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<SEC-DOCUMENT>0001062993-06-001899.txt : 20060630
<SEC-HEADER>0001062993-06-001899.hdr.sgml : 20060630
<ACCEPTANCE-DATETIME>20060630153753
ACCESSION NUMBER:		0001062993-06-001899
CONFORMED SUBMISSION TYPE:	424B4
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20060630
DATE AS OF CHANGE:		20060630

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PLURISTEM LIFE SYSTEMS INC
		CENTRAL INDEX KEY:			0001158780
		STANDARD INDUSTRIAL CLASSIFICATION:	BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836]
		IRS NUMBER:				980351734
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		424B4
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-133878
		FILM NUMBER:		06937597

	BUSINESS ADDRESS:	
		STREET 1:		MATAM ADVANCED TECHNOLOGY PARK
		STREET 2:		BUILDING NO. 20
		CITY:			HAIFA
		STATE:			L3
		ZIP:			31905
		BUSINESS PHONE:		972-4-850-1080

	MAIL ADDRESS:	
		STREET 1:		MATAM ADVANCED TECHNOLOGY PARK
		STREET 2:		BUILDING NO. 20
		CITY:			HAIFA
		STATE:			L3
		ZIP:			31905

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	AI SOFTWARE INC
		DATE OF NAME CHANGE:	20010906
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B4
<SEQUENCE>1
<FILENAME>form424b4.htm
<DESCRIPTION>PROSPECTUS
<TEXT>
<!DOCTYPE HTML PUBLIC "formsb2a.pdf">


<HTML>
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   <TITLE>Filed by Automated Filing Services Inc. (604) 609-0244 - Pluristem Life Systems, Inc. - Form 424B4</TITLE>
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<BODY style="font-size:10pt;">

<HR noshade align="center" width=100% size=3 color="black">
<br>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left><B>PROSPECTUS</B> </TD></TR>
  <TR vAlign=top>
    <TD align=right>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=right><B>June 29, 2006</B> </TD>
  </TR></TABLE>
<P align=center><B>PLURISTEM LIFE SYSTEMS, INC. <BR></B>A NEVADA CORPORATION
</P>
<P align=center>330,059,239 SHARES OF COMMON STOCK OF PLURISTEM LIFE SYSTEMS,
INC. <BR>_________________________________<BR></P>
<P align=justify>This prospectus relates to the resale by certain selling
security holders of Pluristem Life Systems, Inc. of up to 330,059,239 shares of
our common stock. The selling security holders may offer to sell the shares of
common stock being offered in this prospectus at fixed prices, at prevailing
market prices at the time of sale, at varying prices or at negotiated
prices.</P>
<P align=justify>We will not receive any proceeds from the resale of shares of
our common stock by the selling security holders. We may, however, receive
proceeds upon exercise of the share purchase warrants and these proceeds will be
used for general working capital purposes. We will pay for expenses of this
offering.</P>
<P align=justify>The selling security holders may be deemed to be
&#147;underwriters,&#148; as such term is defined in the Securities Act.</P>
<P align=justify>Our common stock is traded on the National Association of
Securities Dealers OTC Bulletin Board under the symbol &#147;PLRS&#148;. On June 16, 2006,
the closing bid price of our common stock was $0.041 on the OTC Bulletin Board.
</P>
<P align=justify><B>Our business is subject to many risks and an investment in
our common stock will also involve a high degree of risk. You should invest in
our common stock only if you can afford to lose your entire investment. You
should carefully consider the various Risk Factors described beginning on page 8
before investing in our common stock. </B></P>
<P align=justify><B>Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense. </B></P>
<P align=justify>The information in this prospectus is not complete and may be
changed. The selling security holders may not sell or offer these securities
until this registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted. </P>
<P align=center>The date of this prospectus is June 29, 2006.</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_5></A>
<P align=center>- 5 - </P>
<P align=justify>The following table of contents has been designed to help you
find important information contained in this prospectus. We encourage you to
read the entire prospectus. </P>
<P align=center><B>TABLE OF CONTENTS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_6">PROSPECTUS SUMMARY </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_6">6 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_8">RISK FACTORS </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_8">8 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_8">RISKS RELATED TO OUR BUSINESS AND COMPANY </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_8">8 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_14">FORWARD-LOOKING STATEMENTS </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_14">14 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_14">SECURITIES AND EXCHANGE COMMISSION&#146;S PUBLIC REFERENCE
      </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_14">14 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_15">THE OFFERING </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_15">15 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_15">USE OF PROCEEDS </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_15">15 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_16">SELLING SECURITY HOLDERS </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_16">16 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_20">PLAN OF DISTRIBUTION </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_20">20 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_22">APRIL 3, 2006 PRIVATE PLACEMENT OF SENIOR SECURED CONVERTIBLE
      DEBENTURES AND WARRANTS </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_22">22 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_23">LEGAL PROCEEDINGS </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_23">23 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_24">DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
      </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_24">24 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_27">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
      </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_27">27 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_29">DESCRIPTION OF SECURITIES </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_29">29 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_30">DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR
      SECURITIES ACT LIABILITIES </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_30">30 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_30">DESCRIPTION OF BUSINESS </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_30">30 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_43">PLAN OF OPERATION </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_43">43 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_46">APPLICATION OF CRITICAL ACCOUNTING POLICIES </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_46">46 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_47">DESCRIPTION OF PROPERTY </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_47">47 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_47">MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
      </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_47">47 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_48">DIVIDEND POLICY </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_48">48 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_48">EXECUTIVE COMPENSATION </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_48">48 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_51">REPORTS TO SECURITY HOLDERS </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_51">51 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_52">FINANCIAL STATEMENTS </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_52">52 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_53">CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
      AND FINANCIAL DISCLOSURE </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_53">54 </A></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="5%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_53">WHERE YOU CAN FIND MORE INFORMATION </A></TD>
    <TD align=center width="5%" bgColor=#eeeeee ><A
      href="#page_53">54 </A></TD>
  </TR>
</TABLE>
<BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_6></A>
<P align=center>- 6 - </P>
<P align=justify>As used in this prospectus, the terms &#147;we&#148;, &#147;us&#148;, &#147;our&#148;, and
&#147;Pluristem&#148; mean Pluristem Life Systems, Inc., unless otherwise indicated. </P>
<P align=justify>All dollar amounts refer to US dollars unless otherwise
indicated. </P>
<P align=center><B>PROSPECTUS SUMMARY </B></P>
<P align=justify>THIS IS ONLY A SUMMARY AND DOES NOT CONTAIN ALL OF THE
INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS,
ESPECIALLY &#147;RISK FACTORS&#148; AND OUR FINANCIAL STATEMENTS AND THE RELATED NOTES
INCLUDED IN THIS PROSPECTUS, BEFORE DECIDING TO INVEST IN SHARES OF OUR COMMON
STOCK. </P>
<P align=center>Our Business </P>
<P align=justify>We are engaged in the business of the development of the stem
cell production technology and the commercialisation of cell therapy products.
Stem cells are unspecialized cells that renew themselves for long periods
through cell division. Scientists have developed sufficient fundamental
understanding to use stem cells for bone marrow transplants and other methods of
cell therapy. However, generally there are not sufficient stem cells available
to carry out transplants and other operations on adults. Our technology grows
stem cells for potential use in combating fatal disease. We acquired our
exclusive technology under a License Agreement with the Weizmann Institute of
Science and the Technion-Israel Institute of Technology. We intend to improve
this technology platform and develop it into a functional stem cell production
system that use to develop cell therapy products for sale on the medical
marketplace. We have decided to name this system the PluriX&#153; bioreactor
system.</P>
<P align=justify>Currently, we are in the research and developmental stage of
our PluriX&#153; bioreactor system and potential cell therapy products and have not
begun the process of seeking regulatory approval for marketing our products in
any jurisdiction.</P>
<P align=justify>Our principal executive office is at MATAM Advanced Technology
Park, Building No. 20, Haifa, Israel. Our telephone number is
011-972-4-850-1080. </P>
<P align=justify>We were incorporated in the State of Nevada under the name A.I.
Software, Inc. on May 11, 2001. We were not successful in implementing our
initial business plan of developing an artificial intelligence software called
&#147;Randomix&#148;. In March and April of 2003, our board of directors decided to pursue
initiatives in the biotechnology industry as an extension of our business. In
May of 2003, we acquired our exclusive technology under a License Agreement with
the Weizmann Institute of Science and the Technion-Israel Institute of
Technology. On June 10, 2003, we acquired all of the issued and outstanding
shares of a research and development company called Pluristem, Ltd. so we would
have the capacity to conduct further research and development of our exclusive
technology. On June 25, 2003, we changed our name to Pluristem Life Systems,
Inc.</P>
<P align=center>Number of Shares Being Offered </P>
<P align=justify>This prospectus relates to the resale by certain selling
security holders of Pluristem Life Systems, Inc. of up to 330,059,239 shares of
our common stock. </P>
<P align=justify>The selling security holders may sell the shares of common
stock in the public market or through privately negotiated transactions or
otherwise. The selling security holders may sell these shares of common stock
through ordinary brokerage transactions, directly to market makers or through
any other means described in the section entitled &#147;Plan of Distribution&#148;. </P>
<P align=center>Number of Shares Outstanding </P>
<P align=justify>There were 63,743,483 shares of our common stock issued and outstanding
  as at June 16, 2006.</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_7></A>
<P align=center>- 7 - </P>
<P align=center>Use of Proceeds </P>
<P align=justify>We will not receive any of the proceeds from the sale of the
shares of our common stock being offered for sale by the selling security
holders. We may, however, receive proceeds upon exercise of the share purchase
warrants and these proceeds will be used for general working capital purposes.
We will incur all costs associated with this registration statement and
prospectus. </P>
<P align=center>Summary of Financial Data </P>
<P align=justify>The summarized financial data presented below is derived from
and should be read in conjunction with our audited consolidated financial
statements for the years ended June 30, 2005 and June 30, 2004, and our
unaudited consolidated financial statements for the nine-month period ended
March 31, 2006, (in each case including the notes to those financial statements)
which are included elsewhere in this prospectus along with the section entitled
&#147;Plan of Operation&#148; beginning on page 43 of this prospectus. </P>
<DIV align=center>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="90%" border=1>
    <TR vAlign=top>
    <TD align=left bgColor=#eeeeee ><BR><BR><BR></TD>
    <TD align=center width="25%" bgColor=#eeeeee><B>For the 9-month</B>
      <BR><B>period ended</B> <BR><B>March 31, 2006</B> <BR><B>(unaudited)</B>
    </TD>
    <TD align=center width="25%" bgColor=#eeeeee><B>For the 9-month</B>
      <BR><B>period ended</B> <BR><B>March 31, 2005</B> <BR><B>(unaudited)</B>
    </TD></TR>
  <TR vAlign=top>
    <TD align=left >Revenue </TD>
    <TD align=center width="25%">Nil </TD>
    <TD align=center width="25%">Nil </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#ffffff >Net Loss for the Period </TD>
    <TD align=center width="25%" bgColor=#ffffff>$1,489,748 </TD>
    <TD align=center width="25%" bgColor=#ffffff>$2,131,003 </TD></TR>
  <TR vAlign=top>
    <TD align=left >Net loss Per Share- basic and diluted </TD>
    <TD align=center width="25%">$0.03 </TD>
    <TD align=center width="25%">$0.06 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee rowSpan=3 ><BR><BR></TD>
    <TD align=center width="25%" bgColor=#eeeeee rowSpan=3><B>As at</B>
      <BR><B>March 31, 2006</B> <BR><B>(unaudited)</B> </TD>
    <TD align=center width="25%" bgColor=#eeeeee
      rowSpan=8><BR><BR><BR><BR><BR><BR><BR></TD></TR>
  <TR vAlign=top></TR>
  <TR vAlign=top></TR>
  <TR vAlign=top>
    <TD align=left >Working Capital (Deficiency) </TD>
    <TD align=center width="25%">$(21,360) </TD></TR>
  <TR vAlign=top>
      <TD align=left >Total Assets </TD>
      <TD align=center width="25%">$1,023,766 </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Total Share Capital </TD>
      <TD align=center width="25%">$6,500,664 </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Accumulated deficit </TD>
      <TD align=center width="25%">$(6,139,104) </TD>
    </TR>
  <TR vAlign=top>
    <TD align=left >Total Stockholders' Equity </TD>
    <TD align=center width="25%">$361,560 </TD></TR></TABLE></DIV><BR>
<DIV align=center>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="90%" border=1>
    <TR vAlign=top>
    <TD align=left bgColor=#eeeeee ><BR></TD>
    <TD align=center width="25%" bgColor=#eeeeee><B>For the year ended</B>
      <BR><B>June 30, 2005</B> </TD>
    <TD align=center width="25%" bgColor=#eeeeee><B>For the year ended</B>
      <BR><B>June 30, 2004</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left >Revenue </TD>
    <TD align=center width="25%">Nil </TD>
    <TD align=center width="25%">Nil </TD></TR>
  <TR vAlign=top>
      <TD align=left >Net Loss for the Period </TD>
      <TD align=center width="25%">$2,098,108 </TD>
      <TD align=center width="25%">$2,010,350 </TD>
    </TR>
  <TR vAlign=top>
    <TD align=left >Net loss Per Share - basic and diluted </TD>
    <TD align=center width="25%">$0.05 </TD>
    <TD align=center width="25%">$0.083 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee ><BR></TD>
    <TD align=center width="25%" bgColor=#eeeeee><B>As at</B> <BR><B>June 30,
      2005</B> </TD>
    <TD align=center width="25%" bgColor=#eeeeee><B>As at</B> <BR><B>June 30,
      2004</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left >Working Capital </TD>
    <TD align=center width="25%">$1,647,529 </TD>
    <TD align=center width="25%">$349,496 </TD></TR>
  <TR vAlign=top>
      <TD align=left >Total Assets </TD>
      <TD align=center width="25%">$2,620,040 </TD>
      <TD align=center width="25%">$1,377,198 </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Total Share Capital </TD>
      <TD align=center width="25%">$6,452,482 </TD>
      <TD align=center width="25%">$2,908,258 </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Accumulated deficit </TD>
      <TD align=center width="25%">$ (4,649,356) </TD>
      <TD align=center width="25%">$ (2,551,248) </TD>
    </TR>
  <TR vAlign=top>
    <TD align=left >Total Stockholders&#146; Equity </TD>
    <TD align=center width="25%">$1,803,126 </TD>
    <TD align=center width="25%">$357,010 </TD></TR></TABLE></DIV><BR>
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<P align=center>- 8 - </P>
<P align=center><B>RISK FACTORS </B></P>
<P align=justify>An investment in our common stock involves a number of very
significant risks. You should carefully consider the following risks and
uncertainties in addition to other information in this prospectus in evaluating
our company and our business before purchasing shares of common stock. Our
business, operating results and financial condition could be seriously harmed
due to any of the following risks. The risks described below are not the only
ones facing our company. Additional risks not presently known to us may also
impair our business operations. You could lose all or part of your investment
due to any of these risks. </P>
<P align=center><B>RISKS RELATED TO OUR BUSINESS AND COMPANY </B></P>
<P align=justify><I>We have not earned any revenues since our incorporation and
only have a limited operating history in our current business of developing and
commercializing stem cell production technology, which raise doubt about our
ability to continue as a going concern. </I></P>
<P align=justify>Our company has a limited operating history in our current
business of developing and commercializing stem cell production technology and
must be considered in the development stage. We were incorporated on May 11,
2001 with a business plan to develop an artificial intelligence software called
Randomix. We were not successful in implementing our original business plan in
regard to our Randomix software and as a result we decided in April of 2003 to
pursue initiatives in the biotechnology industry as an extension to our
business. In May of 2003 we entered into a license agreement with the Weizmann
Institute of Science and the Technion-Israel Institute of Technology to acquire
an exclusive license for a stem cell production technology. In June of 2003, we
acquired our wholly-owned subsidiary, Pluristem, Ltd., based in Israel to
conduct further research and development of the exclusive stem cell production
technology licensed to us.</P>
<P align=justify>We have not generated any revenues since our inception and we
will, in all likelihood, continue to incur operating expenses without
significant revenues until we successfully develop our stem cell production
technology and commercialise our cell therapy products. Our primary source of
funds has been the sale of our common stock. We cannot assure that we will be
able to generate any significant revenues or income. These circumstances make us
dependent on additional financial support until profitability is achieved. There
is no assurance that we will ever be profitable, and we have a going concern
note as described in an explanatory paragraph to our consolidated financial
statements for the year ended June 30, 2005.</P>
<P align=justify><I>Our likelihood of profit depends on our ability to develop
and commercialise products based on our stem cell production technology, which
is currently in the development stage. If we are unable to complete the
development and commercialisation of our stem cell products successfully, our
likelihood of profit will be limited severely.</I></P>
<P align=justify>We are engaged in the business of developing and
commercializing products based on a technology and proposed device called the
PluriX&#153; Bioreactor system. The proposed function of our PluriX&#153; Bioreactor
system is to allow researchers and physicians to expand hematopoietic stem cells
outside of the human body without differentiation so they may be used in bone
marrow transplants and other methods of cell therapy. Our PluriX&#153; Bioreactor
system and our products are in the development stage and we have not begun the
regulatory approval process. We have not realized a profit from our operations
to date and there is little likelihood that we will realize any profits in the
short or medium term. Any profitability in the future from our business will be
dependent upon successful commercialisation of our potential cell therapy
products, which will require significant additional research and development as
well as substantial clinical trials.</P>
<P align=justify><I>If we encounter problems or delays in the research and
development of our PluriX&#153; Bioreactor system and our potential cell therapy
products, we may not be able to raise sufficient capital to finance our
operation during the period required to resolve the problems or delays.</I></P>
<P align=justify>Our PluriX&#153; Bioreactor system and our cell therapy products are
currently in the development stage and we anticipate that we will continue to
incur operating expenses without significant revenues until we have successfully
completed all necessary research and clinical trials. We, and any of our
potential collaborators, may encounter problems and delays relating to research
and development, regulatory approval and intellectual property rights of </P>
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<P align=center>- 9 - </P>
<P align=justify>our technology. Our research and development programs may not
be successful, and our cell culture technology may not facilitate the production
of cells outside the human body with the expected result. Our PluriX&#153; Bioreactor
system and our potential cell therapy products may not prove to be safe and
efficacious in clinical trials. If any of these events occur, we may not have
adequate resources to continue operations for the period required to resolve the
issue delaying commercialisation and we may not be able to raise capital to
finance our continued operation during the period required for resolution of
that issue. Accordingly, we may be forced to discontinue or suspend our
operations.</P>
<P align=justify><I>We need to raise additional financing to support the
research and development of our PluriX&#153; Bioreactor system and our products in
the future but we cannot be sure we will be able to obtain additional financing
on terms favourable to us when needed. If we are unable to obtain additional
financing to meet our needs, our operations may be adversely affected or
terminated.</I> </P>
<P align=justify>We raised proceeds of approximately $3,000,000 through issuing
a senior convertible debenture on April 3, 2006 to support the development and
commercialisation of our PluriX&#153; Bioreactor system and our potential cell
therapy products. The funds from the are expected to fund operations until early
Spring of 2007. Our ability to continue to develop the PluriX&#153; Bioreactor system
and commercialise our potential cell therapy products is dependent upon our
ability to raise significant additional financing when needed. If we are unable
to obtain such financing, we will not be able to fully develop our technology
and commercialise our cell therapy products.. Our future capital requirements
will depend upon many factors, including:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>continued scientific progress in our research and development programs;
</P>
  <LI>
  <P>costs and timing of conducting clinical trials and seeking regulatory
  approvals and patent prosecutions; </P>
  <LI>
  <P>competing technological and market developments; </P>
  <LI>
  <P>our ability to establish additional collaborative relationships; and </P>
  <LI>
  <P>the effect of commercialisation activities and facility expansions if and
  as required. </P></LI></UL>
<P align=justify>We have limited financial resources and to date, no cash flow
from operations and we are dependent for funds on our ability to sell our common
stock, primarily on a private placement basis. There can be no assurance that we
will be able to obtain financing on that basis in light of factors such as the
market demand for our securities, the state of financial markets generally and
other relevant factors. Any sale of our common stock in the future will result
in dilution to existing stockholders. Furthermore, there is no assurance that we
will not incur debt in the future, that we will have sufficient funds to repay
our future indebtedness or that we will not default on our future debts,
jeopardizing our business viability. Finally, we may not be able to borrow or
raise additional capital in the future to meet our needs or to otherwise provide
the capital necessary to conduct the development of our PluriX&#153; Bioreactor
system and commercialisation of our potential cell therapy products, which might
result in the loss of some or all of your investment in our common stock. </P>
<P align=justify><I>If we fail to obtain and maintain required regulatory
approvals for our PluriX&#153; Bioreactor system </I>and our potential cell therapy
products<I>, our ability to commercialise our </I>potential cell therapy
products<I> will be limited severely.</I></P>
<P align=justify>Once our PluriX&#153; Bioreactor system and our potential cell
therapy products are fully developed, we intend to market our potential cell
therapy products primarily in the United States, Europe and Japan. We must
obtain the approval of the Food and Drug Administration of our technology and
potential cell therapy products before commercialisation of our potential cell
therapy products may commence in the United States and similar agencies in
Europe. We may also be required to obtain additional approvals from foreign
regulatory authorities to commence our marketing activities in those
jurisdictions. If we cannot demonstrate the safety, reliability and efficacy of
our PluriX&#153; Bioreactor system, or of the cells produced in the PluriX&#153;
Bioreactor system, including long-term sustained cell engraftment, or if one or
more patients die or suffer severe complications in future clinical trials, the
Food and Drug Administration or other regulatory authorities could delay or
withhold regulatory approval of our technology and our potential products.</P>
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<P align=center>- 10 - </P>
<P align=justify>Furthermore, even if we obtain regulatory approval for our
PluriX&#153; Bioreactor system and our potential cell therapy products, that approval
may be subject to limitations on the indicated uses for which they may be
marketed. Even after granting regulatory approval, the Food and Drug
Administration, other regulatory agencies, and governments in other countries
will continue to review and inspect marketed products, manufacturers and
manufacturing facilities. Later discovery of previously unknown problems with a
product, manufacturer or facility may result in restrictions on the product or
manufacturer, including a withdrawal of the product from the market. Further,
governmental regulatory agencies may establish additional regulations which
could prevent or delay regulatory approval of our technology and our potential
cell therapy products.</P>
<P align=justify><I>Even if we obtain regulatory approvals to commercialise our
cell therapy products, we may encounter a lack of commercial acceptance of our
cell therapy products, which would impair the profitability of our
business.</I></P>
<P align=justify>Our research and development efforts are primarily directed
toward obtaining regulatory approval for our PluriX&#153; Bioreactor system and our
potential cell therapy products. We intend that our potential products be used
as an alternative or improvement to the cells currently harvested and used in
bone marrow transplants. Current methods of stem cell collection and use have
been widely practiced for a number of years, and our technology and products may
not be accepted by the marketplace as readily as these or other competing
processes and methodologies. Additionally, our PluriX&#153; Bioreactor system and
products may not be employed in all potential applications being investigated,
and any reduction in applications would limit the market acceptance of our
technology and our potential revenues. As a result, even if we obtain all
required regulatory approvals, we cannot be certain that our PluriX&#153; Bioreactor
system and our potential cell therapy products will be adopted at a level that
would allow us to operate profitably.</P>
<P align=justify><I>If we do not keep pace with our competitors and with
technological and market changes, our technology and products may become
obsolete and our business may suffer.</I></P>
<P align=justify>The market for our products is very competitive, is subject to
rapid technological changes and varies for different individual products. We
believe that there are potentially many competitive approaches being pursued in
competition to our products, including some by private companies from which
information is difficult to obtain.</P>
<P align=justify>Many of our competitors have significantly greater resources,
more product candidates and have developed product candidates and processes that
directly compete with our products. Our competitors may have developed, or could
in the future develop, new products that compete with our products or even
render our products obsolete. Our technology is designed to expand hematopoietic
stem cells outside of the human body without differentiation so they may be used
in bone marrow transplants and other methods of cell therapy. Even if we are
able to demonstrate improved or equivalent results, researchers and
practitioners may not use our products and we will suffer a competitive
disadvantage. Finally, to the extent that others develop new products that
address the targeted application for our products, our business will suffer.</P>
<P align=justify><I>We depend to a significant extent on certain key personnel,
the loss of any of whom may materially and adversely affect our company.
</I></P>
<P align=justify>Our success depends on a significant extent to the continued
services of certain highly qualified scientific and management personnel,
including our Chief Executive Officer, Zami Aberman, our Vice President of
Development, Ora Burger, and our Chief Financial Officer, Yossi Keret. We face
competition for qualified personnel from numerous industry sources, and there
can be no assurance that we will be able to attract and retain qualified
personnel on acceptable terms. The loss of service of any of our key personnel
could have a material adverse effect on our operations or financial condition.
In the event of the loss of services of such personnel, no assurance can be
given that we will be able to obtain the services of adequate replacement
personnel. We do not maintain key person insurance on the lives of any of our
officers or employees.</P>
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<P align=center>- 11 - </P>
<P align=justify><I>Our success depends in large part on our ability to develop
and protect our PluriX&#153; Bioreactor system technology and our cell therapy
products. If our patents and proprietary right agreements do not provide
sufficient protection for our PluriX&#153; Bioreactor system technology and our cell
therapy products, our business and competitive position will suffer.</I></P>
<P align=justify>We rely on an exclusive, world-wide license relating to the
production of human cells granted to us by the Weizmann Institute of Science and
Technion-Israel Institute of Technology for certain of our patent rights. If we
materially breach such agreement or otherwise fail to materially comply with
such agreement, or if such agreement expires or is otherwise terminated by us,
we may lose our rights under the patents held by the Weizmann Institute of
Science and Technion-Israel Institute of Technology. At the latest, the license
will terminate when the patents underlying the license expire. The underlying
patents will expire in approximately 2020. Also, the scope of the patents
licensed to us may not be sufficiently broad to offer meaningful protection. In
addition, the patents licensed to us could be successfully challenged,
invalidated or circumvented so that our patent rights would not create an
effective competitive barrier. We also intend to seek patent protection for any
of our potential cell therapy products once we have completed their development.
Significantly, we do not as yet have patents in the United States or Europe or
any other major market, although patents have been applied for. </P>
<P align=justify>We also rely on trade secrets and unpatentable know-how that we
seek to protect, in part, by confidentiality agreements with our employees,
consultants, suppliers and licensees. These agreements may be breached, and we
might not have adequate remedies for any breach. If this were to occur, our
business and competitive position would suffer.</P>
<P align=justify><I>We may be subject to intellectual property litigation such
as patent infringement claims, which could adversely affect our
business.</I></P>
<P align=justify>Our success will also depend in part on our ability to develop
our technology and commercially viable products without infringing the
proprietary rights of others. Although we have not been subject to any filed
infringement claims, other patents could exist or could be filed which would
prohibit or limit our ability to develop our PluriX&#153; Bioreactor system and
market our potential cell therapy products in the future. In the event of an
intellectual property dispute, we may be forced to litigate. Intellectual
property litigation would divert management's attention from developing our
technology and marketing our potential cell therapy products and would force us
to incur substantial costs regardless of whether we are successful. An adverse
outcome could subject us to significant liabilities to third parties, and force
us to curtail or cease the development and commercialisation of our PluriX&#153;
Bioreactor system.</P>
<P align=justify><I>Potential product liability claims could adversely affect
our future earnings and financial condition.</I></P>
<P align=justify>We face an inherent business risk of exposure to product
liability claims in the event that the use of our products results in adverse
affects. As a result, we may incur significant product liability exposure. We
may not be able to maintain adequate levels of insurance at reasonable cost
and/or reasonable terms. Excessive insurance costs or uninsured claims would add
to our future operating expenses and adversely affect our financial
condition.</P>
<P align=justify><I>Our principal research and development facilities are
located in Israel and the unstable military and political conditions of Israel
may cause interruption or suspension of our business operations without
warning.</I><B> </B></P>
<P align=justify>Our principal research and development facilities are located
in Israel. As a result, we are directly influenced by the political, economic
and military conditions affecting Israel. Since the establishment of the State
of Israel in 1948, a number of armed conflicts have taken place between Israel
and its Arab neighbors and, since September 2000, involving the Palestinian
population, and a state of hostility, varying in degree and intensity, has led
to security and economic problems for Israel and companies based in Israel. Acts
of random terrorism periodically occur which could affect our operations or
personnel.</P>
<P align=justify>In addition, Israeli-based companies and companies doing
business with Israel, have been the subject of an economic boycott by members of
the Arab League and certain other predominantly Muslim countries since Israel's
establishment. Although Israel has entered into various agreements with certain
Arab countries and the Palestinian </P>
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<P align=center>- 12 - </P>
<P align=justify>Authority, and various declarations have been signed in
connection with efforts to resolve some of the economic and political problems
in the Middle East, we cannot predict whether or in what manner these problems
will be resolved. Also, since the end of September 2000, there has been a marked
increase in the level of terrorism in Israel, which has significantly damaged
both the Israeli economy and levels of foreign and local investment.</P>
<P align=justify>Furthermore, certain of our officers and employees may be
obligated to perform annual reserve duty in the Israel Defense Forces and are
subject to being called up for active military duty at any time. All Israeli
male citizens who have served in the army are subject to an obligation to
perform reserve duty until they are between 45 and 54 years old, depending upon
the nature of their military service.</P>
<P align=justify><I>Because some of our officers and directors are located in
non-U.S. jurisdictions, you may have no effective recourse against the
management for misconduct and may not be able to enforce judgement and civil
liabilities against our officers, directors, experts and agents. </I></P>
<P align=justify>Most of our directors and officers are nationals and/or
residents of countries other than the United States, and all or a substantial
portion of their assets are located outside the United States. As a result, it
may be difficult for you to enforce within the United States any judgments
obtained against our officers or directors, including judgments predicated upon
the civil liability provisions of the securities laws of the United States or
any U.S. state. </P>
<P align=justify><I>Because we do not intend to pay any dividends on our common
stock, investors seeking dividend income or liquidity should not purchase shares
of our common stock. </I></P>
<P align=justify>We have not declared or paid any dividends on our common stock
since our inception, and we do not anticipate paying any such dividends for the
foreseeable future. Investors seeking dividend income or liquidity should not
invest in our common stock. </P>
<P align=justify><I>There may be significant dilution of your shares of our
common stock. First, the entire amount of money owed under the senior secured
convertible debentures may be converted into shares of our common stock. Second,
the warrants may be exercised for shares of our common stock. Next, the
debenture and warrants may be convertible into even more shares than currently
estimated depending on adjustments to the conversion price of the debenture and
warrants. Than, if this registration statement is not declared effective by a
certain date, we will likely have to pay investors additional shares as
liquidated damages under a registration rights agreement. If additional common
shares are issued as a result of any or all of these possibilities, there likely
will be significant dilution of your shares of our common stock. </I></P>
<P align=justify>The issuance of shares of our common stock being registered in
the registration statement of which this prospectus forms a part, upon
conversion, as principal repayments on or as interest payments on the senior
secured convertible debentures, upon the exercise of common share purchase
warrants or upon the payment of shares as liquidated damages for the failure to
have the registration statement declared effective by the SEC by a certain date
will result in dilution to your interests as a stockholder of our common stock.
This is so because the holders of the senior secured convertible debentures and
the holders of the warrants whose underlying shares are being offered in this
prospectus may sell all of the resulting shares into the public market. </P>
<P align=justify>The principal amount of the senior secured convertible
debentures, $3,000,000, plus 7% interest, may be converted, at the option of the
holders, into shares of our common stock at a price that will be equal to the
lower of 75% of the volume weighted average price of our stock for the twenty
trading days prior to the conversion date or a price at which we sell our stock
in any financing transaction before three-quarters (in the aggregate) of the
principal of all of the senior convertible debentures are converted or fully
paid.</P>
<P align=justify>The senior secured convertible debentures mature on April 3,
2008. Interest accrues on the debentures at the rate of 7% per annum, payable
semi-annually on June 30 and December 31 of each year and on conversion and at
the maturity date. Interest is payable, at the option of our company, either (i)
in cash, or (2) in shares of our common stock at the then applicable conversion
price. Since the conversion price is tied to the stock price, we cannot
calculate exactly how many shares the holders will receive if all of the
principle and interest due under the senior secured convertible debentures is
converted to shares of our common stock. If, for example, we use the closing
</P>
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<P align=center>- 13 - </P>
<P align=justify>price of our shares on April 28, 2006, the date of the closing
of the senior secured convertible debentures, and the debenture plus interest is
converted into shares, then the holders could receive approximately 54,028,436
shares of our common stock upon conversion of the debentures. If all of the
shares underlying warrants being offered in this prospectus are issued resulting
from the exercise of warrants, then an additional 57,872,036 shares will be
issued. </P>
<P align=justify><I>The senior secured convertible debentures provide for
various events of default that would entitle the holders to require us to
immediately repay the outstanding principal amount, plus accrued and unpaid
interest, in cash. If an event of default occurs, we may be unable to
immediately repay the amount owed, and any repayment may leave us with little or
no working capital in our business. </I></P>
<P align=justify>We will be considered in default of the senior secured
convertible debentures if any of the following events, among others, occurs:
</P>
<P align=justify>We default on the payment of principal or interest of the
senior secured convertible debentures for a specified period of time; </P>
<P align=justify>Any of the representations or warranties made by us in the
documents related to the senior secured convertible debenture tranasction are
false or misleading in any material respect at the time made;</P>
<P align=justify>We fail to authorize or to cause our transfer agent to issue
shares of Common Stock upon exercise by the security holder of its conversion
rights in accordance with the terms of the senior secured convertible
debentures;</P>
<P align=justify>We fail to perform or observe, in any material respect, any
other covenant of term of the senior secured convertible debentures or other
transaction agreements and fail to cure such default within a specified period
of time after receiving notice of such failure; or, </P>
<P align=justify>Our common stock is suspended from trading on, or delisted
from, its principal trading market in excess of fifteen (15) consecutive trading
days. </P>
<P align=justify>If an event of default occurs, the holders of the senior
secured convertible debentures can elect to require us to pay any and all of the
outstanding principal amount, plus all other accrued and unpaid amounts. </P>
<P align=justify>Some of the events of default include matters over which we may
have some, little or no control. If a default occurs and we cannot pay the
amounts payable under any of the convertible notes in cash (including any
interest on such amounts and any applicable late fees under the convertible
notes), the holders of the notes may protect and enforce their rights or
remedies either by suit in equity or by action at law, or both, whether for the
specific performance of any covenant, agreement or other provision contained in
the documents related to the senior secured convertible debentures, or to
enforce the payment of the outstanding amount or any other legal or equitable
right or remedy. This would have an adverse effect on our continuing operations.
</P>
<P align=justify><I>All of our assets are secured and consequently if we default
on the </I>senior secured convertible debentures<I>, our continued operation
will be adversely affected. </I></P>
<P align=justify>We are financing our operations primarily through the issuance
of the equity and debt securities, including the senior secured convertible
debentures. The senior secured convertible debentures issued on April 3, 2006
have been secured primarily by all of our assets. If we default on any of the
senior secured convertible debentures, the holders would be entitled to seize
all of our assets and take control of our business, which would have a material
adverse effect on our business. Please refer to section entitled &#147;April 3, 2006
Private Placement of Senior Secured Convertible Debentures and Warrants&#148; on page
22 for a description of the security we granted to the holders of these
convertible notes. </P>
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<P align=center>- 14 - </P>
<P align=justify><I>Our stock is considered a &#147;penny stock&#148; and certain
securities rules may hamper the tradability of our shares in the market.
</I></P>
<P align=justify>Shares of our common stock are subject to rules adopted by the
Securities and Exchange Commission that regulate broker-dealer practices in
connection with transactions in &#147;penny stocks&#148;. &#147;Penny stock&#148; is defined to be
any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. Our common stock are covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell to persons
other than established customers and &#147;accredited investors.&#148; The term
&#147;accredited investor&#148; refers generally to institutions with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document in a form prepared by the SEC which provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must
be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customer's
confirmation. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from these rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the stock
that is subject to these penny stock rules. Consequently, these penny stock
rules may affect the ability of broker-dealers to trade our securities. </P>
<P align=justify>Please read this prospectus carefully. You should rely only on
the information contained in this prospectus. We have not authorized anyone to
provide you with different information. You should not assume that the
information provided by the prospectus is accurate as of any date other than the
date on the front of this prospectus. </P>
<P align=center><B>FORWARD-LOOKING STATEMENTS </B></P>
<P align=justify>This prospectus contains forward-looking statements which
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as &#147;may&#148;, &#147;should&#148;,
&#147;expects&#148;, &#147;plans&#148;, &#147;anticipates&#148;, &#147;believes&#148;, &#147;estimates&#148;, &#147;predicts&#148;,
&#147;potential&#148; or &#147;continue&#148; or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled &#147;Risk Factors&#148; beginning on page 8, that may cause our or our
industry's actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. </P>
<P align=justify>While these forward-looking statements, and any assumptions
upon which they are based, are made in good faith and reflect our current
judgment regarding the direction of our business, actual results will almost
always vary, sometimes materially, from any estimates, predictions, projections,
assumptions or other future performance suggested herein. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results. The safe harbor for forward-looking statements
provided in the Private Securities Litigation Reform Act of 1995 does not apply
to the offering made in this prospectus. </P>
<P align=center><B>SECURITIES AND EXCHANGE COMMISSION'S PUBLIC REFERENCE
</B></P>
<P align=justify>Any member of the public may read and copy any materials filed
by us with the Securities and Exchange Commission at the SEC's Public Reference
Room at 100 F Street NE, Washington, D.C. 20549. Information on the operation of
the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.
The SEC maintains an Internet website (http://www.sec.gov) that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC. </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<A name=page_15></A>
<P align=center>- 15 - </P>
<P align=center><B>THE OFFERING </B></P>
<P align=justify>This prospectus relates to the resale by certain selling
security holders of Pluristem Life Systems, Inc. of up to 330,059,239 shares of
our common stock in connection with the resale of: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>The shares of our common stock that are issuable to certain selling
  security holders upon conversion of Senior Secured Convertible Debentures
  issued on April 3, 2006 by our company to those selling security holders in
  the original aggregate principal amount of $3,000,000. </P>
  <LI>
  <P>The 47,393,364 shares of our common stock that are issuable to certain
  selling security holders upon exercise of common share purchase warrants
  issued to those security holders pursuant to a Securities Purchase Agreement
  between our company and such security holders dated April 3, 2006. </P>
  <LI>
  <P>The 10,426,539 shares of our common stock that are issuable to a certain
  selling security holder upon exercise of common share purchase warrants that
  were issued to him for acting as a finder in connection with the transactions
  contemplated by the April 3, 2006 Securities Purchase Agreement, taking into
  account our good faith estimates of possible adjustments to the number of
  those warrants. </P>
  <LI>
  <P>The 1,000,000 shares of our common stock that are issuable to a certain
  security holder upon exercise of common share purchase warrants issued to the
  security holders pursuant to a consulting agreement between the security
  holder and our company dated February 28, 2006. </P>
  <LI>
  <P>The 10,000,000 of our common shares that are issuable to certain service
  providers pursuant to an investor relations agreement, dated April 28, 2006,
  upon the service providers reaching certain milestones as agreed to by the
  Company. </P>
  <LI>
  <P>The 33,239,336 shares of our common stock that represents our current good
  faith estimate of additional shares that we might be required to issue to the
  selling stockholders (a) upon adjustments to the conversion price of the
  convertible debenture and/or to the number of shares issuable upon exercise of
  the unexercised warrants and (b) as liquidated damages pursuant to a
  Registration Rights agreement between the selling security holders and our
  company dated April 3, 2006. </P></LI></UL>
<P align=justify>The selling security holders may sell the shares of common
stock being offered in this prospectus at fixed prices, at prevailing market
prices at the time of sale, at varying prices or at negotiated prices. We will
not receive any proceeds from the resale of shares of our common stock by the
selling security holder. </P>
<P align=center><B>USE OF PROCEEDS </B></P>
<P align=justify>The shares of common stock offered by this prospectus are being
registered for the account of the selling security holders named in this
prospectus. As a result, all proceeds from the sales of the common stock will go
to the selling security holders and we will not receive any proceeds from the
resale of the common stock by the selling security holders. We will, however,
incur all costs associated with this registration statement and prospectus.</P>
<P align=justify>Assuming that the number of warrants is not adjusted and that
all of the warrants for which the underlying shares of our common stock that are
covered by this prospectus are exercised for cash, we will receive cash proceeds
in the amount of approximately $4,349,881 from the exercise of the 57,872,036
warrants and we will use these proceeds for our general working capital.</P>
<P align=justify>53,132,700 of the common share purchase warrants are
exercisable at $0.075 per share with an expiration date on the last day of the
month in which the third anniversary of the effective date of the registration
statement of which this Prospectus is a part occurs. 4,739,336 of the common
share purchase warrants are exercisable at $0.077 per share with an expiration
date on the last day of the month in which the third anniversary of the
effective date of the registration statement of which this Prospectus is a part
occurs. </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_16></A>
<P align=center>- 16 - </P>
<P align=center><B>SELLING SECURITY HOLDERS </B></P>
<P align=justify>The selling security holders may offer and sell, from time to
time, any or all of the common stock issued and those issuable to them upon
exercise of the share purchase warrants. Because any one of the selling security
holders may offer all or only some portion of the shares of common stock
registered for such holder, no exact estimate can be given as to the amount or
percentage of these shares of common stock that will be held by the selling
security holders upon termination of the offering. </P>
<P align=justify>The following table sets forth the number of shares that are,
to our knowledge, beneficially owned as of June 16, 2006, by the selling
security holders prior to the offering contemplated by this prospectus, the
number of shares each selling security holder is offering by this prospectus and
the number of shares which each would own beneficially if all such offered
shares are sold. The number of shares in the table represents an estimate of the
number of shares of common stock to be offered by the selling security holders.
The selling security holders acquired their beneficial interests in the shares
being offered hereby in private placements in which each such selling security
holder advised us that it purchased the relevant securities solely for
investment and not with a view to or for resale or distribution of such
securities. For full details of these transactions, see the section entitled
&#147;April 3, 2006 Private Placement of Senior Secured Convertible Debentures And
Warrants&#148; on page 22 of this prospectus and our agreements with the selling
security holders, which are attached as exhibits to the registration statement
of which this prospectus forms a part.</P>
<P align=justify>Beneficial ownership is determined in accordance with SEC rules
and includes voting or investment power with respect to the securities currently
owned or for which the selling security holder has the right to acquire within
60 days. However, except for the selling security holders with an asterisk (*)
next to their names, each of the selling security holders is subject to certain
limitations on the conversion of its convertible debentures and the exercise of
its warrants. The warrants held by the investors in the debentures, issued on
April 3, 2006, are not exercisable until (i) 65 days from the date of issue or
(ii) effective date of the Registration Statement of which this Prospectus forms
a part. The other significant limitation on both the Senior Secured Convertible
Debentures and Warrants is that, subject to certain circumstances, the holder
may not convert its convertible debentures or exercise its warrants if such
conversion or exercise would cause the holder's beneficial ownership of our
Common Stock (excluding shares underlying any of their unconverted debentures or
unexercised warrants) to exceed 4.99% of the outstanding shares of our Common
Stock immediately after the conversion or exercise. (If this situation arises
and the holder subsequently disposes of some or all of its holdings, it can
again convert its debenture or exercise its warrant, subject to the same
limitation).</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_17></A>
<P align=center>- 17 - </P>
<P align=justify>The table below also includes an estimate of the number of
shares which might be issuable on the occurrence of certain events which have
not yet occurred and may not occur, such as the accrual of interest. Therefore,
although they are included in the table below, the number of shares of Common
Stock for some listed persons may include shares that are not subject to
purchase during the 60-day period.</P>
<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>
    <TR vAlign=top>
    <TD align=left bgColor=#eeeeee rowSpan=2
      ><BR><BR><BR><BR><BR><BR><BR><BR><B>Name of Selling Security
      </B><BR><B>Holder and Position, Office or </B><BR><B>Material Relationship
      with </B><BR><B>Pluristem </B></TD>
      <TD width="14%"
      rowSpan=2 align=center bgColor=#eeeeee><BR>
        <BR><BR><BR><BR><BR><BR><B>Common Shares </B><BR><B>owned by
      the </B><BR><B>Selling Security </B><BR><B>Holder before </B><BR><B>this
      Offering </B></TD>
      <TD width="14%" rowSpan=2 align=center bgColor=#eeeeee><B>Number of </B><BR>
        <B>Shares </B><BR><B>Issuable </B><BR><B>Upon Exercise
      </B><BR><B>of Share </B><BR><B>Purchase </B><BR><B>Warrants,
      </B><BR><B>Conversion of </B><BR><B>Debenture plus </B><BR><B>Interest and
      </B><BR><B>Issuance of </B><BR><B>Payment Shares </B></TD>
      <TD width="14%"
      rowSpan=2 align=center bgColor=#eeeeee><BR>
        <BR><BR><BR><BR><BR><BR><BR><BR><B>Shares Offered
      </B><BR><B>Pursuant to this </B><BR><B>Offering </B></TD>
      <TD align=center bgColor=#eeeeee colSpan=2><B>Number of Shares Owned </B><BR>
        <B>by Selling Security Holder </B><BR><B>After Offering and
      Percent </B><BR><B>of Total Issued and </B><BR><B>Outstanding if All
      Shares </B><BR><B>Offered are Sold </B></TD></TR>
  <TR vAlign=top>
      <TD width="14%" align=center bgColor=#eeeeee><BR>
        <BR><BR><BR><B># of
      </B><BR><B>Shares </B></TD>
      <TD width="14%" align=center bgColor=#eeeeee><BR>
        <BR><BR><BR><B>% of
      </B><BR><B>Class** </B></TD></TR>
  <TR vAlign=top>
      <TD align=left >Brio Capital L.P. </TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>10,287,757 <SUP>(1) </SUP></TD>
      <TD width="14%" align=center>10,287,757 <SUP>(1) </SUP></TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Ellis International </TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>10,287,757 <SUP>(1) </SUP></TD>
      <TD width="14%" align=center>10,287,757 <SUP>(1) </SUP></TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Double U Master Fund LP </TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>38,579,088 <SUP>(2) </SUP></TD>
      <TD width="14%" align=center>38,579,088 <SUP>(2) </SUP></TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Monarch Capital Fund Ltd. </TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>20,575,514 <SUP>(3) </SUP></TD>
      <TD width="14%" align=center>20,575,514 <SUP>(3) </SUP></TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Nite Capital LP </TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>15,431,635 <SUP>(4) </SUP></TD>
      <TD width="14%" align=center>15,431,635 <SUP>(4) </SUP></TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Puritan LLC </TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>25,719,392 <SUP>(5) </SUP></TD>
      <TD width="14%" align=center>25,719,392 <SUP>(5) </SUP></TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Harborview Master Fund LP. </TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>15,431,635 <SUP>(4) </SUP></TD>
      <TD width="14%" align=center>15,431,635 <SUP>(4) </SUP></TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Rutgers Casualty Insurance Company </TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>5,143,878 <SUP>(6) </SUP></TD>
      <TD width="14%" align=center>5,143,878 <SUP>(6) </SUP></TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Nachum Stein </TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>20,575,514 <SUP>(3) </SUP></TD>
      <TD width="14%" align=center>20,575,514 <SUP>(3) </SUP></TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >First Mirage, Inc. </TD>
      <TD width="14%" align=center>Nil <SUP>(10) </SUP></TD>
      <TD width="14%" align=center>15,431,635 <SUP>(4) </SUP></TD>
      <TD width="14%" align=center>15,431,635 <SUP>(4) </SUP></TD>
      <TD width="14%" align=center>Nil <SUP>(10) </SUP></TD>
      <TD width="14%" align=center>0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Generation Capital Associates </TD>
      <TD width="14%" align=center>200,000 <SUP>(10) </SUP></TD>
      <TD width="14%" align=center>7,715,817 <SUP>(7) </SUP></TD>
      <TD width="14%" align=center>7,715,817 <SUP>(7) </SUP></TD>
      <TD width="14%" align=center>200,000 <SUP>(10) </SUP></TD>
      <TD width="14%" align=center>0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Professional Offshore Opportunity Fund, Ltd. </TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>15,431,635 <SUP>(4) </SUP></TD>
      <TD width="14%" align=center>15,431,635 <SUP>(4) </SUP></TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Professional Traders Fund, LLC </TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>5,143,878 <SUP>(6) </SUP></TD>
      <TD width="14%" align=center>5,143,878 <SUP>(6) </SUP></TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Notzer Chesed </TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>15,431,635 <SUP>(4) </SUP></TD>
      <TD width="14%" align=center>15,431,635 <SUP>(4 </SUP></TD>
      <TD width="14%" align=center>Nil </TD>
      <TD width="14%" align=center>0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Bristol Investment Fund, Ltd. </TD>
      <TD width="14%" align=center>2,100,000 <SUP>(11) </SUP></TD>
      <TD width="14%" align=center>20,575,514 <SUP>(3) </SUP></TD>
      <TD width="14%" align=center>20,575,514 <SUP>(3) </SUP></TD>
      <TD width="14%" align=center>2,100,000 <SUP>(11) </SUP></TD>
      <TD width="14%" align=center>0% </TD>
    </TR></TABLE></DIV><BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_18></A>
<P align=center>- 18 - </P>
<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>
    <TR vAlign=top>
    <TD align=left bgColor=#eeeeee rowSpan=2
      ><BR><BR><BR><BR><BR><BR><BR><BR><B>Name of Selling Security
      </B><BR><B>Holder and Position, Office or </B><BR><B>Material Relationship
      with </B><BR><B>Pluristem </B></TD>
      <TD align=center width="14%" bgColor=#eeeeee
      rowSpan=2><BR>
        <BR><BR><BR><BR><BR><BR><B>Common Shares </B><BR><B>owned by
      the </B><BR><B>Selling Security </B><BR><B>Holder before </B><BR><B>this
      Offering </B></TD>
      <TD align=center width="14%" bgColor=#eeeeee rowSpan=2><B>Number of </B><BR>
        <B>Shares </B><BR><B>Issuable </B><BR><B>Upon Exercise
      </B><BR><B>of Share </B><BR><B>Purchase </B><BR><B>Warrants,
      </B><BR><B>Conversion of </B><BR><B>Debenture plus </B><BR><B>Interest and
      </B><BR><B>Issuance of </B><BR><B>Payment Shares </B></TD>
      <TD align=center width="14%" bgColor=#eeeeee
      rowSpan=2><BR>
        <BR><BR><BR><BR><BR><BR><BR><BR><B>Shares Offered
      </B><BR><B>Pursuant to this </B><BR><B>Offering </B></TD>
    <TD align=center width="26%" bgColor=#eeeeee colSpan=2><B>Number of Shares
      Owned </B><BR><B>by Selling Security Holder </B><BR><B>After Offering and
      Percent </B><BR><B>of Total Issued and </B><BR><B>Outstanding if All
      Shares </B><BR><B>Offered are Sold </B></TD></TR>
  <TR vAlign=top>
      <TD align=center width="14%" bgColor=#eeeeee><BR>
        <BR><BR><BR><B># of
      </B><BR><B>Shares </B></TD>
      <TD align=center width="14%" bgColor=#eeeeee><BR>
        <BR><BR><BR><B>% of
      </B><BR><B>Class** </B></TD></TR>
  <TR vAlign=top>
      <TD align=left >Simon Vogel </TD>
      <TD align=center width="14%">500,000 </TD>
      <TD align=center width="14%">5,143,878 <SUP>(6) </SUP></TD>
      <TD align=center width="14%">5,143,878 <SUP>(6) </SUP></TD>
      <TD align=center width="14%">500,000 </TD>
      <TD align=center width="14%">0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Alpha Capital AG </TD>
      <TD align=center width="14%">750,000 </TD>
      <TD align=center width="14%">15,431,635 <SUP>(4) </SUP></TD>
      <TD align=center width="14%">15,431,635 <SUP>(4) </SUP></TD>
      <TD align=center width="14%">750,000 </TD>
      <TD align=center width="14%">0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Ronald Kimelman </TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">5,143,878 <SUP>(6) </SUP></TD>
      <TD align=center width="14%">5,143,878 <SUP>(6) </SUP></TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Bursteine and Lindsay Sec. Corp. </TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">10,287,757 <SUP>(1) </SUP></TD>
      <TD align=center width="14%">10,287,757 <SUP>(1) </SUP></TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Quines Financial SA </TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">10,287,757 <SUP>(1) </SUP></TD>
      <TD align=center width="14%">10,287,757 <SUP>(1) </SUP></TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Anthony Heller </TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">10,287,757 <SUP>(1) </SUP></TD>
      <TD align=center width="14%">10,287,757 <SUP>(1) </SUP></TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Marvin Mermelstein </TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">10,287,757 <SUP>(1) </SUP></TD>
      <TD align=center width="14%">10,287,757 <SUP>(1) </SUP></TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">0% </TD>
    </TR>
  <TR>
      <TD >Yokim Asset Management Corp. </TD>
      <TD align=center width="14%">50,000 </TD>
      <TD align=center width="14%">10,426,539<SUP>(8) </SUP></TD>
      <TD align=center width="14%">10,426,539 <SUP>(8) </SUP></TD>
      <TD align=center width="14%">50,000 </TD>
      <TD align=center width="14%">0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Ernest Muller </TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">1,000,000<SUP>(9) </SUP></TD>
      <TD align=center width="14%">1,000,000 </TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Zegal &amp; Ross Capital* </TD>
      <TD align=center width="14%">1,400,000 </TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">1,400,000 </TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Tayside Trading* </TD>
      <TD align=center width="14%">3,600,000 </TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">3,600,000 </TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >Levi Israel LLC* </TD>
      <TD align=center width="14%">3,600,000 </TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">3,600,000 </TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >EDA Capital* </TD>
      <TD align=center width="14%">1,400,000 </TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">1,400,000 </TD>
      <TD align=center width="14%">Nil </TD>
      <TD align=center width="14%">0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left >TOTAL </TD>
      <TD align=center width="14%">13,600,000 </TD>
      <TD align=center width="14%">320,059,239 </TD>
      <TD align=center width="14%">330,059,239 </TD>
      <TD align=center width="14%">3,600,000 </TD>
      <TD align=center width="14%">1% </TD>
    </TR></TABLE></DIV>
<P align=justify><SUP>*</SUP>Stockholder is not subject to the limitations on
the conversion of its convertible debentures or the exercise of its warrants, as
the case may be. <BR>** 0% is indicated for amounts less than 1%, based on
63,743,483 issued and outstanding shares as of June 16, 2006 plus the amount
that will be issued and outstanding if all shares offered are sold. </P>
<P align=justify><SUP>(1) </SUP>Represents (a) 200% of the number of shares of
Common Stock issuable upon conversion of $100,000 in aggregate principal amount
of Senior Secured Convertible Debentures according to our good faith estimate of
the conversion price in effect as at June 16, 2006; (b) 200% of the number
shares of Common Stock issuable in payment of interest accruing thereon through
the second anniversary of the issuance thereof according to our good faith
estimate of the conversion price in effect as at June 16, </P>
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<A name=page_19></A>
<P align=center>- 19 - </P>
<P align=justify>2006; (c) 1,579,779 shares of shares of Common Stock issuable
upon the exercise of common share purchase warrants; and, (d) an additional
number of shares of Common Stock representing our current good faith estimate of
shares that we might be required to issue to the selling security holder upon
adjustments to the conversion price of the convertible debenture and/or to the
number of shares issuable upon exercise of the unexercised warrants and as
liquidated damages through the projected effective date of the Registration
Statement of which this Prospectus forms a part.</P>
<P align=justify><SUP>(2) </SUP>Represents (a) 200% of the number of shares of
Common Stock issuable upon conversion of $375,000 in aggregate principal amount
of Senior Secured Convertible Debentures according to our good faith estimate of
the conversion price in effect as at June 16, 2006; (b) 200% of the number
shares of Common Stock issuable in payment of interest accruing thereon through
the second anniversary of the issuance thereof according to our good faith
estimate of the conversion price in effect as at June 16, 2006; (c) 5,924,171
shares of shares of Common Stock issuable upon the exercise of common share
purchase warrants; and, (d) an additional number of shares of Common Stock
representing our current good faith estimate of additional shares that we might
be required to issue to the selling security holder upon adjustments to the
conversion price of the convertible debenture and/or to the number of shares
issuable upon exercise of the unexercised warrants and as liquidated damages
through the projected effective date of the Registration Statement of which this
Prospectus forms a part. </P>
<P align=justify><SUP>(3) </SUP>Represents (a) 200% of the number of shares of
Common Stock issuable upon conversion of $200,000 in aggregate principal amount
of Senior Secured Convertible Debentures according to our good faith estimate of
the conversion price in effect as at June 16, 2006; (b) 200% of the number
shares of Common Stock issuable in payment of interest accruing thereon through
the second anniversary of the issuance thereof according to our good faith
estimate of the conversion price in effect as at June 16, 2006; (c) 3,159,558
shares of shares of Common Stock issuable upon the exercise of common share
purchase warrants; and, (d) an additional number of shares of Common Stock
representing our current good faith estimate of additional shares that we might
be required to issue to the selling security holder upon adjustments to the
conversion price of the convertible debenture and/or to the number of shares
issuable upon exercise of the unexercised warrants and as liquidated damages
through the projected effective date of the Registration Statement of which this
Prospectus forms a part. </P>
<P align=justify><SUP>(4)</SUP> Represents (a) 200% of the number of shares of
Common Stock issuable upon conversion of $150,000 in aggregate principal amount
of Senior Secured Convertible Debentures according to our good faith estimate of
the conversion price in effect as at June 16, 2006; (b) 200% of the number
shares of Common Stock issuable in payment of interest accruing thereon through
the second anniversary of the issuance thereof according to our good faith
estimate of the conversion price in effect as at June 16, 2006; (c) 2,369,668
shares of shares of Common Stock issuable upon the exercise of common share
purchase warrants; and, (d) an additional number of shares of Common Stock
representing our current good faith estimate of additional shares that we might
be required to issue to the selling security holder upon adjustments to the
conversion price of the convertible debenture and/or to the number of shares
issuable upon exercise of the unexercised warrants and as liquidated damages
through the projected effective date of the Registration Statement of which this
Prospectus forms a part. </P>
<P align=justify><SUP>(5) </SUP>Represents (a) 200% of the number of shares of
Common Stock issuable upon conversion of $250,000 in aggregate principal amount
of Senior Secured Convertible Debentures according to our good faith estimate of
the conversion price in effect as at June 16, 2006, (b) 200% of the number
shares of Common Stock issuable in payment of interest accruing thereon through
the second anniversary of the issuance thereof according to our good faith
estimate of the conversion price in effect as at June 16, 2006; (c) 3,949,447
shares of shares of Common Stock issuable upon the exercise of common share
purchase warrants; and, (d) an additional number of shares of Common Stock
representing our current good faith estimate of additional shares that we might
be required to issue to the selling security holder upon adjustments to the
conversion price of the convertible debenture and/or to the number of shares
issuable upon exercise of the unexercised warrants and as liquidated damages
through the projected effective date of the Registration Statement of which this
Prospectus forms a part. </P>
<P align=justify><SUP>(6) </SUP>Represents (a) 200% of the number of shares of
Common Stock issuable upon conversion of $50,000 in aggregate principal amount
of Senior Secured Convertible Debentures according to our good faith estimate of
the conversion price in effect as at June 16, 2006; (b) 200% of the number
shares of Common Stock issuable in payment of interest accruing thereon through
the second anniversary of the issuance thereof according to our good faith
estimate of the conversion price in effect as at June 16, 2006; (c) 789,889
shares of shares of Common Stock issuable upon the exercise of common share
purchase warrants; and, (d) an additional number of shares of Common Stock
representing our current good faith estimate of additional shares that we might
be required to issue to the selling security holder upon adjustments to the
conversion price of the convertible debenture and/or to the number of shares
issuable upon exercise of the unexercised warrants and as liquidated damages
through the projected effective date of the Registration Statement of which this
Prospectus forms a part. </P>
<P align=justify><SUP>(7) </SUP>Represents (a) 200% of the number of shares of
Common Stock issuable upon conversion of $75,000 in aggregate principal amount
of Senior Secured Convertible Debentures according to our good faith estimate of
the conversion price in effect as at June 16, 2006; (b) 200% of the number
shares of Common Stock issuable in payment of interest accruing thereon through
the second anniversary of the issuance thereof according to our good faith
estimate of the conversion price in effect as at June 16, 2006; (c) 1,184,834
shares of shares of Common Stock issuable upon the exercise of common share
purchase warrants; and, (d) an additional number of shares of Common Stock
representing our current good faith estimate of additional shares that we might
be required to issue to the selling security holder upon adjustments to the
conversion price of the convertible debenture and/or to </P>
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<A name=page_20></A>
<P align=center>- 20 - </P>
<P align=justify>the number of shares issuable upon exercise of the unexercised
warrants and as liquidated damages through the projected effective date of the
Registration Statement of which this Prospectus forms a part. </P>
<P align=justify><SUP>(8) </SUP>Represents 10,426,539 shares of Common Stock
that may be issuable upon the exercise of common share purchase warrants, taking
into account our good faith estimate of possible adjustments to the number of
those warrants. </P>
<P align=justify><SUP>(9) </SUP>Represents 1,000,000 shares of Common Stock
issuable upon the exercise of common share purchase warrants. </P>
<P align=justify><SUP>(10) </SUP>200,000 shares of Common Stock may be issuable
upon the exercise of common share purchase warrants held by Generation Capital
Associates, a company affiliated with First Mirage, Inc. The warrants have an
exercise price of $0.75 and an expiry date of January 31, 2007. </P>
<P align=justify><SUP>(11) </SUP>Represents 600,000 shares of Common Stock that
may be issuable upon the exercise of common share purchase warrants with an
exercise price of $0.75 and an expiry date of January 31, 2007 and 1,500,000
shares of Common Stock that may be issuable upon the exercise of common share
purchase warrants with an exercise price of $0.30 and an expiry date of November
30, 2006. </P>
<P align=justify>We may require the selling security holder to suspend the sales
of the securities offered by this prospectus upon the occurrence of any event
that makes any statement in this prospectus or the related registration
statement untrue in any material respect or that requires the changing of
statements in these documents in order to make statements in those documents not
misleading. </P>
<P align=center><B>PLAN OF DISTRIBUTION </B></P>
<P align=justify>The selling security holders may, from time to time, sell all
or a portion of the shares of common stock on any market upon which the common
stock may be quoted (currently the National Association of Securities Dealers
OTC Bulletin Board), in privately negotiated transactions or otherwise. Such
sales may be at fixed prices prevailing at the time of sale, at prices related
to the market prices or at negotiated prices. The shares of common stock being
offered for resale by this prospectus may be sold by the selling security
holders by one or more of the following methods, without limitation: </P>
<P style="MARGIN-LEFT: 5%" align=justify>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; block
trades in which the broker or dealer so engaged will attempt to sell the shares
of common stock as agent but may position and resell a portion of the block as
principal to facilitate the transaction; </P>
<P style="MARGIN-LEFT: 5%" align=justify>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
purchases by broker or dealer as principal and resale by the broker or dealer
for its account pursuant to this prospectus; </P>
<P style="MARGIN-LEFT: 5%" align=justify>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; an
exchange distribution in accordance with the rules of the exchange; </P>
<P style="MARGIN-LEFT: 5%" align=justify>(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; </P>
<P style="MARGIN-LEFT: 5%" align=justify>(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
privately negotiated transactions; </P>
<P style="MARGIN-LEFT: 5%" align=justify>(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
market sales (both long and short to the extent permitted under the federal
securities laws); </P>
<P style="MARGIN-LEFT: 5%" align=justify>(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; at
the market to or through market makers or into an existing market for the
shares; </P>
<P style="MARGIN-LEFT: 5%" align=justify>(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
through transactions in options, swaps or other derivatives (whether exchange
listed or otherwise); </P>
<P style="MARGIN-LEFT: 5%" align=justify>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a
combination of any aforementioned methods of sale; and </P>
<P style="MARGIN-LEFT: 5%" align=justify>(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; any
other method permitted pursuant to applicable law. </P>
<P align=justify>In the event of the transfer by any selling security holder of
his or her shares to any pledgee, donee or other transferee, we will amend this
prospectus and the registration statement of which this prospectus forms a part
by the filing of a post-effective amendment in order to have the pledgee, donee
or other transferee in place of the selling security holder who has transferred
his or her shares. </P>
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<P align=center>- 21 - </P>
<P align=justify>In effecting sales, brokers and dealers engaged by the selling
security holders may arrange for other brokers or dealers to participate.
Brokers or dealers may receive commissions or discounts from the selling
security holders or, if any of the broker-dealers act as an agent for the
purchaser of such shares, from the purchaser in amounts to be negotiated which
are not expected to exceed those customary in the types of transactions
involved. Broker-dealers may agree with the selling security holders to sell a
specified number of the shares of common stock at a stipulated price per share.
Such an agreement may also require the broker-dealer to purchase as principal
any unsold shares of common stock at the price required to fulfill the
broker-dealer commitment to the selling security holders if such broker-dealer
is unable to sell the shares on behalf of the selling security holders.
Broker-dealers who acquire shares of common stock as principal may thereafter
resell the shares of common stock from time to time in transactions which may
involve block transactions and sales to and through other broker-dealers,
including transactions of the nature described above. Such sales by a
broker-dealer could be at prices and on terms then prevailing at the time of
sale, at prices related to the then-current market price or in negotiated
transactions. In connection with such resales, the broker-dealer may pay to or
receive from the purchasers of the shares, commissions as described above. </P>
<P align=justify>The selling security holders and any broker-dealers or agents
that participate with the selling security holders in the sale of the shares of
common stock may be deemed to be &#147;underwriters&#148; within the meaning of the
Securities Act in connection with these sales. In that event, any commissions
received by the broker-dealers or agents and any profit on the resale of the
shares of common stock purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. </P>
<P align=justify>Any sales of shares may be effected through the OTC Bulletin
Board, in private transactions or otherwise, and the shares may be sold at
market price prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. </P>
<P align=justify>The selling security holders may also engage in short sales
against the box, puts and calls and other transactions in our securities or
derivatives of our securities and may sell or deliver shares in connection with
these trades. From time to time, the selling security holders may pledge their
shares of common stock pursuant to the margin provisions of their customer
agreements with their brokers. Upon a default by a selling security holder, the
broker may offer and sell the pledged shares of common stock from time to time.
Upon a sale of the shares of common stock, the selling security holders intend
to comply with the prospectus delivery requirements, under the Securities Act,
by delivering a prospectus to each purchaser in the transaction. We intend to
file any amendments or other necessary documents in compliance with the
Securities Act which may be required in the event any selling security holder
defaults under any customer agreement with brokers. </P>
<P align=justify>To the extent required under the Securities Act, a post
effective amendment to this registration statement will be filed, disclosing the
name of any broker-dealers, the number of shares of common stock involved, the
price at which the common stock is to be sold, the commissions paid or discounts
or concessions allowed to such broker-dealers, where applicable, that such
broker-dealers did not conduct any investigation to verify the information set
out or incorporated by reference in this prospectus and other facts material to
the transaction. </P>
<P align=justify>We and the selling security holders will be subject to
applicable provisions of the Securities Exchange Act of 1934, as amended, and
the rules and regulations under it, including, without limitation, Rule 10b-5
and, insofar as the selling security holders are distribution participants and
we, under certain circumstances, may be a distribution participant, under
Regulation M. All of the foregoing may affect the marketability of the common
stock. </P>
<P align=justify>All expenses of the registration statement including, but not
limited to, legal, accounting, printing and mailing fees are and will be borne
by us. Any commissions, discounts or other fees payable to brokers or dealers in
connection with any sale of the shares of common stock will be borne by the
selling security holders, the purchasers participating in such transaction, or
both. We have agreed to indemnify certain selling security holders and certain
other persons against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments to which such
selling security holders or their respective pledgees, donees, transferees or
other successors in interest may be required to make in respect thereof. </P>
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<P align=center>- 22 - </P>
<P align=justify>Any shares of common stock covered by this prospectus which
qualify for sale pursuant to Rule 144 under the Securities Act, as amended, may
be sold under Rule 144 rather than pursuant to this prospectus. </P>
<P align=center><B>APRIL 3, 2006 PRIVATE PLACEMENT OF SENIOR SECURED
<BR>CONVERTIBLE DEBENTURES AND WARRANTS </B></P>
<P align=justify>Effective April 3, 2006, we issued senior secured convertible
debentures, for gross proceeds of $3,000,000. In conjunction with this
financing, we issued 47,393,364 common share purchase warrants exercisable for
three years from the effective date of the Registration Statement of which this
Prospectus is a part at an exercise price of $0.075. We paid a finder&#146;s fee of
$300,000 in cash and 9,478,672 three year common share purchase warrants, half
of which are exercisable at $0.075, with an expiration date approximately three
years from such effective date and half of which are exercisable at $0.077, with
an expiration date of April 30, 2009. </P>
<P align=justify>Also on April 3, 2006, in connection with a separate finder&#146;s
fee agreement related to the issuance of the senior secured convertible
debentures, we also issued 1,000,000 common share purchase warrants exercisable
for three years at an exercise price of $0.075. </P>
<P align=justify>The senior secured convertible debentures, which mature on
April 3, 2008, are convertible to common shares at the lower of 75% of the
volume weighted average trading price for the 20 trading days prior to issuance
of a notice of conversion by a holder of a debenture, or, if while the
debentures remain outstanding we enter into one or more financing transactions
involving the issuance of common stock or securities convertible or exercisable
for common stock, the lowest transaction price for those new transactions. </P>
<P align=justify>Interest accrues on the debentures at the rate of 7% per annum,
payable semi-annually on June 30 and December 31 of each year and on conversion
and at the maturity date. Interest is payable, at the option of our company,
either (i) in cash, or (2) in shares of Common Stock at the then applicable
conversion price. If our company fails to deliver stock certificates upon the
conversion of the debentures or the exercise of the warrants at the relevant
specified time and in the relevant specified manner, our company may be required
to make substantial payments to the holders of those debentures or warrants..
</P>
<P align=justify>We have agreed to register the common shares issuable upon
conversion of the debentures and exercise of the warrants. We have agreed to
file the registration statement within 30 days after the closing date of the
debenture transaction. That closing date was April 3, 2006. </P>
<P align=justify>Provided the Registration Statement is effective, we may prepay
the amounts outstanding on the debentures by giving advance notice and paying an
amount equal to 120% of the sum of (x) the principal being prepaid plus (y) the
accrued interest thereon. The holders will continue to have the right to convert
their debentures prior to the actual prepayment.</P>
<P align=justify>The holders of the debentures may require us to redeem any or
all of the outstanding debentures upon the occurrence of any one or more of
events of default specified in the debentures. The redemption is co computed
pursuant to a formula in the debentures which takes into account the conversion
and market sales prices of our stock at that time. </P>
<P align=justify>The warrants, issued in connection with the debentures as of
April 3, 2006, become first exercisable on the earlier of (i) the 65th day after
issuance or (ii) the effective date of the Registration Statement. The holders
of the warrants are entitled to exercise their warrants on a cashless basis
following the first anniversary of issuance if the Registration Statement is not
in effect at the time of exercise. </P>
<P align=justify>The holders of debentures are subject to certain limitations on
their rights to convert the debentures. The principal limitation is that the
holder may not, with certain limited exceptions, convert into a number of shares
that would, together with other shares held by the holder, exceed 4.99% of our
then outstanding shares after such conversion. The exercise of the warrants is
subject to a similar limitation. </P>
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<A name=page_23></A>
<P align=center>- 23 - </P>
<P align=justify>To secure our obligations under the debentures and other
transaction agreements, we have granted a security interest in substantially all
of our assets, including without limitation, its intellectual property, in favor
of the investors under the terms and conditions of a security interest agreement
dated as of the date of the debentures. The security interest terminates upon
the earlier of (i) the date on which less than one-fourth of the original
principal amount of the debentures are outstanding or (ii) payment or
satisfaction of all of our obligations under the securities purchase agreement.
</P>
<P align=justify>The conversion price of the debentures and the exercise price
of the warrants are subject to adjustment. Under the agreements with the holders
of the debentures, we agreed that if we make certain offers or sales of our
common stock (or securities convertible into our common stock) to any third
party during the period from the closing date of the debentures to the date when
the aggregate principal amount of all outstanding senior secured debentures
issued is first $750,000 or less, adjustments would be made to the conversion
price of the then unconverted debentures and to the exercise price of the then
unexercised warrants. The exercise price of the warrants also are subject to
adjustment in the event of certain capital adjustments or similar transactions,
such as a stock split or merger. In addition, in certain cases, the investors
may be entitled to receive additional warrants to purchase additional shares.
</P>
<P align=justify>The Company also agreed that until less than one-fourth of the
  aggregate principal amount of the debentures issued remain unconverted, without
  the prior written consent of more than 51% of the then outstanding debentures,
  we will not enter into any new transaction for the offer or sale of our securities
  when such transaction provides for a variable conversion price or a variable
  exercise price. We also agreed that until the effective date of the Registration
  Statement we will not enter into any other transaction for the offer or sale
  of any of its securities and, commencing on the effective date and for six months
  thereafter, we will not enter into any transaction granting the investors in
  that new transaction registration rights. </P>
<P align=justify>Under certain circumstances, we will be obligated to pay
liquidated damages to the holders of the debentures if the Registration
Statement is filed late and/or is not declared effective by the Securities and
Exchange Commission within 120 days after the closing date. Similar payments
will be required if the registration is subsequently suspended beyond certain
agreed upon periods. The amount of liquidated damages that may become payable
may be substantial. If any such liquidated damages are payable, the security
holder may ask, and in certain circumstances, we may elect, to have the amount
paid in shares of common at the then applicable conversion price. </P>
<P align=justify>Directors and officers of our company have also agreed not to
sell any of their shares in our company, unless purchased in the open market or
as part of certain private placements, until six (6) months after the investors&#146;
registration statement has been declared effective, and have also agreed to
limit the volume of their share sales thereafter. </P>
<P align=justify>These securities were issued pursuant to the exemption from
registration under the United States Securities Act of 1933 provided by Section
4(2), Section 4(6) and/or Rule 506 of Regulation D promulgated under the 1933
Act to the investors and brokers who are &#147;accredited investors&#148; within the
respective meanings ascribed to that term in Rule 501(a) under the 1933 Act. No
advertising or general solicitation was employed in offering the securities.
</P>
<P align=justify>Copies of the Securities Purchase Agreement, Form of Debenture,
Form of Warrant, Registration Rights Agreement and Security Interest Agreement
relating to the above transactions, and a copy of a press release of the
Company, dated April 4, 2006, are filed as exhibits to the registration
statement for a more complete description of the complex provisions that are
summarized under this caption. The foregoing descriptions of the above
transactions are qualified in their entirety by reference to such exhibits,
which are incorporated by reference herein. </P>
<P align=center><B>LEGAL PROCEEDINGS </B></P>
<P align=justify>We know of no material, existing or pending legal proceedings
against our company, nor are we involved as a plaintiff in any material
proceeding or pending litigation. There are no proceedings in which any of our
directors, officers or affiliates, or any registered or beneficial stockholder,
is an adverse party or has a material interest adverse to our interest. </P>
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<P align=center>- 24 - </P>
<P align=center><B>DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
</B></P>
<P align=justify>All directors of our company hold office until the next annual
meeting of the security holders or until their successors have been elected and
qualified. The officers of our company are appointed by our board of directors
and hold office until their death, resignation or removal from office. Our
directors and executive officers, their ages, positions held, and duration as
such, are as follows: </P>
<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>
    <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><BR><BR><B>Name</B> </TD>
    <TD align=center width="40%" bgColor=#eeeeee
      ><BR><BR><B>Position Held with our Company</B> </TD>
    <TD align=center width="10%" bgColor=#eeeeee
      ><BR><BR><B>Age</B> </TD>
    <TD align=center width="25%" bgColor=#eeeeee><B>Date First</B>
      <BR><B>Elected or</B> <BR><B>Appointed</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left>Zami Aberman <BR></TD>
    <TD align=center width="40%" >Chief Executive Officer,
      President and <BR>Director </TD>
    <TD align=center width="10%" >52 <BR></TD>
    <TD align=center width="25%">September 26, 2005 <BR>November 21, 2005
  </TD></TR>
  <TR vAlign=top>
      <TD align=left>Yossi Keret </TD>
      <TD align=center width="40%" >Chief Financial Officer </TD>
      <TD align=center width="10%" >40 </TD>
      <TD align=center width="25%">May 30, 2004 </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left>Ora Burger </TD>
      <TD align=center width="40%" >Vice President, Development </TD>
      <TD align=center width="10%" >39 </TD>
      <TD align=center width="25%">October 26, 2005 </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left>Doron Shorrer </TD>
      <TD align=center width="40%" >Director </TD>
      <TD align=center width="10%" >52 </TD>
      <TD align=center width="25%">October 2, 2003 </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left>Hava Meretzki </TD>
      <TD align=center width="40%" >Director </TD>
      <TD align=center width="10%" >37 </TD>
      <TD align=center width="25%">October 2, 2003 </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left>Isaac Braun </TD>
      <TD align=center width="40%" >Director </TD>
      <TD align=center width="10%" >52 </TD>
      <TD align=center width="25%">July 6, 2005 </TD>
    </TR>
  <TR vAlign=top>
      <TD align=left>Israel Ben-Yoram </TD>
      <TD align=center width="40%" >Director </TD>
      <TD align=center width="10%" >42 </TD>
      <TD align=center width="25%">January 26, 2005 </TD>
    </TR></TABLE></DIV>
<P align=justify><I>Business Experience</I> </P>
<P align=justify>The following is a brief account of the education and business
experience of each director and executive officer during at least the past five
years, indicating each person's principal occupation during the period, and the
name and principal business of the organization by which he was employed. </P>
<P align=justify><B>Zami Aberman</B> </P>
<P align=justify>Mr. Aberman became our Chief Executive Officer and President on
September 26, 2005 and a director of our company on November 21, 2005. Mr.
Aberman became our acting Chairman of the Board on April 3, 2006. Mr. Aberman
has 20 years of Experience in Marketing and Management in the Hi-Tech Industry.
He held Chief Executive and Chairman positions in Israel, the USA, Europe, Japan
and Korea. He operated within high-tech global companies in the fields of
Automatic Optical Inspection, network security, Video over IP, software, chip
design and robotic markets. Mr. Aberman serve as the chairman of Rose Hitech
Ltd., a private investment company; as chairman of VLScom Ltd., a private
company specializing in video compression for HDTV and video over IP and as a
director of Ori Software Ltd., involved in data management. Before those
positions he served as the President and CEO of Elbit Vision Systems), a public
company traded on the OTCBB market (EVSNF.OB) which supplies inspection systems
for the microelectronic industry. As well, Mr. Aberman served as President and
CEO of Netect Ltd specializing in the field of Internet security software, he
was the Co-Founder, President and CEO of &#147;Associative computing Ltd, developing
an associative parallel processor for real-time video processing, he served as
chairman of Display Inspection Systems Inc specializing in laser based
inspection machines and he served as President and CEO of Robomatix Technologies
Ltd, a public company (RBMXF.OB). </P>
<P align=justify>In 1992, Mr. Aberman was awarded the Rothschild Prize for
excellence in his field from the President of the State of Israel. Aberman holds
a B.Sc. in Mechanical Engineering from Ben Gurion University in Israel. </P>
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<P align=center>- 25 - </P>
<P align=justify><B>Yossi Keret </B></P>
<P align=justify>Mr. Keret was appointed as our Chief Financial Officer on May
30, 2004. Before his appointment as our Chief Financial Officer, Mr. Keret acted
as the Chief Financial Officer of M.L.L. Software and Computers Industries Ltd.
(TASE:MLL) where he oversaw the company&#146;s three subsidiaries. Prior to his
employment at M.L.L., he was the Chief Financial Officer of Internet-Zahav
Group, Ltd. (NASDAQ:IGLD) the leading Israeli ISP with revenues in excess of $45
million, 900 employees and three subsidiaries. As the Chief Financial Officer of
Top Image Systems Ltd. (NASDAQ:TISA), Mr. Keret directed all activities that led
to a NASDAQ listing, formulated systems which increased sales growth 60% during
his 5 year term and opened branches and subsidiaries in Europe and USA . He
began his career at Kost Forer and Gabai Accountants - a member of E&amp;Y
International. </P>
<P align=justify>Mr. Keret holds a B.A. from Haifa University in Economics and
Accounting, is a Certified Accountant in Israel and is working toward an MBA
from Heriot-Watt University. </P>
<P align=justify><B>Ora Burger </B></P>
<P align=justify>Dr. Burger was appointed as our Vice President, Development on
October 26, 2005. Dr. Burger was recruited to Pluristem in 2003 to promote the
research of hemapoietic stem cells (HSC) growing and expanding in a
physiological like microenvironment 3-D culture in our company' novel PluriX(TM)
bioreactor. She was subsequently promoted to manage turnkey projects in research
and development - specifically the production of transplantable HSC using a 3-D
biodegradable scaffolding platform in the PluriX(TM) bioreactor. This project is
co-sponsored by the Chief Scientist of the Israeli Ministry of Industry and
Trade under the most prestigious &#147;Magneton&#148; grant program directed toward
facilitating technology transfer to the forefront of innovation from the
University to leading high-technology and biotechnology companies.</P>
<P align=justify>Prior to joining our company, Dr. Burger served as a Research
and Development Advisor in several emerging-growth biotechnology companies
validating technologies for further development. She acted as Director of
Research and Development for Diagnostic Technology where she led the development
of ELISA kit, intended for the prenatal diagnose of pregnancy complications such
as preeclampsia, preterm delivery and fetal growth restriction. </P>
<P align=justify>Dr. Burger holds a B.A. and MSc. in plant science from the faculty
  of agronomy of the Hebrew University and a DSc. in Biotechnology Engineering
  from Technion. She completed postdoctoral training at Technion and Tel Aviv
  University, Sackler School of Medicine, working on therapeutic models to cure
  the damage of Helicobacter pylori, a bacterial infection which causes ulcers,
  gastritis, and gastric cancer. Her work was recently re-illuminated following
  the 2005 Nobel Prize in Medicine to the scientists who discovered the clinical
  central importance of the subject: Ulcer Derived from Bacterial Infections.
  Dr. Burger was until recently a lecturer in Biotechnology and Food Engineering
  Faculty at the Technion institute.</P>
<P align=justify><B>Doron Shorrer </B></P>
<P align=justify>Mr. Shorrer was appointed a director on October 2, 2003. Mr.
Shorrer, ISR (CPA) was Chairman of the Board of Phoenix Insurance Company, one
of the largest insurance companies in Israel and Mivtachim Pension Benefit
Group, the largest pension fund in Israel. Prior to these positions, Mr. Shorrer
held senior appointments that included Arbitrator at the Claims Resolution
Tribunal for Dormant Accounts in Switzerland; Economic and Financial Advisor,
Commissioner of Insurance and Capital Markets for the State of Israel; Member of
the board of directors of &#147;Nechasim&#148; of the State of Israel; Member Committee
for the Examination of Structural Changes in the Capital Market (The Brodet
Committee); General Director of the Ministry of Transport; Co-Founder and
director of an accounting firm with offices in Jerusalem, Tel-Aviv and Haifa;
Member of the Lecture Staff of the Amal School Chain; Chairman of a Public
Committee for Telecommunications; and Economic Consultant to the Ministry of
Energy. </P>
<P align=justify>Among many areas of expertise, Mr. Shorrer formulates,
implements and administers business planning in the private and institutional
sector in addition to consulting on economic, accounting and taxation issues to
a large audience ranging from private concerns to government ministries. Mr.
Shorrer holds a B.A. in Economics and </P>
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<P align=center>- 26 - </P>
<P align=justify>Accounting and an M.A. in Business Administration
(specialization in finance and banking) from the Hebrew University of Jerusalem
and is a Certified Public Accountant (ISR). </P>
<P align=justify><B>Hava Meretzki </B></P>
<P align=justify>Ms. Meretzki was appointed a director on October 2, 2003. Ms.
Meretzki, Adv. is a partner in the law firm of Ben-Noun Meretzki in Haifa,
Israel. Ms. Meretzki specializes in civil, trade and labor law and is presently
Vice-Chairman for the National Council of the Israel Bar Association. Ms.
Meretzki previously was a director of the Israel Electric Company. Ms. Meretzki
received a Bachelors Degree in Law from the Hebrew University in 1991, and in
1992 was admitted to the Israel Bar Association. </P>
<P align=justify><B>Isaac Braun </B></P>
<P align=justify>Mr. Braun was appointed a director on July 6, 2005. Mr. Braun
is a business veteran with entrepreneurial, industrial and manufacturing
experience. He has been a co-founder and board member of several hi-tech
start-ups in the areas of e-commerce, security, messaging, search engines and
biotechnology. Mr. Braun is involved with advising private companies on raising
financing and business development. </P>
<P align=justify><B>Israel Ben-Yoram </B></P>
<P align=justify>Mr. Ben-Yoram was appointed a director on January 26, 2005. Mr.
Ben-Yoram has been a director and partner in the accounting firm of Mor,
Ben-Yoram and Partners in Israel since 1985 to present. This accounting firm
currently employs over 15 employees in the field of auditing, consulting, and
accompanying projects. Since 1992 to present, Mr. Ben-Yoram has also served as a
shareholder and the head director of Mor, Ben-Yoram Ltd., a private company in
Israel in parallel to the operation of the Mor, Ben-Yoram and Partners
accounting firm. This company provides management services, economic consulting
services and other professional services to businesses. Mr. Ben-Yoram received a
B.A. in accounting from the University of Tel Aviv, an M.A. in Economics from
the Hebrew University of Jerusalem, an LLB and an MBA from Tel Aviv University
and an LLM from Bar Ilan University. </P>
<P align=justify><I>Significant Employees</I> </P>
<P align=justify>We currently do not have any significant employees aside from
our directors and officers. </P>
<P align=justify><I>Family Relationships </I></P>
<P align=justify>Shai Meretzki, our former Chief Executive Officer and the
founder and chief technology officer of our wholly owned subsidiary, Pluristem,
Ltd. and Hava Meretzki, one of our directors, are husband and wife. </P>
<P align=justify><I>Audit Committee and Audit Committee Financial Expert</I>
</P>
<P align=justify>On October 2, 2003, our board of directors created an audit
committee and adopted an audit committee charter. On July 6, 2005 we appointed
Hava Meretzki, Israel Ben-Yoram and Isaac Braun as members of our Audit
Committee. However, our board of directors has determined that we do not have a
member of our audit committee that qualifies as an &#147;audit committee financial
expert&#148; as defined in Item 401(e) of Regulation S-B. Mr. Israel Ben-Yoram and
Mr. Isaac Braun are &#147;independent&#148; as the term is used in Item 7(d)(3)(iv) of
Schedule 14A under the Securities Exchange Act of 1934, as amended. Ms. Hava
Meretzki is not considered independent as she is married to our former Chief
Executive Officer and the founder and chief technology officer of our wholly
owned subsidiary, Pluristem, Ltd., Dr. Shai Meretzki. We believe that the
members of our audit committee are collectively capable of analyzing and
evaluating our financial statements and understanding internal controls and
procedures for financial reporting. During the fiscal year 2005, the audit
committee met a total of 4 times. </P>
<P align=justify><I>Other Committees of the Board</I> </P>
<P align=justify>On October 2, 2003, our board of directors also created a
compensation committee and a corporate governance committee. Our board of
directors adopted a compensation committee charter and appointed Doron Shorrer
and </P>
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<P align=center>- 27 - </P>
<P align=justify>Hava Meretzki as members of our compensation committee. Our
board of directors also adopted a corporate governance committee charter and
appointed Doron Shorrer and Hava Meretzki as members of our corporate governance
committee </P>
<P align=justify><I>Involvement in Certain Legal Proceedings </I></P>
<P align=justify>Our directors, executive officers and control persons have not
been involved in any of the following events during the past five years: </P>
<P style="MARGIN-LEFT: 5%" align=justify>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; any
bankruptcy petition filed by or against any business of which such person was a
general partner or executive officer either at the time of the bankruptcy or
within two years prior to that time; </P>
<P style="MARGIN-LEFT: 5%" align=justify>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor offenses); </P>
<P style="MARGIN-LEFT: 5%" align=justify>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; being
subject to any order, judgment, or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting his involvement in any type
of business, securities or banking activities; and </P>
<P style="MARGIN-LEFT: 5%" align=justify>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; being
found by a court of competent jurisdiction (in a civil action), the Commission
or the Commodity Futures Trading Commission to have violated a federal or state
securities or commodities law, and the judgment has not been reversed,
suspended, or vacated. </P>
<P align=center><B>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT </B></P>
<P align=justify>The following table sets forth, as of June 16, 2006, certain
information with respect to the beneficial ownership of our common stock by each
security holder known by us to be the beneficial owner of more than 5% of our
common stock and by each of our current directors and executive officers. Each
person has sole voting and investment power with respect to the shares of common
stock, except as otherwise indicated. Beneficial ownership consists of a direct
interest in the shares of common stock, except as otherwise indicated. </P>
<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>
    <TR vAlign=top>
    <TD align=center bgColor=#eeeeee><BR><B>Title of Class </B></TD>
    <TD align=left width="40%" bgColor=#eeeeee ><BR><B>Name and
      Address of Beneficial Owner </B></TD>
    <TD align=center width="20%" bgColor=#eeeeee><B>Amount and Nature
      </B><BR><B>of Beneficial Owner</B><B><SUP>(1) </SUP></B></TD>
    <TD align=center width="20%" bgColor=#eeeeee><B>Percentage of
      </B><BR><B>Class</B><B><SUP>* </SUP></B></TD></TR>
  <TR vAlign=top>
      <TD align=center><BR>
        Common Shares <BR><BR><BR><BR></TD>
      <TD align=left width="40%" >Zami Aberman <BR>
        Chief Executive Officer, Chairman of the <BR>Board, President and
      Director <BR>63 Rabutzky Street <BR>Raanana, Israel </TD>
      <TD align=center width="20%"><BR>
        &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      3,000 <SUP>(2)</SUP><BR><BR><BR><BR></TD>
      <TD align=center width="20%"><BR>
        &nbsp;0%&nbsp;
      <BR><BR><BR><BR></TD></TR>
  <TR vAlign=top>
      <TD align=center>Common Shares <BR>
        <BR><BR></TD>
      <TD align=left width="40%" >Shai Meretzki <BR>
        Chief Technology Officer of Pluristem, Ltd. <BR>38 Raul Wallenberg
      <BR>Haifa, Israel </TD>
      <TD align=center width="20%">&nbsp; 10,053,170 <SUP>(3) </SUP><BR>
        <BR><BR></TD>
      <TD align=center width="20%">15.1% <BR>
        <BR><BR></TD></TR>
  <TR vAlign=top>
      <TD align=center>Common Shares <BR>
        <BR></TD>
      <TD align=left width="40%" >Joseph Corso <BR>
        15 Ottavio Promenade <BR>Staten Island, NY 10307 </TD>
      <TD align=center width="20%">7,000,000 <BR>
        <BR></TD>
      <TD align=center width="20%">&nbsp; 13.63% <BR>
        <BR></TD></TR>
  <TR vAlign=top>
      <TD align=center>Common Shares <BR>
        <BR><BR></TD>
      <TD align=left width="40%" >Stonestreet Limited Partnership <BR>
        #1300 &#150; 320 Bay Street <BR>Toronto, ON M5H 4A6
      <BR>Canada </TD>
      <TD align=center width="20%">4,000,000 <BR>
        <BR><BR></TD>
      <TD align=center width="20%">&nbsp;&nbsp; 6.28% <BR>
        <BR><BR></TD></TR></TABLE></DIV><BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<P align=center>- 28 - </P>
<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>
    <TR vAlign=top>
    <TD align=center bgColor=#eeeeee><BR><B>Title of Class </B></TD>
    <TD align=center width="40%" bgColor=#eeeeee ><BR><B>Name and
      Address of Beneficial Owner </B></TD>
    <TD align=center width="20%" bgColor=#eeeeee><B>Amount and Nature
      </B><BR><B>of Beneficial Owner</B><B><SUP>(1) </SUP></B></TD>
    <TD align=center width="20%" bgColor=#eeeeee><B>Percentage of
      </B><BR><B>Class</B><B><SUP>* </SUP></B></TD></TR>
  <TR vAlign=top>
    <TD align=center><BR>Common Shares <BR></TD>
    <TD align=left width="40%" >Hava Meretzki <BR>Director <BR>38
      Raul Wallenberg <BR>Haifa, Israel </TD>
      <TD align=center width="20%">338,377<SUP>(4) </SUP></TD>
    <TD align=center width="20%">0% </TD></TR>
  <TR vAlign=top>
      <TD align=center><BR>
        Common Shares <BR></TD>
      <TD align=left width="40%" >Doron Shorrer <BR>
        Director <BR>33 Koreh Hadorot Street <BR>Jerusalem, Israel </TD>
      <TD align=center width="20%">451,170<SUP>(5) </SUP></TD>
      <TD align=center width="20%">0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=center><BR>
        Common Shares <BR></TD>
      <TD align=left width="40%" >Israel Ben-Yoram <BR>
        Director <BR>24 Barkan Street <BR>Rishon Lezion, Israel </TD>
      <TD align=center width="20%">155,089<SUP>(6) </SUP></TD>
      <TD align=center width="20%">0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=center><BR>
        Common Shares <BR></TD>
      <TD align=left width="40%" >Isaac Braun <BR>
        Director <BR>9 Zeharia Street, POB 402 <BR>Bene Barak, Israel </TD>
      <TD align=center width="20%">159,594<SUP>(7) </SUP></TD>
      <TD align=center width="20%">0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=center><BR>
        Common Shares <BR></TD>
      <TD align=left width="40%" >Yossi Keret <BR>
        Chief Financial Officer <BR>Hanesi&#146;im Street 6/19 <BR>Hod Hasharon,
      Israel </TD>
      <TD align=center width="20%">451,170<SUP>(8) </SUP></TD>
      <TD align=center width="20%">0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=center><BR>
        Common Shares <BR><BR></TD>
      <TD align=left width="40%" >Ora Burger <BR>
        Vice President, Development <BR>5 Bulchin St. <BR>Haifa 32882
      <BR>Israel </TD>
      <TD align=center width="20%">&nbsp;33,838<SUP>(9) </SUP></TD>
      <TD align=center width="20%">0% </TD>
    </TR>
  <TR vAlign=top>
      <TD align=center>Common Shares </TD>
      <TD align=left width="40%" >Directors and Officers (as a group) </TD>
      <TD align=center width="20%">11,645,408<SUP>(10)&nbsp; </SUP></TD>
      <TD align=center width="20%">18.27% </TD>
    </TR></TABLE></DIV>
<P align=justify>0% is indicated for amounts less than 1% </P>
<P align=justify><SUP>(1) </SUP>Based on 63,743,483 shares of common stock
issued and outstanding as of June 16, 2006. Except as otherwise indicated, we
believe that the beneficial owners of the common stock listed above, based on
information furnished by such owners, have sole investment and voting power with
respect to such shares, subject to community property laws where applicable.
Beneficial ownership is determined in accordance with the rules of the SEC and
generally includes voting or investment power with respect to securities. Shares
of common stock subject to options, warrants or right or through the conversion
of a security currently exercisable or convertible, or exercisable or
convertible within 60 days, are deemed outstanding for purposes of computing the
percentage ownership of the person holding such option or warrants, but are not
deemed outstanding for purposes of computing the percentage ownership of any
other person. </P>
<P align=justify><SUP>(2) </SUP>Mr. Aberman was granted 4,500,000 options to
purchase shares of common stock pursuant to our 2005 Stock Option Plan,
exercisable at $0.10 per share until January 16, 2016. These options vest as
follows: 25% on July 16, 2006, 4% on the 7 month and each successive month
anniversary to and including the 23 month anniversary and the balance on the 24
month anniversary. </P>
<P align=justify><SUP>(3) </SUP>4,802,000 of which are registered under the name
of A.R.Y. Holdings Ltd., which are owned and controlled by Dr. Shai Meretzki.
451,170 of which are options to purchase shares of common stock granted on
December 30, 2003 that are currently exercisable or exercisable within 60 days.
2,400,000 of which were granted in connection with the issuance of Notice of
Allowance by the United States Patent Office for our patent application number
09/890,401. 2,400,000 of which are warrants to purchase shares of common stock
granted in connection with the issuance of Notice of Allowance by the United
States Patent Office for our patent application number 09/890,401. Dr. Meretzki
was granted 1,500,000 options to purchase shares of common stock pursuant to our
2005 Stock Option Plan, exercisable at $0.10 per share until January 16, 2016.
These options vest as follows: 25% on July 16, 2006, 4% on the 7 month and each
successive month anniversary to and including the 23 month anniversary and the
balance on the 24 month anniversary. </P>
<P align=justify><SUP>(4) </SUP>Representing options to purchase shares of our
common stock granted on December 30, 2003 that are currently exercisable or
exercisable within 60 days. Ms. Meretzki was granted 600,000 options to purchase
shares of common stock pursuant to our 2005 </P>
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<P align=justify>Stock Option Plan, exercisable at $0.10 per share until January
16, 2016. These options vest as follows: 25% on July 16, 2006, 4% on the 7 month
and each successive month anniversary to and including the 23 month anniversary
and the balance on the 24 month anniversary. </P>
<P align=justify><SUP>(5) </SUP>Representing options to purchase shares of our
common stock granted on December 30, 2003 that are currently exercisable or
exercisable within 60 days. Mr. Shorrer was granted 800,000 options to purchase
shares of common stock pursuant to our 2005 Stock Option Plan, exercisable at
$0.10 per share until January 16, 2016. These options vest as follows: 25% on
July 16, 2006, 4% on the 7 month and each successive month anniversary to and
including the 23 month anniversary and the balance on the 24 month anniversary.
</P>
<P align=justify><SUP>(6) </SUP>Representing options to purchase shares of our
common stock granted on January 17, 2006 that are currently exercisable or
exercisable within 60 days. Mr. Ben-Yoram was granted 600,000 options to
purchase shares of common stock pursuant to our 2005 Stock Option Plan,
exercisable at $0.10 per share until January 16, 2016. These options vest as
follows: 25% on July 16, 2006, 4% on the 7 month and each successive month
anniversary to and including the 23 month anniversary and the balance on the 24
month anniversary. </P>
<P align=justify><SUP>(7) </SUP>Includes warrants exercisable into 75,000 shares
of our common stock that are currently exercisable or exercisable within 60 days
and 84,594 options to purchase shares of our common stock granted on January 17,
2006 that are currently exercisable or exercisable within 60 days. Mr. Braun was
granted 600,000 options to purchase shares of common stock pursuant to our 2005
Stock Option Plan, exercisable at $0.10 per share until January 16, 2016. These
options vest as follows: 25% on July 16, 2006, 4% on the 7 month and each
successive month anniversary to and including the 23 month anniversary and the
balance on the 24 month anniversary. </P>
<P align=justify><SUP>(8) </SUP>Representing options to purchase shares of our
common stock granted on December 30, 2003 that are currently exercisable or
exercisable within 60 days. Mr. Keret was granted 1,000,000 options to purchase
shares of common stock pursuant to our 2005 Stock Option Plan, exercisable at
$0.10 per share until January 16, 2016. These options vest as follows: 25% on
July 16, 2006, 4% on the 7 month and each successive month anniversary to and
including the 23 month anniversary and the balance on the 24 month anniversary.
</P>
<P align=justify><SUP>(9) </SUP>Representing options to purchase shares of our
common stock granted on December 30, 2003 that are currently exercisable or
exercisable within 60 days. Ms. Burger was granted 1,000,000 options to purchase
shares of common stock pursuant to our 2005 Stock Option Plan, exercisable at
$0.10 per share until January 16, 2016. These options vest as follows: 25% on
July 16, 2006, 4% on the 7 month and each successive month anniversary to and
including the 23 month anniversary and the balance on the 24 month anniversary.
</P>
<P align=justify><SUP>(10) </SUP>Includes options to purchase 4,365,408 shares
of our common stock and warrants to purchase 2,475,000 shares of our common
stock, that are currently exercisable or exercisable within 60 days. </P>
<P align=justify><I>Changes in Control </I></P>
<P align=justify>We are unaware of any contract or other arrangement the
operation of which may at a subsequent date result in a change of control of our
company. </P>
<P align=center><B>DESCRIPTION OF SECURITIES </B></P>
<P align=justify>We are authorized to issue 1,400,000,000 common shares with
$0.00001 par value. As at June 16, 2006 we had 63,743,483 common shares
outstanding. Upon liquidation, dissolution or winding up of the corporation, the
holders of common stock are entitled to share ratably in all net assets
available for distribution to security holders after payment to creditors. The
common stock is not convertible or redeemable and has no preemptive,
subscription or conversion rights. </P>
<P align=justify>Each outstanding share of common stock is entitled to one vote
on all matters submitted to a vote of security holders. There are no cumulative
voting rights. </P>
<P align=justify>The holders of outstanding shares of common stock are entitled
to receive dividends out of assets legally available therefore at such times and
in such amounts as our Board of Directors may from time to time determine.
Holders of common stock will share equally on a per share basis in any dividend
declared by the Board of Directors. We have </P>
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<P align=center>- 30 - </P>
<P align=justify>not paid any dividends on our common stock and do not
anticipate paying any cash dividends on such stock in the foreseeable future.
</P>
<P align=justify>In the event of a merger or consolidation, all holders of
common stock will be entitled to receive the same per share consideration. </P>
<P align=center><B>DISCLOSURE OF COMMISSION POSITION OF <BR>INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES </B></P>
<P align=justify>Our bylaws provide that directors and officers shall be
indemnified by us to the fullest extent authorized by the Nevada General
Corporation Law, against all expenses and liabilities reasonably incurred in
connection with services for us or on our behalf if such persons acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
our best interests, and with respect to any criminal action or proceeding, had
not reasonable cause to believe his or her conduct was unlawful.</P>
<P align=justify>Insofar as indemnification for liabilities arising under the
Securities Act might be permitted to directors, officers or persons controlling
our company under the provisions described above, we have been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable. </P>
<P align=center><B>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS </B></P>
<P align=justify>Except as otherwise indicated below, we have not been a party
to any transaction, proposed transaction, or series of transactions in which the
amount involved exceeds $60,000, and in which, to its knowledge, any of its
directors, officers, five percent beneficial security holder, or any member of
the immediate family of the foregoing persons has had or will have a direct or
indirect material interest. </P>
<P align=justify>Dr. Shai Meretzki is a signatory of the License Agreement with
the Weizmann Institute of Science and the Technion-Israel Institute of
Technology because he was an inventor of the technology listed in the License
</P>
<P align=justify>Agreement. Dr. Meretzki is our former Chief Executive Officer
and an affiliate of our company through his indirect acquisition of shares of
our common stock. </P>
<P align=justify>The promoters of our company are our directors and officers.
</P>
<P align=center><B>DESCRIPTION OF BUSINESS </B></P>
<P align=justify><I>Corporate History </I></P>
<P align=justify>We are engaged in the business of the development of the stem
cell production technology and the commercialisation of cell therapy products.
We were incorporated in the State of Nevada under the name &#147;A.I. Software, Inc.&#148;
on May 11, 2001. Beginning in July 2001, we were engaged in software
development. Our initial business plan at the time of our incorporation was
premised on the use of artificial intelligence in computer programming
technology and in many areas of the computer, Internet, robotics, and games
industries. On July 1, 2001 we entered into a software development agreement
with Empire Group, a software development firm, to develop for us the software
algorithm program for an artificial intelligence software called &#147;Randomix.&#148; We
were not successful in fully implementing our initial business plan in regards
to our Randomix software. As a result, during March and April of 2003, our Board
of Directors conducted an in-depth analysis of our business plan and related
future prospects for software development companies. To better protect
stockholder interests and provide future appreciation, it was decided to
concurrently pursue initiatives in the biotech industry as an extension to our
business.</P>
<P align=justify>On May 5, 2003, we entered into a license agreement with the
Weizmann Institute of Science and the Technion-Israel Institute of Technology to
acquire an exclusive license for an innovative stem cell production technology.
This technology, if fully developed, will offer novel solutions to make
procedures like bone marrow transplants and other methods of cell therapy more
accessible to patients suffering from leukemia, lymphoma, myaloma and a broad
</P>
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<P align=justify>range of complicated diseases and disorders. Under this license
agreement, we agreed to pay $400,000 cash over time and we will pay royalties on
our future sales and product or rights distribution transactions. Also, the
licensors of the license agreement have an option to assign all of their patent
rights in the license agreement to our company in exchange for an aggregate of
5% of all of the issued and outstanding share capital of our company. This
option may only be exercised within a 60-day period commencing from the date
when we notify the licensors that the market capital of our company has exceeded
$25,000,000. The option will expire if it is not exercised within this period.
</P>
<P align=justify>To enable us to conduct further research and development of the
exclusive license for the stem cell production technology we acquired from the
Weizmann Institute of Science and the Technion-Israel Institute of Technology,
on June 10, 2003, 100% of the issued and outstanding shares of a research and
development company based in Israel called Pluristem, Ltd. Pluristem, Ltd. was
incorporated under the law of Israel on January 22, 2003 and has the facilities
and personnel to conduct research and development in the field of stem cell
research. As consideration for the shares of Pluristem, Ltd., we paid to the
shareholder of Pluristem, Ltd. cash in the amount of $1,000 and provided
Pluristem, Ltd. with a line of credit in the amount of $500,000. Accordingly,
Pluristem, Ltd. became our wholly-owned subsidiary as of June 10, 2003. </P>
<P align=justify>On June 25, 2003, we changed our name from &#147;A.I. Software,
Inc.&#148; to &#147;Pluristem Life Systems, Inc.&#148; The name change was effected with the
Nevada Secretary of State on June 25, 2003 and took effect with the OTCBB at the
opening of trading on June 30, 2003 under our new stock symbol &#147;PLRS&#148;. </P>
<P align=justify>From May 2003 until March 2006, our business has focussed on
the development of the stem cell production technology that we license.
Originally, our plan was to develop that technology to the point where we could
sub-license it to medical scientists and practitioners for their use in
producing cell therapy products for their own use of for sale in the
marketplace. On March 6, 2006, we announced that our company was taking a new
direction. Now, instead of looking to sub-lease the stem cell production
technology, we will focus on the developing the technology with the goal of
producing cell therapy products for sale in the marketplace. </P>
<P align=justify><I>Our Current Business </I></P>
<P align=justify>We are engaged in the business of the development of the stem
cell production technology and the commercialisation of cell therapy products.
We aim to become a leader in the production of stem cell based therapeutic
products to improve the engraftment of hematopoietic stem cells in bone marrow
transplants and expansion of hematopoietic stem cells outside of the human body.
Stem cells are unspecialized cells that can renew themselves for long periods
through cell division. Scientists have developed sufficient fundamental
understanding to use stem cells for cell therapy and bone marrow transplants for
the potential treatment of a broad range of complicated diseases. Cell therapy
is the use of living cells in the treatment of medical disorders. Cell therapy
is still in its beginning stages of research and development and only a few
potential products are already in clinical studies.</P>
<P align=justify>We plan to specialize initially in the production of stem cell
based therapeutic products to improve the engraftment of hematopoietic stem
cells in bone marrow transplants and expansion hematopoietic stem cells found in
umbilical cord blood, using the technology platform we license pursuant to our
agreement with the Weizmann Institute of Science and the Technion-Israel
Institute of Technology. We intend to improve this technology platform and
develop it into a functional stem cell production system for the treatment of
severe blood disorders. The first product targets a critical global shortfall of
matched tissue for bone marrow transplantation. We started initial pre-clinical
trials on mice that have insufficient immune systems so as to simulate human
blood and immune systems (SCID mice) on our first cell therapy product. We
intend to test our first product in clinical trials to gain Federal Drug
Administration approval.</P>
<P align=justify><B>Brief Introduction on Stem Cell Research and Cell Therapy
</B></P>
<P align=justify>Since 1998, when embryonic human stem cells were first
isolated, research on stem cells has received much public attention. Stem cells
have two important characteristics that distinguish them from other types of
cells. First, they are unspecialized cells that renew themselves for long
periods through cell division. Second, under certain </P>
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<P align=justify>physiologic or experimental conditions, stem cells can be
induced to become cells with special functions, such as the beating cells of the
heart muscle or the insulin-producing cells of the pancreas.</P>
<P align=justify>Scientists primarily work with two kinds of stem cells from
humans: embryonic stem cells and adult stem cells, which have different
functions and characteristics. In some adult tissues, such as bone marrow,
muscle, and brain, discrete populations of adult stem cells generate
replacements for cells that are lost through normal wear and tear, injury, or
disease. </P>
<P align=justify>Cell therapy is the use of living cells in the treatment of
medical disorders. Stem cells, progenitors and differentiated functional cells
of various tissues are evolving as potential treatment modality for life
threatening diseases and major clinical indications lacking effective cures.
Cell therapy is still in its beginning stages of research and development and
only a few potential products are already in clinical studies. </P>
<P align=justify>Even though we have the capability to work with embryonic stem
cells, we have chosen to concentrate our efforts on hematopoietic stem cells.
Hematopoietic stem cells can be found in every adult's bone marrow, which is the
spongy tissue found in the cavities of our bones. Hematopoietic stem cells are
the precursors of the various types of blood cells in the human body. These
cells include:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>White cells that fight infections and inflammations (leukocytes) and form
  the basis of the immune system (lymphocytes); </P>
  <LI>
  <P>Red cells that carry oxygen through our bodies (erythrocytes); and </P>
  <LI>
  <P>Platelets that help blood to clot. </P></LI></UL>
<P align=justify>Scientists have developed sufficient understanding to actually
use hematopoietic stem cells for therapy, such as through the procedure of bone
marrow transplant. Thus, this class of human stem cell holds the promise of
being able to repair or replace cells or tissues that are damaged or destroyed
by many of our most devastating diseases and disabilities. Furthermore, bone
marrow transplants are ultimate treatments in many pathological disorders,
including:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>Malignant blood system diseases, such as leukemia, lymphoma and myaloma,
  </P>
  <LI>
  <P>Diseases characterized by the lack of, or defective, production of bone
  marrow, such as aplastic anemia, </P>
  <LI>
  <P>Severe combined immune deficiency, </P>
  <LI>
  <P>Non-hematopoietic malignancies (solid tumors), or bone marrow disorders,
  following chemotherapy and radiation, and </P>
  <LI>
  <P>Metabolic diseases or congenital hemoglobinopathies, such as thalessemia.
  </P></LI></UL>
<P align=justify>For stem cell transplants to succeed, the donated stem cells
must repopulate and/or engraft the recipient's bone marrow, where they will
provide a new source of essential blood and immune system cells. Within the
hematopoietic cell system, only a special type of stem cells called pluripotent
hematopoietic stem cells have extensive capacities to expand, differentiate and
self-renew. Accordingly, pluripotent hematopoietic stem cells are exclusively
required for repopulation and engraftment of donated stem cells following
transplantation. In spite of the key role of pluripotent hematopoietic stem
cells in maintaining the hematopoietic cell system, they appear in extremely low
frequency in the bone marrow tissue. The current technology limitation on
maintaining or expanding undifferentiated stem cells outside of human body is a
major drawback to essential clinical applications of these cells. This current
unavailability of technology to expand the number of stem cells outside of human
body reflects the need for novel stem cell regulators. However, in spite of all
the challenges involved in hematopoietic stem cell transplants, physicians are
now trying, sometimes successfully, to assist in hematopoietic and immune system
</P>
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<P align=justify>recovery following high-dose chemotherapy and/or radiation
therapy treatment for malignant and non-malignant diseases such as leukemia and
certain immune and genetic disorders.</P>
<P align=justify>We entered into a consulting agreement as of April 1, 2005 with
Biological Industries, Ltd., of Kibbutz Bet-HuEmek, MP Oshrat 25015 whereby our
company and Biological Industries Ltd. have agreed to globally distribute joint
project products in the field of serum-free media specially designed for
hematopoietic and mesenchymal stem cells utilizing our PluriX<SUP>TM</SUP>
Bioreactor system. Biological Industries Ltd. is a privately-held, leading
biotechnology manufacturer and provider of a large range of animal cell culture
products including sterile, sea, liquid and powdered synthetic media,
supplements and novel serum free media products in the filed of cellular
biology. Biological Industries Ltd. exports products to thirty countries
internationally. Biological Industries Ltd. will pay us a license fee equal to
5% of sales of serum-free media developed in the joint project products for
seven years commencing on the date of the first sale. We have not yet completed
the development of any joint project products and no sales have taken place
pursuant to our agreement with Biological Industries. </P>
<P align=justify><B>Brief Introduction on Bone Marrow Transplants </B></P>
<P align=justify>Bone marrow transplantation is a relatively new medical
procedure being used to treat diseases once thought incurable. Since its first
successful use in 1968, bone marrow transplants have been used to treat patients
diagnosed with leukemia, aplastic anemia, lymphomas such as Hodgkin's disease,
multiple myeloma, immune deficiency disorders and some solid tumors such as
breast and ovarian cancer. The bone marrow transplant procedure generally
involves three phases. In the first phase, lasting 5 to 14 days, the bone marrow
recipient is prepared for the graft. Immunosuppressive and cytotoxic
chemotherapy administered with or without irradiation are used to enable the
recipient to accept the graft, to prevent graft rejection, and in cases of acute
leukemia, to eliminate residual leukemia. </P>
<P align=justify>In the second phase, bone marrow is procured from a compatible
donor and intravenously administered to the graft recipient.</P>
<P align=justify>The third phase is a period of waiting for the bone marrow to
engraft and function normally in the recipient. During the time required for
engraftment (approximately 2 to 4 weeks), the graft recipient is vulnerable to
infection, bleeding, severe weight loss, rejection of the graft and
graft-versus-host disease. Graft-versus-host disease occurs in approximately 50%
of bone marrow transplant patients. If the marrow engrafts and the patient
survives the immediate post-transplant period (first 3 to 6 weeks), the patient
faces another set of complications, including graft-versus-host disease and
interstitial pneumonia. Interstitial pneumonia occurs in 60% of bone marrow
transplant patients, typically 4 to 6 weeks post transplant. The disease
progresses rapidly and is fatal in approximately 50% of the cases. 50%-60% of
patients survive where the bone marrow transplant is made during disease
remission, and only 10%-25% survive in cases where the bone marrow transplant is
done outside of remission. (Source: The Cost Effectiveness of BMT Therapy and
Its Policy Implications, School of Public Health, UCLA). </P>
<P align=justify>There are several types of bone marrow transplants. They are
distinguished according to the source of the stem cells. An autologus bone
marrow transplant means the transplant stem cells come from the patient. An
allogenic bone marrow transplant means the stem cells come from a donor. A
syngeneic bone marrow transplant means the stem cells come from an identical
twin.</P>
<P align=justify>Research and clinical work in the field of bone marrow
transplants is presently limited due to:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>The average number of active pluripotent hematopoietic stem cells in any
  given bone marrow is extremely low, less than 0.5% of total mononuclear cells;
  </P>
  <LI>
  <P>The difficulties of the human body to accept bone marrow transplants from
  donors, and the ensuing damaging reactions; </P>
  <LI>
  <P>The patient is quite prone to infections following radiation and/or
  chemotherapy treatments, and may have been infected even prior to the
  transplant; </P></LI></UL>
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<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>Sorting of healthy cells from cancerous cells has not proven 100%
  successful; </P>
  <LI>
  <P>The great complications in storing and enriching these cells in the absence
  of <I>in vitro </I>differentiation; </P>
  <LI>
  <P>The absence of a large-scale and sustainable model that enables the testing
  of the ability of hematopoietic stem cells to renew the hematopoietic cell
  system; and </P>
  <LI>
  <P>There are some clinical situations where autologus bone marrow after tumor
  purging provides insufficient numbers of hematopoietic stem cells for the bone
  marrow transplant. </P></LI></UL>
<P align=justify>Transplantation experts believe that the ideal approach to a
successful stem cell transplant is to use a large number of stem cells to
maximize the probability of bone marrow repopulation and minimize the time
needed for the return of normal numbers of hematopoietic and immune cells in the
patient. </P>
<P align=justify>One of the major efforts in developing hematopoietic stem cell
technologies has been to identify new and better sources for stem cells. The
majority of transplantable hematopoietic stem cells in adults currently come
primarily from peripheral blood or adult donor bone marrow. Another important
and attainable source of transplantable and lasting hematopoietic stem cells is
from umbilical cord blood. Such blood is drawn from the umbilical cord after
birth, but before the discharge of the placenta, giving way to the following
advantages: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>The standard procedure at birth is that umbilical cord blood is discarded
  with the placenta. No morbidity is involved, making this option free of
  ethical controversy; </P>
  <LI>
  <P>Collection of umbilical cord blood is simple and non-invasive both to the
  mother and the baby; </P>
  <LI>
  <P>Use of umbilical cord blood is already approved by the Federal Drug
  Administration and does not require further clinical testing; </P>
  <LI>
  <P>The hematopoietic stem cells drawn from umbilical cord blood can
  differentiate into primary hematopoietic precursors and create hematopoietic
  clones in cultures better than those hematopoietic stem cells taken from adult
  bone marrow; </P>
  <LI>
  <P>Umbilical cord blood has lower levels of contamination with common viral
  pathogens, such as Cytomegalovirus, and is more tolerant of alloantigens; and
  </P>
  <LI>
  <P>Umbilical cord blood hematopoietic stem cells have high tolerance levels,
  giving way to lower graft- versus-host diseases. </P></LI></UL>
<P align=justify>It is important to note that scientists have found no
difference in the functionality of hematopoietic stem cells drawn from bone
marrow, peripheral blood or umbilical cord blood. However, owing to the small
volume of blood collected from umbilical cords (typically less than 100 ml), use
of umbilical cord blood has been limited to date to transplants in babies and
children weighing less than 45 kg. Moreover, there are no existing hematopoietic
stem cell production technologies for umbilical cord blood that can increase, to
the best of our knowledge, the number of hematopoietic stem cells without
causing differentiation of the hematopoietic stem cells. Once the hematopoietic
stem cells have differentiated, they cannot be transplanted into the patient.
Therefore, the development of a system that will facilitate the proliferation of
hematopoietic stem cells in an appropriate culture media or substrate could
enable the use of such hematopoietic stem cells drawn from umbilical cord blood
for transplanting in adults where insufficient hematopoietic stem cells are
available.</P>
<P align=justify>In summary, transplants of hematopoietic stem cells derived
from umbilical cord blood are a novel alternative to conventional bone marrow
transplants and have several unique advantages, in spite of their present
quantitative limitations. Umbilical cord blood lends itself to sorting and
storing in cord blood banks and transplant clinics, leading to the ability to
build data bases of expanded umbilical cord blood for national and worldwide
access and use, making search of bone marrow transplant donors easily
facilitated and making autologus bone marrow </P>
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<P align=justify>transplants in adults potentially feasible. We believe that the
advantages in use of umbilical cord blood hematopoietic stem cells, combined
with our potential cell therapy products would have the potential to change the
way bone marrow transplants are conducted in the future.</P>
<P align=justify><B>Our Core Technology &#150; the PluriX&#153; Bioreactor System </B></P>
<P align=justify>For decades, scientists have attempted to &#147;grow&#148; stem cells
outside of human body in culture to increase the number of stem cells for
transplantation. The challenge of this undertaking lies in overcoming stem
cells' predisposition to differentiate. Adult hematopoietic stem cells tend to
produce other cells with limited repopulating properties when grown in culture
rather than to replicate and regenerate additional stem cells. Current stem cell
production techniques are complicated by the diverse mix of differentiated cells
generated in stem cell cultures. Existing scientific methods considered in
increasing the number of stem cells include culturing the stem cells on two
dimensional stromal layers and growing in the presence of cytokines. To the best
of our knowledge, none of these existing methods to grow stem cells outside of
patients' bodies are able to prevent differentiation of stem cells while
promoting their proliferation. </P>
<P align=justify>Through the license agreement we entered with the Weizmann
Institute of Science and the Technion-Israel Institute of Technology, we
acquired an exclusive license for an innovative stem cell production technology.
This technology, if fully developed, may offer novel solutions to expand
hematopoietic stem cells taken from umbilical cord blood. We intend to improve
this technology and develop it into a functional stem cell production system
that we can use to produce functional stem cells for sale to other research
laboratories, umbilical cord blood banks, or clinics. We have named the
technology the PluriX&#153; Bioreactor system. </P>
<P align=justify>The PluriX&#153; Bioreactor system is a system of stromal cell
cultures and substrates that create an artificial physiological environment in
which hematopoietic stem cells can grow and reproduce outside of the human body.
The system mimics the environment which exists in human bones, in which stem
cells reproduce in nature. The stem cells are &#147;tricked&#148; into growing and
reproducing in the PluriX&#153; Bioreactor in a similar way they would in living
bone, and because the size and scale of the PluriX&#153; Bioreactor can be much
bigger than a human bone, the stem cell growth can be greatly expanded. We
expect that the three dimensional PluriX&#153; Bioreactor system has the potential to
bring about the production of umbilical cord blood hematopoietic stem cells to
proportions that will be enough for transplants in adults, without promoting
differentiation.</P>
<P align=justify>We are designing and developing the PluriX&#153; Bioreactor system
  to perform controlled production of hematopoietic stem cells for bone marrow
  transplants. The general idea is to cause self-renewal of early stage stem cells
  and prevent them from differentiating through use of the PluriX&#153; Bioreactor
  system. The PluriX&#153; Bioreactor system creates an artificial physiological
  environment in which hematopoietic stem cells can grow and reproduce. This system
  is in direct contrast to standard teflon bags or culture flasks, which cannot
  promote hematopoietic stem cells self-renewal and prevent their differentiation.
  In the PluriX&#153; Bioreactor system, hematopoietic stem cells are influenced
  by contact with the surrounding environment, made up of stromal cell cultures
  and substrates. Therefore, by keeping the hematopoietic stem cells in the closed
  environment of the PluriX&#153; Bioreactor system, the hematopoietic stem cells
  maintain their original form, which means that they can proliferate without
  differentiating.</P>
<P align=justify>We believe that the PluriX&#153; Bioreactor system, once fully
  developed, will<I> </I>enable the production of certain stem cells, such as
  umbilical cord blood hematopoietic stem cells, for which there might otherwise
  be insufficient quantities available for transplants in adults. Having access
  to a sufficient number of hematopoietic stem cells is essential to successful
  clinical outcomes. This is particularly the case with umbilical cord blood transplants.
  The limited quantities of available hematopoietic stem cells in umbilical cord
  blood and difficulties in expanding the starting volumes to therapeutic quantities
  have restricted the widespread practice of umbilical cord blood transplants.
  The PluriX&#153; Bioreactor system is designed to solve this dilemma by providing
  the capability to easily and cost-effectively expand umbilical cord blood hematopoietic
  stem cells to higher quantities for therapeutic treatments.</P>
<P align=justify>The PluriX&#153; Bioreactor system is comprised of several components,
  including (1) a reservoir, (2) gas mixture, (3) a gas filter, (4) an injection
  point, (5) a Plug Flow Bioreactor, (6) a flow monitor and a flow valve, (7)
  a separating </P>
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<P align=justify>container, (8) a container for medium exchange, (9) a
peristaltic pump, (10) a sampling point, (11) a container for medium exchange
and (12) an oxygen monitor. The PluriX&#153; Bioreactor system is designed to be
operated with minimal operator activity by a medical or laboratory technician.
Operation of the PluriX&#153; Bioreactor system is intended to be relatively simple,
and therefore, a trained lab technician will be able to operate and monitor
between 10 to 20 PluriX&#153; Bioreactor systems at any one time.</P>
<P align=justify><B>Primary Advantages of PluriX&#153; Bioreactor System </B></P>
<P align=justify>We believe our core technology, the PluriX&#153; Bioreactor system,
once fully developed, will have the following advantages: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>Our PluriX&#153; Bioreactor system can be used to expand umbilical cord blood
  hematopoietic stem cells for use in adult transplants. This means that healthy
  autologus umbilical cord blood hematopoietic stem cells can be taken at the
  time of birth, expanded into mature hematopoietic stem cells and stored by a
  cell bank in the instance that it may be needed by that specific patient at a
  later date. This will eliminate the current practice of transplanting
  cancerous cells back into the patient. </P>
  <LI>
  <P>Our PluriX&#153; Bioreactor system can be used for allogenic production, i.e. to
  grow the hematopoietic stem cells from donors other than the patient himself.
  Allogenic stem cells can also be expanded for use as a transplant source for
  adults in the instances that enough stem cells are not attainable from a
  particular donor. </P>
  <LI>
  <P>Our PluriX&#153; Bioreactor system can be used for allogenic production, i.e. to
  grow the hematopoietic stem cells from donors other than the patient himself.
  Allogenic stem cells can also be expanded for use as a transplant source for
  adults in the instances that enough stem cells are not attainable from a
  particular. </P>
  <LI>
  <P>Our PluriX&#153; Bioreactor system can be used to produce a high number of
  hematopoietic stem cells, which might result in increased potential for
  faster, successful engraftment of stem cells in transplant patients. </P>
  <LI>
  <P>By making the option of expanding hematopoietic stem cells taken from
  transplant patients themselves available, we believe that costs related to
  donor searches for bone marrow transplants will be reduced significantly.
  </P></LI></UL>
<P align=justify><I>Markets for Our Product and Services </I></P>
<P align=justify>We plan to produce and sell stem cell products for use in bone
marrow transplants. There are presently between 40,000 to 50,000 bone marrow
transplants performed annually<B> </B>worldwide. Approximately 18,000 of these
bone marrow transplants are performed in the United States and approximately
25,000 are performed in Europe. We have not taken steps to determine the number
of bone marrow transplants performed elsewhere. Of the 40,000 to 50,000 bone
marrow transplants performed, only 5,000 are performed on babies and children.
Furthermore, most of these 40,000 to 50,000 bone marrow transplants are
allogeneic transplants, requiring patients to locate donors with compatible
hematopoietic stem cells. Based on the fact that only one in three patients
actually finds a compatible donor, if we succeed in developing stem cells that
will be compatible with more patients, as we are trying to do, we estimate that
the number of potential bone marrow transplants in the United States and Europe
would likely exceed 150,000 annually. Based on these statistics, we believe that
the existing methods of transplanting human bone marrow have not been perfected
and are far from reaching an ideal level of success. </P>
<P align=justify>Presently, standard bone marrow transplant procedure costs
approximately $100,000 per patient. This translates into approximately $5
billion annually<B> </B>that patients and their medical insurers around the
world are spending. If we are successful in developing our technology and
products so that donor searches and repeat procedures are reduced, the annual
expenditures for bone marrow transplant procedures may decrease. </P>
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<P align=justify><I>Intellectual Property </I></P>
<P align=justify>Our success will depend in part on our ability, and the ability
of our licensors, to obtain patent protection for our technology and products we
acquired under the license agreement with the Weizmann Institute of Science and
the Technion-Israel Institute of Technology. Under the license agreement we have
exclusive rights to the technology covering a patent application entitled
&#147;Method and Apparatus for Maintenance and Production of Hematopoietic Stem Cells
and/or Progenitor Cells&#148; filed with the World Intellectual Property Organization
under the Patent Cooperation Treaty (PCT) patent number PCT/US00/02688.
Corresponding patent applications have also been filed in a number of countries
including the United States under patent application number 09/890,401. On
January 28, 2005, we received notice from the U.S. Patent and Trademark Office
that it has allowed the U.S. patent application number 09/890,401, but changing
the title of the patent from &#147;Method and Apparatus for Maintenance and
Production of Hemopoietic Stem Cells and/or Progenitor Cells&#148; to &#147;Method of
Producing Undifferentiated Hemopoietic Stem Cells Using a Stationary Phase
Plug-Flow Bioreactor.&#148; This patent &#150; No 6,911,201, allowance provides coverage
to our concept of creating a three-dimensional bone-like environment that
supports stem cell production without differentiation.</P>
<P align=justify>Our other issued patents were issued in South Africa (patent
#2001/6486), Australia (patent #759719) Russia (patent #2249039) and New Zealand
(patent #513303) between the years 2002 and 2005. These patents are due to
expire in the years 2022 to 2025. These patents present claims to: (i) certain
apparatus for cell culturing, including a bioreactor suitable for culturing
human hematopoietic stem cells or hematopoietic progenitors cells; (ii) three
dimensional stromal cells based bioreactor. In addition, we plan to file
applications, either alone or in conjunction with our exclusive licensors, for
patents in the United States and equivalent applications in certain other
countries claiming other aspects of our technology, products and processes. </P>
<P align=justify>The validity and breadth of claims in medical technology and
products patents involve complex legal and factual questions and, therefore, may
be highly uncertain. No assurance can be given that any patents based on pending
patent applications or any future patent applications by us, or our licensors,
will be issued, that the scope of any patent protection will exclude competitors
or provide competitive advantages to us, that any of the patents that have been
or may be issued to us or our licensors will be held valid if subsequently
challenged or that others will not claim rights in or ownership of the patents
and other proprietary rights held or licensed by us. Furthermore, there can be
no assurance that others have not developed or will not develop similar
products, duplicate any of our technology or products or design around any
patents that have been or may be issued to us or our licensors. Since patent
applications in the United States are maintained in secrecy until patents issue,
we also can not be certain that others did not first file applications for
inventions covered by our, and our licensors' pending patent applications, nor
can we be certain that we will not infringe any patents that may be issued to
others on such applications. </P>
<P align=justify>We rely on the license granted by Weizmann Institute of Science
and Technion-Israel Institute of Technology and others for the patent rights
related to our core technology, the PluriX&#153; Bioreactor system. If we breach the
license agreement or otherwise fail to comply with the license agreement, or if
the license agreement expires or is otherwise terminated, we may lose our rights
in such patents, which would have a material adverse affect on our business,
financial condition and results of operations. For complete details regarding
our license, please see the license agreement itself, which is incorporated by
reference as an exhibit to the registration statement of which this prospectus
forms a part. </P>
<P align=justify>We also rely on trade secrets and unpatentable know-how that we
seek to protect, in part, by confidentiality agreements. It has not been, but is
now our intended policy to require our employees, consultants, contractors,
manufacturers, outside scientific collaborators and sponsored researchers, board
of directors, technical review board and other advisors to execute
confidentiality agreements upon the commencement of employment or consulting
relationships with us. These agreements will provide that all confidential
information developed or made known to the individual during the course of the
individual's relationship with us is to be kept confidential and not disclosed
to third parties except in specific limited circumstances. We also will commence
to require signed confidentiality or material transfer agreements from any
company that is to receive our confidential information. In the case of
employees, consultants and contractors, the agreements will generally provide
that all inventions conceived by the individual while rendering services to us
shall be assigned to us as the exclusive property of Pluristem, Ltd. There can
be no assurance, however, that all persons who we desire to sign such agreements
will sign, or if they do, that </P>
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<P align=justify>these agreements will not be breached, that we would have
adequate remedies for any breach, or that our trade secrets or unpatentable
know-how will not otherwise become known or be independently developed by
competitors.</P>
<P align=justify>Our success will also depend in part on our ability to develop
our technology and commercialise cell therapy products without infringing the
proprietary rights of others. We have not conducted freedom of use patent
searches and no assurance can be given that patents do not exist or could not be
filed which would have an adverse affect on our ability to develop our
technology or maintain our competitive position with respect to our potential
cell therapy products. If our technology components, devices, designs, products,
processes or other subject matter are claimed under other existing United States
or foreign patents or are otherwise protected by third party proprietary rights,
we may be subject to infringement actions. In such event, we may challenge the
validity of such patents or other proprietary rights or we may be required to
obtain licenses from such companies in order to develop, manufacture or market
our technology or products. There can be no assurances that we would be able to
obtain such licenses or that such licenses, if available, could be obtained on
commercially reasonable terms. Furthermore, the failure to either develop a
commercially viable alternative or obtain such licenses could result in delays
in marketing our proposed products or the inability to proceed with the
development, manufacture or sale of products requiring such licenses, which
could have a material adverse affect on our business, financial condition and
results of operations. If we are required to defend ourselves against charges of
patent infringement or to protect our proprietary rights against third parties,
substantial costs will be incurred regardless of whether we are successful. Such
proceedings are typically protracted with no certainty of success. An adverse
outcome could subject us to significant liabilities to third parties and force
us to curtail or cease our development of our technology and the
commercialisation our potential cell therapy products. </P>
<P align=justify><I>Research and Development </I></P>
<P align=justify>Foundational Research </P>
<P align=justify>For the last five years, our former Chief Executive Officer,
Dr. Shai Meretzki, has made the initial strides in the development of our core
technology, the PluriX&#153; Bioreactor system. Research was performed by Dr.
Meretzki and his team in the laboratory of Dr. Shosh Merchav at the Technion -
Israel Institute of Technology's Rappaport Faculty of Medicine. Dr. Meretzki
also worked in close collaboration with Professor Dov Zipori and Dr. Avinoam
Kadouri, both from the Weizmann Institute of Science. Professor Zipori
specializes in cultures and stromal cells and Dr. Kadouri specializes in the
planning and creation of bioreactors. Special carriers were used in our research
and development process. In addition, this foundational research was conducted
in joint cooperation with the laboratory of SCID-NOD mice at the Weizmann
Institute of Science and with Plumacher Laboratories in Rotterdam. To this end,
Plumacher Laboratories allocated a research physician to the project for over
two years. The technology resulting from this research is the subject of our
license agreement (see &#147;Intellectual Property&#148;). </P>
<P align=justify>Ongoing Research and Development Plan </P>
<P align=justify>For the next three to four years, we intend to continue
developing our stem cell production technology based on the PluriX&#153; Bioreactor
system, which will consist of four broad stages: </P>
<P align=justify>3D Stroma Culture Optimization &#150; During this stage, we are
collecting stroma cells from donor bone marrow and adipose tissues and growing
them within the PluriX&#153; 3-D culture. We intend to focus on optimizing the
capacity of the PluriX&#153; system to support the growth and long-term maintenance
of our high-density three dimensional stromal cells cultures. </P>
<P align=justify>Stem-cells/Stromal cells Co-Culture Development &amp;
Optimization - At this stage we intend to focus on the establishment of the
PluriX&#153; Bioreactors containing high-density cell and pluripotent hematopoietic
stem cells co-cultures; maintenance of common cells on high-density cell-coated
carriers and testing of expanded stem cells outside a host body using mice
without immune systems repopulating cells assay. </P>
<P align=justify>Regulatory Approval - We intend to prepare and file with the
Food and Drug Administration and other relevant health authorities an
Investigational New Drug or an Investigational Device Exemption application to
initiate human </P>
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<P align=justify>clinical trials designed to demonstrate the safety, efficacy
and clinical benefits of selectively expanded stem cell populations from
umbilical cord blood. We intend to carry out all research and development
activities with the advice of a Food and Drug Administration advisor. </P>
<P align=justify><I>Employees </I></P>
<P align=justify>We presently have 15 employees in research and development and
4 employees in management through our wholly owned subsidiary, Pluristem,
Ltd.</P>
<P align=justify><I>Competition </I></P>
<P align=justify>The biotechnology and medical device industries are
characterized by rapidly evolving technology and intense competition. Our
competitors include major pharmaceutical, medical device, medical products,
chemical and specialized biotechnology companies, many of which have financial,
technical and marketing resources significantly greater than ours. In addition,
many biotechnology companies have formed collaborations with large, established
companies to support research, development and commercialisation of products
that may be competitive with ours. Academic institutions, governmental agencies
and other public and private research organizations are also conducting research
activities and seeking patent protection and may commercialise products on their
own or through joint ventures. We are aware of certain other products
manufactured or under development by competitors that are used for the
prevention or treatment of certain diseases and health conditions that we have
targeted for product development. There can be no assurance that developments by
others will not render our technology and our potential products obsolete or
noncompetitive, that we will be able to keep pace with new technological
developments or that our potential products technology will be able to supplant
established products and methodologies in the therapeutic areas that are
targeted by us. The foregoing factors could have a material adverse affect on
our business, financial condition and results of operations.</P>
<P align=justify>Our competition will be determined in part by the potential
indications for which our technology and products are developed and ultimately
approved by regulatory authorities. In addition, the first product to reach the
market in a therapeutic or preventive area is often at a significant competitive
advantage relative to later entrants to the market. Accordingly, the relative
speed with which we can develop products, complete the clinical trials and
approval processes and supply commercial quantities of the products to the
market are expected to be important competitive factors. Our competitive
position will also depend on our ability to attract and retain qualified
scientific and other personnel, develop effective proprietary products, develop
and implement production and marketing plans, obtain and maintain patent
protection and secure adequate capital resources. We expect our technology, if
approved for use, and our potential products, if approved for sale, to compete
primarily on the basis of product efficacy, safety, patient convenience,
reliability, value and patent position. </P>
<P align=justify>We believe we compete with the following larger and more
established specialized biotechnology companies that are developing devices and
products to be used for the prevention or treatment of certain diseases and
health conditions that we have targeted for product development: Aastrom
Biosciences, Inc., ViaCell Inc., Gamida-Cell Ltd., Advanced Cell Technology,
Inc., BioTransplant Inc.,<B> </B>StemCell Technologies, Inc. and CellGenix.
However, to the best of our knowledge none of these companies have developed a
platform that can support production of hematopoietic stem cells without
promoting their differentiation in cytokines free conditions.</P>
<P align=justify><I>Government Regulations and Supervision </I></P>
<P align=justify>Once fully developed, we intend to market our stem cells to
research laboratories, clinics and umbilical blood banks primarily in the United
States and in Europe. Accordingly, we believe our research and development of
our technology and the production and marketing of our stem cells are subject to
the laws and regulations of governmental authorities in the United States and
all other countries where our technology will be used and our stem cells will be
marketed. Specifically, in the United States, the Food and Drug Administration,
among other agencies, regulates new product approvals to establish safety and
efficacy of these products. Governments in other countries have similar
requirements for testing and marketing.</P>
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<P align=justify><B>The Regulatory Process</B></P>
<P align=justify>In the United States and in Europe, regulatory approval of new
medical devices and biological products involves a lengthy process leading from
development of a new product through pre-clinical and clinical testing. This
process takes a number of years and requires the expenditure of significant
resources. There can be no assurance that our technology will ultimately receive
regulatory approval.</P>
<P align=justify>We may develop our PluriX&#153; Bioreactor system into a
GMP-compliant cell culture system for production of<I> </I>human cells outside
of the human body for therapeutic applications. &#147;GMP&#148; is a standard set for
laboratories by the World Health Organization and other health regulatory
authorities. Therefore, to a certain degree, the manner in which the Food and
Drug Administration will regulate our PluriX&#153; Bioreactor system is
uncertain.</P>
<P align=justify>We understand that the Food and Drug Administration is still in
the process of developing its requirements with respect to somatic cell therapy
and gene cell therapy products and has issued draft documents concerning the
regulation of cellular and tissue-based products. If the Food and Drug
Administration adopts the regulatory approach set forth in the draft document,
the Food and Drug Administration will require regulatory approval for certain
human cellular or tissue based products, including cells produced in the PluriX&#153;
Bioreactor system, through a biologic license application.</P>
<P align=justify>In addition, the stem cells produced by our PluriX&#153; Bioreactor
system are potentially subject to regulation as medical products under the
Federal Food, Drug and Cosmetic Act and as biological products under the Public
Health Service Act. Different regulatory requirements may apply to our
technology depending on how they are categorized by the Food and Drug
Administration under these laws.</P>
<P align=justify>Furthermore, the Food and Drug Administration has published
regulations which require registration of certain facilities, which may include
our future clinics, and is in the process of publishing regulations for the
manufacture or manipulation of human cellular or tissue based products which may
impact our future clinics.</P>
<P align=justify>Regardless of how our technology is regulated, the Federal
Food, Drug, and Cosmetic Act and other Federal statutes and regulations govern
or influence the research, testing, manufacture, safety, labeling, storage,
record-keeping, approval, distribution, use, reporting, advertising and
promotion of our future products. Noncompliance with applicable requirements can
result in civil penalties, recall, injunction or seizure of products, refusal of
the government to approve or clear product approval applications or to allow us
to enter into government supply contracts, withdrawal of previously approved
applications and criminal prosecution.</P>
<P align=justify><B>Product Approval in the United States </B></P>
<P align=justify>We are currently only in the developmental stage of our
technology, PluriX&#153; Bioreactor system and potential products and have not begun
the process of seeking regulatory approval from the Food and Drug
Administration. Once our PluriX&#153; Bioreactor system is fully developed, we intend
to consult with a Food and Drug Administration advisor to assist us in
determining our path in the process toward gaining regulatory approval from the
Food and Drug Administration. Obtaining regulatory approval of new medical
devices and biological products from the Food and Drug Administration is a
lengthy procedure leading from development of a new product through pre-clinical
and clinical testing. This process takes a number of years and requires the
expenditure of significant resources. There can be no assurance that our
technology and potential products will ultimately receive regulatory approval.
We summarize below our understanding of the regulatory approval requirements
that may be applicable to us if we begin the process of seeking an approval from
the Food and Drug Administration.</P>
<P align=justify>Generally, in order to obtain an approval from the Food and
Drug Administration of a new medical product, an applicant must submit proof of
safety and efficacy. In some cases, such proof entails extensive pre-clinical
and clinical laboratory tests. The testing, preparation of necessary
applications and processing of those applications by the Food and Drug
Administration is expensive and may take several years to complete. There can be
no assurance that the Food and Drug Administration will act favorably or in a
timely manner in reviewing submitted applications, and an applicant may
encounter significant difficulties or costs in its efforts to obtain Food and
Drug Administration approvals, in turn, which could delay or preclude the
applicant from marketing any products it may develop. The </P>
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<P align=justify>Food and Drug Administration may also require post-marketing
testing and surveillance of approved products, or place other conditions on the
approvals. These requirements could cause it to be more difficult or expensive
to sell the products, and could therefore restrict the commercial applications
of such products. Product approvals may be withdrawn if compliance with
regulatory standards is not maintained or if problems occur following initial
marketing. For patented technologies, delays imposed by the governmental
approval process may materially reduce the period during which an applicant will
have the exclusive right to exploit such technologies.</P>
<P align=justify>Where human clinical trials of a proposed medical product are
required, the manufacturer or distributor of the product will have to file an
Investigational Device Exemption or Investigational New Drug submission with the
Food and Drug Administration prior to commencing human clinical trials. The
submission must be supported by data, typically including the results of
pre-clinical and laboratory testing. Following submission of the Investigational
Device Exemption or Investigational New Drug, the Food and Drug Administration
has 30 days to review the application and raise safety and other clinical trial
issues. If an applicant is not notified of objections within that period,
clinical trials may be initiated, and human clinical trials may commence at a
specified number of investigational sites with the number of patients approved
by the Food and Drug Administration.</P>
<P align=justify>The Food and Drug Administration categorizes medical devices
into three regulatory classifications subject to varying degrees of regulatory
control. In general, Class I devices require compliance with labeling and record
keeping regulations, Quality System Regulation, 510(k) pre-market notification,
and are subject to other general controls. Class II devices may be subject to
additional regulatory controls, including performance standards and other
special controls, such as post-market surveillance. Class III devices, which are
either invasive or life-sustaining products, or new products never before
marketed (for example, non-&#148;substantially equivalent&#148; devices), require clinical
testing to demonstrate safety and effectiveness and the approval of the Food and
Drug Administration prior to marketing and distribution. </P>
<P align=justify>We believe that our PluriX&#153; Bioreactor system, if successfully
developed, will be classified as a Class III medical device and be subject to
the requirements of clinical testing to demonstrate safety and effectiveness and
the approval of the Food and Drug Administration before we can market the stem
cells. </P>
<P align=justify>In addition, we, and any contract manufacturer, may be required
to be registered as a medical device manufacturer with the Food and Drug
Administration. These manufacturers will be inspected on a routine basis by the
Food and Drug Administration for compliance with the Food and Drug
Administration's Quality System Regulations. The regulations of the Food and
Drug Administration would require that we, and any contract manufacturer,
design, manufacture and service products and maintain documents in a prescribed
manner with respect to manufacturing, testing, distribution, storage, design
control and service activities. The Medical Device Reporting regulation requires
that we provide information to the Food and Drug Administration on deaths or
serious injuries alleged to be associated with the use of our devices, as well
as product malfunctions that are likely to cause or contribute to death or
serious injury if the malfunction were to recur. In addition, the Food and Drug
Administration prohibits a company from promoting an approved device for
unapproved applications and reviews company labeling for accuracy.</P>
<P align=justify>Also, if we are able to successfully develop our PluriX&#153;
Bioreactor system, we believe that the stem cells produced in the PluriX&#153;
Bioreactor system will be regulated by the Food and Drug Administration as a
licensed biologic, although there can be no assurance that the Food and Drug
Administration will not choose to regulate these stem cells in a different
manner. The Food and Drug Administration categorizes human cell or tissue based
products as either minimally manipulated or more than minimally manipulated, and
has proposed that more than minimally manipulated products be regulated through
a &#147;tiered approach intended to regulate human cellular and tissue based products
only to the extent necessary to protect public health.&#148; For products which may
be regulated as biologics, the Food and Drug Administration requires: (i)
preclinical laboratory and animal testing; (ii) submission to the Food and Drug
Administration of an Investigational Device Exemption or Investigational Device
Exemption New Drug application which must be effective prior to the initiation
of human clinical studies; (iii) adequate and well-controlled clinical trials to
establish the safety and efficacy of the product for its intended use; (iv)
submission to the Food and Drug Administration of a biologic license
application; and (v) review and approval of the biologic license application as
well as inspections of the manufacturing facility by the Food and Drug
Administration prior to commercial marketing of the product.</P>
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<P align=justify>Generally, pre-clinical testing covers laboratory evaluation of
product chemistry and formulation as well as animal studies to assess the safety
and efficacy of the product. The results of these tests are submitted to the
Food and Drug Administration as part of the Investigational Device Exemption.
Following the submission of an </P>
<P align=justify>Investigational Device Exemption, the Food and Drug
Administration has 30 days to review the application and raise safety and other
clinical trial issues. If an applicant is not notified of objections within that
period, clinical trials may be initiated. Clinical trials are typically
conducted in three sequential phases. Phase I represents the initial
administration of the drug or biologic to a small group of humans, either
healthy volunteers or patients, to test for safety and other relevant factors.
Phase II involves studies in a small number of patients to assess the efficacy
of the product, to ascertain dose tolerance and the optimal dose range and to
gather additional data relating to safety and potential adverse affects. Once an
investigational drug is found to have some efficacy and an acceptable safety
profile in the targeted patient population, multi-center Phase III studies are
initiated to establish safety and efficacy in an expanded patient population and
multiple clinical study sites. The Food and Drug Administration reviews both the
clinical plans and the results of the trials and may request an applicant to
discontinue the trials at any time if there are significant safety issues.</P>
<P align=justify>The results of the pre-clinical tests and clinical trials are
submitted to the Food and Drug Administration in the form of a biologic license
application for marketing approval. The testing and approval process is likely
to require substantial time and effort and there can be no assurance that any
approval will be granted on a timely basis, if at all. Additional animal studies
or clinical trials may be requested during the Food and Drug Administration
review period that may delay marketing approval. After the Food and Drug
Administration approval for the initial indications, further clinical trials may
be necessary to gain approval for the use of the product for additional
indications. The Food and Drug Administration requires that adverse affects be
reported to the Food and Drug Administration and may also require post-marketing
testing to monitor for adverse affects, which can involve significant
expense.</P>
<P align=justify>Under current requirements, facilities manufacturing biological
products must also be licensed. To accomplish this, a biologic license
application must be filed with the Food and Drug Administration. The biologic
license application describes the facilities, equipment and personnel involved
in the manufacturing process. An establishment license is granted on the basis
of inspections of the applicant's facilities in which the primary focus is on
compliance with regulations and procedures<B> </B>and the ability to
consistently manufacture the product in the facility in accordance with the
Investigational Device Exemption. If the Food and Drug Administration finds the
inspection unsatisfactory, it may decline to approve the biologic license
application, resulting in a delay in production of products.</P>
<P align=justify>As part of the approval process for human biological products,
each manufacturing facility must be registered and inspected by the Food and
Drug Administration prior to marketing approval. In addition, state agency
inspections and approvals may also be required for a biological product to be
shipped out of state. If we are successful in developing our technology and
obtaining regulatory approval to the point where we are ready to produce stem
cells for sale, our laboratories where we will produce those cells will be
subject to all Food and Drug Administration licensing, registration and
inspection requirements. </P>
<P align=justify><B>Product Approval in Europe </B></P>
<P align=justify>If we successfully develop our PluriX&#153; bioreactor system and
potential cell therapy products and seek regulatory approval in Europe, we
believe our PluriX&#153; Bioreactor system may be regulated in Europe as a Class I
Sterile, Class IIb or Class III medical device, under the authority of the
Medical Device Directives being implemented by European Union member countries.
These classifications apply to medical laboratory equipment and supplies
including, among other products, many devices that are used for the collection
and processing of blood for patient therapy.</P>
<P align=justify>The applicable regulations vest the authority to permit
affixing of the CE Mark with various notified bodies. These are private and
state organizations which operate under license from the member states of the
European Union to certify that appropriate quality assurance standards and
compliance procedures are followed by developers and manufacturers of medical
device products or, alternatively, that a manufactured medical product meets a
more limited set of requirements. Notified bodies are also given the
responsibility for determination of the appropriate </P>
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<P align=justify>standards to apply to a medical product. Receipt of permission
  to affix the CE Mark enables a company to sell a medical device or product in
  all European Union member countries. Other registration requirements may also
  need to be satisfied in certain countries. We have not received permission from
  a notified body to affix the CE Mark to our PluriX&#153; Bioreactor system,
  nor have we as yet requested such permission. </P>
<P align=center><B>PLAN OF OPERATION </B></P>
<P align=justify><I>Overview </I></P>
<P align=justify>You should read the following discussion of our financial
condition and results of operations together with the unaudited financial
statements and the notes to unaudited financial statements included elsewhere in
this filing prepared in accordance with accounting principles generally accepted
in the United States. This discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those anticipated in these forward-looking statements. </P>
<P align=justify>We are engaged in the business of the development of the stem
cell production technology and the commercialisation of cell therapy products.
On May 5, 2003, we entered into a license agreement with the Weizmann Institute
of Science and the Technion-Israel Institute of Technology to acquire an
exclusive license for an innovative stem cell production technology. This
technology, if fully developed and commercialised, will offer novel solutions to
make procedures like bone marrow transplants and other methods of cell therapy
more accessible to patients suffering from leukemia, lymphoma, myaloma and a
broad range of complicated diseases and disorders.</P>
<P align=justify>From May 2003 until March 2006, our business has focussed on
the development of the stem cell production technology that we license.
Originally, our plan was to develop that technology to the point where we could
sub-license it to medical scientists and practitioners for their use in
producing cell therapy products for their own use of for sale in the
marketplace. On March 6, 2006, we announced that our company was taking a new
direction. Now, instead of looking to sub-lease the stem cell production
technology, we will focus on the developing the technology with the goal of
producing cell therapy products for sale in the marketplace. </P>
<P align=justify>Under our licensing agreement, we agreed to pay $400,000 cash
over time and we may pay royalties on our future sales and product or rights
distribution transactions. Also, the licensors of the license agreement have an
option to assign all of their patent rights in the license agreement to our
company in exchange for an aggregate of 5% of all of the issued and outstanding
share capital of our company. This option may only be exercised within a 60-day
period commencing from the date when we notify the licensors that the market
capital of our company has exceeded $25,000,000. The option will expire if it is
not exercised within this period. </P>
<P align=justify>To enable us to conduct further research and development of the
exclusive license for the stem cell production technology we acquired from the
Weizmann Institute of Science and the Technion-Israel Institute of Technology,
on June 10, 2003, 100% of the issued and outstanding shares of a research and
development company based in Israel called Pluristem, Ltd. Pluristem, Ltd. was
incorporated under the law of Israel on January 22, 2003 and has the facilities
and personnel to conduct research and development in the field of stem cell
research. As consideration for the shares of Pluristem, Ltd., we paid to the
shareholder of Pluristem, Ltd. cash in the amount of $1,000 and provided
Pluristem, Ltd. with a line of credit in the amount of $500,000. Accordingly,
Pluristem, Ltd. became our wholly-owned subsidiary as of June 10, 2003. </P>
<P align=justify><I>Plan of Operations </I></P>
<P align=justify>Over the next twelve months, we intend to pursue our primary
objective of developing our technology and process to the point where we can
produce stem cell therapy products through the process performed in the PluriX&#153;
Bioreactor. We intend to first develop methods for the preparation of the cord
blood seed and its freezing and thawing. We also intend to begin the development
of the stromal cells and establish a master cell bank and working cell bank. We
also intend to set up a quality assurance plan and compliance procedures and
implement them. We also would like to set up a documentation center. If these
stages of development go well, we may be in a position to execute pre-clinical
studies to demonstrate the hematopoietic stem cells and how they may be a factor
in repopulating mice bone marrow. When we are ready to begin regulatory
activities, we may begin the process by </P>
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<P align=justify>determining exactly what we need to do and who we need to
contact, preparing a pre-filing document and holding a pre-filing meeting with
the Food and Drug Administration. </P>
<P align=justify>We also intend to initiate contact with research centers and
cord blood banks to establish cooperative relations for future business
development. </P>
<P align=justify>We plan to continue our cooperation with the Technion Institute
of Technology in Israel regarding the Magneton grant received from the Israeli
government. Within this grant we, together with the Technion researchers will
further develop the PluriX<SUP>TM</SUP> Bioreactor using biodegradable scaffold
structures that imitate human bones. </P>
<P align=justify>We intend to consult with Food and Drug Administration
consultants to assist us in determining the process toward gaining Food and Drug
Administration regulatory approval. </P>
<P align=justify>We have not generated any revenues and our operating activities
have used cash resources of $1,443,954 for the nine month period ended March 31,
2006. This negative cash flow is attributable to our operation expenses,
including but not limited to, research and development expense and the payment
of our audit fees and legal fees. We anticipate that our operating expenses will
increase as we intend to conduct detailed development of our first product -
hematopoietic stem cells, animal pre-clinical trials and experiments and
clinical trials and work towards its completion. We estimate our expenses in the
next twelve months will be approximately $2,500,000, generally falling in two
major categories: research and development costs and general and administrative
expenses. </P>
<P align=justify>Research and Development Costs </P>
<P align=justify>For the next twelve months, we estimate that our research and
development costs will be approximately $1,500,000. We intend to spend our
research and development costs on optimizing the 3-D bioreactor operations,
developing expanded hematopoietic stem cell products, implanting stem cells from
stromal cell cultures of PluriX&#153; Bioreactors for production and on conducting
studies on mice to examine stem cell development and production. </P>
<P align=justify>General and Administrative Expenses </P>
<P align=justify>For the next twelve months, we estimate that our general and
administrative expenses will be approximately $2,000,000. These expenses will
include approximately $1,000,000 on public relations and investor relations and
approximately $1,000,000 on office and miscellaneous charges, which consist
primarily of charges incurred for purchase of office supplies and other
administrative expenses. These expenses will also include professional fees,
which consist primarily of accounting and auditing fees for the year-end audit
and legal fees for securities advice, directors liability insurance and cost of
fundraising. </P>
<P align=justify>We do not expect to generate any revenues in the next twelve
months. Our products will likely not be ready for sale for at least five years,
if at all. </P>
<P align=justify>In our management's opinion, we should achieve the following
events or milestones in the next twelve months in order for us to begin
generating revenues as planned in five years or more: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>Optimize 3-D PluriX<SUP>TM </SUP>Bioreactor operations &#150; We have made
  progress using the 3-D environment of the PluriX<SUP>TM </SUP>to produce a
  dense population of stromal supporting cells that provide a basis for stem
  cell in vitro production without differentiation. However, to have a potential
  product that we might eventually be able to market, we must continue to try to
  develop the bioreactor system until it can produce stem cells that will self-
  renew while remaining in their original state; </P>
  <LI>
  <P>Improve the analytical methods of our technology and processes; </P>
  <LI>
  <P>Conduct studies to analyze the hematopeoietic stem cell to reconstitute the
  hematopoietic system within animal model. Trials are planned using SCID mice
  which are mice with insufficient immune systems that can be used </P></LI></UL>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<P align=center>- 45 - </P>
<UL style="TEXT-ALIGN: justify">to simulate human blood and immune systems.
  Using this model, the human hematopoietic stem cell may develop and
  differentiate Pluristem's in vitro production process to be analyzed in vivo.
  <BR><BR>
  <LI>
  <P>Clarify and finalize our regulatory and medical strategy for meeting with
  the Food and Drug Administration. </P>
  <LI>
  <P>Establish relations with research centers and cord blood banks.
</P></LI></UL>
<P align=justify><I>Liquidity and Capital Resources</I><B> </B></P>
<P align=justify>During the nine month period ended March 31, 2006, we incurred
a net loss of $1,489,748, as compared to a net loss of $2,131,003 in the nine
month period ended March 31, 2005. This decrease in net loss resulted in part
from a decrease in expenditures on research and development and general and
administrative expenses.</P>
<P align=justify>We obtained funds to carry on our business from private
placements we conducted in October of 2004 and January of 2005, which raised
gross proceeds of approximately $3,250,000 through the issuance of 32,500,000
units comprising one common share and one common share purchase warrants. As at
March 31, 2006 we had cash of $405,825 which was sufficient to fund our
operations for approximately 2 months. On April 3, 2006 we raised gross proceeds
of approximately $3,000,000 through the issuance of senior secured convertible
debentures. </P>
<P align=justify>While we expect that we have sufficient funds to operate until
early spring of 2007, we will have to raise additional funds from the market
before we have any cash flow from operations. We believe that it will take
several years for us to complete the approval process for our products in the
United States or any other jurisdiction. In addition, future decisions regarding
any acquisitions that we may choose to make or product development that is
beyond the scope of what is described in our Plan of Operations will require
additional capital, which must be raised through the issuance additional
securities and/or incurring more debt. </P>
<P align=justify><I>Research and Development </I></P>
<P align=justify>Since June 10, 2003, the date we acquired Pluristem, Ltd., we
set up and began research activities in our clean rooms and laboratory. We built
bioreactors to conduct research and development in a 3-D environment and seeded
stromal cells into the bioreactors to produce the stromal cell culture where the
stem cells will be implanted. Throughout this period and into 2006, we will
continue with the research and development activities referenced above. Since
inception to March 31, 2006, we have spent $3,658,024 on research and
development. We hope that eventually, all of this cost will be passed on to our
customers.</P>
<P align=justify><I>Purchase or Sale of Equipment </I></P>
<P align=justify>With the acquisition of Pluristem Ltd., we obtained much of the
specialized laboratory equipment that we need to conduct our research. This
equipment included incubators, freezers, computers, hot plates, generators,
microscopes, and other equipment. We expect that we now own most of the
laboratory equipment that we will need to conduct our planned research and
development for the next twelve months. We do not expect to purchase or sell any
plant or significant equipment over the next twelve months. </P>
<P align=justify><I>Going Concern </I></P>
<P align=justify>Due to our being a development stage company and not having
generated revenues, in the consolidated financial statements for the year ended
June 30, 2005 and for the nine month period ended March 31, 2006 , we included
an explanatory paragraph regarding concerns about our ability to continue as a
going concern. Our consolidated financial statements contain additional note
disclosures describing the circumstances that lead to this disclosure. </P>
<P align=justify>The continuation of our business is dependent upon us raising
additional financial support. The issuance of additional equity securities by us
could result in a significant dilution in the equity interests of our current
stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments. </P>
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<P align=center>- 46 - </P>
<P align=justify><I>Recently Issued Accounting Standards </I></P>
<P align=justify>In May 2005, the FASB issued Statement of Financial Accounting
Standard No. 154 (&#147;FAS 154&#148;), &#147;Accounting Changes and Error Corrections&#148; &#150; a
replacement of APB No. 20, &#147;Accounting Changes&#148; and FAS No. 3, &#147;Reporting
Accounting Changes in Interim Financial Statements&#148;. FAS 154 provides guidance
on the accounting for and reporting of accounting changes and error corrections.
APB Opinion 20 previously required that most voluntary changes in accounting
principle to be recognized by including in the net income of the period of the
change the cumulative effect of changing to the new accounting principle. FAS
154 requires retrospective application to prior periods' financial statements of
a voluntary change in accounting principle unless it is impracticable. FAS 154
is effective for accounting changes and corrections of errors made in fiscal
years beginning after December 15, 2005. We estimate that the adoption of FAS
154 will not have a significant impact on our results of operations, financial
condition and liquidity. </P>
<P align=justify>On December 16, 2004, the Financial Accounting Standards Board
(FASB) issued FASB Statement No. 123 (revised 2004) &#147;Share-Based Payment&#148;
(&#147;123(R)&#148;), which in revision of FASB Statement No. 123, &#147;Accounting For
Stock-Based Compensation&#148;. Statement 123(R) supersedes APB Opinion No. 25,
&#147;Accounting For Stock Issued To Employees&#148;, and amends FASB Statements No. 95,
&#147;Statement of Cash Flows&#148;. Generally the approach in FASB Statement 123(R) is
similar to the approach described in Statement 123. However, Statement 123(R)
requires all share-based payments to employees, including grant of employees
stock options, to be recognized in the income statements based on their fair
value. Pro-forma disclosure is no longer an alternative. Statement 123(R) must
be adopted no later than the period beginning after June 15, 2006. Early
adoption will be permitted in periods in which financial statements have not yet
been issued.</P>
<P align=justify>Statement 123(R) permits public companies to adopt its
requirements using one of two methods: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>A &#147;Modified Prospective&#148; method in which compensation cost is recognized
  beginning with the effective date (a) based on the requirements of Statement
  123(R) for all share-based payments granted after the effective date and (b)
  based on the requirements of Statement 123 for all awards granted to employees
  prior to the effective date of Statement 123(R) that remains unvested on the
  effective date. </P>
  <LI>
  <P>A &#147;Modified Retrospective&#148; method which includes the requirements of the
  modified prospective method described above but also permits entities to
  restate, based on the amounts previously recognized under Statement 123 for
  purpose of pro-forma disclosure, all periods presented. </P></LI></UL>
<P align=justify>We plan to adopt Statement 123(R) using the modified
prospective method. </P>
<P align=justify>We are unable to estimate the future impact that Statement
123(R) will have on our financial position, results of operations or cash flows
due to unknown events, such as the type and number of share-based payments that
will be granted, their terms, and their vesting periods. </P>
<P align=justify>In March 2005, the SEC released SEC Staff Accounting Bulletin
No. 107, &#147;Share-Based Payment&#148; (&#147;SAB 107&#148;). SAB-107 provides the SEC staff's
position regarding the application of Statement 123(R), which contains
interpretive guidance related to the interaction between Statement 123R and
certain SEC rules and regulations, and also provides the staff's views regarding
the valuation of share-based payment arrangements for public companies. SAB 107
highlights the importance of disclosures made related to the accounting for
share-based payment transactions. </P>
<P align=center><B>APPLICATION OF CRITICAL ACCOUNTING POLICIES </B></P>
<P align=justify>Our financial statements and accompanying notes are prepared in
accordance with generally accepted accounting principles in the United States.
Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue,
and expenses. These estimates and assumptions are affected by management's
application of accounting policies. We believe that understanding the basis and
nature of the estimates and assumptions involved with the following aspects of
our consolidated financial statements is critical to an understanding of our
financials. </P>
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<P align=justify><I>Acquisition of technology rights</I> </P>
<P align=justify>In the acquisition of stem cell production technology rights
through the license agreement, we considered whether these rights meet the
criteria of an asset or should be expensed. As a result of the negative cash
flows that have occurred and are expected to continue in the foreseeable future,
the PluriX&#153; Bioreactor system and license agreement technology assets which we
acquired in the 2003 fiscal year were written off during the 2004 fiscal year.
</P>
<P align=justify><I>Going Concern </I></P>
<P align=justify>Our annual financial statements have been prepared on the going
concern basis, which assumes the realization of assets and liquidation of
liabilities in the normal course of operations. The financial statements have
been prepared assuming we will continue as a going concern. However, certain
conditions exist which raise doubt about our ability to continue as a going
concern. We have suffered recurring losses from operations and have accumulated
losses of approximately $6,139,104 since inception through the nine month period
ended March 31, 2006. </P>
<P align=justify><I>Off Balance Sheet Arrangements </I></P>
<P align=justify>Our company has no off balance sheet arrangements that are not
disclosed in our Annual Report on Form 10-KSB as filed with the Securities and
Exchange Commission on September 23, 2005. </P>
<P align=center><B>DESCRIPTION OF PROPERTY </B></P>
<P align=justify>Our principal offices are located at MATAM Advanced Technology
Park, Building No. 20, Haifa, Israel 31905. Our telephone number is
011-972-4-850-1080. We lease our office space from MATAM Advanced Technology
Park on a month to month basis and our monthly rental is approximately $6,700.
During the fiscal year ending June 30, 2005, we paid $84,573 for rent and
$62,649 for the nine months ending March 31, 2006. </P>
<P align=center><B>MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
</B></P>
<P align=justify>On December 19, 2002, our common stock received approval for
quotation on the National Association of Securities Dealers Inc.'s
Over-the-Counter Bulletin Board under the name &#147;A.I. Software, Inc.&#148; and under
the symbol &#147;AISF&#148;. On April 8, 2003, we effected a fourteen (14) for one (1)
forward stock split. Accordingly, our symbol was changed to &#147;ASOW&#148;. On June 30,
2003, we effected a name change to &#147;Pluristem Life Systems, Inc.&#148; and our symbol
was changed to &#147;PLRS&#148;. The following table reflects the high and low bid
information for our common stock obtained from Yahoo! Finance and reflects
inter-dealer prices, without retail mark-up, markdown or commission, and may not
necessarily represent actual transactions. </P>
<P align=justify>The high and low bid prices of our common stock for the periods
indicated below are as follows: </P>
<DIV align=center>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="70%" border=1>

  <TR vAlign=bottom>
    <TD align=center colSpan=3><B>National Association of Securities
      Dealers</B> <BR><B>OTC Bulletin Board</B> </TD></TR>
  <TR vAlign=top>
    <TD align=center ><B>Quarter Ended</B><B><SUP>(1)</SUP></B>
    </TD>
    <TD align=center width="27%"><B>High</B><B><SUP>(2)</SUP></B> </TD>
    <TD align=center width="27%"><B>Low</B><B><SUP>(2)</SUP></B> </TD></TR>
  <TR vAlign=top>
    <TD align=center >March 31, 2006 </TD>
    <TD align=center width="27%">$0.11 </TD>
    <TD align=center width="27%">$0.07 </TD></TR>
  <TR vAlign=top>
    <TD align=center >December 31, 2005 </TD>
    <TD align=center width="27%">$0.20 </TD>
    <TD align=center width="27%">$0.08 </TD></TR>
  <TR vAlign=top>
    <TD align=center >September 30, 2005 </TD>
    <TD align=center width="27%">$0.25 </TD>
    <TD align=center width="27%">$0.11 </TD></TR>
  <TR vAlign=top>
    <TD align=center >June 30, 2005 </TD>
    <TD align=center width="27%">$0.29 </TD>
    <TD align=center width="27%">$0.17 </TD></TR>
  <TR vAlign=top>
    <TD align=center >March 31, 2005 </TD>
    <TD align=center width="27%">$0.37 </TD>
    <TD align=center width="27%">$0.22 </TD></TR>
  <TR vAlign=top>
    <TD align=center >December 31, 2004 </TD>
    <TD align=center width="27%">$0.32 </TD>
    <TD align=center width="27%">$0.20 </TD></TR>
  <TR vAlign=top>
    <TD align=center >September 30, 2004 </TD>
    <TD align=center width="27%">$0.40 </TD>
    <TD align=center width="27%">$0.16 </TD></TR>
  <TR vAlign=top>
    <TD align=center >June 30, 2004 </TD>
    <TD align=center width="27%">$0.75 </TD>
    <TD align=center width="27%">$0.34 </TD></TR>
  <TR vAlign=top>
    <TD align=center >March 31, 2004 </TD>
    <TD align=center width="27%">$1.12 </TD>
    <TD align=center width="27%">$0.59 </TD></TR>
  <TR vAlign=top>
    <TD align=center >December 31, 2003 </TD>
    <TD align=center width="27%">$1.24 </TD>
    <TD align=center width="27%">$0.55 </TD></TR></TABLE></DIV>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <p align="justify"><SUP>(1) </SUP>Our common stock received approval for
          quotation on December 19, 2002. The first trade occurred January 21,
          2003. </p>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
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<P align=center>- 48 - </P>
<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <p align="justify"><SUP>(2) </SUP>On April 8, 2003, we effected a 14 for
          1 forward split of our common stock, as a result all stock prices have
          been adjusted on a post-split basis. </p>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
<P align=justify>On June 16, 2006, the closing price for the common stock as
reported by the quotation service operated by the OTC Bulletin Board was $0.051.
</P>
<P align=justify>As of June 16, 2006, there were 82 holders of record of our
common stock. As of such date, 63,743,483 common shares were issued and
outstanding.</P>
<P align=justify>Our common shares are issued in registered form. The Nevada
Agency and Trust Company, Suite 880, Bank of America Plaza, 50 West Liberty
Street, Reno, Nevada 89501 (Telephone: 775.322.0626; Facsimile: 775.322.5623) is
the registrar and transfer agent for our common shares. </P>
<P align=justify>Shares of our common stock are subject to rules adopted by the
Securities and Exchange Commission that regulate broker-dealer practices in
connection with transactions in &#147;penny stocks&#148;. &#147;Penny stock&#148; is defined to be
any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. Our common stock are covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell to persons
other than established customers and &#147;accredited investors.&#148; The term
&#147;accredited investor&#148; refers generally to institutions with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document in a form prepared by the SEC which provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must
be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customer's
confirmation. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from these rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the stock
that is subject to these penny stock rules. Consequently, these penny stock
rules may affect the ability of broker-dealers to trade our securities. </P>
<P align=center><B>DIVIDEND POLICY </B></P>
<P align=justify>We have not declared or paid any cash dividends since inception
and we do not intend to pay any cash dividends in the foreseeable future.
Although there are no restrictions that limit our ability to pay dividends on
our common shares other than as described below, we intend to retain future
earnings, if any, for use in our operations and the expansion of our business.
</P>
<P align=center><B>EXECUTIVE COMPENSATION </B></P>
<P align=justify>The following table summarizes, to the end of fiscal year ended
  June 30, 2005, the compensation of Shai Meretzki, who has served as our Chief
  Executive Officer from October 17, 2004 to September 26, 2005, Dr. Ze&#146;evi
  Mendi, who served as our Chief Executive Officer from June 10, 2004 to October
  17, 2004, Dr. Irit Arbel, who served as our Chief Executive Officer and a director
  from May 30, 2003 to June 10, 2004, and Mr. Harvey M.J. Lawson, who served as
  our Chief Executive Officer from May 11, 2001 to May 30, 2003 and as a director
  from May 11, 2001 to February 11, 2004. No other officers or directors received
  annual compensation in excess of $100,000 during the most recently completed
  fiscal year and are considered to be named executive officers for the purposes
  of our executive compensation disclosure on this annual report. </P>
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<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>
    <TR vAlign=bottom>
      <TD colspan="9" align=center bgColor=#eeeeee >&nbsp;&nbsp;<B>SUMMARY COMPENSATION
        TABLE</B>&nbsp;&nbsp;&nbsp; </TD>
    </TR>
    <TR vAlign=top>
      <TD rowSpan=3 align=center bgColor=#eeeeee
      ><BR> <BR> <BR> <BR> <BR> <B>Name and Principal</B> <BR> <B>Position</B>
      </TD>
      <TD align=center width="8%" bgColor=#eeeeee rowSpan=3
      ><BR> <BR> <BR> <BR> <BR> <BR> <B>Year</B> </TD>
      <TD colspan="3" align=center bgColor=#eeeeee><B>Annual Compensation</B>
      </TD>
      <TD colspan="3" align=center bgColor=#eeeeee><B>Long Term Compensation</B>
      </TD>
      <TD align=center width="10%" bgColor=#eeeeee>&nbsp; </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center width="10%" bgColor=#eeeeee
      rowSpan=2><BR> <BR> <BR> <BR> <B>Salary</B> <BR> <B>(US$)</B> </TD>
      <TD align=center width="10%" bgColor=#eeeeee
      rowSpan=2><BR> <BR> <BR> <BR> <B>Bonus</B> <BR> <B>(US$)</B> </TD>
      <TD align=center width="10%" bgColor=#eeeeee rowSpan=2><BR> <B>Other</B>
        <BR> <B>Annual</B> <BR> <B>Compen-</B> <BR> <B>sation</B> <BR> <B>(US$)</B>
      </TD>
      <TD colspan="2" align=center bgColor=#eeeeee><B>Awards</B></TD>
      <TD align=center width="10%" bgColor=#eeeeee><B>Payouts</B> </TD>
      <TD align=center width="10%" bgColor=#eeeeee>&nbsp; </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center width="10%" bgColor=#eeeeee><B>Securities</B> <BR> <B>Underlying</B>
        <BR> <B>Options/</B> <BR> <B>SARs</B> <BR> <B>Granted</B> </TD>
      <TD align=center width="10%" bgColor=#eeeeee><B>Restricted</B> <BR> <B>Shares
        or</B> <BR> <B>Restricted</B> <BR> <B>Share</B> <BR> <B>Units</B> </TD>
      <TD align=center width="10%" bgColor=#eeeeee><BR> <BR> <B>LTIP</B> <BR>
        <B>Payouts</B> <BR> <B>(US$)</B> </TD>
      <TD align=center width="10%" bgColor=#eeeeee><BR> <BR> <B>All Other</B>
        <BR> <B>Compen-</B> <BR> <B>sation</B> </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left >Shai Meretzki <BR> Chief Executive <BR>
        Officer </TD>
      <TD align=left width="8%" >2005 <BR> 2004 <BR>
        2003 </TD>
      <TD align=left width="10%">163,869 <BR> 105,000 <BR>
        18,500 </TD>
      <TD align=left width="10%">Nil <BR> Nil <BR>
        Nil </TD>
      <TD align=left width="10%">Nil <BR> Nil <BR>
        Nil </TD>
      <TD align=left width="10%">2,851,170 <BR> Nil <BR>
        Nil </TD>
      <TD align=left width="10%">Nil <BR> Nil <BR>
        Nil </TD>
      <TD align=left width="10%">Nil <BR> Nil <BR>
        Nil </TD>
      <TD align=left width="10%">Nil <BR> Nil <BR>
        Nil </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left >Ze&#146;evi Mendi <BR> Chief Executive <BR>
        Officer </TD>
      <TD align=left width="8%" >2005 <BR> 2004 <BR>
        2003 </TD>
      <TD align=left width="10%">47,236 <BR> Nil <BR>
        Nil </TD>
      <TD align=left width="10%">Nil <BR> Nil <BR>
        Nil </TD>
      <TD align=left width="10%">10,000<SUP>(1)</SUP> <BR> Nil <BR>
        Nil </TD>
      <TD align=left width="10%">70,495<SUP>(1)</SUP> <BR> Nil <BR>
        Nil </TD>
      <TD align=left width="10%">Nil <BR> Nil <BR>
        Nil </TD>
      <TD align=left width="10%">Nil <BR> Nil <BR>
        Nil </TD>
      <TD align=left width="10%">Nil <BR> Nil <BR>
        Nil </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left >Dr. Irit Arbel <BR> Former Chief <BR>
        Executive Officer and <BR>
        Director </TD>
      <TD align=left width="8%" >2005 <BR> 2004 <BR>
        2003 <BR></TD>
      <TD align=left width="10%">N/A <BR> 108,000 <BR>
        Nil <BR></TD>
      <TD align=left width="10%">N/A <BR> Nil <BR>
        Nil <BR></TD>
      <TD align=left width="10%">N/A <BR> Nil <BR>
        20,000 <BR></TD>
      <TD align=left width="10%">N/A <BR> 563,962 <BR>
        Nil <BR></TD>
      <TD align=left width="10%">N/A <BR> Nil <BR>
        Nil <BR></TD>
      <TD align=left width="10%">N/A <BR> Nil <BR>
        Nil <BR></TD>
      <TD align=left width="10%">N/A <BR> Nil <BR>
        Nil <BR></TD>
    </TR>
    <TR vAlign=top>
      <TD align=left >Harvey Lawson <BR> Former Chief <BR>
        Executive Officer &amp; <BR>
        Director </TD>
      <TD align=left width="8%" >2005 <BR> 2004 <BR>
        2003 <BR></TD>
      <TD align=left width="10%">N/A <BR> N/A <BR>
        Nil <BR></TD>
      <TD align=left width="10%">N/A <BR> N/A <BR>
        Nil <BR></TD>
      <TD align=left width="10%">N/A <BR> N/A <BR>
        Nil <BR></TD>
      <TD align=left width="10%">N/A <BR> 56,396 <BR>
        N/A <BR></TD>
      <TD align=left width="10%">N/A <BR> N/A <BR>
        Nil <BR></TD>
      <TD align=left width="10%">N/A <BR> N/A <BR>
        Nil <BR></TD>
      <TD align=left width="10%">N/A <BR> N/A <BR>
        Nil <BR></TD>
    </TR>
  </TABLE>
</DIV>
<P align=justify><SUP>(1)</SUP> Dr. Mendi was issued 50,000 common shares upon
his termination as a director at a deemed price of $0.20 per share for his
services as our Chief Executive Officer and 70,495 options to purchase shares of
our common stock, exercisable at a price of $0.30 per share until February 15,
2008, for his services as a director of our company. </P>
<P align=justify><I>Option Grants in the Last Fiscal Year </I></P>
<P align=justify>During the fiscal year ended June 30, 2005, there were no stock
options granted to our named executive officers. </P>
<P align=justify><I>Aggregated Option/Exercises in Last Fiscal Year And 2004
Fiscal Year End Option/Values </I></P>
<P align=justify>During the fiscal year ended June 30, 2005, no stock options
were exercised by our named executive officers. </P>
<P align=justify><I>Repricing of Options/SARS </I></P>
<P align=justify>During the year ended June 30, 2005 our board of directors
resolved to reduce the exercise price of the outstanding stock options granted
to the directors, employees and consultants of our company under our 2003 Stock
Option Plan to $0.30 per share and subsequently to $0.12 per share. </P>
<P align=justify><I>Long-Term Incentive Plans-Awards in Last Fiscal Year
</I></P>
<P align=justify>We have no long-term incentive plans, other than the Stock
Option Plan described below. </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_50></A>
<P align=center>- 50 - </P>
<P align=left><I>Stock Option Plan </I></P>
<P align=justify>On November 25, 2003, we adopted our 2003 Stock Option Plan,
under which options to purchase up to 4,100,000 shares of our common stock can
be granted to our directors, officers, employees and consultants. We granted a
total of 3,645,780 options on December 30, 2003 with various exercise prices and
expiration dates, to directors, officers, employees and consultants. On June 10,
2004 the former chief executive officer left our company and 156,734 of her
options expired and were returned to the option pool. As at June 30, 2004, there
were 610,954 unallocated options remaining under the 2003 Stock Option Plan. On
July 6, 2004 we granted 451,170 options to the company's new chief financial
officer. On February 15, 2005 we granted 70,495 options to Mendi Ze'evi, our
former director and chief executive officer, exercisable at a price of $0.30 per
share until February 15, 2008. During the last quarter of 2004, 15,415 options
expired and were returned to the option pool. During the year ended June 30,
2005, several of our employees left our company and 1,735,734 options expired
and were returned to the option pool. On January 17, 2006 we granted 239,683 to
two of our directors, exercisable at a price of $0.12 per share until May 1,
2013.</P>
<P align=justify>On June 16, 2006, there were 68,941 of our common stock still
available for future grant under the 2003 Stock Option Plan.</P>
<P align=justify>On November 21, 2005, we adopted our 2005 Stock Option Plan,
under which options to purchase up to 15,000,000 shares of our common stock can
be granted to our directors, officers, employees and consultants. We granted a
total of 12,140,000 options on January 17, 2006 at an exercise price of $0.10,
expiring January 16, 2016, to directors, officers employees and consultants.</P>
<P align=justify>On June 16, 2006, there were 2,510,000 of our common stock
still available for future grant under the 2005 Stock Option Plan. </P>
<P align=justify>On July 22, 2004 we granted 500,000 options exercisable at a
price of $0.40 per share until July 22, 2014 outside of our stock option plan.
These options and an additional 500,000 options included in the 2003 Stock
Option Plan expired, unexercised, on March 30, 2005. </P>
<P align=justify><I>Compensation of Directors </I></P>
<P align=justify>We reimburse our directors for expenses incurred in connection
with attending board meetings and on April 15, 2004, we approved of the
following compensation for directors: annual compensation of $8,400 plus
applicable taxes; meeting participation fees of $750 plus taxes; and for meeting
participation by telephone, 50% of the regular meeting compensation. During the
fiscal year ended June 30, 2005 we paid a total of $57,445 to directors as
compensation. </P>
<P align=justify>Other than as described in the paragraph above, we have no
present formal plan for compensating our directors for their service in their
capacity as directors. Directors are entitled to reimbursement for reasonable
travel and other out-of-pocket expenses incurred in connection with attendance
at meetings of our board. The board may award special remuneration to any
director undertaking any special services on behalf of our company other than
services ordinarily required of a director. Other than indicated in this annual
report, no director received and/or accrued any compensation for his or her
services as a director, including committee participation and/or special
assignments during the fiscal year ended June 30, 2005. </P>
<P align=justify>We did not grant any stock options to directors of our company
during the year ended June 30, 2005. </P>
<P align=justify><I>Executive Employment Agreements </I></P>
<P align=justify>There are no written employment or consulting agreements
between our company and any of our directors and executive officers, except for
the following: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%">(a) </TD>
    <TD>
      <P align=justify>an agreement with Yossi Keret dated May 29, 2004, under
      which Mr. Keret is paid 33,000 New Israeli Shekels per month (US$7,290 at
      a conversion rate of 4.52645 NIS to the $US);</P></TD></TR></TABLE><BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_51></A>
<P align=center>- 51 - </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%">(b) </TD>
    <TD>
      <P align=justify>a consulting agreement dated September 26, 2005 with Zami
      Aberman, under which Mr. Aberman is paid an equivalent of US$13,000 per
      month in New Israeli Shekels at the then current exchange rate plus Value
      Added Tax; and</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(c) </TD>
    <TD>
      <P align=justify>a consulting agreement dated November 24, 2005 with
      Meretzki Consulting Ltd., a company incorporated under the laws of the
      state of Israel and wholly owned by Dr. Shai Meretzki, under which
      Meretzki Consulting Ltd. is paid a monthly retainer of 60,000 New Israeli
      Shekels ($12,755.50 USD at current exchange rate) plus Value Added Tax.
      Dr. Shai Meretzki will also be provided with a cellular phone and a
      company car pursuant to the terms of the consulting
  agreement.</P></TD></TR></TABLE>
<P align=justify>For a portion of fiscal 2005, we paid Dr. Mendi Ze'evi, our
former Chief Executive Officer, a monthly gross compensation of $15,000. During
the year ended June 30, 2005, we paid Dr. Ze&#146;evi a total of $47,236. On October
17, 2004, Dr. Mendi Ze&#146;evi ceased to be CEO of our company and his contract was
not renewed. </P>
<P align=justify>Arrangements and plans to provide pension, retirement or
similar benefits for directors or executive officers will be decided upon by the
compensation committee. We do not have any material bonus or profit sharing
plans pursuant to which cash or non-cash compensation is or may be paid to our
directors or executive officers, except that we have agreed to pay Mr. Aberman
two (2%) percent of any financings we conduct through August 2007. We have no
plans or arrangements in respect of remuneration received or that may be
received by our executive officers to compensate such officers in the event of
termination of employment (as a result of resignation, retirement, change of
control) or a change of responsibilities following a change of control, where
the value of such compensation exceeds $60,000 per executive officer, except Dr.
Shai Meretzki, whose termination provisions provide for 6 months&#146; payment on
termination, which at current salary would total approximately $120,000.
Additionally, Mr. Aberman&#146;s stock options fully vest upon a change of control.
</P>
<P align=justify><I>Pension, Retirement or Similar Benefit Plans </I></P>
<P align=justify>There are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive officers, except that
our directors and executive officers may receive stock options at the discretion
of our board of directors. We do not have any material bonus or profit sharing
plans pursuant to which cash or non-cash compensation is or may be paid to our
directors or executive officers, except that stock options may be granted at the
discretion of our board of directors. </P>
<P align=center><B>REPORTS TO SECURITY HOLDERS </B></P>
<P align=justify>We are not required to deliver an annual report to our security
holders but intend to voluntarily send an annual report, together with our
annual audited financial statements. We are required to file annual, quarterly
and current reports, proxy statements and other information with the Securities
and Exchange Commission. Our Securities and Exchange Commission filings are
available to the public over the Internet at the SEC's website at
http://www.sec.gov. </P>
<P align=justify>The public may read and copy any materials filed by us with the
SEC at the SEC's Public Reference Room at 100 F Street, Washington DC 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. We are an electronic filer. The SEC maintains
an Internet site that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the SEC. The
Internet address of the site is http://www.sec.gov. </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_52></A>
<P align=center>- 52 - </P>
<P align=center><B>FINANCIAL STATEMENTS </B></P>
<P align=justify>Our financial statements are stated in United States dollars
(US$) and are prepared in accordance with United States Generally Accepted
Accounting Principles. </P>
<P align=justify>The following unaudited consolidated financial statements are
filed as part of this registration statement: </P>
<P style="MARGIN-LEFT: 5%" align=justify>Unaudited Consolidated Financial
Statement as at March 31, 2006 </P>
<P style="MARGIN-LEFT: 5%" align=justify>Consolidated Balance Sheet at March 31,
2006</P>
<P style="MARGIN-LEFT: 5%" align=justify>Consolidated Statements of Operations &#150;
Nine Months and Three Months Ended March 31, 2006 and 2005 and for the period
from May 11, 2001 (incorporation) through March 31, 2006</P>
<P style="MARGIN-LEFT: 5%" align=justify>Consolidated Statements of Changes in
Stockholders&#146; Equity (Deficiency) </P>
<P style="MARGIN-LEFT: 5%" align=justify>Consolidated Statements of Cash Flows &#150;
Nine Months Ended March 31, 2006 and 2005 and for the period from May 11, 2001
(incorporation) through March 31, 2006 </P>
<P style="MARGIN-LEFT: 5%" align=justify>Notes to Consolidated Financial
Statements &#150; Nine Months Ended March 31, 2006 </P>
<P align=justify>The following audited consolidated financial statements are
filed as part of this registration statement: </P>
<P style="MARGIN-LEFT: 5%" align=justify>Audited Consolidated Financial
Statements as at June 30, 2005 </P>
<P style="MARGIN-LEFT: 5%" align=justify>Report of Independent Registered Public
Accounting Firm, dated September 21, 2005 </P>
<P style="MARGIN-LEFT: 5%" align=justify>Consolidated Balance Sheets as at June
30, 2005 and June 30, 2004 </P>
<P style="MARGIN-LEFT: 5%" align=justify>Consolidated Statements of Operations
for the years ended June 30, 2005 and June 30, 2004 and for the period from May
11, 2001 (inception) through June 30, 2005 </P>
<P style="MARGIN-LEFT: 5%" align=justify>Consolidated Statements of Changes in
Stockholders' Equity (Deficiency)</P>
<P style="MARGIN-LEFT: 5%" align=justify>Consolidated Statements of Cash Flows
for the years ended June 30, 2005 and June 30, 2004 and for the period from May
11, 2001 (inception) through June 30, 2005 </P>
<P style="MARGIN-LEFT: 5%" align=justify>Notes to the Consolidated Financial
Statements</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_F-1 id="page_F-1"></A>
<P align=center>F-1 </P>
<P align=center><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY <BR>
  </B>(A Development Stage Company)<BR>
  <B> (Previous Name - A. I. SOFTWARE INC.) </B></P>
<P align=center><B>CONSOLIDATED FINANCIAL STATEMENTS </B></P>
<P align=center><B>As of March 31, 2006 </B></P>
<P align=center><B>IN U.S. DOLLARS </B></P>
<P align=center><B><U>INDEX</U></B><B> </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left ><B><U>Page</U></B><B></B></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#EEEEEE><a href="#page_F-2">Consolidated Balance Sheet</a>
    </TD>
    <TD width="10%" align=left bgColor=#EEEEEE ><a href="#page_F-2">F-2 to F-3
      </a></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#EEEEEE"><a href="#page_F-5">Consolidated Statements
      of Operations</a> </TD>
    <TD width="10%" align=left bgcolor="#EEEEEE" ><a href="#page_F-5">F-5</a>
    </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#EEEEEE><a href="#page_F-6">Statements of changes in
      Stockholders&#146; Equity (Deficiency) </a></TD>
    <TD width="10%" align=left bgColor=#EEEEEE ><a href="#page_F-6">F-6 to F-10</a></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#EEEEEE><a href="#page_F-11">Consolidated Statements
      of Cash Flows</a> </TD>
    <TD width="10%" align=left bgColor=#EEEEEE ><a href="#page_F-11">F-11 to F-12</a></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#EEEEEE"><a href="#page_F-13">Notes to Consolidated
      Financial Statements</a> </TD>
    <TD width="10%" align=left bgcolor="#EEEEEE" ><a href="#page_F-13">F-13 to
      F-26</a></TD>
  </TR>
</TABLE>
<BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_F-2 id="page_F-2"></A>
<P align=center>F-2 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>CONSOLIDATED BALANCE
      SHEET</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars</B> </TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="12%" align=center nowrap><B>March</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="12%" align=center nowrap><B>31,</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD
      width="12%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2006</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD
      width="12%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>(Unaudited)</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap><B>ASSETS</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>CURRENT ASSETS: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Cash and cash equivalents </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;405,825 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Prepaid expenses </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">78,380 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Other accounts receivables </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>96,767 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap><U>Total </U>current assets </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">580,972 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>LONG-TERM RESTRICTED LEASE DEPOSIT </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">30,819 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>SEVERANCE PAY FUND </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">45,839 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>PROPERTY AND EQUIPMENT, NET </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">253,568 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>DEFERRED ISSUANCE EXPENSES </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>112,568 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff><U>Total </U>assets </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="12%"
    bgColor=#e6efff>&nbsp;1,023,766 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<P align=justify>The accompanying notes are an integral part of the consolidated
  financial statements. </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_F-4 id="page_F-4"></A>
<P align=center>F-4 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>CONSOLIDATED BALANCE
      SHEET</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars</B> </TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="12%" align=center nowrap><B>March</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="12%" align=center nowrap><B>31,</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD
      width="12%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2006</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD
      width="12%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>(Unaudited)</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=center nowrap><B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR bgcolor="#E6EFFF">
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>CURRENT LIABILITIES: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Know-how licensors </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>218,750 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Trade payables </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">187,661 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Accrued expenses </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>141,409 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Other accounts payable </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">54,512 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff><U>Total </U>current liabilities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>602,332 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=center nowrap><B>LONG-TERM LIABILITIES</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Accrued severance pay </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>59,874 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD align=center nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD align=center nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD align=center nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD align=center nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=center nowrap><B>STOCKHOLDERS&#146; EQUITY</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Share capital: </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; &nbsp; &nbsp; &nbsp;Common stock $0.00001 par
      value: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Authorized:
      1,400,000,000 shares </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; &nbsp; &nbsp; &nbsp;Issued and Outstanding: 63,743,483
      shares </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">636 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Additional paid-in capital </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>6,500,028 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Deficit accumulated during the development stage </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(6,139,104</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>361,560 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="12%">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;1,023,766 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<P align=justify>The accompanying notes are an integral part of the consolidated
  financial statements. </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_F-5 id="page_F-5"></A>
<P align=center>F-5 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>CONSOLIDATED STATEMENTS
      OF OPERATIONS (UNAUDITED)</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars (except share and per share data)</B> </TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Period From</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>May 11, 2001</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>(Inception)</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="19%" colSpan=4 align=center nowrap><B>Nine Month Period Ended</B>
    </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="19%" colSpan=4 align=center nowrap><B>Three Month Ended</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Through</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="19%" colSpan=4 align=center nowrap><B>March 31,</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="19%" colSpan=4 align=center nowrap><B>March 31,</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>March 31,</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2006</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2005</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2006</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2005</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2006</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Research and development costs, net
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff><B>$</B></TD>
    <TD align=right width="8%" bgColor=#e6efff><B>&nbsp;</B>867,843 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="8%" bgColor=#e6efff>&nbsp;1437,801 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff><B>$</B></TD>
    <TD align=right width="8%" bgColor=#e6efff><B>&nbsp;</B>347,665 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="8%" bgColor=#e6efff>&nbsp;995,730 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="8%" bgColor=#e6efff>&nbsp;3,658,024 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>General and administrative expenses
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>666,105 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>725,492 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>253,426 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>277,401 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>3,826,524 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>In-process research and development
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp;write-off </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="8%">246,470 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">1,533,948 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">2,163,293 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">601,091 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">1,273,131 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">7,731,018 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Financial expenses (income), net </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="8%">(44,200</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="8%">(32,290</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">27,491
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="8%">148,918 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="8%">(1,591,914</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Net loss for the period </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="8%"
    bgColor=#e6efff><B>&nbsp;</B>1,489,748 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;2,131,003 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="8%"
    bgColor=#e6efff><B>&nbsp;</B>628,582 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;1,422,049 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;6,139,104 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Basic and diluted net loss per share
    </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="8%"
    bgColor=#e6efff><B>&nbsp;</B>(0.03</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;(0.06</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="8%"
    bgColor=#e6efff><B>&nbsp;</B>(0.01</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;(0.03</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Weighted average number of shares </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp;used in computing basic and diluted
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp;net loss per share: </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">50,180,355 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">33,066,731 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">63,740,816 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">44,603,594</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
</TABLE>
<P align=justify>The accompanying notes are an integral part of the consolidated
  financial statements. </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_F-6 id="page_F-6"></A>
<P align=center>F-6 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><strong>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY </strong></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><strong>STATEMENTS
      OF CHANGES IN STOCKHOLDERS&#146; EQUITY (DEFICIENCY) (UNAUDITED) </strong></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><strong>In U.S. Dollars (except shares data) </strong> </TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Deficit</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Accumulated</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Total</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Additional</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Receipts</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>during the</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Stockholders&#146;</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="19%" colSpan=4 align=center nowrap><B>Common Stock</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>paid-in</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>On account</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Development</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Equity</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>Shares</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>Amount</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>Capital</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>of
      shares</B> </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>Stage</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>(Deficiency)</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Issuance of common stock on July 9,
      2001 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%"
    bgColor=#e6efff>35,000,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;350 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;2,150 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;2,500 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Balance as of June 30, 2001 (audited)
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>35,000,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>350 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>2,500 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Net loss </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="8%">(77,903</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="8%">(77,903</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Balance as of June 30, 2002 </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">35,000,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">350 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">2,150 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">(77,903</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">(75,403</TD>
    <TD align=left width="2%" >) </TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Issuance of common stock on October 14, 2002, </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp;Net of issuance expenses of $17,359
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>14,133,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>141 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>83,450 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>83,591 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Forgiveness of debt </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">11,760 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">11,760 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Stocks cancelled on March 19, 2003 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>(27,300,000</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>(273</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>273 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Receipts on account of stock and warrants, net </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; &nbsp; &nbsp;of finders and legal
      fees of $56,540 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>933,464 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>933,464 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Net loss </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="8%">(462,995</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="8%">(462,995</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Balance as of June 30, 2003 (audited) </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">21,833,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;218 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;97,633 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;933,464 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;(540,898</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;490,417 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
</TABLE>
<P align=justify>The accompanying notes are an integral part of the consolidated
  financial statements. </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_F-7 id="page_F-7"></A>
<P align=center>F-7 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>STATEMENTS OF CHANGES
      IN STOCKHOLDERS&#146; EQUITY (DEFICIENCY) (UNAUDITED)</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars (except share and per share data)</B> </TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Deficit</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>accumulated</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Additional</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Receipts</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>During the</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Total</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="19%" colSpan=4 align=center nowrap><B>Common Stock</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>paid-in</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>on account</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>development</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Shareholders&#146;</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Shares</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Amount</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Capital</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>of shares</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>stage</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Equity</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid">&nbsp;
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>(Deficiency)</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Balance as of July 1, 2003 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>21,833,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="8%" bgColor=#e6efff>&nbsp;218 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="8%" bgColor=#e6efff>&nbsp;97,633 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="8%" bgColor=#e6efff>&nbsp;933,464 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="8%" bgColor=#e6efff>&nbsp;(540,898</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="8%" bgColor=#e6efff>&nbsp;490,417 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Issuance of common stock on July 16,
      2003, </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; &nbsp;net of issuance expenses of $70,110 </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">725,483 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">7 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">1,235,752 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">(933,464</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">302,295 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Issuance of common stock on January
      20, </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; &nbsp; &nbsp;2004 </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">3,000,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">30 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">30 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Issuance of warrants on January 20,
      2004 for </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; &nbsp; &nbsp;finder&#146;s fee </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">192,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">192,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Common stock granted to consultants
      on </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; &nbsp;February 11, 2004 </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">1,000,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">10 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">799,990 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">800,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Stock based compensation related to
      warrants </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; &nbsp; &nbsp;granted to consultants on December
      31, </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">357,618 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">357,618 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; &nbsp; &nbsp;2003 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Exercise of warrants on </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; &nbsp;April 19, 2004 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>300,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>3 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>224,997 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>225,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Net loss for the year </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="8%">(2,010,350</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="8%">(2,010,350</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Balance as of June 30, 2004 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">26,858,483 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;268 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;2,907,990 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;- </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;(2,551,248</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;357,010 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
</TABLE>
<P align=justify>The accompanying notes are an integral part of the consolidated
  financial statements. </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_F-8 id="page_F-8"></A>
<P align=center>F-8 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>STATEMENTS OF CHANGES
      IN STOCKHOLDERS&#146; EQUITY (DEFICIENCY) (UNAUDITED)</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars (except share and per share data)</B> </TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Deficit</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>accumulated</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Additional</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Receipts</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>During the</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Total</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="19%" colSpan=4 align=center nowrap><B>Common Stock</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>paid-in</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>on account</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>development</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Shareholders&#146;</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>Shares</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>Amount</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>capital</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>of
      shares</B> </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>stage</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>Equity
      (Deficiency)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Balance as of July 1, 2004 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>26,858,483 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="8%" bgColor=#e6efff>&nbsp;268 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="8%" bgColor=#e6efff>&nbsp;2,907,990 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="8%" bgColor=#e6efff>&nbsp;- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="8%" bgColor=#e6efff>&nbsp;(2,551,248</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="8%" bgColor=#e6efff>&nbsp;357,010 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Stock-based compensation related to
      warrants </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; &nbsp;granted to consultants on September 30,
      2004 </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">161,641 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">161,641 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Issuance of common stock and warrants on November 30,
    </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; &nbsp; &nbsp;2004 related to
      the October 2004 Agreement net of </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; &nbsp; &nbsp;issuance costs of $28,908 </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">3,250,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">33 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">296,059 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">296,092 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Issuance of common stock and warrants
      on </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>January 26, 2005 related to the October 2004 Agreement
      net </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; &nbsp; &nbsp;of issuance costs
      of $4,975 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>4,300,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>43 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>424,982 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>425,025 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Issuance of common stock and warrants
      on </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>January 31, 2005 related to the January 31, 2005 Agreement
    </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">70 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>7,000,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>70 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Issuance of common stock and options on February 15,
      2005 </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; &nbsp; &nbsp;to former director
      of the company </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>50,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>(*) </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>14,500 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>14,500 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Issuance of common stock and warrants
      on </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>February 16, 2005 related to the January 31, 2005 </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">50 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; &nbsp; &nbsp;Agreement </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>5,000,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>50 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<P align=justify>(*) Less then one dollar <BR>
  The accompanying notes are an integral part of the consolidated financial statements.
</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_F-9 id="page_F-9"></A>
<P align=center>F-9 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>STATEMENTS OF CHANGES
      IN STOCKHOLDERS&#146; EQUITY (DEFICIENCY) (UNAUDITED)</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars (except share and per share data)</B> </TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Deficit</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>accumulated</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Additional</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Receipts</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>During the</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Total</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="19%" colSpan=4 align=center nowrap><B>Common Stock</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>paid-in</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>on account</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>development</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Shareholders&#146;</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>Shares</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>Amount</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>capital</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>of
      shares</B> </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>stage</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>Equity
      (Deficiency)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="2%"
    >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Issuance of warrants on February 16, 2005 for finder
      fee </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; &nbsp; &nbsp;related to the January 31, 2005
      Agreement </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>144,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>144,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Issuance of common stock and warrants
      on </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>March 3, 2005 related to the January 24, 2005 Agreement
    </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; &nbsp; &nbsp;net of issuance
      costs of $24,000 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>12,000,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>120 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>1,175,880 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>1,176,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Issuance of common stock on March 3,
      2005 for finder fee </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; &nbsp; &nbsp;related to the January 24, 2005
      Agreement </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>1,845,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>18 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>(18</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Issuance of common stock and warrants
      on </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>March 3, 2005 related to the October 2004 Agreement
      net </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; &nbsp; &nbsp;of issuance costs
      of $6,038 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>750,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>8 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>68,954 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>68,962 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Issuance of common stock and warrants
      to the Chief </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; &nbsp; &nbsp;Executive Officer on March 23, 2005
    </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">2,400,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">24 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">695,976 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">696,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Issuance of common stock on March 23, 2005 related to
      the </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; &nbsp; &nbsp;October 2004 Agreement
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>200,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>2 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>19,998 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>20,000 </TD>
    <TD align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<P align=justify>The accompanying notes are an integral part of the consolidated
  financial statements. </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_F-10 id="page_F-10"></A>
<P align=center>F-10 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>STATEMENTS OF CHANGES
      IN STOCKHOLDERS&#146; EQUITY (DEFICIENCY) (UNAUDITED)</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars (except share and per share data)</B> </TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Deficit</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>accumulated</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Additional</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Receipts</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>during the</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Total</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="19%" colSpan=4 align=center nowrap><B>Common Stock</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>paid-in</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>on account</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>development</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>shareholders&#146;</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>Shares</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>Amount</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>capital</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>of
      shares</B> </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>stage</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>Equity
      (Deficiency)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="2%"
    >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Classification of a liability in respect of warrants
      to </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; &nbsp; &nbsp;additional paid in capital, net
      of issuance costs of </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; &nbsp; &nbsp;$178,116 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>541,884 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>541,884 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Net loss for the year </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%"
    bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%"
    bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%"
    bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%"
    bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%"
    bgColor=#e6efff>(2,098,108</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%"
    bgColor=#e6efff>(2,098,108</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Balance as of June 30, 2005 </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">63,653,483 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">636 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">6,451,846 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">(4,649,356</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">1,803,126 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Exercise of warrants into common stock on November 28,
    </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; &nbsp; &nbsp;2005 for finder
      fee related to the January 24, 2005 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; &nbsp; &nbsp;Agreement </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">80,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">(*) </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Exercise of warrants into common stock on January 25,
    </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; &nbsp; &nbsp;2006 for finder
      fee related to the January 24, 2005 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; &nbsp; &nbsp;Agreement </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">10,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">(*) </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="8%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Stock based compensation related to warrants granted
      to </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; &nbsp; &nbsp;consultants on December
      31, 2003 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>48,182 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="8%" bgColor=#e6efff>48,182 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Net loss for the period </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="8%">(1,489,748</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="8%">(1,489,748</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Balance as of March 31, 2006 (unaudited) </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">63,743,483 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;636 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;6,500,028 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;- </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;(6,139,104</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;(361,560</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >) </TD>
  </TR>
</TABLE>
<P align=justify>(*) Less than one dollar <br>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The accompanying
  notes are an integral part of the consolidated financial statements. </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_F-11 id="page_F-11"></A>
<P align=center>F-11 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;<B>CONSOLIDATED STATEMENTS OF CASH</B>
    </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; &nbsp; &nbsp;<B>FLOWS</B>
    </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp;<B>In U.S. Dollars</B> </TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD width="9%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="9%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="9%" align=center nowrap><B>Period from May</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD width="9%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="9%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="9%" align=center nowrap><B>11, 2001</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD width="9%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="9%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="9%" align=center nowrap><B>(inception)</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD width="21%" colSpan=4 align=center nowrap><B>Nine months ended</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="9%" align=center nowrap><B>through</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD width="21%"
    colSpan=4 align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>March
      31,</B> </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="9%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>March
      31</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD
      width="9%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2006</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="9%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2005</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="9%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2006</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap><B>CASH FLOWS FROM OPERATING ACTIVITIES:</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Net loss </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="9%" bgColor=#e6efff>&nbsp;(1,489,748</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="9%" bgColor=#e6efff>(2,131,003</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="9%" bgColor=#e6efff>&nbsp;(6,139,104</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Adjustments to reconcile net loss to net cash used in
      operating </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; &nbsp; &nbsp;activities: </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Depreciation and amortization </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">31,528 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">25,001 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">175,561 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Capital gain </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>(12,954</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>(16,373</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Impairment of know-how </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">264,807 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Amortization of deferred issuance costs
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>104,802 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>119,244 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>335,526 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Stock-based compensation to consultants and employees
    </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">48,182 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">151,570 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">1,393,834 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>In-process research and development
      write-off </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>246,470 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Know-how licensors &#150; imputed interest </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">18,791 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">9,292 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">54,600 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Salary grant in shares and warrants
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>696,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>710,500 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Decrease (increase) in accounts receivable </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">51,014 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">(19,792</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">(87,931</TD>
    <TD align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Decrease in prepaid expenses </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>(17,081</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>(16,431</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>11,620 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Increase (decrease) in trade payables </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">2,588 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">(66,785</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">178,254 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Increase (decrease) in other accounts
      payable and accrued </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>(51,245</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>110,342 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>(336,938</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; &nbsp; &nbsp;expenses </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Increase in accrued interest due to
      related parties </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>3,450 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Linkage differences and interest on long-term restricted
      lease </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; &nbsp; &nbsp;deposit </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>50 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>(1,205</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>(2,164</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Change in fair value of liability in respect of warrants
    </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">(150,000</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">(180,000</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">(1,979,850</TD>
    <TD align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Accrued severance pay, net </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="9%"
    bgColor=#e6efff>7,165 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="9%"
    bgColor=#e6efff>6,131 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="9%"
    bgColor=#e6efff>14,035 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Net cash used in operating activities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="9%">(1,443,954</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="9%">(1,310,590</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="9%">(5,173,703</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap><B>CASH FLOWS FROM INVESTING ACTIVITIES:</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Acquisition of Pluristem Ltd. (1) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>31,899 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Purchase of property and equipment </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">(36,006</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">(22,645</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">(230,638</TD>
    <TD align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Proceed from sale of property and equipment
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>28,475 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Purchase of long-term restricted lease deposit </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">(3,653</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">(25,278</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">(29,699</TD>
    <TD align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Repayment of long-term restricted lease
      deposit </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>19,851 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>19,851 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Purchase of know-how </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="9%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="9%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="9%">(100,000</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Net cash used in investing activities
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="9%"
    bgColor=#e6efff>(39,659</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="9%"
    bgColor=#e6efff>(28,072</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="9%"
    bgColor=#e6efff>(280,112</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff><B>CASH FLOWS FROM FINANCING ACTIVITIES:</B>
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Issuance of common stock, net of issuance costs </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">3,150,367 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">4,686,209 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>1,246,397 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Short-term bank credit, net </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">(23</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">(26</TD>
    <TD align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Repayment of know-how licensors </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>(81,250</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>(81,250</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Proceeds from notes and loan payable to related parties
    </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">78,195 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Repayments of know &#150; how licenses
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="9%"
    bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="9%"
    bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="9%"
    bgColor=#e6efff>(69,885</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Net cash provided by financing activities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="9%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="9%">3,024,094 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="9%">5,859,640 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%"
      bgColor=#e6efff>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%"
      bgColor=#e6efff>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="9%"
      bgColor=#e6efff>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="2%"
    bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Increase (decrease) in cash and cash equivalents </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">(1,483,613</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">1,685,432 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">405,825 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Cash and cash equivalents at the beginning
      of the period </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="9%"
    bgColor=#e6efff>1,889,438 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="9%"
    bgColor=#e6efff>668,867 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="9%"
    bgColor=#e6efff>- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Cash and cash equivalents at the end of the period </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="9%">&nbsp;405,825 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="9%">&nbsp;2,354,299 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="9%">&nbsp;405,825 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
</TABLE>
<P align=justify>The accompanying notes are an integral part of the consolidated
  financial statements. </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_F-12 id="page_F-12"></A>
<P align=center>F-12 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>CONSOLIDATED STATEMENTS
      OF CASH FLOWS</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars</B> </TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="9%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="9%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="9%" align=center nowrap><B>Period from</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="9%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="9%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="9%" align=center nowrap><B>May 11, 2001</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="9%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="9%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="9%" align=center nowrap><B>(inception)</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="21%" colSpan=4 align=center nowrap><B>Nine months ended</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="9%" align=center nowrap><B>through</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD width="21%"
    colSpan=4 align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>March
      31,</B> </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="9%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>March
      31,</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD
      width="9%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2006</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="9%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2005</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="9%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2006</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap><B>Non-cash investing and financing</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap><B>information:</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Unpaid know-how </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="9%"
    bgColor=#e6efff>&nbsp;- </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="9%"
    bgColor=#e6efff>&nbsp;- </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="9%"
    bgColor=#e6efff>&nbsp;218,750 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Issuance of stock to finders and employees
    </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="9%"
    bgColor=#e6efff>&nbsp;- </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="9%"
    bgColor=#e6efff>&nbsp;696,018 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="9%"
    bgColor=#e6efff>&nbsp;696,018 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Issuance of shares </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="9%"
    bgColor=#e6efff>&nbsp;- </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="9%"
    bgColor=#e6efff>&nbsp;20,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="9%"
    bgColor=#e6efff>&nbsp;20,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff><B>(1) Acquisition of Pluristem Ltd.</B>
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff><B>Fair value of assets acquired and</B>
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap><B>liabilities assumed at the acquisition date:</B>
    </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Working capital (excluding cash and cash </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="9%">&nbsp;(427,176</TD>
    <TD align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>equivalents) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Long-term restricted lease deposit </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">18,807 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Property and equipment </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="9%" bgColor=#e6efff>130,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>In-process research and development write- </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="9%">246,470 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>off </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="9%"
    bgColor=#e6efff>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="9%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="9%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="9%"
    bgColor=#e6efff>&nbsp;31,899</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
  </TR>
</TABLE>
<P align=justify>The accompanying notes are an integral part of the consolidated
  financial statements. </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_F-13 id="page_F-13"></A>
<P align=center>F-13 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>NOTES TO CONSOLIDATED
      FINANCIAL STATEMENTS</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars</B> </TD>
  </TR>
</TABLE>
<P align=justify><B>NOTE 1: - GENERAL </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">a. </TD>
    <TD> <P align=justify>Pluristem Life Systems Inc. (the Company&#148;), a Nevada
        Corporation, was incorporated and commenced operations on May 11, 2001.
        The Company has a wholly owned subsidiary, Pluristem Ltd. (the &#147;subsidiary&#148;)
        that was incorporated under the laws of Israel and began its activity
        in January 2004.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">b. </TD>
    <TD> <P align=justify>The Company is devoting substantially all of its efforts
        towards conducting research and development of critical cell expansion
        services to cord blood banks. In the course of such activities, the Company
        and its subsidiary have sustained operating losses and expect such losses
        to continue in the foreseeable future. The Company and its subsidiary
        have not generated any revenues or product sales and have not achieved
        profitable operations or positive cash flows from operations. The Company&#146;s
        deficit accumulated during the development stage aggregated to $6,139,104
        through March 31, 2006. There is no assurance that profitable operations,
        if ever achieved, could be sustained on a continuing basis.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD width="5%"></TD>
    <TD> <P align=justify>The Company plans to continue to finance its operations
        with a combination of stock issuance and private placements and in the
        longer term, revenues from product sales. There are no assurances, however,
        that the Company will be successful in obtaining an adequate level of
        financing needed for the long-term development and commercialization of
        its planned products.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD width="5%"></TD>
    <TD> <P align=justify>These conditions raise substantial doubt about the Company&#146;s
        ability to continue as a going concern. The consolidated financial statements
        do not include any adjustments that might arise from this uncertainty,
        relating to the recoverability and classification of recorded assets amounts
        or the amounts and classification of liabilities that might be necessary
        should the Company be unable to continue as a going concern.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">c. </TD>
    <TD> <P align=justify>The accompanying unaudited interim consolidated financial
        statements have been prepared as of March 31, 2006, in accordance with
        United States generally accepted accounting principles relating to the
        preparation of financial statements for interim periods. Accordingly,
        they do not include all the information and footnotes required by generally
        accepted accounting principles for complete financial statements. In the
        opinion of management, all adjustments (consisting of normal recurring
        accruals) considered necessary for a fair presentation have been included.
        Operating results for the nine-month period ended March 31, 2006 are not
        necessarily indicative of the results that may be expected for the year
        ended June 30, 2006.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">d. </TD>
    <TD> <P align=justify>As for the issuance of Senior Secured Convertible Debentures
        that were issued on April 3, 2006 refer to note 3 (p) subsequent events.</P></TD>
  </TR>
</TABLE>
<BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<P align=center>F-14 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>NOTES TO CONSOLIDATED
      FINANCIAL STATEMENTS</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars</B> </TD>
  </TR>
</TABLE>
<P align=justify><B>NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">a. </TD>
    <TD> <P align=justify>The significant accounting policies applied in the annual
        consolidated financial statements of the Company as of June 30, 2005 are
        applied consistently in these consolidated financial statements.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD> <P align=justify>These financial statements should be read in conjunction
        with the audited annual financial statements of the Company as of June
        30, 2005 and their accompanying notes.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD> <P align=justify>Certain amounts from prior years have been reclassified
        to conform to current period presentation.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">b. </TD>
    <TD> <P align=justify><U>Accounting for stock-based compensation</U></P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD> <P align=justify>The Company has elected to follow Accounting Principles
        Board Opinion No. 25 &#147;Accounting for Stock Issued to Employees (&#147;APB
        25&#148;) and FASB Interpretation No. 44 &#147;Accounting for Certain
        Transactions Involving Stock Compensation (&#147;FIN 44&#148;) in accounting
        for its employee stock option plan. Under APB 25, when the exercise price
        of the Company&#146;s stock options is less than the market price of the
        underlying stocks on the date of grant, compensation expense is recognized
        over the vesting period.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD> <P align=justify>Pro forma information regarding the Company&#146;s net
        loss and net loss per stock as required by Financial Accounting Standards
        Board Statement No. 148 &#147;Accounting for Stock Based Compensation
        &#150; Transaction and Disclosure (&#147;SFAS No. 148&#148;) that amended
        Financial Accounting Standards Board Statement No. 123 (&#147;SFAS 123&#148;)
        has been determined as if the Company had accounted for its stock options
        under the fair value method prescribed by SFAS No. 123.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD> <P align=justify>The fair value for options granted is amortized over
        their vesting period and estimated at the date of grant using a Black-Scholes
        option pricing model with the following weighted average assumptions for
        the nine months ended March 31, 2006 and 2005:</P></TD>
  </TR>
</TABLE>
<BR>
<DIV>
  <div style="margin-left:5%">
    <div style="margin-left:5%">
      <table
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
bordercolor=#000000 cellspacing=0 cellpadding=3 width="90%" border=1>
        <tr valign=top>
          <td align=left><br></td>
          <td align=center width="30%" colspan=2>Nine month ended <br>
            March 31 </td>
        </tr>
        <tr valign=top>
          <td align=left>&nbsp; </td>
          <td align=center width="15%">2006 </td>
          <td align=center width="15%">2005 </td>
        </tr>
        <tr valign=top>
          <td align=left>Dividend yield </td>
          <td align=right width="15%">0% </td>
          <td align=right width="15%">0% </td>
        </tr>
        <tr valign=top>
          <td align=left>Volatility </td>
          <td align=right width="15%">105% </td>
          <td align=right width="15%">98% </td>
        </tr>
        <tr valign=top>
          <td align=left>Weighted average risk-free <br>
            interest rate </td>
          <td align=right width="15%"><br>
            4.2% </td>
          <td align=right width="15%"><br>
            4.2% </td>
        </tr>
        <tr valign=top>
          <td align=left>Expected life (in years) </td>
          <td align=right width="15%">6 </td>
          <td align=right width="15%">10 </td>
        </tr>
      </table>
    </div>
  </div>
</DIV>
<BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<P align=center>F-15 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>NOTES TO CONSOLIDATED
      FINANCIAL STATEMENTS</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars</B> </TD>
  </TR>
</TABLE>
<P align=justify><B>NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (continued)</B>
</P>
<P style="MARGIN-LEFT: 5%" align=justify>Pro forma information under SFAS No.
  123, is as follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>Period from May</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>11, 2001</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap>&nbsp; </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>(inception)</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="19%" colSpan=4 align=center nowrap><B>Nine months ended</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="19%" colSpan=4 align=center nowrap><B>Three months ended</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="8%" align=center nowrap><B>through</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD width="19%"
    colSpan=4 align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>March
      31</B> </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="19%"
    colSpan=4 align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>March
      31</B> </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>March
      31</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2006</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2005</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2006</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2005</B>
    </TD>
    <TD width="2%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="8%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2006</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Net loss available to Common stock </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp;&#150; as Reported </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="8%" bgColor=#e6efff>&nbsp;1,489,748 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="8%" bgColor=#e6efff>&nbsp;2,131,003 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="8%" bgColor=#e6efff>&nbsp;628,582 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="8%" bgColor=#e6efff>&nbsp;1,442,049 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="8%" bgColor=#e6efff>&nbsp;6,139,104 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Add - stock based employee </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp;compensation </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&#150; fair value </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%"
    bgColor=#e6efff>290,646 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%"
    bgColor=#e6efff>522,151 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%"
    bgColor=#e6efff>233,748 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%"
    bgColor=#e6efff>132,036 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="8%"
    bgColor=#e6efff>981,578 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Pro forma net loss </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;1,780,394 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;2,653,154 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;869,330 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;1,554,085 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;7,120,682 </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>Basic and diluted net loss per stock </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>&nbsp;as reported </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;(0.03</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;(0.06</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;(0.01</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right width="8%"
    bgColor=#e6efff>&nbsp;(0.03</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
     bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD nowrap>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="8%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap bgColor=#e6efff>Basic and diluted pro forma net loss
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="8%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left nowrap>&nbsp;per stock </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;(0.04</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;(0.08</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;(0.01</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=right
      width="8%">&nbsp;(0.03</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" align=left width="2%"
    >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="8%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
</TABLE>
<BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<P align=center>F-16 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>NOTES TO CONSOLIDATED
      FINANCIAL STATEMENTS</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars</B> </TD>
  </TR>
</TABLE>
<P align=justify><B>NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (continued)</B>
</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">d. </TD>
    <TD> <P align=justify>Impact of recently issued accounting standards:</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD> <P align=justify>In May 2005, the FASB issued Statement of Financial
        Accounting Standard No. 154 ("FAS 154"), "Accounting Changes and Error
        Corrections"- a replacement of APB No. 20, "Accounting changes" and FAS
        No. 3, "Reporting Accounting Changes in Interim Financial Statements".
        FAS 154 provides guidance on the accounting for and reporting of accounting
        changes and error corrections. APB Opinion 20 previously required that
        most voluntary changes in accounting principle be recognized by including
        in the net income of the period of the change the cumulative effect of
        changing to the new accounting principle. FAS154 require retrospective
        application to prior periods' financial statements of a voluntary change
        in accounting principle unless it is impracticable. FAS 154 is effective
        for accounting changes and corrections of errors made in fiscal years
        beginning after December 15, 2005. The Company estimates that the adoption
        of FAS 154 will not have a significant impact on its results of operations
        and financial condition.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD> <P align=justify>On December 16, 2004, the Financial Accounting Standards
        Board (FASB) issued FASB Statement No. 123 (revised 2004) (&#147;statement
        123 (R)&#148;), &#147;Share-Based Payment&#148;, which in revision of
        SFAS 123. Statement 123(R) supersedes APB Opinion No. 25, &#147;Accounting
        for Stock Issued to Employees&#148;, and amends SFAS 123. Statement 123
        (R) requires all share-based payments to employees, including grant of
        employees stock options, to be recognized in the income statements based
        on their fair value .Pro forma discloser is no longer an alternative.
        The Company except to adopt statement 123 (R) on July 1, 2006.</P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%"></TD>
    <TD> <P align=justify>Statement 123(R) permits public companies to adopt its
        requirements using one of two methods:</P></TD>
  </TR>
</TABLE>
<br>
<table style="font-size: 10pt;border-color:#000000;" width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="5%" valign="top">&nbsp;</td>
    <td width="5%" valign="top">&nbsp;</td>
    <td><ul>
        <li>
          <div align="justify">
            <p>A &#147;Modified prospective&#148; method in which compensation
              cost is recognized beginning with the effective date (a) based on
              the requirements of statement 123 (R) for all share-based payments
              granted after the effective date and (b) based on the requirements
              of statements 123 (R) for all awards granted to employees prior
              to the effective date of statements 123 (R) that remains unvested
              on the effective date.</p>
          </div>
        <li>
          <div align="justify">A &#147;Modified retrospective&#148; method which
            includes the requirements of the modified prospective method describe
            above but also permits entities to restate, based on the amounts previously
            recognized under statements 123 for purpose of Pro forma disclosure,
            all periods presented. </div>
        </li>
      </ul></td>
  </tr>
</table>
<br>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<P align=center>F-17 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>NOTES TO CONSOLIDATED
      FINANCIAL STATEMENTS</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars</B> </TD>
  </TR>
</TABLE>
<P align=justify><B>NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (continued)</B>
</P>
<P style="MARGIN-LEFT: 10%" align=justify>The Company plans to adopt statement
  No. 123 (R) using the modified prospective method. </P>
<P style="MARGIN-LEFT: 10%" align=justify>The Company is unable to estimate the
  future impact that Statement 123R will have on its financial position, results
  of operations or cash flows due to unknown events, such as the type and number
  of share-based payments that will be granted, their terms, and their vesting
  periods.</P>
<P style="MARGIN-LEFT: 10%" align=justify>In March 2005, the SEC released SEC
  Staff Accounting Bulletin No. 107, &#147;Share-Based Payment&#148; (&#147;SAB
  107&#148;). SAB 107 provides the SEC staff&#146;s position regarding the application
  of Statement 123R, which contains interpretive guidance related to the interaction
  between Statement 123R and certain SEC rules and regulations, and also provides
  the staff&#146;s views regarding the valuation of share-based payment arrangements
  for public companies. SAB 107 highlights the importance of disclosures made
  related to the accounting for share-based payment transactions </P>
<P align=justify><B>NOTE 3: -CHANGES IN SHARE CAPITAL</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%">a. </TD>
    <TD> <P align=justify>The Company's authorized common stock consists of 1,400,000,000
        shares with a par value of $0.00001 per share. All shares have equal voting
        rights and are entitled to one vote per share in all matters to be voted
        upon by stockholders. The shares have no pre-emptive, subscription, conversion
        or redemption rights and may be issued only as fully paid and non- assessable
        shares. Holders of the common stock are entitled to equal ratable rights
        to dividends and distributions with respect to the common stock, as may
        be declared by the Board of Directors out of funds legally available.
        The common stocks are registered and publicly traded on the Over-the-Counter
        Bulletin Board service of the National Association of Securities Dealers,
        Inc. under the symbol PLRS.OB.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">b. </TD>
    <TD> <P align=justify>On July 9, 2001, the Company issued 35,000,000 shares
        of common stock in consideration for $2,500, which was received on July
        27, 2001.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>On October 14, 2002, the Company issued 14,133,000 shares
        of common stock at a price of $0.007 per common share in consideration
        for $100,950 before offering costs of $17,359.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">c. </TD>
    <TD> <P align=justify>On March 19, 2003, two directors each returned 13,650,000
        shares of common stock with a par value of $0.01 per share, for cancellation
        for no consideration.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">d. </TD>
    <TD> <P align=justify>On March 27, 2003 the Company's Board of Directors authorized
        a 14:1 split of the common stock. Accordingly, all references to number
        of shares, common stock and per share data in the accompanying financial
        statements have been adjusted to reflect the stock split on a retroactive
        basis.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">e. </TD>
    <TD> <P align=justify>In July 2003, the Company issued an aggregate of 725,483
        units comprised of 725,483 common stock and 1,450,966 warrants to a group
        of investors, for total consideration of $1,235,752 (net of issuance costs
        of $70,110), under a private placement. The consideration was paid partly
        in the year ended June 30, 2003 ($933,464) and the balance was paid in
        the year ended June 30, 2004.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>In this placement each unit was comprised of one common
        stock and two warrants, the first warrant is exercisable for one common
        stock at a price of $2.25 per stock, and may be exercised within one year.
        The second warrant is exercisable for one common stock at a price of $2.70
        per stock, and may be exercised within five years. As of June 30, 2005,
        725,483 warrants were expired unexercised.</P></TD>
  </TR>
</TABLE>
<BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<P align=center>F-18 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>NOTES TO CONSOLIDATED
      FINANCIAL STATEMENTS</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars</B> </TD>
  </TR>
</TABLE>
<P align=justify><B>NOTE 3: -CHANGES IN SHARE CAPITAL (continued) </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%">f. </TD>
    <TD> <P align=justify>On January 20, 2004, the Company consummated a private
        equity placement with a group of investors (the "investors"). The Company
        issued 3,000,000 units in consideration for net proceeds of $1,272,790
        (net of issuance costs of $227,210), each unit is comprised of 3,000,000
        common stock and 3,000,000 warrants. Each warrant is exercisable into
        one common stock at a price of $0.75 per stock, and may be exercised until
        January 31, 2007. If the price of the common stock will be more than $1
        within 10 consecutive trading days, then the Company may, by notice to
        the warrants' holders, reduce the expiry date of 1,500,000 warrants to
        60 days from the day of notice. In case the Company fails to register
        the above-mentioned shares and the related shares resulting from the exercise
        of the warrants, it will be subject to penalties as detailed in the private
        placement agreement. On March 18, 2004, a registration statement on Form
        SB-2 has been declared affective and the above-mentioned common stocks
        have been registered for trading. If the effectiveness of the Registration
        Statement is suspended subsequent to the effective date of registration
        (March 18, 2004), for more than certain permitted periods, as described
        in the private equity placement agreement, the Company shall pay penalties
        to the investors in respect of the liquidated damages.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>According to EITF 00-19, "Accounting for derivative
        financial instruments indexed to, and potentially settled in, a Company's
        own stock", the Company classified the warrants as liabilities according
        to their fair value as remeasured at each reporting period until exercised
        or expired. Changes in the fair value of the warrants will be reported
        in the statements of operations as financial income or expense.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>As of June 20, 2004, the Company allocated the gross
        amount received of $1.5 million to the par value of the shares issued
        ($30) and to the liability in respect of the warrants issued ($1,499,970).
        The amount allocated to the liability was less than the fair value of
        the warrants at grant date. As of March 31,2006, the fair value of the
        liability in respect for the warrants issued was $0. The fair value as
        of March 31,2006 was estimated using the Black-Scholes option pricing
        model with the following weighted average assumptions: risk-free interest
        rate of 4.3%, expected dividend yield of 0%, expected volatility of 99.6%,
        and expected life of 0.83 years.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>The change in the carrying amount of the liability in
        respect of the warrants in the amount of $1,079,970, $270,000 and $150,000,
        for the year ended June 30, 2004 and 2005 and for the nine months ended
        March 31,2006, respectively was recognized in the statements of operations
        as financial income.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>In addition, the Company issued 300,000 warrants to
        finders in connection with this private placement, exercisable into 300,000
        common shares at a price of $0.75 per common share until January 31, 2007.
        The fair value of the warrants issued in the amounts of $192,000 was recorded
        as deferred issuance costs and is amortized over a period of 3 years.
        On April 19, 2004, the finders exercised the warrants. The fair value
        of the warrants was estimated using the Black-Scholes option pricing model
        under the same weighted average assumptions.</P></TD>
  </TR>
</TABLE>
<BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<P align=center>F-19 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>NOTES TO CONSOLIDATED
      FINANCIAL STATEMENTS</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars</B> </TD>
  </TR>
</TABLE>
<P align=justify><B>NOTE 3: -CHANGES IN SHARE CAPITAL (continued) </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%">g. </TD>
    <TD> <P align=justify>In October 2004 the Company commenced a private placement
        offering (&#147;the October 2004 Agreement&#148;) accordingly to which
        it issued 8,500,000 units. Each unit is compromised of one common stock
        and one warrant. The warrant is exercisable for one common stock at an
        exercise price of $0.30 per stock, subject to certain adjustments, and
        may be exercised until November 30, 2006. The units were issued as follows:</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>In November 2004, the Company issued according to the
        October 2004 Agreement 3,250,000 units comprised of 3,250,000 common stock
        and 3,250,000 warrants to a group of investors, for total consideration
        of $296,092 (net of cash issuance costs of $28,908), and additional 120,000
        warrants to finders as finders&#146; fee.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>In January 2005 the Company issued according to the
        October 2004 Agreement an additional 4,300,000 units for total consideration
        of $425,025 (net of cash issuance costs of $4,975), and additional 90,000
        warrants were issued to finders as finders&#146; fee.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>In March 2005 the Company issued according to the October
        2004 Agreement additional 750,000 units for total consideration of $68,962
        (net of cash issuance costs of $6,038), and additional 35,000 warrants
        were issued to finders as finders&#146; fee.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>In March 2005 the Company issued, according to the October
        2004 Agreement 200,000 common shares and 200,000 share purchase warrants
        to one investor for total consideration of $20,000 which were paid to
        the Company in May 2005.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">h. </TD>
    <TD> <P align=justify>On January 24, 2005 the Company commenced a private
        placement offering (the &#147;January 24, 2005 Agreement&#148;) which
        was closed on March 3, 2005 and issued 12,000,000 units in consideration
        for $1,176,000 (net of cash issuance costs of $24,000). Each unit is compromised
        of one common stock and one warrant. The warrant is exercisable for one
        common stock at a price of $0.30 per stock and may be exercised until
        November 30, 2006. Under this agreement the Company issued to finders
        1,845,000 shares and 475,000 warrants with exercise price of $2.5 per
        stock exercisable until November 2007.</P></TD>
  </TR>
</TABLE>
<BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<P align=center>F-20 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>NOTES TO CONSOLIDATED
      FINANCIAL STATEMENTS</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars</B> </TD>
  </TR>
</TABLE>
<P align=justify><B>NOTE 3: -CHANGES IN SHARE CAPITAL (continued) </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%">i. </TD>
    <TD> <P align=justify>On January 31, 2005, the Company consummated a private
        equity placement offering (the &#147;January 31, 2005 Agreement&#148;)
        with a group of investors (the "Investors") according to which it issued
        12,000,000 units in consideration for net proceeds of $1,137,000 (net
        of issuance costs of $63,000). Each unit is comprised of one common stock
        and one warrant. Each warrant is exercisable into one common stock at
        a price of $0.30 per stock, and may be exercised until November 30, 2006.
        If the Registration Statement covering the Registrable Securities was
        not filed as contemplated by 70 days and if the Registration Statement
        covering the Registrable Securities was not effective until August 31,
        2005, The Company would have paid the Investor 2% of the purchase price
        for each 30 day period beyond the applicable date until the filing or
        the registration is completed. The January 31, 2005 Agreement includes
        a finder&#146;s fee of a cash amount equal to 5% of the amount invested
        ($60,000) and issuance of warrants for number of shares equal to 5% of
        the number of shares that were issued (600,000) with an exercise price
        of $0.1 per stock, subject to certain adjustments, exercisable until November
        30, 2006.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>According to EITF 00-19, "Accounting for derivative
        financial instruments indexed to, and potentially settled in, a Company's
        own stock", the Company classified the warrants as liabilities according
        to their fair value as remeasured at each reporting period until exercised
        or expired. Changes in the fair value of the warrants will be reported
        in the statements of operations as financial income or expense.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>As of the date of the issuance the Company allocated
        the gross amount received of $1,200,000 to the par value of the shares
        issued ($120) and to the liability in respect of the warrants issued ($1,199,880).
        Issuance expenses in the amount of $63,000 and finders fee in the amount
        of $144,000 were recorded as deferred issuance costs. The amount allocated
        to the liability was less than the fair value of the warrants at grant
        date. On May 13, 2005 the Registration Statement became effective and
        the Company became no longer under possible penalties. As such, the liability
        and the deferred issuance costs related to the agreement has been classified
        to the Stockholders Equity as Additional Paid in Capital. As of May 13,
        2005, the fair value of the liability in respect of the warrants issued
        was $720,000 and the amount of the deferred issuance costs was $178,116.
        The change in the carrying amount of the liability in respect of the warrants,
        recorded as income, in the year ended June 30, 2005 amounted to $479,880.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>The fair value as of May 13, 2005 was estimated using
        the Black-Scholes option pricing model with the following weighted average
        assumptions: risk-free interest rate of 3.75%, expected dividend yield
        of 0%, expected volatility of 104%, and expected life of 1.54 years. </P></TD>
  </TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%" >&nbsp;j. </TD>
    <TD vAlign=top >On March 23, 2005, the Company issued 2,400,000 shares of
      common stock and 2,400,000 common stock purchase warrants as a bonus to
      the chief executive officer, Dr. Shai Meretzki, in connection with the issuance
      of a Notice of Allowance by the United States Patent Office for patent application
      number 09/890,401. Each warrant is exercisable until November 30, 2006 into
      one common share at a price of $0.30 per share. Salary expenses of $696,000
      were recognized during the nine month period ended March 31, 2005 in respect
      of this bonus based on the quoted market price of the Company's stock and
      the fair value of the options granted determined using the Black &#150;
      Scholes valuation model.</TD>
  </TR>
</TABLE>
<BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<P align=center>F-21 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>NOTES TO CONSOLIDATED
      FINANCIAL STATEMENTS</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars</B> </TD>
  </TR>
</TABLE>
<P align=justify><B>NOTE 3: -CHANGES IN SHARE CAPITAL (continued) </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%">k. </TD>
    <TD> <P align=justify>Following the Board resolutions and authorizations from
        January 28, 2004, the Company issued on February 11, 2004, an aggregate
        amount of 1,000,000 common stock to a consultant and service provider
        as compensation for carrying out investor relations activities during
        the year 2004.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>Total compensation, measured as the grant date fair
        market value of the stock, amounted to $800,000 and was recorded as an
        operating expense in the statement of operations in the year ended June
        30, 2004.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">l. </TD>
    <TD> <P align=justify>On November 28, 2005, 80,000 warrants, which were issued
        to finders as finder fees in related to the &#147;January 24, 2005 Agreement&#148;,
        were exercised to shares.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">m. </TD>
    <TD> <P align=justify>On January 25, 2006, 10,000 warrants, which were issued
        to finders as finder fees in related to the &#147;January 24, 2005 Agreement&#148;,
        were exercised to shares.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="5%">n. </TD>
    <TD> <P align=justify>Stock Option Plan 2003 ("ESOP")</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>Under the Company's 2003 Stock Option Plan (the "Plan"),
        options may be granted to officers, directors, employees and consultants
        of the Company or its subsidiary.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>Pursuant to the Plan, the Company reserved for issuance
        4,100,000 of its common stock. As of March 31, 2006, 68,941 common stock
        of the Company are still available for future grant under the terms of
        the Plan.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>Each option granted under the Plan is exercisable through
        the expiration date of the Plan which is December 2013 unless stated otherwise.
        The exercise price of the options granted under the plan may not be less
        than the nominal value of the stock into which such options are exercised.
        The options vest primarily over two years. Any option, which are cancelled
        or forfeited before expiration, become available for future grants.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>Options to employees:</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>On December 2003, the Company granted 2,976,591 options
        to employees and directors at an exercise price of $0.76. All options
        were granted with an exercise price that exceeded the quoted market price
        of the Company's stock on the date of grant. Fair value (determined using
        the Black-Scholes valuation model) of options granted was $0.29 at date
        of grant. During the period ended June 30, 2004, 156,734 options to employees
        were forfeited.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>During the year ended June 30, 2005, 451,170 options
        with an exercise price of of $0.3 per share were granted to the Company&#146;s
        Chief Financial Officer. On February 15, 2005 the Company issued 50,000
        shares and 70,495 options to former director and Chief Executive Officer
        of the Company. The exercise price of the options is $0.3 per share and
        they are fully vested and exercisable till February 15, 2008. Compensation
        expenses of $14,500 were recognized during the year ended June 30, 2005
        in accordance with APB 25. During the year ended June 30, 2005, 15,415
        options to employees were forfeited.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>During the nine months ended March 31, 2006 , 239,683
        options with an exercise price of $0.1 per share were granted to directors
        of the Company.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>As of March 31, 2006, 3,546,991 options to employees
        are exercisable.</P></TD>
  </TR>
</TABLE>
<BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<P align=center>F-22 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>NOTES TO CONSOLIDATED
      FINANCIAL STATEMENTS</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars</B> </TD>
  </TR>
</TABLE>
<P align=justify><B>NOTE 3: -CHANGES IN SHARE CAPITAL (continued) </B></P>
<P style="MARGIN-LEFT: 5%" align=justify>On October 17, 2004 the Board of Directors
  decided to reduce the exercise price of the options that were granted to the
  Company&#146;s employees and directors from $0.76 to $0.3. On September 21,
  2005 the Board of directors decided to reduce the exercise price of the options
  that were granted to the Company&#146;s employees and directors from $0.3 to
  $0.12 . According to APB Opinion No. 25 and FIN 44 when the exercise price of
  a fixed stock option award is reduced, the award shall be accounted for as a
  variable plan from the date of modification to the date the award is exercised,
  forfeited, or expires unexercised. The reduction of the exercise price did not
  result in compensation expenses in the year ended June 30, 2005 and in the nine
  months period ended March 31, 2006. </P>
<P style="MARGIN-LEFT: 5%" align=justify>Options to consultants: </P>
<P style="MARGIN-LEFT: 10%" align=justify>In the framework of the stock option
  plan, the Company issues warrants to consultants, for carrying out investor
  relation's activities On December 2003, the Company granted 669,189 options
  to consultants at a weighted average exercise price of $0.92. </P>
<P style="MARGIN-LEFT: 10%" align=justify>In July 2004, the Company's board of
  directors approved to modify the terms of 500,000 options granted to a consultant
  on December 2003 (of which 250,000 are with an exercise price of $1 and 250,000
  with an exercise price of $1.25) to provide for a cashless exercise of the options.
  The Board of directors also resolved that the options' exercise price will be
  reduced to $0.4 and that the options will be fully vested. In addition, it was
  resolved to grant the consultant additional 500,000 options with an exercise
  price of $0.4, vested immediately and with a cashless exercise feature. The
  additional 500,000 options were granted outside of the terms of the options
  plan. In June 2005 the consultant agreed to cancel the 1,000,000 options and
  to be granted 600,000 shares of the Company&#146;s common stock. Since the fair
  value of the options that were cancelled and the shares that were issued were
  equal, no additional compensation expenses were recorded. </P>
<P style="MARGIN-LEFT: 10%" align=justify>As of March 31, 2006, 169,189 options
  to consultants are exercisable. </P>
<P style="MARGIN-LEFT: 10%" align=justify>The Company accounted for its options
  to consultants under the fair value method in accordance of SFAS 123 and EITF
  96-18. The fair value for these warrants was estimated using Black-Scholes option-pricing
  model with the following weighted-average assumptions for June 30, 2004: risk-free
  interest rates of 4.2%, expected dividend yield of 0%, expected volatility of
  84%, and a weighted-average contractual life of the warrants of up to 10 years.
  Compensation expenses of $357,618 and $161,641 and $0 were recognized during
  the year ended June 30, 2004 and 2005 and in the period of nine months ended
  March 31, 2006, respectively in accordance with EITF 96-18. </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<P align=center>F-23 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>NOTES TO CONSOLIDATED
      FINANCIAL STATEMENTS</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars</B> </TD>
  </TR>
</TABLE>
<P align=justify><B>NOTE 3: -CHANGES IN SHARE CAPITAL (continued) </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%">o. </TD>
    <TD> <P align=justify>Stock Option Plan 2005 ("ESOP")</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>Under the Company's 2005 Stock Option Plan (the "Plan"),
        options may be granted to officers, directors, employees and consultants
        of the Company or its subsidiary.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>Pursuant to the Plan, the Company reserved for issuance
        15,000,000 of its common stock.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>Each option granted under the Plan is exercisable trough
        the expiration date of the Plan which is January 2016 unless stated otherwise.
        The exercise price of the options granted under the plan may not be less
        than the nominal value of the stock into which such options are exercised.
        The options vest primarily over two years. Any option, which are cancelled
        or forfeited before expiration, become available for future grants.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>Options to employees:</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>On September 21, 2005 the Board of Directors appointed
        a new Chief Executive Officer, and approved to grant him 4,500,000 stock
        options exercisable at a price of $0.12 per share to be vested over a
        three years period. On January 17, 2006 the Company granted him the stock
        options from the 2005 plan and resolved to reduce the exercise price to
        $0.1 and also to revise the vesting period to two years. The reduction
        of the exercise price did not result in compensation expenses in the nine
        months period ended March 31, 2006. The award shall be accounted for as
        a variable plan from the date of modification to the date the award is
        exercised, forfeited, or expires unexercised.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>On January 17, 2006, the Company granted 5,490,000 stock
        options to employees and directors from the Plan. The options will have
        a two years vesting period with six months grace period (i.e. vesting
        equally monthly during the remaining 18 months). The option&#146;s exercise
        price was determined as the stock price at the date of grant witch was
        $0.10.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>Options to consultants:</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>On November 21, 2005 the Board of Directors approved
        Dr. Shai Maretzki&#146;s consulting agreement with the Company (which
        was signed on the same date) for a period of 2.5 years. Under this agreement
        the Company granted him 1,500,000 stock options under the Plan and upon
        the formal approval of the Plan by Tax Authorities. The options will have
        a two years vesting period with six months grace period (i.e. vesting
        equally monthly during the remaining 18 months). The options were granted
        on January 17, 2006 at the price of $0.10.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>On January 17, 2006, the Company granted to consultants
        1,000,000 stock options from the Plan. The options will have a two years
        vesting period with six months grace period (i.e. vesting equally monthly
        during the remaining 18 months). The option&#146;s exercise price will
        be determined as the stock price at the date of grant. The stock price
        at that day was $0.10.</P></TD>
  </TR>
</TABLE>
<BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<P align=center>F-24 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>NOTES TO CONSOLIDATED
      FINANCIAL STATEMENTS</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars</B> </TD>
  </TR>
</TABLE>
<P align=justify><B>NOTE 3: -CHANGES IN SHARE CAPITAL (continued) </B></P>
<P style="MARGIN-LEFT: 5%" align=justify>The Company accounted for its options
  to consultants under the fair value method in accordance of SFAS 123 and EITF
  96-18. The fair value for these warrants was estimated using Black-Scholes option-pricing
  model with the following weighted-average assumptions for March 31, 2006: risk-free
  interest rates of 4.3%, expected dividend yield of 0%, expected volatility of
  105%, and a weighted-average contractual life of the warrants of up to 10 years.
  Compensation expenses of $48,182 were recognized during the nine and three months
  ended March 31, 2006, in accordance with EITF 96-18. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%">p. </TD>
    <TD> <P align=justify>Subsequent events</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>1. On April 3, 2006, the Company issued Senior Secured
        Convertible Debentures (the &#147;Debentures &#147;), for gross proceeds
        of $3,000,000. In conjunction with this financing, the Company issued
        47,393,364 common share purchase warrants exercisable for three years
        at an exercise price of $0.075. The Company paid a finder's fee of 10%
        in cash and issued 9,478,672 three year common share purchase warrants,
        half of which are exercisable at $0.075 and half of which are exercisable
        at $0.077.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>The Company has agreed to register the common shares
        issuable upon conversion of the Debentures and exercise of the warrants.
        The Company have agreed to file the registration statement within 30 days
        after the Closing Date.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>The Company will pay a penalty of consisting of 947,867
        common shares per each months of delay in effectiveness of registration
        as determent above. There is no limitation on the number of shares that
        are issueable pursuant to the penalty.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>1a. The Debentures, which mature on April 3, 2008, are
        convertible to common shares at the lower of 75% of the volume weighted
        average trading price for the 20 days prior to issuance of a notice of
        conversion by a holder of a Debentures, or, if while the Debentures remain
        outstanding the Company enters into one or more financing transactions
        involving the issuance of common stock or securities convertible or exercisable
        for common stock, the lowest transaction price for those new transactions.</P></TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%"></TD>
    <TD> <P align=justify>Interest accrues on the Debentures at the rate of 7%
        per annum, is payable semi-annually on June 30 and December 31 of each
        year and on conversion and at the maturity date. Interest is payable,
        at the option of the Company, either (1) in cash, or (2) in shares of
        Common Stock at the then applicable conversion price. If the Company fails
        to deliver stock certificates upon the conversion of the Debentures at
        the specified time and in the specified manner, the Company will be required
        to make substantial payments to the holders of the Debentures.</P></TD>
  </TR>
</TABLE>
<BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<P align=center>F-25 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>NOTES TO CONSOLIDATED
      FINANCIAL STATEMENTS</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars</B> </TD>
  </TR>
</TABLE>
<P align=justify><B>NOTE 3: -CHANGES IN SHARE CAPITAL (continued) </B></P>
<P style="MARGIN-LEFT: 5%" align=justify>Provided the Registration Statement is
  effective, the Company may prepay the amounts outstanding on the Debentures
  by giving advance notice and paying an amount equal to 120% of the sum of the
  principal being prepaid plus the accrued interest thereon. Holders will continue
  to have the right to convert their Debentures prior to the actual prepayment.</P>
<P style="MARGIN-LEFT: 5%" align=justify>Holders of the Debentures may require
  the Company to redeem any or all of the outstanding Debentures upon the occurrence
  of any one or more of events of default specified in the Debentures.</P>
<P style="MARGIN-LEFT: 5%" align=justify>Holders of Debentures are subject to
  certain limitations on their rights to convert the Debentures. The principal
  limitation is that the holder may not, with certain limited exceptions, convert
  into a number of shares that would, together with other shares held by the holder,
  exceed 4.99% of the then outstanding shares of the Company after such conversion.
  The exercise of the Warrants is subject to a similar limitation.</P>
<P style="MARGIN-LEFT: 5%" align=justify>To secure the Company's obligations under
  the Debentures and other transaction agreements, the Company has granted a security
  interest in substantially all of its assets, including without limitation, its
  intellectual property, in favour of the investors under the terms and conditions
  of a Security Interest Agreement dated as of the date of the Debentures. The
  security interest terminates upon the earlier of (i) the date on which less
  than one-fourth of the original principal amount of the Debentures issued on
  the Closing Date are outstanding or (ii) payment or satisfaction of all of the
  Company's obligations under the Securities Purchase Agreement.</P>
<P style="MARGIN-LEFT: 5%" align=justify>The conversion price of the Debentures
  and the exercise price of the Warrants are subject to adjustment. Under the
  agreements with the holders of the Debentures, the Company agreed that if the
  Company makes certain offers or sales of its Common Stock (or securities convertible
  into Common Stock) to any third party during the period from the Closing Date
  until the date that less than one-fourth of the aggregate principal amount of
  the Debentures issued remain unconverted, adjustments would be made to the conversion
  price of the then unconverted Debentures and to the exercise price of the then
  unexercised Warrants. The exercise price of the Warrants also are subject to
  adjustment in the event of certain capital adjustments or similar transactions,
  such as a stock split or merger. In addition, in certain cases, the investors
  may be entitled to receive additional warrants to purchase additional shares.
</P>
<P style="MARGIN-LEFT: 5%" align=justify>The Company also agreed that until less
  than one-fourth of the aggregate principal amount of the Debentures issued remain
  unconverted, without the prior written consent of more than 51% of the then
  outstanding Debentures, the Company will not enter into any new transaction
  for the offer or sale of the Company's securities when such transaction provides
  for a variable conversion price or a variable exercise price. The Company also
  agreed that until the effective date of the Registration Statement it will not
  enter into any other transaction for the offer or sale of any of its securities
  and, commencing on the effective date and for six months thereafter, the Company
  will not enter into any transaction granting the investors in that new transaction
  registration rights.</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<P align=center>F-26 </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(A Development Stage Company) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>(Previous Name - A. I. SOFTWARE INC.) </TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>NOTES TO CONSOLIDATED
      FINANCIAL STATEMENTS</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>In U.S. Dollars</B> </TD>
  </TR>
</TABLE>
<P align=justify><B>NOTE 3: -CHANGES IN SHARE CAPITAL (continued) </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD align=left>1b. The Warrants, issued as of April 3, 2006, become first
      exercisable on the earlier of (i) the 65th day after issuance or (ii) the
      effective date of the Registration Statement. Holders of the Warrants are
      entitled to exercise their warrants on a cashless basis following the first
      anniversary of issuance if the Registration Statement is not in effect at
      the time of exercise. </TD>
  </TR>
</TABLE>
<BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="5%">2. </TD>
    <TD> <P align=justify>The Company registered 10,000,000 common shares issuable
        to service providers pursuant to investment relations agreement, dated
        April 30, 2006 upon service provider reaching certain milestones to be
        determined by the Company.</P></TD>
  </TR>
</TABLE>
<P align=justify><B>NOTE</B> <B>4: -GRANT RECEIVED FROM THE GOVERNMENT OF ISRAEL</B>
</P>
<P style="MARGIN-LEFT: 5%" align=justify>The Company&#146;s subsidiary received
  funding as part of its participation in the Office of Chief Scientist Magnet
  program operated by Israel's Ministry of Industry and Trade. Through March 31,
  2006, the subsidiary received grants in the total amount of $275,696 ($180,943
  for the nine month period ended March 31, 2006).</P>
<P align=center># # # # # </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<p align="center"><font size=2>F-27</font></p>
<p>&nbsp;</p>
<p align="center"><strong>PLURISTEM LIFE SYSTEMS INC. AND ITS SUBSIDIARY<br>
  (A Company in the Development Stage)<br>
  (Previous Name - A. I. SOFTWARE INC.)<br>
  CONSOLIDATED FINANCIAL STATEMENTS <br>
  AS OF JUNE 30, 2005</strong></p>
<hr style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noshade size=5>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><br>
  F-28<font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:center;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:center;'><B><font SIZE=2>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY </font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>(A
  Company in the Development Stage)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:center;'><b><font size=2>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:center;'><B><font SIZE=2>CONSOLIDATED
  FINANCIAL STATEMENTS </font></B></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:center;'><B><font SIZE=2>AS
  OF JUNE 30, 2005</font></B></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:center;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:center;'><B><font SIZE=1>IN
  U.S. DOLLARS</font></B></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:center;'><font size=1>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:center;'><font SIZE=1>INDEX</font></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
  <tr>
    <td width="384" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="68" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=2>Page</font></b></u></p></td>
  </tr>
  <tr>
    <td width="384" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="68" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
  <tr>
    <td width="384" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Report
        of Independent Registered Public Accounting Firm</font></p></td>
    <td width="68" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>3</font></p></td>
  </tr>
  <tr>
    <td width="384" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Consolidated
        Balance Sheets</font></p></td>
    <td width="68" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>4-5</font></p></td>
  </tr>
  <tr>
    <td width="384" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Consolidated
        Statements of Operations</font></p></td>
    <td width="68" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>6</font></p></td>
  </tr>
  <tr>
    <td width="384" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Statements
        of Changes in Stockholders' Equity (Deficiency)</font></p></td>
    <td width="68" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>7-10</font></p></td>
  </tr>
  <tr>
    <td width="384" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Consolidated
        Statements of Cash Flows</font></p></td>
    <td width="68" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>11-13</font></p></td>
  </tr>
  <tr>
    <td width="384" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Notes
        to Consolidated Financial Statements</font></p></td>
    <td width="68" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>14-27</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:center;'><u><font size=1>&nbsp;&nbsp;</font></u><font size=1>&nbsp;</font></p>
<br>
<hr noshade align="center" width="100%" size=5 color="Black">
<p align="center">F-29</p>
<p><img src="ey.gif" width="225" height="23"></p>
<p align="center"><strong>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</strong></p>
<p align="center"><strong>To The Stockholders Of<br>
  <br>
  PLURISTEM LIFE SYSTEMS INC.<br>
  (A Development Stage Company)<br>
  (Previous Name - A. I. SOFTWARE INC.)</strong></p>
<p align="justify"> We have audited the accompanying consolidated balance sheet
  of Pluristem Life Systems Inc. (a development stage company) (&#8220;the Company&#8221;)
  (formerly - A. I. Software Inc.), and its subsidiary as of June 30, 2005 and
  2004 and the related consolidated statements of operations, changes in stockholders'
  equity and cash flows for each of the two years in the period ended June 30,
  2005 and for the period from May 11, 2001 (inception date) through June 30,
  2005. These consolidate financial statements are the responsibility of the Company's
  management. Our responsibility is to express an opinion on these consolidate
  financial statements based on our audits.</p>
<p align="justify"> We conducted our audits in accordance with the standards of
  the Public Company Accounting Oversight Board (United States). Those standards
  require that we plan and perform the audit to obtain reasonable assurance about
  whether the financial statements are free of material misstatement. An audit
  includes examining, on a test basis, evidence supporting the amounts and disclosures
  in the financial statements. An audit also includes assessing the accounting
  principles used and significant estimates made by management, as well as evaluating
  the overall financial statement presentation. We believe that our audits provide
  a reasonable basis for our opinion. </p>
<p align="justify">In our opinion, the consolidated financial statements referred
  to above, present fairly, in all material respects, the financial position of
  the Company and its subsidiary as of June 30, 2005 and 2004, and the consolidated
  results of their operations and their cash flows for each of the two years in
  the period ended June 30, 2005 and for the period from May 11, 2001 (inception
  date) through June 30, 2005, in conformity with U.S. generally accepted accounting
  principles. </p>
<p align="justify">As discussed in Note 1b to the financial statements, the Company
  has not yet generated revenues from its operations and is dependent on external
  sources for financing its operations. These factors, among others discussed
  in Note 1b, raise substantial doubt about the Company's ability to continue
  as a going concern. The consolidated financial statements do not include any
  adjustments relating to the recoverability and classification of recorded assets
  amounts or the amounts and classification of liabilities that might be necessary
  should the Company be unable to continue as a going concern.</p>
<p align="right"><em>/s/ Kost Forer Gabbay &amp; Kasierer</em><br>
  Kost Forer Gabbay &amp; Kasierer<br>
  A member of Ernst &amp; Young Global</p>
<p align="left">Haifa, Israel<br>
  September 21, 2005 </p>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-30</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table border="0" cellspacing=0 cellpadding=0 width="622" style=' margin-left:0pt;border-collapse:collapse;  '>
  <tr>
    <td width="322" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>CONSOLIDATED
        BALANCE SHEETS</font></B></p></td>
    <td width="300" valign=top style='border:solid gray .75pt;border-color:gray; border-left:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
  <tr>
    <td width="322" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars </font></b></p></td>
    <td width="300" valign=top style='border-top:none;border-left: none;border-bottom:solid gray .75pt;border-right:solid gray .75pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>&nbsp;</font></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
  <tr>
    <td width="374" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td  colspan="3" valign=bottom style=' border-bottom:solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>June
        30,</font></b></p></td>
  </tr>
  <tr>
    <td width="374" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="48" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="19" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="374" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="48" valign=bottom style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Note</font></b></p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="78" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>2005</font></b></p></td>
    <td width="19" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>2004</font></b></p></td>
  </tr>
  <tr>
    <td width="374" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="78" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="19" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="374" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>ASSETS</font></B></p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="78" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="19" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="374" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="78" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="19" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="374" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font SIZE=2>CURRENT
        ASSETS:</font></p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="78" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="19" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="374" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:6.0pt;margin-bottom:0pt'><font size=2>Cash
        and cash equivalents</font></p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:6.0pt;margin-bottom:0pt'><font size=1>3</font></p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:6.0pt;margin-bottom:0pt'><font size=2>$</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0in;text-indent:0pt;text-align:right;margin-top:6.0pt;margin-bottom:0in'><font size=2>1,889,438</font></p></td>
    <td width="19" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:6.0pt;margin-bottom:0pt'><font size=2>$</font></p></td>
    <td width="73" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0in;text-indent:0pt;text-align:right;margin-top:6.0pt;margin-bottom:0in'><font size=2>668,867</font></p></td>
  </tr>
  <tr>
    <td width="374" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Prepaid
        expenses </font></p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>61,299</font></p></td>
    <td width="19" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>56,910</font></p></td>
  </tr>
  <tr>
    <td width="374" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Other
        accounts receivable</font></p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>147,781</font></p></td>
    <td width="19" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>15,332</font></p></td>
  </tr>
  <tr>
    <td width="374" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="48" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="19" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="374" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><u><font size=2>Total</font></u><font size=2>
        current assets</font></p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>2,098,518</font></p></td>
    <td width="19" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>741,109</font></p></td>
  </tr>
  <tr>
    <td width="374" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="48" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="19" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="374" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="19" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="374" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font SIZE=2>LONG-TERM
        RESTRICTED LEASE DEPOSIT</font></p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>27,216</font></p></td>
    <td width="19" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>20,959</font></p></td>
  </tr>
  <tr>
    <td width="374" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="48" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="19" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="374" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="19" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="374" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font SIZE=2>SEVERANCE
        PAY FUND</font></p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>27,846</font></p></td>
    <td width="19" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>31,575</font></p></td>
  </tr>
  <tr>
    <td width="374" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="48" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="19" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="374" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="19" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="374" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font SIZE=2>PROPERTY
        AND EQUIPMENT, NET </font></p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>4</font></p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>249,090</font></p></td>
    <td width="19" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>226,449</font></p></td>
  </tr>
  <tr>
    <td width="374" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="48" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="19" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="374" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="19" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="374" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font SIZE=2>DEFERRED
        ISSUANCE EXPENSES</font></p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>217,370</font></p></td>
    <td width="19" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>357,106</font></p></td>
  </tr>
  <tr>
    <td width="374" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="48" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="19" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="374" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="19" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="374" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><u><font size=2>Total
        </font></u><font size=2>assets</font></p></td>
    <td width="48" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>2,620,040</font></p>
      </div></td>
    <td width="19" valign=bottom style='padding:0in .75pt 0in .75pt'> <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$</font></p>
      </div></td>
    <td width="73" valign=bottom style='padding:0in .75pt 0in .75pt'> <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>1,377,198</font></p>
      </div></td>
  </tr>
  <tr>
    <td width="374" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="48" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="19" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="73" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:left;'><font size=1>The
  accompanying notes are an integral part of the consolidated financial statements.</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-31</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'> <B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table border="0" cellspacing=0 cellpadding=0 width="622" style=' margin-left:0pt;border-collapse:collapse;  '>
  <tr>
    <td width="322" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>CONSOLIDATED
        BALANCE SHEETS</font></B></p></td>
    <td width="300" valign=top style='border:solid gray .75pt;border-color:gray; border-left:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
  <tr>
    <td width="322" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars (except share data)</font></b></p></td>
    <td width="300" valign=top style='border-top:none;border-left: none;border-bottom:solid gray .75pt;border-right:solid gray .75pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
</table>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
  <tr>
    <td width="368" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td  colspan="3" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=2>June
        30,</font></b></u><u></u></p></td>
  </tr>
  <tr>
    <td width="368" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=2>Note</font></b></u><u></u></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="78" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=2>2005</font></b></u><u></u></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=2>2004</font></b></u><u></u></p></td>
  </tr>
  <tr>
    <td width="368" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="36" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>LIABILITIES
        AND STOCKHOLDERS' EQUITY </font></B></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="78" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font SIZE=2>CURRENT
        LIABILITIES:</font></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="78" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Short-term
        bank credit</font></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>-</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$</font></p></td>
    <td width="74" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>23</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Current
        maturities of liabilities to know-how licensors</font></p></td>
    <td width="36" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>5</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>18,750</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>100,000</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Trade
        payables</font></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>185,073</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>112,875</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Accrued
        expenses</font></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>175,814</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>109,048</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Other
        accounts payable</font></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>71,352</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>69,667</font></p></td>
  </tr>
  <tr>
    <td width="368" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="36" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><u><font size=2>Total
        </font></u><font size=2>current liabilities</font></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>450,989</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>391,613</font></p></td>
  </tr>
  <tr>
    <td width="368" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="36" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font SIZE=2>LONG-TERM
        LIABILITIES</font></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Know-how
        licensors, net of current maturities</font></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>5</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>181,209</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>168,877</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Liability
        in respect of warrants </font></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>7(f)</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>150,000</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>420,000</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Accrued
        severance pay</font></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>34,716</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>39,698</font></p></td>
  </tr>
  <tr>
    <td width="368" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="36" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Total
        long-term liabilities</font></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>365,925</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>628,575</font></p></td>
  </tr>
  <tr>
    <td width="368" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="36" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font SIZE=2>COMMITMENTS
        AND CONTINGENCIES</font></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>6</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font SIZE=2>STOCKHOLDERS'
        EQUITY </font></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Share
        capital:</font></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>7</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Common
        stock $0.00001 par value: </font><br>
        <font size=2>Authorized: 1,400,000,000 shares; </font><br>
        <font size=2>Issued and outstanding: 63,653,483 shares and 26,858,493
        shares as of June 30, 2005 and 2004, respectively </font></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>636</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <br>
        <font size=2>268</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Additional
        paid-in capital</font></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>6,451,846</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>2,907,990</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Deficit
        accumulated during the development stage</font></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>(4,649,356)</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>(2,551,248)</font></p></td>
  </tr>
  <tr>
    <td width="368" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="36" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:.75pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Total
        stockholders equity</font></p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>1,803,126</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>357,010</font></p></td>
  </tr>
  <tr>
    <td width="368" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="36" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="368" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="36" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>2,620,040</font></p>
      </div></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$</font></p>
      </div></td>
    <td width="74" valign=bottom style='padding:0in .75pt 0in .75pt'> <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>1,377,198</font></p>
      </div></td>
  </tr>
  <tr>
    <td width="368" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="36" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="74" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  accompanying notes are an integral part of the consolidated financial statements.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:center;'><font size=1>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-32</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'> <B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table border="0" cellspacing=0 cellpadding=0 width="622" style=' margin-left:0pt;border-collapse:collapse;  '>
  <tr>
    <td width="364" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>CONSOLIDATED
        STATEMENTS OF OPERATIONS</font></B></p></td>
    <td width="258" valign=top style='border:solid gray .75pt;border-color:gray; border-left:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
  <tr>
    <td width="364" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars (except share and per share data)</font></b></p></td>
    <td width="258" valign=top style='border-top:none;border-left: none;border-bottom:solid gray .75pt;border-right:solid gray .75pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:center;'><font size=1>&nbsp;</font></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
  <tr>
    <td width="341" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="42" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td  colspan="3" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><br>
        <br>
        <br>
        <br>
        <b><font size=2>Year ended June 30,</font></b></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>Period
        from May 11, 2001 (inception) through </font></b><br>
        <b><font size=2>June 30,</font></b></p></td>
  </tr>
  <tr>
    <td width="341" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="42" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="341" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="42" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>Note</font></b></p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>2005</font></b></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>2004</font></b></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>2005</font></b></p></td>
  </tr>
  <tr>
    <td width="341" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="42" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="341" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Research
        and development costs </font></p></td>
    <td width="42" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>1,984,125</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>907,642</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>2,986,823</font></p></td>
  </tr>
  <tr>
    <td width="341" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Less
        - participation by the Office of the Chief Scientist</font></p></td>
    <td width="42" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0in;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0in'><font size=2>(196,641)</font></p></td>
    <td width="12" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=bottom style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>-</font></p></td>
    <td width="14" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>(196,641)</font></p></td>
  </tr>
  <tr>
    <td width="341" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Research
        and development costs, net</font></p></td>
    <td width="42" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>1,787,484</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>907,642</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>2,790,182</font></p></td>
  </tr>
  <tr>
    <td width="341" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>General
        and administrative expenses</font></p></td>
    <td width="42" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>873,649</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>2,096,882</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>3,160,419</font></p></td>
  </tr>
  <tr>
    <td width="341" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>In-process
        research and development</font><br>
        <font size=2>write-off</font></p></td>
    <td width="42" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>1</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>-</font></p></td>
    <td width="12" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=bottom style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>-</font></p></td>
    <td width="14" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>246,470</font></p></td>
  </tr>
  <tr>
    <td width="341" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="42" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="341" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="42" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="341" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="42" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>(2,661,133)</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>(3,004,524)</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>(6,197,071)</font></p></td>
  </tr>
  <tr>
    <td width="341" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="42" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="341" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Financial
        income, net</font></p></td>
    <td width="42" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>8</font></p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>563,025</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>994,174</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>1,547,715</font></p></td>
  </tr>
  <tr>
    <td width="341" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="42" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="341" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="42" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="341" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Net
        loss</font></p></td>
    <td width="42" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>(2,098,108)</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>(2,010,350)</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>(4,649,356)</font></p></td>
  </tr>
  <tr>
    <td width="341" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="42" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="341" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="42" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="341" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Basic
        and diluted net loss per share</font></p></td>
    <td width="42" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>(0.05)</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>(0.083)</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="341" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="42" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="341" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="42" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="341" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Weighted
        average number of shares used in computing basic and diluted net loss
        per share:</font></p></td>
    <td width="42" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>40,804,788</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>24,341,271</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="341" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="42" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="78" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  accompanying notes are an integral part of the consolidated financial statements.</font></p>
<br>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-33</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:center;'><font size=1>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table border="0" cellspacing=0 cellpadding=0 width="622" style=' margin-left:0pt;border-collapse:collapse;  '>
  <tr>
    <td  colspan="2" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>STATEMENTS
        OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)</font></B></p></td>
    <td width="126" valign=top style='border:solid gray .75pt;border-color:gray; border-left:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
  <tr>
    <td width="244" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars (except shares data)</font></b></p></td>
    <td  colspan="2" valign=top style='border-top:none; border-left:none;border-bottom:solid gray .75pt;border-right:solid gray .75pt;  padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
  <tr>
    <td width="244" ></td>
    <td width="252" ></td>
    <td width="126" ></td>
  </tr>
</table>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center>&nbsp; </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center>&nbsp; </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center>&nbsp; </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center><B>Receipts</B> </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center><B>Deficit</B> </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center>&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center>&nbsp; </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center>&nbsp; </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center>&nbsp; </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center><B>on</B> </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center><B>Accumulated</B> </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center><B>Total</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center>&nbsp; </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center>&nbsp; </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center><B>Additional</B> </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center><B>account</B> </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center><B>during the</B> </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center><B>Stockholders'</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center colSpan=4><B>Common Stock</B> </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center><B>paid-in</B> </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center><B>of</B> </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center><B>Development</B> </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center><B>Equity</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center><B>Shares</B> </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center><B>Amount </B></TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center
    ><STRONG>capital</STRONG>&nbsp;&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center><B>shares</B> </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center><B>Stage</B> </TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center >&nbsp;</TD>
    <TD align=center><B>(Deficiency)</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Issuance of common stock </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>July 9, 2001 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%"
    bgColor=#e6efff><B>35,000,000</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%"
    bgColor=#e6efff><B>350</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%"
    bgColor=#e6efff><B>2,150</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%"
    bgColor=#e6efff><B>-</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%"
    bgColor=#e6efff><B>-</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%"
    bgColor=#e6efff><B>2,500</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Balance as of June 30, 2001</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="7%"><B>35,000,000</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="7%"><B>350</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="7%"><B>2,150</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="7%"><B>-</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="7%"><B>-</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="7%"><B>2,500</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Loss for the year ended </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>June 30, 2002 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="7%">(77,903</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="7%">(77,903</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
  </TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Balance as of June 30, 2002</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff><B>35,000,000</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff><B>350</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff><B>2,150</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff><B>-</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff><B>(77,903</B></TD>
    <TD align=left width="2%"  bgColor=#e6efff><B>)</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff><B>(75,403</B></TD>
    <TD align=left width="2%"  bgColor=#e6efff><B>)</B> </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Issuance of common stock </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>on October 14, 2002, net of </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>issuance costs of $17,359 </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="7%">14,133,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="7%">141 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="7%">83,450 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="7%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="7%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="7%">83,591 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Forgiveness of debt </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff>11,760 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff>11,760 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Stocks cancelled on </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>March 19, 2003 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff>(27,300,000</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff>(273</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff>273 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Receipts on account of stock </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="7%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>and warrants, net of finders </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>fee and legal fees of $56,540 </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="7%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="7%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="7%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="7%">933,464 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="7%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="7%">933,464 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Loss for the year ended </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>June 30, 2003 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="7%">(462,995</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="7%">(462,995</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%"
    >) </TD>
  </TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="7%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="7%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Balance as of June 30, 2003</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="7%"
    bgColor=#e6efff><B>21,833,000</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="7%"
    bgColor=#e6efff><B>&nbsp;218</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="7%"
    bgColor=#e6efff><B>&nbsp;97,633</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="7%"
    bgColor=#e6efff><B>933,464</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="7%"
    bgColor=#e6efff><B>&nbsp;(540,898</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgColor=#e6efff><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="7%"
    bgColor=#e6efff><B>&nbsp;490,417</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  accompanying notes are an integral part of the consolidated financial statements.</font></p>
<br>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-34</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:center;'><font size=1>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table border="0" cellspacing=0 cellpadding=0 width="622" style=' margin-left:0pt;border-collapse:collapse;  '>
  <tr>
    <td  colspan="2" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>STATEMENTS
        OF CHANGES IN STOCKHOLDERS' EQUITY</font></B></p></td>
    <td width="186" valign=top style='border:solid gray .75pt;border-color:gray; border-left:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
  <tr>
    <td width="244" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars (except shares data)</font></b></p></td>
    <td  colspan="2" valign=top style='border-top:none; border-left:none;border-bottom:solid gray .75pt;border-right:solid gray .75pt;  padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
  <tr>
    <td width="244" ></td>
    <td width="192" ></td>
    <td width="186" ></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:center;'><font size=1>&nbsp;</font></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
  <tr>
    <td width="171" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="3" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Common
        Stock</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Additional</font></b><br>
        <b><font size=1>paid-in</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Receipts</font></b><br>
        <b><font size=1>on account</font></b></p></td>
    <td width="9" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Deficit</font></b><br>
        <b><font size=1>accumulated</font></b><br>
        <b><font size=1>During the</font></b><br>
        <b><font size=1>development</font></b></p></td>
    <td width="8" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Total</font></b><br>
        <b><font size=1>Shareholders'</font></b></p></td>
  </tr>
  <tr>
    <td width="171" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="67" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Shares</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Amount</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>capital</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>of
        shares</font></b></p></td>
    <td width="9" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>stage</font></b></p></td>
    <td width="8" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Equity</font></b></p></td>
  </tr>
  <tr>
    <td width="171" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="67" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="8" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="171" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Balance
        as of July 1, 2003 </font></b></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>21,833,000</font></b></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$
        218</font></b></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$
        97,633</font></b></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$933,464</font></b></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$
        (540,898)</font></b></p></td>
    <td width="8" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$
        490,417</font></b></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="171" style='padding:0in .75pt 0in .75pt;height:5.65pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="8" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr style='height:2.8pt'>
    <td width="171" style='padding:0in .75pt 0in .75pt;height:2.8pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt; height:2.8pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt; height:2.8pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:2.8pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt; height:2.8pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:2.8pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt; height:2.8pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:2.8pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt; height:2.8pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt; height:2.8pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt; height:2.8pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="8" valign=top style='padding:0in .75pt 0in .75pt; height:2.8pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=top style='padding:0in .75pt 0in .75pt; height:2.8pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="171" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Issuance
        of common stock and warrants on</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="8" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="171" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>July
        16, 2003, net of issuance costs of $70,110</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="67" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>725,483</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>7</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>1,235,752</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(933,464)</font></p></td>
    <td width="9" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="8" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>302,295</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="171" style='padding:0in .75pt 0in .75pt;height:5.65pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="8" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="171" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Issuance
        of common stock on</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="8" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="171" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>January
        20, 2004</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>3,000,000</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>30</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="8" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>30</font></p></td>
  </tr>
  <tr>
    <td width="171" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="8" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="171" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Issuance
        of warrants on January 20, 2004 as finder&#146;s fee</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="67" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=1>192,000</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=1>-</font></p></td>
    <td width="9" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=1>-</font></p></td>
    <td width="8" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=1>192,000</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="171" style='padding:0in .75pt 0in .75pt;height:5.65pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="8" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="171" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Common
        stock granted to consultants on February 11, 2004</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="67" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=1>1,000,000</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=1>10</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=1>799,990</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=1>-</font></p></td>
    <td width="9" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=1>-</font></p></td>
    <td width="8" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=1>800,000</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="171" style='padding:0in .75pt 0in .75pt;height:5.65pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="8" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="171" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Stock
        based compensation </font><br>
        <font size=1>related to warrants granted to</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="8" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="171" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>consultant
        on December 31, </font><br>
        <font size=1>2003</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="67" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=1>357,618</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=1>-</font></p></td>
    <td width="9" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=1>-</font></p></td>
    <td width="8" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=1>357,618</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="171" style='padding:0in .75pt 0in .75pt;height:5.65pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="8" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="171" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Exercise
        of warrants on </font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="8" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="171" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>April
        19, 2004 (see Note 7f)</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="67" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>300,000</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>3</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>224,997</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="9" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="8" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>225,000</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="171" style='padding:0in .75pt 0in .75pt;height:5.65pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="8" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="171" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Loss
        for the year ended </font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="8" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="171" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'><font size=1>June
        30, 2004</font></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="67" valign=top style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(2,010,350)</font></p></td>
    <td width="8" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=top style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(2,010,350)</font></p></td>
  </tr>
  <tr>
    <td width="171" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="8" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="171" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'><b><font size=1>Balance
        as of June 30, 2004</font></b></p></td>
    <td width="14" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="67" valign=top style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>26,858,483</font></b></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$
        268</font></b></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$2,907,990</font></b></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$
        -</font></b></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="72" valign=top style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$
        (2,551,248)</font></b></p></td>
    <td width="8" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="76" valign=top style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$
        357,010</font></b></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  accompanying notes are an integral part of the consolidated financial statements.</font></p>
<br>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-35</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table border="0" cellspacing=0 cellpadding=0 width="630" style=' margin-left:0pt;border-collapse:collapse;  '>
  <tr>
    <td  colspan="2" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>STATEMENTS
        OF CHANGES IN STOCKHOLDERS' EQUITY</font></B></p></td>
    <td width="186" valign=top style='border:solid gray .75pt;border-color:gray; border-left:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
  <tr>
    <td width="252" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars (except shares data)</font></b></p></td>
    <td  colspan="2" valign=top style='border-top:none; border-left:none;border-bottom:solid gray .75pt;border-right:solid gray .75pt;  padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
  <tr>
    <td width="252" ></td>
    <td width="192" ></td>
    <td width="186" ></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>&nbsp;</font></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
  <tr>
    <td width="156" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="3" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Common
        Stock</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Additional</font></b><br>
        <b><font size=1>paid-in</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Receipts</font></b><br>
        <b><font size=1>on account</font></b></p></td>
    <td width="9" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Deficit</font></b><br>
        <b><font size=1>accumulated</font></b><br>
        <b><font size=1>During the</font></b><br>
        <b><font size=1>development</font></b></p></td>
    <td width="13" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Total</font></b><br>
        <b><font size=1>Shareholders'</font></b></p></td>
  </tr>
  <tr>
    <td width="156" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="61" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Shares</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Amount</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>capital</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>of
        shares</font></b></p></td>
    <td width="9" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>stage</font></b></p></td>
    <td width="13" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Equity</font></b></p></td>
  </tr>
  <tr style='height:6.6pt'>
    <td width="156" style='padding:0in .75pt 0in .75pt;height:6.6pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" style='padding:0in .75pt 0in .75pt;height:6.6pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="61" style='padding:0in .75pt 0in .75pt;height:6.6pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" style='padding:0in .75pt 0in .75pt;height:6.6pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" style='padding:0in .75pt 0in .75pt;height:6.6pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" style='padding:0in .75pt 0in .75pt;height:6.6pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" style='padding:0in .75pt 0in .75pt;height:6.6pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" style='padding:0in .75pt 0in .75pt;height:6.6pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" style='padding:0in .75pt 0in .75pt;height:6.6pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" style='padding:0in .75pt 0in .75pt;height:6.6pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" style='padding:0in .75pt 0in .75pt;height:6.6pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="13" style='padding:0in .75pt 0in .75pt;height:6.6pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" style='padding:0in .75pt 0in .75pt;height:6.6pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="156" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Balance
        as of July 1, 2004 </font></b></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="61" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>26,858,483</font></b></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$268</font></b></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$2,907,990</font></b></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$
        -</font></b></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$(2,551,248)</font></b></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$357,010</font></b></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="156" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="61" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="156" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Stock-based
        compensation related to warrants granted to consultants on September 30,
        2004</font></p></td>
    <td width="12" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="61" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>161,641</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="9" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="13" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>161,641</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="156" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="61" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="156" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Issuance
        of common stock and warrants on November 30, 2004 related to the October
        2004 Agreement net of issuance costs of $28,908</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="61" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>3,250,000</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>33</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>296,059</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="9" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="13" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>296,092</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="156" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="61" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="156" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Issuance
        of common stock and warrants on January 26, 2005 related to the October
        2004 Agreement net of issuance costs of $4,975</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="61" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>4,300,000</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>43</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>424,982</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="9" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="13" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>425,025</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="156" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="61" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="156" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Issuance
        of common stock and warrants on January 31, 2005 related to the January
        31, 2005 Agreement </font></p></td>
    <td width="12" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="61" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>7,000,000</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>70</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="9" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="13" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>70</font></p></td>
  </tr>
  <tr style='height:4.75pt'>
    <td width="156" valign=top style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="61" valign=top style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=top style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr style='height:31.05pt'>
    <td width="156" valign=top style='padding:0in .75pt 0in .75pt; height:31.05pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Issuance
        of common stock and options on February 15, 2005 to a former director
        of the Company </font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt; height:31.05pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="61" valign=bottom style='padding:0in .75pt 0in .75pt; height:31.05pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>50,000</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:31.05pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=bottom style='padding:0in .75pt 0in .75pt; height:31.05pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>-(*)</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:31.05pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt; height:31.05pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>14,500</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:31.05pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=bottom style='padding:0in .75pt 0in .75pt; height:31.05pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="9" valign=bottom style='padding:0in .75pt 0in .75pt; height:31.05pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=bottom style='padding:0in .75pt 0in .75pt; height:31.05pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="13" valign=bottom style='padding:0in .75pt 0in .75pt; height:31.05pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt; height:31.05pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>14,500</font></p></td>
  </tr>
  <tr style='height:4.15pt'>
    <td width="156" valign=top style='padding:0in .75pt 0in .75pt; height:4.15pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt; height:4.15pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="61" valign=top style='padding:0in .75pt 0in .75pt; height:4.15pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:4.15pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt; height:4.15pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:4.15pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt; height:4.15pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:4.15pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt; height:4.15pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt; height:4.15pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt; height:4.15pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt; height:4.15pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=top style='padding:0in .75pt 0in .75pt; height:4.15pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="156" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Issuance
        of common stock and warrants on</font><font size=2> </font><font size=1>February
        16, 2005 related to the January 31, 2005 Agreement </font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="61" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>5,000,000</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>50</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="9" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="13" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>50</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="156" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="61" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="44" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="57" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="81" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>(*)
  Less then one dollar</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  accompanying notes are an integral part of the consolidated financial statements.</font></p>
<br>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-36</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table border="0" cellspacing=0 cellpadding=0 width="622" style=' margin-left:0pt;border-collapse:collapse;  '>
  <tr>
    <td  colspan="2" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>STATEMENTS
        OF CHANGES IN STOCKHOLDERS' EQUITY</font></B></p></td>
    <td width="186" valign=top style='border:solid gray .75pt;border-color:gray; border-left:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
  <tr>
    <td width="244" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars (except shares data)</font></b></p></td>
    <td  colspan="2" valign=top style='border-top:none; border-left:none;border-bottom:solid gray .75pt;border-right:solid gray .75pt;  padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
  <tr>
    <td width="244" ></td>
    <td width="192" ></td>
    <td width="186" ></td>
  </tr>
</table>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=1>&nbsp;</font></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
  <tr style='height:41.95pt'>
    <td width="203" valign=bottom style='padding:0in .75pt 0in .75pt; height:41.95pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:41.95pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="3" valign=bottom style='padding:0in .75pt 0in .75pt; height:41.95pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Common
        Stock</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:41.95pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt; height:41.95pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Additional</font></b><br>
        <b><font size=1>paid-in</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:41.95pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" valign=bottom style='padding:0in .75pt 0in .75pt; height:41.95pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Receipts</font></b><br>
        <b><font size=1>on account</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:41.95pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=bottom style='padding:0in .75pt 0in .75pt; height:41.95pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Deficit</font></b><br>
        <b><font size=1>accumulated</font></b><br>
        <b><font size=1>During the</font></b><br>
        <b><font size=1>development</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:41.95pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="95" valign=bottom style='padding:0in .75pt 0in .75pt; height:41.95pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Total</font></b><br>
        <b><font size=1>Shareholders'</font></b></p></td>
  </tr>
  <tr>
    <td width="203" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="55" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Shares</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Amount</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>capital</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>of
        shares</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>stage</font></b></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="95" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Equity</font></b></p></td>
  </tr>
  <tr>
    <td width="203" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Issuance
        of warrants on February 16, 2005 for finder fee related to the January
        31, 2005 Agreement</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="55" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>144,000</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="95" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>144,000</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="203" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="55" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="95" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="203" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Issuance
        of common stock and warrants on</font><font size=2> </font><font size=1>March
        3, 2005 related to the January 24, 2005 Agreement</font><font size=2>
        </font><font size=1>net of issuance costs of $24,000</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="55" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>12,000,000</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>120</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>1,175,880</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="95" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>1,176,000</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="203" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="55" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="95" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="203" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Issuance
        of common stock on March 3, 2005 for finder fee related to the January
        24, 2005 Agreement</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="55" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>1,845,000</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>18</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(18)</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="95" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="203" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="55" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="95" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="203" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Issuance
        of common stock and warrants on</font><font size=2> </font><font size=1>March
        3, 2005 related to the October 2004 Agreement</font><font size=2> </font><font size=1>net
        of issuance costs of $6,038</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="55" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>750,000</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>8</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>68,954</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="95" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>68,962</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="203" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="55" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="95" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="203" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Issuance
        of common stock and warrants to the Chief Executive Officer on March 23,
        2005</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="55" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>2,400,000</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>24</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>695,976</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="95" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>696,000</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="203" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="55" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="95" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="203" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Issuance
        of common stock on March 23, 2005 related to the October 2004 Agreement</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="55" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>200,000</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>2</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>19,998</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="95" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>20,000</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="203" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="55" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="95" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="203" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Classification
        of a liability in respect of warrants to additional paid in capital, net
        of issuance costs of $178,116</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="55" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>541,884</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="95" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>541,884</font></p></td>
  </tr>
  <tr style='height:6.2pt'>
    <td width="203" valign=top style='padding:0in .75pt 0in .75pt; height:6.2pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:6.2pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="55" valign=bottom style='padding:0in .75pt 0in .75pt; height:6.2pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:6.2pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt; height:6.2pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:6.2pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt; height:6.2pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:6.2pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" valign=bottom style='padding:0in .75pt 0in .75pt; height:6.2pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:6.2pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=bottom style='padding:0in .75pt 0in .75pt; height:6.2pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:6.2pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="95" valign=bottom style='padding:0in .75pt 0in .75pt; height:6.2pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="203" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Net
        loss for the year ended June 30, 2005</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="55" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(2,098,108)</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="95" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(2,098,108)</font></p></td>
  </tr>
  <tr style='height:4.75pt'>
    <td width="203" valign=top style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="55" valign=bottom style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="56" valign=bottom style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=bottom style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" valign=bottom style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=bottom style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="95" valign=bottom style='padding:0in .75pt 0in .75pt; height:4.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="203" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Balance
        as of June 30, 2005</font></b></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="55" valign=bottom style='border-top:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>63,653,483</font></b></p>
      </div></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p>
      </div></td>
    <td width="56" valign=bottom style='border-top:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$636</font></b></p>
      </div></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p>
      </div></td>
    <td width="71" valign=bottom style='border-top:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$6,451,846</font></b></p>
      </div></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p>
      </div></td>
    <td width="66" valign=bottom style='border-top:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>-</font></b></p>
      </div></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p>
      </div></td>
    <td width="84" valign=bottom style='border-top:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$(4,649,356)</font></b></p>
      </div></td>
    <td width="5" valign=bottom style='padding:0in .75pt 0in .75pt'> <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p>
      </div></td>
    <td width="95" valign=bottom style='border-top:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=1>$1,803,126</font></b></p>
      </div></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  accompanying notes are an integral part of the consolidated financial statements.</font><br>
</p>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-37</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'> <B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name &#150; A. I. SOFTWARE INC.)</font></b></p>
<table border="0" cellspacing=0 cellpadding=0 width="622" style=' margin-left:0pt;border-collapse:collapse;  '>
  <tr>
    <td width="352" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>CONSOLIDATED
        STATEMENTS OF CASH FLOWS</font></B></p></td>
    <td width="270" valign=top style='border:solid gray .75pt;border-color:gray; border-left:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
  <tr>
    <td width="352" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars</font></b></p></td>
    <td width="270" valign=top style='border-top:none;border-left: none;border-bottom:solid gray .75pt;border-right:solid gray .75pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
</table>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=1>&nbsp;</font></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; margin-bottom: 5pt;'>
  <tr style='height:46.75pt'>
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt; height:46.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td  colspan="6" valign=bottom style='padding:0in .75pt 0in .75pt; height:46.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Year
        ended June 30,</font></b></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt; height:46.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Period
        from May 11, 2001 (inception)</font></b><br>
        <b><font size=1>through</font></b><br>
        <b><font size=1>June 30</font></b></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=1>2005</font></b></u><u></u></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=1>2004</font></b></u><u></u></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=1>2005</font></b></u><u></u></p></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=1>CASH
        FLOWS FROM OPERATING ACTIVITIES: </font></B></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Net
        loss </font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>$(2,098,108)</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>$(2,010,350)</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:86.25pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>$(4,649,356)</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Adjustments
        to reconcile net loss to net cash used in operating activities: </font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Depreciation
        and amortization </font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>34,232</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>91,540</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>144,033</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Capital
        gain</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(16,373)</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(16,373)</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Impairment
        of know-how </font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>264,807</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>264,807</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Amortization
        of deferred issuance costs </font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>168,620</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>62,104</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>230,724</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Stock-based
        compensation to consultants </font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>161,641</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>1,157,618</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>1,319,259</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>In-process
        research and development write-off </font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>246,470</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Know-how
        licensors - imputed interest </font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>12,332</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>20,699</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>35,809</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Salary
        grant in shares and warrants</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>710,500</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>710,500</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Increase
        in accounts receivable </font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(132,449)</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(5,051)</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(138,945)</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Increase
        in prepaid expenses</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(4,389)</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(56,910)</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(61,299)</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Increase
        (decrease) in trade payables </font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>72,198</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(10,534)</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>175,666</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Increase
        (decrease) in other accounts payable and accrued expenses </font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>52,201</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>46,121</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(195,693)</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Increase
        in accrued interest due to related parties </font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>3,450</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Linkage
        differences and interest on long-term restricted lease deposit </font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(1,108)</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>54</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(2,084)</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Change
        in fair value of liability in respect of warrants </font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(749,880)</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(1,079,970)</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(1,829,850)</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Accrued
        severance pay, net </font></p></td>
    <td  colspan="2" valign=bottom style=' border-bottom:solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(1,253)</font></p></td>
    <td  colspan="2" valign=bottom style=' border-bottom:solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style=' border-bottom:solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>8,123</font></p></td>
    <td  colspan="2" valign=bottom style=' border-bottom:solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>6,870</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr style='height:2.85pt'>
    <td width="247" style='padding:0in .75pt 0in .75pt;height:2.85pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style=' padding:0in .75pt 0in .75pt; height:2.85pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style=' padding:0in .75pt 0in .75pt; height:2.85pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style=' padding:0in .75pt 0in .75pt; height:2.85pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style=' padding:0in .75pt 0in .75pt; height:2.85pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td width="247" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Net
        cash used in operating activities </font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>$(1,791,836)</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>$(1,511,749)</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>$(3,756,012)</font></p></td>
    <td  width="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr>
    <td width="247" ></td>
    <td width="2" ></td>
    <td width="86" ></td>
    <td width="4" ></td>
    <td width="28" ></td>
    <td width="2" ></td>
    <td width="92" ></td>
    <td width="4" ></td>
    <td width="172" ></td>
    <td width="5" ></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  accompanying notes are an integral part of the consolidated financial statements.</font><br>
</p>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-38</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:center;'><font size=1>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:right;'><font size=1>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name &#150; A. I. SOFTWARE INC.)</font></b></p>
<table border="0" cellspacing=0 cellpadding=0 width="622" style=' margin-left:0pt;border-collapse:collapse;  '>
  <tr>
    <td width="352" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>CONSOLIDATED
        STATEMENTS OF CASH FLOWS</font></B></p></td>
    <td width="270" valign=top style='border:solid gray .75pt;border-color:gray; border-left:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
  <tr>
    <td width="352" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars</font></b></p></td>
    <td width="270" valign=top style='border-top:none;border-left: none;border-bottom:solid gray .75pt;border-right:solid gray .75pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
</table>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<table border="0" cellspacing=0 cellpadding=0 width="568" style=' border-collapse:collapse'>
  <tr style='height:46.75pt'>
    <td  width="3"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt; height:46.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td  colspan="6" valign=bottom style='padding:0in .75pt 0in .75pt; height:46.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Year
        ended June 30,</font></b></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt; height:46.75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>Period
        from May 11, 2001 (inception)</font></b><br>
        <b><font size=1>through</font></b><br>
        <b><font size=1>June 30</font></b></p></td>
  </tr>
  <tr >
    <td  width="3"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=1>2005</font></b></u><u></u></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=1>2004</font></b></u><u></u></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=1>2005</font></b></u><u></u></p></td>
  </tr>
  <tr >
    <td  width="3"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=1>CASH
        FLOWS FROM INVESTING ACTIVITIES: </font></B></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:50.25pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr >
    <td  width="3"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Acquisition
        of Pluristem Ltd. (1) </font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>$-</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>$-</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>$31,899</font></p></td>
  </tr>
  <tr >
    <td  width="3"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Purchase
        of property and equipment </font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(68,975)</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(125,657)</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(194,632)</font></p></td>
  </tr>
  <tr >
    <td  width="3"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Proceed
        from sale of property and equipment</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>28,475</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>28,475</font></p></td>
  </tr>
  <tr >
    <td  width="3"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Purchase
        of long-term restricted lease deposit</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>19,851</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>19,581</font></p></td>
  </tr>
  <tr >
    <td  width="3"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Repayment
        of long-term restricted lease deposit </font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(25,000)</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(1,176)</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(26,176)</font></p></td>
  </tr>
  <tr >
    <td  width="3"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Purchase
        of know-how </font></p></td>
    <td  colspan="2" valign=bottom style=' border-bottom:solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font><u></u></p></td>
    <td  colspan="2" valign=bottom style=' border-bottom:solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style=' border-bottom:solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td  colspan="2" valign=bottom style=' border-bottom:solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(100,000)</font></p></td>
  </tr>
  <tr >
    <td  width="3"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Net
        cash used in investing activities </font></p></td>
    <td  colspan="2" valign=top style=' border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(45,649)</font></p></td>
    <td  colspan="2" valign=top style=' border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style=' border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(126,833)</font></p></td>
    <td  colspan="2" valign=top style=' border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(240,583)</font></p></td>
  </tr>
  <tr >
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  width="6"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=1>CASH
        FLOWS FROM FINANCING ACTIVITIES: </font></B></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  width="6"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Issuance
        of common stock and warrants, net of issuance costs </font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>3,139,329</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>1,800,115</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>5,958,999</font></p></td>
    <td  width="6"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  width="6"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  width="6"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Short-term
        bank credit, net </font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(23)</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(3)</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(26)</font></p></td>
    <td  width="6"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Repayment
        of liability to know-how licensor </font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:20.25pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>
        (81,250)</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(81,250)</font></p></td>
    <td  width="6"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Proceeds
        from notes and loan payable to related parties </font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>78,195</font></p></td>
    <td  width="6"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr style='height:16.2pt'>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt; height:16.2pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Repayments
        of notes and loan payable to related parties </font></p></td>
    <td  colspan="2" valign=bottom style=' border-bottom:solid black .5pt;padding:0in .75pt 0in .75pt;height:16.2pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td  colspan="2" valign=bottom style=' border-bottom:solid black .5pt;padding:0in .75pt 0in .75pt;height:16.2pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=bottom style=' border-bottom:solid black .5pt;padding:0in .75pt 0in .75pt;height:16.2pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td  colspan="2" valign=bottom style=' border-bottom:solid black .5pt;padding:0in .75pt 0in .75pt;height:16.2pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>(69,885)</font></p></td>
    <td  width="6"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr style='height:14.85pt'>
    <td  colspan="2" style='padding:0in .75pt 0in .75pt; height:14.85pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" style='padding:0in .75pt 0in .75pt;height:14.85pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" style='padding:0in .75pt 0in .75pt;height:14.85pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" style='padding:0in .75pt 0in .75pt;height:14.85pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" style='padding:0in .75pt 0in .75pt;height:14.85pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  width="6"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Net
        cash provided by financing activities </font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>3,058,056</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>1,800,112</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>5,886,033</font></p></td>
    <td  width="6"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr style='height:5.65pt'>
    <td  colspan="2" style='padding:0in .75pt 0in .75pt; height:5.65pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" style='padding:0in .75pt 0in .75pt; height:5.65pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" style='padding:0in .75pt 0in .75pt; height:5.65pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" style='padding:0in .75pt 0in .75pt; height:5.65pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" style='padding:0in .75pt 0in .75pt; height:5.65pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  width="6"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Increase
        in cash and cash equivalents </font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>1,220,571</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>161,530</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>1,889,438</font></p></td>
    <td  width="6"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr style='height:5.65pt'>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  width="6"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Cash
        and cash equivalents at the beginning of the period </font></p></td>
    <td  colspan="2" valign=top style=' border-bottom:solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>668,867</font></p></td>
    <td  colspan="2" valign=top style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style=' border-bottom:solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>507,337</font></p></td>
    <td  colspan="2" valign=top style=' border-bottom:solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>-</font></p></td>
    <td  width="6"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr style='height:5.65pt'>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style=' padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt;height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style=' padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style=' padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  width="6"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Cash
        and cash equivalents at the end of the period </font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>$1,889,438</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>$
        668,867</font></p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>$1,889,438</font></p></td>
    <td  width="6"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr>
    <td width="3" ></td>
    <td width="259" ></td>
    <td width="6" ></td>
    <td width="63" ></td>
    <td width="3" ></td>
    <td width="16" ></td>
    <td width="5" ></td>
    <td width="71" ></td>
    <td width="4" ></td>
    <td width="132" ></td>
    <td width="6" ></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  accompanying notes are an integral part of the consolidated financial statements.</font><br>
</p>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-39</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'> <B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table border="0" cellspacing=0 cellpadding=0 width="592" style=' margin-left:0pt;border-collapse:collapse;  '>
  <tr>
    <td width="344" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>CONSOLIDATED
        STATEMENTS OF CASH FLOWS</font></B></p></td>
    <td width="248" valign=top style='border:solid gray .75pt;border-color:gray; border-left:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
  <tr>
    <td width="344" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars</font></b></p></td>
    <td width="248" valign=top style='border-top:none;border-left: none;border-bottom:solid gray .75pt;border-right:solid gray .75pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>&nbsp;</font></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
  <tr>
    <td width="246" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td  colspan="3" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>Year
        ended June 30,</font></b></p></td>
    <td width="121" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>Period
        from May 11, 2001 (inception) through</font></b><br>
        <b><font size=2>June 30,</font></b></p></td>
  </tr>
  <tr>
    <td width="246" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="84" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=2>2005</font></b></u><u></u></p></td>
    <td width="27" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=2>2004</font></b></u><u></u></p></td>
    <td width="121" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=2>2005</font></b></u><u></u></p></td>
  </tr>
  <tr>
    <td width="246" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>Non-cash
        investing and financing information:</font></b></p></td>
    <td width="84" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="27" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="121" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="246" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Unpaid
        know-how</font></p></td>
    <td width="84" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>$
        -</font></p></td>
    <td width="27" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>$
        -</font></p></td>
    <td width="121" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>$
        199,959</font></p></td>
  </tr>
  <tr>
    <td width="246" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="27" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="121" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="246" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="27" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="121" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="246" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>Supplemental
        disclosure with respect to cash flows:</font></b></p></td>
    <td width="84" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="27" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="121" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="246" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Cash
        paid for interest</font></p></td>
    <td width="84" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>$
        -</font></p></td>
    <td width="27" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>$
        -</font></p></td>
    <td width="121" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>$
        92</font></p></td>
  </tr>
  <tr>
    <td width="246" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="27" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="84" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="121" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1> (1)Acquisition
  of Pluristem Ltd.</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=2>Estimated
  fair value of assets acquired and liabilities assumed at the acquisition date:</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>&nbsp;</font></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
  <tr>
    <td width="223" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="54" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="10" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="134" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>Period
        from May 11, 2001 (inception) </font></b><u><b><font size=2>through June
        30, 2005</font></b></u></p></td>
  </tr>
  <tr>
    <td width="223" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="54" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="10" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="134" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="223" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="54" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="10" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="134" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="223" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Working
        capital (excluding cash and cash equivalents)</font></p></td>
    <td width="54" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="10" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="134" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>$
        427,176</font></p></td>
  </tr>
  <tr>
    <td width="223" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="54" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="10" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="134" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="223" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Long-term
        restricted lease deposit</font></p></td>
    <td width="54" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="10" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="134" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>(18,807)</font></p></td>
  </tr>
  <tr>
    <td width="223" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Property
        and equipment</font></p></td>
    <td width="54" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="10" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="134" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>(130,000)</font></p></td>
  </tr>
  <tr>
    <td width="223" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>In-process
        research and development write-off</font></p></td>
    <td width="54" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="10" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="134" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>(246,470)</font></p></td>
  </tr>
  <tr>
    <td width="223" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="54" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="10" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="134" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="223" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="54" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="10" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="134" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>$
        31,899</font></p></td>
  </tr>
  <tr>
    <td width="223" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="54" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="10" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="134" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  accompanying notes are an integral part of the consolidated financial statements.</font><br>
</p>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-40</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse;   '>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS</font></B></p></td>
  </tr>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars</font></b></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><B><font SIZE=1>NOTE
  1:-GENERAL</font></B></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>a.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=1>Pluristem
  Life Systems Inc. (&#147;</font><i><b><font size=1>the Company&#148;)</font></b></i><font size=1>
  was incorporated on May 11, 2001 under the laws of Nevada in the United States
  of America under the name A. I. Software Inc. that was changed as of June 30,
  2003 to Pluristem Life Systems Inc. </font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  Company was engaged in the development of artificial intelligence software through
  May 2003. The Company has not been successful in fully implementing its business
  plan and therefore, it was decided to concurrently pursue initiatives in the
  Biotech Industry as an extension to the existing activity.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>On
  May 5, 2003 the Company entered into a license agreement with Weizmann Institute
  of Science and the Technion-Israel Institute of Technology to acquire an exclusive
  license for an innovative stem cell expansion technology (&#147;the Technology&#148;).</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>On
  June 10, 2003, the Company acquired all of the issued and outstanding shares
  of Pluristem Ltd. (&#147;the subsidiary&#148;) in consideration of $1,000. Pluristem
  Ltd. is engaged in the research and development of expansion of cord blood hematopoetic
  stem cells, which was in line with the Technology, the rights which the Company
  had purchased on May 1, 2003. The purchase price has been allocated to identifiable
  assets and liabilities of which an amount of $246,470 has been allocated to
  in-process research and development. The acquisition was accounted under the
  purchase method of accounting in accordance with Statement of Financial Accounting
  Standards No. 141 &#147;Business Combinations&#148; (&#147;SFAS&#148; No. 141).
  The results of the subsidiary&#146;s operations have been included in the consolidated
  financial statements since that date.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  amount of $246,470 that was assigned to in-process research and development
  activities was written off at the date of acquisition in accordance with FASB
  Interpretation No. 4, &#147;Applicability of FASB Statement No. 2 to Business
  Combinations Accounted for by the Purchase Method&#148; (&#147;FIN 4&#148;).</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>b.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=1>The
  Company is devoting substantially all of its efforts towards conducting research
  and development of critical cell expansion services to cord blood banks. In
  the course of such activities, the Company and its subsidiary have sustained
  operating losses and expect such losses to continue in the foreseeable future.
  The Company and its subsidiary have not generated any revenues or product sales
  and have not achieved profitable operations or positive cash flows from operations.
  The Company's deficit accumulated during the development stage aggregated to
  $4,649,356 through June 30, 2005. There is no assurance that profitable operations,
  if ever achieved, could be sustained on a continuing basis.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  Company plans to continue to finance its operations with a combination of stock
  issuance and private placements and in the longer term, revenues from product
  sales. There are no assurances, however, that the Company will be successful
  in obtaining an adequate level of financing needed for the long-term development
  and commercialisation of its planned products.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>These
  conditions raise substantial doubt about the Company's ability to continue as
  a going concern. The consolidated financial statements do not include any adjustments
  relating to the recoverability and classification of recorded assets amounts
  or the amounts and classification of liabilities that might be necessary should
  the Company be unable to continue as a going concern.</font></p>
<br>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-41</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse;   '>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS</font></B></p></td>
  </tr>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars</font></b></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><B><font SIZE=1>NOTE
  2:-SIGNIFICANT ACCOUNTING POLICIES</font></B><u><b><font size=1> </font></b></u><font size=1>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  consolidated financial statements have been prepared in accordance with United
  States generally accepted accounting principles (&#147;U.S. GAAP&#148;).</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font size=1>a.
  Use of estimates</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  preparation of financial statements in conformity with generally accepted accounting
  principles requires management to make estimates and assumptions that affect
  the amounts reported in the financial statements and accompanying notes. Actual
  results could differ from those estimates.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font size=1>b.
  Functional currency of the subsidiary</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>It
  is anticipated that the majority of the subsidiary's revenues will be generated
  outside Israel and will be determined in U.S. Dollars (&#147;dollars&#148;).
  In addition, most of the financing of the subsidiary's operations has been made
  in dollars. The subsidiary's management believes that the currency of the primary
  economic environment in which its operations are conducted is the dollar. Thus,
  the functional and reporting currency of the subsidiary is the dollar. Accordingly,
  monetary accounts maintained in currencies other than the dollar are remeasured
  into dollars in accordance with Statement of Financial Accounting Standards
  No. 52 &#147;Foreign Currency Translation&#148; (&#147;SFAS&#148; No. 52). All
  transaction gains and losses from the remeasurement of monetary balance sheet
  items are reflected in the statement of operations as financial income or expenses,
  as appropriate.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font size=1>c.
  Principles of consolidation</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  consolidated financial statements include the accounts of the Company and its
  wholly owned subsidiary. Intercompany transactions and balances have been eliminated
  upon consolidation.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font size=1>d.
  Cash equivalents </font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>Cash
  equivalents are short-term highly liquid investments that are readily convertible
  to cash with maturities of three months or less at the date acquired.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font size=1>e.
  Long-term restricted lease deposit</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>Long-term
  restricted lease deposit with maturities of more than one year used to secure
  lease agreement is presented at cost. The deposit is in dollars and bears an
  average annual interest of approximately 2%. </font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font size=1>f.
  Property and Equipment</font></b><u><b><font size=1> </font></b></u><font size=1>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>Property
  and equipment are stated at cost, net of accumulated depreciation. Depreciation
  is calculated by the straight-line method over the estimated useful lives of
  the assets, at the following annual rates: </font></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
  <tr>
    <td width="243" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="51" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=2>%</font></b></u><u></u></p></td>
  </tr>
  <tr>
    <td width="243" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="51" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="243" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Laboratory
        equipment</font></p></td>
    <td width="51" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>10</font></p></td>
  </tr>
  <tr>
    <td width="243" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Computers
        and peripheral equipment</font></p></td>
    <td width="51" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>33</font></p></td>
  </tr>
  <tr>
    <td width="243" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Office
        furniture and equipment</font></p></td>
    <td width="51" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>6-15</font></p></td>
  </tr>
  <tr>
    <td width="243" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="51" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><b><font size=1>g.
  Impairment of long-lived assets</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  Company's long-lived assets and identifiable intangibles are reviewed for impairment
  in accordance with Statement of Financial Accounting Standard No. 144 &#147;Accounting
  for the Impairment or Disposal of Long-Lived Assets&#148; (&#147;SFAS No. 144&#148;)
  whenever events or changes in circumstances indicate that the carrying amount
  of an asset may not be recoverable. Recoverability of assets to be held and
  used is measured by a comparison of the carrying amount of the assets to the
  future undiscounted cash flows expected to be generated by the assets. If such
  assets are considered to be impaired, the impairment to be recognized is measured
  by the amount by which the carrying amount of the assets exceeds the fair value
  of the assets. As of June 30, 2004, due to the on-going losses and negative
  cash flows, the Company recognized an impairment of its know-how in the amount
  of $264,807.</font><br>
</p>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-42</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'> <B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse;   '>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS</font></B></p></td>
  </tr>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars</font></b></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=1>&nbsp;</font><b><font size=1>NOTE
  2:-SIGNIFICANT ACCOUNTING POLICIES (continued)</font></b></p>
<p style=' margin-bottom:0pt; margin-top:18pt; margin-left:0.5in; text-indent:-0.5in;text-align:left;line-height: 150%;'><b><font size=1>h.</font></b><font size=1>
  </font><b><font size=1>Non-royalty-bearing grants</font></b></p>
<p style=' margin-bottom:0pt; margin-top:6pt;text-align:left;'><font size=1>The
  Company receives non-royalty-bearing grants from the European Union Research
  and Development Program, and from the MOST and STRIMM consortiums, which are
  part of the Office of the Chief Scientist Magnet program. These grants are recognized
  at the time the Company is entitled to such grants on the basis of the costs
  incurred and are recorded as a reduction of research and development costs.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font size=1>i.
  Accounting for stock-based compensation:</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  Company's Board of Directors has adopted an Employee Stock Option Plan. (See
  Note 7l). The Company has elected to follow Accounting Principles Board Statement
  No. 25 &#147;Accounting for Stock Option Issued to Employees&#148; (&#147;APB
  No. 25&#148;) and Financial Accounting Standards Board Interpretation No. 44
  &#147;Accounting for Certain Transactions Involving Stock Compensation&#148;
  (&#147;FIN No. 44&#148;) in accounting for its employee stock option plan. Under
  APB 25, when the exercise price of an employee stock option is equivalent to
  or is above the market price of the underlying stock on the date of grant, no
  compensation expense is recognized.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  Company adopted the disclosure provisions of Statement of Financial Accounting
  Standard No. 148, &#147;Accounting for Stock-Based Compensation - transition
  and disclosure&#148; (&#147;SFAS No. 148&#148;), which amended certain provisions
  of Statement of Financial Accounting Standard No. 123 &#147;Accounting for Stock-Based
  Compensation&#148; (&#147;SFAS No. 123&#148;). The Company continues to apply
  the provisions of APB No. 25, in accounting for stock-based compensation.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>Pro
  forma information regarding the Company's net loss and net loss per share is
  required by SFAS No. 123 and has been determined as if the Company had accounted
  for its employee stock options under the fair value method presented by SFAS
  No. 123.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  fair value for options granted in the year ended June 30, 2005 and 2004 is amortized
  over their vesting period of two years and was estimated at the date of grant
  using a Black-Scholes options pricing model with the following weighted average
  assumptions:</font></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
  <tr>
    <td width="347" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="29" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="83" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><font size=2>2005</font></u><u></u></p></td>
    <td width="83" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><font size=2>2004</font></u><u></u></p></td>
  </tr>
  <tr>
    <td width="347" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Expected
        dividend yield</font></p></td>
    <td width="29" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="83" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>0%</font></p></td>
    <td width="83" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>0%</font></p></td>
  </tr>
  <tr>
    <td width="347" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Expected
        volatility</font></p></td>
    <td width="29" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="83" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>102%</font></p></td>
    <td width="83" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>92%</font></p></td>
  </tr>
  <tr>
    <td width="347" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Risk-free
        interest rate</font></p></td>
    <td width="29" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="83" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>4.2%</font></p></td>
    <td width="83" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>4.2%</font></p></td>
  </tr>
  <tr>
    <td width="347" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>Expected
        life of up to</font></p></td>
    <td width="29" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="83" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>8-10
        years</font></p></td>
    <td width="83" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>10
        years</font></p></td>
  </tr>
</table>
<br>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-43</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse;   '>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS</font></B></p></td>
  </tr>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars</font></b></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><b><font size=1>NOTE
  2:-SIGNIFICANT ACCOUNTING POLICIES (continued)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=1>Pro
  forma information under SFAS No. 123, is as follows:</font></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
  <tr>
    <td width="187" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="36" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td  colspan="3" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>Year
        ended</font></b><br>
        <b><font size=2>June 30,</font></b></p></td>
    <td width="6" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="120" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>Period
        from May 11, 2001</font></b><br>
        <b><font size=2> (inception through</font></b><br>
        <b><font size=2>June 30)</font></b></p></td>
  </tr>
  <tr>
    <td width="187" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="36" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="96" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="96" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="6" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="120" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="187" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="36" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=2>2005</font></b></u><u></u></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=2>2004</font></b></u><u></u></p></td>
    <td width="6" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="120" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=2>2005</font></b></u><u></u></p></td>
  </tr>
  <tr>
    <td width="187" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="36" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="96" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="96" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="6" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="120" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="187" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Net
        loss available to Common stock- as reported</font></p></td>
    <td width="36" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>$2,098,108</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=2>$2,010,350</font></p></td>
    <td width="6" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="120" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=2>$4,649,356</font></p></td>
  </tr>
  <tr>
    <td width="187" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Deduct
        - stock based employee compensation - intrinsic value</font></p></td>
    <td width="36" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;-</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>-</font></p></td>
    <td width="6" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="120" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>-</font></p></td>
  </tr>
  <tr style='height:.1in'>
    <td width="187" valign=top style='padding:0in .75pt 0in .75pt; height:.1in'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="36" valign=top style='padding:0in .75pt 0in .75pt; height:.1in'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="96" valign=top style='padding:0in .75pt 0in .75pt; height:.1in'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt; height:.1in'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="96" valign=bottom style='padding:0in .75pt 0in .75pt; height:.1in'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="6" valign=top style='padding:0in .75pt 0in .75pt; height:.1in'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="120" valign=bottom style='padding:0in .75pt 0in .75pt; height:.1in'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="187" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="36" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="96" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="96" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="6" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="120" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="187" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Add
        - stock-based employee</font><br>
        <font size=2>compensation - fair value</font></p></td>
    <td width="36" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=bottom style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>558,628</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=bottom style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>109,885</font></p></td>
    <td width="6" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="120" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>668,513</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="187" style='padding:0in .75pt 0in .75pt;height:5.65pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="36" style='padding:0in .75pt 0in .75pt;height:5.65pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="96" style=' padding:0in .75pt 0in .75pt;height:5.65pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="12" style='padding:0in .75pt 0in .75pt;height:5.65pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="96" valign=bottom style='padding:0in .75pt 0in .75pt;height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="6" style='padding:0in .75pt 0in .75pt;height:5.65pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="120" valign=bottom style='padding:0in .75pt 0in .75pt;height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="187" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'><font size=2>Pro
        forma net loss</font></p></td>
    <td width="36" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=bottom style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>$2,656,736</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=bottom style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>$2,120,235</font></p></td>
    <td width="6" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="120" valign=bottom style='border-bottom: double black 2.25pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>$5,317,869</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="187" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="36" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=top style='padding:0in .75pt 0in .75pt;height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=bottom style='padding:0in .75pt 0in .75pt;height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="6" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="120" valign=bottom style='padding:0in .75pt 0in .75pt;height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="187" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Earning
        per share:</font></p></td>
    <td width="36" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="6" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="120" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="187" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Basic
        and diluted net loss per share </font><br>
        <font size=2>as reported</font></p></td>
    <td width="36" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>$(0.05)</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=2>$ (0.083)</font></p></td>
    <td width="6" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="120" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr style='height:5.65pt'>
    <td width="187" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="36" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=bottom style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="6" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="120" valign=top style='padding:0in .75pt 0in .75pt; height:5.65pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="187" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Pro
        forma basic and diluted net loss </font><br>
        <font size=2>per share</font></p></td>
    <td width="36" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>$(0.065)</font></p></td>
    <td width="12" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="96" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=2>$ (0.087)</font></p></td>
    <td width="6" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p></td>
    <td width="120" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  Company applies SFAS No. 123 and Emerging Issues Task Force No. 96-18 &#147;Accounting
  for Equity Instruments that are Issued to other than Employees for Acquiring,
  or in conjunction with selling, goods or services&#148; (&#147;EIFT 96-18&#148;),
  with respect to options and warrants issued to non-employees. SFAS No. 123 requires
  the use of option valuation models to measure the fair value of the options
  and warrants at the date of grant.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font size=1>j.
  Research and Development costs</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=1>Research
  and development costs, net of grants, are charged to the statement of operations
  as incurred.</font><br>
</p>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-44</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse;   '>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS</font></B></p></td>
  </tr>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars</font></b></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><b><font size=1>NOTE
  2:-SIGNIFICANT ACCOUNTING POLICIES (continued)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font size=1>k.
  Basic and diluted net loss per share</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>Basic
  net loss per share is computed based on the weighted average number of shares
  of common stock outstanding during each year. Diluted net loss per share is
  computed based on the weighted average number of shares of Common stock outstanding
  during each year, plus dilutive potential shares of common stock and warrants
  considered outstanding during the year, in accordance with Statement of Financial
  Accounting Standard No. 128, &#147;Earnings Per Share.&#148; (&#147;SFAS No.
  128&#148;)</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>All
  outstanding stock options and warrants have been excluded from the calculation
  of the diluted net loss per common share because all such securities are anti-dilutive
  for all periods presented. The total weighted average number of shares related
  to the outstanding options and warrants excluded from the calculations of diluted
  net loss per share was 4,548,024 and 21,290,534 for the years ended June 30,
  2004 and 2005. </font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font size=1>l.
  Income taxes</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  Company and its subsidiary accounts for income taxes in accordance with Statement
  of Financial Accounting Standards No. 109, &#147;Accounting for Income Taxes&#148;
  (&#147;SFAS No. 109&#148;). This Statement prescribes the use of the liability
  method, whereby deferred tax assets and liability account balances are determined
  based on differences between financial reporting and tax bases of assets and
  liabilities and are measured using the enacted tax rates and laws that will
  be in effect when the differences are expected to reverse. The Company and its
  subsidiary provide a valuation allowance, if necessary, to reduce deferred tax
  assets to their estimated realizable value.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font size=1>m.
  Concentration of credit risk</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>Financial
  instruments that potentially subject the Company and its subsidiary to concentrations
  of credit risk consist principally of cash and cash equivalents, which are invested
  in major banks in Israel. Management believes that the financial institutions
  that hold the Company's investments are financially sound and accordingly, minimal
  credit risk exits with respect to these investments.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  Company has no off-balance-sheet concentration of credit risk such as foreign
  exchange contracts, option contracts or other foreign hedging arrangements.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><b><font size=1>n.
  Severance pay fund</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  subsidiary's liability for severance pay is calculated pursuant to Israeli severance
  pay law based on the most recent salary of the employees multiplied by the number
  of years of employment, as of the balance sheet date. Employees are entitled
  to one month's salary for each year of employment or a portion thereof. The
  Company's liability for all of its employees is fully provided by monthly deposits
  with insurance policies and by an accrual. The value of these policies is recorded
  as an asset in the Company's balance sheet.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  deposited funds include profits accumulated up to the balance sheet date. The
  deposited funds may be withdrawn only upon the fulfillment of the obligation
  pursuant to Israeli severance pay law or labor agreements. The value of the
  deposited funds is based on the cash surrendered value of these policies, and
  includes immaterial profits.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>Severance
  expenses for the year ended June 30, 2004 and 2005 amounted to approximately
  $36,000 and $19,257, respectively.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font size=1>o.
  Fair value of financial instruments</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>The
  carrying amounts of cash and cash equivalents, accounts receivable, short-term
  bank credit, trade payables and other accounts payable, approximate their fair
  value due to the short-term maturity of such instruments.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>Long-term
  know-how liability is estimated by the discounting the future cash flow using
  current interest rates for liabilities of similar terms and maturities. The
  carrying amount of the long-term liability approximates its fair value. Liability
  in respect of the warrants issued is presented at fair value estimated using
  the Black-Scholes option pricing model.</font></p>
<table border="0" cellspacing=0 cellpadding=0 width="108" style=' border-collapse:collapse'>
  <tr>
    <td width="108" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b><font size=1>p.
        Reclassification</font></b></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=1>Certain
  amounts from prior years have been reclassified to conform to current period
  presentation.</font><br>
</p>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-45</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse;   '>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS</font></B></p></td>
  </tr>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars</font></b></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><b><font size=1>NOTE
  2:-SIGNIFICANT ACCOUNTING POLICIES (continued)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><b><font size=1>q.
  Impact of recently issued accounting standards</font></b></p>
<p style=' margin-bottom:0pt; margin-top:6pt;text-align:left;'><font size=1>In
  May 2005, the FASB issued Statement of Financial Accounting Standard No. 154
  (&#147;FAS 154&#148;), &#147;Accounting Changes and Error Corrections&#148;-
  a replacement of APB No. 20, &#147;Accounting changes&#148; and FAS No. 3, &#147;Reporting
  Accounting Changes in Interim Financial Statements&#148;. FAS 154 provides guidance
  on the accounting for and reporting of accounting changes and error corrections.
  APB Opinion 20 previously required that most voluntary changes in accounting
  principle be recognized by including in the net income of the period of the
  change the cumulative effect of changing to the new accounting principle. FAS154
  require retrospective application to prior periods' financial statements of
  a voluntary change in accounting principle unless it is impracticable. FAS 154
  is effective for accounting changes and corrections of errors made in fiscal
  years beginning after December 15, 2005. The Company estimates that the adoption
  of FAS 154 will not have a significant impact on its results of operations,
  financial condition and liquidity.</font></p>
<p style=' margin-bottom:0pt; margin-top:6pt;text-align:left;'><font size=1>On
  December 16, 2004, the Financial Accounting Standards Board (FASB) issued FASB
  Statement No. 123 (revised 2004) &#147;Share-Based Payment&#148; (&#147;123
  (R)&#148;), which is a revision of FASB Statement No. 123, &#147;Accounting
  For Stock- Based Compensation&#148;. Statement 123(R) supersedes APB Opinion
  No. 25, &#147;Accounting For Stock Issued To Employees&#148;, and amends FASB
  Statements No.95, &#147;Statement of cash flows&#148;. Generally the approach
  in FASB statement 123 (R) is similar to the approach describe in statement 123.
  However, Statement 123 (R) requires all share-based payments to employees, including
  grant of employees stock options, to be recognized in the income statements
  based on their fair value .Pro forma discloser is no longer an alternative.
  &nbsp;Statement 123 (R) must be adopted no later than period beginning after
  December 15, 2005. Early adoption will be permitted in periods in which financial
  statements have not yet been issued. The Company expects to adopt statement
  123 (R) on January 1, 2006. </font></p>
<p style=' margin-bottom:0pt; margin-top:6pt;text-align:left;'><font size=1>Statement
  123(R), permits public companies to adopt its requirements using one of two
  methods:</font></p>
<table border="0" cellspacing=0 cellpadding=0 width="624" style=' border-collapse:collapse'>
  <tr>
    <td width="24" valign=top style='padding:12.0pt 0in 0in 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:12.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" valign=top style='padding:12.0pt 0in 0in 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=4><b>&#149;</b></font></p></td>
    <td width="576" valign=top style='padding:12.0pt 0in 0in 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>A
        &#147;Modified prospective&#148; method in which compensation cost is
        recognized beginning with the effective date (a) based on the requirements
        of statement 123 (R) for all share-based payments granted after the effective
        date and (b) based on the requirements of statements 123 for all awards
        granted to employees prior to the effective date of statements 123 (R)
        that remains unvested on the effective date. </font></p></td>
  </tr>
</table>
<table border="0" cellspacing=0 cellpadding=0 width="624" style=' border-collapse:collapse'>
  <tr>
    <td width="24" valign=top style='padding:12.0pt 0in 0in 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:12.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" valign=top style='padding:12.0pt 0in 0in 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=4><b>&#149;</b></font></p></td>
    <td width="576" valign=top style='padding:12.0pt 0in 0in 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>A
        &#147;Modified retrospective&#148; &nbsp;method which includes the requirements
        of the modified prospective method describe above but also permits entities
        to restate, based on the amounts previously recognized under statements
        123 for purpose of Pro forma disclosure, all periods presented. </font></p></td>
  </tr>
</table>
<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><font size=1>The
  Company plans to adopt statement No. 123 (R) using the modified prospective
  method.</font></p>
<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><font size=1>The
  Company is unable to estimate the future impact that Statement 123R will have
  on its financial position, results of operations or cash flows due to unknown
  events, such as the type and number of share-based payments that will be granted,
  their terms, and their vesting periods. </font></p>
<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><font size=1>In
  March&nbsp;2005, the SEC released SEC Staff Accounting Bulletin No.&nbsp;107,
  &#147;Share-Based Payment&#148; (&#147;SAB 107&#148;). SAB 107 provides the
  SEC staff&#146;s position regarding the application of Statement 123R, which
  contains interpretive guidance related to the interaction between Statement
  123R and certain SEC rules and regulations, and also provides the staff&#146;s
  views regarding the valuation of share-based payment arrangements for public
  companies. SAB 107 highlights the importance of disclosures made related to
  the accounting for share-based payment transactions.</font><br>
</p>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-46</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse;   '>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS</font></B></p></td>
  </tr>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars</font></b></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=1>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><B><font SIZE=1>NOTE
  3:-CASH AND CASH EQUIVALENTS </font></B></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
  <tr>
    <td width="144" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="148" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>Annual</font></b></p></td>
    <td  colspan="3" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>June
        30,</font></b></p></td>
  </tr>
  <tr>
    <td width="144" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="148" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Interest</font></b></p></td>
    <td width="120" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="106" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="144" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="148" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=2>%</font></b></u><u></u></p></td>
    <td width="120" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>2005</font></b></p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="106" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>2004</font></b></p></td>
  </tr>
  <tr>
    <td width="144" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="148" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="120" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="106" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="144" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>In
        dollars</font></p></td>
    <td width="148" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>2%</font></p></td>
    <td width="120" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$1,858,298</font></p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="106" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$
        647,425</font></p></td>
  </tr>
  <tr>
    <td width="144" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>In
        New Israeli Shekels (NIS)</font></p></td>
    <td width="148" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>-</font></p></td>
    <td width="120" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>31,140</font></p></td>
    <td width="18" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="106" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>21,442</font></p></td>
  </tr>
  <tr>
    <td width="144" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="148" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="120" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="106" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="144" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="148" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="120" valign=top style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$1,889,438</font></p></td>
    <td width="18" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="106" valign=top style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$
        668,867</font></p></td>
  </tr>
  <tr>
    <td width="144" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="148" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="120" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="18" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="106" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=1>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><B><font SIZE=1>NOTE
  4:-PROPERTY AND EQUIPMENT, NET</font></B></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
  <tr>
    <td width="228" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td  colspan="3" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>June
        30,</font></b></p></td>
  </tr>
  <tr>
    <td width="228" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="91" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="13" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="228" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="91" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=2>2005</font></b></u><u></u></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><u><b><font size=2>2004</font></b></u><u></u></p></td>
  </tr>
  <tr>
    <td width="228" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="91" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="13" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="228" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>Cost:</font></b></p></td>
    <td width="91" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="228" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Laboratory
        equipment</font></p></td>
    <td width="91" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>$262,934</font></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>$231,364</font></p></td>
  </tr>
  <tr>
    <td width="228" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Computers
        and peripheral equipment</font></p></td>
    <td width="91" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>34,467</font></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>18,044</font></p></td>
  </tr>
  <tr>
    <td width="228" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Office
        furniture and equipment</font></p></td>
    <td width="91" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>7,869</font></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>6,249</font></p></td>
  </tr>
  <tr>
    <td width="228" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="91" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="13" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="228" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="91" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>305,270</font></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>255,657</font></p></td>
  </tr>
  <tr>
    <td width="228" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="91" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="13" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="228" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>Accumulated
        depreciation:</font></b></p></td>
    <td width="91" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="228" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Laboratory
        equipment</font></p></td>
    <td width="91" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>44,857</font></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>22,482</font></p></td>
  </tr>
  <tr>
    <td width="228" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Computers
        and peripheral equipment</font></p></td>
    <td width="91" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>10,586</font></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>6,038</font></p></td>
  </tr>
  <tr>
    <td width="228" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Office
        furniture and equipment</font></p></td>
    <td width="91" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>737</font></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>688</font></p></td>
  </tr>
  <tr>
    <td width="228" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="91" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="13" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="228" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="91" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>56,180</font></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>29,208</font></p></td>
  </tr>
  <tr>
    <td width="228" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="91" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="13" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="228" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="91" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="228" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'><b><font size=2>Depreciated
        cost</font></b></p></td>
    <td width="91" valign=top style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>$249,090</font></p>
      </div></td>
    <td width="13" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" valign=top style='padding:0in .75pt 0in .75pt'> <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=2>$226,449</font></p>
      </div></td>
  </tr>
  <tr>
    <td width="228" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="91" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="13" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="101" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=2>Depreciation
  expenses amounted to $34,232 and, $22,163 for the years ended June 30, 2005
  and 2004, respectively.</font><br>
</p>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-47</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse;   '>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS</font></B></p></td>
  </tr>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars</font></b></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=1>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><B><font SIZE=1>NOTE
  5 - KNOW-HOW LICENSORS</font></B></p>
<table border="0" cellspacing=0 cellpadding=0 width="624" style=' border-collapse:collapse'>
  <tr>
    <td width="48" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>a.</font></b></p></td>
    <td width="576" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>On
        May 1, 2003, the Company entered into a License Agreement with the Weizmann
        Institute of Science and Technion-Israel Institute of Technology and other
        individuals, including two stockholders of the Company (the &#147;Licensor&#148;)
        to acquire a license of stem cell expansion technology related to bone
        marrow transplants. The Company received an exclusive, worldwide license
        to use the technology over the life of the related patent. The patent
        is currently in the application stage. The license grants exclusivity
        over all products, uses and related intellectual property, and grants
        the Company the right to enter into sub-licenses. According to the License
        Agreement, the Company is committed to pay the Licensor the aggregate
        amount of $400,000 of which $181,250 has been paid as of the balance sheet
        date and the remainder is to be paid under the following terms:</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt; text-indent:0.5in;text-align:left;'><font size=1>1.An
  additional $18,750 - in the short term. </font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.5in;text-align:left;'><font size=1>2.The
  balance of $200,000 on the earlier of the date FDA approval is received for
  a product, or December 15, 2006.</font></p>
<table border="0" cellspacing=0 cellpadding=0 width="624" style=' border-collapse:collapse'>
  <tr>
    <td width="48" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>b.</font></b></p></td>
    <td width="576" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>A
        royalty of 5% of monthly gross sales and a 12.5% royalty on any other
        payments received by the Company for one time payments, such as distribution
        or sub-license rights, is payable to the Licensor. The Company may also
        elect to pay 25% of all payments received under sub-licenses, in lieu
        of the 5% royalty on sales and the 12.5% royalty on lump sum payments.</font></p></td>
  </tr>
</table>
<table border="0" cellspacing=0 cellpadding=0 width="624" style=' border-collapse:collapse'>
  <tr>
    <td width="48" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>c.</font></b></p></td>
    <td width="576" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>The
        Company is responsible for any costs incurred for the enforcement of the
        patent and related intellectual property.</font></p></td>
  </tr>
</table>
<table border="0" cellspacing=0 cellpadding=0 width="624" style=' border-collapse:collapse'>
  <tr>
    <td width="48" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>d.</font></b></p></td>
    <td width="576" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>The
        Licensor has the option to assign the patent to the Company in exchange
        for issuance by the Company of additional common shares to the Licensor.
        This option is only exercisable by the Licensor within 60 days of the
        date on which the aggregate market capitalization of the Company's share
        capital reaches $25 million or more. If the Licensor exercises this option,
        the Company will issue 5% of the Company's fully diluted and outstanding
        share capital on the date of exercise to the Licensor.</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.5in;text-align:left;'><font size=1>As
  of June 30, 2004 due to an ongoing losses and negative cash flows, the Company
  recognized an impairment of its know-how License in the amount of $264,807.
  Amortization expenses amounted to $69,080 in the year ended June 30, 2004.</font><br>
</p>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-48</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:center;'> </p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse;   '>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS</font></B></p></td>
  </tr>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars</font></b></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><b><font size=1>NOTE
  5 - KNOW-HOW LICENSORS (continued)</font></b></p>
<table border="0" cellspacing=0 cellpadding=0 width="480" style=' margin-left:0pt;border-collapse:collapse'>
  <tr >
    <td  width="0"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
    <td  colspan="2" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>f.</font></b></p></td>
    <td width="113" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>Know-how
        licensors</font></p></td>
    <td   colspan="5"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr >
    <td   colspan="2"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
    <td  colspan="3" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td  colspan="2" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><b><font size=2>June
        30,</font></b></p></td>
    <td   colspan="2"> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td>
  </tr>
  <tr>
    <td  colspan="6" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="88" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="62" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td  colspan="6" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="88" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>2005</font></b></p></td>
    <td width="24" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="62" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>2004</font></b></p></td>
  </tr>
  <tr>
    <td  colspan="6" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="88" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="62" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td  colspan="6" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Due
        in the short term</font></p></td>
    <td width="88" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>$18,750</font></p></td>
    <td width="24" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="62" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=2>$100,000</font></p></td>
  </tr>
  <tr>
    <td  colspan="6" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Due
        at December 15, 2006, without interest</font></p></td>
    <td width="88" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>200,000</font></p></td>
    <td width="24" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="62" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>200,000</font></p></td>
  </tr>
  <tr>
    <td  colspan="6" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Less:
        unamortized discount based on interest rate of 7%</font></p></td>
    <td width="88" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>(18,791)</font></p></td>
    <td width="24" valign=bottom style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="62" valign=bottom style='border-bottom: solid black .5pt;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>(31,123)</font></p></td>
  </tr>
  <tr>
    <td  colspan="6" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="88" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="62" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td  colspan="6" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="88" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>199,959</font></p></td>
    <td width="24" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="62" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>268,877</font></p></td>
  </tr>
  <tr>
    <td  colspan="6" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Less
        - current maturities</font></p></td>
    <td width="88" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>(18,750)</font></p></td>
    <td width="24" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="62" valign=top style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>(100,000)</font></p></td>
  </tr>
  <tr>
    <td  colspan="6" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="88" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="62" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td  colspan="6" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="88" valign=top style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>$
        181,209</font></p></td>
    <td width="24" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="62" valign=top style='border-bottom:double black 2.25pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1pt;margin-bottom:0pt'><font size=2>$
        168,877</font></p></td>
  </tr>
  <tr>
    <td  colspan="6" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="88" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="24" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="62" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="0" ></td>
    <td width="24" ></td>
    <td width="24" ></td>
    <td width="113" ></td>
    <td width="125" ></td>
    <td width="19" ></td>
    <td width="88" ></td>
    <td width="24" ></td>
    <td width="62" ></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:right;'><font size=1>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><B><font SIZE=1>NOTE
  6:-COMMITMENTS AND CONTINGENCIES </font></B></p>
<table border="0" cellspacing=0 cellpadding=0 width="624" style=' border-collapse:collapse'>
  <tr>
    <td width="48" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>a.</font></b></p></td>
    <td width="576" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>The
        subsidiary leases facilities under operating lease agreements, which expire
        on January 2006 . The average monthly payment is NIS 31,740 (approximately
        $7,300) and is linked to the Israeli Consumer Price Index (&#147;CPI&#148;).
        In order to secure these agreements, the subsidiary pledged a deposit
        with the bank in the amount of $25,000.</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.5in;text-align:left;'><font size=1>Lease
  expenses amounted $80,655 and $84,573 for the years ended June 30, 2004 and
  2005, respectively.</font></p>
<table border="0" cellspacing=0 cellpadding=0 width="624" style=' border-collapse:collapse'>
  <tr>
    <td width="48" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>b.</font></b></p></td>
    <td width="576" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>The
        subsidiary leases a car under operating lease agreement, which expire
        in May 2007. The average monthly payment is NIS 3,850 (approximately $880)
        and is linked to the CPI. In order to secure this agreement, the subsidiary
        pledged a deposit with the bank in the amount of $2,216.</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.5in;text-align:left;'><font size=1>Lease
  expenses amounted to, $750 and $15,042 for the years ended June 30, 2004 and
  2005, respectively.</font></p>
<table border="0" cellspacing=0 cellpadding=0 width="370" style=' border-collapse:collapse'>
  <tr>
    <td width="48" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>c.</font></b></p></td>
    <td width="322" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>As
        to commitments in respect of know-how acquired - see Note 5.</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><B><font SIZE=1>NOTE
  7:-SHARE CAPITAL</font></B></p>
<table border="0" cellspacing=0 cellpadding=0 width="628" style='border-collapse:collapse; margin-bottom: 0pt;'>
  <tr>
    <td width="16" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>a.</font></b></p></td>
    <td width="612" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>The
        Company's authorized common stock consists of 1,400,000,000 shares with
        a par value of $0.00001 per share. All shares have equal voting rights
        and are entitled to one non-cumulative vote per share in all matters to
        be voted upon by stockholders. The shares have no pre-emptive, subscription,
        conversion or redemption rights and may be issued only as fully paid and
        non-assessable shares. Holders of the common stock are entitled to equal
        ratable rights to dividends and distributions with respect to the common
        stock, as may be declared by the Board of Directors out of funds legally
        available. The common stocks are registered and publicly traded on the
        Over-the-Counter Bulletin Board service of the National Association of
        Securities Dealers, Inc. under the symbol PLRS.OB.</font></p></td>
  </tr>
</table>
<br>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-49</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse;   '>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS</font></B></p></td>
  </tr>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars</font></b></p></td>
  </tr>
</table>
<table border="0" cellspacing=0 cellpadding=0 width="628" style=' border-collapse:collapse'>
  <tr>
    <td width="16" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>b.</font></b></p></td>
    <td width="612" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>On
        July 9, 2001, the Company issued 35,000,000 shares of common stock in
        consideration of $2,500, which was received on July 27, 2001.</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.12in;text-align:left;'><font size=1>On
  October 14, 2002, the Company issued 14,133,000 shares of common stock at a
  price of $0.007 per common share in consideration of $100,950 before offering
  costs of $17,359.</font></p>
<table border="0" cellspacing=0 cellpadding=0 width="628" style=' border-collapse:collapse'>
  <tr>
    <td width="16" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>c.</font></b></p></td>
    <td width="612" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>On
        March 19, 2003, two directors each returned 13,650,000 shares of common
        stock with a par value of $0.01 per share, for cancellation for no consideration.</font></p></td>
  </tr>
</table>
<table border="0" cellspacing=0 cellpadding=0 width="628" style=' border-collapse:collapse'>
  <tr>
    <td width="16" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>d.</font></b></p></td>
    <td width="612" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>On
        March 27, 2003 the Company's Board of Directors authorized a 14:1 split
        of the common stock. Accordingly, all references to number of shares,
        common stock and per share data in the accompanying financial statements
        have been adjusted to reflect the stock split on a retroactive basis.</font></p></td>
  </tr>
</table>
<table border="0" cellspacing=0 cellpadding=0 width="628" style=' border-collapse:collapse'>
  <tr>
    <td width="16" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>e.</font></b></p></td>
    <td width="612" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>In
        July 2003, the Company issued an aggregate of 725,483 units comprised
        of 725,483 common stock and 1,450,966 warrants to a group of investors,
        for total consideration of $1,235,752 (net of issuance costs of $70,110),
        under a private placement. The consideration was paid partly in the year
        ended June 30, 2003 ($933,464) and the balance was paid in the year ended
        June 30, 2004. </font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.12in;text-align:left;'><font size=1>In
  this placement each unit was comprised of one common stock and two warrants,
  the first warrant is exercisable for one common stock at a price of $2.25 per
  stock, and may be exercised within one year. The second warrant is exercisable
  for one common stock at a price of $2.70 per stock, and may be exercised within
  five years. As of June 30, 2005, 725,483 warrants were expired unexercised.
  </font></p>
<table border="0" cellspacing=0 cellpadding=0 width="628" style=' border-collapse:collapse'>
  <tr>
    <td width="16" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>f.
        </font></b></p></td>
    <td width="612" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>On
        January 20, 2004, the Company consummated a private equity placement with
        a group of investors (the &#147;investors&#148;). The Company issued 3,000,000
        units in consideration for net proceeds of $1,272,790 (net of issuance
        costs of $227,210), each unit is comprised of 3,000,000 common stock and
        3,000,000 warrants. Each warrant is exercisable into one common stock
        at a price of $0.75 per stock, and may be exercised until January 31,
        2007. If the price of the common stock will be more than $1 within 10
        consecutive trading days, then the Company may, by notice to the warrants'
        holders, reduce the expiry date of 1,500,000 warrants to 60 days from
        the day of notice. In case the Company fails to register the above-mentioned
        shares and the related shares resulting from the exercise of the warrants,
        it will be subject to penalties as detailed in the private placement agreement.
        On March 18, 2004, a registration statement on Form SB-2 has been declared
        affective and the above-mentioned common stocks have been registered for
        trading. If the effectiveness of the Registration Statement is suspended
        subsequent to the effective date of registration (March 18, 2004), for
        more than certain permitted periods, as described in the private equity
        placement agreement, the Company shall pay penalties to the investors
        in respect of the liquidated damages.</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.12in;text-align:left;'><font size=1>According
  to EITF 00-19, &#147;Accounting for derivative financial instruments indexed
  to, and potentially settled in, a Company's own stock&#148;, the Company classified
  the warrants as liabilities according to their fair value as remeasured at each
  reporting period until exercised or expired. Changes in the fair value of the
  warrants will be reported in the statements of operations as financial income
  or expense. </font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.12in;text-align:left;'><font size=1>As
  of June 20, 2004, the Company allocated the gross amount received of $1.5 million
  to the par value of the shares issued ($30) and to the liability in respect
  of the warrants issued ($1,499,970). The amount allocated to the liability was
  less than the fair value of the warrants at grant date. As of June 30, 2005,
  the fair value of the liability in respect for the warrants issued was $150,000.
  The fair value as of June 30, 2005 was estimated using the Black-Scholes option
  pricing model with the following weighted average assumptions: risk-free interest
  rate of 3.75%, expected dividend yield of 0%, expected volatility of 107%, and
  expected life of 1.58 years.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.12in;text-align:left;'><font size=1>The
  change in the carrying amount of the liability in respect of the warrants in
  the amount of $1,079,970 and $270,000, for the years ended June 30, 2004 and
  June 30, 2005, respectively, was recognized in the statements of operations
  as financial income.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.12in;text-align:left;'><font size=1>The
  Company is obligated to adjust the exercise price of the above mentioned warrants
  and to issue the investors additional shares if the Company enters into certain
  transactions, such as sale of its common stock to a third party on any date
  which is earlier than 180 days after the effective date of registration.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.12in;text-align:left;'><font size=1>In
  addition, the Company issued 300,000 warrants to finders in connection with
  this private placement, exercisable into 300,000 common shares at a price of
  $0.75 per common share until January 31, 2007. The fair value of the warrants
  issued in the amounts of $192,000 was recorded as deferred issuance costs and
  is amortized over a period of 3 years. On April 19, 2004, the finders exercised
  the warrants. </font><br>
</p>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-50</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.12in;text-align:left;'>
</p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse;   '>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS</font></B></p></td>
  </tr>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars</font></b></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font size=1>NOTE
  7:-SHARE CAPITAL (continued)</font></b></p>
<table border="0" cellspacing=0 cellpadding=0 width="632" style=' border-collapse:collapse'>
  <tr>
    <td width="40" valign=top style='padding:6.0pt 0in 0in 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>g.</font></b></p></td>
    <td width="592" valign=top style='padding:6.0pt 0in 0in 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>In
        October 2004 the Company commenced a private placement offering (&#147;the
        October 2004 Agreement&#148;) accordingly to which it issued 8,500,000
        units. Each unit is compromised of one common stock and one warrant. The
        warrant is exercisable for one common stock at an exercise price of $0.30
        per stock, subject to certain adjustments, and may be exercised until
        November 30, 2006. The units were issued as follows: </font></p></td>
  </tr>
</table>
<p style=' margin-bottom:0pt; margin-top:6pt; margin-left:0.33in;text-align:left;'><font size=1>In
  November 2004, the Company issued according to the October 2004 Agreement 3,250,000
  units comprised of 3,250,000 common stock and 3,250,000 warrants to a group
  of investors, for total consideration of $296,092 (net of cash issuance costs
  of $28,908), and additional 120,000 warrants to finders as finders&#146; fee.</font></p>
<p style=' margin-bottom:0pt; margin-top:6pt; margin-left:0.33in;text-align:left;'><font size=1>In
  January 2005 the Company issued according to the October 2004 Agreement an additional
  4,300,000 units for total consideration of $425,025 (net of cash issuance costs
  of $4,975), and additional 90,000 warrants were issued to finders as finders&#146;
  fee. </font></p>
<p style=' margin-bottom:0pt; margin-top:6pt; margin-left:0.33in;text-align:left;'><font size=1>In
  March 2005 the Company issued according to the October 2004 Agreement an additional
  750,000 units for total consideration of $68,962 (net of cash issuance costs
  of $6,038), and additional 35,000 warrants were issued to finders as finders&#146;
  fee. </font></p>
<p style=' margin-bottom:0pt; margin-top:6pt; margin-left:0.33in;text-align:left;'><font size=1>In
  March 2005 the Company issued, according to the October 2004 Agreement 200,000
  common shares and 200,000 share purchase warrants to one Investor for total
  consideration of $20,000 which were paid to the Company in May 2005.</font></p>
<table border="0" cellspacing=0 cellpadding=0 width="632" style=' border-collapse:collapse'>
  <tr>
    <td width="40" valign=top style='padding:6.0pt 0in 0in 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>h.</font></b></p></td>
    <td width="592" valign=top style='padding:6.0pt 0in 0in 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>On
        January 24, 2005 the Company commenced a private placement offering (the
        &#147;January 24, 2005 Agreement&#148;) which was closed on March 3, 2005
        and issued 12,000,000 units in consideration for $1,176,000 (net of cash
        issuance costs of $24,000). Each unit is compromised of one common stock
        and one warrant. The warrant is exercisable for one common stock at a
        price of $0.30 per stock and may be exercised until November 30, 2006.
        Under this agreement the Company issued to finders 1,845,000 shares and
        475,000 warrants with exercise price of $2.5 per stock exercisable until
        November 2007.</font></p></td>
  </tr>
</table>
<table border="0" cellspacing=0 cellpadding=0 width="632" style=' border-collapse:collapse'>
  <tr>
    <td width="40" valign=top style='padding:6.0pt 0in 0in 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>i.</font></b></p></td>
    <td width="592" valign=top style='padding:6.0pt 0in 0in 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>On
        January 31, 2005, the Company consummated a private equity placement offering
        (the &#147;January 31, 2005 Agreement&#148;) with a group of investors
        (the &#147;Investors&#148;) according to which it issued 12,000,000 units
        in consideration for net proceeds of $1,137,000 (net of issuance costs
        of $63,000). Each unit is comprised of one common stock and one warrant.
        Each warrant is exercisable into one common stock at a price of $0.30
        per stock, and may be exercised until November 30, 2006. If the Registration
        Statement covering the Registrable Securities was not filed as contemplated
        by 70 days and if the Registration Statement covering the Registrable
        Securities was not effective until August 31, 2005, The Company would
        have paid the Investor 2% of the purchase price for each 30 day period
        beyond the applicable date until the filing or the registration is completed.
        The January 31, 2005 Agreement includes a finder&#146;s fee of a cash
        amount equal to 5% of the amount invested ($60,000) and issuance of warrants
        for number of shares equal to 5% of the number of shares that were issued
        (600,000) with an exercise price of $0.1 per stock, subject to certain
        adjustments, exercisable until November 30, 2006.</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.33in;text-align:left;'><font size=1>According
  to EITF 00-19, &#147;Accounting for derivative financial instruments indexed
  to, and potentially settled in, a Company's own stock&#148;, the Company classified
  the warrants as liabilities according to their fair value as determined at each
  reporting period until exercised, expired or registered. Changes in the fair
  value of the warrants are reported in the statements of operations as financial
  income or expense. </font></p>
<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.33in;text-align:left;'><font size=1>As
  of the date of the issuance the Company allocated the gross amount received
  of $1.2 million to the par value of the shares issued ($120) and to the liability
  in respect of the warrants issued ($1,199,880). Issuance expenses in the amount
  of $63,000 and finders fee in the amount of $144,000 were recorded as deferred
  issuance costs. The amount allocated to the liability was less than the fair
  value of the warrants at grant date. On May 13, 2005 the Registration Statement
  became effective and the Company became no longer under possible penalties.
  As such, the liability and the deferred issuance costs related to the agreement
  has been classified to the Stockholders Equity as Additional Paid in Capital.
  As of May 13, 2005, the fair value of the liability in respect of the warrants
  issued was $720,000 and the amount of the deferred issuance costs was $178,116.
  The change in the carrying amount of the liability in respect of the warrants,
  recoded as income, in the year ended June 30, 2005 amounted to $479,880. </font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.33in;text-align:left;'><font size=1>The
  fair value as of May 13, 2005 was estimated using the Black-Scholes option pricing
  model with the following weighted average assumptions: risk-free interest rate
  of 3.75%, expected dividend yield of 0%, expected volatility of 104%, and expected
  life of 1.54 years.</font></p>
<br>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-51</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse;   '>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS</font></B></p></td>
  </tr>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars</font></b></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font size=1>NOTE
  7:-SHARE CAPITAL (continued)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.33in;text-align:justify;'><font size=1>&nbsp;</font></p>
<table border="0" cellspacing=0 cellpadding=0 width="624" style=' border-collapse:collapse'>
  <tr>
    <td width="32" valign=top > <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>j.</font></b></p></td>
    <td width="592" valign=top > <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>On
        March 23, 2005, the Company issued 2,400,000 shares of common stock and
        2,400,000 common stock purchase warrants as a bonus to the chief executive
        officer, Dr. Shai Meretzki, in connection with the issuance of a Notice
        of Allowance by the United States Patent Office for patent application
        number 09/890,401. Each warrant is exercisable until November 30, 2006
        into one common share at a price of $0.30 per share. Salary expenses of
        $696,000 were recognized during the nine month period ended March 31,
        2005 in respect of this bonus based on the quoted market price of the
        Company's stock.</font></p></td>
  </tr>
</table>
<table border="0" cellspacing=0 cellpadding=0 width="624" style=' border-collapse:collapse'>
  <tr>
    <td width="32" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>k.</font></b></p></td>
    <td width="592" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>Following
        the Board resolutions and authorizations from January 28, 2004, the Company
        issued on February 11, 2004, an aggregate amount of 1,000,000 common stock
        to a number of consultants and service providers as compensation for carrying
        out investor relations activities during the year 2004.</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.33in;text-align:left;'><font size=1>Total
  compensation, measured as the grant date fair market value of the stock, amounted
  to $800,000 and was recorded as an operating expense in the statement of operations
  in the year ended June 30, 2004. </font></p>
<table border="0" cellspacing=0 cellpadding=0 width="624" style=' border-collapse:collapse'>
  <tr>
    <td width="30" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=1>l.</font></b></p></td>
    <td width="594" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>Stock
        Option Plan (&#147;ESOP&#148;)</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.33in;text-align:left;'><font size=1>Under
  the Company's 2003 Stock Option Plan (the &#147;Plan&#148;), options may be
  granted to officers, directors, employees and consultants of the Company or
  its subsidiary.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.33in;text-align:left;'><font size=1>Pursuant
  to the Plan, the Company reserved for issuance 4,100,000 of its common stock.
  As of June 30 2005, 604,704 common stock of the Company are still available
  for future grant under the terms of the Plan.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.33in;text-align:left;'><font size=1>Each
  option granted under the Plan is exercisable through the expiration date of
  the Plan which is December 2013 unless stated otherwise. The exercise price
  of the options granted under the plan may not be less than the nominal value
  of the stock into which such options are exercised. The options vest primarily
  over two years. Any option, which are canceled or forfeited before expiration,
  become available for future grants.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.33in;text-align:left;'><u><font size=1>Options
  to employees</font></u><font size=1>:</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.33in;text-align:left;'><font size=1>On
  December 2003, the Company granted 2,976,591 options to employees and directors
  at an exercise price of $0.76. All options were granted with an exercise price
  that exceeded the quoted market price of the Company's stock on the date of
  grant. Fair value (determined using the Black-Scholes valuation model) of options
  granted was $0.29 at date of grant. During the period ended June 30, 2004, 156,734
  options to employees were forfeited. </font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.33in;text-align:left;'><font size=1>During
  the year ended June 30, 2005, 451,170 options with an exercise price of $0.3
  per share were granted to the Company&#146;s Chief Financial Officer. On February
  15, 2005 the Company issued 50,000 shares and 70,495 options to former director
  and Chief Executive Officer of the Company. The exercise price of the options
  is $0.3 per share and they are fully vested and exercisable till February 15,
  2008. Compensation expenses of $14,500 were recognized during the period ended
  June 30, 2005 in accordance with APB 25.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.33in;text-align:left;'><font size=1>During
  the year ended June 30, 2005, 15,415 options to employees were forfeited. As
  of June 30, 2005, 3,122,140 options to employees are exercisable. </font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.33in;text-align:left;'><font size=1>On
  October 17, 2004 the Board of Directors decided to reduce the exercise price
  of the options that were granted to the Company&#146;s employees and directors
  from $0.76 to $0.3. According to APB Opinion No. 25 and FIN 44 when the exercise
  price of a fixed stock option award is reduced, the award shall be accounted
  for as a variable plan from the date of modification to the date the award is
  exercised, forfeited, or expires unexercised. The reduction of the exercise
  price did not result in compensation expenses in the reported period.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; text-indent:0.36in;text-align:left;'><u><font size=1>Options
  to consultants</font></u><font size=1>:</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.36in;text-align:left;'><font size=1>In
  the framework of the stock option plan, the Company issues warrants to consultants,
  for carrying out investor relation's activities over a period of two years.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.33in;text-align:justify;'><font size=1>On
  December 2003, the Company granted 669,189 options to consultants at an at a
  weighted average exercise price of $0.92.</font><br>
</p>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-52</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse;   '>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS</font></B></p></td>
  </tr>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars</font></b></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font size=1>NOTE
  7:-SHARE CAPITAL (continued)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.5in;text-align:justify;'><font size=1>In
  July 2004, the Company's board of directors approved to modify the terms of
  500,000 options granted to a consultant on December 2003 (of which 250,000 are
  with an exercise price of $1 and 250,000 with an exercise price of $1.25) to
  provide for a cashless exercise of the options. The board of directors also
  resolved that the options' exercise price will be reduced to $0.4 and that the
  options will be fully vested and cashless exercise feature. In addition, it
  was resolved to grant the consultant additional 500,000 options with an exercise
  price of $0.4, vested immediately and with a cashless exercise feature. The
  additional 500,000 options were granted outside of the terms of the options
  plan. In June 2005 the consultant agreed to cancel the 1,000,000 options and
  to be granted 600,000 shares of the Company&#146;s common stock that he got
  as a finder&#146;s fee for the last investment in the Company. Since the fair
  value of the options that were canceled and the shares that were issued were
  equal, no additional compensation expenses were recorded.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.5in;text-align:justify;'><font size=1>As
  of June 30, 2005, 169,189 options to consultants are exercisable.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt; margin-left:0.5in;text-align:justify;'><font size=1>The
  Company accounted for its options to consultants under the fair value method
  in accordance of SFAS 123 and EITF 96-18. The fair value for these warrants
  was estimated using Black-Scholes option-pricing model with the following weighted-average
  assumptions for June 30, 2004: risk-free interest rates of 4.2%, expected dividend
  yield of 0%, expected volatility of 84%, and a weighted-average contractual
  life of the warrants of up to 10 years. Compensation expenses of $357,618 and
  $161,641 were recognized during the year ended June 30, 2004 and 2005, respectively,
  in accordance with EITF 96-18.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=1>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><B><font SIZE=1>NOTE
  8:-FINANCIAL INCOME, NET</font></B></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
  <tr>
    <td width="214" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td  colspan="3" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><br>
        <br>
        <br>
        <br>
        <br>
        <br>
        <b><font size=2>Year ended June 30,</font></b></p></td>
    <td width="15" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="94" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=1>For
        the period from </font></b><br>
        <b><font size=1>May 11, 2001</font></b><br>
        <b><font size=1>(date of incorporation) through </font></b><br>
        <b><font size=2>June 30,</font></b></p></td>
  </tr>
  <tr>
    <td width="214" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="15" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="94" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="214" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="66" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>2005</font></b></p></td>
    <td width="9" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>2004</font></b></p></td>
    <td width="15" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="94" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>2005</font></b></p></td>
  </tr>
  <tr>
    <td width="214" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Foreign
        currency translation differences </font></p></td>
    <td width="66" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$
        8,921</font></p></td>
    <td width="9" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=2>$ 8,126</font></p></td>
    <td width="15" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="94" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=2>$ 20,534</font></p></td>
  </tr>
  <tr>
    <td width="214" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Interest
        on short-term bank credit</font></p></td>
    <td width="66" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>9,449</font></p></td>
    <td width="9" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>724</font></p></td>
    <td width="15" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="94" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>13,622</font></p></td>
  </tr>
  <tr>
    <td width="214" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Interest
        accrued on know-how licensors</font></p></td>
    <td width="66" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=2>12,332</font></p></td>
    <td width="9" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=2>20,699</font></p></td>
    <td width="15" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="94" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><br>
        <font size=2>46,181</font></p></td>
  </tr>
  <tr>
    <td width="214" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Interest
        income on deposits</font></p></td>
    <td width="66" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>(12,467)</font></p></td>
    <td width="9" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>(5,857)</font></p></td>
    <td width="15" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="94" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>(28,926)</font></p></td>
  </tr>
  <tr>
    <td width="214" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Deferred
        issuance expenses amortization</font></p></td>
    <td width="66" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>168,620</font></p></td>
    <td width="9" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>62,104</font></p></td>
    <td width="15" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="94" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>230,724</font></p></td>
  </tr>
  <tr>
    <td width="214" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Change
        in fair value of warrants</font></p></td>
    <td width="66" style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>(749,880)</font></p></td>
    <td width="9" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>(1,079,970)</font></p></td>
    <td width="15" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="94" style='border-bottom:solid black .5pt; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>(1,829,850)</font></p></td>
  </tr>
  <tr>
    <td width="214" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="15" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="94" style=' padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="214" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="66" style='padding:0in .75pt 0in .75pt'> <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$(563,025)</font></p>
      </div></td>
    <td width="9" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" style='padding:0in .75pt 0in .75pt'> <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$(994,174)</font></p>
      </div></td>
    <td width="15" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="94" style='padding:0in .75pt 0in .75pt'> <div style='border-bottom:double black 2.25pt;padding:0in 0in 1.0pt 0in'>
        <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$(1,547,715)</font></p>
      </div></td>
  </tr>
  <tr>
    <td width="214" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="66" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="9" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="71" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="15" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="94" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'>&nbsp;</p>
<br>
<hr noshade align="center" width="100%" size=5 color="Black">
<p style='page-break-before:always'></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>F-53</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:center;'> </p>
<p style=' margin-bottom:0pt; margin-top:5pt;text-align:right;'><B><font SIZE=1>PLURISTEM
  LIFE SYSTEMS INC. AND ITS SUBSIDIARY</font></B></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=1>(A
  Development Stage Company)</font></b></p>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><b><font size=1>(Previous
  Name - A. I. SOFTWARE INC.)</font></b></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse;   '>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><B><font SIZE=2>NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS</font></B></p></td>
  </tr>
  <tr>
    <td width="600" valign=top style='border:solid gray .75pt;border-color:gray; border-top:none;padding:0in .75pt 0in .75pt'>
      <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><b><font size=2>In
        U.S. Dollars</font></b></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><B><font SIZE=1>NOTE
  9:-INCOME TAXES</font></B></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><b><font size=1>Reconciliation
  of the theoretical tax expense (benefit) to the actual tax expense (benefit):</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=1>In
  the year ended June 30, 2005, the main reconciling items from the statutory
  tax rate of the Company (34%-35%) to the effective tax rate (0%) is carryforward
  tax losses and tax exempt financial income, for which a full valuation allowance
  was provided.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><b><font size=1>Net
  operating losses carryforwards</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=1>The
  Company has accumulated losses for tax purposes as of June 30, 2005 of approximately
  $2 million, which may be carried forward and offset against taxable income until
  2021- 2024. </font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=1>The
  subsidiary has accumulated losses for tax purposes as of June 30, 2005 in the
  amount of approximately $2.5 million that may be carried forward and offset
  against taxable income in the future for an indefinite period.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=1>Utilization
  of U.S. net operating losses may be subject to a substantial annual limitation
  due to the &#147;change in ownership&#148; provisions of the Internal Revenue
  Code of 1986 and similar state provisions. The annual limitation may result
  in the expiration of net operating losses before utilization.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font size=1>Deferred
  Income taxes</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=1>As
  of June 30, 2005, the Company and its subsidiary have provided valuation allowances
  of approximately $1 million in respect of deferred tax assets resulting from
  tax loss carryforwards. Management currently believes that since the Company
  and its subsidiary have a history of losses it is more likely than not that
  the deferred tax regarding the loss carryforwards and other temporary differences
  will not be realized in the foreseeable future.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><b><font size=1>Subsequent
  tax event</font></b></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=1>On
  July 25, 2005, the Knesset (Israeli Parliament) passed the Law for the Amendment
  of the Income Tax Ordinance (No. 147), 2005, which prescribes, among others,
  a gradual decrease in the corporate tax rate in Israel to the following tax
  rates: in 2006 &#150; 31%, in 2007 &#150; 29%, in 2008 &#150; 27%, in 2009 &#150;
  26% and in 2010 and thereafter &#150; 25%. The amendment is not expected to
  have a material effect on the Company's financial position and results operations.</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><B><font SIZE=1>NOTE
  10:-TRANSACTIONS AND BALANCES WITH RELATED PARTIES</font></B></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font size=1>Balances
  with related parties</font></b></p>
<table width="600" border="0" cellspacing=0 cellpadding=0 style='border-collapse:collapse; '>
  <tr>
    <td width="276" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td  colspan="3" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>June
        30,</font></b></p></td>
  </tr>
  <tr>
    <td width="276" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>2005</font></b></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="63" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><b><font size=2>2004</font></b></p></td>
  </tr>
  <tr>
    <td width="276" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="67" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="63" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="276" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'>&nbsp;</p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="63" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="276" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1pt;margin-bottom:0pt'><font size=2>Know-how
        licensors (included current maturities)</font></p></td>
    <td width="67" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$199,959</font></p></td>
    <td width="5" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="63" valign=top style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1pt;margin-bottom:0pt'><font size=2>$268,877</font></p></td>
  </tr>
  <tr>
    <td width="276" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="67" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="63" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="276" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Accrued
        expenses</font></p></td>
    <td width="67" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>$29,493</font></p></td>
    <td width="5" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="63" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>$6,328</font></p></td>
  </tr>
  <tr>
    <td width="276" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="67" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="63" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
  <tr>
    <td width="276" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Salary
        expenses to the Chief Executive Officer</font></p></td>
    <td width="67" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>$888,293</font></p></td>
    <td width="5" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="63" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>$105,000</font></p></td>
  </tr>
  <tr>
    <td width="276" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="67" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="5" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
    <td width="63" style='padding:0in .75pt 0in .75pt'> <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p></td>
  </tr>
</table>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=1>&nbsp;</font></p>
<p style=' margin-bottom:5pt; margin-top:5pt;text-align:center;'><font size=1>#
  # # # # # # # # # #</font></p>
<br>
<hr noshade align="center" width="100%" size=5 color="Black">
<A name=page_53></A>
<P align=center>- 54 - </P>
<P align=center><B>CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS <BR>ON
ACCOUNTING AND FINANCIAL DISCLOSURE </B></P>
<P align=justify>None. </P>
<P align=center><B>WHERE YOU CAN FIND MORE INFORMATION </B></P>
<P align=justify>We are required to file annual, quarterly and current reports,
proxy statements and other information with the Securities and Exchange
Commission. Our Securities and Exchange Commission filings are available to the
public over the Internet at the SEC's website at http://www.sec.gov. </P>
<P align=justify>You may also read and copy any materials we file with the
Securities and Exchange Commission at the SEC's public reference room at 100 F
Street NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the operation of the public reference rooms. </P>
<P align=justify>We have filed with the Securities and Exchange Commission a
registration statement on Form SB-2, under the Securities Act with respect to
the securities offered under this prospectus. This prospectus, which forms a
part of that registration statement, does not contain all information included
in the registration statement. Certain information is omitted and you should
refer to the registration statement and its exhibits. With respect to references
made in this prospectus to any contract or other document of Pluristem, the
references are not necessarily complete and you should refer to the exhibits
attached to the registration statement for copies of the actual contract or
document. You may review a copy of the registration statement at the SEC's
public reference room. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. Our filings and the
registration statement can also be reviewed by accessing the SEC's website at
http://www.sec.gov. </P>
<P align=justify><B>No finder, dealer, sales person or other person has been
authorized to give any information or to make any representation in connection
with this offering other than those contained in this prospectus and, if given
or made, such information or representation must not be relied upon as having
been authorized by Pluristem Life Systems, Inc. This prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby by anyone in any jurisdiction in which such offer or
solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to any person to whom it is unlawful
to make such offer or solicitation. Neither the delivery of this prospectus nor
any sale made hereunder shall, under any circumstances, create any implication
that the information contained herein is correct as of any time subsequent to
the date of this prospectus. </B></P>
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