---

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UNITED STATES SECURITIES AND
EXCHANGE COMMISSION WASHINGTON D.C. 20549

---

# FORM 10-Q

(Mark One)

|x | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|- | ----------------------------------------------------------------------------------------

For the quarterly
period ended March 31, 2008

OR

|o | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|- | -----------------------------------------------------------------------------------------

For the transition period from _______________________ to_______________

Commission file number
0-538

|                                                      
|------------------------------------------------------
|AMPAL-AMERICAN ISRAEL CORPORATION                     
|                                                      
|(Exact Name of Registrant as Specified in Its Charter)

|                                |                      
|------------------------------- | ---------------------
|
|
|
|
|New York                        | 13-0435685           
|                                |                      
|(State or Other Jurisdiction of | (I.R.S. Employer)    
|Incorporation of Organization)  | Identification Number

|                                         |           
|---------------------------------------- | ----------
|
|
|
|
|111 Arlozorov Street, Tel Aviv, Israel   | 62098     
|                                         |           
|(Address of Principal Executive Offices) | (Zip code)

Registrant's Telephone Number, Including Area Code (866) 447-8636

|                                                                                 
|---------------------------------------------------------------------------------
|                                                                                 
|Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report.

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports) , and
(2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of accelerated filer and large
accelerated filer in Rule 12b-2 of the Exchange Act (Check one):

|                          |                     |                        
|------------------------- | ------------------- | -----------------------
|
|
|
|
|Large accelerated filer o | Accelerated filer x | Non-accelerated filer o
|                          |                     |                        

Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).

Yes o No x

The
number of shares outstanding of the issuer's Class A Stock, its only authorized common
stock, is 57,702,532 (as of April 29, 2008).



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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES

Index to Form 10-Q

|         |                                                                                          |                                                             | Page
|-------- | ---------------------------------------------------------------------------------------- | ----------------------------------------------------------- | ----
|
|
|
|
|Part I   | Financial Information                                                                    |                                                            
|        
|Item 1.  | Financial Statements (unaudited)                                                         |                                                            
|        
|         | Consolidated Balance Sheets                                                              | 1-2                                                        
|        
|         | Consolidated Statements of Operations for the Three Months Ended March 31, 2008 and 2007 | 3                                                          
|        
|         | Consolidated Statements of Cash Flows                                                    | 4-5                                                        
|        
|         | Consolidated Statements of Changes in Shareholders' Equity                               | 6-7                                                        
|        
|         | Notes to the Consolidated Financial Statements                                           | 8-13                                                       
|        
|Item 2.  | Management's Discussion and Analysis of Financial Condition and Results of Operations    | 13-18                                                      
|        
|Item 3.  | Quantitative and Qualitative Disclosures About Market Risk                               | 18-19                                                      
|        
|Item 4.  | Controls and Procedures                                                                  | 19                                                         
|        
|Part II. | Other Information                                                                        | 20                                                         
|        
|         | Item 1.                                                                                  | Legal Proceedings                                           | 20  
|        
|         | Item 1A.                                                                                 | Risk Factors                                                | 20  
|        
|         | Item 2.                                                                                  | Unregistered Sales of Equity Securities and Use of Proceeds | 20  
|        
|         | Item 3.                                                                                  | Defaults upon Senior Securities                             | 20  
|        
|         | Item 4.                                                                                  | Submission of Matters to a Vote of Security Holders         | 20  
|        
|         | Item 5.                                                                                  | Other Information                                           | 20  
|        
|         | Item 6.                                                                                  | Exhibits                                                    | 21  
|         |                                                                                          |                                                             |     



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ITEM 1. FINANCIAL STATEMENTS
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET

|ASSETS AS OF                                                     | March 31,
2008 | December 31,
2007
|---------------------------------------------------------------- | -------------- | -----------------
|
|
|
|
|Current assets:                                                  |                |                  
|Cash and cash equivalents                                        |                |                  
|Marketable securities                                            |                |                  
|Account receivable                                               |                |                  
|Deposits, notes and loans receivable                             |                |                  
|Inventories                                                      |                |                  
|Other assets                                                     |                |                  
|                                                                 |                |                  
|Total current assets                                             |                |                  
|                                                                 |                |                  
|Non-current assets:                                              |                |                  
|Investments                                                      |                |                  
|Fixed assets, less accumulated depreciation of $5,493 and $3,697 |                |                  
|Deposits, notes and loans receivable                             |                |                  
|Deferred tax                                                     |                |                  
|Other assets                                                     |                |                  
|Goodwill                                                         |                |                  
|Intangible assets                                                |                |                  
|                                                                 |                |                  
|Total Non-current assets                                         |                |                  
|                                                                 |                |                  
|                                                                 |                |                  
|TOTAL ASSETS                                                     |                |                  
|                                                                 |                |                  
|                                                                 |                |                  

The accompanying notes are an
integral part of these condensed consolidated financial statements.

1

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET

|LIABILITIES AND SHAREHOLDERS' EQUITY AS OF                                                   | March 31,
2008 | December 31,
2007
|-------------------------------------------------------------------------------------------- | -------------- | -----------------
|
|
|
|
|LIABILITIES                                                                                  |                |                  
|Current liabilities:                                                                         |                |                  
|Notes and loans payable and current maturities                                               |                |                  
|Accounts payable, accrued expenses and others                                                |                |                  
|                                                                                             |                |                  
|Total current liabilities                                                                    |                |                  
|                                                                                             |                |                  
|Long term liabilities:                                                                       |                |                  
|Notes and loans payable                                                                      |                |                  
|Debentures                                                                                   |                |                  
|Deferred tax                                                                                 |                |                  
|Other long term liabilities                                                                  |                |                  
|                                                                                             |                |                  
|Total long term liabilities                                                                  |                |                  
|                                                                                             |                |                  
|Total liabilities                                                                            |                |                  
|                                                                                             |                |                  
|Minority interests, net                                                                      |                |                  
|                                                                                             |                |                  
|                                                                                             |                |                  
|SHAREHOLDERS' EQUITY                                                                         |                |                  
|Class A Stock $1 par value; authorized 100,000,000 and 100,000,000 shares; issued 63,277,321 |                |                  
|and 63,277,321 shares; outstanding 57,702,532 and 57,702,532 shares                          |                |                  
|                                                                                             |                |                  
|Additional paid-in capital                                                                   |                |                  
|                                                                                             |                |                  
|Retained earnings                                                                            |                |                  
|                                                                                             |                |                  
|Accumulated other comprehensive loss                                                         |                |                  
|                                                                                             |                |                  
|Treasury stock, at cost                                                                      |                |                  
|                                                                                             |                |                  
|                                                                                             |                |                  
|Total shareholders' equity                                                                   |                |                  
|                                                                                             |                |                  
|                                                                                             |                |                  
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                   |                |                  
|                                                                                             |                |                  
|                                                                                             |                |                  

The accompanying notes are an integral
part of these condensed consolidated financial statements.

2

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

|THREE MONTHS ENDED MARCH 31,                                 | 2008 | 2007
|------------------------------------------------------------ | ---- | ----
|
|
|
|
|REVENUES:                                                    |      |     
|Chemical income                                              |      |     
|Equity in earnings (losses) of affiliates                    |      |     
|Realized gains on investments                                |      |     
|Realized and unrealized gains on marketable securities       |      |     
|Interest income                                              |      |     
|Leisure-time income                                          |      |     
|Gain from change in ownership interest at a subsidiary       |      |     
|Other income                                                 |      |     
|                                                             |      |     
|Total revenues                                               |      |     
|                                                             |      |     
|EXPENSES:                                                    |      |     
|Chemical expense                                             |      |     
|Loss from impairment of investments                          |      |     
|Interest expense                                             |      |     
|Translation loss                                             |      |     
|Marketing expense                                            |      |     
|Other (mainly general and administrative)                    |      |     
|                                                             |      |     
|Total expenses                                               |      |     
|                                                             |      |     
|Loss before income taxes                                     |      |     
|Provision for income taxes (tax benefits)                    |      |     
|                                                             |      |     
|Loss after income taxes (tax benefits)                       |      |     
|Minority interests in profits (losses)  of subsidiaries, net |      |     
|                                                             |      |     
|Loss from continuing operations                              |      |     
|                                                             |      |     
|Discontinued operation:                                      |      |     
|Loss from operation of discontinued, net of tax              |      |     
|                                                             |      |     
|                                                             |      |     
|Net Loss for the period                                      |      |     
|                                                             |      |     
|                                                             |      |     
|Basic and diluted EPS:                                       |      |     
|Loss from continuing operations                              |      |     
|Discontinued operations                                      |      |     
|                                                             |      |     
|                                                             |      |     
|                                                             |      |     
|                                                             |      |     
|Shares used in calculation (in thousands)                    |      |     
|                                                             |      |     
|                                                             |      |     

The accompanying notes are an
integral part of these condensed consolidated financial statements.

3

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

|THREE MONTHS ENDED MARCH 31,                                                        | 2008 | 2007
|----------------------------------------------------------------------------------- | ---- | ----
|
|
|
|
|Cash flows from operating activities:                                               |      |     
|Net loss for the period                                                             |      |     
|Adjustments to reconcile net (income)loss for the period to net cash from operating |      |     
|activities:                                                                         |      |     
|Equity in loss (earnings) of affiliates                                             |      |     
|Realized and unrealized gains on investments, net                                   |      |     
|Depreciation expense                                                                |      |     
|Amortization                                                                        |      |     
|Non cash stock based compensation                                                   |      |     
|Gain from change in ownership interest at a subsidiary                              |      |     
|Loss from impairment of investment                                                  |      |     
|Translation  loss                                                                   |      |     
|Minority interests                                                                  |      |     
|Increase in Inventories                                                             |      |     
|Increase in accounts receivable                                                     |      |     
|Increase in other assets                                                            |      |     
|Increase (decrease) in accounts payable, accrued expenses and others                |      |     
|Investments made in trading securities                                              |      |     
|Proceeds from sale of trading securities                                            |      |     
|Dividends received from affiliates                                                  |      |     
|                                                                                    |      |     
|                                                                                    |      |     
|Net cash used in operating activities                                               |      |     
|                                                                                    |      |     
|                                                                                    |      |     
|Cash flows from investing activities:                                               |      |     
|                                                                                    |      |     
|Investments made in  affiliates                                                     |      |     
|Proceeds from sale of investments                                                   |      |     
|Proceeds from sale of fixed asset                                                   |      |     
|Capital improvements                                                                |      |     
|                                                                                    |      |     
|                                                                                    |      |     
|Net cash used in investing activities                                               |      |     
|                                                                                    |      |     
|                                                                                    |      |     

The accompanying notes are an integral
part of these condensed consolidated financial statements.

4

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

|THREE MONTHS ENDED MARCH 31,                                          | 2008 | 2007
|--------------------------------------------------------------------- | ---- | ----
|
|
|
|
|Cash flows from financing activities:                                 |      |     
|Notes and loans payable received                                      |      |     
|Notes and loans payable repaid                                        |      |     
|Contribution to partnership by minority                               |      |     
|                                                                      |      |     
|Net cash provided by  financing activities                            |      |     
|                                                                      |      |     
|                                                                      |      |     
|Effect of exchange rate changes on cash and cash equivalents          |      |     
|                                                                      |      |     
|                                                                      |      |     
|Net decrease in cash and cash equivalents                             |      |     
|Cash and cash equivalents at beginning of Period                      |      |     
|                                                                      |      |     
|                                                                      |      |     
|Cash and cash equivalents at end of period                            |      |     
|                                                                      |      |     
|Supplement Disclosure of Non-cash Investing and Financing Activities: |      |     
|Conversion of a convertible debenture in subsidiary                   |      |     
|                                                                      |      |     
|                                                                      |      |     

The accompanying notes are an
integral part of these condensed consolidated financial statements.

5

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

(U.S. Dollars in thousands)

Unaudited

|                                      | Class A stock |  |  |        |  | 
|------------------------------------- | ------------- |  |  | ------ |  | 
|
|
|
|
|BALANCE AT JANUARY 1, 2008            |               |  |  | 63,277 |  | 
|CHANGES DURING 2008:                  |               | 
|Net Loss for the period               |               |  |  |        |  | 
|Other comprehensive income (loss):    |               | 
|Foreign currency translation          |               | 
|adjustments                           |               |  |  |        |  | 
|Unrealized gain on marketable         |               | 
|securities                            |               |  |  |        |  | 
|                                      |               |  |  |        |  | 
|Total comprehensive loss              |               |  |  |        |  | 
|Compensation expense recognized under |               | 
|SFAS 123R                             |               |  |  |        |  | 
|                                      |               |  |  |        |  | 
|BALANCE AT MARCH 31, 2008             |               |  |  | 63,277 |  | 
|                                      |               |  |  |        |  | 
|                                      |               |  |  |        |  | 

*In thousands

The accompanying notes are an integral
part of these condensed consolidated financial statements.

6

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(U.S. Dollars in thousands)
Unaudited

|                            | Class A stock |  |  |        |  |  |        | 
|--------------------------- | ------------- |  |  | ------ |  |  | ------ | 
|
|
|
|
|BALANCE AT JANUARY 1, 2007  |               |  |  | 46,328 |  |  | 46,328 | 
|CHANGES DURING 2007:        |               | 
|Net income for the period   |               |  |  |        |  |  |        | 
|Foreign currency            |               | 
|translation adjustments     |               |  |  |        |  |  |        | 
|Sale of foreign currency    |               | 
|translation adjustment      |               |  |  |        |  |  |        | 
|                            |               |  |  |        |  |  |        | 
|Total comprehensive loss    |               |  |  |        |  |  |        | 
|Adjustment upon adoption of |               | 
|FIN 48                      |               |  |  |        |  |  |        | 
|Change in deferred tax      |               | 
|asset relating to adoption  |               | 
|of FIN 48                   |               |  |  |        |  |  |        | 
|Shares issued for           |               | 
|investment made             |               |  |  | 8,603  |  |  | 8,603  | 
|Shares issued upon          |               | 
|conversion of convertible   |               | 
|note                        |               | 
|Compensation expense        |               | 
|recognized under SFAS 123R  |               |  |  |        |  |  |        | 
|Issuance of shares for      |               | 
|exercise of Warrants        |               |  |  |        |  |  |        | 
|                            |               |  |  |        |  |  |        | 
|BALANCE AT MARCH 31, 2007   |               |  |  | 54,931 |  |  | 54,931 | 
|                            |               |  |  |        |  |  |        | 
|                            |               |  |  |        |  |  |        | 

*In thousands

The accompanying notes are an
integral part of these condensed consolidated financial statements.

7

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

|1. | As
used in these financial statements, the term the Company refers
                    to Ampal-American Israel Corporation (Ampal) and its
consolidated                     subsidiaries.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | The
accompanying unaudited condensed consolidated financial statements of the
                    Company have been prepared in accordance with generally accepted
accounting                     principles (GAAP), in the United States of
America, for interim                     financial information and with the instructions
to Form 10-Q and Article 10 of                     Regulation S-X. Accordingly, they do
not include all of the information and                     notes required by GAAP 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                     interim period are not necessarily indicative of the
results that may be                     expected for the full year. You should read these
interim condensed consolidated                     financial statements in conjunction
with the audited consolidated financial                     statements in the Annual
Report on Form 10-K for the year ended December 31,                     2007, filed with
the Securities and Exchange Commission.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Reference
should be made to the Companys consolidated financial statements for the year ended
December 31, 2007 for a description of the critical accounting policies. Also, reference
should be made to the notes to the Companys December 31, 2007 consolidated
financial statements for additional information regarding the Companys consolidated
financial condition, results of operations and cash flows.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Recently
Issued Accounting Pronouncements
|-- | -----------------------------------------

| | SFAS
No. 141R  Business Combinations
| | -------------------------------------

| | In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business
Combinations (SFAS 141R), which replaces SFAS No. 141, Business
Combination. SFAS 141R establishes the principles and requirements for how an
acquirer: (1) recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; (2)
recognizes and measures the goodwill acquired in the business combination or a gain from
a bargain purchase; and (3) discloses the business combination. This Statement applies to
all transactions in which an entity obtains control of one or more businesses, including
transactions that occur without the transfer of any type of consideration. SFAS 141R will
be effective on a prospective basis for all business combinations on or after January 1,
2009, with the exception of the accounting for valuation allowances on deferred taxes and
acquired tax contingencies. Early adoption is not allowed. The Company is in process of
evaluating the impact, if any, the adoption of SFAS 141R will have on the Companys
consolidated results of operations or financial position.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | SFAS
No. 160  Noncontrolling Interests in Consolidated Financial Statements
| | ----------------------------------------------------------------------------

| | In
December 2007, the FASB issued SFAS No. 160 Noncontrolling Interests in
Consolidated Financial Statementsan amendment of ARB No. 51" (SFAS
160). SFAS 160 amends ARB No. 51 and establishes accounting and reporting
standards that require noncontrolling interests (previously referred to as minority
interest) to be reported as a component of equity, changes in a parents ownership
interest while the parent retains its controlling interest be accounted for as equity
transactions, and upon a loss of control, retained ownership interest will be remeasured
at fair value, with any gain or loss recognized in earnings. SFAS 160 will be effective
for the Company commencing January 1, 2009, except for the presentation and
disclosure requirements, which will be applied retrospectively. Early adoption is not
allowed. The Company is in process of evaluating the impact, if any, that the adoption of
SFAS 160 will have on the Companys consolidated results of operations or financial
position.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | SFAS
No. 161
| | ------------

| | In
March 2008, the FASB issued Statement of Financial Accounting Standards No. 161
Disclosures about Derivative Instruments and Hedging Activities  an amendment
of FASB Statement No. 133 (SFAS 161). This Standard requires
enhanced disclosures regarding derivatives and hedging activities, including: (a) the
manner in which an entity uses derivative instruments; (b) the manner in which
derivative instruments and related hedged items are accounted for under Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities; and (c) the effect of derivative instruments and related
hedged items on an entitys financial position, financial performance, and cash
flows. SFAS 161 is effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008. The Company is in process of evaluating
the impact, if any, that the adoption of SFAS 161 will have on its financial statements.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

---

---

|4. | Cash
and cash equivalents
|-- | -------------------------

| | Cash
equivalents are short-term, highly liquid investments that have original maturity dates
of three months or less and are readily convertible into cash.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------

| | Cash
equal to $12.0 million has been placed as a compensating balance for various loans
provided to the Company.
| | ----------------------------------------------------------------------------------------------------------------

|5. | East
Mediterranean Gas Company
|-- | ------------------------------

| | Through
December 31, 2006, the Company, through Merhav Ampal Energy, Ltd. (MAE), a
wholly-owned subsidiary of the Company, purchased from Merhav M.N.F. Ltd. (Merhav)
in series of transactions a total of 12.5% beneficial interest in East Mediterranean Gas
Co. S.A.E., an Egyptian joint stock company (EMG), for total considerations of
$259.9 million..
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Yosef
A. Maiman, the Chairman, President and CEO of the Company and a member of the controlling
shareholder group of the Company, is the sole owner of Merhav. Because of the foregoing
relationships, a special committee of the Board of Directors composed of the Companys
independent directors, who also constitute all of the members of the Companys Audit
Committee, negotiated and approved the transaction. Houlihan Lokey Howard & Zukin
Financial Advisors, Inc., which was retained as financial advisor to the special
committee, advised the special committee on these transactions.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
June 4, 2007, EMG called for additional capital from all of its shareholders. As a
result, the Company paid an additional $5.8 million in order to maintain its pro rata
beneficial interest in EMG.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
connection with the Companys investment in EMG, the Company issued to Merhav   a convertible promissory note (the Convertible Promissory Note) in the
principal amount of $20 million, which at the option of Merhav, was payable
in cash, additional shares of Ampal Class A Stock (based on a price per share of $4.65
per share), or a combination thereof. The Convertible Promissory Note bore interest at 6
months LIBOR (5.375%) and matured on the earlier of September 20, 2007, or upon demand by
Merhav  On September 20, 2007, Merhav   exercised its option to
convert the outstanding balance of $20.8 million (which includes accrued interest of $0.8
million) on the Convertible Promissory Note into 4,476,389 shares of Class A Stock of the
Company.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
November 29, 2007, Ampal and the Israeli Infrastructure Fund (IIF), leading a group of institutional investors, purchased a
4.3% interest in EMG, through Merhav Ampal Energy Holdings, LP, an Israeli limited
partnership (the Joint Venture), from Merhav for a purchase price
of approximately $95.4 million, using funds provided by the Investors. In addition to the
Joint Ventures purchase from Merhav, Ampal contributed into the Joint
Venture an additional 4.3% interest in EMG already held by Ampal. The Joint Venture now
holds a total of 8.6% of the outstanding shares of EMG. Ampals contribution was
valued at the same price per EMG share as the Joint Ventures purchase. This amount
is equivalent to the purchase price (on a per share basis) paid by Ampal for its December
2006 purchase of EMG shares from Merhav, which was accounted for as a
transfer of assets between entities under common control, which resulted in Merhav  transferring the investment in EMG to Ampal at carrying value. Due to the nature of
Merhavs operations, Merhav  would be treated as an investment
company under US GAAP, and as such, the carrying value of the investment in EMG would
equal fair value. On this basis, the said investment in EMG was transferred to Ampal at
carrying value, which also equals fair value. Based on the terms stipulated in the
shareholders agreement of the general partner of the Joint Venture, Ampal and Israel
Infrastructure G.P. Ltd. have equal rights in governing the affairs of the Joint Venture.
However, in certain events and under certain conditions, matters relating to decisions on
how to vote the EMG shares held by the Joint Venture shall be decided by the directors of
the general partner of the Joint Venture appointed by Ampal or by IIF. As such, Ampal has
consolidated the results of the Joint Venture in its financial statements.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Companys Financial Statements reflect a 16.8% interest in shares of EMG, with 8.2%
held directly and 8.6% held through the Joint Venture (of which Ampal owns 50%).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | Acquisition
of Gadot
|-- | --------------------

| | On
December 3, 2007, Ampal completed its acquisition of 65.5% of the control and ownership
(63.66% on a fully diluted basis) of Gadot Chemical Tankers and Terminals Ltd. (Gadot).
The total consideration including direct transaction expenses was $91.2 million. The cash
consideration was financed with Ampals own resources and with borrowings in the
amount of $60.7 million.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Gadot
and its group of companies is an Israeli chemical distribution organization. Gadot ships,
stores, and distributes liquid chemicals, oils, and a large variety of materials to the
local industry.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
acquisition was accounted for by the purchase method. The results of operations of Gadot
were included in the consolidated financial statements of Ampal commencing November 30,
2007. The consideration for the acquisition was attributed to net assets on the basis of
fair value of assets acquired and liabilities assumed, based on an appraisal performed by
management, which included a number of factors, including the assistance of independent
appraisers. The following table summarizes the final fair values of the assets acquired
and liabilities assumed, with reference to Gadot balance sheet data as of November 30,
2007:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

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|                                                | U.S. dollars in millions
|----------------------------------------------- | ------------------------
|
|
|
|
|Current assets                                  |                         
|Investments and other non-current assets        |                         
|Fixed assets                                    |                         
|Identifiable intangible assets                  |                         
|Goodwill                                        |                         
|                                                |                         
|Total assets acquired                           |                         
|                                                |                         
|Current liabilities                             |                         
|Long-term liabilities, including deferred taxes |                         
|Minority interest                               |                         
|                                                |                         
|Total liabilities assumed                       |                         
|                                                |                         
|Net assets acquired                             |                         
|                                                |                         
|                                                |                         

| | Under
the purchase method of accounting, the total consideration of $91.2 million allocated to
Gadots identifiable tangible and intangible assets and liabilities assumed based on
their estimated fair values as of the date of the completion of the transaction.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. | Fair
value measurement
|-- | ----------------------

| | In
September 2006, the FASB issued SFAS 157 which defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles and
expands disclosures about fair-value measurements. The Company adopted SFAS 157 effective
January 1, 2008 for all financial assets and liabilities and any other assets and
liabilities that are recognized or disclosed at fair value on a recurring basis. Although
the adoption of SFAS 157 did not materially impact the Companys financial
condition, results of operations or cash flows, the company is required to provide
additional disclosures within its condensed consolidated financial statements.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | SFAS
157 defines fair value as the price that would be received to sell an asset or paid to
transfer the liability (an exit price) in an orderly transaction between market
participants and also establishes a fair value hierarchy which requires an entity to
maximize the use of observable inputs and minimize the use of unobservable inputs when
measuring fair value. The fair value hierarchy within SFAS 157 distinguishes between
three levels of inputs that may be utilized when measuring fair value including level 1
inputs (using quoted prices in active markets for identical assets or liabilities), level
2 inputs (using inputs other than level 1 prices such as quoted prices for similar assets
and liabilities in active markets or inputs that are observable for the asset or
liability) and level 3 inputs (unobservable inputs supported by little or no market
activity based on the companys own assumptions used to measure assets and
liabilities). A financial assets or liabilitys classification within the
above hierarchy is determined based on the lowest level input that is significant to the
fair value measurement.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company also adopted FAS 159, The Fair Value Option for Financial Assets and
Financial Liabilities (SFAS 159). This standard permits entities to
choose to measure many financial assets and financial liabilities at fair value.
Unrealized gains and losses on items for which the fair value option has been elected are
reported in earnings. SFAS 159 is effective for fiscal years after November 15, 2007. The
Company did not elect to apply the fair value option available under SFAS 159 for any of
its eligible instruments.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

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---

| | Financial
assets and liabilities measured at fair value on a recurring basis as at March 31,
2008 consisted of the following (in thousands):
| | --------------------------------------------------------------------------------------------------------------------------------------------

Fair Value Measurements as at March 31, 2008 Using:

| |                               | Level 1 | Level 2 | Total
| | ----------------------------- | ------- | ------- | -----
|
|
|
|
| | Trading securities            |         |         | $    
| | Available for sale securities |         |         |      
| | Derivative Assets             |         |         |      
| |                               |         |         |      

| | Marketable
securities that are classified in level 1 consist of available-for-sale and trading
securities for which market prices are readily available, marketable securities that are
classified in level 2 consist of trading securities for which quoted prices in active
brokers market. The fair value of derivative assets are determined
based on inputs that can be derived from information available in publicly quoted
markets. Unrealized gains or losses from available-for-sale securities are recorded in
accumulated other comprehensive (loss) income.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8. | Segment
information presented below, results primarily from operations in           Israel.
|-- | -------------------------------------------------------------------------------------------

| | SFAS
131 Disclosure about Segments of an Enterprise and Related Informationestablishes
annual and interim reporting standards for an enterprises operating segments and
related disclosures about its products, services, geographic areas and major customers.
Segment information presented below results primarily from operations in Israel.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
chemical segment consists of the investment in Gadot, a 65.5% owned subsidiary of Ampal which
operates in the distribution and marketing of liquid chemicals for raw materials used in
the chemical industry.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
energy segment consists of the investment in EMG, an Egyptian joint stock company, which
holds the right to supply natural gas to Israel through a pipeline to be constructed from
Egypt to Israel.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
real estate rental segment previously consisted of operations of Am-Hal Ltd. (Am-Hal),
a wholly-owned subsidiary which owns and operates a chain of senior citizen facilities
located in Israel. On August 5, 2007, the Company sold all of its interest in Am-Hal .
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
leisure-time segment consists of an affiliate Country Club Hod Hasharon Sport Center and
Kfar Saba, the Companys 51%-owned subsidiary, all located in Israel.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
finance segment consists of all other activities which are not part of the above
segments.
| | ----------------------------------------------------------------------------------------------

11

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---

| | THREE MONTHS ENDED MARCH 31,          | 2008 | 2007
| | ------------------------------------- | ---- | ----
|
|
|
|
| | Revenues:                             |      |     
| | Chemicals                             |      |     
| | Finance                               |      |     
| | Leisure-time                          |      |     
| | Intercompany adjustments              |      |     
| |                                       |      |     
| |                                       |      |     
| | Equity                                |      |     
| |                                       |      |     
| | Total consolidated revenues           |      |     
| |                                       |      |     
| |                                       |      |     
| | Pretax Operating Gain (loss):         |      |     
| | Chemicals                             |      |     
| | Finance                               |      |     
| | Leisure-time                          |      |     
| |                                       |      |     
| |                                       |      |     
| | Equity                                |      |     
| |                                       |      |     
| | Total consolidated pretax gain (loss) |      |     
| |                                       |      |     
| |                                       |      |     
| | Total Assets:                         |      |     
| | Chemicals                             |      |     
| | Finance                               |      |     
| | Energy                                |      |     
| | Real Estate                           |      |     
| | Leisure-Time                          |      |     
| | Intercompany adjustments              |      |     
| |                                       |      |     
| | Total consolidated assets             |      |     
| |                                       |      |     
| |                                       |      |     

| | Corporate
office expense is principally applicable to the financing operations and has been charged
to that segment above. Revenues and pretax operating gain above exclude equity in
earnings of affiliates.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9. | The
following table summarizes securities that were not included in the
                    calculations of diluted earnings per Class A share for the periods
ended March                     31, 2008 and 2007 because such shares are anti-dilutive.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (Shares in thousands) | Three Months ended
March 31,
| | --------------------- | ----------------------------
|
|
|
|
| | Options and Rights    |                             
| |                       |                             

|10. | LEGAL
PROCEEDINGS:
|--- | ------------------

| | On
January 1, 2002, Galha (1960) Ltd. (Galha) filed a suit against the Company and other parties,
including directors of Paradise Industries Ltd. (Paradise) appointed by the
Company, in the Tel Aviv District Court, in the amount of NIS 11,560,000 ($3 million).
Galha claimed that the Company, which was a shareholder of Paradise, and another
shareholder of Paradise, misused funds that were received by Paradise from an insurance
company for the purpose of reconstructing an industrial building owned by Galha and used
by Paradise which burnt down. Paradise is currently involved in liquidation proceedings.
Ampal issued a guarantee in favor of Galha for the payment of an amount of up to NIS
4,172,000 ($1,085,000) if a final judgment against the Company will be given.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
May 26, 2003, the Company and the directors of Paradise appointed by the Company filed a
third party claim against Arieh Israeli Insurance Company Ltd. (Arieh) in the
Tel Aviv District Court claiming that, to the extent the court decides that the directors
of Paradise appointed by the Company will have to pay any amounts to Galha, Arieh will
pay such amounts on behalf of the directors in accordance with the Directors and Officers
insurance policy that the Company had at that time with Arieh. Arieh filed a statement of
defense and stated that the policy does not cover the claim. At this stage, the Company
cannot estimate the impact this claim will have on it. In March 2008, the dispute was
submitted to mediation by order of the court, with the consent of the parties.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12

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|11. | SUBSEQUENT
EVENTS
|--- | -----------------

| | On
April 29, 2008, the Company completed its Series B debenture offering in Israel. Ampal
accepted subscriptions in the amount of NIS 577.8 million (approximately $165.7 million)
for its Series B debentures. The debentures are linked to the Israeli consumer price
index and will carry an annual interest rate of 6.6%.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
April 29, 2008 Gadot, a subsidiary of Ampal, signed an agreement with its partner to
liquidate Chem-Tankers C.V., a partnership which provides shipping service of chemicals.
The agreement divides the shipping lines, the ships and other fixed assets between the
partners. According to the agreement the Company will continue to operate the shipping
lines which were operated by it prior to the formation of the partnership in 2005.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

AMPAL-AMERICAN ISRAEL
CORPORATION AND SUBSIDIARIES

CRITICAL ACCOUNTING
POLICIES

As used in this Quarterly Report on
Form 10-Q, the term Company refers to Ampal  American Israel Corporation
(Ampal) and its consolidated subsidiaries.

The preparation of Ampals consolidated financial statements is in conformity
with accounting principles generally accepted in the United States (US
GAAP)which requires management to make estimates and assumptions in certain
circumstances that affect amounts reported in the accompanying consolidated financial
statements and related footnotes. Actual results may differ from these estimates. To
facilitate the understanding of Ampals business activities, described below are
certain Ampal accounting policies that are relatively more important to the portrayal of
its financial condition and results of operations and that require managements
subjective judgments. Ampal bases its judgments on its experience and various other
assumptions that it believes to be reasonable under the circumstances. Please refer to
Note 1 to Ampals consolidated financial statements included in the Companys
Annual Report on Form 10-K for the fiscal year ended December 31, 2007 for a summary of
all of Ampals significant accounting policies.

No significant updates were occurred
since our last annual report on forn 10-K, except of revenue recognition policy results
from recent acquisition of    65.5% of the control and ownership
(63.66% on a fully diluted basis) of Gadot Chemical Tankers and Terminals Ltd., an Israeli
Company (Gadot).

Revenue Recognition

Chemical income is measured at the
fair value of the consideration received or the consideration that the Company is entitled
to receive, taking into account trade discounts and/or bulk discounts granted by the
Company.

Revenue from sale of goods is
recognized when all the following conditions have been satisfied: (a) the significant
risks and rewards of ownership of the goods have been transferred to the buyer; (b) the
Company retains neither continuing managerial involvement to the degree usually associated
with ownership nor effective control over the goods sold; (c) the amount of revenue can be
measured reliably; (d) it is probable that the economic benefits associated with the
transaction will flow to the Company and (e) the costs incurred or to be incurred in
respect of the transaction can be measured reliably.

Revenue from the provision of
services is recognized by reference to the stage of completion of the transaction at the
balance sheet date, and only when the stage of completion of the transaction at the
balance sheet date can be measured reliably.

Recently Issued
Accounting Pronouncements

SFAS
No. 141R  Business Combinations

In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business
Combinations (SFAS 141R), which replaces SFAS No. 141,
Business Combination. SFAS 141R establishes the principles and requirements
for how an acquirer: (1) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in
the acquiree; (2) recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase; and (3) discloses the business combination.
This Statement applies to all transactions in which an entity obtains control of one or
more businesses, including transactions that occur without the transfer of any type of
consideration. SFAS 141R will be effective on a prospective basis for all business
combinations on or after January 1, 2009, with the exception of the accounting for
valuation allowances on deferred taxes and acquired tax contingencies. Early adoption is
not allowed. The Company is in process of evaluating the impact, if any, the adoption of
SFAS 141R will have on the Companys consolidated results of operations or financial
position.

13

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SFAS
No. 160  Noncontrolling Interests in Consolidated Financial Statements

In
December 2007, the FASB issued SFAS No. 160 Noncontrolling Interests in
Consolidated Financial Statementsan amendment of ARB
No. 51" (SFAS 160). SFAS 160 amends ARB No. 51 and
establishes accounting and reporting standards that require noncontrolling interests
(previously referred to as minority interest) to be reported as a component of equity,
changes in a parents ownership interest while the parent retains its controlling
interest be accounted for as equity transactions, and upon a loss of control, retained
ownership interest will be remeasured at fair value, with any gain or loss recognized in
earnings. SFAS 160 will be effective for the Company commencing January 1, 2009,
except for the presentation and disclosure requirements, which will be applied
retrospectively. Early adoption is not allowed. The Company is in process of evaluating
the impact, if any, that the adoption of SFAS 160 will have on the Companys
consolidated results of operations or financial position.

SFAS
No. 161

In
March 2008, the FASB issued Statement of Financial Accounting Standards No. 161,
Disclosures about Derivative Instruments and Hedging Activities  an amendment of
FASB Statement No. 133 (SFAS 161). This Standard requires enhanced
disclosures regarding derivatives and hedging activities, including: (a) the manner
in which an entity uses derivative instruments; (b) the manner in which derivative
instruments and related hedged items are accounted for under Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities; and (c) the effect of derivative instruments and related hedged items on
an entitys financial position, financial performance, and cash flows. SFAS 161 is
effective for financial statements issued for fiscal years and interim periods beginning
after November 15, 2008. The Company is in process of evaluating the impact, if any,
that the adoption of SFAS 161 will have on its financial statements.

Results of Operations

Three months ended March 31, 2008
compared to Three months ended March 31, 2007

The Company recorded a consolidated
net loss of $10.3 million for the three months ended March 31, 2008 compared to a net loss
of $5.0 million for the same period in 2007. The increase in loss is primarily
attributable to an increase in interest expense, translation loss and loss from operations
of Gadot for the three months
ended March 31, 2008 as compared to the same period in 2007. This increase in loss was
partially offset by increase in gain from affiliates, other income and increase in
realized gain from investments.

In the three months ended March 31,
2008 the company includes the results of operations from Gadot, which was purchased on
December 3, 2007. Below are data from Gadot results of operations (in millions of dollar):

| |                   |  | 
| | ----------------- |  | 
|
|
|
|
| | Chemical income   |  | 
| |                   |  | 
| | Chemical Expense  |  | 
| |                   |  | 
| | Marketing Expense |  | 
| |                   |  | 
| | Other expense     |  | 
| |                   |  | 
| | Interest expense  |  | 
| |                   |  | 
| | Net loss          |  | 

Gadot experienced certain increase in
its Chemical activity in the first quarter. Part of the increase was attributed to the
impact of revenues from Gadot recent purchase in Europe, Finlog. Finlog provides logistic
service throughout Western Europe.

In the marine shipping activity Gadot
in the first quarter of 2008 continued to invest in building additional ships in an amount
of approximately $14 million. On April 29, 2008 Gadot, signed an agreement with its
partner to liquidate Chem-Tankers C.V., a partnership which provides shipping service of
chemicals. The agreement divides the shipping lines, the ships and other fixed assets
between the partners. According to the agreement the Company will continue to operate the
shipping lines which were operated by it prior to the formation of the partnership in
2005. The management of Gadot believes that there will be no material impact on the
results of operations of Gadot.

During the first quarter of 2008 the
US dollar continued to devalue against the New Israeli Shekel. This devaluation had
certain adverse effect on the result of Gadot.

In the three months ended March 31,
2008, the Company recorded a $4.4 million interest expense, as compared to a $1.8 million
interest expense for the same period in 2007. The increase in interest expense relates to
the increase in notes payable which the Company received to finance the purchase of Gadot
in December 2007, and the interest expense of Gadot which the Company included for the
first time in 2008.

In the three months ended March 31,
2008, the Company recorded a $13.2 million translation loss, as compared to a $1.0 million
translation loss for the same period in 2007. The increase in translation loss is related
to a change in the valuation of the New Israeli Shekel as compared to the U.S. dollar.

14

---

---

Equity in earnings of affiliates
increased to a net gain of $0.6 million for the three months ended March 31, 2008,
compared to a net loss of $17 thousand for the same period in 2007. The increase is
primarily attributable to the earnings from Gadots affiliates which were included
for the first time in three months ended March 31, 2008.

In the three month period ended March
31, 2008, the Company recorded $0.6 million of other income. The income is mostly
attributable to diluted gain from issuance of shares by Gadot. In 2007 the Company did not
record any other income

In the three month period ended March
31, 2008, the Company recorded $0.4 million of net realized gain on investments, compared
to $37 thousand of net realized gain in the same period in 2007. The net gain recorded in
2008 was primarily attributable to the sale of certain assets by PSINet Europe, one of the
holdings of one of Ampals investee companies, Telecom Partners (TP)
($0.3 million gain) and the sale of certain assets by FIMI Opportunity Fund L.P
(FIMI) ($0.1 million gain).

On August 5, 2007, the Company
completed the sale of Am-Hal Ltd (Am-Hal). Am-Hal was a wholly owned
subsidiary which owned and operated a chain of senior citizens facilities located in
Israel. Accordingly, Am-Hal has been reported as a discontinued operation for the three
months ended March 31, 2007.

Results of operations analyzed by
segments for three months ended March 31:

|                                | 2008 | 2007
|------------------------------- | ---- | ----
|
|
|
|
|Revenues:                       |      |     
|                                |      |     
|Chemicals                       |      |     
|Energy                          |      |     
|Finance                         |      |     
|Leisure-time                    |      |     
|Intercompany adjustments        |      |     
|                                |      |     
|                                |      |     
|Equity in earning of affiliates |      |     
|                                |      |     
|                                |      |     
|Total                           |      |     
|                                |      |     

In the three months ended March 31,
2008, the Company recorded $128.7 million in revenue which was comprised of $126.1 million
in the Chemicals segment, due to the acquisition of Gadot in December 2007, $1.3 million
in the Finance segment, $0.7 million in the Leisure-Time segment and a $0.6 million gain
in Equity in earnings of affiliates, as compared to $1.1 million for the same period in
2007 which was comprised of $0.5 million in the Finance segment, $0.6 million in the
Leisure-Time segment and a $17 thousand loss in Equity in earnings of affiliates. The
increase in the Finance segment revenue is primarily related to the increase in realized
and unrealized gains on marketable securities.

|             | 2008 | 2007
|------------ | ---- | ----
|
|
|
|
|Expenses:    |      |     
|             |      |     
|Chemicals    |      |     
|Energy       |      |     
|Finance      |      |     
|Leisure-time |      |     
|             |      |     
|             |      |     
|Total        |      |     
|             |      |     
|             |      |     

In the three months ended March 31,
2008, the Company recorded $147.8 million in expenses which was comprised of $128.3
million in the Chemicals segment, due to the acquisition of Gadot in December 2007, $18.9
million in the Finance segment and $0.6 million in the Leisure-Time segment, as compared
to $5.4 million expense for the same period in 2007 which was comprised of $4.9 million in
the Finance segment and $0.5 million in the Leisure-Time segment. The increase in expenses
in the Finance segment is primarily attributable to the $13.2 million translation loss
which was recorded due to the change in the valuation of the New Israeli Shekel as
compared to the U.S. dollar and to the increase in interest expense relate to the notes
payable which the company received to finance the purchase of Gadot in December 2007.

15

---

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Liquidity and Capital
Resources

Cash
Flows

On March 31, 2008, cash, cash
equivalents and marketable securities were $52.6 million, as compared with $66.7 million
at December 31, 2007. The decrease is primarily attributable to the purchase of a ship by
Gadot.

As of March 31, 2008, the Company had
$22.5 million of marketable securities as compared to $22.5 million in 2007.

The Company may also receive cash
from operations and investing activities and amounts available under credit facilities, as
described below. The Company believes that these sources are sufficient to fund the
current requirements of operations, capital expenditures, investing activities and other
financial commitments of the Company for the next 12 months. However, to the extent that
contingencies and payment obligations described below and in other parts of this Report
require the Company to make unanticipated payments, the Company would need to further
utilize these sources of cash. The Company may need to draw upon its other sources of
cash, which may include additional borrowing, refinancing of its existing indebtedness or
liquidating other assets, the value of which may also decline.

In addition, Ampals interest in
Gadot has been pledged and cash equal to $12.0 million has been placed as a compensating
balance for various loans provided to the Company.

Cash
flows from operating activities

Net cash used in operating activities
totaled approximately $7.0 million for the three months ended March 31, 2008, compared to
approximately $4.0 million used in operating activities for the same period in 2007. The
increase in cash used is primarily attributable to the increase in operation loss due to
the increase in interest expense and the loss attributable to Gadot operations.

Cash
flows from investing activities

Net cash used in investing activities
totaled approximately $15.2 million for the three months ended March 31, 2008, compared to
approximately $1.0 million used in investing activities for the same period in 2007. The
increase in cash used in is primarily attributable to the payment for ships purchased by
Gadot and investment in Bay Heart Ltd. (Bay Heart) ($1.0 million).

Cash
flows from financing activities

Net cash provided by financing
activities was approximately $7.8 million for the three months ended March 31, 2008,
compared to approximately $0.7 million of net cash provided by financing activities for
the same period in 2007.

In the three months ended March 31,
2008, the Company received $7.9 million notes payable, while in 2007 the Company paid down
its existing notes payable to Bank Hapoalim Ltd. (Bank Hapoalim) in the amount
of $26.5 million while borrowing an additional $27.2 million under a loan facility with
Bank Hapoalim.

Investments

In the three months ended March 31
2008, the Company made an additional investment in the form of a $1.0 million loan to Bay
Heart.

In the three months ended March 31,
2008, the Company disposed of the following investments:

During March 2008 the company
received $0.3 million from the sale of certain assets by PSINet Europe, one of the
holdings of TP.

On February 29, 2008, the Company
sold certain assets of FIMI for $0.1 million.

Debt

Notes issued to institutional
investors in Israel, the convertible note issued to Merhav and other loans payable
pursuant to bank borrowings are either in U.S. dollars, linked to the Consumer Price Index
in Israel or in unlinked New Israel Shekels, with interest rates varying depending upon
their linkage provision and mature between 2008-2019.

The Company finances its general
operations and other financial commitments through bank loans from Bank Hapoalim, Union
Bank of Israel Ltd. (UBI) and Israel Discount Bank Ltd (IDB). As
of March 31, 2008, the outstanding indebtedness under these bank loans totaled $103.7
million and the loans mature through 2008-2019.

16

---

---

As of March 31, 2008, the Company has
a $17 million loan with UBI, a $10 million loan with UBI that bears interest at the rate
of LIBOR plus 2% to be repaid in six annual installments commencing on April 2, 2008 and
various other loans with UBI in the aggregate amount of $7 million bearing interest at
rates between 4.3% and 4.8% to be repaid until 2009.

As of March 31, 2008 the Company has
a $22.5 million loan with Bank Hapoalim as part of a $27 million dollar loan facility. The
funds borrowed under the loan facility are due in six annual installments commencing on
December 31, 2007 and bear interest at an annual rate of LIBOR plus 2%. The related loan
agreement contains financial and other covenants including an acceleration of payment
upon the occurrence of certain changes in the ownership of the Companys Class A
Stock. As of March 31, 2008, the Company is in compliance with its debt covenants.

As of March 31, 2008 the Company has
a $103.2 million loan from institutional investors to Merhav Ampal Energy
Holdings, LP.    (the Partnership). In
connection with the Partnerships purchase of an interest in East Mediterranean Gas
Co. S.A.E., an Egyptian joint stock company, the investors own 50% of the Partnership.       The loan is not linked to the Consumer Price Index in Israel, bears no
interest and is repayable upon agreement by both parties, but with a minimum term of one
year.

A short term loan from Bank Hapoalim
in the amount of $3.5 million bears interest of 7.1% and is to be repaid by March 31,
2009.

On November 20, 2006, the Company
entered into a trust agreement with Hermetic Trust (1975) Ltd. pursuant to which the
Company issued notes to institutional investors in Israel in the principal aggregate
amount of NIS 250 million (approximately $58 million) with an interest rate of 5.75%,
which is linked to the Israeli consumer price index. The notes shall rank pari passu with
our unsecured indebtedness. The notes will be repaid in five equal annual installments
commencing on November 20, 2011, and the interest will be paid semi-annually. As of March
31, 2008, the outstanding debt under the notes amounts to $72.4 million, due to the change
in valuation of the New Israeli Shekel as compared to the U.S. dollar. The Company
deposited an amount of $10,207,000 with Hermetic Trust (1975) Ltd. to secure the first
three years worth of payments of interest on the debentures. As of March 31, 2008, the
outstanding amount of the deposit was $8.1 million. Prior to the issuance of the
debentures, Midroog Ltd., an affiliate of Moodys Investors Service, rated the
debentures as A3, which rating was raised to A2 in March 2008.

Ampal
funded the Gadot transaction with a combination of available cash and the proceeds of a
new credit facility, dated November 29, 2007 (the Credit Facility), between
Merhav Ampal Energy, Ltd. (MAE) and IDB, for approximately $60.7 million. The
Credit Facility is divided into two equal loans of approximately $30.35 million. The first
loan is a revolving loan that has no principal payments and may be repaid in full or in
part on December 31 of each year until 2019, when a single balloon payment will become
due. The second loan also matures in 2019, has no principal payments for the first two
years, and shall thereafter be paid in equal installments over the remaining ten years of
the term. Interest on both loans accrues at a floating rate equal to LIBOR plus a
percentage spread and is payable on a current basis. Ampal has guaranteed all the
obligations of MAE under the Credit Facility and Ampals interest in Gadot has also
been pledged to IDB as a security for the Credit Facility.  Yosef Maiman has agreed
to maintain ownership of a certain amount of the Companys Class A Common Stock. The
Credit Facility contains customary affirmative and negative covenants for credit
facilities of this type.

On
April 29, 2008 the company completed its Series B debenture offering in Israel. Ampal
accepted subscriptions in the amount of NIS 577.8 million (approximately $165.7 million)
for its Series B debentures. The debentures are linked to the Israeli consumer price index
and will carry an annual interest rate of 6.6%.

Other
long term borrowings in the amount of $0.3 million are linked to the Consumer Price Index
in Israel, mature between 2008 and 2010 and bear annual interest of 5.7%.

As
of March 31, 2008, Gadot had $0.7 million outstanding under its convertible debentures.
Gadots debentures were listed on the Tel Aviv Stock Exchange (TASE) in
December 2003, are linked to the Consumer Price Index in Israel, bear annual interest at
the rate of 6.5%, and are repayable in two equal annual installments on December 5,
2008 and 2009. The debentures are convertible into ordinary shares of Gadot, commencing
from the date they were listed on the TASE until December 5, 2009.

As
of March 31, 2008, Gadot had $12.7 million outstanding under its other debentures. These
debentures are not convertible into shares and are repayable in five equal annual
installments on September 15 of each of the years 2008 through 2012. The unsettled
balance of the principal of the debentures bears annual interest at the rate of 5.3%. The
principal and interest of the debentures are linked to the Consumer Price Index in Israel
and the interest is payable in semi-annual installments on March 15 and
September 15 of each of the years 2006 through 2012.

As
of March 31, 2008, Gadot has short term loans payable in the amount of $107.5 million and
long term loans payable in the amount of $33.3 million. The various short term loans
payable are either unlinked or linked to the Euro and bear interest at rates between 5.73%
to 6.09%. The various long term loans payable are either unlinked, linked to the Consumer
Price Index in Israel or linked to the Euro and bear interest at rates between 4.82% to
6.90%.

The
weighted average interest rates and the balances of these short-term borrowings at March
31, 2008 and December 31, 2007 were 6.04% on $149.1 million and 6.3% on $136.6 million,
respectively.

17

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As of March 31, 2008, the Company had
issued guarantees on certain outstanding loans to its investees and subsidiaries in the
aggregate principal amount of $22.7 million. These include:

|1. | A
$5.7 million guarantee on indebtedness incurred by Bay Heart in connection
                    with the development of the property. Bay Heart recorded losses in
2008 as a                     result of decreased rental revenues. There can be no
guarantee that Bay Heart                     will become profitable or that it will
generate sufficient cash to repay its                     outstanding indebtedness
without relying on the Companys guarantee.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | A
$1.1 million guarantee to Galha (1960) Ltd. (Galha) if a final judgment is entered
                    against the Company in the Tel Aviv District Court. (See Part II
 Item 1                     Legal Proceedings)
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | A
$15.9 million guarantee of Gadot for outstanding loans.
|-- | ---------------------------------------------------------

Off-Balance
Sheet Arrangements

Other than the foreign currency
contracts specified below, the Company has no off-balance sheet arrangements.

FOREIGN CURRENCY CONTRACTS

The
Companys derivative financial instruments consist of foreign currency forward
exchange contracts to purchase or sell U.S. dollars. These contracts are utilized by the
Company, from time to time, to manage risk exposure to movements in foreign exchange
rates. None of these contracts have been designated as hedging instruments. These
contracts are recognized as assets or liabilities on the balance sheet at their fair
value, which is the estimated amount at which they could be settled, based on market
prices or dealer quotes, where available, or based on pricing models. Changes in fair
value are recognized currently in earnings.

As
of March 31, 2008, the Company had open foreign currency forward exchange contracts to
purchase U.S. dollars and sell Euros in the amount of $17.7 million and contracts to sell
U.S. dollars and buy Euros in the amount of $12.7 million.

FORWARD
LOOKING STATEMENTS

This
Quarterly Report (including but not limited to factors discussed above, in the
Managements Discussion and Analysis of Financial Condition and Results of
Operations, as well as those discussed elsewhere in this Quarterly Report on Form
10-Q) includes forward-looking statements (within the meaning of Section 27A of the
Securities Act of 1993 and Section 21E of the Securities Exchange Act of 1934) and
information relating to the Company that are based on the beliefs of management of the
Company as well as assumptions made by and information currently available to the
management of the Company. When used in this Quarterly Report, the words
anticipate, believe, estimate, expect,
intend, plan, and similar expressions, as they relate to the
Company or the management of the Company, identify forward-looking statements. Such
statements reflect the current views of the Company with respect to future events or
future financial performance of the Company, the outcome of which is subject to certain
risks and other factors which could cause actual results to differ materially from those
anticipated by the forward-looking statements, including among others, the economic and
political conditions in Israel and the Middle East and the global business and economic
conditions in the different sectors and markets where the Companys portfolio
companies operate.

Should
any of those risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results or outcome may vary from those described herein as anticipated,
believed, estimated, expected, intended or planned. These risks and uncertainties may
include, but are not limited to, those described in this report, in Part II, Item 1A. Risk
Factors and elsewhere in our Annual Report on Form 10-K for the year ended December 31,
2007, and those described from time to time in our future reports filed with the
Securities and Exchange Commission. The Company assumes no obligation to update or revise
any forward-looking statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK

MARKET RISKS AND
SENSITIVITY ANALYSIS

The
Company is exposed to various market risks, including changes in interest rates, foreign
currency exchange rates and equity price changes. The following analysis presents the
hypothetical loss in earnings, cash flows and fair values of the financial instruments
which were held by the Company at March 31, 2008, and are sensitive to the above market
risks.

During the three months ended March
31, 2008, there have been no material changes in the market risk exposures facing the
Company as compared to those the Company faced in the fiscal year ended December 31, 2007.

18

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Interest Rate Risks

As
of March 31, 2008, the Company had financial assets totaling $42.1 million and financial
liabilities totaling $433.7 million. For fixed rate financial instruments, interest rate
changes affect the fair market value but do not impact earnings or cash flows. Conversely,
for variable rate financial instruments, interest rate changes generally do not affect the
fair market value but do impact future earnings and cash flows, assuming other factors are
held constant.

As
March 31, 2008, the Company did not have fixed rate financial assets and had variable rate
financial assets of $42.1 million. A ten percent decrease in interest rates would not
increase the unrealized fair value of the fixed rate assets.

As
of March 31, 2008, the Company had fixed rate debt of $207.2 million and variable rate
debt of $226.5 million. A ten percent decrease in interest rates would increase the
unrealized fair value of the financial debts in the form of the fixed rate debt by
approximately $1.7 million.

The
net decrease in earnings and cash flows for the next year resulting from a ten percent
interest rate increase would be approximately $1.4 million, holding other variables
constant.

Foreign Currency Exchange
Rate Sensitivity Analysis

The
Companys exchange rate exposure on its financial instruments results from its
investments and ongoing operations. As of March 31, 2008, the Company had open foreign
exchange forward contracts to purchase U.S. dollars and sell Euros in the amount of $17.7
million and contracts to sell U.S. dollars and buy Euros in the amount of $12.7 million.
Holding other variables constant, if there were a ten percent devaluation of the foreign
currency, the Companys cumulative translation loss reflected in the Companys
accumulated other comprehensive loss would increase by $2.0 million, and regarding the
statements of operations, a ten percent devaluation of the U.S. Dollar exchange rate would
result in a net increase in earnings and cash flows of $20.9 million, and a ten percent
devaluation of the Euro exchange rate would result in a net increase in earnings and cash
flows of $0.5 million.

Equity Price Risk

The Companys investments at
March 31, 2008 included trading marketable securities which are recorded at a fair value
of $6.5 million, including a net unrealized gain of $0.8 million, and $16.0 million of
trading securities that are classified as Available for sale, including a net unrealized
loss of $0.4 million. Those securities have exposure to equity price risk. The estimated
potential loss in fair value resulting from a hypothetical ten percent decrease in prices
quoted on stock exchanges is approximately $2.3 million. There will be no impact on cash
flow resulting from a hypothetical ten percent decrease in prices quoted on stock
exchanges.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and
Procedures

The Companys management, with
the participation of the Companys Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of the Companys disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the
period covered by this report. Based on such evaluation, the Companys Chief
Executive Officer and Chief Financial Officer have concluded that, as of the end of such
period, the Companys disclosure controls and procedures are effective.
Notwithstanding the foregoing, a control system, no matter how well designed and operated,
can provide only reasonable, not absolute, assurance that it will detect or uncover
failures within the Company to disclose material information otherwise required to be set
forth in the Companys periodic reports.

Internal Control Over
Financial Reporting

There have not been any changes in
the Companys internal control over financial reporting (as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which
this report relates that have materially affected, or are reasonably likely to materially
affect the Companys internal control over financial reporting.

19

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|Part II |  | OTHER INFORMATION
|------- | - | -----------------

|Item 1. |  | Legal Proceedings:
|------- |  | ------------------

| | On
January 1, 2002, Galha filed a suit against the Company and other parties,
including directors of Paradise Industries Ltd. (Paradise) appointed by the
Company, in the Tel Aviv District Court, in the amount of NIS 11,560,000 ($3 million).
Galha claimed that the Company, which was a shareholder of Paradise, and another
shareholder of Paradise, misused funds that were received by Paradise from an insurance
company for the purpose of reconstructing an industrial building owned by Galha and used
by Paradise which burnt down. Paradise is currently involved in liquidation proceedings.
Ampal issued a guarantee in favor of Galha for the payment of an amount of up to NIS
4,172,000 ($1,085,000) if a final judgment against the Company will be given.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
May 26, 2003, the Company and the directors of Paradise appointed by the Company filed a
third party claim against Arieh Israeli Insurance Company Ltd. (Arieh) in the
Tel Aviv District Court claiming that, to the extent the court decides that the directors
of Paradise appointed by the Company will have to pay any amounts to Galha, Arieh will
pay such amounts on behalf of the directors in accordance with the Directors and Officers
insurance policy that the Company had at that time with Arieh. Arieh filed a statement of
defense and stated that the policy does not cover the claim. At this stage, the Company
cannot estimate the impact this claim will have on it. In March 2008, the dispute was
submitted to mediation by order of the court, with the consent of the parties.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item  1A. |  | RISK FACTORS
|--------- |  | ------------

| | In
addition to the other information set forth in this report, you should carefully consider
the factors discussed in Part I, Item 1A. Risk Factors in our Annual Report
on Form 10-K for the year ended December 31, 2007, which could materially affect our
business, financial condition or future results. The risks described in our Annual Report
on Form 10-K are not the only risks facing our Company. Additional risks and
uncertainties not currently known to us or that we currently deem to be immaterial also
may materially adversely affect our business, financial condition and/or operating
results.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds.
|------- |  | ------------------------------------------------------------

| | None.
| | -----

|Item 3. |  | Defaults upon Senior Securities
|------- |  | -------------------------------

| | None.
| | -----

|Item 4. |  | Submission of Matters to a Vote of Security Holders.
|------- |  | ----------------------------------------------------

| | None.
| | -----

|Item 5. |  | Other Information.
|------- |  | ------------------

| | None.
| | -----

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|Item 6. |  | Exhibits.
|------- |  | ---------

| | (a) | Exhibits:
| | --- | ---------

|4.a |  | English
translation of the original Hebrew language Trust Deed dated April 6, 2008 between
Ampal-American Israel Corporation and Clal Financial Trusts 2007 Ltd., and its
amendments.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11.1 |  | Schedule
Setting Forth Computation of Earnings Per Share of Class A Stock.
|---- |  | --------------------------------------------------------------------------

|31.1 |  | Certification
of Yosef A. Maiman pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002.
|---- |  | -----------------------------------------------------------------------------------------------------------

|31.2 |  | Certification
of Irit Eluz pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|---- |  | -------------------------------------------------------------------------------------

|32.1 |  | Certification
of Yosef A. Maiman and Irit Eluz pursuant to 18 U.S.C. Section 1350, as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

21

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AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.

| |  | AMPAL-AMERICAN ISRAEL CORPORATIONBy: /s/ Yosef A. Maiman
Yosef A. MaimanChairman of the BoardPresident & Chief Executive Officer(Principal Executive Officer)
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | By: /s/ Irit Eluz
Irit EluzCFO and Senior Vice President,Finance and Treasurer(Principal Financial Officer)                                                  
| |  | By: /s/ Giora Bar-Nir
Giora Bar-NirVP Accounting and Controller(Principal Accounting Officer)                                                                

Date: May 7, 2008

22

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AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIES

Exhibit Index

|Exhibit No. | Description
|----------- | -----------

|4.a | English
translation of the original Hebrew language Trust Deed dated April 6, 2008 between
Ampal-American Israel Corporation and Clal Financial Trusts 2007 Ltd., and its
amendments.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11.1 | Schedule
Setting Forth Computation of Earnings Per Share of Class A Stock.
|---- | --------------------------------------------------------------------------

|31.1 | Certification
of Yosef A. Maiman pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002.
|---- | -----------------------------------------------------------------------------------------------------------

|31.2 | Certification
of Irit Eluz pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|---- | -------------------------------------------------------------------------------------

|32.1 | Certification
of Yosef A. Maiman and Irit Eluz pursuant to 18 U.S.C. Section 1350, as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

23

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