=7><FONT FACE="Times New Roman" SIZE="2"><B>Shareholders' Equity</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Share capital and additional paid in capital</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>33,328</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>33,102</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Treasury shares</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>(38</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>)</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(38</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Retained earnings</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>13,393</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>12,270</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Total Shareholders' equity</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>46,683</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>45,334</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Total liabilities and shareholders equity</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>52,416</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>51,974</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD></TR>
</TABLE>
<Br>

<!-- MARKER FORMAT-SHEET="Footnote Rule-TNR" FSL="Workstation" -->
<Hr Size=1 Noshade Width=100% Align=LEFT>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Workstation" -->
<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=100% align=center><Font Face="Times New Roman, Times, Serif" Size=2>
The
accompanying notes are an integrated part of these condensed interim consolidated
financial statements  </font></td>
</tr>
</table>
<br>

<p align=center>
<font size=2>3</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<Page>

<A name=zk102></A>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Silicom Ltd. (An Israeli
Corporation) and its Consolidated Subsidiary </font></p>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Workstation" -->
<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=100%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>
Condensed
Interim Consolidated Statements of Income</B> </FONT> </td>
</tr>
</table>

<!-- MARKER FORMAT-SHEET="Footnote Rule-TNR" FSL="Workstation" -->
<Hr Size=1 Noshade Width=100% Align=LEFT>


<Br>


<Table Cellpadding="0" Cellspacing="0" Width="100%">
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>Three-month period<BR>
ended June 30, </FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>Six-month period<BR>
ended June 30, </FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2009</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2008</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2009</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2008</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>U.S dollars in thousands<BR>
(Except for share and<BR>
per-share data) </FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>U.S dollars in thousands<BR>
(Except for share and<BR>
per-share data) </FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="52%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>Sales</FONT></TD>
     <Td Width="1%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="3%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="Right"><FONT FACE="Times New Roman" SIZE="2"><B>4,048</B> </FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>5,172</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="Right"><FONT FACE="Times New Roman" SIZE="2"><B>9,066</B> </FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>12,875</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Cost of sales</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>2,438</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>3,196</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>5,516</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>7,641</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Gross profit</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>1,610</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,976</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>3,550</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>5,234</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Operating Expenses</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Research and development</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>698</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>827</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>1,335</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,684</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Selling and marketing</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>443</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>629</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>822</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>1,173</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>General and administrative</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>317</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>382</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>592</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>791</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Total operating expenses</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>1,458</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>1,838</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>2,749</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>3,648</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Operating income</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>152</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>138</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>801</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,586</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Financial income, net</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>192</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>262</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>536</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>509</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Income before income taxes</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>344</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>400</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>1,337</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>2,095</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Income tax expenses</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>88</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>77</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>214</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>36</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Net income</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>256</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>323</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>1,123</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>2,059</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Income per share</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Basic income per ordinary share</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>0.04</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>0.05</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>0.17</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>0.31</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Weighted average number of ordinary</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>shares used to compute basic income</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>per-share (in thousands)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>6,696</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>6,688</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>6,695</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>6,676</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Diluted income per ordinary share</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>0.04</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>0.05</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>0.16</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>0.30</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Weighted average number of ordinary</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>shares used to compute diluted income</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>per-share (in thousands)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>6,840</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>6,770</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>6,818</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>6,777</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD></TR>
</TABLE>
<Br>


<!-- MARKER FORMAT-SHEET="Footnote Rule-TNR" FSL="Workstation" -->
<Hr Size=1 Noshade Width=100% Align=LEFT>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Workstation" -->
<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=100% align=center><Font Face="Times New Roman, Times, Serif" Size=2>
The
accompanying notes are an integrated part of these consolidated condensed interim
financial statements  </font></td>
</tr>
</table>
<br>

<p align=center>
<font size=2>4</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<Page>

<A name=zk103></A>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Workstation" -->
<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=100%><Font Face="Times New Roman, Times, Serif" Size=2>
Silicom
Ltd. (An Israeli Corporation) and its Consolidated Subsidiary  </font></td>
</tr>
</table>
<Br>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Workstation" -->
<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=100%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>
Condensed
Interim Consolidated Statements of Changes in Shareholders' Equity</B> </FONT> </td>
</tr>
</table>


<!-- MARKER FORMAT-SHEET="Footnote Rule-TNR" FSL="Workstation" -->
<Hr Size=1 Noshade Width=100% Align=LEFT>

<Br>








<Table Cellpadding="0" Cellspacing="0" Width="100%">
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>Ordinary shares </FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Additional<BR>
paid-in<BR>
capital </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Treasury<BR>
shares </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Retained<BR>
earnings </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Total<BR>
shareholders'<BR>
equity </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE="1">Number<BR>
of shares<SUP>(1)</SUP> </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=15><FONT FACE="Times New Roman" SIZE=1>US$ thousands </FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="31%" Align="Left"><FONT FACE="Times New Roman" SIZE="2"><B>Balance at</B> </FONT></TD>
     <Td Width="1%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="2%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="Right"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="Right"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="Right"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="Right"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="Right"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="Right"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;December 31, 2007</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>6,570,876</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>20</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>31,727</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(38</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>7,625</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>39,334</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Changes during 2008</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Exercise of options</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>14,700</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>*</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>38</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>38</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Exercise of warrants</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>108,487</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>*</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>983</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>983</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Share-based compensation</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>334</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>334</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Net income</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>4,645</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>4,645</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"  colspan=19><FONT FACE="Times New Roman" SIZE="2"><B>Balance at</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;December 31, 2008</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>6,694,063</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>20</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>33,082</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(38</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>12,270</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>45,334</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Changes during Six-month</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>period Ended June 30, 2009</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom Bgcolor="#cceeff">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2">Exercise of options </FONT> </TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>2,827</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>*</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>9</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>9</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD></TR>
<Tr Valign="Bottom" >
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2">Share-based compensation </FONT> </TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>217</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>217</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD></TR>
<TR VALIGN=Bottom Bgcolor="#cceeff">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2">Net income </FONT> </TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>1,123</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>1,123</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom">
     <Td Align="LEFT"  colspan=19><FONT FACE="Times New Roman" SIZE="2"><B>Balance at</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD></TR>
<Tr Valign="Bottom">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;June 30, 2009</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>6,696,890</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>20</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>33,308</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>(38</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>)</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>13,393</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>46,683</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD></TR>
</TABLE>
<Br>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><SUP>(1)
</SUP>Net of 14,971 shares held by the subsidiary </FONT> </p>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><Font Face="Times New Roman, Times, Serif" Size=2><Sup>(*)
          </sup>Less than 1 thousand. </font></p>

<!-- MARKER FORMAT-SHEET="Footnote Rule-TNR" FSL="Workstation" -->
<Hr Size=1 Noshade Width=100% Align=LEFT>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Workstation" -->
<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=100% align=center><Font Face="Times New Roman, Times, Serif" Size=2>
The
accompanying notes are an integrated part of these condensed interim consolidated
financial statements  </font></td>
</tr>
</table>
<br>


<p align=center>
<font size=2>5</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<Page>

<A name=zk104></A>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Silicom Ltd. (An Israeli
Corporation) and its Consolidated Subsidiary </font></p>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Workstation" -->
<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=100%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>
Condensed
Interim Consolidated Statements of Cash Flows</B> </FONT> </td>
</tr>
</table>

<!-- MARKER FORMAT-SHEET="Footnote Rule-TNR" FSL="Workstation" -->
<Hr Size=1 Noshade Width=100% Align=LEFT>


<Br>








<Table Cellpadding="0" Cellspacing="0" Width="100%">
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Six-month<BR> period
ended<BR>
June 30, 2009 </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Six-month<BR>
period ended<BR>
June 30, 2008 </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>U.S$ in thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>U.S$ in thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="71%" Align="Left"><FONT FACE="Times New Roman" SIZE="2"><B>Cash flows from operating activities</B> </FONT></TD>
     <Td Width="1%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="2%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE="2"><B></B> </FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Net Income</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>1,123</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>2,059</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"  colspan=7><FONT FACE="Times New Roman" SIZE="2"><B><U>Adjustments required to reconcile net income to net cash</U></B> </FONT> </TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"  colspan=7><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;<U>provided by operating activities:</U></B> </FONT> </TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Depreciation and amortization</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>220</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>207</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Liability for employees' severance benefits, net</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>10</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>293</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Expenses from marketable securities</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>70</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>2</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Share based compensation expense</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>217</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>146</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Deferred tax assets</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>83</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>(189</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Accounts receivable - trade</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>786</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>2,344</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Accounts receivable - other</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>103</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>(3</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Inventories</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>389</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(1,415</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Trade accounts payable</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>(1,095</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>)</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>261</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Other accounts payable and accrued expenses</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>201</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>391</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Capital gains from sales of property, plant and equipment</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>(12</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Net cash provided by operating activities</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>2,107</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>4,084</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Cash flows from investing activities</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Purchase of property, plant and equipment</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>(98</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>)</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(460</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Proceeds from sales of property, plant and equipment</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>13</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Proceeds from maturity of marketable securities</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>5,800</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>3,200</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Purchase of marketable securities</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>(8,745</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>)</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>(12,404</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Net cash used in investing activities</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>(3,043</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>)</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(9,651</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Cash flows from financing activities</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Exercise of options and warrants</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>9</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>964</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Net cash provided by financing activities</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>9</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>964</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Decrease in cash and cash equivalents</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>(927</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>)</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(4,603</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Cash and cash equivalents at beginning of period</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>14,568</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>14,216</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Cash and cash equivalents at end of period</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>13,641</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>9,613</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Supplementary disclosure of cash flow information:</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT" colspan=7><FONT FACE="Times New Roman" SIZE=2>&nbsp;Cash paid during the year for:</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;Financing expenses</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>53</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>48</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;Taxes on income</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>20</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>37</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD></TR>
</TABLE>
<Br>


<!-- MARKER FORMAT-SHEET="Footnote Rule-TNR" FSL="Workstation" -->
<Hr Size=1 Noshade Width=100% Align=LEFT>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Workstation" -->
<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=100% align=center><Font Face="Times New Roman, Times, Serif" Size=2>
The
accompanying notes are an integrated part of these condensed interim consolidated
financial statements  </font></td>
</tr>
</table>
<br>

<p align=center>
<font size=2>6</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<Page>

<A name=zk105></A>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Silicom Ltd. and its Consolidated Subsidiary
<Br>Notes to the Condensed Interim Consolidated Financial Statements</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Note 1 &#150; General </font></h1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>A. Description of
Business </font></h1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Silicom Ltd. is an Israeli
corporation engaged in designing, manufacturing, marketing and supporting server
networking solutions for a broad range of servers and server based systems. It also offers
a broad range of its traditional PC cards, PCI cards and USB products. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>The Company&#146;s shares have been
traded in the United States on the National Association of Securities Dealers Automated
Quotation System (&#147;NASDAQ&#148;), since February 1994 and in Israel on the Tel Aviv
Stock Exchange (&#147;TASE&#148;), since December 2005. Since February 11, 2008, the
Company&#146;s shares have been traded on the NASDAQ Global Market (prior thereto they
were traded on the NASDAQ Capital Market). </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Silicom markets its products
directly, through (i) Original Equipment Manufacturers (&#147;OEMs&#148;) which sell the
Company&#146;s connectivity products under their own private labels or incorporate the
Company&#146;s products into their products, (ii)&nbsp;a worldwide network of independent
distributors and (iii) its US-based subsidiary. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>In these Condensed Interim
Consolidated Financial Statements the terms &#147;Company&#148; or Silicom refer to
Silicom Ltd. and its wholly owned subsidiary, Silicom Connectivity Solutions, Inc.,
whereas the term &#147;subsidiary&#148; refers to Silicom Connectivity Solutions, Inc., a
wholly owned subsidiary of Silicom Ltd. </font></p>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Note 2 &#150;
Significant Accounting Policies </font></h1>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><Font Face="Times New Roman, Times, Serif" Size=2><B>A.
          Basis of Presentation and adoption of new accounting standards</b> </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>The accompanying Condensed Interim
Consolidated Financial Statements have been prepared in accordance with generally accepted
accounting principles in the United States for interim financial information and contain
all adjustments (consisting only of normal recurring adjustments) which, in the opinion of
management, are necessary to present fairly the financial information included therein. It
is suggested that these condensed interim consolidated financial statements be read in
conjunction with the audited consolidated financial statements and related notes included
in the Company&#146;s Annual Report on Form 20-F for the year ended December 31, 2008.
Results for the interim period presented are not necessarily indicative of the results to
be expected for the full year. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Effective April&nbsp;1, 2009, the
Company adopted FSP FAS 107-1 and APB 28-1, <I>&#147;Interim Disclosures About Fair Value
of Financial Instruments&#148; </i>(FSP FAS 107-1 and APB 28-1). FSP FAS 107-1 and APB
28-1 require disclosure of the fair value of the Company&#146;s financial instruments in
interim reporting periods. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Effective April 1, 2009, the Company
adopted FSP FAS 115-2 and FAS 124-2, <I>&#147;Recognition and Presentation of
Other-Than-Temporary Impairments&#148; </i>(FSP FAS 115-2 and 124-2) which significantly
changes the existing other-than-temporary impairment model for debt securities. It also
modifies the presentation of other-than-temporary impairment losses and increases the
frequency and expands required disclosures about other-than-temporary impairment for debt
and equity securities. FSP FAS 115-2 and FAS 124-2 did not have a material effect on the
Company&#146;s financial statements. </font></p>

<p align=center>
<font size=2>7</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<Page>


<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Notes to the Condensed
Interim Consolidated Financial Statements (Continued) </font></h1>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><Font Face="Times New Roman, Times, Serif" Size=2><B>A.
          Basis of Presentation and adoption of new accounting standards</b> (Continued) </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Effective April 1, 2009, the Company
adopted FSP FASB statement No. 157-4 <I>&#147;Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly</i>, This FSP provides additional guidance for
estimating fair value in accordance with FASB Statement No. 157, &#147;<I>Fair Value
measurements&#148;</i>, when the volume and level of activity for the asset or liability
have significantly decreased and when circumstances indicate a transaction is not orderly.
FSP FASB statement No. 157-4 did not have a material effect on the Company&#146;s
financial statements. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Effective April&nbsp;1, 2009, the
Company adopted FASB SFAS No.&nbsp;165, <I>&#147;Subsequent Events&#148; </i>(SFAS 165).
SFAS 165 establishes general standards for accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are available to be
issued (subsequent events). These standards are largely the same guidance on subsequent
events which previously existed only in auditing literature. SFAS 165 also requires
disclosure of the date through which subsequent events have been evaluated, as well as
whether that date is the date the financial statements were issued or the date the
financial statements were available to be issued. This disclosure has been provided in
Note 6 below. </font></p>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>B. Use of Estimates and
Assumptions </font></h1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>The preparation of the Condensed
Interim Consolidated Financial Statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the Condensed Interim Consolidated
Financial Statements, and the reported amounts of revenue and expenses during the
reporting period. Actual results may vary from these estimates. Significant items subject
to such estimates and assumptions include the useful lives of fixed assets; allowances for
doubtful accounts; deferred tax assets, fixed assets, inventory, investments, and
share-based compensation; income tax uncertainties and other contingencies. The current
economic environment has increased the degree of uncertainty inherent in those estimates
and assumptions. </font></p>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Default" -->
<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Note 3 &#150; Inventories </font></h1>







<Table Cellpadding="0" Cellspacing="0" Width="100%">
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>June 30, 2009</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>December 31, 2008</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>US dollars in thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>US dollars in thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="5%"> </td>
     <Td Width="59%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>Raw materials and components</FONT></TD>
     <Td Width="1%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="5%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>$</FONT></TD><Td Width="12%" Align="Right"><FONT FACE="Times New Roman" SIZE=2> 1,881</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>$</FONT></TD><Td Width="12%" Align="Right"><FONT FACE="Times New Roman" SIZE=2> 2,282</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <Td> </td>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Work in progress</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2> 2,680</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2> 2,858</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td> </td>
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Finished goods</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>$</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>   319</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>$</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>   129</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <Td> </td>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2> 4,880</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2> 5,269</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
</TABLE>
<Br>

<p align=center>
<font size=2>8</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<Page>



<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Notes to the Condensed
Interim Consolidated Financial Statements (Continued) </font></h1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Note 4 &#150; Marketable
Securities </font></h1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>As at December 31, 2008 and June 30,
2009, investment securities consist of corporate debt securities and US government
agencies (&#147;the Bonds&#148;), which the Company classified as
&#147;held-to-maturity&#148;. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>The amortized cost, gross unrealized
losses and fair value of the Bonds by major interest type were as follows: </font></p>









<Table Cellpadding="0" Cellspacing="0" Width="100%">
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=9><FONT FACE="Times New Roman" SIZE=1>December 31, 2008</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Amortized cost</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Gross unrealized<BR>
holding losses </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Fair value</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=9><FONT FACE="Times New Roman" SIZE=1>US dollars in thousands</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="5%"> </td>
     <Td Width="50%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>Up to 5%</FONT></TD>
     <Td Width="1%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="5%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>11,867</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>(324</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>11,543</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <Td> </td>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>5.01% - 5.34%</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>12,763</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>(213</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>12,550</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td> </td>
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>24,630</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(537</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>24,093</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
</TABLE>
<Br>



<Table Cellpadding="0" Cellspacing="0" Width="100%">
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=9><FONT FACE="Times New Roman" SIZE=1>June 30, 2009</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Amortized cost</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Gross unrealized<BR>
holding losses </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Fair value</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=9><FONT FACE="Times New Roman" SIZE=1>US dollars in thousands</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="5%"> </td>
     <Td Width="50%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>Up to 5%</FONT></TD>
     <Td Width="1%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="5%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>18,601</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>(164</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>18,437</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <Td> </td>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>5.01% - 5.3%</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>8,904</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>(83</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>8,821</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td> </td>
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>27,505</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(247</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>27,258</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
</TABLE>
<Br>




<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Workstation" -->
<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=5%>&nbsp;</td>
<td Width=95%><Font Face="Times New Roman, Times, Serif" Size=2>
Maturities
of the Bonds were as follows as at June 30, 2009: </font></td>
</tr>
</table>
<br>








<Table Cellpadding="0" Cellspacing="0" Width="100%">
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Amortized cost</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Fair value</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>US dollars in thousands</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="5%"> </td>
     <Td Width="64%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>Current maturities</FONT></TD>
     <Td Width="1%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="4%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>8,908</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>8,852</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <Td> </td>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Due after one year through 1.88 years</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>18,597</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>18,406</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td> </td>
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>27,505</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>27,258</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD></TR>
</TABLE>
<Br>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>The following table summarizes the
gross unrealized losses on investment securities and the fair value of the related
securities, aggregated by investment category and length of time that individual
securities have been in a continuous unrealized loss position, at June 30, 2009: </font></p>




<Table Cellpadding="0" Cellspacing="0" Width="100%">
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>Less than 12 months</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>12 months or more</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>Total</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3 align=left><FONT FACE="Times New Roman" SIZE=1>Held to maturity</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Unrealized<BR>
Losses </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Fair value</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Unrealized<BR>
Losses </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Fair value</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Unrealized<BR>
Losses </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Fair value</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Td Width="38%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>Corporate and US Government Agencies debt securities</FONT></TD>
     <Td Width="1%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="7%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>(142</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="7%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>19,403</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="7%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>(105</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="7%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>7,855</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="7%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>(247</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="7%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>27,258</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD></TR>
</TABLE>
<Br>



<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>The unrealized losses on the
investments were caused by interest rate increases. The Company has the ability and intent
to hold these investments until maturity; therefore these investments are not considered
other than temporary impaired. </font></p>

<p align=center>
<font size=2>9</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<Page>



<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Notes to the Condensed
Interim Consolidated Financial Statements (Cont&#146;d) </font></h1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Note 5 &#150; Share
based compensation &#150; Stock options to employees and directors </font></h1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Workstation" -->
<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=5%>&nbsp;</td>
<td Width=95%><Font Face="Times New Roman, Times, Serif" Size=2>
The
following table summarizes information regarding stock options as at June 30, 2009:  </font></td>
</tr>
</table>
<br>










<Table Cellpadding="0" Cellspacing="0" Width="100%">
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>Options outstanding</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3 align=left><FONT FACE="Times New Roman" SIZE=1>Exercise price<BR>
US$ </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Number<BR>
of options </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Weighted<BR>
average remaining<BR>
contractual life<BR>
(in years) </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="10%"> </td>
     <Td Width="55%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>0.90&nbsp;</FONT></TD>
     <Td Width="1%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="8%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>1,950</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>2.57</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <Td> </td>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>2.53&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>40,500</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>5.49</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td> </td>
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>3.19 - 5.75</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>311,173</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>5.08</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <Td> </td>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <Td> </td>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>353,623</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD></TR>
</TABLE>
<Br>



<Table Cellpadding="0" Cellspacing="0" Width="100%">
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>Options exercisable</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3 align=left><FONT FACE="Times New Roman" SIZE=1>Exercise price<BR>
US$ </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Number<BR>
of options </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Weighted<BR>
average remaining<BR>
contractual life<BR>
(in years) </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="10%"> </td>
     <Td Width="55%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>0.90&nbsp;</FONT></TD>
     <Td Width="1%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="8%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>1,950</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>2.57</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <Td> </td>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>2.53&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>40,500</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>5.49</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td> </td>
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>3.19 - 5.75</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>112,173</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1.16</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <Td> </td>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <Td> </td>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>154,623</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD></TR>
</TABLE>
<Br>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Workstation" -->
<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=5%>&nbsp;</td>
<td Width=95%><Font Face="Times New Roman, Times, Serif" Size=2>
The
stock option activity in the six months ended June 30, 2009 is as follows:  </font></td>
</tr>
</table>
<br>








<Table Cellpadding="0" Cellspacing="0" Width="100%">
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Number<BR>
of options </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="10%"> </td>
     <Td Width="59%" Align="Left"><FONT FACE="Times New Roman" SIZE="2"><B>Balance at December 31, 2008</B> </FONT></TD>
     <Td Width="1%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="4%" Align="Left"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>357,450</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="10%" Align="Right"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <Td> </td>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Forfeited</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>(1,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td> </td>
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Exercised</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(2,827</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <Td> </td>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <Td> </td>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Balance at June 30, 2009</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>353,623</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td> </td>
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Exercisable at June 30, 2009</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>154,623</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD></TR>
</TABLE>
<Br>

<p align=center>
<font size=2>10</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<Page>


<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Notes to the Condensed
Interim Consolidated Financial Statements (Continued) </font></h1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Note 6 &#150; Subsequent
Events </font></h1>

<!-- MARKER FORMAT-SHEET="Para (List) Hang Lv 0-TNR" FSL="Workstation" -->
     <Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
          <Tr Valign=TOP>
          <Td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2>A.</font></td>
          <Td Width=95%><Font Face="Times New Roman, Times, Serif" Size=2>
          On July 25, 2005, the Knesset passed the law for Amendment of Income Tax
          Ordinance (No. 147 and Temporary Order) &#150; 2005 (hereinafter &#150;
          amendment 147), which provides for a gradual reduction in the company tax rate
          to 25% as from 2010. </font></td>
          </tr>
          </table>
          <Br>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Workstation" -->
<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=5%>&nbsp;</td>
<td Width=95%><Font Face="Times New Roman, Times, Serif" Size=2>
On
July 14, 2009, the Knesset Passed the law for Economic Efficiency (amendment for
legislation for implementation of the economic program for 2009-2010), which provides for
gradual reduction in the company tax rate to 18% as from 2016. According to the amendments
the company tax rate will be reduced in the following manner: in 2009 &#150; 26%, in 2010
&#150; 25%, in 2011 &#150; 24%, in 2012 &#150; 23%, in 2013 &#150; 22%, in 2014 &#150;
21%, in 2015 &#150; 20%, and from 2016 onward the tax rate will be 18%. The aforesaid
change in the tax rates did not have a material effect on the Company&#146;s financial
statements. </font></td>
</tr>
</table>
<br>

<!-- MARKER FORMAT-SHEET="Para (List) Hang Lv 0-TNR" FSL="Default" -->
     <Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
          <Tr Valign=TOP>
          <Td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2>B.</font></td>
          <Td Width=95%><Font Face="Times New Roman, Times, Serif" Size=2>
          Subsequent events for the period ended June 30, 2009 have been evaluated by the
          management of the Company through August 25, 2009, the date which these
          financial statements are issued on. </font></td>
          </tr>
          </table>
          <Br>

<p align=center>
<font size=2>11</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">


</body>
</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>exhibit_99-2.htm
<TEXT>
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\edgar filing\Silicom Ltd\97169\a97169.eep               -->
     <!-- Control Number: 97169                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    Silicom Ltd                                                      -->
     <!-- Project Name:   6-K                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>6-K</TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Scotch Rule Top-TNR" FSL="Workstation" -->
<Hr Align=LEFT Width=100% Size=4 Noshade Style="margin-top: -5px">
<hr Align=LEFT Width=100% Size=1 Noshade Style="margin-top: -10px">

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P align=right><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>Exhibit 99.2</U></B> </FONT> </p>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=3>MANAGEMENT&#146;S
DISCUSSION AND ANALYSIS OF FINANCIAL </font></h1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=3>CONDITION AND RESULTS
OF OPERATIONS </font></h1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>THE INFORMATION CONTAINED IN THIS
SECTION SHOULD BE READ IN CONJUNCTION WITH (1) OUR CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF JUNE 30, 2009 AND FOR THE SIX MONTHS THEN ENDED AND RELATED
NOTES INCLUDED IN THIS REPORT AND (2) OUR AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND
RELATED NOTES INCLUDED IN OUR ANNUAL REPORT ON FORM 20-F FOR THE YEAR ENDED DECEMBER 31,
2008 AND THE OTHER INFORMATION CONTAINED IN SUCH ANNUAL REPORT AND (3) OUR REPORT OF FORM
6-K, FILED JULY 27, 2009. </font></p>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Results of Operations </font></h1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>The following table sets forth
certain statement of operations data as a percentage of total sales for the periods
indicated. </font></p>






<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>Six Months Ended June 30,</FONT></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2008</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2009</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="72%" Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Sales</B> </FONT></TD>
     <Td Width="1%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="3%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="9%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>100</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="9%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>100</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Cost of sales</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>59.35</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>60.84</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Gross profit</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>40.65</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>39.16</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Research and development costs</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>13.08</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>14.73</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Selling and marketing expenses</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>9.11</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>9.07</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>General and administrative expenses</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>6.14</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>6.53</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Operating Income</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>12.32</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>8.83</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Financial income, net</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>3.95</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>5.91</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Income before income taxes</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>16.27</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>14.74</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Income tax expenses</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>0.28</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>2.36</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Net Income</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>15.99</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>12.38</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>
<Br>

<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<Page>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Sales in the six months ended June
30, 2009 decreased by 29.6% to $9,066 thousand compared to $12,875 thousand in the six
months ended June 30, 2008.  The decrease in sales is mostly
attributed to the generally lower demand caused by the global economic downturn. As a
result of this economic downturn, during the first half of 2009 we have experienced a
significant reduction in ongoing purchase orders, particularly from some of our major
customers, who have been in the process of drawing down their inventory stock over the
past few quarters. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Gross profit in the six months ended
June 30, 2009 was $3,550 thousand compared to $5,234 thousand in the six months ended June
30, 2008. Gross profit as a percentage of sales in the six months ended June 30, 2009 was
39.2%, compared to 40.7% in the six months ended June 30, 2008. Our gross profit is
largely dependent on the mix of products we sell during a specific period. The slightly
lower gross profit percentage in the six months ended June 30, 2009 was primarily a result
of such a change to the mix of sold products. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Research and development expenses,
gross, in the six months ended June 30, 2009 decreased by 20.7% to $1,335 thousand
compared to $1,684 thousand in the six months ended June 30, 2008. This decrease was
mainly attributed to a relative strengthening of the US dollar against the New Israeli
Shekel (a significant portion of our Research and development expenses are incurred in New
Israeli Shekels). </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Selling and marketing expenses in the
six months ended June 30, 2009 decreased by 29.9% to $822 thousand compared to $1,173
thousand in the six months ended June 30, 2008, mainly due to a relative strengthening of
the US dollar against the New Israeli Shekel (a significant portion of our selling and
marketing expenses are incurred in New Israeli Shekels). </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>General and administrative expenses
in the six months ended June 30, 2009 decreased by 25.2% to $592 thousand compared to $791
thousand in the six months ended June 30, 2008, primarily due to a relative strengthening
of the US dollar against the New Israeli Shekel (a significant portion of our General and
administrative expenses are incurred in New Israeli Shekels). </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Financial income in the six months
ended June 30, 2009 increased by 5.3% to $536 thousand compared to $509 thousand in the
six months ended June 30, 2008. The increase was primarily caused by a relative
strengthening of the US dollar against the New Israeli Shekel (a significant portion of
our balance sheet assets and obligations are denominated in NIS), which created a net
financial income in US dollars from exchange rate differences. In addition, such increase
was also caused by an increase in funds available for investment. Thus, despite the effect
of the decrease in yields from investments in marketable securities, there was an increase
in financial income in the six months ended June 30, 2009. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>In the six months ended June 30, 2009
we recorded current income tax expenses of $131 thousand and deferred income tax expenses
of $83 thousand, compared to $225 thousand income tax expenses and deferred income tax
benefit of $189 thousand in the six months ended June 30, 2008. </font></p>


<p align=center>
<font size=2>2</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<Page>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>In the six months ended June 30, 2009
we recorded net income of $1,123 thousand compared to net income of $2,059 thousand in the
six months ended June 30, 2008, a 45.5% decrease. This decrease was mainly due to the
decrease in sales, despite the decrease in our operational expenses as described above. </font></p>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Impact of Inflation and
Currency Fluctuations on Results of Operations, Liabilities and Assets </font></h1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Since the majority of our revenues
are denominated and paid in U.S. dollars, we believe that inflation and fluctuations in
the U.S. dollar exchange rate have no material effect on our revenue. Inflation in Israel
and the Israeli currency as well as U.S. dollar exchange rate fluctuations, may however,
have an effect on our expenses and, as a result, on our net income/loss. The cost of our
Israeli operations, as expressed in U.S. dollars, is influenced by the extent to which any
change in the rate of inflation in Israel is not offset (or is offset on a lagging basis)
by the change in valuation of the NIS in relation to the U.S. dollar. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>We do not presently engage in any
hedging or other transactions intended to manage the risks relating to foreign currency
exchange rate or interest rate fluctuations. However, we may in the future undertake such
transactions, if management determines that it is necessary to offset such risks. </font></p>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Liquidity and Capital
Resources </font></h1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>As of June 30, 2009, we had working
capital of $28,093 thousand and our current ratio (current assets to current liabilities)
was 8.31. Cash and cash equivalents as of June 30, 2009 decreased by $927 thousand to
$13,641 thousand compared with $14,568 thousand as of December 31, 2008. Short-term
marketable securities increased by $482 thousand and long-term marketable securities
increased by $2,393 thousand. The net increase of $1,948 thousand in these three balance
sheet items in the six months ended June 30, 2009 was mainly due to the net cash provided
by operating activities. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Trade receivables decreased to $4,063
thousand as of June 30, 2009 from $4,849 thousand as of December 31, 2008, mainly due to
the decrease in sales in the second quarter of 2009, as compared to sales in the fourth
quarter of 2008. Other receivables decreased from $353 thousand to $250 thousand. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Trade payables decreased from $2,681
thousand at the end of 2008 to $1,586 thousand at June 30, 2009, mainly due to the
decrease in sales in the second quarter of 2009, resulting in a decrease in the cost of
goods sold. Other payables and accrued liabilities increased from $2,054 thousand at the
end of 2008 to $2,255 thousand at June 30, 2009. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Cash provided by operating activities
in the six months ended June 30, 2009 amounted to $2,107 thousand compared to cash
provided by operating activities in the amount of $4,084 thousand in the six months ended
June 30, 2008. The cash provided by operating activities in the six months ended June 30,
2009 was the result of our positive operating income. </font></p>

<p align=center>
<font size=2>3</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<Page>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Inventories decreased from $5,269
thousand at the end of 2008 to $4,880 thousand as of June 30, 2009, mainly due to the
recent lower sales. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Capital expenditures on property and
equipment in the six months ended June 30, 2009 were $98 thousand compared with $460
thousand in the six months ended June 30, 2008. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>We have cash and cash equivalents
that we believe are sufficient for our present requirements. </font></p>

<p align=center>
<font size=2>4</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">

</body>
</html>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
