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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON D.C.
20549



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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, 2007                            
|                                                                           
|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 o     Non-accelerated filer x

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 49,355,791(as of May 10, 2007).

---

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AMPAL-AMERICAN ISRAEL CORPORATION AND
SUBSIDIARIES

Index to Form 10-Q

|         |                                                                                            |                                                               |     
|-------- | ------------------------------------------------------------------------------------------ | ------------------------------------------------------------- | ----
|         |                                                                                            |                                                               | Page
|         |                                                                                            |                                                               |     
|         |                                                                                            |                                                               |     
|Part I   | Financial
  Information                                                                    |                                                              
|         |                                                                                            |                                                               |     
|Item 1.  | Financial
  Statements                                                                     |                                                              
|         |                                                                                            |                                                               |     
|         | Consolidated Balance Sheets                                                                | 1-2                                                          
|         |                                                                                            |                                                               |     
|         | Consolidated Statements of Operations for the Three Months Ended
  March 31, 2007 and 2006 | 3                                                            
|         |                                                                                            |                                                               |     
|         | Consolidated Statements of Cash Flows                                                      | 4-5                                                          
|         |                                                                                            |                                                               |     
|         | Consolidated Statements of Changes in ShareholdersEquity                                  | 6-7                                                          
|         |                                                                                            |                                                               |     
|         | Notes to the Consolidated Financial Statements                                             | 8                                                            
|         |                                                                                            |                                                               |     
|         |                                                                                            |                                                               |     
|Item 2.  | Managements Discussion and Analysis of Financial Condition and
  Results of Operations    | 13                                                           
|         |                                                                                            |                                                               |     
|         |                                                                                            |                                                               |     
|Item 3.  | Quantitative and Qualitative Disclosures About Market Risk                                 | 19                                                           
|         |                                                                                            |                                                               |     
|Item 4.  | Controls and Procedures                                                                    | 20                                                           
|         |                                                                                            |                                                               |     
|Part II. | Other Information                                                                          | 21                                                           
|         |                                                                                            |                                                               |     
|         | Item 1.                                                                                    | Legal Proceedings                                             | 21  
|         |                                                                                            |                                                               |     
|         | Item 1A.                                                                                   | Risk Factors                                                  | 21  
|         |                                                                                            |                                                               |     
|         | Item 2.                                                                                    | Unregistered Sales of Equity Securities and
  Use of Proceeds | 21  
|         |                                                                                            |                                                               |     
|         | Item 3.                                                                                    | Defaults upon Senior Securities                               | 21  
|         |                                                                                            |                                                               |     
|         | Item 4.                                                                                    | Submission of Matters to a Vote of Security Holders           | 21  
|         |                                                                                            |                                                               |     
|         | Item 5.                                                                                    | Other Information                                             | 22  
|         |                                                                                            |                                                               |     
|         | Item 6.                                                                                    | Exhibits                                                      | 22  

---

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                                             |  |                  |         |                     |   |         | 
|---------------------------------------------------------------------------- |  | ---------------- | ------- | ------------------- | - | ------- | 
|                                                                             |  |                  |         |                     |   |         | 
|ASSETS AS
  OF                                                               |  | March 31,
  2007 |         | December 31,
  2006 |  
|                                                                             |  |                  |         |                     |  
|(U.S.
  Dollars in thousands)                                                |  | (Unaudited)      |         | (Audited)           |  
|                                                                             |  |                  |         |                     |  
|Cash and
  cash equivalents                                                  |  | $                | 32,220  |                     | $ | 36,733  | 
|                                                                             |  |                  |         |                     |   |         | 
|Deposits
  receivable                                                        |  |                  | 10,379  |                     |   | 10,207  | 
|                                                                             |  |                  |         |                     |   |         | 
|                                                                             |  |                  |         |                     |   |         | 
|Investments                                                                  |  |                  | 265,026 |                     |   | 265,616 | 
|                                                                             |  |                  |         |                     |   |         | 
|Real estate property, less accumulated
  depreciation of $14,425 and $14,003 |  |                  | 69,619  |                     |   | 69,319  | 
|                                                                             |  |                  |         |                     |   |         | 
|Other assets                                                                 |  |                  | 22,729  |                     |   | 19,808  | 
|                                                                             |  |                  |         |                     |   |         | 
|Total Assets                                                                 |  | $                | 399,973 |                     | $ | 401,683 | 
|                                                                             |  |                  |         |                     |   |         | 

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

1

---

---



AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                     |  |                  |         |                     |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------- | ------------------- | - | ------- | -
|LIABILITIES
  AND SHAREHOLDERS EQUITY AS OF                                                                                                                         |  | March 31,
  2007 |         | December 31,
  2006 |  
|                                                                                                                                                                     |  |                  |         |                     |  
|(U.S.
  Dollars in thousands, except per share amounts)                                                                                                              |  | (Unaudited)      |         | (Audited)           |  
|                                                                                                                                                                     |  |                  |         |                     |  
|LIABILITIES                                                                                                                                                          |  |                  |         |                     |   |         |  
|                                                                                                                                                                     |  |                  |         |                     |   |         |  
|Notes and
  loans payable                                                                                                                                            |  | $                | 47,468  |                     | $ | 46,453  |  
|Debentures                                                                                                                                                           |  |                  | 60,168  |                     |   | 59,172  |  
|Deposits
  from tenants                                                                                                                                              |  |                  | 54,099  |                     |   | 54,979  |  
|Accounts
  payable, accrued expense and others                                                                                                                       |  |                  | 32,627  |                     |   | 30,964  |  
|                                                                                                                                                                     |  |                  |         |                     |   |         |  
|Total Liabilities                                                                                                                                                    |  |                  | 194,362 |                     |   | 191,568 |  
|                                                                                                                                                                     |  |                  |         |                     |   |         |  
|                                                                                                                                                                     |  |                  |         |                     |   |         |  
|Minority
  interests, net                                                                                                                                            |  |                  | 1,366   |                     |   | 1,302   |  
|                                                                                                                                                                     |  |                  |         |                     |   |         |  
|                                                                                                                                                                     |  |                  |         |                     |   |         |  
|Class A Stock; $1 par value; authorized
  100,000,000 and 60,000,000 shares; issued 54,930,580 and 46,328,429 shares;
  outstanding 49,355,791 and 40,753,640 shares |  |                  | 54,931  |                     |   | 46,328  |  
|                                                                                                                                                                     |  |                  |         |                     |   |         |  
|Receipt on
  account of unallocated shares                                                                                                                           |  |                  | -       |                     |   | 40,000  |  
|                                                                                                                                                                     |  |                  |         |                     |   |         |  
|Additional
  paid-in capital                                                                                                                                         |  |                  | 158,525 |                     |   | 126,945 |  
|                                                                                                                                                                     |  |                  |         |                     |   |         |  
|Warrants                                                                                                                                                             |  |                  | 308     |                     |   | 308     |  
|                                                                                                                                                                     |  |                  |         |                     |   |         |  
|Retained
  earnings                                                                                                                                                  |  |                  | 35,116  |                     |   | 40,165  |  
|                                                                                                                                                                     |  |                  |         |                     |   |         |  
|Accumulated
  other comprehensive loss                                                                                                                               |  |                  | (16,761 | )                   |   | (17,059 | )
|                                                                                                                                                                     |  |                  |         |                     |   |         |  
|Treasury
  Stock, at cost                                                                                                                                            |  |                  | (27,874 | )                   |   | (27,874 | )
|                                                                                                                                                                     |  |                  |         |                     |   |         |  
|                                                                                                                                                                     |  |                  |         |                     |   |         |  
|Total
  shareholders equity                                                                                                                                         |  |                  | 204,245 |                     |   | 208,813 |  
|                                                                                                                                                                     |  |                  |         |                     |   |         |  
|                                                                                                                                                                     |  |                  |         |                     |   |         |  
|TOTAL
  LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                         |  | $                | 399,973 |                     | $ | 401,683 |  
|                                                                                                                                                                     |  |                  |         |                     |   |         |  

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

2

---

---



ITEM 1. FINANCIAL STATEMENTS

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

|                                                         |  |             |        |             |   |        |  
|-------------------------------------------------------- |  | ----------- | ------ | ----------- | - | ------ | -
|THREE
  MONTHS ENDED MARCH 31,                           |  | 2007        |        | 2006        |  
|                                                         |  |             |        |             |  
|(U.S.
  Dollars in thousands, except per share amounts)  |  | (Unaudited) |        | (Unaudited) |  
|                                                         |  |             |        |             |  
|REVENUES                                                 |  |             |        |             |   |        |  
|                                                         |  |             |        |             |   |        |  
|Real estate
  income                                     |  | $           | 2,436  |             | $ | 2,315  |  
|Equity in
  earnings (loss) of affiliates                |  |             | (17    | )           |   | 897    |  
|Realized
  gains on investments                          |  |             | 37     |             |   | 987    |  
|Realized and
  unrealized gains on marketable securities |  |             | 1      |             |   | 539    |  
|Interest
  income                                        |  |             | 446    |             |   | 234    |  
|Other income                                             |  |             | 622    |             |   | 576    |  
|                                                         |  |             |        |             |   |        |  
|Total revenues                                           |  |             | 3,525  |             |   | 5,548  |  
|                                                         |  |             |        |             |   |        |  
|                                                         |  |             |        |             |   |        |  
|EXPENSES                                                 |  |             |        |             |   |        |  
|Real estate
  expenses                                   |  |             | 2,561  |             |   | 2,173  |  
|Loss from
  impairment of investment                     |  |             | 484    |             |   | -      |  
|Interest
  expenses                                      |  |             | 2,034  |             |   | 1,015  |  
|Translation
  loss                                       |  |             | 1,237  |             |   | 284    |  
|Other
  (mainly general and administrative)              |  |             | 1,969  |             |   | 2,253  |  
|                                                         |  |             |        |             |   |        |  
|Total expenses                                           |  |             | 8,285  |             |   | 5,725  |  
|                                                         |  |             |        |             |   |        |  
|                                                         |  |             |        |             |   |        |  
|Loss before
  income taxes                               |  |             | (4,760 | )           |   | (177   | )
|Provision
  for income taxes                             |  |             | 323    |             |   | 393    |  
|                                                         |  |             |        |             |   |        |  
|Loss after
  income tax                                  |  |             | (5,083 | )           |   | (570   | )
|Minority
  interests, net                                |  |             | 34     |             |   | (5     | )
|                                                         |  |             |        |             |   |        |  
|Net Loss for the period                                  |  | $           | (5,049 | )           | $ | (575   | )
|                                                         |  |             |        |             |   |        |  
|                                                         |  |             |        |             |   |        |  
|Basic and
  diluted EPS:                                 |  |             |        |             |   |        |  
|Loss per Class A Share                                   |  | $           | (0.11  | )           | $ | (0.03  | )
|                                                         |  |             |        |             |   |        |  
|                                                         |  |             |        |             |   |        |  
|Shares used in calculation (in thousands)                |  |             | 45,772 |             |   | 20,124 |  
|                                                         |  |             |        |             |   |        |  

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

3

---

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS

|                                                                                          |  |             |        |      |             |         |  
|----------------------------------------------------------------------------------------- |  | ----------- | ------ | ---- | ----------- | ------- | -
|THREE
  MONTHS ENDED MARCH 31,                                                            |  | 2007        |        | 2006 |            
|                                                                                          |  |             |        |      |            
|(U.S.
  Dollars in thousands)                                                             |  | (Unaudited) |        |      | (Unaudited) |        
|                                                                                          |  |             |        |      |             |        
|Cash flows from operating activities:                                                     |  |             |        |      |             |         |  
|Net loss for the period                                                                   |  | $           | (5,049 | )    | $           | (575    | )
|Adjustments to reconcile net loss for the
  period to net cash from operating activities: |  |             |        |      |             |         |  
|Equity in loss (earnings) of affiliates                                                   |  |             | 17     |      |             | (897    | )
|Realized and unrealized gains on
  investments, net                                       |  |             | (39    | )    |             | (1,526  | )
|Depreciation expense                                                                      |  |             | 479    |      |             | 503     |  
|Amortization income from tenants deposits                                                 |  |             | (389   | )    |             | (406    | )
|Non cash stock based compensation                                                         |  |             | 183    |      |             | 216     |  
|Loss from impairment of investment                                                        |  |             | 484    |      |             | -       |  
|Translation loss                                                                          |  |             | 1,237  |      |             | 284     |  
|Minority interests                                                                        |  |             | (34    | )    |             | 5       |  
|Decrease in other assets                                                                  |  |             | (1,046 | )    |             | (714    | )
|Increase in accounts payable, accrued
  expenses and others                               |  |             | (314   | )    |             | 19      |  
|Investments made in trading securities                                                    |  |             | -      |      |             | (12,188 | )
|Proceeds from sale of trading securities                                                  |  |             | 371    |      |             | 17,209  |  
|Dividends received from affiliates                                                        |  |             | 59     |      |             | 127     |  
|                                                                                          |  |             |        |      |             |         |  
|                                                                                          |  |             |        |      |             |         |  
|Net cash (used in) provided by operating
  activities                                     |  |             | (4,041 | )    |             | 2,057   |  
|                                                                                          |  |             |        |      |             |         |  
|                                                                                          |  |             |        |      |             |         |  
|Cash flows
  from investing activities:                                                   |  |             |        |      |             |         |  
|Investments made                                                                          |  |             | (552   | )    |             | (359    | )
|Proceeds from sale of investments                                                         |  |             | 37     |      |             | 622     |  
|Capital improvements                                                                      |  |             | (486   | )    |             | (212    | )
|                                                                                          |  |             |        |      |             |         |  
|                                                                                          |  |             |        |      |             |         |  
|Net cash (used in) provided by investing
  activities                                     |  |             | (1,001 | )    |             | 51      |  
|                                                                                          |  |             |        |      |             |         |  

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

4

---

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                                                      |  |             |         |             |   |        |  
|------------------------------------------------------------------------------------- |  | ----------- | ------- | ----------- | - | ------ | -
|THREE
  MONTHS ENDED MARCH 31,                                                        |  | 2007        |         | 2006        |  
|                                                                                      |  |             |         |             |  
|(U.S.
  Dollars in thousands)                                                         |  | (Unaudited) |         | (Unaudited) |  
|                                                                                      |  |             |         |             |  
|Cash flows from financing
  activities:                                               |  |             |         |             |   |        |  
|Notes and loans payable received                                                      |  | $           | 27,164  |             | $ | 1,175  |  
|Notes and loans payable repaid                                                        |  |             | (26,522 | )           |   | (5,110 | )
|Contribution to partnership by minority                                               |  |             | 78      |             |   | -      |  
|Proceeds from exercise of stock options                                               |  |             | -       |             |   | 82     |  
|                                                                                      |  |             |         |             |   |        |  
|                                                                                      |  |             |         |             |   |        |  
|Net cash provided by (used in) financing
  activities                                 |  |             | 720     |             |   | (3,853 | )
|                                                                                      |  |             |         |             |   |        |  
|                                                                                      |  |             |         |             |   |        |  
|Effect of exchange rate changes on cash and
  cash equivalents                        |  |             | (191    | )           |   | (162   | )
|                                                                                      |  |             |         |             |   |        |  
|                                                                                      |  |             |         |             |   |        |  
|Net decrease in cash and cash equivalents                                             |  |             | (4,513  | )           |   | (1,907 | )
|Cash and cash equivalents at beginning of Period                                      |  |             | 36,733  |             |   | 24,314 |  
|                                                                                      |  |             |         |             |   |        |  
|                                                                                      |  |             |         |             |   |        |  
|Cash and cash equivalents at end of
period                                            |  | $           | 32,220  |             | $ | 22,407 |  
|                                                                                      |  |             |         |             |   |        |  
|                                                                                      |  |             |         |             |   |        |  
|Supplemental Disclosure of Non-cash Investing and Financing Activities:               |  |             |         |             |   |        |  
|                                                                                      |  |             |         |             |   |        |  
|Sale of trading securities for which cash
  was received subsequent to March 31, 2006 |  | $           | -       |             | $ | 2,234  |  
|                                                                                      |  |             |         |             |   |        |  
|                                                                                      |  |             |         |             |   |        |  
|Dividend from an equity investment recorded
  as payable accounts in previous period  |  | $           | -       |             | $ | 5,060  |  
|                                                                                      |  |             |         |             |   |        |  

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

5

---

---



AMPAL-AMERICAN ISRAEL CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS
EQUITY

(U.S. Dollars in
thousands)

|                                                              |  |                     |        |        |  |                                                |  |                                |         |          |  |                     |  |                                                     |     |                  |  |                            |   |  |         |   |  |         |   |  |         |  
|------------------------------------------------------------- |  | ------------------- | ------ | ------ |  | ---------------------------------------------- |  | ------------------------------ | ------- | -------- |  | ------------------- |  | --------------------------------------------------- | --- | ---------------- |  | -------------------------- | - |  | ------- | - |  | ------- | - |  | ------- | -
|                                                              |  | Class A stock       |        |        |  |                                                |  |                                |         |          |  |                     |  |                                                     |     |                  | 
|                                                              |  |                     |        |        |  |                                                |  |                                |         |          |  |                     |  |                                                     |     |                  | 
|                                                              |  | Number
  of shares* |        | Amount |  | Receipt on
  account of
  unallocated
  shares |  | Additional
  paid in
  capital |         | Warrants |  | Retained
  earnings |  | Accumulated
  other
  comprehensive
  income (loss) |     | Treasury
  stock |  | Total
  sharehold
  equity |  
|                                                              |  |                     |        |        |  |                                                |  |                                |         |          |  |                     |  |                                                     |     |                  |  |                            |  
|BALANCE AT JANUARY 1, 2007                                    |  |                     | 46,328 |        |  | 46,328                                         |  |                                | 40,000  |          |  | 126,945             |  |                                                     | 308 |                  |  | 40,165                     |   |  | (17,059 | ) |  | (27,874 | ) |  | 208,813 |  
|CHANGES DURING 2007:                                          |  |                     |        |        |  |                                                |  |                                |         |          |  |                     |  |                                                     |     |                  |  |                            |   |  |         |   |  |         |   |  |         |  
|Net loss for the period                                       |  |                     |        |        |  |                                                |  |                                |         |          |  |                     |  |                                                     |     |                  |  | (5,049                     | ) |  |         |   |  |         |   |  | (5,049  | )
|Other comprehensive income
  (loss):                          |  |                     |        |        |  |                                                |  |                                |         |          |  |                     |  |                                                     |     |                  |  |                            |   |  |         |   |  |         |   |  |         |  
|Foreign currency
  translation adjustments                    |  |                     |        |        |  |                                                |  |                                |         |          |  |                     |  |                                                     |     |                  |  |                            |   |  | 298     |   |  |         |   |  | 298     |  
|                                                              |  |                     |        |        |  |                                                |  |                                |         |          |  |                     |  |                                                     |     |                  |  |                            |   |  |         |   |  |         |   |  |         |  
|Total comprehensive loss                                      |  |                     |        |        |  |                                                |  |                                |         |          |  |                     |  |                                                     |     |                  |  |                            |   |  |         |   |  |         |   |  | (4,751  | )
|                                                              |  |                     |        |        |  |                                                |  |                                |         |          |  |                     |  |                                                     |     |                  |  |                            |   |  |         |   |  |         |   |  |         |  
|Adjustment upon adoption of
  FIN 48                          |  |                     |        |        |  |                                                |  |                                |         |          |  |                     |  |                                                     |     |                  |  | (2,000                     | ) |  |         |   |  |         |   |  | (2,000  | )
|Change in deferred tax
  asset relating to adoption of FIN 48 |  |                     |        |        |  |                                                |  |                                |         |          |  |                     |  |                                                     |     |                  |  | 2,000                      |   |  |         |   |  |         |   |  | 2,000   |  
|Shares issued for
  investment made                           |  |                     | 8,603  |        |  | 8,603                                          |  |                                | (40,000 | )        |  | 31,397              |  |                                                     |     |                  |  |                            |   |  |         |   |  |         |   |  | --      |  
|Compensation expense
  recognized under SFAS 123R             |  |                     |        |        |  |                                                |  |                                |         |          |  | 183                 |  |                                                     |     |                  |  |                            |   |  |         |   |  |         |   |  | 183     |  
|                                                              |  |                     |        |        |  |                                                |  |                                |         |          |  |                     |  |                                                     |     |                  |  |                            |   |  |         |   |  |         |   |  |         |  
|                                                              |  |                     |        |        |  |                                                |  |                                |         |          |  |                     |  |                                                     |     |                  |  |                            |   |  |         |   |  |         |   |  |         |  
|BALANCE AT MARCH 31, 2007                                     |  |                     | 54,931 |        |  | 54,931                                         |  |                                | --      |          |  | 158,525             |  |                                                     | 308 |                  |  | 35,116                     |   |  | (16,761 | ) |  | (27,874 | ) |  | 204,245 |  
|                                                              |  |                     |        |        |  |                                                |  |                                |         |          |  |                     |  |                                                     |     |                  |  |                            |   |  |         |   |  |         |   |  |         |  

|  |             
|- | ------------
|* | In thousands

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

6

---

---



AMPAL-AMERICAN ISRAEL CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

(U.S. Dollars in
thousands)

|                                                                                          |  |                     |        |                        |  |                          |  |        |     |                    |  |        |   |                                |     |                     |  |                                                     |   |                  |        |                            |  |        |   |  |         |   |  |         |   |  |        |  
|----------------------------------------------------------------------------------------- |  | ------------------- | ------ | ---------------------- |  | ------------------------ |  | ------ | --- | ------------------ |  | ------ | - | ------------------------------ | --- | ------------------- |  | --------------------------------------------------- | - | ---------------- | ------ | -------------------------- |  | ------ | - |  | ------- | - |  | ------- | - |  | ------ | -
|                                                                                          |  | Class A
  stock     |        | 4%
  Preferred
  stock |  | 6.5%
  Preferred
  stock |  |        |     |                    |  |        |   |                                |     |                     | 
|                                                                                          |  |                     |        |                        |  |                          |  |        |     |                    |  |        |   |                                |     |                     | 
|                                                                                          |  | Number
  of shares* |        | Amount                 |  | Number
  of shares       |  | Amount |     | Number
  of shares |  | Amount |   | Additional
  paid in
  capital |     | Retained
  earnings |  | Accumulated
  other
  comprehensive
  income (loss) |   | Treasury
  stock |        | Total
  sharehold
  equity | 
|                                                                                          |  |                     |        |                        |  |                          |  |        |     |                    |  |        |   |                                |     |                     |  |                                                     |   |                  |        |                            | 
|BALANCE AT JANUARY 1, 2006                                                                |  |                     | 25,827 |                        |  | 25,827                   |  |        | 114 |                    |  | 571    |   |                                | 641 |                     |  | 3,207                                               |   |                  | 58,252 |                            |  | 51,223 |   |  | (19,518 | ) |  | (30,693 | ) |  | 88,869 |  
|CHANGES DURING 2006:                                                                      |  |                     |        |                        |  |                          |  |        |     |                    |  |        |   |                                |     |                     |  |                                                     |   |                  |        |                            |  |        |   |  |         |   |  |         |   |  |        |  
|Net loss                                                                                  |  |                     |        |                        |  |                          |  |        |     |                    |  |        |   |                                |     |                     |  |                                                     |   |                  |        |                            |  | (575   | ) |  |         |   |  |         |   |  | (575   | )
|Other comprehensive income
  (loss):                                                      |  |                     |        |                        |  |                          |  |        |     |                    |  |        |   |                                |     |                     |  |                                                     |   |                  |        |                            |  |        |   |  |         |   |  |         |   |  |        |  
|Foreign currency
  translation adjustments                                                |  |                     |        |                        |  |                          |  |        |     |                    |  |        |   |                                |     |                     |  |                                                     |   |                  |        |                            |  |        |   |  | (247    | ) |  |         |   |  | (247   | )
|Unrealized gain on
  marketable securities                                                |  |                     |        |                        |  |                          |  |        |     |                    |  |        |   |                                |     |                     |  |                                                     |   |                  |        |                            |  |        |   |  | 6       |   |  |         |   |  | 6      |  
|                                                                                          |  |                     |        |                        |  |                          |  |        |     |                    |  |        |   |                                |     |                     |  |                                                     |   |                  |        |                            |  |        |   |  |         |   |  |         |   |  |        |  
|Total comprehensive loss                                                                  |  |                     |        |                        |  |                          |  |        |     |                    |  |        |   |                                |     |                     |  |                                                     |   |                  |        |                            |  |        |   |  |         |   |  |         |   |  | (816   | )
|Conversion of 640 4%
  preferred stock and 23,460 6.5% preferred stock into Class A stock |  |                     | 73     |                        |  | 73                       |  |        | (1  | )                  |  | (3     | ) |                                | (23 | )                   |  | (117                                                | ) |                  | 47     |                            |  |        |   |  |         |   |  |         |   |  | --     |  
|Compensation expense
  recognized under SFAS 123R                                         |  |                     |        |                        |  |                          |  |        |     |                    |  |        |   |                                |     |                     |  |                                                     |   |                  | 216    |                            |  |        |   |  |         |   |  |         |   |  | 216    |  
|Reissuance of 26,250
  treasury stock for exercise of stock options                       |  |                     |        |                        |  |                          |  |        |     |                    |  |        |   |                                |     |                     |  |                                                     |   |                  |        |                            |  | (49    | ) |  |         |   |  | 131     |   |  | 82     |  
|                                                                                          |  |                     |        |                        |  |                          |  |        |     |                    |  |        |   |                                |     |                     |  |                                                     |   |                  |        |                            |  |        |   |  |         |   |  |         |   |  |        |  
|BALANCE AT MARCH 31, 2006                                                                 |  |                     | 25,900 |                        |  | 25,900                   |  |        | 113 |                    |  | 568    |   |                                | 618 |                     |  | 3,090                                               |   |                  | 58,515 |                            |  | 50,599 |   |  | (19,759 | ) |  | (30,562 | ) |  | 88,351 |  
|                                                                                          |  |                     |        |                        |  |                          |  |        |     |                    |  |        |   |                                |     |                     |  |                                                     |   |                  |        |                            |  |        |   |  |         |   |  |         |   |  |        |  

|  |             
|- | ------------
|* | 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, 2006, filed with the Securities and Exchange
  Commission.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Reference
  should be made to the Companys consolidated financial statements for the
  year ended December 31, 2006 for a description of the critical accounting
  policies. Also, reference should be made to the notes to the Companys
  December 31, 2006 consolidated financial statements for additional
  information regarding the Companys consolidated financial condition, results
  of operations and cash flows.Accounting Change - Effective January 1, 2007 the Company
  adopted Financial Accounting Standards Board (FASB) Interpretation
  No. 48, Accounting for Uncertainty in Income Taxes (an interpretation of
  FASB Statement No. 109) (FIN 48). Refer to Note 6 for additional
  information regarding the Companys unrecognized tax benefits.                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3. | Recently
  Issued Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | SFAS No. 157 - Fair Value Measurements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In September
  2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157),
  which provides guidance on how to measure assets and liabilities that use
  fair value. SFAS 157 will apply whenever another US GAAP standard requires
  (or permits) assets or liabilities to be measured at fair value but does not
  expand the use of fair value to any new circumstances. This standard also
  will require additional disclosures in both annual and quarterly reports.
  SFAS 157 will be effective for fiscal years beginning after November 15, 2007
  (January 1, 2008 for the Company). The Company is currently evaluating the
  impact, if any, the adoption of SFAS 157 will have on its financial
  statements.                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | FAS No. 159 - The Fair Value Option for Financial Assets and
  Financial Liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In February
  2007, the FASB issued FAS 159, The Fair Value Option for Financial Assets
  and Financial Liabilities. 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. As applicable to Ampal, this statement will
  be effective as of the year beginning January 1, 2008. Ampal is currently
  evaluating the impact that the adoption of FAS 159 would have on its
  consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                        

8

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 $9.0 million has been placed as a compensating balance for various loans
  provided to the Company and would therefore be unavailable if the Company
  wished to pledge them in order to provide an additional source of cash.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|5. | East
  Mediterranean Gas Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On December
  1, 2005, the Company, through Merhav Ampal Energy, Ltd., a wholly-owned
  subsidiary of the Company, acquired a 2% interest in East Mediterranean Gas
  Co. S.A.E., an Egyptian joint stock company (EMG) from Merhav M.N.F. Ltd.
  (Merhav). The Company paid $30.0 million in cash, representing the fair
  value of the interest purchased at the time this transaction closed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On August 1,
  2006, the Company acquired the beneficial ownership of 4.6% of the
  outstanding shares of EMGs capital stock from Merhav. The transaction 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, this entity 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 4.6%
  investment in EMG was transferred to Ampal at carrying value, which also
  equals fair value. The cost of the investment was $100.0 million, of which,
  $50.0 million was paid in cash and the balance was paid in 10,248,002 shares
  of the Company Class A Stock (based on the Companys share price of $4.88 per
  share) that was accounted for at a fair value of $49.0 million. The issuance
  of the shares of Class A Stock received the approval of the shareholders of
  the Company as required by the marketplace rules of the NASDAQ Global Market.
  As a result of this transaction, the Company beneficially owned 6.6% of the
  total outstanding shares of EMG. Through August 2008, the cost of the
  investment may be adjusted downward should Merhav sell any of its remaining
  shares of EMG to a third-party purchaser at a price per share lower than the
  price per share paid by the Company pursuant to the agreement. Additionally,
  pursuant to the agreement, the Company was granted an option for a period of
  up to two years to have the right to acquire up to an additional 5.9% of the
  total outstanding shares of EMG stock.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | 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, delivered a fairness opinion to the special committee regarding
  the transaction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On August
  22, 2006, EMG called for additional capital from all of its shareholders. As
  a result, the Company paid an additional $2.7 million in order to maintain
  its pro rata beneficial interest in this investment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On December
  21, 2006, the Company acquired the beneficial ownership of an additional 5.9%
  of the outstanding shares of EMGs capital stock pursuant to an option
  granted by Merhav in August 2006. The transaction 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, this entity 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 5.9% investment
  in EMG was transferred to Ampal at carrying value, which also equals fair
  value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

9

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | The cost of
  the investment was approximately $128.3 million, of which approximately $68.3
  million was paid in cash, $40 million was paid in 8,602,151 shares of the
  Companys Class A Stock and the balance was satisfied by the issuance of a
  promissory note in the principal amount of $20 million (the Convertible
  Promissory Note), which, at the option of Merhav, will be paid in cash,
  additional shares of the Company Class A Stock (based on a price per share of
  $4.65), or a combination thereof. As permitted under the stock purchase
  agreement, Merhav assigned its right to the 8,602,151 Shares to De Majorca
  Holdings Limited as part of Merhavs restructuring process. The Convertible
  Promissory Note bears interest at 6 months LIBOR (5.375%) and matures on
  September 20, 2007 or upon demand by Merhav. Ampal may pre-pay the
  Convertible Promissory Note at any time in whole or in part. The maximum
  number of shares that can be issued in this transaction (including accrued
  interest payable through the maturity date on the Convertible Promissory
  Note) is 13,078,540 shares of Class A Stock. As a result of this transaction,
  Ampal beneficially owns 12.5% of the total outstanding shares of EMG. The
  issuance of the 8,602,151 shares and the shares underlying the Convertible
  Promissory Note received the approval of the shareholders of the Company on
  February 7, 2007, as required by the marketplace rules of the NASDAQ Global
  Market. Due to the agreement of the controlling shareholder group to vote in
  favor of the issuance of these shares to Merhav as of the closing date of the
  EMG transaction (which ensured that the proposal would be adopted by the
  requisite shareholders vote on February 7, 2007) the Company as of December
  31, 2006 classified for accounting purposes the sale of these shares as part
  of the exchange with Merhav on December 21, 2006 and recognized the $40
  million with shareholders equity as Receipt on account of unallocated
  shares.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|6. | Income Tax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | In July
  2006, the Financial Accounting Standards Board (FASB) released FASB
  Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an
  interpretation of FASB Statement No. 109 (FIN 48) which became effective
  for and was adopted by the Company as of January 1, 2007. FIN 48 clarifies
  the accounting and reporting for uncertainties in income taxes and prescribes
  a comprehensive model for the financial statement recognition, measurement,
  presentation and disclosure of uncertain tax positions taken or expected to
  be taken in income tax returns.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | As a result
  of the adoption by the Company of FIN 48, on January 1, 2007, we
  recognized, as a cumulative effect of change in accounting principle, a
  $2 million increase in our liability for unrecognized tax benefits,
  which was accounted for as a decrease in the January 1, 2007 balance of
  retained earnings. Furthermore, the Company recognized an increase in
  deferred tax assets of approximately $2.0 million, which was accounted for as
  an increase in the January 1, 2007 balance of retained earnings. The Company
  and its subsidiaries have not received tax assessments for the years 2003 and
  thereafter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|7. | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

10

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| |                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 pipe line to
  be constructed from Egypt to Israel.                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                      
| | The real
  estate rental segment consists of rental property owned in Israel and the
  United States and leased to unrelated parties, and operations of Am-Hal Ltd.,
  a wholly-owned subsidiary which owns and operates a chain of senior citizen
  facilities located in Israel.                                                   
| |                                                                                                                                                                                                                                                                                                                                      
| | The
  leisure-time segment consists of Coral World International Limited (marine
  parks located around the world) and Country Club Hod Hasharon Sport Center
  and Kfar Saba, the Companys 51%-owned subsidiary located in Israel. During
  June 2006, the Company sold all of its interest in Coral World International
  Limited.
| |                                                                                                                                                                                                                                                                                                                                      
| | The finance
  segment consists of all other activities which are not part of the above
  segments.                                                                                                                                                                                                                                   

| |                                         |  |   |          |   |   |         |  
| | --------------------------------------- |  | - | -------- | - | - | ------- | -
| | THREE
  MONTHS ENDED MARCH 31,          |  |   | 2007     |   |   | 2006    |  
| |                                         | 
| | (Dollars
  in thousands)                |  |   |          |   |   |         |  
| |                                         |  |   |          |   |   |         |  
| | Revenues:                               |  |   |          |   |   |         |  
| | Finance                                 |  | $ | 501      |   | $ | 1,838   |  
| | Real Estate                             |  |   | 2,436    |   |   | 2,315   |  
| | Leisure-time                            |  |   | 622      |   |   | 516     |  
| | Intercompany
  adjustments              |  |   | (17      | ) |   | (18     | )
| |                                         |  |   |          |   |   |         |  
| |                                         |  |   | 3,542    |   |   | 4,651   |  
| | Equity                                  |  |   | (17      | ) |   | 897     |  
| |                                         |  |   |          |   |   |         |  
| | Total
  consolidated revenues           |  | $ | 3,525    |   | $ | 5,548   |  
| |                                         |  |   |          |   |   |         |  
| |                                         |  |   |          |   |   |         |  
| | Pretax
  Operating Gain (loss):         |  |   |          |   |   |         |  
| | Finance                                 |  |   | (4,320   | ) | $ | (1,084  | )
| | Real Estate                             |  |   | (534     | ) |   | (37     | )
| | Leisure-time                            |  |   | 111      |   |   | 47      |  
| |                                         |  |   |          |   |   |         |  
| |                                         |  |   | (4,743   | ) |   | (1,074  | )
| | Equity                                  |  |   | (17      | ) |   | 897     |  
| |                                         |  |   |          |   |   |         |  
| | Total
  consolidated pretax gain (loss) |  | $ | (4,760   | ) | $ | (177    | )
| |                                         |  |   |          |   |   |         |  
| |                                         |  |   |          |   |   |         |  
| | Total
  Assets:                         |  |   |          |   |   |         |  
| | Finance                                 |  | $ | 333,588  |   | $ | 79,331  |  
| | Energy                                  |  |   | 259,860  |   |   | 29,960  |  
| | Real Estate                             |  |   | 75,873   |   |   | 75,442  |  
| | Leisure-Time                            |  |   | 3,282    |   |   | 18,527  |  
| | Intercompany
  adjustments              |  |   | (272,630 | ) |   | (2,677  | )
| |                                         |  |   |          |   |   |         |  
| | Total
  consolidated assets             |  | $ | 399,973  |   | $ | 200,583 |  
| |                                         |  |   |          |   |   |         |  

| |                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

11

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|   |                                                                                                                                                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|8. | The
  following table summarizes securities that were not included in the
  calculations of diluted earnings per Class A share for the three-month
  periods ended March 31, 2007 and 2006 because such shares are anti-dilutive.

| |                            |  |           |       |      |  |       | 
| | -------------------------- |  | --------- | ----- | ---- |  | ----- | 
| |                            |  | MARCH 31, |      
| |                            |  |           |      
| | (Shares in
  thousands)    |  | 2007      |       | 2006 | 
| |                            |  |           |       |      | 
|
| | Options and
  Rights       |  |           | 2,164 |      |  | 1,994 | 
| | 6 - 1/2%
  Preferred Stock |  |           | -     |      |  | 495   | 
| | 4% Preferred
  Stock       |  |           | -     |      |  | 110   | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.  | DEBT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | On February
  26, 2007, the Company entered into a bank loan with Union Bank Of Israel
  (UBI). Pursuant to the loan agreement, UBI granted the Company a $10
  million loan, which bears interest at the rate of LIBOR plus 2% to be repaid
  in six annual installments commencing on April 2, 2008. The Company received
  the $10 million loan on April 2, 2007. The loan is secured by a pledge of
  certain assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | On April 26,
  2007, the Company refinanced its existing loans with Bank Hapoalim. This
  agreement provides for a secured $27 million dollar loan facility to the
  Company at the value as of March 30, 2007, to be used for general corporate
  purposes. On March 30, 2007, the Company borrowed the full $27 million under
  the loan facility. The funds borrowed under the loan facility are due in six
  annual installments commencing on December 31, 2007 and bear an interest at
  an annual rate of LIBOR plus 2%. The Loan Agreement contains financial and
  other covenants including an acceleration of payment upon the occurrence of
  certain changes in the ownership of our Class A Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10. | LEGAL
  PROCEEDINGS:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | On March 18,
  2007, tenants of the retirements centers for senior citizens of Am-Hal filed
  a lawsuit in the Tel Aviv District Court against Ampal, Am-Hal and other
  subsidiaries of Ampal. The lawsuit was filed after Ampal announced the
  potential sale of its holdings in Am-Hal to Mishan. Among other things, the
  plaintiffs requested that the District Court (i) issue warrants that will
  oblige Am-Hal to keep the deposits received from the tenants in a designated
  account for each tenant controlled by an accountant agreed to by Am-Hal and
  the tenants, (ii) maintain the level of services provided by Am-Hal to the
  tenants and (iii) maintain the ratio of independent tenants and supportive
  tenants in the centers. The plaintiffs also asked the District Court to issue
  temporary ex parte injunctions to prohibit Ampal from signing an agreement
  for the sale of its holdings in Am-Hal and to nominate a receiver to locate
  and keep the tenants deposits. The District Court did not grant the
  temporary injunctions ex parte and requested that the defendants reply to the
  claim in accordance with the normal procedures.

12

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

AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES

CRITICAL ACCOUNTING POLICIES

The
preparation of Ampals consolidated financial statements is in conformity with
generally accepted accounting principles in the United States 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 this Annual Report for the fiscal year ended December
31, 2006 for a summary of all of Ampals significant accounting policies.

Investment in
EMG and other cost basis investments

The Company
accounts for its 12.5% equity interest in EMG and a number of other investments
on the basis of the cost method. EMG, which is the Companys most significant
holding as of March 31, 2007, was acquired from Merhav (M.N.F.) Ltd.
(Merhav), which is an entity controlled by one of the members of the
Companys controlling shareholder group. As a result, the transaction 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, this entity 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. As a result, the 12.5% investment in
EMG was transferred at carrying value, which equals fair value. Application of
the cost basis method requires the Company to periodically review these
investments in order to determine whether to maintain the current carrying
value or to write off some or all of the investment. While the Company uses
some objective measurements in its review, such as the portfolio companys
liquidity, burn rate, termination of a substantial number of employees, achievement
of milestones set forth in its business plan or projections and seeks to obtain
relevant information from the company under review, the review process involves
a number of judgments on the part of the Companys management. These judgments
include assessments of the likelihood of the company under review to obtain
additional financing, to achieve future milestones, make sales and to compete
effectively in its markets. In making these judgments the Company must also
attempt to anticipate trends in the particular companys industry as well as in
the general economy. There can be no guarantee that the Company will be
accurate in its assessments and judgments. To the extent that the Company is
not correct in its conclusion it may decide to write down all or part of the
particular investment.

Long-Lived
Assets

On January 1,
2002, Ampal adopted SFAS 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. SFAS 144 requires that long-lived assets, to be held and
used by an entity, be reviewed for impairment and, if necessary, written down
to the estimated fair values, whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable through
undiscounted future cash flows.

13

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Accounting for
Income Taxes

As part of the
process of preparing our consolidated financial statements, we are required to
estimate our income taxes in each of the jurisdictions in which we operate.
This process involves us estimating our current tax exposure together with
assessing temporary differences resulting from differing treatment of items for
tax and accounting purposes. These differences result in deferred tax assets
and liabilities, which are included in our consolidated balance sheet. We must
then assess the likelihood that our deferred tax assets will be recovered from
future taxable income, and, to the extent we believe that recovery is not
likely, we must establish a valuation allowance. To the extent we establish a
valuation allowance or increase this allowance in a period, we must include an
expense within the tax provision in the statement of operations. A valuation
allowance is currently set against certain tax assets because management
believes it is more likely than not that these deferred tax assets will not be
realized through the generation of future taxable income. We also do not
provide for taxes on undistributed earnings of our foreign subsidiaries, as it
is our intention to reinvest undistributed earnings indefinitely outside the
United States. In 2007, there were no undistributed earnings from foreign
subsidiaries.

Significant
management judgment is required in determining our provision for income taxes,
our deferred tax assets and liabilities and our future taxable income for
purposes of assessing our ability to realize any future benefit from our
deferred tax assets. In the event that actual results differ from these
estimates or we adjust these estimates in future periods, our operating results
and financial position could be materially affected.

We account for
uncertain tax positions in accordance with FIN 48. The application of income tax law is inherently complex. As
such, we are required to make many assumptions and judgments regarding our
income tax positions and the likelihood of such tax positions being upheld if
challenged by applicable regulatory authorities. Interpretations and guidance
surrounding income tax laws and regulations change over time. As such, changes
in our assumptions and judgments can materially affect amounts recognized in
the consolidated balance sheets and statements of operations.

Employee
Stock-Based Compensation

Prior to
January 1, 2006, we accounted for employees share-based payment under the
intrinsic value model in accordance with Accounting Principles Board Opinion No
- 25. Accounting for Stock Issued to Employees (APB 25) and related
interpretations. In accordance with Statement of Financial Accounting Standards
No. 123 - Accounting for Stock-Based Compensation (FAS 123), as amended by
Statement of Financial Accounting Standards No. 148, Accounting for
Stock-Based Compensation - Transition and Disclosure, we disclosed pro forma
information assuming we had accounted for employees share-based payments using
the fair value-based method defined in FAS 123.

Effective
January 1, 2006, we adopted Statement of Financial Accounting Standards No. 123
(revised 2004), Share-based Payment (FAS 123(R)). FAS 123(R) supersedes APB
25 and related interpretations and amends Statement of Financial Accounting
Standards No. 95, Statement of Cash Flows (FAS 95). FAS 123(R) requires
awards classified as equity awards to be accounted for using the grant-date
fair value method. The fair value of stock options is determined based on the
number of shares granted and the price of our common stock, and determined
based on the Black-Scholes models, net of estimated forfeitures. We estimated
forfeitures based on historical experience and anticipated future conditions.

In March 2005,
the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107
(SAB 107). SAB 107 provides supplemental implementation guidance on FAS
123(R), including guidance on valuation methods, inventory capitalization of
share-based compensation cost, income statement effects, disclosures and other
issues. SAB 107 requires share-based payment to be classified in the same
expense line items as cash compensation. We have applied the provisions of SAB
107 in our implementation of FAS 123(R).

14

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We elected to
adopt the modified prospective transition method, permitted by FAS 123(R).
Under such transition method, FAS 123(R) was implemented as of the first
quarter of 2006 with no restatement of prior periods. The valuation provisions
of FAS 123(R) apply to new awards and to awards modified, repurchased, or
cancelled after January 1. 2006. Additionally, compensation cost for the
portion of awards for which the requisite service has not been rendered that
are outstanding as of January 1, 2006, is recognized over the remaining service
period using the grant-date fair value of those awards as calculated for pro
forma disclosure purposes under FAS 123(R).

Recently
Issued Accounting Pronouncements

SFAS No. 157 - Fair Value Measurements

In September
2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157),
which provides guidance on how to measure assets and liabilities that use fair
value. SFAS 157 will apply whenever another US GAAP standard requires (or
permits) assets or liabilities to be measured at fair value but does not expand
the use of fair value to any new circumstances. This standard also will require
additional disclosures in both annual and quarterly reports. SFAS 157 will be
effective for fiscal years beginning after November 15, 2007 (January 1, 2008
for the Company). The Company is currently evaluating the impact, if any, the
adoption of SFAS 157 will have on its financial statements.

FAS No. 159 - The Fair Value Option for
Financial Assets and Financial Liabilities

In February
2007, the FASB issued FAS 159, The Fair Value Option for Financial Assets and
Financial Liabilities. 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. As applicable to Ampal, this statement will be effective
as of the year beginning January 1, 2008. Ampal is currently evaluating the
impact that the adoption of FAS 159 would have on its consolidated financial
statements.

Results of Operations

Three months ended March 31, 2007 compared to three months ended March
31, 2006

Ampal-American
Israel Corporation (Ampal) and its subsidiaries (the Company) recorded a
consolidated net loss of $5.0 million for the three months ended March 31, 2007
compared to a net loss of $0.6 million for the same period in 2006. The
increase in losses is primarily attributable to a decrease in earning of
affiliates, a decrease in net realized gains from investments and marketable
securities, an increase in loss from impairment of investment, an increase in
interest expense and an increase in translation loss for the three months ended
March 31, 2007 as compared to the same period in 2006.

Equity in
earnings of affiliates decreased to a net loss of $17.0 thousand for the three
months ended March 31, 2007, compared to a net gain of $0.9 million for the
same period in 2006. The decrease is primarily attributable to the sale of
Coral World International in June 2006, which had recorded a gain of $0.7
million in the three months ended March 31, 2006.

In the three
month period ended March 31, 2007, the Company recorded $37 thousand of net
realized gain on investments, compared to $1.0 million of net realized gain in
the same period in 2006. The gain recorded in 2006 was primarily attributable
to additional proceeds from the sale of Modem Art Ltd. ($0.6 million gain) and
the sale of certain assets by PSINet Europe, one of the holdings of Ampals
investee company, Telecom Partners (TP)($0.4 million gain).

In the three
month period ended March 31 2007, the Company recorded $0.5 million of loss
from impairment of investment relating to the investment in Carmel Containers
Ltd.

15

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In the three
month period ended March 31 2007, the Company recorded $2.0 million of interest
expense, compared to $1.0 million for the same period in 2006. The increase in
interest expense is primarily attributable to the notes issued to institutional
investors in Israel and the convertible promissory note issued to Merhav which
were issued in November and December 2006, respectively.

In the three
month period ended March 31, 2007, the Company recorded a $1.2 million
translation loss, as compared to a $0.3 million translation loss for the same
period in 2006. The increase in translation loss is related to the revaluation
of the New Israeli Shekel compared to the American Dollar.

Liquidity and
Capital Resources

Cash
Flows

The Companys
sources of cash include cash and cash equivalents and marketable securities,
which totaled $32.2 million as of March 31, 2007, compared to $37.1 million in
December 31, 2006. The Company also has the capability of receiving cash from
operations and investing activities. 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, which may include additional borrowing,
refinancing of its existing indebtedness or liquidating other assets, the value
of which may also decline.

In addition,
cash equal to $9 million has already been pledged as security for various loans
provided to the Company and would therefore be unavailable if the Company
wished to pledge them in order to provide an additional source of cash.

Cash
flows from operating activities

Net cash used
in by operating activities totaled approximately $4.0 million for the three
months ended March 31, 2007, compared to approximately $2.1 million provided by
operating activities for the same period in 2006. The decrease is primarily
attributable to the $371 thousand of net proceeds from the sale of marketable
securities in 2007 as compared to $5.0 million of net proceeds from the sale of
marketable securities ($17.2 million proceeds offset by $12.2 million invested)
in the same period of 2006.

Cash
flows from investing activities

Net
cash used in investing activities totaled approximately $1.0 million for the
Three months ended March 31, 2007, compared to approximately $51 thousand
provided by investing activities for the same period in 2006. The decrease is
primarily attributable to the Companys investments in Bay-Heart and capital
improvement in Am-Hal.

Cash
flows from financing activities

Net cash provided
by financing activities was approximately $0.7 million for the three months
ended March 31, 2007, compared to approximately $3.9 million of net cash used
in financing activities for the three month period ended March 31, 2006.

In the three
months ended March 31, 2007, the Company paid down its existing notes payable
to Bank Hapoalim in the amount of $26.5 million while borrowing an additional
$27.2 million under a loan facility with Bank Hapoalim. In the three months
ended March 31, 2006, the Company paid down its existing notes payable to Bank
Hapoalim in the amount of $5.1 million while using its own cash and borrowing
an additional $1.2 million under a loan facility with Bank Hapoalim.

16

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Investments

In the three
months ended March 31 2007, the Company made an additional investment in the
form of a $0.6 million loan to Bay Heart Ltd. On March 7, 2007, Ampal entered
into an agreement to sell to Carmel Container Systems Ltd., a packaging
manufacturer based in Israel (Carmel), all of the holdings of Carmel held by
Ampal and its subsidiaries. Pursuant to this transaction, Ampal and its
subsidiaries will sell to Carmel an aggregate of 522,350 ordinary shares of
Carmel for an expected aggregate sales price of approximately $4.57 million.
The completion of the sale of shares to Carmel is subject to the satisfaction
of certain closing conditions. As of March 31, 2007, the Company recorded a
loss from impairment on investment of $0.5 million and is not expecting to
record a gain at the completion of the transaction.

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 Israel Shekels,
with interest rates varying depending upon their linkage provision and mature
between 2007-2015.

The Company
finances its general operations and other financial commitments through bank
loans from Bank Hapoalim and UBI. As of March 31, 2007, the outstanding
indebtedness under these bank loans totaled $27.0 million and mature through
2007-2012. As of December 31, 2006, the outstanding indebtedness under the bank
loans from Bank Hapoalim was $26.3 million.

On February
26, 2007, the Company entered into a bank loan with Union Bank Of Israel
(UBI). Pursuant to the loan agreement, UBI granted the Company a $10 million
loan, which bears interest at the rate of LIBOR plus 2% to be repaid in six
annual installments commencing on April 2, 2008. The Company received the $10
million loan on April 2, 2007. The loan is secured by a pledge of certain
assets.

On April 26,
2007, the Company refinanced its existing loans with Bank Hapoalim. This
agreement provides for a secured $27 million dollar loan facility to the
Company at the value as of March 30, 2007, to be used for general corporate
purposes. On March 30, 2007, the Company borrowed the full $27 million under
the loan facility. The funds borrowed under the loan facility are due in six
annual installments commencing on December 31, 2007 and bear an interest at an
annual rate of LIBOR plus 2%. The Loan Agreement contains financial and other
covenants including an acceleration of payment upon the occurrence of certain
changes in the ownership of our Class A Stock.

On November
20, 2006, the Company entered into a trust agreement with Hermatic Trust (1975)
Ltd. pursuant to which the Company issued notes to institutional investors in
Israel in the principal aggregate amount of NIS 250,000,000 (approximately $58
million) with an interest rate of 5.75%, which is linked to the Consumer Price
Index in Israel. 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.
The Company received the funds from the private placement on November 20, 2006.
Midroog Ltd., an affiliate of Moodys Investors Service rated the Company as
A3.

The Company
intends to register the notes for trading on the TASE subject to publishing a
final prospectus approved by the Israeli Securities Authority as well as the
approval of the TASE for the listing of the notes. Until the listing is
approved, Ampal will pay an additional annual interest rate of 0.5% on the
notes.

The following
additional terms apply to the notes:

| |   |                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Until the
  listing of the notes is approved, if the rating of the notes from Midroog is
  reduced below A3, the interest rate per annum of the notes will increase by
  0.2% increments subject to the terms and conditions set forth in the notes;

17

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| |   |                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Ampal may
  issue additional notes without limitation, but until the listing is approved
  by the TASE, Ampal cannot issue additional notes if such issuance would
  adversely affect the Midroog rating of our existing series of notes, which
  are the subject of this prospectus;          
| |   |                                                                                                                                                                                                                                                                                                
| |  | The notes
  will be listed for trade on the TASE no sooner than 47 days after the final
  prospectus is approved by the Israeli Securities Authority and the TASE, and
  during such 47 day period, the notes will not be tradable;                                                            
| |   |                                                                                                                                                                                                                                                                                                
| |  | If Yosef A.
  Maiman ceases to directly or indirectly own the largest amount of shares of
  Ampal (relative to the rest of the shareholders of Ampal) before the notes
  are listed on the TASE, a meeting of the noteholders will be convened to
  discuss whether the notes will be redeemed.

In addition,
as part of the EMG transaction in December 2006, the Company issued to Merhav a
promissory note in the principal amount of $20 million, which at the option of
Merhav, will be paid 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 bears interest at 6 months LIBOR (5.375%) and
matures on the earlier of September 20, 2007 or upon demand by Merhav. Ampal
may pre-pay the Convertible Promissory Note at any time in whole or in part.

The Company
financed a portion of the development of Am-Hal, a wholly-owned subsidiary of
the Company, which develops and operates luxury retirement centers for senior
citizens, through a revolving credit facility from Bank Hapoalim Ltd., Phoenix
Insurance Company and others. On December 1, 2005, a loan agreement creating
the facility was signed between Am-Hal, Phoenix Insurance Company and others.
Pursuant to the loan agreement, the lenders granted Am-Hal a revolving credit
facility in Israeli Shekels equal to $12.5 million. The annual interest rate on
the loan, which matures in 10 years, is 7.5%. The interest rate and the principal
of the loan will be adjusted based on the changes in the Israeli Consumer Price
Index. As of March 31, 2007, Am-Hal had drawn $2.5 million from the facility.
As of March 31, 2007, and December 31, 2006, the amount of Am-Hals outstanding
debt under the loans from Bank Hapoalim Ltd., Phoenix Insurance Company and
others, were $15.3 million and $15.0 million, respectively. The loans,
excluding the Phoenix loan, mature in up to one year and have interest rates
ranging between 6.5% and 7.5%. Am-Hal Company generally repays these loans with
the proceeds received from deposits and other payments from the apartments in
Am-Hal facilities. The loans are secured by a lien on Am-Hals properties. The
Company also issued guarantees in the amount of $2.9 million in favor of
tenants of Am-Hal in order to secure their deposits.

Other long
term borrowings in the amount of $1.7 million are linked to the Consumer Price
Index in Israel and mature between 2007 and 2010, of which $1.5 million bears
no interest. The remaining $0.2 million bears an annual interest rate of 5.7%.

The weighted
average interest rates and the balances of these short-term borrowings as of
March 31, 2007 and December 31, 2006 were 6.2% on $16.3 million and 6.4% on
$21.2 million, respectively.

As of March
31, 2007, the Company had issued guarantees on certain outstanding loans to its
investees and subsidiaries in the aggregate principal amount of $9.6 million.
These include:

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | $5.7 million
  guarantee on indebtedness incurred by Bay Heart ($2.3 million of which is
  recorded as a liability in the Companys financial statements as of March 31,
  2007) in connection with the development of the property. Bay Heart recorded
  losses in 2007 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.

18

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| |    |                                                               
| | -- | --------------------------------------------------------------
| | 2. | $2.9 million
  guarantee to Am-Hal tenants as described above.
| |    |                                                               
| | 3. | $1.0 million
  guarantee to Galha 1960 Ltd.                   

FOREIGN CURRENCY CONTRACTS

The Companys
derivative financial instruments consist of foreign currency forward exchange
contracts to purchase or sell US 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, 2007, the Company did not have any open foreign currency forward exchange
contracts to purchase or sell U.S. Dollars.

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, 2006, 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 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, 2007, and are sensitive
to the above market risks.

19

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During the
three months ended March 31, 2007, 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, 2006.

Interest Rate Risks

At March 31,
2007, the Company had financial assets totaling $36.0 million and financial
liabilities totaling $107.6 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.

At March 31,
2007, the Company did not have fixed rate financial assets and had variable
rate financial assets of $36.0 million. A ten percent decrease in interest
rates would not increase the unrealized fair value of the fixed rate assets.

At March 31,
2007, the Company had fixed rate debt of $66.4 million and variable rate debt
of $41.2 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 $0.1 million.

The net
decrease in earnings and cash flow for the next year resulting from a ten
percent interest rate increase would be approximately $0.2 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 in Israel. During 2007, the Company did not
enter into foreign exchange forward purchase contracts. At March 31, 2007, the
Company didnt have any open foreign exchange forward purchase contracts.
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 $1.4 million,
and regarding the statements of operations, a ten percent devaluation of the
foreign currency would be reflected in a net increase in earnings and cash flow
would be $8.4 million.

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.

20

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

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 1.  | Legal
  Proceedings:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|         | On March 18,
  2007, tenants of the retirements centers for senior citizens of Am-Hal filed
  a lawsuit in the Tel Aviv District Court against Ampal, Am-Hal and other
  subsidiaries of Ampal. The lawsuit was filed after Ampal announced the
  potential sale of its holdings in Am-Hal to Mishan. Among other things, the
  plaintiffs requested that the District Court (i) issue warrants that will
  oblige Am-Hal to keep the deposits received from the tenants in a designated
  account for each tenant controlled by an accountant agreed to by Am-Hal and
  the tenants, (ii) maintain the level of services provided by Am-Hal to the
  tenants and (iii) maintain the ratio of independent tenants and supportive
  tenants in the centers. The plaintiffs also asked the District Court to issue
  temporary ex parte injunctions to prohibit Ampal from signing an agreement
  for the sale of its holdings in Am-Hal and to nominate a receiver to locate
  and keep the tenants deposits. The District Court did not grant the
  temporary injunctions ex parte and requested that the defendants reply to the
  claim in accordance with the normal procedures.
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|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, 2006, 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|         | The Special
  Meeting of Shareholders was held on February 7, 2007. The following proposals
  were approved by the margins indicated below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| |     |                                                                                                                                                                                                                            
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | The approval
  of the proposed amendment to our Restated Certificate of Incorporation to
  increase the authorized share capital of Ampal from 60,000,000 shares of
  Class A Stock to 100,000,000 shares of Class A Stock.

|FOR        |  |  | AGAINST |  |  | ABSTAIN | 
|---------- |  |  | ------- |  |  | ------- | 
|           |  |  |         |  |  |         | 
|           |  |  |         |  |  |         | 
|23,031,173 |  |  | 149,022 |  |  | 528,897 | 

21

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| |     |                                                                                                                                                                                                                                                  
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | The approval
  of the proposed issuance of up to 4,071,352 shares of Class A Stock of the
  Company issuable upon the exercise of warrants sold by the Company in a
  private placement transaction to certain institutional investors in Israel.

|FOR        |  |  | AGAINST |  |  | ABSTAIN | 
|---------- |  |  | ------- |  |  | ------- | 
|           |  |  |         |  |  |         | 
|           |  |  |         |  |  |         | 
|23,055,306 |  |  | 108,890 |  |  | 544,896 | 

| |     |                                                                                                                                                                                                                                                                                                                                                                    
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (3) | The approval
  of the proposed issuance of 8,602,151 shares of Class A Stock of the Company
  to De Majorca Holdings Ltd. and up to 4,476,389 shares of Class A Stock of
  the Company to Merhav in connection with the purchase by a wholly-owned
  subsidiary of the Company from Merhav of a portion of Merhavs interest in
  East Mediterranean Gas Co. S.A.E.

|FOR        |  |  | AGAINST |  |  | ABSTAIN | 
|---------- |  |  | ------- |  |  | ------- | 
|           |  |  |         |  |  |         | 
|           |  |  |         |  |  |         | 
|25,522,508 |  |  | 659,458 |  |  | 527,126 | 

|        |                             
|------- | ----------------------------
|Item 5. | Other
  Information.
  None.
|        |                             
|Item 6. | Exhibits.                   

|     |  |                                                                                                                                                                                                          
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)  |  | Exhibits:                                                                                                                                                                                                
|     |  |                                                                                                                                                                                                          
|3.1  |  | Certificate
  of Amendment of Certificate of Incorporation, dated February 7, 2007 (Filed
  as Exhibit 3.4 to Form S-3, filed with the SEC on February 28, 2007, and
  incorporated herein by reference).
|     |  |                                                                                                                                                                                                          
|10.1 |  | Undertaking
  for the Repayment of a Foreign Currency Loan between Bank Hapoalim BM and
  Ampal (Israel) Ltd. dated April 26, 2007.                                                                      
|     |  |                                                                                                                                                                                                          
|10.2 |  | Letter of
  Undertaking between Bank Hapoalim BM and Ampal (Israel) Ltd. dated April 26,
  2007.                                                                                                         
|     |  |                                                                                                                                                                                                          
|10.3 |  | Letter of
  Undertaking between Bank Hapoalim BM and Ampal-American Israel Corporation
  dated April 26, 2007.                                                                                           
|     |  |                                                                                                                                                                                                          
|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.                                             

22

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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 CORPORATION  
|                    |                                      
|                    | By: /s/ Yosef
  A. Maiman            
|                    |                                      
|                    | Yosef
  A. Maiman                    
|                    | Chairman
  of the Board              
|                    | President
  & Chief Executive Officer
|                    | (Principal
  Executive Officer)      
|                    |                                      
|                    | By: /s/ Irit
  Eluz                  
|                    |                                      
|                    | Irit
  Eluz                          
|                    | CFO
  and Senior Vice President,     
|                    | Finance
  and Treasurer              
|                    | (Principal
  Financial Officer)      
|                    |                                      
|                    | By: /s/ Giora
  Bar-Nir              
|                    |                                      
|                    | Giora
  Bar-Nir                      
|                    | VP
  Accounting and Controller       
|                    | (Principal
  Accounting Officer)     
|                   
|Date:  May 15, 2007 |                                      

23

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AMPAL-AMERICAN ISRAEL CORPORATION AND
SUBSIDIARIES

Exhibit Index

|              |  |                                                                                                                                                                                                          
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
  No. |  | Description                                                                                                                                                                                              
|              |  |                                                                                                                                                                                                          
|3.1           |  | Certificate
  of Amendment of Certificate of Incorporation, dated February 7, 2007 (Filed
  as Exhibit 3.4 to Form S-3, filed with the SEC on February 28, 2007, and
  incorporated herein by reference).
|              |  |                                                                                                                                                                                                          
|10.1          |  | Undertaking
  for the Repayment of a Foreign Currency Loan between Bank Hapoalim BM and
  Ampal (Israel) Ltd. dated April 26, 2007.                                                                      
|              |  |                                                                                                                                                                                                          
|10.2          |  | Letter of
  Undertaking between Bank Hapoalim BM and Ampal (Israel) Ltd. dated April 26,
  2007.                                                                                                         
|              |  |                                                                                                                                                                                                          
|10.3          |  | Letter of
  Undertaking between Bank Hapoalim BM and Ampal-American Israel Corporation
  dated April 26, 2007.                                                                                           
|              |  |                                                                                                                                                                                                          
|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.                                             

24

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