UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON 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, 2004

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 an accelerated filer (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 19,838,026 (as of May 6, 2004).



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AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIES

Index to Form 10-Q

|        |                                                                                                      |     
|------- | ---------------------------------------------------------------------------------------------------- | ----
|
|
|
|Part I  | Financial Information                                                                                | Page
|       
|Item 1  | Financial Statements                                                                                
|        | Consolidated Statements of Operations                                                               
|        | Three Months Ended March 31, 2004 and 2003                                                           | 1   
|        | Consolidated Balance Sheets                                                                          | 2   
|        | Consolidated Statements of Cash Flows                                                                | 4   
|        | Consolidated Statements of Changes in Shareholders'Equity                                            | 6   
|        | Consolidated Statements of Comprehensive Gain (Loss)                                                 | 8   
|        | Notes to the Consolidated Financial Statements.                                                      | 9   
|Item 2  | Management's Discussion and Analysis ofFinancial Condition and Results of Operations.                | 12  
|Item 3  | Quantitative and Qualitative DisclosuresAbout Market Risk                                            | 18  
|Item 4  | Controls and Procedures                                                                              | 19  
|Part II | Other Information                                                                                    | 20  
|        | Item 1. Legal Proceedings                                                                            | 20  
|        | Item 2. Changes in Securities, Use of Proceeds             and Issuer Purchases of Equity Securities | 20  
|        | Item 3. Defaults upon Senior Securities                                                              | 20  
|        | Item 4. Submission of Matters to a Vote of Security Holders                                          | 20  
|        | Item 5. Other Information                                                                            | 20  
|        | Item 6. Exhibits and Reports on Form 8-K                                                             | 20  



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ITEM
1. FINANCIAL STATEMENTS

AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS

|THREE MONTHS ENDED MARCH 31,                 | 2004 | 2003
|-------------------------------------------- | ---- | ----
|
|
|
|REVENUES                                     |      |     
|Equity in earnings (loss) of affiliates      |      |     
|Interest                                     |      |     
|Real estate income                           |      |     
|Realized and unrealized gains on investments |      |     
|Other                                        |      |     
|                                             |      |     
|Total revenues                               |      |     
|                                             |      |     
|EXPENSES                                     |      |     
|Interest                                     |      |     
|Real estate expenses                         |      |     
|Loss from impairment of investments          |      |     
|Minority interests                           |      |     
|Translation loss                             |      |     
|Other (mainly general and administrative)    |      |     
|                                             |      |     
|Total expenses                               |      |     
|                                             |      |     
|Loss before income taxes                     |      |     
|Provision (benefit) for income taxes         |      |     
|                                             |      |     
|Net loss                                     |      |     
|                                             |      |     
|Basic and Diluted EPS:                       |      |     
|Loss per Class A share                       |      |     
|                                             |      |     
|Shares used in calculation (in thousands)    |      |     
|                                             |      |     

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

1

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AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEETS

|ASSETS AS OF                           | March 31,
2004 | December 31,
2003
|-------------------------------------- | -------------- | -----------------
|
|
|
|Cash and cash equivalents              |                |                  
|                                       |                |                  
|Deposits, notes and loans receivable   |                |                  
|                                       |                |                  
|Investments                            |                |                  
|Marketable Securities                  |                |                  
|                                       |                |                  
|Total Investments                      |                |                  
|                                       |                |                  
|Real estate property, less accumulated |                |                  
|depreciation of $11,078 and $9,166     |                |                  
|                                       |                |                  
|Other assets                           |                |                  
|                                       |                |                  
|                                       |                |                  
|                                       |                |                  
|Total Assets                           |                |                  
|                                       |                |                  

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

2

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AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

|LIABILITIES AND
      SHAREHOLDERS' EQUITY AS OF | March 31,
2004 | December 31,
2003
|------------------------------------------------ | -------------- | -----------------
|
|
|
|LIABILITIES                                      |                |                  
|Notes and loans payable                          |                |                  
|Debentures                                       |                |                  
|Accounts payable, accrued                        |                |                  
|expense and others                               |                |                  
|                                                 |                |                  
|Total Liabilities                                |                |                  
|                                                 |                |                  
|Minority interests                               |                |                  
|                                                 |                |                  
|SHAREHOLDERS EQUITY                              |                |                  
|4% Cumulative Convertible Preferred Stock, $5    |                |                  
|par value; authorized 189,287 shares; issued     |                |                  
|130,927 and 131,952 shares; outstanding 127,577  |                |                  
|and 128,602 shares                               |                |                  
|                                                 |                |                  
|6-1/2% Cumulative Convertible Preferred Stock,   |                |                  
|$5 par value; authorized 988,055 shares; issued  |                |                  
|667,652 and 697,380 shares; outstanding 545,116  |                |                  
|and 574,844 shares                               |                |                  
|                                                 |                |                  
|Class A Stock; $1 par value; authorized          |                |                  
|60,000,000 shares; issued 25,661,519 and         |                |                  
|25,567,210 shares; outstanding 19,829,855        |                |                  
|and 19,735,546 shares                            |                |                  
|                                                 |                |                  
|Additional paid-in capital                       |                |                  
|                                                 |                |                  
|Retained earnings                                |                |                  
|                                                 |                |                  
|Treasury Stock, at cost                          |                |                  
|                                                 |                |                  
|Accumulated other comprehensive loss             |                |                  
|                                                 |                |                  
|Total shareholders' equity                       |                |                  
|                                                 |                |                  
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       |                |                  
|                                                 |                |                  

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

3

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

|THREE MONTHS ENDED MARCH 31,                   | 2004 | 2003
|---------------------------------------------- | ---- | ----
|
|
|
|Cash flows from operating activities:          |      |     
|Net loss                                       |      |     
|Adjustments to reconcile net loss to net       |      |     
|cash provided by operating activities:         |      |     
|Equity in (earnings) loss of affiliates        |      |     
|Realized and unrealized gain                   |      |     
|on investments                                 |      |     
|Depreciation expense                           |      |     
|Net amortization                               |      |     
|Loss from impairment of investments and loans  |      |     
|Translation loss                               |      |     
|Minority interests                             |      |     
|Increase in other assets                       |      |     
|(Decrease) increase in accounts payable,       |      |     
|accrued expenses and others                    |      |     
|Investments made in trading securities         |      |     
|Proceeds from sale of trading securities       |      |     
|Dividends received from affiliates             |      |     
|                                               |      |     
|Net cash provided by operating activities      |      |     
|                                               |      |     
|Cash flows from investing activities:          |      |     
|Deposits, notes and loans receivable collected |      |     
|Deposits, notes and loans receivable granted   |      |     
|Investments made in affiliates and others      |      |     
|Proceeds from sale of investments              |      |     
|Return of capital by partnership               |      |     
|Capital improvements                           |      |     
|                                               |      |     
|Net cash (used in) provided by investing       |      |     
|Activities                                     |      |     
|                                               |      |     

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

4

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

|THREE MONTHS ENDED MARCH 31,                     | 2004 | 2003
|------------------------------------------------ | ---- | ----
|
|
|
|Cash flows from financing activities:            |      |     
|Notes and loans payable received                 |      |     
|Notes and loans payable repaid                   |      |     
|Debentures repaid                                |      |     
|                                                 |      |     
|Net cash provided by (used in) financing         |      |     
|activities                                       |      |     
|                                                 |      |     
|Effect of exchange rate changes on cash and      |      |     
|cash equivalents                                 |      |     
|                                                 |      |     
|Net increase (decrease) in cash and cash         |      |     
|Equivalents at beginning of period               |      |     
|                                                 |      |     
|Cash and cash equivalents at end of period       |      |     
|                                                 |      |     
|Supplemental Disclosure of Cash Flow Information |      |     
|Cash paid during the period:                     |      |     
|Interest paid to others                          |      |     
|                                                 |      |     
|Income taxes paid                                |      |     
|                                                 |      |     
|Supplemental Disclosure of Non-cash              |      |     
|Investing Activities:                            |      |     
|Proceeds in tradable securities received from    |      |     
|realization of an investment                     |      |     
|                                                 |      |     

The
accompanying notes are an integral part of the consolidated financial statement.

5

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

|                                           | March 31
2004 | December 31
2003
|------------------------------------------ | ------------- | ----------------
|
|
|
|4% PREFERRED STOCK                         |               |                 
|Balance, beginning of year                 |               |                 
|Conversion of 1,025 and 7,439 shares into  |               |                 
|Class A Stock                              |               |                 
|                                           |               |                 
|Balance, end of period                     |               |                 
|                                           |               |                 
|6-1/2% PREFERRED STOCK                     |               |                 
|Balance, beginning of year                 |               |                 
|Conversion of 29,728 and 9,070 shares into |               |                 
|Class A Stock                              |               |                 
|                                           |               |                 
|Balance, end of period                     |               |                 
|                                           |               |                 
|CLASS A STOCK                              |               |                 
|Balance beginning of year                  |               |                 
|Issuance of shares upon conversion of      |               |                 
|Preferred Stock                            |               |                 
|                                           |               |                 
|Balance, end of period                     |               |                 
|                                           |               |                 
|ADDITIONAL PAID-IN CAPITAL                 |               |                 
|Balance, beginning of year                 |               |                 
|Conversion of Preferred Stock              |               |                 
|                                           |               |                 
|Balance, end of period                     |               |                 
|                                           |               |                 
|RETAINED EARNINGS                          |               |                 
|Balance, beginning of year                 |               |                 
|Net gain (loss)                            |               |                 
|Dividends:                                 |               |                 
|4% Preferred Stock - $0.2 per share        |               |                 
|6-1/2% Preferred Stock - $0.325 per share  |               |                 
|                                           |               |                 
|Balance, end of period                     |               |                 
|                                           |               |                 

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

6

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

|                       | March 31,
2004 | December 31,
2003
|---------------------- | -------------- | -----------------
|
|
|
|TREASURY STOCK         |                |                  
|                       |                |                  
|4% PREFERRED STOCK     |                |                  
|Balance, end of period |                |                  
|                       |                |                  
|6-1/2% PREFERRED STOCK |                |                  
|Balance, end of period |                |                  
|                       |                |                  
|CLASS A STOCK          |                |                  
|Balance, end of period |                |                  
|                       |                |                  
|Balance, end of period |                |                  
|                       |                |                  

|THREE MONTHS ENDED MARCH 31,              | 2004 | 2003
|----------------------------------------- | ---- | ----
|
|
|
|ACCUMULATED OTHER COMPREHENSIVE LOSS      |      |     
|                                          |      |     
|Cumulative translation adjustments:       |      |     
|Balance, beginning of year                |      |     
|Foreign currency translation adjustment   |      |     
|                                          |      |     
|Balance, end of period                    |      |     
|                                          |      |     
|Unrealized gain on marketable securities: |      |     
|Balance, beginning of year                |      |     
|Unrealized gain (loss), net               |      |     
|Sale of available-for-sale securities     |      |     
|                                          |      |     
|Balance, end of period                    |      |     
|                                          |      |     
|Balance, end of period                    |      |     
|                                          |      |     

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

7

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AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE GAIN
(LOSS)

|THREE MONTHS ENDED MARCH 31,                 | 2004 | 2003
|-------------------------------------------- | ---- | ----
|
|
|
|Net loss                                     |      |     
|                                             |      |     
|Other comprehensive gain (loss), net of tax: |      |     
|Foreign currency translation adjustments     |      |     
|Unrealized gain on securities                |      |     
|                                             |      |     
|Other comprehensive (loss) income            |      |     
|                                             |      |     
|Comprehensive loss                           |      |     
|                                             |      |     
|Related tax(expense) on other                |      |     
|comprehensive gain (loss):                   |      |     
|Foreign currency translation adjustments     |      |     
|Unrealized (loss) on securities              |      |     

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

8

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AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIES
NOTES 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
March 31, 2004 consolidated balance sheet presented herein was derived from
               the audited December 31, 2003 consolidated financial statements of the
Company.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Reference
should be made to the Companys consolidated financial statements for the year ended
December 31, 2003 for a description of the accounting policies, which have been continued
without change. Also, reference should be made to the notes to the Companys
December 31, 2003 consolidated financial statements for additional details of the Companys
consolidated financial condition, results of operations and cash flows. The details in
those notes have not changed except as a result of normal transactions in the interim.
All adjustments (of a normal recurring nature) which are, in the opinion of management,
necessary to a fair presentation of the results of the interim period have been included.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Employee
Stock Based Compensation
|-- | ---------------------------------

| | The
Company accounts for all plans under APB Opinion No. 25, under which no compensation
costs were incurred. The following table illustrates the effect on net income and net
loss and EPS as if the Company had applied the fair value-recognition provisions of SFAS
No. 123, Accounting for Stock-Based Compensation, to stock based incentive
plans for the periods indicated below:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Three Months Ended March 31           | 2004 | 2003
|------------------------------------- | ---- | ----
|
|
|
|Basic and Diluted EPS:                |      |     
|                                      |      |     
|Net loss:                             |      |     
|As reported(1)                        |      |     
|Less-stock based compensation expense |      |     
|determined under fair value method    |      |     
|                                      |      |     
|Pro forma                             |      |     
|                                      |      |     
|As reported                           |      |     
|                                      |      |     
|Pro forma                             |      |     
|                                      |      |     

| | (1)After
  deduction  of  accrued   Preferred  Stock  Dividend  of  $53  and  $55
                respectively.
| | ---------------------------------------------------------------------------------------------------------------

| | (2)In
2004 and 2003, the conversion of the 4% and 6-1/2% Preferred Stock was excluded from the
diluted EPS calculation due to the antidilutive effect.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------

9

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| | Under
SFAS No. 123, the fair value of each option is estimated on the date of grant using the
Black Scholes option-pricing model with the following assumptions: (1) expected life of
options; (2) dividend yield; (3) volatility; and (4) risk-free interest rate. For the
period of three months ended March 31, 2004, 15,000 options were granted. The fair value
generated by the Black-Scholes model may not be indicative of the future benefit, if any,
that may be received by the option holder.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | Segment
information presented below results primarily from operations in Israel.
|-- | --------------------------------------------------------------------------------

|THREE MONTHS ENDED MARCH 31,  | 2004 | 2003
|----------------------------- | ---- | ----
|
|
|
|Revenues:                     |      |     
|Finance                       |      |     
|Real Estate                   |      |     
|Leisure-time                  |      |     
|Intercompany adjustments      |      |     
|                              |      |     
|                              |      |     
|Equity                        |      |     
|                              |      |     
|Total                         |      |     
|                              |      |     
|Pretax Operating Gain (Loss): |      |     
|Finance                       |      |     
|Real Estate                   |      |     
|Leisure-time                  |      |     
|                              |      |     
|                              |      |     
|Equity                        |      |     
|Minority Interest             |      |     
|                              |      |     
|Total                         |      |     
|                              |      |     
|Total Assets:                 |      |     
|Finance                       |      |     
|Real Estate                   |      |     
|Leisure-Time*                 |      |     
|Intercompany adjustments      |      |     
|                              |      |     
|Total                         |      |     
|                              |      |     

| | Corporate
office expense is principally applicable to the financing operations and has been charged
to that segment above.
| | --------------------------------------------------------------------------------------------------------------------------

| | The
real estate rental segment consists of rental property owned in Israel and the United
States and leased to unrelated parties, and of the 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 primarily of Coral World International Limited (marine
parks located in Israel and around the world) and Country Club Kfar Saba, the Companys
51%-owned subsidiary located in Israel.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

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|5. | The
following table summarizes securities that were outstanding as of March 31,
               2004 and 2003, but not included in the calculations of diluted earnings
per                Class A share because such shares are anti-dilutive.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(Shares in thousands)  | March 31,
|---------------------- | ---------
|
|
|
|Options and Rights     |          
|6-1/2% Preferred Stock |          
|4% Preferred Stock     |          

|6. | Subsequent
Events:
|-- | ------------------

| | During
May 2004, the Company signed an agreement to sell approximately 49% of its holdings in
PowerDsine Ltd. (PowerDsine) for approximately U.S. $5.7 million, to a third
party investment group. Upon the completion of the sale, the Company will recognize a
capital gain of approximately U.S. $2.6 million.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
closing of the transaction is subject to certain regulatory approvals and other
conditions. Following the completion of the sale, Ampal will hold approximately 3% of
PowerDsines outstanding share capital on a fully-diluted basis.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
May 10, 2004, Ampal Communications L.P., a limited partnership controlled by Ampal
and in which Ampal holds a 75% equity interest, filed a claim in the Tel-Aviv District
Court against Motorola Communications Israel Ltd., Motorola Israel Ltd., Elisha Yanai,
Peter Brum, Rami Guzman, Nathan Gidron, Shimon Tal and MIRS Communications Ltd.
(collectively, the Defendants), for injunctive and declaratory relief as
described below. The claim is in connection with the exploitation by the defendants of
Ampal Communications minority rights by virtue of its 33% holding in MIRS
Communications Ltd.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Ampal
Communications L.P. requested the Court to issue relief as follows:
| | -------------------------------------------------------------------------

| | 1. | Declaring
that the business of MIRS Communications Ltd. is conducted in such a           way as to
be prejudicial to the rights of Ampal Communications L.P. as a           minority share
holder;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | Appointing
a valuer to carry out a valuation of MIRS Communications Ltd. and of           Ampal
Communications L.P.s holding therein, which will incorporate an           inquiry
into the way in which MIRS Communications Ltd. has conducted its           business up to
the present time, including related party transactions between           MIRS
Communications Ltd. and Motorola Israel Ltd. and/or any other of the
          Defendants;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Instructing
each of the Defendants to acquire and purchase from Ampal           Communications L.P.
the shares it holds in MIRS Communications Ltd. at the           highest of the following
prices:
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a)       
based
on a company valuation of MIRS Communications Ltd. as presented to Ampal Communications
L.P. by Motorola prior to the signing of the Share Purchase Agreement for MIRS
Communications Ltd.; or
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)       
based
 on the  amount  paid by  Ampal  Communications  L.P.  for  its  share
                  holding in MIRS Communications Ltd. plus linkage and interest; or
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)       
based
on the company valuation that will be determined by the valuation specified in Section 2
above, excluding any material negative effect brought about by the Defendants omissions
and/or negligence in their management of MIRS Communications Ltd., all as may be assessed
and computed by the valuer specified in Section 2 above;
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11

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| | 4. | Determining
that each of the individual Defendants, as officers in MIRS           Communications
Ltd., has violated his respective fiduciary obligations towards           Ampal
Communications L.P. as a minority share holder in MIRS Communications           Ltd.;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | Declaring
that the Share Purchase Agreement pursuant to which Ampal           Communications L.P.
acquired its shareholding in MIRS Communications Ltd. and           the Shareholders
Agreement in respect thereof, are void.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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
accounting principles generally accepted 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 the Annual Report for the year ended December 31, 2003 for a summary of all of
Ampals significant accounting policies.

Portfolio
Investments

The Company accounts for a number of
its investments, including many of its investments in the high-technology and
communications industries, on the basis of the cost method. Application of this 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.

12

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Investment
in MIRS

MIRS is our largest investment and
is being accounted for at cost (our equity interest is 25%). The cost method is applied
due to preference features we have been granted in our investment in preferred shares in
Mirs. Revenues from guaranteed payments from Motorola are recognized as income. We
perform annual tests for impairment regarding our investment.

Marketable
Securities

We determine the appropriate
classification of marketable securities at the time of purchase. We hold marketable
securities classified as trading securities that are carried at fair value, and
marketable securities classified as available-for-sale that are carried at fair value
with unrealized gains and losses included in the component of accumulated other
comprehensive loss in stockholders equity. If according to managements
assessment it is determined that a decline in the fair value of the available for sale
securities is other than temporary, an impairment loss is recorded and included in the
consolidated statements of income as loss from impairment of investments.

Long-Lived
Assets

On January 1, 2002, Ampal adopted
FAS 144, Accounting for the Impairment or Disposal of Long- Lived Assets. FAS
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.

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.

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.

13

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Results of Operations

Three months ended March 31, 2004
compared to three months ended March 31, 2003:

Ampal-American Israel Corporation (Ampal)
and its subsidiaries (the Company) recorded a consolidated net loss was $0.8
million for the three months ended March 31, 2004 as compared to a net loss of $2.2
million for the same period in 2003. The decrease in net loss is primarily attributable
to the increase in equity in earnings of affiliates, and a decrease in interest expense
in the three months ended March 31, 2004 as compared to the same period in 2003. These
increases were partially offset by the increase in loss from impairment and a translation
loss in the three months ended March 31, 2004, as compared to the same period in 2003.

Equity in earnings of affiliates
increased to $1.9 million for the three months ended March 31, 2004, as compared to a
loss of $0.5 million for the same period in 2003. The increase is primarily attributable
to a $1.2 million gain recorded by Ophir Holdings Ltd. as a result of a dividend and
partial sale of Industrial Building Corporation Ltd. shares.

In the three-month period ended
March 31, 2004, the Company recorded $1.5 million in losses from the impairment of its
investments in Identify Solutions Ltd. ($0.7 million) and Star Management of Investment
II (2000) L.P., ($0.8 million).

The Company recorded a translation
loss of $1.2 million in the three months ended March 31, 2004 as compared to a
translation loss of $0.3 million in the same period in 2003. The translation losses in
2004 are attributable to the devaluation of the new Israeli shekel against the U.S.
dollar.

The Company recorded lower interest
expense ($0.8 million) in the three months ended March 31, 2004, as compared to $2.2
million in the same period in 2003, primarily as a result of lower interest rates.

Liquidity and Capital Resources

Cash Flows

On March 31, 2004, cash and cash
equivalents were $7.7 million, as compared with $4.6 million at December 31, 2003.

The Companys sources of cash
include cash and cash equivalents, marketable securities, cash from operations, cash from
investing activities and amounts available under credit facilities, as described below.
The Company believes that these sources are sufficient to fund the current requirements
of operations, capital expenditures, investing activities, dividends on preferred stock
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. To the extent that the Company intends to rely on
the sale of its unpledged marketable securities in order to satisfy its cash needs, it is
subject to the risk of a shortfall in the amount of proceeds from any such sale as
compared with the anticipated sale proceeds due to a decline in the market price of those
securities. In the event of a decline in the market price of its marketable securities,
the Company may need to draw upon its other sources of cash, which may include additional
borrowing, refinancing of its existing indebtedness or liquidating other assets, the
value of which may also decline. In addition, the shares of MIRS owned by the Company,
the shares of Ophir Holdings Ltd. and $9 million of marketable securities have 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.

14

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Cash
flows from operating activities

Net cash provided by operating
activities totaled approximately $9.3 million for the three months ended March 31, 2004,
as compared to approximately $0.5 million for the same period in 2003. The increase is
primarily attributable to the increase in net proceeds from trading securities which was
partially offset by the increase in other assets and to the decrease in account payable.

Cash
flows from investing activities

Net cash used in investing
activities totaled approximately $4.7 million for the three months ended March 31, 2004,
as compared to approximately $0.3 million provided by investing activities for the same
period in 2003. The increase in investing activities is primarily attributable to an
increase of investment in investee companies and deposits granted which was partially
offset by increased deposits collected and proceeds from sale of investments.

Cash
flows from financing activities

Net cash provided by financing
activities was approximately $2.0 million at March 31, 2004, as compared to approximately
$0.6 million used in financing activities at March 31, 2003. The increase in the cash
provided in 2004 is primarily attributable to the decrease in pay down of debentures
($1.8 million and $19.3 million in 2004 and 2003, respectively).

Investments

On March 31, 2004, the aggregate
fair value of trading and available-for-sale securities was approximately $51.2 million,
as compared to $64.7 million at December 31, 2003. The decrease in 2004 is attributable
to the sale of various trading securities.

During the fiscal quarter ended
March 31, 2004, the Company made the following investments:

In February 2004, the Company
invested EUR 4.5 million (approximately US $5.6 million) in Telecom Partners, a newly
formed entity that will serve as a platform for investments in the telecommunication
industry predominantly outside of Israel. Ampals investment consists of EUR 4
million convertible debenture, which converts into a one-third partnership interest in
the partnership, and a EUR 0.5 million loan. The debenture is convertible at the Companys
discretion. Telecom Partners currently holds investments in PSINet Europe B.V. and Grapes
Communications N.V./S.A., two European telecom service providers.

On January 4, 2004, the Company
loaned $0.2 million to ShellCase Ltd.(ShellCase), the principal business of which
is the packaging process of semiconductor chips.

Debt

In connection with its investment in
MIRS, the Company has two long-term loans from Bank Hapoalim Ltd. (Hapoalim)
and Bank Leumi le-Israel B.M. (Leumi) in the outstanding amount of $37.3
million and $33.4 million, respectively, as of March 31, 2004. Both loans are due on
March 31, 2008 and bear interest at a rate of LIBOR plus 0.8%. Other than as described in
this paragraph, the loans are non-recourse to the Company and are secured by the Companys
shares in MIRS. The principal payments are due as follows: 10% on March 31, 2004, 15% on
March 31, 2005 and 25% on each of March 31, 2006, 2007 and 2008. Interest will be paid
annually on March 31 of each year from March 31, 2002 until and including March 31, 2008.
These loans are subject to the compliance by MIRS with covenants regarding its operations
and financial results. In March 2002, some of the covenants in the loan from Leumi were
amended to reflect changes in MIRS business. In connection with these amendments,
the Company agreed that Leumi will have recourse to the Company for an additional $0.5
million beginning in 2006 with respect to the Companys repayment obligations under
the loan.

15

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As of March 31, 2004, the company
had $1.9 million in debentures outstanding with interest rates of 7.5% These debentures,
which mature in 2005, are secured by $1.9 million in cash held in a secured account.

The Company financed a portion of
the development of Am-Hal, a wholly-owned subsidiary which develops and operates luxury
retirement centers for senior citizens, through bank loans from Hapoalim and others. At
March 31, 2004, and December 31, 2003 the amounts outstanding under these loans were $9.1
million and $9.2 million respectively. The loans are dollar linked, mature in up to one
year and have interest rates of LIBOR plus 1%. The 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 $4.6 million in favor of clients of Am-Hal in order to
secure their deposits.

The Company also finances its
general operations and other financial commitments through bank loans from Bank Hapoalim.
The long-term loans in the amount of $32.8 million mature through 2005-2011.

The weighted average interest rates
and the balances of these short-term borrowings at March 31, 2004 and December 31, 2003
were 4.0% on $31.3 million and 3.6% on $27.5 million, respectively.

As of March 31, 2004, the Company
had issued guarantees on certain outstanding loans to its investees and subsidiaries in
the aggregate principal amount of $12.2 million. This includes:

$0.5 million guarantee to Leumi with
respect to the MIRS loan as described above.

$6.2 million guarantee on
indebtedness incurred by Bay Heart ($3.8 million of which is recorded as a liability in
the Companys financial statements) in connection with the development of its
property. 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.

$4.6 million guarantee to Am-Hal
tenants as described above.

$0.9 million guarantee to Galha
1960 Ltd.

FOREIGN CURRENCY CONTRACTS

The Companys derivative
financial instruments consist of foreign currency forward exchange contracts. 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, 2004,
the Company had no open foreign currency forward exchange contracts.

16

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SUBSEQUENT EVENTS

During May 2004, the Company signed
an agreement to sell approximately 49% of its holdings in PowerDsine Ltd. (PowerDsine)
for approximately U.S. $5.7 million, to a third party investment group. Upon the
completion of the sale, the Company will recognize a capital gain of approximately U.S.
$2.6 million.

The closing of the transaction is
subject to certain regulatory approvals and other conditions. Following the completion of
the sale, Ampal will hold approximately 3% of PowerDsines outstanding share capital
on a fully-diluted basis.

On May 10, 2004, Ampal
Communications L.P., a limited partnership controlled by Ampal and in which Ampal holds a
75% equity interest, filed a claim in the Tel-Aviv District Court against Motorola
Communications Israel Ltd., Motorola Israel Ltd., Elisha Yanai, Peter Brum, Rami Guzman,
Nathan Gidron, Shimon Tal and MIRS Communications Ltd. (collectively, the Defendants),
for injunctive and declaratory relief as described below. The claim is in connection with
the exploitation by the defendants of Ampal Communications minority rights by
virtue of its 33% holding in MIRS Communications Ltd.

Ampal Communications L.P. requested
the Court to issue relief as follows:

|1. | Declaring
that the business of MIRS Communications Ltd. is conducted in such a           way as to
be prejudicial to the rights of Ampal Communications L.P. as a           minority share
holder;
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | Appointing
a valuer to carry out a valuation of MIRS Communications Ltd. and of           Ampal
Communications L.P.s holding therein, which will incorporate an           inquiry
into the way in which MIRS Communications Ltd. has conducted its           business up to
the present time, including related party transactions between           MIRS
Communications Ltd. and Motorola Israel Ltd. and/or any other of the
          Defendants;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Instructing
each of the Defendants to acquire and purchase from Ampal           Communications L.P.
the shares it holds in MIRS Communications Ltd. at the           highest of the following
prices:
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a)               based
on a company valuation of MIRS Communications Ltd. as presented to Ampal Communications
L.P. by Motorola prior to the signing of the Share Purchase Agreement for MIRS
Communications Ltd.; or
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)        based
on the amount  paid by Ampal  Communications  L.P.  for its share  holding in
           MIRS Communications Ltd. plus linkage and interest; or
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)        based
on the company valuation that will be determined by the valuation specified in Section 2
above, excluding any material negative effect brought about by the Defendants omissions
and/or negligence in their management of MIRS Communications Ltd., all as may be assessed
and computed by the valuer specified in Section 2 above;
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | Determining
that each of the individual Defendants, as officers in MIRS           Communications
Ltd., has violated his respective fiduciary obligations towards           Ampal
Communications L.P. as a minority share holder in MIRS Communications           Ltd.;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | Declaring
that the Share Purchase Agreement pursuant to which Ampal           Communications L.P.
acquired its shareholding in MIRS Communications Ltd. and           the Shareholders
Agreement in respect thereof, are void.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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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 (as such term is defined in the Private Securities Litigation Reform Act of
1995) 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, the Middle East, including the situation in Iraq, 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. Subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the cautionary statements in this paragraph and elsewhere
described in this quarterly Report and other Reports filed with the Securities and
Exchange Commission.

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, 2004, and are sensitive to the above market risks.

During the three months ended March
31, 2004, 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,
2003.

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Interest Rate Risks

At March 31, 2004, the Company had
financial assets totaling $19.9 million and financial liabilities totaling $138.6
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, 2004, the Company had
fixed rate financial assets of $10.7 million and variable rate financial assets of $9.2
million. Holding other variables constant, a ten percent increase in interest rates would
decrease the unrealized fair value of the fixed financial assets by approximately $0.1
million.

At March 31, 2004, the Company had
fixed rate debt of $16.1 million and variable rate debt of $122.5 million. A ten percent
decrease in interest rates would increase the unrealized fair value of the fixed rate
debt by approximately $0.1 million.

The net decrease in earnings for the
next year resulting from a ten percent interest rate increase would be approximately $0.2
million, holding other variables constant.

Exchange Rate Sensitivity Analysis

The Companys exchange rate
exposure on its financial instruments results from its investments and ongoing operations
in Israel. As of March 31, 204, the Company had no 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 $1.8 million, and
in the statements of operations, a ten percent devaluation of the foreign currency would
decrease net earnings in the amount of approximately $1.2 million.

Securities Price Risk

The Companys investments at
March 31, 2004, included marketable securities (trading and available-for-sale) which are
recorded at fair value of $51.2 million. Those securities have exposure to price risk.
The estimated potential loss in fair value resulting from a hypothetical ten percent
decrease in prices quoted on stock exchanges is approximately $5.1 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.

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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.

Part II  OTHER INFORMATION

|Item 1. |  | Legal
Proceedings:                          None.
|------- |  | -------------------------------------------------

|Item 2. |  | Changes
in Securities, Use of Proceeds and Issuer Purchases of                          Equity
Securities                          None.
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------

|Item 3. |  | Defaults
upon Senior Securities                          None.
|------- |  | --------------------------------------------------------------

|Item 4. |  | Submission
of Matters to a Vote of Security Holders:                          None.
|------- |  | -----------------------------------------------------------------------------------

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

|Item 6. |  | Exhibits and Reports on Form 8-K
|------- |  | --------------------------------

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

| | 11.1
Schedule Setting Forth Computation of Loss per Share of Class A Stock.
| | ---------------------------------------------------------------------------

| | 31.1
Certification of Jack Bigio 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 Jack Bigio and Irit Eluz pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Reports
on Form 8-K: None
| | --- | -------------------------

20

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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 dully authorized.

| |  | AMPAL-AMERICAN ISRAEL CORPORATIONBY: /S/ Jack Bigio
Jack BigioChief Executive Officer(Principal Executive Officer)
| |  | --------------------------------------------------------------------------------------------------------------------------------

| |  | BY: /S/ Irit Eluz
Irit EluzCFO and Vice President - Financeand Treasurer(Principal Financial Officer)
| |  | -------------------------------------------------------------------------------------------------------------------

| |  | BY: /S/ Giora Bar-Nir
Giora Bar-NirController(Principal Accounting Officer)
| |  | -----------------------------------------------------------------------------------------

Dated:  May 13, 2004

21

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AMPAL-AMERICAN
ISRAEL CORPORATION AND SUBSIDIARIES

Exhibit Index

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

|11.1 |  | Schedule
Setting Forth Computation of Earnings
|---- |  | ----------------------------------------------

| |  | Per
Share of Class A Stock
| |  | --------------------------

|31.1 |  | Certification
of Jack Bigio 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 Jack Bigio 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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