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|-----------------------------------------------------------------------
|UNITED STATES                                                          
|SECURITIES AND EXCHANGE COMMISSION                                     
|WASHINGTON,
  D.C. 20549                                               
|                                                                       
|FORM 10-KSB                                                            
|                                                                       
|(Mark One)                                                             
|xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES       
|EXCHANGE ACT OF
  1934                                                 
|                                                                       
|For the Fiscal Year Ended September 30,
  2007                         
|                                                                       
|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: 0-32835                                        
|                                                                       
|GAMMACAN INTERNATIONAL, INC.                                           
|(Exact name of registrant as specified in its charter)                 

|                                                                                                       |                                                                   |  |                                      | 
|------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------- |  | ------------------------------------ | 
|                                                                                                       | Delaware                                                          |  | 33-0956433                           | 
|                                                                                                       | (State or other jurisdiction of 
  incorporation or organization) |  | (IRS Employer Identification 
  No.) | 
|                                                                                                       |                                                                   |  |                                      | 
|Kiryat Ono Mall                                                                                       
|Azorim Center A                                                                                       
|39 Jerusalem St.,                                                                                     
|55423 Kiryat Ono, Israel                                                                              
|(Address
  of principal executive offices)                                                            
|                                                                                                      
|972 3 7382616                                                                                         
|(Registrants
  telephone number, including area code)                                                
|                                                                                                      
|Securities registered pursuant to Section 12(b) of the Exchange Act:
  None                           
|                                                                                                       |                                                                   | 
|Securities registered pursuant to Section 12(g) of the Exchange Act:
  Common Stock, $0.0001 par value

Check whether
the issuer: (1) filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of1934 during the past 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

Check if there
is no disclosure of delinquent filers in response to Item 405 of Regulation S-B
contained in this form, and no disclosure will be contained, to the best of
registrants knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-KSB or any amendment to this Form
10-KSB. o

---

---



Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act) Yes o No x

State issuers
revenues for its most recent fiscal year $0.00

State the aggregate market value of the
voting and non-voting common equity held by non-affiliates computed by
reference to the price at which the common equity was sold, or the average bid
and asked price of such common equity, as of a specified date within the past
60 days. As of December 24, 2007: $14,940,899 (37,352,248 shares at $0.40 per
    share).

State the
number of shares outstanding of each of the registrants classes of common
equity, as of the latest practicable date: 44,958,917 shares issued and
outstanding as of December 24, 2007.

2

---



GAMMACAN INTERNATIONAL, INC.

FORM 10-KSB

TABLE OF CONTENTS

|         |                                                                                                           |           
|-------- | --------------------------------------------------------------------------------------------------------- | ----------
|PART I   | 1                                                                                                        
|         |                                                                                                           |           
|         | ITEM 1 - BUSINESS                                                                                         | 1         
|         |                                                                                                           |           
|         | ITEM 1A  RISK FACTORS                                                                                    | 22        
|         |                                                                                                           |           
|         | ITEM 2 - PROPERTIES                                                                                       | 35        
|         |                                                                                                           |           
|         | ITEM 3 - LEGAL PROCEEDINGS                                                                                | 35        
|         |                                                                                                           |           
|         | ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                                             | 35        
|         |                                                                                                           |           
|PART II  | 36                                                                                                       
|         |                                                                                                           |           
|         | ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                                         | 36        
|         |                                                                                                           |           
|         | ITEM 6 - MANAGEMENTS DISCUSSION AND ANALYSIS AND PLAN OF OPERATION                                       | 40        
|         |                                                                                                           |           
|         | ITEM 7 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                      | F-1 - F-32
|         |                                                                                                           |           
|         | ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
  AND FINANCIAL DISCLOSURE           | 48        
|         |                                                                                                           |           
|         | ITEM 8A  CONTROLS AND PROCEDURES                                                                         | 48        
|         |                                                                                                           |           
|         | ITEM 8B  OTHER INFORMATION                                                                               | 48        
|         |                                                                                                           |           
|PART III | 55                                                                                                       
|         |                                                                                                           |           
|         | ITEM 10 - EXECUTIVE COMPENSATION                                                                          | 55        
|         |                                                                                                           |           
|         | ITEM 11- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
  MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 61        
|         |                                                                                                           |           
|         | ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                  | 63        
|         |                                                                                                           |           
|         | ITEM 13  EXHIBITS                                                                                        | 65        
|         |                                                                                                           |           
|         | ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                          | 67        

---



PART I

ITEM 1 -
BUSINESS

This Annual Report on Form 10-KSB
(including the section regarding Managements Discussion and Analysis of
Financial Condition and Results of Operations) contains forward-looking
statements regarding our business, financial condition, results of operations
and prospects. Words such as expects, anticipates, intends, plans,
believes, seeks, estimates and similar expressions or variations of such
words are intended to identify forward-looking statements, but are not deemed
to represent an all-inclusive means of identifying forward-looking statements
as denoted in this Annual Report on Form 10-KSB. Additionally, statements
concerning future matters are forward-looking statements.

Although
forward-looking statements in this Annual Report on Form 10-KSB reflect the
good faith judgment of our management, such statements can only be based on
facts and factors currently known by us. Consequently, forward-looking
statements are inherently subject to risks and uncertainties and actual results
and outcomes may differ materially from the results and outcomes discussed in
or anticipated by the forward-looking statements. Factors that could cause or
contribute to such differences in results and outcomes include, without
limitation, those specifically addressed under the heading Risks
Related to Our Business below, as well as those discussed elsewhere
in this Annual Report on Form 10-KSB. Readers are urged not to place undue
reliance on these forward-looking statements, which speak only as of the date
of this Annual Report on Form 10-KSB. We file reports with the Securities and
Exchange Commission (the Commission). We make available on our
website under Investor Information/SEC Filings, free of charge, our annual reports
on Form 10-KSB, quarterly reports on Form 10-QSB, current reports on Form 8-K
and amendments to those reports as soon as reasonably practicable after we
electronically file such materials with or furnish them to the SEC. Our website
address is www.gammacan.com. You can also read and copy any materials we file
with the SEC at the SECs Public Reference Room at 450 Fifth Street, NW,
Washington, DC 20549. You can obtain additional information about the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition,
the SEC maintains an internet site (www.sec.gov) that contains reports, proxy
and information statements, and other information regarding issuers that file
electronically with the SEC, including us.

We
undertake no obligation to revise or update any forward-looking statements in
order to reflect any event or circumstance that may arise after the date of
this Annual Report on Form 10-KSB. Readers are urged to carefully review and
consider the various disclosures made throughout the entirety of this Annual
Report, which attempt to advise interested parties of the risks and factors
that may affect our business, financial condition, results of operations and
prospects.

As
used in this Annual Report, the terms we, us, our, and
GammaCan mean GammaCan
International, Inc. and our subsidiary, GammaCan, Ltd., unless otherwise
indicated.

All
dollar amounts refer to US dollars, unless otherwise indicated. Throughout this
document we use IgG to refer to intravenous immunoglobulin therapy, unless
otherwise indicated. Others in the industry use abbreviations such as IVIG or
IVIg when referring to intravenous immunoglobulin therapy.

1

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DESCRIPTION
OF BUSINESS

General

We
are a life science company focused on the development of immunotherapy and
related approaches to treat cancer. To date, we have
focused on the use of intravenous immunoglobulins, or IgGs, derived from human plasma to treat
melanoma, and other cancers. We believe that IgGs may be the basis for safer,
more effective and efficient cancer treatment as a mono-therapy, a combination
therapy and as an adjuvant therapy. Our business objective is to become a
recognized leader in the development of immunotherapy and related approaches to
treat cancer.

IgG-based Technology:
Based on our research, IgG-derived from human plasma has anti-cancer
properties. These properties appear to be the result of the immunomodulatory
effects of IgGs, as well as the direct effects of certain antibody populations
present in IgG fractions. We have demonstrated a reduction in metastatic
lesions and an improved survival rate in mice injected with human sarcoma or
human melanoma cells when the animals were treated with IgGs. There is also
clinical evidence suggesting that IgG-based therapy is efficacious in human
cancers, including melanoma. Also, IgGs have been found to dramatically reduce
the white blood cell count in chronic lymphocytic leukemia.

In
addition, we recognize that IgG-based therapies possess the following unique
advantages as a result of more than thirty years of clinical experience and
manufacturing know-how pertaining to the treatment of immune deficiencies and
autoimmune diseases:

| |                                                                                                                                                                                      | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
| |  Superior product safety-IgGs are
 safeand non-toxic; and                                                                                                                          
| |                                                                                                                                                                                      | 
| |  Minimal manufacturing riskthe manufacturing process for IgGs is
 well established and optimized due to the numerous products that have been
 developed from human plasma to date.

As
a result, we are pursuing the development of IgG-based technology to
develop therapies for the treatment of melanoma, as well as therapies directed
toward disrupting the blood supply to cancers, referred to as
anti-angiogenesis.

Melanoma:
The incidence of melanoma, despite new developments in other cancers, continues
to increase with little or no therapeutic progress in the last ten years. Our
lead product candidate, VitiGam, is a first-in-class anti-cancer immunotherapy
derived entirely from the plasma of donors with vitiligo, a benign autoimmune
skin condition affecting up to two percent of the general population. We have
demonstrated that plasma from individuals with vitiligo contains anti-melanoma
activities. Based on this, we are developing
VitiGam to initially address Stage III and Stage IV melanoma and possibly
earlier stages of melanoma at a future time.

In
June 2007, we completed a non-FDA Phase II clinical
trial designed to test the safety and efficacy of standard IgG
(collected and manufactured from general population donors, which may have
included donors with vitiligo) in patients with prostate cancer, colon cancer
and melanoma. In this trial, no serious untoward effects of IgGs were noted. In
one patient with melanoma, the cancer remained stable
or improved over eight cycles of therapy
(approximately ten months).

In
addition to the pre-clinical evidence we have
accumulated using vitiligo-derived plasma, the
above observations provide further validation
for our plan to develop VitiGam.

2

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We
plan to file an Investigational New Drug Application, or IND, for VitiGam in
the near future. We believe that the FDA is well acquainted with IgG-based therapies
and their safety profiles resulting
from a long history of regulatory approvals of IgG-based products.

In
addition to VitiGam, we are also developing the following:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| |  Next generation (recombinant)
 VitiGam - VitiGam is currently manufactured as a
 mixture that largely consists of IgG molecules (antibodies of the IgG type).
 We anticipate that within this mixture, only a subset of IgG molecules will
 be responsible for the biological activity of VitiGam. Next generation
 VitiGam will be composed of only the IgGs
 required to exert the anti-melanoma effect, thereby creating a
 more effective compound. Identifying the relevant IgGs may also permit cost
 reductions; and
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 
| |  Cancer vaccines based on
 VitiGam - An off-the-shelf cancer vaccine is
 considered a silver bullet in cancer therapy. We anticipate that based on
 our evolving understanding of the specific IgG molecules responsible for the
 biological activity of VitiGam, we may be in a position to identify the
 corresponding antigens that may be used to develop melanoma cancer vaccines.                                                                                                                                     

Anti-angiogenesis:We
are developing additional novel IgG-based therapies
for cancer and other diseases. These therapies are based on the disruption of
the blood supply to cells. Our scientists have shown that several
mechanisms may be involved in mediating the anti-cancer effects of IgG-based
immunotherapies. Angiogenesis is one of a number of well known pathways to
deprive cells from their blood supply.

In
June 2007, we announced the discovery of proprietary IgG sub-fractions, in
human plasma, which contain potent anti-angiogenic properties. These
sub-fractions may be used for treatment of disorders resulting from neovascularization (the formation of new blood
vessels or angiogenesis).

We
have established a pre-clinical development program to define and characterize
these anti-angiogenic anti-cancer fractions and to test their biological activity
    in animal models. We believe that successfully developed therapies derived
    from our novel IgG sub-fractions have the potential to address multi-billion
    dollar markets. For example, Avastin®, also known as Bevacizumab,
    counteracts VEGF, a growth factor which stimulates neovascularization, and
    is used to treat colon and other cancers. Sales for Avastin® in
    2006 were in excess of $2 billion.

Intellectual Property: We own a significant
portfolio of
patents and patent applications covering our technologies and are aggressively
protecting these technology developments on a worldwide basis. In addition, in August 2007, VitiGam received Orphan Drug Status
in
the U.S. for Stage IIB to Stage IV metastatic melanoma. We are currently applying for Orphan Drug Designation in the European
Union (E.U.)
and its member states. Orphan Drug Status is granted by the U.S. and European regulatory
authorities to promote the development of drugs for diseases affecting less
than 200,000 people and in the E.U. for diseases affecting less than 5 cases
per 10,000 people. In the U.S., Orphan Drug Status
provides market exclusivity for a seven year period as well as other
regulatory and income tax advantages. In the E.U.
Orphan Drug Designation, if granted, will provide us with market
exclusivity for ten years, certain fee reductions, protocol assistance
(scientific advice), and various other E.U. and member state-specific incentives.

In-licensing
and Acquisitions: We are continuously
evaluating in-licensing and/or acquisition opportunities to broaden our product
portfolio and technology base.

3

---



Management: We are led by a
highly-experienced
management team knowledgeable in immunotherapy for the treatment of cancer. Our
management team has access to our
internationally recognized Scientific Advisory Board whose members are
thought-leaders in their respective areas. Our subsidiarys Chief Scientist,
Professor Yehuda Shoenfeld, M.D., FRCP, is a world-recognized immunologist and
the innovator primarily responsible for much of our IgG-based technology
development and know-how.

Corporate History

We
were incorporated under the laws of the state of Delaware on October 6, 1998
under the name of San Jose International, Inc. We engaged in several business
models and acquisition plans, until in June 2004, approximately 27% of our then
outstanding shares of common stock was acquired by Zeev Bronfeld and Vered
Caplan in a private transaction. Shortly thereafter, on August 14, 2004 we
raised approximately $900,000 in a private placement, and, pursuant to an
agreement for the purchase and sale of intellectual property between our newly
formed Israeli subsidiary, GammaCan, Ltd., and ARP Biomed, Ltd. (ARP),
our subsidiary completed the purchase and sale of ARPs intellectual property
on August 17, 2004 in consideration for the issuance to ARP of 12.5% of the
outstanding shares of our subsidiary. As a result, we became the owner of 87.5%
of our subsidiary which in turn owns all of the aforementioned intellectual
property consisting of IgG research and development, patents and other
intellectual property. At the same time, we also made a loan of $800,000 from
the proceeds of the private placement to the subsidiary to finance its new
business. On August 19, 2004, we changed our name to GammaCan International,
Inc.

On
December 13, 2007, we entered into a Share Purchase Agreement made as of
November 26, 2007 with ARP. The Share Purchase Agreement provides that, subject
to fulfillment of certain closing conditions, including the receipt of an
Israeli tax ruling, ARP will sell to us 12.5% of the issued and outstanding
shares of our subsidiary such that at closing we will own 100% of the issued
and outstanding shares of our subsidiary. In consideration for such sale, we
agreed to issue to ARP, at closing, 2,697,535 shares of our common stock, a
warrant to acquire 1,123,973 shares of our common stock and an additional
warrant to acquire 449,589 shares of our common stock. Both warrants are
exercisable for five years at an exercise price equal to the average last sales
price of our common stock during the sixty trading days prior to November 26,
2007. The warrants are subject to adjustment for, among other things, stock
splits, stock dividends, distributions and reclassifications. In the case of
the warrant to acquire 1,123,973 shares, if there is a change of control (as
defined therein), then subject to certain restrictions, the warrant shall be
deemed exercised in full and no exercise price shall be payable by the holder.
The securities (and underlying securities) to be issued under the Share
Purchase Agreement will also be subject to a separate lock up agreement and
registration rights agreement upon issuance.

In
connection with the Share Purchase Agreement, ARP and our subsidiary agreed to
enter into an amendment of the agreement for the purchase and sale of
intellectual property from ARP, which amendment specifically delineates clarity
of title and related issues to certain intellectual property sold under the
original agreement.

Background

Current Approaches to Cancer Therapy

Cancer
is a malignant condition which starts in a cell of a specific organ in the
body. If left untreated, the cancer will grow in size, affect the organ, and
ultimately spread (metastasize) to other
organs throughout the body where it will also grow and affect the vital
function of the organs to which it has spread. Malignant cancers are ultimately
terminal because they affect vital organ function. The rate at which these
events occur depends on the natural course of the specific cancer, host factors
such as the general health of the patient, his or her age, the ability of his
or her immune system to deal with the cancer, and other factors.

4

---



In
general and whenever possible, primary cancers are surgically removed,
particularly if the tumor has not spread beyond the site where it originated.
In most cases excision will be curative if the cancer has not spread (e.g. such
is the case with early stage melanomas). For some cases, adjuvant chemo and/or
radiation therapy may be indicated, even when the primary tumor does not appear
to have spread elsewhere. Once the cancer has spread beyond its primary site, a
variety of therapeutic options are available depending on the location and
extent of metastases and the natural history of the cancer. Patient factors
also play a role. Therapeutic options can be one or more of the following:

Further surgical removal;

Chemotherapy  the use of drugs designed to destroy
cancer cells;

Radiotherapy  the use of radiation to kill the
cancer. Radiation may be administered externally (e.g. x-ray) or via a drug
that targets the cancer (brachytherapy);

Hormonal therapy  Some cancers are hormone-sensitive
(e.g. prostate and breast);

Immunotherapy  the use of drugs such as antibodies or
cancer vaccines that attack the cancer immunologically; and

Combinations of any of the above.

More
recently, the use of antibodies plus chemotherapy has emerged as a promising
approach to treat cancers.

Use of Immunotherapy in Cancer Treatment

Cancer
develops from a single abnormal cell. Most individuals immune systems
recognize the cancer cell as a foreign invader and destroy it. Under certain
conditions, however, when the individuals immune system is inadequate or when
the cancerous cell fools the immune system into treating the cell as normal
tissue, the cancerous cell will multiply unchecked and over time cancer will
develop. Because of the importance of the immune system in protecting against
cancer in the natural state, there has been extensive research dedicated to
enlisting immunological approaches to treat cancer. These may be summarized as
follows:

Immunoglobulin
or Antibody-Based Treatments

Antibodies
are plasma-derived proteins (also called immunoglobulins) that bind or interact
with one specific (unique) target. The body synthesizes antibodies to destroy
and eliminate any cell or organism that bears (expresses) the target to which
the immunoglobulin is specific. After the antibodies have bound to their targets,
immune cells (B and T cells and macrophages) effect the destruction of the
target cell and remove the debris.

Scientists
have harnessed the bodys tools and are now able to make antibodies against
virtually any target. Antibodies are manufactured outside the body, usually in
cell lines, in large manufacturing
plants. These antibodies are generally monoclonal - and may affect the cancer
in a variety of ways:

5

---



| |                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  A
 monoclonal antibody may attack the tumor cell itself. An example of such a
 drug is Herceptin trastuzumab (it binds to the HER-2 receptor which is
 over-expressed in cancerous breast tissue), used in the treatment of certain
 patients with breast cancer;                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                
| |  The
 antibody may react against a substance that is secreted by the tumor to
 enhance its own cancerous capabilities (for example to stimulate the
 formation of new blood vessels). Avastin bevacizumab (it targets VEGF, a
 growth factor that stimulates blood vessel formation or angiogenesis), used
    to treat colon and other cancers, is an example of such a drug;
| |                                                                                                                                                                                                                                                                                                                                                                                
| |  The
 antibody may attack a target central to the modulation of the immune system.
 Although there are no approved therapies available for cancer, there are
 several products in late stage development including anti-CTLA4 antibodies
 (Antegren natalizumab targets a receptor in the Integrin family and is
 approved for the treatment of multiple sclerosis).          

We
are developing immunoglobulin or antibody-based therapies. We use more than one
antibody, which we understand enhances our product vis-à-vis the others
discussed above. Moreover, we harvest IgG from human donors, which we think
makes our IgG-based therapy safer than others.
Our donors are considered healthy and are extensively screened for possible
diseases or contaminants.

Immunoglobulins
are also used in combination with chemotherapeutic drugs as an adjuvant
therapy. We are active in developing this approach as well.

Cell-Based Therapies

There
are two basic approaches to this therapy. The first involves harvesting the
patients own immune or other cells, manipulating them outside the body and
then returning them to the patient as an anti-cancer therapy. A second approach
involves taking established immune or other cells and giving them to a cancer
patient. Clinical and commercial development of cell-based therapies has been
challenging and there are no commercial products in the market at present.

Tumor Vaccinations

This
is the use of tumor extracts or other substances related to the tumor to induce
the patients immune system to act against the tumor. Such vaccines would work
in a manner similar to any other vaccine (e.g. rubella, varicella) except that
the target is an internal invader, the cancer, rather than an external
pathogen such as a virus. To date, only two cancer vaccines are commercially
available (Melacine, sold by GlaxoSmithKline in Canada to treat melanoma and
Mercks Gardasil® human papilloma virus vaccine to prevent cervical cancer).We are also pursuing novel ways to
leverage our knowledge of the immune system, IgG biology, and the cellular
immune response in order to develop cancer vaccines.

Immune Modulators

Small
stretches of nucleic acids have been shown to be immunostimulatory. These molecules affect the innate immune
response by means of so called pattern recognition receptors. Several
therapies based on this concept are in clinical development.

6

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Stage III and Stage IV Melanoma

Melanoma
is a serious skin cancer that originates from the transformation (e.g.,
conversion from normal cells to cancerous cells) of melanocytes, the skins
pigment (melanin) producing cells. In 2002, the American Joint Committee on
Cancer (AJCC) published a revised staging system for melanoma comprising five
different stages of the degree of the disease (Stages 0 through IV).

Current
therapies for melanoma, especially those available for the treatment of Stage
III and Stage IV metastatic melanoma, are unsatisfactory. Chemotherapy, with
    or without the addition of biologics, have improved survival only slightly,
    if at all, and the overall prognosis in these patients is poor. Interferon
    (IFN), interleukin-2 (IL-2) and dacarbazine are the most commonly prescribed
therapeutics for the treatment of Stage III and Stage IV melanoma. Their
efficacy is moderate and these drugs are plagued by significant side effects.
Newer therapies, including monoclonal antibodies and vaccines, are still in
development stage. Accordingly, new approaches for the treatment of melanoma
are being actively pursued and metastatic melanoma remains a major unmet
medical need.

According
to the American Cancer Society (ACS):

| |                                                                                                           
| | ----------------------------------------------------------------------------------------------------------
| |  there were
 62,160 new cases of melanoma diagnosed in the U.S. during 2006; and                         
| |                                                                                                           
| |  the
 incidence of melanoma in the U.S. has doubled since 1973 and has doubled
 around the world as well.

If
recognized early, melanoma is curable by surgery alone. Most new cases are, in
fact, cured surgically. For Stage 0, simple excision is 100% effective. For
Stage I melanoma, surgery is also almost 100% effective.

Melanoma
can be a particularly aggressive cancer. Although melanoma accounts for only 4%
of all skin cancers, it accounts for 80% of all skin cancer deaths. Once the
disease has spread, the prognosis worsens dramatically. There have been no
significant advances in improving the survival of patients with advanced
melanoma (Stages II to IV) in the ten last years and limited success in
improving their quality of life. We are committed to developing better and
safer immune-mediated approaches to treat melanoma and other cancers.

We
believe that the U.S. melanoma market will continue to grow significantly in
the next few years as a result of:

| |                                      
| | -------------------------------------
| |  ozone depletion;                   
| |                                      
| |  increased
 exposure to the sun; and
| |                                      
| |  population
 growth in the sunbelt. 

Market
researchers estimate the number of melanoma cases will grow from 731,000 cases
in 2004 to over 1,000,000 cases in 2010.

According
to Navigant Consulting, the worldwide melanoma market is expected to double
from $265 million in 2004 to over $600 million in 2009. Experts estimate that
it will exceed $1 billon in 2010. The U.S. accounts for close to 50% of the
worldwide melanoma market.

7

---



Intravenous Immunoglobulin (IgG)

Intravenous
immunoglobulins are manufactured from human plasma. More than 12 million liters
of source plasma are collected annually in the U.S. Virtually all this plasma
is collected from paid donors.

The
plasma industry has existed for more than 50 years and has developed
substantial experience and know-how in methods to attract, recruit and retain
donors. The industry recruits individuals to donate plasma for the manufacture
of standard plasma products as well as other individuals who agree to be
immunized prior to the donation of plasma for the production of specific
immunoglobulin preparations (e.g., rabies immune globulin, Rh immune globulin,
hepatitis B immune globulin, etc.). This also includes recruiting specific
patients whose plasma contains commercially valuable constituents, particularly
for use as control reagents in the diagnostic field and for research (e.g.,
patients with anti-mitochondrial antibodies, patients with various
hyperglobulinemic syndromes, etc.).

Plasma
for manufacture into plasma derivativesis
collected by plasmapheresis. This
is a process where the donor is connected to a machine for about 40 minutes.
The machine extracts plasma, and returns the bloods cellular components to the
donor automatically. Plasma collected by this approach is termed source plasma. On average, about 800 to
850 mls of plasma are harvested per donation. Donors may donate twice per
week and are monitored with an FDA-mandated series of tests with every donation
which includes a plasma protein determination and testing for transmissible
diseases. There is substantial literature going back more than 30 years
indicating that regular plasmapheresis donors suffer no ill effects from this
activity.

Strategy

Our
business objective is to become a recognized leader in the development of
immunotherapy and related approaches to treat cancer. We intend to pursue our
objective by implementing the following key strategies:

Market
Introduction of VitiGam Through Its Designation as an Orphan Drug

In
August of 2007, we received Orphan Drug Status
by the FDA VitiGam for the treatment of Stage IIB to Stage IV metastatic
melanoma. Orphan Drug Status is granted by the FDA to promote the development
of drugs for diseases affecting fewer than 200,000 people in the U.S. Orphan
Drug Status provides us with the following:

| |                                                                  
| | -----------------------------------------------------------------
| |  seven year
 period of market exclusivity;                      
| |                                                                  
| |  waiver of
 fees required for FDA filings and registrations; and
| |                                                                  
| |  tax
 incentives for up to 50% of clinical development costs.   

We
are currently also applying for Orphan Drug Designation for VitiGam for Stage
IIB to Stage IV metastatic melanoma in the E.U. and its member states. Similar
to the FDA, the European Medicines Agency (EMEA) grants Orphan Drug Designation to
promote the development of drugs for diseases with a prevalence of fewer than 5 cases per 10,000 inhabitants.
If granted, Orphan Drug Designation would provide us with the following:

| |                                           
| | ------------------------------------------
| |   ten year
 period of market exclusivity;
| |                                           
| |  fee
 reductions;                        

8

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| |                                                            
| | -----------------------------------------------------------
| |  protocol
 assistance (scientific advice); and            
| |                                                            
| |  European
 Community and member state specific incentives.

Leverage Our Capabilities in
Order to Bring to Market
Novel and Improved Cancer Therapy Products

We
intend to leverage our IgG-based technology, the expertise of our development
team, and the expertise of GammaCans research and development partner, Sheba
Hospital in Tel HaShomer, and Professor Yehuda Shoenfeld, M.D., F.R.C.P., a
world renowned immunologist.

Leverage
Our Research and Development Efforts to Attract Collaborative Partners to
Assist Us

We
intend to utilize our research and development efforts to attract collaborative
partners with expertise in, and resources necessary for, clinical trials and
manufacturing. By entering into collaborative arrangements, we anticipate that
we will gain access to sales, marketing, and other resources to expedite
commercialization of our product candidates.

Continue
to Leverage Our Technology to Develop Additional Products

We
intend to build upon our technology to develop the following:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  Next generation (recombinant)
 VitiGam - VitiGam is currently manufactured as a
 mixture that largely consists of IgG molecules (antibodies of the IgG type).
 We anticipate that within this mixture, only a subset of IgG molecules will
 be responsible for the biological activity of VitiGam. Next generation
 VitiGam will be composed of only the IgGs
 required to exert the anti-melanoma effect, thereby creating a
 more effective compound. Identifying the relevant IgGs may also permit cost
 reductions;
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  Cancer vaccines based on
 VitiGam - An off-the-shelf cancer vaccine is
 considered a silver bullet in cancer therapy. We anticipate that based on
 our evolving understanding of the specific IgG molecules responsible for the
 biological activity of VitiGam, we may be in a position to identify the
 corresponding antigens that may be used to develop melanoma cancer
vaccines; and                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  Anti-angiogenesis -We are developing additional
    novel IgG-based therapies for cancer and other diseases. These therapies
    are based on the disruption of the blood supply to cells. Our scientists
    have shown that several mechanisms may be involved in mediating the anti-cancer
    effects of IgG-based immunotherapies. Angiogenesis is one of a number of
    well known pathways to deprive cells of their blood supply.                                                                                   

9

---



Research and Development Program

Foundational
Research

Prior
to our acquisition of ARP intellectual property by us, ARP
scientists conducted extensive pre-clinical research to test the
effectiveness of IgG immunotherapy in treating cancer. They have employed mouse
models of various types of cancers as well as various types of human cancers
introduced into these mice. They have investigated the effectiveness of IgG
treatment at various stages of disease progression, using alternative dosages
and routes of administration. These pre-clinical and preliminary experiments
have shown that IgG treatment prevents metastases and tumor recurrence for a
broad spectrum of cancers with few or no side effects.

Most
pre-clinical experiments were conducted using a standard dosage of 2.0 grams
per kilogram body weight. Additional experiments have shown that our proposed
therapy is effective with low doses of IgG representing 1% (20 milligrams per
kilogram body weight) of the standard IgG dosage. These experiments suggest
that IgG treatment could be affordably administered as a preventive measure.
IgG has been shown in mice experiments to be effective when administered
subcutaneously, intravenously, or through intra-cavitary injection. The option
of alternative routes of administration dramatically improves ease-of-use and
enables the treatment of previously untreatable conditions such as
intra-peritoneal spread (i.e. ovarian carcinoma). IgG has also been shown to be
effective when administered as a whole molecule or as a fraction.

Product
Development

Our
near term focus is to demonstrate efficacy of IgG-based cancer immunotherapy in
human clinical trials. Efficacy is the ability of a drug or other treatments to
produce the desired result when taken by its intended users. If ultimately
proven to be successful, and we can provide no assurance that it will be, we
could be well-positioned to enter into a licensing agreement with one or more
major pharmaceutical partners for late stage clinical development and/or
commercial market development and sales.

IgG
immunotherapy will require regulatory approval before being commercially
marketed for human therapeutic use. Clinical trials generally include three
phases that together may take several years to complete. Phase I clinical
studies (toxicity trials) are primarily conducted to establish the safety and
determine the maximum tolerated dose, or MTD. Phase II studies are designed to
determine preliminary efficacy and establish dosing. Phase III studies are
conducted to demonstrate therapeutic efficacy in a statistically significant
manner at the levels of optimal dose, method or route of delivery into the
body, and the schedule of administration. Once clinical trials are completed
successfully, products may receive regulatory approval. See BusinessGovernment
Regulation.

We
are pursuing the development of IgG-based technology to develop
therapies for the treatment of melanoma, as well as therapies directed toward
disrupting the blood supply to cancers, referred to as anti-angiogenesis
therapies.

Our
lead product candidate, VitiGam, is a first-in-class anti-cancer immunotherapy
derived entirely from the plasma of donors with vitiligo, a benign autoimmune
skin condition affecting up to two percent of the general population. We have
demonstrated that plasma from individuals with vitiligo contains anti-melanoma
activities. Based on this, we are developing VitiGam to initially address
Stage III and Stage IV melanoma and possibly earlier stages of melanoma at a
future time.

10

---



In
June 2007, we completed a non-FDA Phase II clinical trial designed to test the
safety and efficacy of standard IgG (collected and manufactured from general
population donors, which may have included donors with vitiligo) in patients
with prostate cancer, colon cancer and melanoma. In this trial, no serious
untoward effects of IgGs were noted. In one patient with melanoma, the cancer
remained stable or improved over eight cycles of therapy (approximately ten
months).

In
addition to the pre-clinical evidence we have accumulated using
vitiligo-derived plasma, the above observations provide further validation for
our plan to develop VitiGam.

We
plan to file an Investigational New Drug Application, or IND, for VitiGam in the near future with
the intent
to conduct a Phase I/II trial to evaluate VitiGam in patients with Stage III
and IV melanoma. We estimate that the costs of this Phase I/II will be
substantial and the timing of initiation of the Phase I/II trials will be based
on several major factors, including our ability to attract sufficient financing
on acceptable terms.

We
are developing additional novel IgG-based therapies for cancer and other
diseases. These therapies are based on the disruption of the blood supply to
cells. Our scientists have shown that several mechanisms may be involved in
mediating the anti-cancer effects of IgG-based immunotherapies. Angiogenesis is
one of a number of well known pathways to deprive cells of their blood
supply.

In
June 2007, we announced the discovery of proprietary IgG sub-fractions which
contain potent anti-angiogenic properties. These sub-fractions may be used for
treatment of disorders resulting from neovascularization (the formation of new blood
vessels or angiogenesis).

We
have established a pre-clinical development program to define and characterize
these anti-angiogenic anti-cancer fractions and to test their biological activity in
animal models. We believe that successfully developed therapies derived
from our novel IgG sub-fractions have the potential to address multi-billion
dollar markets. For example, Avastin®, also known as Bevacizumab, counteracts
VEGF, a growth factor which stimulates neovascularization, and is used to treat
colon and other cancers. Sales for Avastin® in 2006 were in excess of $2
billion.

We
are also contemplating conducting additional clinical trials to test new
formulations and/or combinations of IgG-based immunotherapies and to test these
formulations and/or methods for different cancers at different stages of
disease progression with varying dosages and routes of administration. To
achieve this, we may elect to partner with a pharmaceutical company to conduct
these further clinical trials, in order to attain broad-based regulatory
approval.

We
expect that it will take a number of years to receive final approval and
registration of our IgG preparation for commercial use as an anti-cancer agent.
Our strategy is to collaborate with a suitable partner to support late stage
(Phase III) clinical development, registration and/or sales for our IgG-based
cancer products.

We
have spent approximately $2.7 million through September 30, 2007 on our
research and development.

Raw Materials

IgGs
are manufactured from human plasma. More than 12 million liters of source
plasma are collected annually in the U.S. Virtually all this plasma is
collected from paid donors. The U.S. supplies the majority of the plasma needed
for the in excess of $6 billion plasma-derivatives market
worldwide. The largest producers of IgG are CSL-Behring, a subsidiary of CSL
LTD., Baxter Bioscience, a business of Baxter International Inc., and Talecris
Biotherapeutics, Inc. (formerly the plasma business of Bayer A.G.s Biological
Products business unit). In addition, there are numerous smaller suppliers
serving the market. We generally depend upon a limited number of suppliers for
our IgGs. Although alternative sources of supply for these materials are
generally available, we could incur significant costs and disruptions in
changing suppliers. The termination of our relationship with our suppliers or
the failure of these suppliers to meet our requirements for raw materials on a
timely and cost-effective basis could materially adversely affect our business,
prospects, financial condition and results of operations.

11

---



Patents and Licenses

To
the best of our knowledge, we are the only entity to own issued patents
covering the use of IgG-based therapies for the treatment of cancer. We have
been issued two U.S. patents that cover the use of basic IgG to treat cancers.

| |                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  U.S. Patent 5,562,902, Immunotherapeutic Method of
 Treating Cancerous Disease by Administration of Intravenous Immunoglobulin
 claims the use of intravenous IgG or fragments to inhibit melanoma
 metastasis. The claims further recite the intracavitary and subcutaneous
 administration of intravenous IgG or fragments to inhibit tumor metastasis.
 The patent was issued on October 8, 1996.             
| |                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  U.S. Patent 5,965,130, Immunotherapeutic Method
      of Treating Cancerous Disease by Administration of Gamma Globulins
 claims the use of 2g/kg bodyweight/month to inhibit the growth of a primary
 tumor or metastases. The claims further recite the intracavitary and
 subcutaneous administration of intravenous IgG or fragments to inhibit tumor
 metastasis. The patent was issued on October 12, 1999.

In
December 2006, we filed two Continuations in Part (CIPs) to
these patents. The first CIP is titled
Administration of Gamma Globulins to Treat
Metastatic Melanoma and builds on the pre-clinical work conducted
at GammaCan and substantiates these findings with data from our non-FDA
clinical trials. The second CIP is titled Administration
of Gamma Globulins to Treat Cancer and provides experimental data
supporting the use of IgG-based therapy for colorectal cancers.

Consistent
with a strategy to seek protection in key markets worldwide, we have been
issued or are prosecuting national counterparts to our issued U.S. patents.

We
have filed two additional U.S. patent applications that cover both composition
of matter and methods for using IgG manufactured from donors with Vitiligo
(VitiGam) and its use in melanoma. The prosecution of these and related
patents is taking place in the U.S. and worldwide.

We
have also filed one additional U.S. patent application covering novel IgG
sub-fractions with potent anti-angiogenic properties. In June 2007, we
discovered that IgGs contain sub-fractions with potent anti-angiogenic
properties which may have application in disorders of neovascularization (the
formation of new blood vessels), including cancer and other diseases. We
anticipate that this discovery may be developed into broad-based cancer
therapies and other therapies that address non-cancer disorders.

We
    have also filed  a patent application for the utilization of IgG
therapy as a potential treatment of Avian Influenza.

Our
patent strategy is as follows:

| |                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 
 Aggressively protect all current and future technological developments to
 assure strong and
 broad protection by filing patents and/or continuations in part as
 appropriate;

| |                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                             
| |  Protect
 technological developments at various levels, in a complementary manner,
 including the base technology, as well as specific applications of the
 technology; and
| |                                                                                                                                                                             
| |  Establish
 comprehensive coverage in the U.S. and in all relevant foreign markets in
 anticipation of future commercialization opportunities.                             

12

---



We
believe that our success will depend in part on our ability to obtain patent
protection for our intellectual property. Our patent coverage includes a wide
range of matters including but not limited to: a novel method of administering
to a mammal a preparation of IgG for inhibiting tumor metastasis, for treating
primary tumors, and for a broad spectrum of cancerous diseases. Our patents
will both expire in November 2014.

We
believe anyone selling IgG for treatment of cancer is subject to these patents.
However, the validity and breadth of claims in medical technology patents
involve complex legal and factual questions and, therefore, may be highly
uncertain. No assurance can be given that any patents based on pending patent
applications or any future patent applications by us will be issued, that the
scope of any patent protection will exclude competitors or provide competitive
advantages to us, that any of the patents that have been or may be issued to us
will be held valid if subsequently challenged or that others will not claim
rights in or ownership of the patents and other proprietary rights held or
licensed by us. Furthermore, there can be no assurance that others have not
developed or will not develop similar products, duplicate any of our technology
or design around any patents that have been or may be issued to us. Since
patent applications in the United States are maintained in secrecy for the
initial period of time following filing, we also cannot be certain that others
did not first file applications for inventions covered by our pending patent
applications, nor can we be certain that we will not infringe any patents that
may be issued to others on such applications.

We
also rely on trade secrets and unpatentable know-how that we seek to protect,
in part, by confidentiality agreements. Our policy is to require our employees,
consultants, contractors, manufacturers, outside scientific collaborators and
sponsored researchers, board of directors, technical review board and other
advisors to execute confidentiality agreements upon the commencement of
employment or consulting relationships with us. These agreements provide that
all confidential information developed or made known to the individual during
the course of the individuals relationship with us is to be kept confidential
and not disclosed to third parties except in specific limited circumstances. We
also require signed confidentiality or material transfer agreements from any
company that is to receive our confidential information. In the case of employees,
consultants and contractors, the agreements provide that all inventions
conceived by the individual while rendering services to us shall be assigned to
us as the exclusive property of our company. There can be no assurance,
however, that all persons who we desire to sign such agreements will sign, or
if they do, that these agreements will not be breached, that we would have
adequate remedies for any breach, or that our trade secrets or unpatentable
know-how will not otherwise become known or be independently developed by
competitors.

Our
success will also depend in part on our ability to commercialize our technology
without infringing the proprietary rights of others. Although we have conducted
freedom of use patent searches, no assurance can be given that patents do not
exist or could not be filed which

13

---



would have an
adverse affect on our ability to market our technology or maintain our
competitive position with respect to our technology. If our technology
components, products, processes or other subject matter are claimed under other
existing United States or foreign patents or are otherwise protected by third
party proprietary rights, we may be subject to infringement actions. In such
event, we may challenge the validity of such patents or other proprietary
rights or we may be required to obtain licenses from such companies in order to
develop, manufacture or market our technology. There can be no assurances that
we would be able to obtain such licenses or that such licenses, if available,
could be obtained on commercially reasonable terms. Furthermore, the failure to
either develop a commercially viable alternative or obtain such licenses could
result in delays in marketing our proposed technology or the inability to
proceed with the development, manufacture or sale of products requiring such
licenses, which could have a material adverse effect on our business, financial
condition and results of operations. If we are required to defend ourselves
against charges of patent infringement or to protect our proprietary rights
against third parties, substantial costs will be incurred regardless of whether
we are successful. Such proceedings are typically protracted with no certainty
of success. An adverse outcome could subject us to significant liabilities to
third parties and force us to curtail or cease our development and
commercialization of our technology.

Partnerships and Collaborative Arrangements

We
anticipate that we will enter into strategic relationships for plasma
collection and for the manufacture of VitiGam. There is considerable
specialized expertise associated with the collection and manufacture
(fractionation) of plasma products. There are also significant expenses,
capital expenditures and infrastructure involved in the manufacture of plasma.
We believe that working together with strategic partners will expedite product
formulation, production and approval.

On
December 13, 2005, our subsidiary, GammaCan Ltd., entered into a Research and
Licensing Agreement (the Research and Licensing Agreement)
with Tel HaShomer Medical Research Infrastructure and Services LTD. (THM),
pursuant to which our subsidiary agreed to provide THM with $200,000 in funding
for THM to conduct a research project relating to the mechanism of action for
intravenous IgG, hyper-immune intravenous IgG and use of intravenous IgG as an
anti-cancer treatment. To date, our subsidiary paid a total of $200,000 to THM
under this agreement. Pursuant to the Research and Licensing Agreement, THM has
granted our subsidiary an exclusive worldwide license to any resulting technology
and know-how as described in the above mentioned agreement.

On
December 23, 2007, our subsidiary entered into an Amendment of the Research and
Licensing Agreement (the Amendment) with THM. The Amendment reduces the license fees payable
under the Research and Licensing Agreement and clarifies, among other things, the nature of research activities pursuant
to the Research and Licensing Agreement. Further, the research period under the Research and Licensing
Agreement has been extended for a two year period, commencing January 1, 2007,
and the research funding for this period totals $500,000.

In
connection with this Amendment, we will issue to THM a five year warrant to
acquire 500,000 shares of our common stock exercisable, commencing December 31,
2008, at $0.40 per share. In addition, within 30 days of the acceptance by the
FDA of each new IND application that results from work pursuant to a research
project (excluding INDs pertaining to VitiGam), we will issue to THM a warrant
to acquire 250,000 shares of our common stock at an exercise price equal to the
closing price of our common stock on the date of issuance of such warrant. The
warrants are subject to adjustment for, among other things, stock splits, stock
dividends, distributions and reclassifications.

14

---



In
October 2006, we entered into a strategic agreement with Life Therapeutics,
Inc. (Life) for the purpose of
collecting source plasma from individuals with Vitiligo. Under the agreement,
Life will be responsible for the collection, storage, quality control,
import/export, delivery, and supply of plasma to us in such amounts as required
to complete Phase I and Phase II clinical trials for VitiGam. Life is a
U.S./Australian company that specializes in niche therapeutic hyperimmune
products. Life currently operates 13 plasma collection centers in eight
American states and has considerable experience recruiting and collecting hard
to find plasma donors. Life is headquartered in Atlanta, Georgia and operates
facilities in the U.S. and in Australia. In the event that Life, for any
reason, fails to provide us with its total required plasma for the timely
initiation and completion of Phase I and Phase II clinical testing for
VitiGam, we will have the unrestricted right to acquire plasma from other
sources. We recognize the importance of having access to sufficient plasma for
the clinical development of VitiGam as well as for commercial sale. Life and GammaCan have been approved for
a $1 million dollar grant for VitiGams Phase I and Phase II clinical program
by the BIRD Foundation, an Israeli Government non-profit organization that
promotes U.S./Israeli joint programs.

On
September 6, 2007, we entered into an agreement for the purchase and sale of
blood plasma with DCI Management Group, LLC (DCI). Under the
terms of the agreement, DCI will collect plasma from vitiligo donors at DCI
operated FDA-approved, IQPP certified donor centers for the manufacture of
VitiGam. The entry into this agreement is part of our revised strategy to
assure a continued and uninterrupted supply of Vitiligo plasma for the clinical
development and long-term commercial sale of VitiGam as we gear up to submit
an Investigational New Drug Application (IND) for VitiGam.

We
have engaged INC Research to assist us in conducting our clinical trials. INC
Research is a therapeutically focused contract research organization engaged in
conducting global Phase I - Phase IV clinical development programs in
therapeutic areas including oncology. INC Research is headquartered in Raleigh,
North Carolina and has 24 offices with a presence in 36 locations worldwide.

We
have also engaged BioSolutions Services, LLC (BioSolutions) for various
projects to assist us with the commercialization of our anti-cancer
immunotherapy to treat metastatic cancer. The first project relates to
regulatory consulting services to be provided by BioSolutions in connection
with the application for an IND with the FDA for VitiGam.

Government Regulation

The Drug and Therapeutic Product Development
Process

The
FDA requires that pharmaceutical and certain other therapeutic products undergo
significant clinical experimentation and clinical testing prior to their
marketing or introduction to the general public. Clinical testing, known as clinical trials or clinical studies, is
either conducted
internally by life science, pharmaceutical, or biotechnology companies or is
conducted on behalf of these companies by contract research organizations.

The
process of conducting clinical studies is highly regulated by the FDA, as well
as by other governmental and professional bodies. Below we describe the
principal framework in which clinical studies are conducted, as well as
describe a number of the parties involved in these studies.

15

---



Protocols.
Before commencing human clinical studies, the sponsor of a new drug or
therapeutic product must submit an investigational new drug application, or
IND, to the FDA. The application contains what is known in the industry as a protocol. A protocol is the blueprint for
each drug study. The protocol sets forth, among other things, the following:

| |                                                                                  | 
| | -------------------------------------------------------------------------------- | 
| |  who must be
 recruited as qualified participants;                             
| |                                                                                  | 
| |  how often to
 administer the drug or product;                                 
| |                                                                                  | 
| |  what tests
 to perform on the participants; and                               
| |                                                                                  | 
| |  what dosage
 of the drug or amount of the product to give to the participants.

Institutional
Review Board. An institutional review board is an
independent committee of professionals and lay persons which reviews clinical
research studies involving human beings and is required to adhere to guidelines
issued by the FDA. The institutional review board does not report to the FDA,
but its records are audited by the FDA. Its members are not appointed by the
FDA. All clinical studies must be approved by an institutional review board.
The institutional review boards role is to protect the rights of the
participants in the clinical studies. It approves the protocols to be used, the
advertisements which the company or contract research organization conducting
the study proposes to use to recruit participants, and the form of consent
which the participants will be required to sign prior to their participation in
the clinical studies.

Clinical
Trials. Human clinical studies or testing of a
potential product are generally done in three stages known as Phase I through
Phase III testing. The names of the phases are derived from the regulations of
the FDA. Generally, there are multiple studies conducted in each phase.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  Phase I. Phase I studies involve testing
 a drug or product on a limited number of healthy participants, typically 24
 to 100 people at a time. Phase I studies determine a products basic safety
 and how the product is absorbed by, and eliminated from, the body. This phase
 lasts an average of six months to a year;                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  Phase II. Phase II trials involve
 testing up to 200 participants at a time who may suffer from the targeted
 disease or condition. Phase II testing typically lasts an average of one to
 two years. In Phase II, the drug is tested to determine its safety and
 effectiveness for treating a specific illness or condition. Phase II testing
 also involves determining acceptable dosage levels of the drug. If Phase II
 studies show that a new drug has an acceptable range of safety risks and
 probable effectiveness, a company will continue to review the substance in
 Phase III studies.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  Phase III. Phase III studies involve
 testing large numbers of participants, typically several hundred to several
 thousand persons. The purpose is to verify effectiveness and long-term safety
 on a large scale. These studies generally last two to three years. Phase III
 studies are conducted at multiple locations or sites. Like the other phases,
 Phase III requires the site to keep detailed records of data collected and
 procedures performed.                                                                                                                                       

New
Drug Approval.The results of the clinical trials are
submitted to the FDA as part of a new drug application (NDA).
Following the completion of Phase III studies, assuming the sponsor of a potential
product in the United States believes it has sufficient information to support
the safety and effectiveness of its product, it submits an NDA to the FDA requesting
that the product be
approved for marketing. The application is a comprehensive, multi-volume filing
that includes the results of all clinical studies, information about the drugs
composition, and the sponsors plans for producing, packaging and labeling
the product. The FDAs review of an application can take a few months to
many years, with the average review lasting 18 months. Once approved, drugs and
other products may be marketed in the United States, subject to any conditions
imposed by the FDA.

16

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Phase
IV. The FDA may require that the sponsor conduct
additional clinical trials following new drug approval. The purpose of these
trials, known as Phase IV studies, is to monitor long-term risks and benefits,
study different dosage levels or evaluate safety and effectiveness. In recent
years, the FDA has increased its reliance on these trials. Phase IV studies
usually involve thousands of participants. Phase IV studies also may be
initiated by the company sponsoring the new drug to gain broader market value
for an approved drug. For example, large-scale trials may also be used to prove
effectiveness and safety of new forms of drug delivery for approved drugs.
Examples may be using an inhalation spray versus taking tablets or a
sustained-release form of medication versus capsules taken multiple times per
day.

Biologics
License Application. Once clinical trials are
completed and the results tabulated and analyzed, a Biologics License
Application (BLA) is submitted
to the FDA. The application presents to FDA reviewers the entire history or the
whole story of the drug product including animal studies/human studies,
manufacturing, and labeling/medical claims. Before the FDA applies its
scientific technical expertise to the review of the application, it will decide
if the application gets a priority review or a standard review.
This classification determines the review timeframe. A priority review is for
a drug that appears to represent an advance over available therapy, whereas,
a standard review is for a drug that appears to have therapeutic qualities
similar to those of an already marketed product. Generally, an advisory committee
(the Oncology Drug Advisory Committee, ODAC) will review the BLA and make a
recommendation to the FDA. This outside advice is sought so that the FDA will
have the benefit of wider expert input. The FDA usually agrees with advisory
committee decisions but they are not binding.

The
FDA takes action on the BLA after their review is complete. There are three
possible actions to be taken by the review team:

| |                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  Approved 
 This indicates to a company that it may now market in the U.S.;                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                 
| |  Not
 Approved  This tells a company that the product may not be marketed in
 the U.S. and is accompanied by a detailed explanation as to why; or                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                 
| |  Approvable
  This indicates that the FDA is prepared to approve the application upon the
 satisfaction of certain conditions. These drug products may not be legally
 marketed until the deficiencies have been satisfied, as well as any other
 requirements that may be imposed by the FDA.

The
drug approval process is time-consuming, involves substantial expenditures of
resources, and depends upon a number of factors, including the severity of the
illness in question, the availability of alternative treatments, and the risks
and benefits demonstrated in the clinical trials.

Orphan
Drug Act. The Orphan Drug Act provides incentives to
develop and market drugs (Orphan Drugs) for rare disease conditions
in the United States. A drug that receives Orphan Drug designation and is the
first product to receive FDA marketing approval for its product claim is
entitled to a seven-year exclusive marketing period in the United States for
that product claim. A drug which is considered by the FDA to be different than such FDA-approved
Orphan Drug is not barred from sale in the United States during such exclusive
marketing period even if it receives approval for the same claim. We can
provide no assurance that the Orphan Drug Acts provisions will be the same at
the time of the approval, if any, of our products.

17

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Orphan
Drug Designation. The E.U. offers a range of
incentives to encourage the development of orphan drugs for rare disease
conditions in the E.U and its member states. A drug that receives orphan drug
designation and is the first product to receive EMEA marketing approval for its
product claim is entitled to a ten-year exclusive marketing period in the E.U
and its member states for that product claim. A drug which is considered by the
EMEA to be different than such EMEA-approved orphan drug is not barred from
sale in the E.U and its member states during such exclusive marketing period
even if it receives approval for the same claim. We can provide no assurance
that the above provisions will be the same at the time of the approval, if any,
of our products.

Other Regulations

Various
federal and state laws, regulations, and recommendations relating to safe
working conditions, laboratory practices, the experimental use of animals, and
the purchase, storage, movement, import, export, use, and disposal of hazardous
or potentially hazardous substances, including radioactive compounds and
infectious disease agents, used in connection with our research are applicable
to our activities. They include, among others, the United States Atomic Energy
Act, the Clean Air Act, the Clean Water Act, the Occupational Safety and Health
Act, the National Environmental Policy Act, the Toxic Substances Control Act,
and Resources Conservation and Recovery Act, national restrictions on
technology transfer, import, export, and customs regulations, and other present
and possible future local, state, or federal regulation. The extent of
governmental regulation which might result from future legislation or
administrative action cannot be accurately predicted.

Competition

Competition in General

Competition
in the area of biomedical and pharmaceutical research and development is
intense and significantly depends on scientific and technological factors.
These factors include the availability of patent and other protection for
technology and products, the ability to commercialize technological
developments and the ability to obtain governmental approval for testing,
manufacturing and marketing. Our competitors include major pharmaceutical,
medical products, chemical and specialized biotechnology companies, many of
which have financial, technical and marketing resources significantly greater
than ours. In addition, many biotechnology companies have formed collaborations
with large, established companies to support research, development and commercialization
of products that may be competitive with ours. Academic institutions,
governmental agencies and other public and private research organizations are
also conducting research activities and seeking patent protection and may
commercialize products on their own or through joint ventures. We are aware of
certain other products manufactured or under development by competitors that
are used for the treatment of the diseases and health conditions that we have
targeted for product development. We can provide no assurance that developments
by others will not render our technology obsolete or noncompetitive, that we
will be able to keep pace with new technological developments or that our
technology will be able to supplant established products and methodologies in
the therapeutic areas that are targeted by us. The foregoing factors could have
a material adverse effect on our business, prospects, financial condition and
results of operations. These companies, as well as academic institutions,
governmental agencies and private research organizations,
also compete with us in recruiting and retaining highly qualified scientific
personnel and consultants.

18

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Competition
within our sector itself is increasing, so we will encounter competition from
existing firms that offer competitive solutions in cancer treatment. These
competitive companies could develop products that are superior
to, or have greater market acceptance, than the products being developed by us.
We will have to compete against other biotechnology and pharmaceutical
companies with greater market recognition and greater financial, marketing and
other resources.

Our
competition will be determined in part by the potential indications for which
our technology is developed and ultimately approved by regulatory authorities.
In addition, the first product to reach the market in a therapeutic or
preventive area is often at a significant competitive advantage relative to
later entrants to the market. Accordingly, the relative speed with which we, or
our potential corporate partners, can develop products, complete the clinical
trials and approval processes and supply commercial quantities of the products
to the market are expected to be important competitive factors. Our competitive
position will also depend on our ability to attract and retain qualified
scientific and other personnel, develop effective proprietary products, develop
and implement production and marketing plans, obtain and maintain patent
protection and secure adequate capital resources. We expect our technology, if
approved for sale, to compete primarily on the basis of product efficacy,
safety, patient convenience, reliability, value and patent position.

Competition for VitiGam

We
anticipate VitiGam to be a competitive anti-melanoma drug because of its
anticipated efficacy and safety profile. Treatment options for Stage III and
Stage IV melanoma comprise three drugs from major drug classes as follows:

| |                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 
 Antineoplastics  Antineoplastics include chemotherapeutics (alkylating
 agents, antimetabolites and antimitotic agents) that are administered
 intravenously or orally. Generally speaking, they have significant toxicity
 associated with severe side effects to the patient. Antineoplastics are
 typically used to treat Stage IV melanoma.
| |                                                                                                                                                                                                                                                                                                                                                    
| | 
 Immunomodulators  Substances that suppress, stimulate or boost the immune
 system. These have some efficacy (10% to 20%), with side effects that are
 moderate compared to antineoplastics.                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                    
| |  Vaccines 
 Preparations that aim at coaxing the patients immune system to mount an
 immune response against the tumor.                                                                                                                                                                                                                       

Because
of the paucity of safe and effective therapies to treat late stage melanomas,
so called off-label use of drugs is common and physicians typically use
antineoplastics approved for other cancers in treating melanoma.

Antineoplastics
and immunomodulators account for 80% of the treatment for Stage III and Stage
IV melanoma. Interferon (IFN), interleukin-2 (IL-2) and dacarbazine are the
most commonly prescribed therapeutics in these categories.

| |                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |  Schering
 Corporations INTRON® A (Interferon alfa-2b, recombinant) dominates the
 melanoma market with a 46% market share;                      
| |                                                                                                                                                    
| |  Chirons PROLEUKIN® (aldesleukin,
      recombinant human interleukin-2, rhIL-2) commands approximately 28% of
    the total melanoma market; and
| |                                                                                                                                                    
| |  Bayers DITCDOME (dacarbazine,
    alkylating agent) accounts for 9%.                                                                           

19

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The
majority of the remaining 17% of the market is comprised of a group of
antineoplastics that are sold by Bristol Myers Squibb, Daiichi, Eli Lilly, and
Roche. GlaxoSmithKline is currently the only company selling a melanoma
vaccine.

Scientific Advisory Board

We
maintain a scientific advisory board consisting of internationally recognized
scientists who advise us on scientific and technical aspects of our business.
The scientific advisory board meets periodically to review specific projects
and to assess the value of new technologies and developments to us. In
addition, individual members of the scientific advisory board meet with us
periodically to provide advice in particular areas of expertise. The scientific
advisory board consists of the following members, information with respect to
whom is set forth below: David Sidransky; Richard Spritz, M.D.; Yoseff Yarden M.D., Ph D.; Lynn M.
Schuchter M.D.; and Pearl E. Grimes M.D.

David
Sidransky, M.D.Dr. Sidransky is the Director of
the Head and Neck Cancer Research Division at Johns Hopkins University School
of Medicine. In addition, he is Professor of Oncology, Otolaryngology-Head and
Neck Surgery, Cellular & Molecular Medicine, Urology, Genetics, and
Pathology at Johns Hopkins University and Hospital. Dr. Sidransky is certified
in Internal Medicine and Medical Oncology by the American Board of Medicine. He
has served as a Director of Imclone since January 2004. He is a founder of
several private biotechnology companies and has served on the scientific
advisory boards of many private and public companies including MedImmune,
Telik, Roche and Amgen. He was formerly on the Board of Scientific Counselors
at the NIDCR and is currently a member of the Recombinant DNA Advisory
Committee at the National Institute of Health (NIH). Dr. Sidransky is a member
of numerous editorial boards. He has over 250 peer-reviewed publications, has
contributed more than 40 cancer reviews, and also has numerous issued
biotechnology patents. He has been the recipient of many awards and honors, including
the 1997 Sarstedt International Prize from the German Society of Clinical
Chemistry, the 1998 Alton Ochsner Award Relating To Smoking and Health by the
American College of Chest Physicians, and the 2004 Hinda and Richard Rosenthal
Award from the American Association of Cancer Research.

Richard
Spritz, M.D.Dr. Spritz is the Director Human Medical
Genetics Program and Professor of Pediatrics, Biochemistry and Molecular
Genetics at the University of Colorado Health Science Center. Prior to his
tenure at the University of Colorado, Dr. Spritz served as Professor of Medical
Genetics and Pediatrics at the University of Wisconsin. Among his numerous
accomplishments, Dr. Spritz sits on the Medical Advisory Board of Vitiligo
Support International, is a member of the Council of the PanAmerican Pigment
Cell Society, and has chaired a number of NIH Committees. He has for many years
served on various national research advisory committees and for the March of
Dimes Birth Defects Foundation. He has published over 170 peer-reviewed papers
and receives ongoing research support from the NIH, specifically for studies of
the genetics of human pigmentation and autoimmune disorders. Dr. Spritz holds
an M.D. from Pennsylvania State University, was a Resident in Pediatrics at the
Childrens Hospital of Philadelphia, and was a Fellow in Human Genetics at the
Yale University School of Medicine. Dr. Spritz has received many honors and
awards, including the first Annual Research Award from the Society for
Pediatric Dermatology, the Vitiligo and Melanocyte Biology Research Achievement
Award from the American Skin Association, the Tanioku Memorial Lectureship from
the Japanese Society for Investigative Dermatology, and the Alumni Fellow Medal
from Pennsylvania State University.

20

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Yoseff
Yarden M.D., Ph D.Dr. Yarden is professor in the Department of
Biological Regulation at the Weizmann Institute of Science in Rehovot. He
received his B.Sc. in Biology and Geology (cum laude) at the Hebrew University
in Jerusalem in 1979, and his Ph.D. at the Weizmann Institute in 1985. Dr.
Yardens research career has been devoted to understanding the role of the EGFR
family of growth-factor receptors and EGF-like growth factors in human cancers.
He has been involved in many crucial developments in this field, including
isolating the EGFR, isolating several neuregulins, establishing the pivotal
role of receptor dimerization in transmembrane signaling, understanding the
role of HER2 in signal transduction and tumor development, and resolving the
process of ligand-induced degradation of oncogenic receptors.

Lynn
M. Schuchter M.D.Dr. Schuchter is Director of the
Abramson Cancer Center at the University of Pennsylvania and is a world
renowned hematologist and oncologist. Her published research and focus of
investigative clinical trial activity is melanoma and breast cancer. Dr.
Shuchters research has led to the development of leading-edge approaches to
melanoma therapy.

Pearl
E. Grimes M.D.Dr. Grimes is nationally and internationally
recognized for her work on pigmentary disorders. She lectures worldwide on
pigmentary disorders including Vitiligo, Melasma, and post-inflammatory
hyperpigmentation. Dr. Grimes is the past Assistant Editor of the Journal of
the American Academy of Dermatology, and has served on the Editorial Board of
the Journal of Clinical Dermatology, Practical Dermatology, and Skin &
Allergy News. Dr. Grimes is presently a contributing editor to Cosmetic
Dermatology. As founder of The Vitiligo and Pigmentation Institute of Southern
California and its ongoing research program, Dr. Grimes mission is to provide
cutting edge therapies to patients suffering from Vitiligo and other pigmentary
disorders. She has authored over 100 publications and abstracts and is a member
of: The American Academy of Dermatology; the American Society of Dermatological
Surgery; the American Dermatological Association; Society of Investigative
Dermatology; Dermatology Foundation; and the International Pigment Cell
Society. Dr. Grimes is a graduate of Washington University in St. Louis,
Missouri and completed her Dermatology Residency at Howard University Hospital
in Washington, D.C.

Employees

We
have been successful in retaining the experienced personnel involved in our
research and development program. In addition, we believe we have successfully
recruited clinical/regulatory, quality assurance and other personnel needed to
advance through clinical studies or have engaged the services of experts in the
field for these requirements. As of September 30, 2007, we employed eight
individuals and engaged the services of several consultants. Of our employees,
three were senior management, three were engaged in research and development
work, and the remaining in administration work.

Facilities

Our
principal executive offices are located in approximately 1337 square feet of
office space in Kiryat Ono, Israel. The lease commenced on August 10, 2006 and
lasts for a period of 36 months. The aggregate annual base rental for this space
    is $26,827. Since June 8, 2006, we have been leasing a suite in New York
    for the use of our CEO. The lease agreement was renewed on June 6, 2007 for
    a period of 12 months and the aggregate annual base rental for this space
    is $24,000. We believe that our existing facilities are suitable and adequate
    to meet our current business requirements. In the event that we should require
    additional or alternative facilities, we believe that such facilities can
be obtained on short notice at competitive rates.

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Legal Proceedings

We
are not a party to any material legal proceedings.

ITEM 1A  RISK FACTORS

An investment in our
common stock involves a high degree of risk. You should consider carefully the
following information about these risks, together with the other information
contained in this prospectus before buying shares of our common stock. Our
business, prospects, financial condition, and results of operations may be
materially and adversely affected as a result of any of the following risks. The
trading of our common stock could decline as a result of any of these risks.
You could lose all or part of your investment in our common stock. Some of the
statements in Risk Factors are forward looking statements. See Special Note
Regarding Forward Looking Statements.

Risks Related to Our Business

There is substantial
doubt as to our ability to
continue as a going concern.

Our
financial statements were prepared on the assumption that we will continue as
    a going concern. We estimate that our cash reserves will be sufficient to
    permit us to continue at our anticipated level of operations for a minimum
    four months from the date of this Annual Report. During 2008, we plan to
    increase research and development, product development, and administrative
    expenses relating to our business, including expenses related to research
    and development related to our IgG technology. We intend to use our cash
    reserves, as well as other funds in the event that they shall be available
    on commercially reasonable terms, to finance these activities and other activities
    described herein, although we can provide no assurance that these additional
    funds will be available in the amounts or at the times we may require. If
    sufficient capital is not available, we would likely be required to scale
    back or terminate our research and development efforts. See Risk
    Factors  We
    will need additional capital in order to satisfy our business objectives.

As we have a limited operating history, investors may not have a sufficient
  history on which to base an investment decision.

Although
we were incorporated in 1998, we acquired our operating subsidiary in August
2004 and are in the development
stage. Accordingly, we have a limited operating history upon which investors
may evaluate our prospects for success. Investors must consider the risks and
difficulties frequently encountered by early stage companies, particularly in
rapidly evolving markets such as the life science industry. Such risks include,
without limitation, the following:

| |                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------
| | 
  competition;                                                                                                                              
| |                                                                                                                                               
| |  need for
  acceptance of products;                                                                                                          
| |                                                                                                                                               
| |  ability to
  anticipate and adapt to a competitive market and rapid technological
  developments;                                           
| |                                                                                                                                               
| |  amount and
  timing of operating costs and capital expenditures relating to expansion of
  our business, operations, and infrastructure; and
| |                                                                                                                                               
| |  dependence
  upon key personnel.                                                                                                            

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We
cannot be certain our strategy will be successful or that we will successfully
address these risks. In the event that we do not successfully address these
risks, our business, prospects, financial condition, and results of operations
could be materially and adversely affected. Information regarding all of our
past operations can be found in our reports and registration statements that
have been previously filed with the Securities and Exchange Commission.

We are a development stage company with a history of losses and can
  provide no assurance as to our future operating results.

We
are a development stage company with no revenues from our contemplated
principal business activity. Consequently, we have incurred net losses and
negative cash flows since inception. We currently have no product revenues, and
may not succeed in developing or commercializing any products which will
generate product or licensing revenues. We do not expect to have any products
on the market for several years. In addition, development of our product
candidates requires a process of pre-clinical and clinical testing, during
which our products could fail. We may not be able to enter into agreements with
one or more companies experienced in the manufacturing and marketing of
therapeutic drugs and, to the extent that we are unable to do so, we will not
be able to market our product candidates. Eventual profitability will depend
    on our success in developing, manufacturing, and marketing our product candidates.
As of September 30, 2007 and 2006, we had working capital of $3,177,967 and
$222,133, respectively, and stockholders equity of $3,200,838 and $259,190,
respectively. We generated no revenues to date. For the period from our
inception on October 6, 1998 through September 30, 2007 we incurred net losses
of $(8,956,187). For the years ended September 30, 2007 and 2006, we incurred
net losses of $(5,178,774), and $(2,064,795), respectively. We may never achieve
profitability and expect to incur net losses in the foreseeable future. See Managements
Discussion and Analysis of Financial Condition and Results of Operations.

At present, our success depends solely on
  the successful commercialization of IgG-based therapies for our proposed use
  as a cancer therapy alternative.

The
successful commercialization of IgG-based cancer immunotherapies is crucial for
our success. Our proposed products and their potential applications are in an
early stage of clinical and manufacturing/process development and face a
variety of risks and uncertainties. Principally, these risks include the
following:

| |                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  future
  clinical trial results may show that IgG based therapy is not well tolerated
  by recipients at its effective doses or is not efficacious as compared to
  placebo;                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                
| |  future
  clinical trial results may be inconsistent with ARPs previous preliminary
  testing results and data from our earlier studies may be inconsistent with clinical
  data;                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                
| |  even if
  our IgG-based therapies are shown to be safe and effective for their intended
  purposes, we may face significant or unforeseen difficulties in obtaining or
  manufacturing sufficient quantities or at reasonable prices;                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                
| |  our
  ability to complete the development and commercialization of IgG-based
  therapies for our intended use is significantly dependent upon our ability to
  obtain and maintain experienced and committed partners to assist us with
  obtaining clinical and regulatory approvals for, and the manufacturing,
  marketing and distribution of, IgGs on a worldwide basis;
| |                                                                                                                                                                                                                                                                                                                                                                                
| |  even if
  our IgG-based products are successfully developed, commercially produced and
  receive all necessary regulatory approvals, there is no guarantee that there
  will be market acceptance of the products; and                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                
| |  our competitors may develop therapeutics
      or other treatments which are superior to, or less costly than our own
      with the result that our products, even if they are successfully developed,
    manufactured and approved, may not generate significant revenues.                                                                                                

23

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If
we are unsuccessful in dealing with any of these risks, or if we are unable to
successfully commercialize our IgG products for some other reason, it would
likely seriously harm our business.

We can provide no assurance of the successful and timely development
  of our newproducts.

Our
product candidates are at various stages of research and development. Further
development and extensive testing will be required to determine their technical
feasibility and commercial viability. Our success will depend on our ability to
achieve scientific and technological advances and to translate such advances
into reliable, commercially competitive products on a timely basis. Products
that we have developed and may in the future develop are not likely to be
commercially available for some time. The proposed development schedules for
our products may be affected by a variety of factors, including technological
difficulties, proprietary technology of others, and changes in governmental
regulation, many of which will not be within our control. Any delay in the
development, introduction, or marketing of our products could result either in
such products being marketed at a time when their cost and performance
characteristics would not be competitive in the marketplace or in the
shortening of their commercial lives. In light of the long-term nature of our
projects, the nature of technology involved, and the other factors, described elsewhere
in Risk Factors, there can be no assurance that we will be able to complete
successfully the development or marketing of any new products.

We will need additional
capital in order to satisfy
our business objectives.

To
date, we have financed our operations principally through offerings of
securities exempt from the registration requirements of the Securities Act. We
believe that our available resources and cash flow will be sufficient to meet
our anticipated working capital needs for a minimum of four months from the
    date of this Annual Report. We estimate that we will require substantial
    additional financing at various intervals in order to continue our research
    and development programs, including significant requirements for operating
    expenses including intellectual property protection and enforcement, for
    pursuit of regulatory approvals, and for commercialization of our products.
    We can provide no assurance that additional funding will be available on
    a timely basis, on terms acceptable to us, or at all. In the event that we
    are unable to obtain such financing, we will not be able to fully develop
    and commercialize our technology. Our future capital requirements will depend
    upon many factors, including:

| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| |  continued
  scientific progress in our research and development programs;                                   
| |                                                                                                               
| |  costs and
  timing of conducting clinical trials and seeking regulatory approvals and
  patent prosecutions;
| |                                                                                                               
| |  competing
  technological and market developments;                                                          
| |                                                                                                               
| |  our
  ability to establish additional collaborative relationships; and                                      
| |                                                                                                               
| |  effects of commercialization activities
    and facility expansions if and as required.                     

If we cannot secure adequate financing when needed, we may be required to delay, scale back or eliminate one or more of our research and development programs or to enter into license or other arrangements with third parties to commercialize products or technologies that we would otherwise seek to develop ourselves and commercialize ourselves. In such event, our business, prospects, financial condition, and results of operations may be adversely affected as we may be required to scale-back, eliminate, or delay development efforts or product introductions or enter into royalty, sales or other agreements with third parties in order to commercialize our products.

24

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In the future, we may rely upon our collaborative agreements with
large pharmaceutical companies.

In
the future, we may rely heavily on collaborative agreements with large
pharmaceutical companies, governments, or other parties for our revenues. Our
inability to obtain any one or more of these agreements, on commercially
reasonable terms, or at all, or to circumvent the need for any such agreement,
could cause significant delays and cost increases and materially affect our
ability to develop and commercialize our product candidates. Some of our
programs may require the use of multiple proprietary technologies, especially
patented drugs. Obtaining licenses for these technologies may require us to
make cumulative royalty payments or other payments to several third parties,
potentially reducing amounts paid to us or making the cost of our products
commercially prohibitive. Manufacturing of drug products may also require
licensing technologies and intellectual property from third parties.

We rely upon patents to protect our technology. We may be unable to
    protect our  intellectual property
    rights and we may be liable for infringing the intellectual property rights
of others.

Our ability
to compete effectively will depend on our ability to maintain the proprietary
nature of our technologies, including IgG technologies. We currently hold
several patents and pending patent applications in the United States and
corresponding patents and patent applications filed in certain other countries
covering IgG. Further, we intend to rely on a combination of trade secrets and
non-disclosure, and other contractual agreements and technical measures to
protect our rights in our technology. We intend to depend upon confidentiality
agreements with our officers, directors, employees, consultants, and
subcontractors, as well as collaborative partners, to maintain the proprietary
nature of our technology. These measures may not afford us sufficient or complete
protection, and others may independently develop technology similar to ours,
otherwise avoid our confidentiality agreements, or produce patents that would
materially and adversely affect our business, prospects, financial condition,
and results of operations. We believe that our technology is not subject to any
infringement actions based upon the patents of any third parties; however, our
technology may in the future be found to infringe upon the rights of others.
Others may assert infringement claims against us, and if we should be found to
infringe upon their patents, or otherwise impermissibly utilize their
intellectual property, our ability to continue to use our technology or the
licensed technology could be materially restricted or prohibited. If this event
occurs, we may be required to obtain licenses from the holders of this
intellectual property, enter into royalty agreements, or redesign our products
so as not to utilize this intellectual property, each of which may prove to be
uneconomical or otherwise impossible. Licenses or royalty agreements required
in order for us to use this technology may not be available on terms acceptable
to us, or at all. These claims could result in litigation, which could
materially adversely affect our business, prospects, financial condition, and
results of operations.

25

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The
patent position of biopharmaceutical and biotechnology firms is generally
uncertain and involves complex legal and factual questions. We do not know
whether any of our current or future patent applications will result in the
issuance of any patents. Even issued patents may be challenged, invalidated or
circumvented. Patents may not provide a competitive advantage or afford
protection against competitors with similar technology. Competitors or
potential competitors may have filed applications for, or may have received
patents and may obtain additional and proprietary rights to compounds or
processes used by or competitive with ours. In addition, laws of certain
foreign countries do not protect intellectual property rights to the same
extent as do the laws of the United States or Canada.

Patent
litigation is becoming widespread in the biotechnology industry and we cannot
predict how this will affect our efforts to form strategic alliances, conduct
clinical testing or manufacture and market any products under development. If
challenged, our patents may not be held valid. We could also become involved in
interference proceedings in connection with one or more of our patents or patent
applications to determine priority of invention. If we become involved in any
litigation, interference or other administrative proceedings, we will likely
incur substantial expenses and the efforts of our technical and management
personnel will be significantly diverted. In addition, an adverse determination
could subject us to significant liabilities or require us to seek licenses that
may not be available on favorable terms, if at all. We may be restricted or
prevented from manufacturing and selling our products in the event of an
adverse determination in a judicial or administrative proceeding or if we fail
to obtain necessary licenses.

Our
commercial success will also depend significantly on our ability to operate
without infringing the patents and other proprietary rights of third parties.
Patent applications are, in many cases, maintained in secrecy until patents are
issued. The publication of discoveries in the scientific or patent literature
frequently occurs substantially later than the date on which the underlying
discoveries were made and patent applications are filed. In the event of
infringement or violation of another partys patent, we may be prevented from
pursuing product development or commercialization. See BusinessPatents and
Licenses.

We can provide no assurance that our products will obtain regulatory
  approval or that the results of clinical studies will be favorable.

The
testing, marketing and manufacturing of any of our products will require the
approval of the FDA. We cannot predict with any certainty the amount of time
necessary to obtain such FDA approvals and whether any such approvals will
ultimately be granted. In any event, review and approval by the FDA is
anticipated to take a number of years. Preclinical and clinical trials may
reveal that one or more of our products are ineffective or unsafe, in which
event further development of such products could be seriously delayed or
terminated. Moreover, obtaining approval for certain products may require the
testing on human subjects of substances whose effects on humans are not fully
understood or documented. Delays in obtaining FDA or any other necessary
regulatory approvals of any proposed product and failure to receive such
approvals would have an adverse effect on the products potential commercial
success and on our business, prospects, financial condition, and results of
operations. In addition, it is possible that a product may be found to be
ineffective or unsafe due to conditions or facts which arise after development
has been completed and regulatory approvals have been obtained. In this event
we may be required to withdraw such product from the market. To the extent that
our success will depend on any regulatory approvals from governmental authorities
outside of the United States which perform roles similar to that of the FDA,
uncertainties similar to those stated above will also exist. See Business 
Governmental Regulation.

26

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If our products are
commercialized, we may be subject
to product liability claims.

The
testing, marketing, and sale of pharmaceutical products entail inherent risks.
If we succeed in developing new pharmaceutical products, the sale of such
products may expose us to potential liability resulting from the use of such
products. Such liability might result from claims made directly by consumers or
by pharmaceutical companies or others selling such products. While we may seek
to obtain product liability insurance, there can be no assurance that we will be
able to obtain such insurance or, if obtained, that such insurance can be
acquired in amounts sufficient to protect us against such potential liability
or at a reasonable cost. We do not currently maintain product liability
insurance.

As we have no sales, marketing, and distribution capabilities, we
  will be required to either develop such capabilities or to outsource these
activities to third parties.

We
currently have no sales, marketing or distribution capabilities. In order to
succeed, we ultimately will be required to either develop such capabilities or
to outsource these activities to third parties. We can provide no assurance
that third parties will be interested in acting as our outsourced sales,
marketing, and distribution arms on a timely basis, on commercially reasonable
terms, or at all. If we are unable to establish sales, marketing, or
distribution capabilities either by developing our own organization or by
entering into agreements with others, we may be unable to successfully sell any
products that we are able to begin to commercialize, which would have a
material adverse effect upon our business, prospects, financial condition, and
results of operations. Further, in the event that we are required to outsource
these functions on disadvantageous terms, we may be required to pay a
relatively large portion or our net revenue to these organizations, which would
have a material adverse effect upon our business, prospects, financial
condition, and results of operations.

We have no prior
experience manufacturing our
products.

We
currently lack the resources to manufacture any of our product candidates on a
large scale. Our ability to conduct clinical trials and commercialize our
product candidates will depend, in part, on our ability to manufacture our
products, either directly or, as currently intended, through contract
manufacturers, at a competitive cost and in accordance with current Good
Manufacturing Practices (cGMP)
and other regulatory requirements. We anticipate that we will be required to
depend on contract manufacturers or collaborative partners for the
manufacturing of our product candidates for preclinical studies and clinical
trials and intend to use contract manufacturers to produce any products we may eventually
commercialize. If we are not able to obtain contract manufacturing on
commercially reasonable terms, we may not be able to conduct or complete
clinical trials or commercialize our product candidates. We have identified
multiple suppliers for most if not all of the components of our drug product
candidates, although we can provide no assurance that these components will be
available when needed on commercially reasonable terms.

27

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In
order to succeed, we ultimately will be required to either develop such
manufacturing capabilities or to outsource manufacturing on a long-term basis
to third parties. We can provide no assurance that third parties will be
interested in manufacturing our products on a timely basis, on commercially
reasonable terms, or at all. If we are unable to establish manufacturing
capabilities either by developing our own organization or by entering into
agreements with others, we may be unable to commercialize our products, which
would have a material adverse effect upon our business, prospects, financial
condition, and results of operations. Further, in the event that we are
required to outsource these functions on disadvantageous terms, we may be
required to pay a relatively large portion or our net revenue to these organizations,
which would have a material adverse effect upon our business, prospects,
financial condition, and results of operations.

We have limited
experience in conducting clinical
trials.

Clinical
trials must meet FDA and foreign regulatory requirements. We have limited
experience in designing, conducting and managing the preclinical studies and
clinical trials necessary to obtain regulatory approval for our product
candidates in any country. We may encounter problems in clinical trials that
may cause us or the FDA or foreign regulatory agencies to delay, suspend or
terminate our clinical trials at any phase. These problems could include the
possibility that we may not be able to conduct clinical trials at our preferred
sites, enroll a sufficient number of patients for our clinical trials at one or
more sites or begin or successfully complete clinical trials in a timely
fashion, if at all. Furthermore, we, the FDA or foreign regulatory agencies may
suspend clinical trials at any time if we or they believe the subjects
participating in the trials are being exposed to unacceptable health risks or
if we or they find deficiencies in the clinical trial process or conduct of the
investigation. If clinical trials of any of the product candidates fail, we
will not be able to market the product candidate which is the subject of the
failed clinical trials. The FDA and foreign regulatory agencies could also
require additional clinical trials, which would result in increased costs and
significant development delays. Our failure to adequately demonstrate the
safety and effectiveness of a pharmaceutical product candidate under
development could delay or prevent regulatory approval of the product candidate
and could have a material adverse effect on our business, prospects, financial
condition, and results of operations.

We are dependent upon
third party suppliers of our raw
materials.

We
are dependent on outside vendors for our entire supply of IgG. While we believe
that there are numerous sources of supply available, if the third party
suppliers were to cease production or otherwise fail to supply us with quality
IgG in sufficient quantities on a timely basis and we were unable to contract
on acceptable terms for these services with alternative suppliers, our ability
to produce our products and to conduct testing and clinical trials would be
materially adversely affected.

We have limited senior management resources and may be required to
  obtain more resources to manage our growth.

We
expect the expansion of our business to place a significant strain on our
limited managerial, operational, and financial resources. We will be required
to expand our operational and financial systems significantly and to expand,
train, and manage our work force in order to manage the expansion of our
operations. Our failure to fully integrate our new employees into our
operations could have a material adverse effect on our business, prospects,
financial condition, and results of operations. Our ability to attract and
retain highly skilled personnel is critical to our operations and expansion. We
face competition for these types of personnel from

28

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other
technology companies and more established organizations, many of which have
significantly larger operations and greater financial, technical, human, and
other resources than we have. We may not be successful in attracting and
retaining qualified personnel on a timely basis, on competitive terms, or at
all. If we are not successful in attracting and retaining these personnel, our
business, prospects, financial condition, and results of operations will be
materially adversely affected. See Managements Discussion and Analysis of Financial
Condition and Results of Operations, Business  Strategy, and
BusinessEmployees.

We depend upon our senior management and skilled personnel and their
  loss or unavailability could put us at a competitive disadvantage.

We
currently depend upon the efforts and abilities of our senior executives, as
well as the services of several key consultants and other key personnel. The
loss or unavailability of the services of any of these individuals for any
significant period of time could have a material adverse effect on our
business, prospects, financial condition, and results of operations. In
addition, recruiting and retaining qualified scientific personnel to perform
future research and development work will be critical to our success. There is
currently a shortage of employees with expertise in our areas of research and
clinical and regulatory affairs, and this shortage is likely to continue.
Competition for skilled personnel is intense and turnover rates are high. Our
ability to attract and retain qualified personnel may be limited. Our inability
to attract and retain qualified skilled personnel would have a material adverse
effect on our business, prospects, financial condition, and results of
operations.

Because we will not pay cash dividends, investors may have to sell
  shares in order to realize their investment.

We
have not paid any cash dividends on our common stock and do not intend to pay
cash dividends in the foreseeable future. We intend to retain future earnings,
if any, for reinvestment in the development and expansion of our business. Any
credit agreements which we may enter into with institutional lenders or
otherwise may restrict our ability to pay dividends. Whether we pay cash
dividends in the future will be at the discretion of our board of directors and
will be dependent upon our financial condition, results of operations, capital
requirements, and any other factors that the board of directors decides is
relevant. See Dividend Policy and Description of Securities  Common
Stock.

Fulfilling our obligations incident to being a public company will be
  expensive and time consuming.

As
a public company, the Sarbanes-Oxley Act of 2002 and the related rules and
regulations of the SEC, requires us to implement additional corporate
governance practices and adhere to a variety of reporting requirements and
complex accounting rules. Compliance with these public company obligations
increases our legal and financial compliance costs and places significant
additional demands on our finance and accounting staff and on our financial,
accounting and information systems.

In
particular, as a public company, our management will be required to conduct an
annual evaluation of our internal controls over financial reporting and include
a report of management on our internal controls in our annual reports on Form
10-KSB. Under current rules, we will be subject to this requirement beginning
with our annual report on Form 10-KSB for our fiscal year ending September 30,
2008. In addition, we will be required to have our independent public
accounting firm attest to and report on managements assessment of the
effectiveness of our internal controls over financial reporting.
Under current rules, we will be subject to this requirement beginning with our
annual report on Form 10-KSB for our fiscal year ending September 30, 2009. If
we are unable to conclude that we have effective internal controls over
financial reporting or, if our independent auditors are unable to provide us
with an attestation and an unqualified report as to the effectiveness of our
internal controls over financial reporting, investors could lose confidence in
the reliability of our financial statements, which could result in a decrease
in the value of our common stock.

29

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Risks Related to our Industry

The biotechnology and biopharmaceutical industries are characterized
  by rapid technological developments and a high degree of competition. We may
  be unable to compete with more substantial enterprises.

The
biotechnology and biopharmaceutical industries are characterized by rapid
technological developments and a high degree of competition. As a result, our actual or proposed
products could become obsolete before we recoup any portion of our related
research and development and commercialization expenses. These industries are
highly competitive, and this competition comes both from biotechnology firms
and from major pharmaceutical and chemical companies. Many of these companies
have substantially greater financial, marketing, and human resources than we do
(including, in some cases, substantially greater experience in clinical
testing, manufacturing, and marketing of pharmaceutical products). We also
experience competition in the development of our products from universities and
other research institutions and compete with others in acquiring technology
from such universities and institutions. In addition, certain of our products
may be subject to competition from products developed using other technologies.
See Business
 Competition.

The industry in which we
operate is highly
competitive.

Numerous
well-known companies, which have substantially greater capital, research and
development capabilities and experience than we have, are presently engaged in
research and development efforts with respect to our target indications. By
virtue of having or introducing competitive products on the market before us,
these entities may gain a competitive advantage. Further, future technological
developments may render some or all of our current or future products
noncompetitive or obsolete, and we may not be able to make the enhancements to
our products necessary to compete successfully with newly emerging
technologies. If we are unable to successfully compete in our chosen markets, our
business prospects, financial condition, and results of operations would be
materially adversely affected. See Business  Competition.

The government regulatory
approval process is time
consuming and expensive.

To
date, we have not submitted a marketing application for any product candidate
to the FDA or any foreign regulatory agency, and none of our product candidates
have been approved for commercialization in any country. Prior to
commercialization, each product candidate will be subject to an extensive and
lengthy governmental regulatory approval process in the United States and in
other countries. We may not be able to obtain regulatory approval for any
product candidate we develop or, even if approval is obtained, the labeling for
such products may place restrictions on their use that could materially impact
the marketability and profitability of the product subject to such
restrictions. We have limited experience in designing, conducting and managing
the clinical testing necessary to obtain such regulatory approval. Satisfaction
of these regulatory requirements, which includes satisfying the FDA and foreign
regulatory authorities that the product is both safe and effective for its
intended therapeutic uses, typically takes several years
depending upon the type, complexity and novelty of the product and requires the
expenditure of substantial resources.

30

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Any manufacturer to produce our products will be required to comply
  with extensive government regulation.

Before
we can begin to commercially manufacture any of our product candidates, we must
either secure manufacturing in an approved manufacturing facility or obtain
regulatory approval of our own manufacturing facility and processes. In
addition, the manufacturing of our product candidates must comply with cGMP
and/or other requirements of the FDA and requirements by regulatory agencies in
other countries. These requirements govern, among other things, quality control
and documentation procedures. We or any third-party manufacturer of our product
candidates, may not be able to comply with these requirements, which would
prevent us from selling such products. Material changes to the manufacturing
processes of our products after approvals have been granted are also subject to
review and approval by the FDA or other regulatory agencies.

The commercial success of any newly-introduced pharmaceutical product
  depends in part upon the ability of patients to obtain adequate
  reimbursement.

If
we succeed in bringing our product candidates to market, they may not be
considered cost-effective, and coverage and adequate payments may not be
available or may not be sufficient to allow us to sell our products on a
competitive basis. In both the United States and elsewhere, sales of medical
products, diagnostics, and therapeutics are dependent, in part, on the
availability of reimbursement from third party payors, such as health
maintenance organizations and other private insurance plans and governmental
programs such as Medicare. Third party payors are increasingly challenging the
prices charged for pharmaceutical products and services. We anticipate that our
business will be affected by the efforts of government and third party payors
to contain or reduce the cost of health care through various means. In the
United States, there have been and will continue to be a number of federal and
state proposals to implement government controls on pricing. Similar government
pricing controls exist in varying degrees in other countries. In addition, the
emphasis on managed care in the United States has increased and will continue
to increase the pressure on the pricing of pharmaceutical products. We cannot
predict whether any legislative or regulatory proposals will be adopted or the
effect these proposals or managed care efforts may have on our business.

Risks Related to our Common Stock

As the market price of our common stock may fluctuate significantly,
  this may make it difficult for you to sell your shares of common stock when
  you want or at prices you find attractive.

The
price of our common stock is quoted on the OTCBB and constantly changes. In recent years, the stock
market in general
has experienced extreme price and volume fluctuations. We expect that the
market price of our common stock will continue to fluctuate. These fluctuations
may result from a variety of factors, many of which are beyond our control.
These factors include:

| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| |  quarterly
  variations in our operating results;                                                            
| |                                                                                                               
| |  operating
  results that vary from the expectations of management, securities analysts
  and investors;     
| |                                                                                                               
| |  changes in
  expectations as to our business, prospects, financial condition, and results
    of operations;

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| |                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------
| | 
  announcements by us, our partners or our competitors regarding material
  developments;                                                         
| |                                                                                                                                                     
| |  the
  operating and securities price performance of other companies that investors
  believe are comparable to us;                                
| |                                                                                                                                                     
| |  future
  sales of our equity or equity-related securities;                                                                                        
| |                                                                                                                                                     
| |  changes in
  general conditions in our industry and in the economy, the financial markets
  and the domestic or international political situation;
| |                                                                                                                                                     
| | 
  fluctuations in oil and gas prices;                                                                                                             
| |                                                                                                                                                     
| |  departures
  of key personnel; and                                                                                                                
| |                                                                                                                                                     
| |  regulatory
  considerations.                                                                                                                      

As
a result of these fluctuations, you may experience difficulty selling shares of
our common stock when desired or at acceptable prices.

Future sales of common stock or the issuance of securities senior to
  our common stock or convertible into, or exchangeable or exercisable for, our
  common stock could materially adversely affect the trading price of our
  common stock, and our ability to raise funds in new equity offerings.

Future
sales of substantial amounts of our common stock or other equity-related
securities in the public market or privately, or the perception that such sales
could occur, could adversely affect prevailing trading prices of our common
stock and could impair our ability to raise capital through future offerings of
equity or other equity-related securities. We can make no prediction as to the
effect, if any, that future sales of shares of our common stock or
equity-related securities, or the availability of shares of common stock for
future sale, will have on the trading price of our common stock.

Our common
  stock is deemed to be a penny stock, which may make it more difficult for
  investors to sell their shares due to suitability requirements.

The
SEC has adopted regulations that generally define penny stock to be an equity
security that has a market price of less than $5.00 per share, subject to
specific exemptions. The market price of our common stock is currently
less than $5.00 per share and therefore is a penny stock according to SEC
rules. This designation requires any broker or dealer selling these securities
to disclose certain information concerning the transaction, obtain a written
agreement from the purchaser and determine that the purchaser is reasonably
suitable to purchase the securities. These rules may restrict the ability of
brokers or dealers to sell our common stock and may affect the ability of
investors hereunder to sell their shares.

You
should be aware that, according to the SEC, the market for penny stocks has
suffered in recent years from patterns of fraud and abuse. Such patterns
include:

| |                                                                           
| | --------------------------------------------------------------------------
| |  Control of
  the market for the security by one or a few broker-dealers;
| |                                                                           
| |  Boiler
  room practices involving high-pressure sales tactics;        

32

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| |                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 
  Manipulation of prices through prearranged matching of purchases and sales;                                                                                               
| |                                                                                                                                                                               
| |  The
  release of misleading information;                                                                                                                                    
| |                                                                                                                                                                               
| |  Excessive
  and undisclosed bid-ask differentials and markups by selling broker-dealers;
  and                                                                              
| |                                                                                                                                                                               
| |  Dumping of
  securities by broker-dealers after prices have been manipulated to a desired
  level, which hurts the price of the stock and causes investors to suffer
  loss.

We
are aware of the abuses that have occurred in the penny stock market. Although
we do not expect to be in a position to dictate the behavior of the market or
of broker-dealers who participate in the market, we will strive within the
confines of practical limitations to prevent such abuses with respect to our
common stock.

Future sales of our common stock by our existing stockholders could adversely
  affect our stock price.

The
market price of our common stock could decline as a result of sales of a large
number of shares of our common stock in the market, or the perception that
these sales could occur. These sales also might make it more difficult for us
to sell equity securities in the future at a time and at a price that we deem
appropriate. Currently, we have outstanding 44,958,917 shares of common stock.
Of these shares, 33,780,421 shares, are freely tradable. Giving effect to the
exercise in full of all of our outstanding warrants and options, we would have
outstanding 70,021,475 shares of common stock.

Some
of our stockholders, holding approximately 1,333,332 shares of common stock,
have the right, subject to a number of conditions and limitations, to include
their shares in registration statements relating to our securities. By
exercising their registration rights and causing a large number of shares to be
registered and sold in the public market, these holders may cause the market
price of the common stock to fall. In addition, any demand to include these
shares in our registration statements could have an adverse effect on our
ability to raise needed capital. In connection with our private placement which
closed on February 26, 2007, directors, officers, employees, consultants and
certain stockholders beneficially owning in the aggregate 16,030,013 shares of
common stock, agreed to restrict their ability to dispose of their shares of
common stock or common stock equivalents until the first anniversary of the
effective date of the initial registration statement that was filed pursuant to
such private placement.

Our issuance of warrants and options to investors, employees and
  consultants and the registration rights for the underlying shares of common
  stock may have a negative effect on the trading prices of our common stock as
  well as a dilutive effect.

We
have issued and may continue to issue warrants and options at or below the
current market price. As of September 30, 2007, we had outstanding 25,062,558
warrants and options (5,917,775 for the year ended September 30, 2006). In
addition to the dilutive effect of a large number of shares and a low exercise
price for the warrants and options, there is a potential that a large number of
underlying shares may be sold in the open market at any given time, which could
place downward pressure on the trading of our common stock.

33

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Risks Related to Conducting Business in
Israel

We are affected by the political, economic, and military risks of
locating our principal operations in Israel.

Our
operations are located in the State of Israel, and we are directly affected by
political, economic, and military conditions in that country. Since December
1987, the State of Israel has experienced severe civil unrest primarily in the
areas that have been under its control since 1967. No prediction can be made as
to whether these problems will be resolved. Our business, prospects, financial
condition, and results of operations could be materially adversely affected if
major hostilities involving Israel should occur or if trade between Israel and
its current trading partners is interrupted or curtailed.

All
adult male permanent residents of Israel under the age of 51, unless exempt,
may be required to perform between 14 and 40 days of military reserve duty
annually. Additionally, all such residents are subject to being called to
active duty at any time under emergency circumstances. Some of our officers,
directors, and employees currently are obligated to perform annual military
reserve duty. We can provide no assurance that such requirements will not have
a material adverse effect on our business, prospects, financial condition, and
results of operations in the future, particularly if emergency circumstances
occur.

Because some of our officers and directors are located in non-U.S.
  jurisdictions, you may have no effective recourse against the management for
  misconduct and may not be able to enforce judgment and civil liabilities
  against our officers, directors, experts and agents.

Some
of our directors and officers are nationals and/or residents of countries other
than the United States, and all or a substantial portion of their assets are
located outside the United States. As a result, it may be difficult for
investors to enforce within the United States any judgments obtained against
some of our officers or directors, including judgments predicated upon the
civil liability provisions of the securities laws of the United States or any
U.S. state.

34

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ITEM 2 - PROPERTIES

Our
principal executive offices are located in approximately 1337 square feet of
office space in Kiryat Ono, Israel. The lease commenced on August 10, 2006 and
lasts for a period of 36 months. The aggregate annual base rental for this
space is $26,827.

We
are leasing a suite in New York City since June 8, 2006 for the use of our CEO.
The lease agreement was renewed on June 6, 2007 for a period of 12 months and
the aggregate annual base rental for this space is $24,000

We
believe that our existing facilities are suitable and adequate to meet our
current business requirements.

ITEM 3 - LEGAL PROCEEDINGS

From
time to time we may become subject to litigation incidental to our business.
    We are not currently a party to any material legal proceedings.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS.

Stockholders
at the Annual Meeting of Stockholders held on September 10, 2007 took the
following six actions:

| |                                             
| | --------------------------------------------
| |  Approved the election of
  five directors.

|                |  |                     |  |                        
|--------------- |  | ------------------- |  | -----------------------
|Name of Nominee |  | Number of Votes For |  | Number of Votes Against
|                |  |                     |  |                        
|Yair Aloni      |  | 24,298,298          |  | 17,350                 
|Steven Katz     |  | 24,277,248          |  | 38,400                 
|Shmuel Levi*    |  | 24,298,098          |  | 17,550                 
|Josef Neuhaus   |  | 24,299,706          |  | 15,942                 
|Albert Passner  |  | 24,298,456          |  | 17,192                 

| |                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                          
| | *On October
  30, 2007, Mr. Levi resigned from our board of directors and our audit and
  compensation committees. His vacancy was filled by Mr. DeMedio.

| |                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  Approved
  an amendment to our Certificate of Incorporation to increase the number of
  our authorized shares of common stock from 100,000,000 to 200,000,000 by a
  vote of 23,913,623 shares for, 145,875 shares against and 256,150 shares
  abstaining.
| |                                                                                                                                                                                                                                                              
| |  Approved
  an amendment to our Certificate of Incorporation to classify 20,000,000
  shares of our preferred stock as blank check preferred by a vote of
  23,715,714 shares for, 164,137 shares against and 435,797 shares abstaining.                  
| |                                                                                                                                                                                                                                                              
| |  Approved
  an amendment to our Certificate of Incorporation to indemnify our directors
  and officers to the fullest extent permitted by Delaware law by a vote of
  24,204,521 shares for, 101,670 shares against and 9,457 shares abstaining.            

35

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| |                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  Approved an
  amendment to our Certificate of Incorporation to limit the liability of our
  directors by a vote of 24,094,136 shares for, 193,320 shares against and
  28,192 shares abstaining.                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                      
| |  Approved the
  ratification of the appointment of Kesselman & Kesselman, certified
  public accountants (Isr.), a member of PriceWaterhouseCoopers International
  Limited, as our independent auditor of the financial statements for the year
  ended September 30, 2007 by a vote of 24,232,898 shares for, 76,550 shares
  against and 6,200 shares abstaining.

PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

Market Price for our Common Stock

Our
common stock is quoted on the OTC Bulletin Board (the OTCBB) under the symbol
GCAN.OB. The quarterly high and low
reported sales prices for our common stock as quoted on the OTCBB for the
periods indicated are as follows:

|                                        |       |  |      
|--------------------------------------- | ----- |  | -----
|                                        | High  |  | Low  
|                                        |       |  |      
|Year Ended September 30, 2006           |       |  |      
|Three Months
Ended December 31,
  2005  | $1.75 |  | $1.01
|Three Months
Ended March 31, 2006       | $1.72 |  | $1.05
|Three Months
Ended June 30, 2006        | $1.69 |  | $0.71
|Three Months
Ended September 30,
  2006 | $1.20 |  | $0.53
|                                        |       |  |      
|Year Ended September 30, 2007           |       |  |      
|Three Months
Ended December 31,
  2006  | $0.70 |  | $0.35
|Three Months
Ended March 31, 2007       | $0.68 |  | $0.37
|Three Months
Ended June 30, 2007        | $0.70 |  | $0.45
|Three Months
Ended September 30,
  2007 | $0.79 |  | $0.40

The
foregoing quotations were provided by Yahoo finance and the quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may
not represent actual transactions.

The
last reported sale price per share of common stock as quoted on the OTCBB was
$0.40 on December 24, 2007. As of such date, we had 44,958,917 shares of common
stock outstanding. Based on information available from our registrar and
transfer agent, we estimate that we had approximately 49 stockholders of record
on December 24, 2007.

Dividend Policy

We
have never paid any cash dividends on our capital stock and do not anticipate
paying any cash dividends on our common stock in the foreseeable future. We
intend to retain future earnings to fund ongoing operations and future capital
requirements of our business. Any future determination to pay cash dividends
will be at the discretion of our board and will be dependent upon our financial
condition, results of operations, capital requirements and such other factors
as our board deems relevant.

36

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Recent Sales of
Unregistered Securities

During
the year ended September 30, 2007, we issued unregistered securities to the
persons, as described below. We believe that each transaction was exempt from
the registration requirements of the Securities Act of 1933, as amended, by
virtue of Section 4(2) thereof and/or Rule 506 of Regulation D promulgated
thereunder. All recipients had adequate access, through their relationships with
us, to information about us.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
| On October 12, 2006, we granted options to purchase up to 50,000
  shares of our common stock at an exercise price of $0.65 to a then new member
  of our Scientific Advisory Board.                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 
| On October 18, 2006 we entered into a
Strategic Alliance Agreement with UTEK Corporation (UTEK), pursuant to
which UTEK would assist us in
identifying technology acquisition opportunities. As consideration for the
services being provided to us by
UTEK, we issued UTEK
an aggregate of 171,432 shares of our common stock which vested in 12 equal monthly
instalments of 14,286 shares each.                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 
| On November 13, 2006, we granted options to purchase up to 150,000
  shares of our common stock under our 2004 Stock Option Plan at an exercise
  price of $0.45 to each of Steven Katz and Albert Passner, our then two new
  additions to our board of directors.                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 
| On December 5, 2006, we granted options to purchase up to 50,000
  shares of our common stock under our 2004 Stock Option Plan at an exercise
  price of $0.50 to a then new member of our Scientific Advisory Board.                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 
| On January 30, 2007, we granted warrants to purchase 434,783 shares
  of our common stock exercisable for five years at an exercise price of $0.45
  to our regulatory consultant.                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 
| On February 15, 2007, we granted options to purchase up to 100,000
  shares of our common stock under our 2004 Stock Option Plan at an exercise
  price of $0.45 to an employee.                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 
| On February 26, 2007, we granted options to purchase 2,340,000
  shares of our common stock at an exercise price of $0.53 to our directors,
  officers, employees and consultants. Of the options granted, 865,000 were
  granted under the 2004 Stock Option Plan and 1,475,000 were granted under the
  2007 Stock Option Plan.                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 
| On
    February 27, 2007, we completed a private placement for the sale of 16,250,000
    units at a purchase price of $0.40 per unit, for total consideration of $6,500,000.
    Each unit consisted of one share of common stock and one share purchase warrant.
    Each warrant entitles the holder to purchase one share of common stock for
    a period of five years at an exercise price of $0.48 per share. In connection
    with the private placement, T.R. Winston & Company, LLC acted as placement
    agent and received aggregate commissions of $487,500.

37

---



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| On March 22, 2007, we granted warrants to purchase 350,000 shares
  of our common stock exercisable for five years at an exercise price of $0.53
  to a consultant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
| On May 15, 2007, we prepaid the principal amount of a convertible
  note issued on November 20, 2006, in the amount of $350,000. The accumulated
  interest on the principal amount, in the amount of $13,501, was converted
  into 33,753 shares of our common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
| On
    May 17, 2007, we granted options to purchase 2,790,000 shares of our common
    stock under the 2007 Stock Option Plan at an exercise price of $0.61 to our
    directors, officers and employees. These options were issued upon the surrender
    and cancellation by each of such directors, officers and employees of options,
    exercisable for an aggregate of 2,780,000 shares of our common stock at exercise
    prices ranging from $0.93 to $1.37, which were granted previously.                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
| On May 17, 2007, we granted options to purchase 20,000 of our
  common stock under the 2007 Stock Option Plan to an employee at an exercise
  price of $0.61 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
| On
    June 1, 2007, we entered into a services agreement with ROI Group, LLC, pursuant
    to which we issued them 50,000 shares of our common stock and consulting
    warrants exercisable for an aggregate of 62,500 shares of common stock at
    an exercise price of $0.75 which vested on August 31, 2007, 62,500 shares
    of common stock at an exercise price of $0.90 which vested on November 30,
    2007, 62,500 shares of common stock at an exercise price of $1.10 which vest
    on February 28, 2008 and 62,500 shares of common stock at an exercise price
    of $1.25 which vest on May 31, 2008. The warrants are exercisable from their
    respective date of vesting through February 27, 2014.

Purchases
of Equity Securities by the Issuer and Affiliated Purchasers

We
did not purchase any of our shares of common stock or other securities during
the year ended September 30, 2007.

Securities Authorized for Issuance under
Equity Compensation Plans

The
following table sets forth information with respect to our 2004 Employees and
Consultants Stock Option Plan (2004 Stock Option Plan) and our 2007 Global
Share Option Plan (2007 Stock Option Plan) as of September 30, 2007:

38

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|                                                           |  |                                                                                                              |  |                                                                                      |  |                                                                                                                                                              
|---------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|Plan
  Category                                            |  | Number of Securities
  to be Issued Upon 
  Exercise of 
  Outstanding Options,
  Warrants and Rights 
  (a) |  | Weight-Average
  Exercise Price of 
  Outstanding Options,
  Warrants and Rights (b) |  | Number of Securities
  Remaining Available for
  Future Issuance Under
  Equity Compensation
  Plans (Excluding
  Securities Reflected in
  Column (a))
  (c)
|Equity Compensation Plans Approved
By Security Holders     |  |                                                                                                             |  |                                                                                     |  |                                                                                                                                                             
|                                                           |  |                                                                                                              |  |                                                                                      |  |                                                                                                                                                              
|Equity Compensation Plans Not
Approved By Security Holders |  | 5,800,000(1)                                                                                                 |  | $0.58                                                                                |  | 4,200,000(2)                                                                                                                                                 
|TOTAL                                                      |  |                                                                                                              |  |                                                                                      |  |                                                                                                                                                              

|                                                                                                                                                                                                                                                           | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|                                                                                                                                                                                                                                                          
|1. Represents
  1,515,000 shares of our common stock issuable upon exercise of options
  granted under our 2004 Stock Option Plan and 4,285,000 shares of our common
  stock issuable upon exercise of options granted under our 2007 Stock Option
  Plan.
|                                                                                                                                                                                                                                                           | 
|2. Represents
  up to 3,485,000 shares of our common stock authorized for issuance under our
  2004 Stock Option Plan and up to 715,000 shares of our common stock
  authorized for issuance under our 2007 Stock Option Plan.                            

39

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ITEM 6 - MANAGEMENTS DISCUSSION AND ANALYSIS
AND PLAN OF OPERATION

We
are a development stage company and currently have no revenue from operations.
Other than existing cash reserves and our intellectual property we have no
significant assets, tangible or intangible. Presently, we do not have
sufficient cash resources to meet our requirements in the twelve months
following October 1, 2007 and we expect to seek to raise additional funds
during that time period. There can be no assurance that we will raise
additional funds on a timely basis, on terms acceptable to us or at all and
there can be no assurance that we will generate revenues in the future, or that
we will be able to operate profitably in the future, if at all. We have
incurred net losses in each fiscal year since inception of our operations.

Plan
of Operation

Short
Term Business Plan

We
are a life science company focused on the development of immunotherapy and
related approaches to treat cancer. Until recently, we have focused on the use
of intravenous immunoglobulins, or IgGs,
derived from human plasma to treat melanoma, prostate, and colon cancers. We
believe that IgG therapy may be the basis of a more effective and efficient
cancer treatment both as a mono or a combination therapy as well as for
adjuvant cancer treatments (IgGs used in concert with other proprietary
pharmaceuticals). Our business objective is to become a recognized leader in
the development of immunotherapy including IgG-based therapies and related approaches
to treat cancer.

IgG-based
immunotherapy will require regulatory approval before being commercially
marketed for human therapeutic use. Clinical trials generally include three
phases that, together, may take several years to complete. Phase I clinical
studies are conducted primarily to establish safety and determine the maximum
tolerated dose, or MTD. Phase
II studies are designed to determine preliminary efficacy and establish dosing.
Phase III studies are conducted to demonstrate therapeutic efficacy in a
statistically significant number of patients, at an optimal dose level, method
or route of delivery into the body, and a schedule of administration. Once
clinical trials are successfully completed, products may receive regulatory approval.

We
are pursuing the development of IgG-based technology to develop therapies for
the treatment of melanoma, as well as therapies directed toward disrupting the
blood supply to cancers, referred to as anti-angiogenesis.

Melanoma: Our lead product
candidate, VitiGam, is
a first-in-class anti-cancer immunotherapy derived entirely from the plasma of
donors with vitiligo, a benign autoimmune skin condition affecting up to two
percent of the general population. We have demonstrated that plasma from
individuals with vitiligo contains anti-melanoma activities. Based on this, we
are developing VitiGam to initially address Stage III and Stage IV melanoma
and possibly earlier stages of melanoma at a future time.

In
June 2007, we completed a non-FDA Phase II clinical trial designed to test the
safety and efficacy of standard IgG (collected and manufactured from general
population donors, which may have included donors with vitiligo) in patients
with prostate cancer, colon cancer and melanoma. In his trial, no serious untoward effects of IgGs were noted. In one patient with melanoma, the cancer remained stable or improved over eight cycles of therapy (approximately ten months).

40

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In
addition to the pre-clinical evidence we have accumulated using
vitiligo-derived plasma, the above observations provide further validation for
our plan to develop VitiGam.

We
plan to file an Investigational New Drug Application, or IND, for VitiGam in
the near future. We believe that the FDA is well acquainted with IgG-based therapies
and their safety profiles resulting
from a long history of regulatory approvals of IgG-based products.

In
addition to VitiGam, we are also developing the following:

 Next
generation (recombinant) VitiGam - VitiGam is currently
manufactured as a mixture that largely consists of IgG molecules (antibodies
of the IgG type). We anticipate that within this mixture, only a subset of
IgG molecules will be responsible for the biological activity of VitiGam.
Next generation VitiGam will be composed of only the IgGs required to exert the anti-melanoma effect,
thereby creating a more effective compound. Identifying the relevant IgGs may
also permit cost reductions; and

 Cancer
vaccines based on VitiGam - An off-the-shelf cancer vaccine
is considered a silver bullet in cancer therapy. We anticipate that based
on our evolving understanding of the specific IgG molecules responsible for
the biological activity of VitiGam, we may be in a position to identify the
corresponding antigens that may be used to develop melanoma cancer vaccines.

Anti-angiogenesis:
We are developing additional novel IgG-based therapies for cancer and other
diseases. These therapies are based on the disruption of the blood supply to
cells. Our scientists have shown that several mechanisms may be involved in
mediating the anti-cancer effects of IgG-based immunotherapies. Angiogenesis
    is one of a number of well known pathways to deprive cells of their blood
supply.

In
June 2007, we announced the discovery of proprietary IgG sub-fractions in
human plasma, which contain potent anti-angiogenic properties. These
sub-fractions may be used for treatment of disorders resulting from neovascularization
(the formation
of new blood vessels or angiogenesis).

We
have established a pre-clinical development program to define and characterize
these anti-angiogenic anti-cancer fractions and to test their biological activity
    in animal models. We believe that successfully developed therapies derived
    from our novel IgG sub-fractions have the potential to address multi-billion
    dollar markets. For example, Avastin®,
    also known as bevacizumab,
    counteracts VEGF, a growth factor which stimulates neovascularization, and
    is used to treat colon and other cancers. Sales for Avastin® in
    2006 were in excess of $2 billion.

We
are also contemplating conducting additional clinical trials to test new
formulations and/or combinations of IgG-based immunotherapy candidates and to
test these formulations and/or methods for different cancers at different
stages of disease progression with varying dosages and routes of
administration. To achieve this, we may elect to partner with a pharmaceutical company
to conduct these further clinical trials, although there can
be no assurance that we will locate a pharmaceutical company able, or willing,
to partner with us on terms commercially acceptable to us, in order to attain
broad-based regulatory approval.

41

---



Although
there can be no assurance that the FDA will approve VitiGam, or any other IgG
immunotherapy candidate, we expect that, at a minimum, it will take a number of
years to receive final approval and registration for commercial use as an
anti-cancer agent. Our strategy is to collaborate with a suitable partner, although
there can be no assurance that we will locate a suitable partner, to support
late stage (Phase III) clinical development, registration and/or sales for our
IgG-based cancer products.

Long
Term Business Strategy

If
our IgG-based cancer immunotherapy candidates show significant promise in
clinical trials, and at this preliminary stage there can be no assurance that
any such immunotherapy candidates will show significant promise, we plan to
ultimately seek a strategic commercial partner, or partners, with extensive
experience in the development, commercialization, and marketing of cancer drugs
and/or other infused therapeutic proteins, although there can be no assurance
that we will locate a strategic commercial partner or partners on terms
commercially acceptable to us. We anticipate such partner or partners would be
responsible for, or substantially support, late stage clinical trials (Phase
III) to ensure regulatory approvals and registrations in the appropriate
territories in a timely manner. We further anticipate that the partner, or
partners, would be responsible for sales and marketing of our IgG-based
immunotherapies in certain agreed upon territories. Such planned strategic
partnership, or partnerships, may provide a marketing and sales infrastructure
for our products as well as financial and operational support for global
clinical trials, post-marketing studies, label expansions and other regulatory
requirements concerning future clinical development in the United States and elsewhere.
Any future strategic partner, or partners, may also provide capital and
expertise that would enable the partnership to develop new formulations of IgG
cancer immunotherapy suitable for patients at different stages of disease
progression as well as IgG derivatives. Under certain circumstances, we may
determine to develop one or more of our IgG-based cancer immunotherapies on our
own, either worldwide or in select territories.

Other
Research and Development Plans

In
addition to conducting early-stage clinical trials, we plan to conduct
pre-clinical research to accomplish the following:

| |                                                                                                        
| | -------------------------------------------------------------------------------------------------------
| |  Further
 deepen and broaden our understanding of the biology of our IgG products in
 cancer;         
| |                                                                                                        
| |  Develop
 alternative delivery systems and determine the optimal dosage for different
 patient groups;
| |                                                                                                        
| |  Investigate
 alternative sources of immunoglobulin other than human plasma;                          
| |                                                                                                        
| |  Develop
 novel IgG-based therapies; and                                                              
| |                                                                                                        
| |  Develop
 successor products.                                                                         

42

---



Our
plan is to patent any successful inventions resulting from our future research
activities and to exploit any other means that may exist to protect our future
IgG anti-cancer therapies in the commercial markets; although at this early
stage there can be no assurance that there will be any successful inventions
resulting from such research activities.

Other
Strategic Plans

In
addition to developing our own IgG-based anti-cancer therapies drug portfolio,
we are, on an on-going basis, considering in-licensing and other means of
obtaining additional lead molecules of technologies to complement and/or expand
our current product portfolio. Our goal is to create a well-balanced product
portfolio that includes lead molecules in different stages of development and
addresses different medical needs.

Critical accounting policies and estimates

Managements
discussion and analysis of the financial condition and results of operations is
based upon the consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States
of America. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets and
liabilities, expenses and related disclosure of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates and judgments. We
base our estimates on various factors, including historical experience that we
believe to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other resources. Actual results may differ
from these estimates under different assumptions or conditions.

We
believe the following critical accounting policies affect our more significant
judgments and estimates used in the preparation of our consolidated financial
statements.

Going
concern assumption

The
accompanying financial statements have been prepared assuming that we will
continue as a going concern. We have net losses for the period from inception
(October 6, 1998) through September 30, 2007 of $8,956,187, as well as
negative cash flow from operating activities. Presently we do not have
sufficient cash resources to meet our requirements in the twelve months
following October 1, 2007. These factors raise substantial doubt about our
ability to continue as a going concern. Management is in the process of evaluating
various financing alternatives as we will need to finance future research and
development activities and general and administrative expenses through fund-raising
in the public or private equity markets. Although there is no assurance that
we will be successful with those initiatives, management is confident that it
will be able to secure the necessary financing as a result of ongoing financing
discussions with third party investors and existing shareholders.

The
financial statements do not include any adjustments that may be necessary
should we be unable to continue as a going concern. Our continuation as a going
concern is dependent on our ability to obtain additional financing as may be
required and ultimately to attain profitability.

43

---



Valuation
of options and warrants

We
granted options to purchase shares of our common stock to employees and
consultants and issued warrants in connection with fund-raising.

Until
September 30, 2006, we accounted for employee stock based compensation in
accordance with Accounting Principles Board Opinion No. 25 Accounting for Stock
Issued to Employees(APB 25) and related interpretations. In accordance with
FAS 123 Accounting for Stock-Based Compensation(FAS 123), we disclosed
pro-forma data assuming we had accounted for employee stock option grants using
the fair value-based method defined in FAS 123.

Effective
October 1, 2006, we adopted the revised Statement of Financial Accounting
Standards No. 123, Share-Based Payment(FAS 123R), which
addresses the accounting for share-based payment transactions in which we
obtain employee services in exchange for (a) equity instruments of the Company
or (b) liabilities that are based on the fair value of our equity instruments
or that may be settled by the issuance of such equity instruments. FAS 123R
eliminates the ability to account for employee share-based payment transactions
using APB 25, and requires
instead that such transactions be accounted for using the grant-date fair value
based method.

The
fair value of each stock option grant was estimated at the date of grant using
a Black-Scholes option pricing model. The volatility is based on a historical
volatility, by statistical analysis of the weekly share price for past periods.
The expected term is the length of time until the expected dates of exercising
the options, based on estimated data regarding employees exercise behavior.

FAS
123R applies to all awards granted or modified after the Statements effective
date. In addition, compensation cost for the unvested portion of previously
granted awards that remain outstanding on the Statements effective date is
recognized on or after the effective date, as the related services are
rendered, based on the awards grant-date fair value as previously calculated
for the pro-forma disclosure under FAS 123.

We
applied the modified prospective application transition method, as permitted by
the Statement. Under such transition method, upon the adoption of FAS 123R, our
financial statements for periods prior to the effective date of the Statement
are not restated.

We
account for equity instruments issued to third party service providers
(non-employees) in accordance with the fair value based on an option-pricing model,
pursuant to the guidance in EITF 96-18 Accounting for Equity Instruments That
Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling Goods or Services.The fair value of the options granted is revalued
over the related service periods and recognized using the accelerated method.

Deferred
income taxes

Deferred
taxes are determined utilizing the assets and liabilities method based on the
estimated future tax effects of differences between the financial accounting
and tax bases of assets and liabilities under the applicable tax laws. Deferred
tax balances are computed using the tax rates expected to be in effect when
those differences reverse. A valuation allowance in respect of deferred tax
assets is provided if, based upon the weight of available evidence, it is more
likely than not that some or all of the deferred tax assets will not be realized.
We have provided a full valuation allowance with respect to our deferred tax assets.

44

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Regarding
our Israeli subsidiary, Gammacan Ltd, paragraph 9(f) of FAS 109, Accounting for
Income Taxes, prohibits the recognition of deferred tax liabilities or assets
that arise from differences between the financial reporting and tax bases of
assets and liabilities that are measured from the local currency into dollars
using historical exchange rates, and that result from changes in exchange rates
or indexing for tax purposes. Consequently, the above mentioned differences
were not reflected in the computation of deferred tax assets and liabilities.

Results of Operations

The following
table summarizes certain statement of operations data for the Company for the
year ended September 30, 2007 and 2006 (in US$):

|                                            |  |                    |   |                    |   |  |  |   |            |   | 
|------------------------------------------- |  | ------------------ | - | ------------------ | - |  |  | - | ---------- | - | 
|                                            |  | Year ended         |  
|Operating Data:                             |  | September 30, 2007 |   | September 30, 2006 |  
|                                            |  |                    |   |                    |  
|Research and
  development costs            |  |                    | $ | 1,198,004          |   |  |  | $ | 802,254    |   | 
|General and
  administrative expenses       |  |                    |   | 4,090,163          |   |  |  |   | 1,263,070  |   | 
|Financial income,
  net                     |  |                    |   | (110,771           | ) |  |  |   | (29,151    | ) | 
|                                            |  |                    |   |                    |   |  |  |   |            |   | 
|Loss before tax on
  income                 |  |                    |   | 5,177,396          |   |  |  |   | 2,036,173  |   | 
|Taxes on income                             |  |                    |   | 1,378              |   |  |  |   | 28,622     |   | 
|                                            |  |                    |   |                    |   |  |  |   |            |   | 
|Net loss for the
  period                   |  |                    | $ | (5,178,774         | ) |  |  | $ | (2,064,795 | ) | 
|                                            |  |                    |   |                    |   |  |  |   |            |   | 
|Loss per common
  share  basic and diluted |  |                    | $ | (0.14              | ) |  |  | $ | (0.07)     |   | 
|                                            |  |                    |   |                    |   |  |  |   |            |   | 
|Weighted average common shares outstanding  |  |                    |   | 38,043,043         |   |  |  |   | 28,052,065 |   | 
|                                            |  |                    |   |                    |   |  |  |   |            |   | 

Research
and development costs

Research and
development expenses are the costs incurred in the process of our pre-clinical
and our clinical trials. Clinical trial and pre-clinical expenses include
regulatory consultant compensation and fees, research expenses, purchase of
plasma, the cost of manufacturing IgG and payments to medical centers for
patient recruitment and treatment.

During
    the year ended September 30, 2007 and September 30, 2006, the research and
development expenses included, among others, the cost of IgG used in the
clinical trials and research work, payments to medical centers and research
labs for clinical trial and pre-clinical trial work, regulatory and scientific
consultant compensation, costs related to the maintenance of our registered
patents, costs related to the filings of patent applications as well as
salaries and related expenses of research and development staff.

During
    the year ended September 30, 2007, the research and development expenses
    totaled $1,198,004 compared to $802,254 during the year ended September 30,
  2006. The increase is related to the pre-clinical, assay development and regulatory
    work in preparation for the VitiGam FDA clinical trial as well as stock-based
compensation expenses. The research and development costs include stock
    based compensation costs, which during the year ended September 30, 2007
    totaled $166,147 as compared to $33,440 during the year ended September 30,
    2006. This increase is attributable to the implementation of FAS123R since
    October 1, 2006.

45

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General
and administrative expenses

The general
and administrative expense includes the salaries and related expenses of our
management, consulting costs, legal and professional fees, travel costs,
business development costs, insurance expenses and other general costs.

For
    the year ended September 30, 2007, general and administrative expenses totaled
$4,090,163 compared to $1,263,070 for the year ended September 30, 2006. Costs
incurred for general and administrative activities in the year ended September
30, 2007 reflect an increase in the number of employees as compared to the year
ended September 30, 2006, from five to eight as well as additional
professional, legal and consulting expenses and an increase in general expenses
such as office and maintenance expenses. During the year ended September 30,
2007, as part of the general and administrative expenses, we incurred
$1,580,963 of compensation expenses due to the implementation of FAS 123R
related to stock options granted to employees. During the year ended September
30, 2006, we accounted for employee stock based compensation in accordance with
APB 25 and incurred $163,517 of costs. Additional costs in the year ended
September 30, 2007 included $474,087 related to the fair value of options,
warrants and shares issued to consultants during the period, with no similar
costs being incurred in the year ended September 30, 2006.

Financial
income/expense, net

During
    the year ended September 30, 2007 and 2006, we generated interest income
    on available cash and cash equivalents balance as well as bank charges. During
    the year ended September 30, 2007, we incurred financial expenses related
    to a convertible promissory note, issued on November 20, 2006, in the total
amount of $13,501.

Liquidity and Capital Resources

Through
September 30, 2007, we incurred losses in an aggregate amount of $9,011,687.
    We have financed our operations from the private placements of equity and
    debt financing. Through September 30, 2007, we raised a total of $9,538,553,
    net of transaction cost, through private placements of equity. We anticipate
    that additional financing will be through similar sources. As of September
    30, 2007, we have $4,048,583 of available cash, most of which is deposited
    in short term, interest bearing, bank deposits. We do not have material financing
    commitments.

Our
financing activities for the year ended September 30, 2007 included the
following:

| |                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  On November 20,
 2006, we issued a convertible promissory note, in the principal amount of
 $350,000, which bore interest at 8% payable on maturity of the note and with
 a maturity date of November 20, 2007. On May 15, 2007, we prepaid the
 principal amount of $350,000. The accumulated interest in the amount of
 $13,501 was converted into 33,753 shares of our common stock.

46

---



| |                                                                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  On February 27,
 2007, we completed a private placement for the sale of 16,250,000 units at a
 purchase price of $0.40 per unit for total consideration of $6,500,000. Each
 unit consisted of one share of common stock and one share purchase warrant.
 Each share purchase warrant entitles the holder to purchase one share of
 common stock for a period of five years at an exercise price of $0.48.
| |                                                                                                                                                                                                                                                                                                                                                                                                             
| |  On
    February 27, 2007, we reduced the exercise price of 333,333 and 1,333,334
    warrants issued to investors on October 31, 2005 and December 20, 2005
    respectively, from $1.00 and $1.20, respectively, to $0.55.                                                                                                                                                                               

Off Balance Sheet Arrangements

We
have no off-balance sheet arrangements.

Planned Expenditures

The
estimated expenses referenced herein are in accordance with our business plan.
As our technology is still in the development stage, it can be expected that
there will be changes in some budgetary items. Our planned expenditures for the
twelve months following October 1, 2007 are as follows:

|                                  |  |        |           |  
|--------------------------------- |  | ------ | --------- | -
|Category                          |  | Amount |          
|                                  |  |        |           |  
|Research & Development            |  | $      | 5,309,000 |  
|General & Administrative Expenses |  |        | 2,824,000 |  
|Finance Income, net               |  |        | (105,000  | )
|                                  |  |        |           |  
|Total                             |  | $      | 8,028,000 |  

As
 previously indicated, we are planning to file an IND with the FDA for VitiGam.
 Our ability to proceed with this IND application as well as the commencement
 of the related clinical trial is dependent on several major factors including
 the ability to attract sufficient financing on terms acceptable to us.

47

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ITEM 7 -
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

TABLE OF CONTENTS

|                                                                                                            |         
|----------------------------------------------------------------------------------------------------------- | --------
|                                                                                                            | Page    
|                                                                                                            |         
|REPORT OF INDEPENDENT REGISTERED
            PUBLIC ACCOUNTING FIRM - Report of Kesselman &
      Kesselman | F-2     
|REPORT OF INDEPENDENT AUDITORS
            - Report of Armando C. Ibarra                                    | F-3     
|CONSOLIDATED FINANCIAL STATEMENTS:                                                                          |         
|Balance
            sheets                                                                                  | F-4     
|Statements
            of operations                                                                        | F-5     
|Statements
            of changes in stockholders equity                                                   | F-6     
|Statements
            of cash flows                                                                        | F-7     
|Notes
            to financial statements                                                                   | F-8-F-32



|
|
|
|
|
|

F-1

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|                                 |                                    
|-------------------------------- | -----------------------------------
|(PRICE WATER HOUSE COOPERS LOGO) |                                    
|                                 |                                    
|                                 |                                    
|                                 | Kesselman & Kesselman              
|                                 | Certified Public Accountants (Isr.)
|                                 | Trade Tower, 25 Hamered Street     
|                                 | Tel Aviv 68125 Israel              
|                                 | P.O Box 452 Tel Aviv 61003         
|                                 | Telephone +972-3-7954555           
|                                 | Facsimile +972-3-7954556           

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

To the Shareholders of 
GammaCan International, Inc. 
(A Development Stage Company)

We have audited the
accompanying consolidated balance sheets of GammaCan International, Inc. (A
Development Stage Company) and its subsidiary (the Company) as of September 30, 2007 and 2006, and the related
consolidated statements of operations, changes in stockholders equity and cash
flows for each of the two years then ended and cumulatively, for the period
from October 1, 2003 to September 30, 2007. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
cumulative totals of the Company for the period from October 6, 1998 (date of
incorporation) to September 30, 2003, which totals reflect a deficit of $15,640
accumulated during the development stage. Those cumulative totals were audited
by other independent auditors, whose report, dated November 17, 2003, expressed
an unqualified opinion on the cumulative amounts but included an emphasis of a
matter. Our opinion, insofar as it relates to amounts included for that period
is based on the report of the other independent auditors.

We conducted our audits in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, based upon
our audits and the report of the other independent auditors, the consolidated
financial statements referred to above present fairly, in all material
respects, the consolidated financial position of the Company as of September
30, 2007 and 2006, and the consolidated results of their operations and their
cash flows for each of the years then ended and cumulatively, for the period
from October 1, 2003 to September 30, 2007, in conformity with accounting
principles generally accepted in the United States of America.

As discussed in Note 1m to
the financial statements, effective October 1, 2006 the Company changed its
method of accounting for stock-based payment to conform with FASB Statement of
Financial Accounting Standards No. 123 (revised 2004), Share-based Payment.

The accompanying financial
statements have been prepared assuming that the Company will continue as a
going concern. As discussed in Note 1 to the financial statements, the Company
has net losses for the period from inception (October 6, 1998) through
September 30, 2007 of $8,956,187 and presently the Company does not have
sufficient cash resources to meet its requirements in the twelve months
following October 1, 2007. These reasons raise substantial doubt about its
ability to continue as a going concern. Managements plans in regard to these
matters are also described in Note 1a. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

Kesselman & Kesselman

Tel Aviv, Israel 
December 28, 2007

F-2

---



ARMANDO C. IBARRA
Certified Public Accountants
A Professional Corporation

|                                  |                                                    |                                                                    
|--------------------------------- | -------------------------------------------------- | -------------------------------------------------------------------
|Armando
  C. Ibarra, C.P.A.       |                                                    | Members
  of the California Society of Certified Public Accountants
|Armando
  Ibarra, Jr., C.P.A., JD |                                                    | Members
  of the American Institute of Certified Public Accountants
|                                  | Members
  of the Better Business Bureau since 1997

INDEPENDENT AUDITORS REPORT

To the Board of Directors of 
San Jose International, Inc. 
(A Development Stage Company)

We have audited the
statements of operations, changes in stockholders equity and cash flows for
the period from October 6, 1998 (date of inception) through September 30, 2003
of San Jose International, Inc. (A Development Stage Company). These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audits in
accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial
statements referred to above present fairly, in all material respects, the
results of operations and cash flows of San Jose International, Inc. for the
period from October 6, 1998 (date of inception) through September 30, 2003 in
conformity with accounting principles generally accepted in the United States
of America.

The accompanying financial
statements have been prepared assuming the Company will continue as a going
concern. As discussed in Note 1 to the financial statements, the Company has
had significant losses since inception. This condition raises substantial doubt
as to its ability to continue as a going concern. Managements plans regarding
those matters are also described in Note 1. These financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

| |                               
| | ------------------------------
| | /s/ Armando C. Ibarra, CPA-APC
| |                               
| | Armando C. Ibarra, CPA-APC    

November 17, 2003 
Chula Vista, California

371 E Street, Chula Vista,
CA 91910 Tel: (619) 422-1348 Fax: (619) 422-1465

F-3

---



GAMMACAN INTERNATIONAL, INC.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                             |  |              |            |      |   |            |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | ---- | - | ---------- | -
|                                                                                                                                                                             |  | September 30 |           
|                                                                                                                                                                             |  | 2007         |            | 2006 |  
|                                                                                                                                                                             |  |              |            |      |  
|A s s e t s                                                                                                                                                                  |  |              |            |      |   |            |  
|CURRENT
  ASSETS:                                                                                                                                                            |  |              |            |      |   |            |  
|Cash and cash equivalents                                                                                                                                                    |  | $            | 4,048,583  |      | $ | 538,738    |  
|Prepaid expenses                                                                                                                                                             |  |              | 9,851      |      |   |           |  
|Other                                                                                                                                                                        |  |              | 47,271     |      |   | 12,494     |  
|                                                                                                                                                                             |  |              |            |      |   |            |  
|T o t a l current assets                                                                                                                                                     |  |              | 4,105,705  |      |   | 551,232    |  
|                                                                                                                                                                             |  |              |            |      |   |            |  
|                                                                                                                                                                             |  |              |            |      |   |            |  
|FUNDS IN
  RESPECT OF EMPLOYEE RIGHTS UPON RETIREMENT (Note 2)                                                                                                               |  |              | 49,281     |      |   | 21,071     |  
|                                                                                                                                                                             |  |              |            |      |   |            |  
|LONG TERM
  DEPOSITS (Note 3)                                                                                                                                                |  |              | 18,590     |      |   | 22,270     |  
|                                                                                                                                                                             |  |              |            |      |   |            |  
|PROPERTY
  AND EQUIPMENT, NET
  (Note 4)                                                                                                                                     |  |              | 26,338     |      |   | 25,247     |  
|                                                                                                                                                                             |  |              |            |      |   |            |  
|T o t a l assets                                                                                                                                                             |  | $            | 4,199,914  |      | $ | 619,820    |  
|                                                                                                                                                                             |  |              |            |      |   |            |  
|                                                                                                                                                                             |  |              |            |      |   |            |  
|Liabilities and stockholders equity                                                                                                                                         |  |              |            |      |   |            |  
|CURRENT
  LIABILITIES:                                                                                                                                                       |  |              |            |      |   |            |  
|Accounts payable                                                                                                                                                             |  | $            | 797,515    |      | $ | 279,857    |  
|Payroll and related accruals                                                                                                                                                 |  |              | 130,223    |      |   | 49,242     |  
|                                                                                                                                                                             |  |              |            |      |   |            |  
|T o t a l current liabilities                                                                                                                                                |  |              | 927,738    |      |   | 329,099    |  
|                                                                                                                                                                             |  |              |            |      |   |            |  
|                                                                                                                                                                             |  |              |            |      |   |            |  
|LIABILITY
  FOR EMPLOYEE RIGHTS UPON RETIREMENT (Note 2)                                                                                                                     |  |              | 71,338     |      |   | 31,531     |  
|                                                                                                                                                                             |  |              |            |      |   |            |  
|COMMITMENTS (Note 5)                                                                                                                                                         |  |              |            |      |   |            |  
|                                                                                                                                                                             |  |              |            |      |   |            |  
|STOCKHOLDERS
  EQUITY:                                                                                                                                                      |  |              |            |      |   |            |  
|Preferred stock, $0.0001 par value (20,000,000
shares authorized;
  none issued and outstanding)                                                                             |  |              |            |      |   |            |  
|Common stock, $0.0001 par value (100,000,000
authorized shares;
  44,958,917 and 28,453,732 shares issued and outstanding as of September 30,
  2007 and 2006, respectively) |  |              | 4,495      |      |   | 2,845      |  
|Additional paid-in capital                                                                                                                                                   |  |              | 8,968,930  |      |   | 3,172,284  |  
|Warrants                                                                                                                                                                     |  |              | 3,203,600  |      |   | 861,474    |  
|Deficit accumulated during the development
stage                                                                                                                             |  |              | (8,956,187 | )    |   | (3,777,413 | )
|Services not yet rendered                                                                                                                                                    |  |              | (20,000    | )    |   |           |  
|                                                                                                                                                                             |  |              |            |      |   |            |  
|T o t a l stockholders equity                                                                                                                                               |  |              | 3,200,838  |      |   | 259,190    |  
|                                                                                                                                                                             |  |              |            |      |   |            |  
|T o t a l liabilities and stockholders
equity                                                                                                                               |  | $            | 4,199,914  |      | $ | 619,820    |  
|                                                                                                                                                                             |  |              |            |      |   |            |  

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

F-4

---



GAMMACAN INTERNATIONAL, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF
OPERATIONS

(US $, except share data)

|                                                                                                               |  |                          |            |                                                       |   |            |   |   |            |  
|-------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ---------- | ----------------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                                                                               |  |                          |            | Period from
 October 6,
 1998* to
 September 30
 2007 |  
|                                                                                                               |  |                          |            |                                                      
|                                                                                                               |  | Year ended
 September 30 |            |                                                      
|                                                                                                               |  |                          |           
|                                                                                                               |  | 2007                     |            | 2006                                                  |   |           
|                                                                                                               |  |                          |            |                                                       |   |            |  
|                                                                                                               |  |                          |            |                                                       |   |            |   |   |            |  
|RESEARCH AND DEVELOPMENT COSTS(Note
 10)                                                                       |  | $                        | 1,198,004  |                                                       | $ | 802,254    |   | $ | 2,713,178  |  
|GENERAL AND ADMINISTRATIVE EXPENSES(Note
 11)                                                                  |  |                          | 4,090,163  |                                                       |   | 1,263,070  |   |   | 6,378,874  |  
|                                                                                                               |  |                          |            |                                                       |   |            |   |   |            |  
|OPERATING LOSS                                                                                                 |  |                          | 5,288,167  |                                                       |   | 2,065,324  |   |   | 9,092,052  |  
|FINANCIAL INCOME                                                                                               |  |                          | (152,088   | )                                                     |   | (44,130    | ) |   | (216,921   | )
|FINANCIAL EXPENSES                                                                                             |  |                          | 41,317     |                                                       |   | 14,979     |   |   | 63,431     |  
|                                                                                                               |  |                          |            |                                                       |   |            |   |   |            |  
|LOSS BEFORE TAXES ON INCOME                                                                                    |  |                          | 5,177,396  |                                                       |   | 2,036,173  |   |   | 8,938,562  |  
|TAXES ON INCOME(Note
 9)                                                                                       |  |                          | 1,378      |                                                       |   | 28,622     |   |   | 30,000     |  
|                                                                                                               |  |                          |            |                                                       |   |            |   |   |            |  
|LOSS FROM OPERATIONS OF THE COMPANY AND ITS
 CONSOLIDATED SUBSIDIARY                                           |  |                          | 5,178,774  |                                                       |   | 2,064,795  |   |   | 8,968,562  |  
|                                                                                                               |  |                          |            |                                                       |   |            |   |   |            |  
|MINORITY SHARE IN LOSSES OF A SUBSIDIARY                                                                       |  |                          |           |                                                       |   |           |   |   | (12,375    | )
|                                                                                                               |  |                          |            |                                                       |   |            |   |   |            |  
|NET LOSS FOR THE PERIOD                                                                                        |  | $                        | (5,178,774 | )                                                     | $ | (2,064,795 | ) | $ | (8,956,187 | )
|                                                                                                               |  |                          |            |                                                       |   |            |   |   |            |  
|BASIC AND DILUTED LOSS PER COMMON SHARE                                                                        |  | $                        | (0.14      | )                                                     | $ | (0.07      | ) |   |            |  
|                                                                                                               |  |                          |            |                                                       |   |            |   |   |            |  
|WEIGHTED AVERAGE
      NUMBER OF COMMON SHARES USED IN COMPUTING BASIC AND DILUTED LOSS PER COMMON
      SHARE |  |                          | 38,043,043 |                                                       |   | 28,052,065 |   |   |            |  
|                                                                                                               |  |                          |            |                                                       |   |            |   |   |            |  

*
Incorporation date, see Note 1a.

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

F-5

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
(US $, except share data)

|                                                                                                |  |                    |             |                       |   |          |   |                              |           |                                                       |   |                             |   |       |            |   |   |         |   |   |            |  
|----------------------------------------------------------------------------------------------- |  | ------------------ | ----------- | --------------------- | - | -------- | - | ---------------------------- | --------- | ----------------------------------------------------- | - | --------------------------- | - | ----- | ---------- | - | - | ------- | - | - | ---------- | -
|                                                                                                |  | Number
 of
 Shares |             | Common
 Stock
 Amount |   | Warrants |   | Additional
 paid-in
 capital |           | Deficit
 accumulated
 during
 the
 development
 stage |   | Services
 not yet
 rendered |   | Total |           
|                                                                                                |  |                    |             |                       |   |          |   |                              |           |                                                       |   |                             |   |       |           
|Changes
 during the period from
 October 6, 1998 (date of incorporation)
 to September 30, 2004 |  |                    |             |                       |   |          |   |                              |           |                                                       |   |                             |   |       |            |   |   |         |   |   |            |  
|Common stock and warrants issued for cash                                                       |  |                    | 57,506,498  |                       | $ | 5,750    |   | $                            | 139,494   |                                                       | $ | 782,141                     |   | $     |           |   | $ |        |   | $ | 927,385    |  
|Contributed capital                                                                             |  |                    |             |                       |   |          |   |                              |           |                                                       |   | 7,025                       |   |       |            |   |   |         |   |   | 7,025      |  
|Cancellation of shares at June 8, 2004                                                          |  |                    | (32,284,988 | )                     |   | (3,228   | ) |                              |           |                                                       |   | 3,228                       |   |       |            |   |   |         |   |   |            |  
|Gain on issuance
    of subsidiary stock to third party                                         |  |                    |             |                       |   |          |   |                              |           |                                                       |   | 86,625                      |   |       |            |   |   |         |   |   | 86,625     |  
|Stock based compensation                                                                        |  |                    |             |                       |   |          |   |                              |           |                                                       |   | 62,600                      |   |       |            |   |   |         |   |   | 62,600     |  
|Net loss                                                                                        |  |                    |             |                       |   |          |   |                              |           |                                                       |   |                             |   |       | (514,086   | ) |   |         |   |   | (514,086   | )
|                                                                                                |  |                    |             |                       |   |          |   |                              |           |                                                       |   |                             |   |       |            |   |   |         |   |   |            |  
|Balance at September 30, 2004                                                                   |  |                    | 25,221,510  |                       |   | 2,522    |   |                              | 139,494   |                                                       |   | 941,619                     |   |       | (514,086   | ) |   |        |   |   | 569,549    |  
|Common stock and warrants issued for cash on November 11, 2004, net of
 issuance costs          |  |                    | 978,000     |                       |   | 97       |   |                              | 367,892   |                                                       |   | 766,630                     |   |       |            |   |   |         |   |   | 1,134,619  |  
|Common stock and warrants issued for cash on January 25, 2005, net of
 issuance costs           |  |                    | 32,000      |                       |   | 3        |   |                              | 12,037    |                                                       |   | 24,760                      |   |       |            |   |   |         |   |   | 36,800     |  
|Issuance of warrants
    to consultants                                                         |  |                    |             |                       |   |          |   |                              |           |                                                       |   | 34,592                      |   |       |            |   |   |         |   |   | 34,592     |  
|Net loss                                                                                        |  |                    |             |                       |   |          |   |                              |           |                                                       |   |                             |   |       | (1,198,532 | ) |   |         |   |   | (1,198,532 | )
|                                                                                                |  |                    |             |                       |   |          |   |                              |           |                                                       |   |                             |   |       |            |   |   |         |   |   |            |  
|Balance at September 30, 2005                                                                   |  |                    | 26,231,510  |                       |   | 2,622    |   |                              | 519,423   |                                                       |   | 1,767,601                   |   |       | (1,712,618 | ) |   |        |   |   | 577,028    |  
|Common stock and warrants issued for cash on October 31, 2005, net of
 issuance costs           |  |                    | 666,666     |                       |   | 67       |   |                              | 72,410    |                                                       |   | 365,670                     |   |       |            |   |   |         |   |   | 438,147    |  
|Common stock and warrants issued for cash on December 20, 2005, net of
 issuance costs          |  |                    | 1,555,556   |                       |   | 156      |   |                              | 269,641   |                                                       |   | 804,998                     |   |       |            |   |   |         |   |   | 1,074,795  |  
|Options issued to employees and directors                                                       |  |                    |             |                       |   |          |   |                              |           |                                                       |   | 163,517                     |   |       |            |   |   |         |   |   | 163,517    |  
|Options and warrants issued to non-employees                                                    |  |                    |             |                       |   |          |   |                              |           |                                                       |   | 70,498                      |   |       |            |   |   |         |   |   | 70,498     |  
|Net loss                                                                                        |  |                    |             |                       |   |          |   |                              |           |                                                       |   |                             |   |       | (2,064,795 | ) |   |         |   |   | (2,064,795 | )
|                                                                                                |  |                    |             |                       |   |          |   |                              |           |                                                       |   |                             |   |       |            |   |   |         |   |   |            |  
|Balance at September 30, 2006                                                                   |  |                    | 28,453,732  |                       |   | 2,845    |   |                              | 861,474   |                                                       |   | 3,172,284                   |   |       | (3,777,413 | ) |   |        |   |   | 259,190    |  
|Common stock and warrants issued for cash on February 27, 2007, net of
 issuance costs          |  |                    | 16,250,000  |                       |   | 1,625    |   |                              | 2,231,459 |                                                       |   | 3,652,640                   |   |       |            |   |   |         |   |   | 5,885,724  |  
|Common stock issued as part of the prepayment of the convertible
 promissory note*              |  |                    | 33,753      |                       |   | 3        |   |                              |           |                                                       |   | 13,498                      |   |       |            |   |   |         |   |   | 13,501     |  
|Amendment of warrants exercise price                                                            |  |                    |             |                       |   |          |   |                              | 110,667   |                                                       |   | (110,667                    | ) |       |            |   |   |         |   |   |           |  
|Stock based compensation expenses:                                                              |  |                    |             |                       |   |          |   |                              |           |                                                       |   |                             |   |       |            |   |   |         |   |   |            |  
|Common stock issued for services                                                                |  |                    | 221,432     |                       |   | 22       |   |                              |           |                                                       |   | 149,978                     |   |       |            |   |   |         |   |   | 150,000    |  
|Services not yet rendered **                                                                    |  |                    |             |                       |   |          |   |                              |           |                                                       |   |                             |   |       |            |   |   | (20,000 | ) |   | (20,000    | )
|Options issued to employees and directors                                                       |  |                    |             |                       |   |          |   |                              |           |                                                       |   | 1,713,169                   |   |       |            |   |   |         |   |   | 1,713,169  |  
|Options and warrants issued to non-employees                                                    |  |                    |             |                       |   |          |   |                              |           |                                                       |   | 378,028                     |   |       |            |   |   |         |   |   | 378,028    |  
|Net loss                                                                                        |  |                    |             |                       |   |          |   |                              |           |                                                       |   |                             |   |       | (5,178,774 | ) |   |         |   |   | (5,234,274 | )
|                                                                                                |  |                    |             |                       |   |          |   |                              |           |                                                       |   |                             |   |       |            |   |   |         |   |   |            |  
|Balance at September 30, 2007                                                                   |  |                    | 44,958,917  |                       | $ | 4,495    |   | $                            | 3,203,600 |                                                       | $ | 8,968,930                   |   | $     | (8,956,187 | ) | $ | (20,000 | ) | $ | 3,200,838  |  
|                                                                                                |  |                    |             |                       |   |          |   |                              |           |                                                       |   |                             |   |       |            |   |   |         |   |   |            |  

* See Note 6

** See Note 8(v)

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

F-6

---



GAMMACAN INTERNATIONAL, INC.

(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                      |  |                          |            |                                                  |   |            |   |   |            |  
|------------------------------------------------------------------------------------- |  | ------------------------ | ---------- | ------------------------------------------------ | - | ---------- | - | - | ---------- | -
|                                                                                      |  | Year ended
 September 30 |            | Period from
 October 6,
 1998* to
 September 30, |  
|                                                                                      |  | 2007                     |            | 2006                                             |   | 2007       |  
|                                                                                      |  |                          |            |                                                  |   |            |  
|                                                                                     
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                 |  |                          |            |                                                  |   |            |   |   |            |  
|Net loss for the period                                                               |  | $                        | (5,178,774 | )                                                | $ | (2,064,795 | ) | $ | (8,956,187 | )
|Adjustments required to reconcile net loss
 to net cash used in operating activities: |  |                          |            |                                                  |   |            |   |   |            |  
|Income and expenses not involving cash
 flows:                                        |  |                          |            |                                                  |   |            |   |   |            |  
|Depreciation                                                                          |  |                          | 8,311      |                                                  |   | 4,299      |   |   | 15,203     |  
|Exchange differences on long term
deposits                                            |  |                          | 310        |                                                  |   | (48        | ) |   | 262        |  
|Common stock issued for services                                                      |  |                          | 143,501    |                                                  |   |           |   |   | 146,501    |  
|Minority share in losses of a subsidiary                                              |  |                          |           |                                                  |   |           |   |   | (12,375    | )
|Write off of in process research and
 development                                     |  |                          |           |                                                  |   |           |   |   | 100,000    |  
|Employees and consultants stock based
 compensation expenses                          |  |                          | 2,091,197  |                                                  |   | 196,957    |   |   | 2,385,346  |  
|Increase in liability for employee rights
 upon retirement                            |  |                          | 39,807     |                                                  |   | 17,806     |   |   | 71,338     |  
|Changes in operating assets and
 liabilities:                                         |  |                          |            |                                                  |   |            |   |   |            |  
|Decrease (increase) in prepaid expenses                                               |  |                          | (9,851     | )                                                |   | 6,416      |   |   | (9,851     | )
|Decrease (increase) in other current
assets                                           |  |                          | (29,592    | )                                                |   | 9,535      |   |   | (45,611    | )
|Increase in current liabilities                                                       |  |                          | 598,639    |                                                  |   | 155,065    |   |   | 926,738    |  
|                                                                                      |  |                          |            |                                                  |   |            |   |   |            |  
|Net cash used in operating activities                                                 |  |                          | (2,336,452 | )                                                |   | (1,674,765 | ) |   | (5,378,636 | )
|                                                                                      |  |                          |            |                                                  |   |            |   |   |            |  
|                                                                                      |  |                          |            |                                                  |   |            |   |   |            |  
|CASH FLOWS
      FROM INVESTING ACTIVITIES:                                           |  |                          |            |                                                  |   |            |   |   |            |  
|Increase in long term deposits                                                        |  |                          | (1,815     | )                                                |   | (17,019    | ) |   | (20,512    | )
|Funds in respect of employee rights upon
 retirement                                  |  |                          | (28,210    | )                                                |   | (13,543    | ) |   | (49,281    | )
|Purchase of property and equipment                                                    |  |                          | (9,402     | )                                                |   | (19,277    | ) |   | (41,541    | )
|                                                                                      |  |                          |            |                                                  |   |            |   |   |            |  
|Net cash used in investing activities                                                 |  |                          | (39,427    | )                                                |   | (49,839    | ) |   | (111,334   | )
|                                                                                      |  |                          |            |                                                  |   |            |   |   |            |  
|                                                                                      |  |                          |            |                                                  |   |            |   |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                 |  |                          |            |                                                  |   |            |   |   |            |  
|Issuance of common stock and warrants net
 of issuance costs                          |  |                          | 5,885,724  |                                                  |   | 1,550,000  |   |   | 9,538,553  |  
|                                                                                      |  |                          |            |                                                  |   |            |   |   |            |  
|Net cash provided by financing activities                                             |  |                          | 5,885,724  |                                                  |   | 1,550,000  |   |   | 9,538,553  |  
|                                                                                      |  |                          |            |                                                  |   |            |   |   |            |  
|INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS                                     |  |                          | 3,509,845  |                                                  |   | (174,604   | ) |   | 4,048,583  |  
|BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF
 PERIOD                          |  |                          | 538,738    |                                                  |   | 713,342    |   |   |           |  
|                                                                                      |  |                          |            |                                                  |   |            |   |   |            |  
|BALANCE OF CASH AND CASH EQUIVALENTS AT END
 OF PERIOD                                |  | $                        | 4,048,583  |                                                  | $ | 538,738    |   | $ | 4,048,583  |  
|                                                                                      |  |                          |            |                                                  |   |            |   |   |            |  

Supplemental
information on financing activities not involving cash flow  issuance costs
paid by a grant of warrants to third parties who assisted in securing
subscription agreements totaled $37,058 for the year ended September 30, 2006.

*
Incorporation date, see Note 1a.

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

F-7

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES:

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | General:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |   
| |    | GammaCan
 International, Inc. (A Development Stage Company) was incorporated on October
 6, 1998, under the laws of the State of Delaware, under the name of San Jose
 International, Inc. Unless the context indicates otherwise, references to the
 Company refer to GammaCan
 International, Inc. and its Israeli subsidiary, GammaCan Ltd (the Subsidiary).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | The Company
 is engaged in research and development in the biotechnology field and is
 considered a development stage company in accordance with Statement of
 Financial Accounting Standard (SFAS)
 No. 7 Accounting and Reporting by
 Development Stage Enterprises.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | The
 Companys lead product candidate, VitiGam, is an anti-cancer immunotherapy
 derived entirely from the plasma of donors with vitiligo, a benign skin
 condition affecting up to 2% of the general population. The Company is
 developing VitiGam to treat melanoma. The Company has demonstrated that
 plasma from individuals with vitiligo contains anti-melanoma activities, and
 the Company is seeking to develop VitiGam for the treatment of Stage III and
 Stage IV melanoma.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | The
 accompanying financial statements have been prepared assuming that the
 Company will continue as a going concern. The Company has net losses for the
 period from inception (October 6, 1998) through September 30, 2007 of
 $8,956,187, as well as negative cash flow from operating activities.
 Presently, the Company does not have sufficient cash resources to meet its
 requirements in the twelve months following October 1, 2007. These factors
 raise substantial doubt about the Companys ability to continue as a going
 concern. Management is in the process of evaluating various financing
 alternatives as the Company will need to finance future research and
 development activities and general and administrative expenses through fund
 raising in the public or private equity markets. Although there is no assurance that the
 Company will be successful with those initiatives, management is confident
 that it will be able to secure the necessary financing as a result of ongoing
 financing discussions with third party investors and existing shareholders.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | These
 financial statements do not include any adjustments that may be necessary
 should the Company be unable to continue as a going concern. The Companys
 continuation as a going concern is dependent on its ability to obtain
 additional financing as may be required and ultimately to attain
 profitability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

F-8

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES(continued):

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |      | 
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---- | 
| | b. | Accounting principles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | The consolidated
 financial statements have been prepared in accordance with generally accepted
 accounting principles in the United States of America (U.S. GAAP).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | c. | Use of estimates in the preparation of financial statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | The
 preparation of the financial statements in conformity with U.S. GAAP requires
 management to make estimates and assumptions that affect the reported amounts
 of assets and liabilities and disclosure of contingent assets and liabilities
 at the financial statement date and the reported expenses during the
 reporting periods. Actual results could differ from those estimates.                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | d. | Functional currency                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | The currency
 of the primary economic environment in which the operations of the Company
 are conducted is the U.S. dollar ($
 or dollar).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | Most of the
 Companys research and development costs are incurred in dollars. A
 significant part of the Companys capital expenditures and most of its
 financing is in dollars. Thus, the functional currency of the Company is the
 dollar.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | Transactions
 and balances originally denominated in dollars are presented at their
 original amounts. Balances in foreign currencies are translated into dollars
 using historical and current exchange rates for non-monetary and monetary
 balances, respectively. For foreign transactions and other items reflected in
 the statements of operations, the following exchange rates are used: (1) for
 transactions  exchange rates at transaction dates or average rates and (2)
 for other items (derived from non-monetary balance sheet items such as
 depreciation)  historical exchange rates. The resulting transaction gains or
 losses are carried to financial income or expenses, as appropriate.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | e. | Principles of consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | The
 consolidated financial statements include the accounts of GammaCan
 International, Inc. and its Israeli subsidiary GammaCan Ltd. All material
 inter-company transactions and balances have been eliminated in
 consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | f. | Property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | Property and
 equipment are recorded at cost and depreciated by the straight-line method
 over the estimated useful lives of the assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |    | Annual rates
 of depreciation are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | %    | 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |      | 
| |    | Computers
 and peripheral equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 33   | 
| |    | Office
 furniture and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 6-15 | 

F-9

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES(continued):

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | g. | Deferred taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | Deferred
 taxes are determined utilizing the assets and liabilities method based on the
 estimated future tax effects of differences between the financial accounting
 and tax bases of assets and liabilities under the applicable tax laws.
 Deferred tax balances are computed using the tax rates expected to be in
 effect when those differences reverse. A valuation allowance in respect of
 deferred tax assets is provided if, based upon the weight of available
 evidence, it is more likely than not that some or all of the deferred tax
 assets will not be realized. The Company has provided a full valuation
 allowance with respect to its deferred tax assets.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | Regarding
 the Subsidiary, paragraph 9(f) of FAS 109, Accounting
 for Income Taxes, prohibits the recognition of deferred tax
 liabilities or assets that arise from differences between the financial
 reporting and tax bases of assets and liabilities that are measured from the
 local currency into dollars using historical exchange rates, and that result
 from changes in exchange rates or indexing for tax purposes. Consequently,
 the abovementioned differences were not reflected in the computation of
 deferred tax assets and liabilities.                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | h. | Research and development                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | Research and
 development costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | Acquisition
 of in process research and development and the costs of registration of
 patents that have not yet reached technological feasibility, have no
 alternative future use, are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | i. | Cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | The Company
 considers all short term, highly liquid investments, which include short-term
 deposits with original maturities of three months or less from the date of
 purchase that are not restricted as to withdrawal or use and are readily
 convertible to known amounts of cash, to be cash equivalents.                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | j. | Comprehensive loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | The Company
 has no other comprehensive loss components other than net loss for the
 reported periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | k. | Loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | Basic and
 diluted net losses per share of common stock are computed by dividing the net
 loss for the period by the weighted average number of shares of common stock
 outstanding during the period. Outstanding stock options and warrants have
 been excluded from the calculation of the diluted loss per share because all
 such securities are anti-dilutive for all periods presented. The total number
 of common stock options and warrants excluded from the calculation of diluted
 net loss was 25,062,558 for the year ended September 30, 2007 (5,917,775 for
 the year ended September 30, 2006).                                                                 

F-10

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES(continued):

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | l. | Impairment in value of long-lived assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The Company
 reviews long-lived assets, to be held and used, for impairment whenever
 events or changes in circumstances indicate that the carrying amount of the
 assets may not be recoverable. In the event the sum of the expected future
 cash flows (undiscounted and without interest charges) of the long-lived
 assets is less than the carrying amount of such assets, an impairment loss
 would be recognized, and the assets are written down to their estimated fair
 values.                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | m. | Stock based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Until
 September 30, 2006, the Company 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, the Company disclosed pro forma information, assuming the
 Company had accounted for employees share-based payments using the fair
 value-based method defined in FAS 123.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Effective
 October 1, 2006, the Company 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 be accounted for using the grant-date fair value
 method. The fair value of share-based payment transactions is recognized as
 expense over the requisite service period, net of estimated forfeitures. The
 Company 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. The Company has applied the provisions of
 SAB 107 in its adoption of FAS 123(R).                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The Company
 elected to recognize compensation cost for an award with only service
 conditions that has a graded vesting schedule using the accelerated method
 based on multiple option award approach.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

F-11

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES(continued):

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | FAS 123(R)
 applies to all awards granted or modified after the Statements effective
 date. In addition, compensation cost for the unvested portion of previously
 granted awards that remain outstanding on the Statements effective date
 shall be recognized on or after the effective date, as the related services
 are rendered, based on the awards grant-date fair value as previously
 calculated for the pro-forma disclosure under FAS 123.                                                                                                                      
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | The Company
 elected to adopt the modified prospective application transition method, as
 permitted by the Statement. Under such transition method, upon the adoption
 of FAS 123(R), the Companys financial statements for periods prior to the
 effective date of the Statement are not restated.                                                                                                                                                                                                                                                                           
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | Costs
 incurred in respect of stock based compensation for years ended September 30,
 2007 and 2006 were $1,713,169 and $163,517, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | The Company
 accounts for equity instruments issued to third party service providers
 (non-employees) in accordance with the fair value based on an option-pricing
 model or when more reliability is based on the fair value of the services
 received, pursuant to the guidance in EITF 96-18 Accounting for Equity Instruments That Are Issued to Other Than
 Employees for Acquiring, or in Conjunction with Selling Goods or Services.
 The fair value of the options granted is revalued over the related service
 periods and recognized using the accelerated method.
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | The Company
 recorded stock compensation of $508,028 and $33,440 during the years ended
 September 2007 and 2006 respectively, related to consulting services.                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | The
 following table illustrates the pro-forma effect on net loss and loss per
 common share assuming the Company had applied the fair value recognition
 provisions of FAS 123 to its stock-based employee compensation:                                                                                                                                                                                                                                                                                                                                                      

|                                                                                                                                                                        |  |                                |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ---------- | -
|                                                                                                                                                                        |  | Year ended
 September 30
 2006 |           
|                                                                                                                                                                        |  |                                |           
|                                                                                                                                                                        |  |                                |            |  
|Net loss as
 reported                                                                                                                                                   |  | $                              | (2,064,795 | )
|Add back: Stock based employee compensation
 expense included in net loss as reported                                                                                   |  |                                | 163,517    |  
|Deduct: pro forma stock based employee
 compensation expense determined under fair value method for all awards                                                          |  |                                | (1,107,201 | )
|Recognize the reversal of the pro forma
 stock based employee compensation expense determined under fair value method
 due to forfeiture of awards granted to employees |  |                                | 79,676     |  
|                                                                                                                                                                        |  |                                |            |  
|Pro forma
 net loss                                                                                                                                                     |  | $                              | (2,928,803 | )
|                                                                                                                                                                        |  |                                |            |  
|Net loss per
 common share:                                                                                                                                             |  |                                |            |  
|Basic and
 diluted loss per shares - as reported                                                                                                                        |  | $                              | (0.07      | )
|                                                                                                                                                                        |  |                                |            |  
|Basic and diluted loss per shares - pro
 forma                                                                                                                          |  | $                              | (0.10      | )
|                                                                                                                                                                        |  |                                |            |  

F-12

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES(continued):

|                                                                                                                                                                     
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The fair
 value of each option grant is estimated on the date of grant using the Black
 Scholes option-pricing model with the following weighted average assumptions:

|                                 |  |                                                 |  |            
|-------------------------------- |  | ----------------------------------------------- |  | -----------
|                                 |  | For options granted in
 year ended September 30
|                                 |  |                                                
|                                 |  | 2007                                            |  | 2006       
|                                 |  |                                                 |  |            
|Expected
 option life (years)    |  | 5.47-7.88                                       |  | 7.85       
|Expected
 stock price volatility |  | 85.0%-89.9%                                     |  | 80.0%-85.1%
|Risk free
 interest rate         |  | 4.23%-4.68%                                     |  | 4.5%       
|Expected
 dividend yield         |  | 0.0%                                            |  | 0.0%       

| |    |                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | -- | ------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | n. | Newly issued and recently adopted accounting pronouncements:
| |    |                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | 1)                                                           | In September
 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin
 No. 108, Considering the Effects of Prior
 Year Misstatements when Quantifying Misstatements in Current Year Financial
 Statements (SAB 108),
 which provides interpretive guidance on the consideration of the effects of
 prior year misstatements in quantifying current year misstatements for the
 purpose of a materiality assessment. SAB 108 is effective for fiscal years
 ending after November 15, 2006 (September 30, 2007 for the Company). The
 Company adopted SAB 108 in these financial statements and accordingly,
 follows SAB 108 requirements when quantifying financial statement
 misstatements. The adoption of SAB No.108 did not result in corrections of
 the Companys financial statements.                                                                                                                                                                                                                                                                                                                                             
| |    |                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | 2)                                                           | In July
 2006, the FASB issued FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes - an interpretation of
 FASB Statement 109 (FIN 48).
 FIN 48 prescribes a comprehensive model for recognizing, measuring and
 presenting in the financial statements tax positions taken or expected to be
 taken on a tax return. This Interpretation also provides guidance on
 derecognition, classification, interest and penalties and disclosure
 requirements for uncertain tax positions. FIN 48 is effective for fiscal
 years beginning on or after December 15, 2006 (October 1, 2007, for the
 Company). The provisions of FIN 48 shall be applied to all tax positions upon
 initial adoption of this Interpretation. Only tax positions that meet the
 more likely than not recognition threshold at the effective date may be recognized
 or continue to be recognized upon adoption of this Interpretation. The
 cumulative effects, if any, of applying this Interpretation will be recorded
 as an adjustment to retained earnings. The Company is currently assessing
 this standard effect on its financial statements in future periods.
| |    |                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | 3)                                                           | In September
 2006, the FASB issued Statement of Financial Accounting Standard No. 157, Fair Value Measurements (FAS
157). FAS 157 defines fair value,
 establishes a framework for measuring fair value in accordance with generally
 accepted accounting principles, and expands disclosures about fair value
 measurements. FAS 157 will apply whenever another standard requires (or
 permits) assets or liabilities to be measured at fair value. The standard
 does not expand the use of fair value to any new circumstances. FAS 157 is
 effective for financial statements issued for fiscal years beginning after
 November 15, 2007, and interim periods within those fiscal years (October 1,
 2008, for the Company). The Company is currently assessing this standard
 effect on its financial statements in future periods.                                                                                                                                                                                                                                                                                                                        

F-13

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES(continued):

| |  |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 4) | In February
 2007, FASB issued SFAS 159, The Fair
 Value Option for Financial Assets and Financial Liabilities. This standard permits companies 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. This statement will be effective
 for fiscal years beginning on or after November 15, 2007 (October 1, 2008,
 for the Company). The Company is currently evaluating the impact that the
 adoption of SFAS 159 will have on its consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | 5) | In June
 2007, the Emerging Issues Task Force (EITF) issued EITF 07-3, Accounting for Nonrefundable Advance Payments for
 Goods or Services to Be Used in Future Research and Development Activities(EITF 07-3). EITF 07-3
addresses the
 diversity which exists with respect to the accounting for the non-refundable
 portion of a payment made by a research and development entity for future
 research and development activities. The EITF concluded that an entity will
 defer and capitalize non-refundable advance payments made for research and
 development activities until the related goods are delivered or the related
 services are performed. EITF 07-3 is effective for interim or annual
 reporting periods in fiscal years beginning after December 15, 2007 (October
 1, 2008 for the Company). The Company is currently evaluating the impact of
 adopting EITF 07-03 on its financial statements and results of operations.                                                                                                                                                                                                                                                                                                                                                           
| |  |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | 6) | In December
 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (SFAS 141(R)). SFAS 141(R) expands the
 definition of a business and a business combination, requires the fair value
 of the purchase price of an acquisition, including the issuance of equity
 securities to be determined on the acquisition date, requires that all
 assets, liabilities, contingent consideration, contingencies and in-process
 research and development costs of an acquired business be recorded at fair
 value at the acquisition date, requires that acquisition costs generally be
 expensed as incurred, requires that restructuring costs generally be expensed
 in periods subsequent to the acquisition date, and requires changes in
 accounting for deferred tax asset valuation allowances and acquired income
 tax uncertainties after the measurement period to impact income tax expense.
 SFAS 141(R) applies prospectively to business combinations for which the
 acquisition date is on or after the beginning of the first annual reporting
 period beginning on or after December 15, 2008 (October 1, 2009 for the
 Company). Early application is prohibited. The Company is currently
 evaluating the impact SFAS 141(R) will have on its consolidated financial
 statements.

F-14

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES(continued):

| |    |                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -- | ------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | 7)                                                                                                            | In December
 2007, the FASB issued SFAS No. 160, Noncontrolling
 Interests in Consolidated Financial Statements, an Amendment of ARB No. 51
 (SFAS 160). SFAS 160 amends
 ARB 51 to establish accounting and reporting standards for the noncontrolling
 interest in a subsidiary and for the deconsolidation of a subsidiary. An
 ownership interest in subsidiaries held by parties other than the parent
 should be presented in the consolidated statement of financial position
 within equity, but separate from the parents equity. SFAS 160 requires that
 changes in a parents ownership interest while the parent retains its
 controlling financial interest in its subsidiary should be accounted for
 similarly as equity transactions. When a subsidiary is deconsolidated, any
 retained noncontrolling equity investment in the former subsidiary should be
 initially measured at fair value, with any gain or loss recognized in
 earnings. SFAS 160 requires consolidated net income to be reported at amounts
 that include the amounts attributable to both the parent and the
 noncontrolling interest. It also requires disclosure, on the face of the
 consolidated income statement, of the amounts of consolidated net income
 attributable to the parent and to the noncontrolling interests. SFAS 160 is
 effective for fiscal years (including interim periods within those fiscal
 years) beginning on or after December 15, 2008 (October 1, 2009 for the
 Company). Earlier adoption is prohibited. The statement shall be applied
 prospectively as of the beginning of the fiscal year in which it is initially
 applied, except for the presentation and disclosure requirement which shall
 be applied retrospectively for all periods presented. The Company is
 currently evaluating the impact SFAS 160 will have on its consolidated
 financial statements.
| |    |                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | 8)                                                                                                            | In December
 2007, the FASB ratified EITF Issue No.
 07-01, Accounting for Collaborative Arrangements(EITF 07-01).EITF 07-01 defines
collaborative arrangements and
 establishes reporting requirements for transactions between participants in a
 collaborative arrangement and between participants in the arrangement and
 third parties. EITF 07-01 also establishes the appropriate income statement
 presentation and classification for joint operating activities and payments
 between participants, as well as the sufficiency of the disclosures related
 to these arrangements. EITF 07-01 is effective for fiscal years beginning
 after December 15, 2008 (October 1, 2009 for the Company). The Company is
 currently evaluating the impact EITF 07-01 will have on its consolidated
 financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | o. | Reclassifications                                                                                            
| |    |                                                                                                              
| |    | Certain
 figures in respect of prior years have been reclassified to conform to the
 prior year presentation.

F-15

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 2 - EMPLOYEE RIGHTS UPON RETIREMENT

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | Israeli
 labor laws and agreements require payment of severance pay upon dismissal of
 an employee or upon termination of employment in certain other circumstances.
 The Subsidiarys severance pay liability to its employees, mainly based upon
 length of service and the latest monthly salary (one months salary for each
 year worked), is reflected by the balance sheet accrual under the liability
 for employee rights upon retirement. The Company records the liability as if
 it was payable at each balance sheet date on an undiscounted basis. The
 liability is partly funded by purchase of insurance policies. The amounts
 funded are included in the balance sheet as funds in respect of employee
 rights upon retirement. The policies are the Companys assets and under
 labor agreements, subject to certain limitations, they may be transferred to
 the ownership of the beneficiary employees.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | b. | The
 severance pay expenses for the years ended September 30, 2007 and 2006, were
 $39,807 and $17,806 respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | c. | Cash flow
 information regarding the Companys liability for employee rights upon
 retirement:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | 1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | The Company
 expects to contribute to the insurance policies $23,000 in respect of
 severance pay for the year ended September 30, 2008.                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | 2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Due to the
 relatively young age of the Companys employees, benefit payments to
 employees reaching retirement age in the next 10 years, are not material. The
 amounts were determined based on the employees current salary rates and the
 number of service years that will accumulate upon their retirement date.
 These amounts do not include amounts that might be paid to employees who will
 cease working for the Subsidiary before their normal retirement age.

NOTE 3  LONG TERM DEPOSITS

|                                                       |  |              |        |      |   |        | 
|------------------------------------------------------ |  | ------------ | ------ | ---- | - | ------ | 
|                                                       |  | September 30 |       
|                                                       |  |              |       
|                                                       |  | 2007         |        | 2006 |  
|                                                       |  |              |        |      |  
|Bank
 Deposits (1)                                     |  | $            | 11,723 |      | $ | 12,034 | 
|Deposits in
 respect of vehicles lease agreements
 (2) |  |              | 6,867  |      |   | 10,236 | 
|                                                       |  |              |        |      |   |        | 
|                                                       |  |              | 18,590 |      |   | 22,270 | 
|                                                       |  |              |        |      |   |        | 

| |  |     |                  
| |  | --- | -----------------
| |  | (1) | See also
 Note 5a
| |  |     |                  
| |  | (2) | See also
 Note 5b

F-16

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 4  PROPERTY AND EQUIPMENT, Net

| |    |                                                                                         
| | -- | ----------------------------------------------------------------------------------------
| | a. | Composition
 of property and equipment, grouped by major classifications, is as follows:

|                                   |  |              |        |      |   |        | 
|---------------------------------- |  | ------------ | ------ | ---- | - | ------ | 
|                                   |  | September 30 |       
|                                   |  |              |       
|                                   |  | 2007         |        | 2006 |  
|                                   |  |              |        |      |  
|Cost:                              |  |              |        |      |   |        | 
|Office furniture and equipment     |  | $            | 24,316 |      | $ | 14,287 | 
|Computers and peripheral equipment |  |              | 17,225 |      |   | 17,852 | 
|                                   |  |              |        |      |   |        | 
|                                   |  |              | 41,541 |      |   | 32,139 | 
|Less - accumulated depreciation    |  |              | 15,203 |      |   | 6,892  | 
|                                   |  |              |        |      |   |        | 
|                                   |  | $            | 26,338 |      | $ | 25,247 | 
|                                   |  |              |        |      |   |        | 

| |    |                                                                                                               
| | -- | --------------------------------------------------------------------------------------------------------------
| | b. | Depreciation
 expense totaled $8,311 and $4,299 in the years ended September 30, 2007 and
 2006, respectively.

NOTE 5  COMMITMENTS:

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | On May 18,
 2006, the Subsidiary entered into a new lease agreement for its new office
 facilities, in Israel, which commenced on August 10, 2006. The new lease
 agreement is for a period of 36 months with an option to renew the lease for
 an additional 36 month period. The monthly lease payment is $2,236. The future
 lease payments under the lease are $26,827 and $22,356 for the years ending
 September 30, 2008 and 2009 respectively.                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | As security
 for its obligation under this lease agreement the Company provided a bank
 guarantee in an amount equal to six monthly lease payments, which is secured
 by a long term bank deposit (See also Note 3).                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | On June 8,
 2006, the Company entered into a lease agreement for the office facilities,
    in the United States, it currently occupies. The lease agreement was for
    a period of 12 months with an automatic option to renew for another 60 days
    at the same monthly rate plus an increase of 14.83%. The monthly lease payment
    was $1,800. On June 6, 2007, the Company renewed the lease agreement for
    a period of 12 months. The current monthly lease payments is $2,000. The
    future lease payments under this lease are $16,000 for the year ending September
    30, 2008.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | Rental
 expenses, for all office facilities used by the Company, for the years ended
 September 30, 2007 and 2006 were $43,219 and $18,307, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                           

F-17

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 5  COMMITMENTS(continued):

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | The
 Subsidiary has entered into operating lease agreements for vehicles used by
 its employees for a period of 3 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | The lease
 expenses for the years ended September 30, 2007 and 2006 were approximately
 $45,766 and $39,328, respectively. The future lease payments under the lease
 agreement are $28,443 and $4,990 for the years ending September 30, 2008, and
 2009 respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | c. | On December
 13, 2005, the Subsidiary entered into a Research and Licensing Agreement with
 Tel Hashomer Medical Research Infrastructure and Services LTD. (THM and THM
 Agreement),
pursuant to which the Subsidiary provided
 THM with $200,000 in funding for THM to conduct a research project relating
 to the mechanism of action for IVIg, hyper-immune IVIg and use of IVIg as an
 anti-cancer treatment. As of September 30, 2007, the Company paid its
 obligation under the contract. According to the THM Agreement, THM granted
 the Subsidiary an exclusive worldwide license to any resulting technology and
 know-how as described in the above mentioned agreement. See Note 13d in
 connection with an amendment to the THM Agreement.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | d. | On January
 30, 2007, the Subsidiary entered into a Master Services Agreement with
 BioSolutions Services, LLC (BioSolutions),
 an outside party, pursuant to which the Subsidiary will from time-to-time
 engage BioSolutions for various projects to assist it with the
 commercialization of its anti-cancer immunotherapy to treat metastatic
 cancer. The services to be performed under the Master Services Agreement will
 be specified in separate work orders, which will set forth the scope of the
 work, schedule and costs.                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | Work Order #
 1 relates to regulatory consulting services to be provided by BioSolutions in
 connection with the application for an IND with the US FDA for VitiGam. As
 compensation for the services, the Subsidiary agreed to pay BioSolutions a
 cash fee of between $170,000 to $290,000 based on several factors. The
 Company issued to BioSolutions a warrant to purchase 434,783 shares of its
 common stock at a purchase price of $0.45 per share vesting as follows: (1)
 33% upon signature of a definitive agreement with an IVIg manufacturer, (2)
 33% upon the IND filing and (3) 34% when the IND has been approved by the FDA
 (See also Note 8m).                                                                                      

F-18

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 5  COMMITMENTS(continued):

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | e. | On February
 1, 2007, the Subsidiary entered into a Cooperation and Project Funding
 Agreement with Israel-U.S. Binational Industrial Research and Development
 (the BIRD Foundation) and
 Life Therapeutics (Life),
 pursuant to which the BIRD Foundation will provide the Subsidiary and Life
 with funding of the lesser of $1,000,000 or 50% of expenditures on the
 development of an anti-cancer immunotherapy to treatment for metastatic
 cancer (the Project), which
 funding will be repaid to the BIRD Foundation if the development work goes
 beyond a Phase II clinical trial. The repayment of the funding will be due
 within twelve months following the completion of the Project in an amount
 equal to the total funding linked to the US Consumer Price Index.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | f. | On September
 6, 2007, the Subsidiary entered into an Agreement for the Purchase of Blood
 Plasma with DCI Management Group, LLC ( DCI). Under the terms of the agreement, DCI will collect plasma from
 vitiligo donors at DCI operated FDA-approved, IQPP certified donor centers
 for the manufacture of VitiGam.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

NOTE 6  CONVERTIBLE PROMISSORY NOTE:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | On November
 20, 2006, the Company issued a convertible promissory note, in a principal
 amount of $350,000, which bore annual interest at 8% payable on maturity of
 the note with a maturity date of November 20, 2007. On May 15, 2007 (the Prepayment
 Date) the Company repaid the
 principal amount of the note and issued 33,753 shares of its common stock in
 exchange for the accrued interest on the principal amount to that date.                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
| | As of the
 date of issuance, the hybrid instrument was bifurcated into an option and a
 host debt contract. The fair value assigned to the option, determined using
 Black Scholes option-pricing model, was $109,075. As of the Prepayment Date,
 the fair value allocated to the option, estimated by using the Black Scholes
 option-pricing model was $93,273. The value was based on the following
 assumptions: dividend yield of 0%; expected volatility of 87%; risk-free
 interest rates of 5.0%; and expected lives of 0.52 years.

NOTE 7  STOCK HOLDERS EQUITY:

| |                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
 Companys shares are traded on the Over-The-Counter Bulletin Board.                                          
| |                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | The
 following are capital stock transactions that took place during the years
 ended September 30, 2007 and 2006:
| |                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | a.                                                                                                                 | On October
 31, 2005, the Company entered into a subscription agreement for the sale of
 666,666 units at a purchase price of $0.75 per unit for total consideration
 of $500,000. Each unit consisted of one share of the Companys common stock
 and one common stock purchase warrant. Each warrant entitles the holder to
 purchase half a share of common stock exercisable for three years at an
 exercise price of at $1.00 per share.

F-19

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 7  STOCK HOLDERS EQUITY(continued):

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | In
 connection with the subscription agreement, the Company paid a $50,000 cash
 fee to a third party which assisted in securing the agreement and issued a
 three year warrant to acquire 66,666 shares of common stock exercisable at
 $1.50 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | The
 consideration was allocated to the shares and warrants issued based on
 relative fair value. The value allocated to the warrants estimated by using
 the Black Scholes option-pricing model is $72,410 and was based on the
 following assumptions: dividend yield of 0%; expected volatility of 80%; risk-free
 interest rates of 4.4%; and expected lives of 3 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | b. | On December
 20, 2005, the Company entered into a subscription agreement for the sale of
 1,333,334 units at a purchase price of $0.75 per unit for total consideration
 of $1,000,000. Each unit consisted of one share of the Companys common
 stock and one common stock purchase warrant. Each warrant entitles the holder
 to purchase one share of common stock exercisable for three years at an exercise
 price of $1.20 per share.                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | In connection
 with the subscription agreement the Company paid a $100,000 cash fee to third
 parties who assisted in securing the agreement, as well as issued warrants to
    purchase 133,332
 shares of common stock exercisable for three years. Warrants
    exercisable for 66,666 shares of common stock are exercisable at $1.25 per
    share, and warrants exercisable for 66,666 shares of common stock are exercisable
    at $1.50 per share.                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | The
 consideration was allocated to the shares and warrants issued based on
 relative fair value. The value allocated to all warrants estimated by using
 the Black Scholes option-pricing model is $235,527 and was based on the
 following assumptions: dividend yield of 0%; expected volatility of 81%;
 risk-free interest rates of 4.4%; and expected lives of 3 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | c. | On December
 20, 2005, the Company entered into a subscription agreement for the sale of
 222,222 units at a purchase price of $0.90 per unit for a total consideration
 of $200,000. Each unit consisted of one share of the Companys common stock
 and one common stock purchase warrant. Each warrant entitles the holder to
 purchase half a share of common stock exercisable for three years at an
 exercise price of $1.15 per share.                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | The
 consideration was allocated to the shares and warrants issued based on relative
 fair value. The value allocated to all warrants estimated by using the Black
 Scholes option-pricing model is $34,114 and was based on the following
 assumptions: dividend yield of 0%; expected volatility of 81%; risk-free
 interest rates of 4.4%; and expected lives of 3 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | d. | On February
 27, 2007, the Company completed a private placement for the sale of
 16,250,000 units at a purchase price of $0.40 per unit for total
 consideration of $6,500,000. Each unit consisted of one share of common stock
 and one share purchase warrant. Each warrant entitles the holder to purchase
 one share of common stock for a period of five years at an exercise price of
 $0.48. The consideration was allocated to the shares and warrants issued
 based on relative fair value. The fair value, net transaction costs allocated
 to the warrants is $2,231,459, using the Black Scholes option-pricing model
 and was based on the following assumptions: dividend yield of 0% for all
 years; expected volatility of 89%; risk-free interest rates of 4.63%; and
 expected lives of 5 years. Transaction costs of $614,275 were paid.

F-20

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 7  STOCK HOLDERS EQUITY(continued):

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | e. | On February
 27, 2007, the exercise price of 1,333,334 warrants was reduced to $0.55. The
 warrants were issued on December 20, 2005 as part of a subscription agreement
 for the sale of 1,333,334 units at a purchase price of $0.75 per unit for
 total consideration of $1,000,000. The increase in the fair value of the
 warrants is charged in the Statement of Changes in Stockholders Equity
 against the additional paid-in capital.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | f. | On February
 27, 2007, the exercise price of 333,333 warrants was reduced to $0.55. The
 warrants were issued on October 31, 2005 as part of a subscription agreement
 for the sale of 666,666 units at a purchase price of $0.75 per unit for a
 total consideration of $500,000. The increase in the fair value of the
 warrants is charged in the Statement of Changes in Stockholders Equity
 against the additional paid-in capital.     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | g. | On May 15,
 2007, the Company issued 33,753 shares of its common stock in exchange for
 the interest accumulated on the principal amount of a convertible promissory
 note issued by the Company on November 20, 2006. See also Note 6.                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | h. | As to shares
 issued as part of stock based compensation plan see Note 8.                                                                                                                                                                                                                                                                                                                                                                      

NOTE 8  STOCK BASED COMPENSATION:

| |                                                                                                                                                                                                                                                                                                                                                                                                                   | 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | On August
 17, 2004, the Companys board of directors adopted the 2004 Employees and
 Consultants Stock Option Plan (the 2004
 Stock Option Plan).                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                   | 
| | On February
 26, 2007, the Companys board of directors adopted the 2007 Global Share
 Option Plan (the 2007 Stock Option Plan).                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                   | 
| | Under both
 plans 10,000,000 shares have been reserved for the grant of options, which
 may be issued at the discretion of the Companys board of directors from
 time to time. Under these plans, each option is exercisable into one share of
 common stock of the Company.                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                   | 
| | The options
 may be exercised after vesting and in accordance with vesting schedules which
 will be determined by the board of directors for each grant. The maximum term
 of the options is 10 years.                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                   | 
| | The fair
 value of each stock option grant is estimated at the date of grant using a
 Black Scholes option pricing model. The volatility is based on a historical
 volatility, by statistical analysis of the weekly share price for past
 periods. The expected term is the length of time until the expected dates of
 exercising the options, based on estimated data regarding employees exercise
 behavior.
| |                                                                                                                                                                                                                                                                                                                                                                                                                   | 
| | In
 connection with the completion on February 27, 2007 of a private placement by
 the Company (See Note 7d), the officers, directors, and employees holding a
 total of 5,600,000 options, agreed to restrictions on resale of the shares
 underlying the options until the first anniversary of the effective date of
 the initial registration statement that was filed pursuant to the private
 placement.   

F-21

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 8  STOCK BASED COMPENSATION(continued):

| |                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
 following are stock options and warrants transactions made during the years
 ended September 30, 2007 and 2006, (See Note 13 as to grants of stock options
 subsequent to September 30, 2007):
| |                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | a.                                                                                                                                                                                                  | On October
 6, 2005, 350,000 options were granted to an employee under the 2004 Stock
 Option Plan at an exercise price of $0.93 per share which was equivalent to 90%
 of the traded market price on the date of grant. Compensation costs
 calculated in accordance with APB 25 totaled $35,000. The fair value of these
 options on the date of grant is $283,262 using the Black Scholes
 option-pricing model and was based on the following assumptions: dividend
 yield of 0%; expected volatility of 80%; risk-free interest rates of 4.5%;
 and expected lives of 7.59 years. These options were cancelled on May 17,
 2007 (See also Note 8s).
| |                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | b.                                                                                                                                                                                                  | On October
 20, 2005, 30,000 options were granted to an employee under the 2004 Stock
 Option Plan at an exercise price of $1.35 per share which was equivalent to
 the traded market price on the date of grant. The fair value of the above
 options on the date of grant is $32,637 using the Black Scholes
 option-pricing model and was based on the following assumptions: dividend
 yield of 0%; expected volatility of 85%; risk-free interest rates of 4.5%;
 and expected lives of 7.85 years. These options
 were cancelled on May 17, 2007 (See also Note 8s).                                                                              
| |                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | c.                                                                                                                                                                                                  | On December
 21, 2005, 250,000 options were granted to an employee under the 2004 Stock
 Option Plan. at an exercise price of $1.34 per share which was equivalent to
 the traded market price on the date of grant. The fair value of these options
 on the date of the grant, is $269,449 using the Black Scholes option-pricing
 model and was based on the following assumptions: dividend yield of 0%;
 expected volatility of 85%; risk-free interest rates of 4.5%; and expected
 lives of 7.85 years. These options were cancelled on May 17, 2007 (See also
 Note 8s).                                                                         
| |                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | d.                                                                                                                                                                                                  | On January
 12, 2006, 50,000 options were granted to an employee under the 2004 Stock
 Option Plan at an exercise price of $1.10 per share which was equivalent to
 the traded market price on the date of grant. The fair value of these options
 on the date of the grant, is $44,163 using the Black Scholes option-pricing
 model and was based on the following assumptions: dividend yield of 0%;
 expected volatility of 85%; risk-free interest rates of 4.5%; and expected
 lives of 7.85 years.                                                                                                                                               
| |                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | e.                                                                                                                                                                                                  | On March 15,
 2006, 50,000 options were granted to a director under the 2004 Stock Option
 Plan at an exercise price of $1.37 per share which was equivalent to the
 traded market price on the date of grant. The fair value of these options on
 the date of grant is $54,712 using the Black Scholes option-pricing model and
 was based on the following assumptions: dividend yield of 0%; expected
 volatility of 84%; risk-free interest rates of 4.5%; and expected lives of
 7.85 years. These options were cancelled on May 17, 2007 (See also Note 8s).                                                                                      

F-22

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 8  STOCK BASED COMPENSATION(continued):

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | f. | On April 17,
 2006, 1,400,000 stock options were granted to the then new CEO under the 2004
 Stock Option Plan at an exercise price of $1.29 per share which was
 equivalent to 90% of the average closing price of the common stock of the
 Company on the 30 days immediately preceding the date of grant. Compensation
 costs calculated in accordance with APB 25 totaled $434,000. The fair value
 of these options on the date of grant is $1,832,296 using the Black Scholes
 option-pricing model and was based on the following assumptions: dividend
 yield of 0%; expected volatility of 83%; risk-free interest rates of 4.5%;
 and expected lives of 7.85 years. These options were cancelled on May 17,
 2007 (See also Note 8s).          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | g. | On May 4,
 2006, 500,000 (100,000 for each of its five board members) options were
 granted under the 2004 Stock Option Plan at an exercise price of $1.29 per
 share which was equivalent to 90% of the average closing price of the common
 stock of the Company on the 30 days immediately preceding the date of grant.
 Compensation costs calculated in accordance with APB 25 totaled $105,000. The
 fair value of these options on the date of grant is $605,909 using the Black
 Scholes option-pricing model and was based on the following assumptions:
 dividend yield of 0%; expected volatility of 82%; risk-free interest rates of
 4.5%; and expected lives of 7.85 years These option were cancelled on May 17,
 2007 (See also Note 8s).
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | h. | During
 September 2006, 50,000 options were forfeited due to the departure of a
 scientific advisor. Expenses in respect of options forfeited due to non-performance were
 reversed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | i. | On October
 12, 2006, 50,000 options were granted under the 2004 Stock Option Plan to a
 then new member of the Scientific Advisory Board, an outside party, at an
 exercise price of $0.65 per share, which was equivalent to the traded market
 price on the date of grant. These options vest according to the following
 vesting schedule:                                                                                                                                                                                                                                                                                                                                                                                                           

| |  |  |    |                                                                                                                                                        
| |  |  | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | 1) | On the first
 anniversary of the grant date, 25% of the options vest;                                                                                  
| |  |  |    |                                                                                                                                                        
| |  |  | 2) | On the last
 day of each of the 36 months following the first anniversary of the grant
 date, the remaining options vest in equal monthly installments.

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | The fair
 value of these options as of September 30, 2007 is $14,849, using the Black
 Scholes option-pricing model and was based on the following assumptions:
 dividend yield of 0% for all years; expected volatility of 85%; risk-free
 interest rates of 4.23%; and expected lives of 5.47 years.                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | j. | On October
 18, 2006 the Company entered into a Strategic Alliance Agreement with UTEK
 Corporation (UTEK), pursuant
 to which UTEK would assist the Company in identifying technology acquisition
 opportunities. In consideration for the services being provided to the
 Company by UTEK, the Company agreed to pay UTEK $120,000. The Company had the
 option of paying UTEK $10,000 per month in cash and instead issued UTEK an
 aggregate of 171,432 shares of common stock of the Company which vest in 12
 equal monthly instalments of 14,286 shares each.

F-23

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       |    |                                                                                                                                                        
|-------- | --------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|NOTE 8 - | STOCK
 BASED COMPENSATION
 (continued):
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       |    |                                                                                                                                                        
|         | k.                                      | On November
 13, 2006, 150,000 options were granted under the 2004 Stock Option Plan to
 each of the Companys two board members who joined the Board of Directors on
 November 6, 2006 (totaling 300,000 options). The options are exercisable at
 $0.45 per share (equivalent to the traded market price on the date of grant),
 in accordance with the following vesting schedule:
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       |    |                                                                                                                                                        
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       | 1) | On the first
 anniversary commencing the grant date, 25% of the options vest;                                                                          
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       |    |                                                                                                                                                        
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       | 2) | On the last
 day of each of the 36 months following the first anniversary of the grant
 date, the remaining options vest in equal monthly installments.
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       |    |                                                                                                                                                        
|         |                                         | The fair
 value of these options on the date of grant is $111,859, using the Black
 Scholes option-pricing model and was based on the following assumptions:
 dividend yield of 0%; expected volatility of 90%; risk-free interest rates of
 4.65%; and expected lives of 7.88 years.                                                                                                
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       |    |                                                                                                                                                        
|         | l.                                      | On December
 5, 2006, 50,000 options were granted under the 2004 Stock Option Plan to a
 then new member of the Scientific Advisory Board, an outside party. The
 options are exercisable at $0.50 per share (equivalent to the traded market
 price on the date of grant) in accordance with the following vesting
 schedule:                                                       
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       |    |                                                                                                                                                        
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       | 1) | On the first
 anniversary commencing the grant date, 25% of the options vest;                                                                          
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       |    |                                                                                                                                                        
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       | 2) | On the last
 day of each of the 36 months following the first anniversary of the grant
 date, the remaining options vest in equal monthly installments.
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       |    |                                                                                                                                                        
|         |                                         | The fair
 value of these options as of September 30, 2007 is $15,789, using the Black
 Scholes option-pricing model and was based on the following assumptions:
 dividend yield of 0% for all years; expected volatility of 85%; risk-free
 interest rates of 4.23%; and expected lives of 5.47 years.                                                                               
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       |    |                                                                                                                                                        
|         | m.                                      | On January
 30, 2007, warrants to acquire 434,783 shares of common stock of the Company
 were granted to an outside consultant. The warrants are exercisable for a
 period of five years at an exercise price of $0.45 per share. Since the
 warrants only vest if certain performance conditions are met (See also Note
 5d), no compensation was recorded this period.             
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       |    |                                                                                                                                                        
|         | n.                                      | On February
 15, 2007, 100,000 options were granted under the 2004 Stock Option Plan to an
 employee. The options are exercisable at $0.45 per share, (equivalent to the
 traded market price on the date of grant) in accordance with the following
 vesting schedule:                                                                                                              
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       |    |                                                                                                                                                        
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       | 1) | On the first
 anniversary commencing the grant date, 25% of the options vest;                                                                          
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       |    |                                                                                                                                                        
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       | 2) | On the last
 day of each of the 36 months following the first anniversary of the grant
 date, the remaining options vest in equal monthly installments.
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                       |    |                                                                                                                                                        
|         |                                         | The fair
 value of these options on the date of grant is $34,244, using the Black
 Scholes option-pricing model and was based on the following assumptions:
 dividend yield of 0% for all years; expected volatility of 90%; risk-free
 interest rates of 4.68%; and expected lives of 5.91 years.                                                                                   

F-24

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | 
|-------- | --------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|NOTE 8 - | STOCK
 BASED COMPENSATION
 (continued):
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | 
|         | o.                                      | On February
 26, 2007, 785,000 and 400,000 options were granted under the 2004 Stock
 Option Plan and the 2007 Stock Option Plan, respectively. The options were
 granted to directors, officers and employees. The options are exercisable at
 $0.53 per share (equivalent to the traded market price on the date of grant)
 with one third vesting on each of the first, second and third anniversaries
 of the grant date. The fair value of these options on the date of grant is
 $412,685, using Black Scholes option-pricing model and was based on the
 following assumptions: dividend yield of 0% for all years; expected
 volatility of 89%; risk-free interest rates of 4.62%; and expected lives of
 5.89 years.                                                                    
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|         | p.                                      | On February
 26, 2007, 80,000 options were granted under the 2004 Stock Option Plan to the
 Subsidiarys Chief Scientist and a consultant, both outside parties.
 The options are exercisable at $0.53 per share (equivalent to the traded market
 price on the date of grant) with one third vesting on each of the first, second
 and third anniversaries of the grant date. The fair value of these options as
 of September 30, 2007 is $24,936, using the Black Scholes option-pricing model
 and was based on the following assumptions: dividend yield of 0% for all
 years; expected volatility of 85%; risk-free interest rates of 4.23%; and
 expected lives of 5.47 years.                                                                                                            
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|         | q.                                      | On February
 26, 2007, 1,075,000 options were granted under the 2007 Stock Option Plan to
 the Chairman of the Board in his capacity as an outside consultant. The
 options are exercisable at $0.53 per share (equivalent to the traded market
 price on the date of grant) with one third vesting on each of the first,
 second and third anniversaries of the grant date. The fair value of these
 options as of September 30, 2007 is $335,080, using the Black Scholes
 option-pricing model and was based on the following assumptions: dividend
 yield of 0% for all years; expected volatility of 85%; risk-free interest
 rates of 4.23%; and expected lives of 5.47 years.                                                                                                             
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|         | r.                                      | On March 22,
 2007, warrants to purchase 350,000 shares of common stock were granted to an
 outside consultant. The warrants are exercisable for five years at an
 exercise price of $0.53. The fair value of these warrants on the date of
 grant is $179,470, using the Black Scholes option-pricing model and was based
 on the following assumptions: dividend yield of 0% for all years; expected
 volatility of 89%; risk-free interest rates of 4.62%; and expected lives of 5
 years.                                                                                                                                                                                                                                                                                                    
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|         | s.                                      | On May 17,
 2007, 2,790,000 options were granted under the 2007 Stock Option Plan at an
 exercise price of $0.61, which was the fair market value at the close of
 business on May 16, 2007, to directors, officers and employees of the Company
 (total 9 individuals), upon the surrender and cancellation by each of such
 directors, officers and employees of options, exercisable for an aggregate
 2,780,000 shares of common stock which were granted previously. The
 additional fair value added due to the replacement of these options is
 $177,881, using the Black Scholes option-pricing model and was based on the
 following assumptions: dividend yield of 0% for all years; expected
 volatility of 87%; risk-free interest rates of 4.68%; and expected lives of
 5.80 years.

F-25

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | 
|-------- | --------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|NOTE 8 - | STOCK
 BASED COMPENSATION
 (continued):
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | 
|         | t.                                      | On May 17,
 2007, 20,000 options were granted to an employee under the 2007 Stock Option
 Plan at an exercise price of $0.61 per share with one third vesting on each
 of the first, second and third anniversary of the date of grant. The fair
 value of these options on the date of grant is $9,096, using the Black
 Scholes option-pricing model and was based on the following assumptions:
 dividend yield of 0% for all years; expected volatility of 87%; risk-free
 interest rates of 4.68%; and expected lives of 5.80 years.                                                                      
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|         | u.                                      | On May 21,
 2007, two Subsidiary directors resigned from their positions and as part of
 accepting their resignation, the Board of Directors extended the term of all
 options granted to them (350,000 in total for both) until May 20, 2010. The
 fair value of the unvested portion of the 350,000 options as of that date,
 held by these directors, is $98,423, using the Black Scholes option-pricing
 model and was based on the following assumptions: dividend yield of 0% for
 all years; expected volatility of 87%; risk-free interest rates of 4.68%; and
 expected lives of 3 years.             
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|         | v.                                      | On June 1,
 2007, the Company entered into a Service Agreement with ROI Group, LLC (ROI),
pursuant to which ROI is to
 provide investor relations services for a period of one year. In
 consideration for the services being provided to the Company, the
 Company pays a monthly retainer of $9,500. In addition, the Company issued
 50,000 fully vested shares of common stock of the Company and warrants to
 acquire 250,000 shares of common stock.                                                                                                                                                   
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|         |                                         | The warrants
 will expire on February 27, 2014 and are exercisable into 62,500 shares of
 common stock at an exercise price of $0.75 which vested on August 31, 2007,
 62,500 shares of common stock at an exercise price of $0.90 which vested on
 November 30, 2007, 62,500 shares of common stock at an exercise price of
 $1.10 which vest on February 28, 2008 and 62,500 shares of common stock at an
 exercise price of $1.25 which vest on May 31, 2008.                                                                                                                                               
|         |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|         |                                         | The Company
 has valued the shares issued to ROI based on the market
    value of the shares of the Company on the date of issuance, which was $0.60.
    The value of the shares issued assigned to services not yet rendered through
    September 30, 2007 are presented as a separate line item (contra-equity).
    The fair value of these warrants is $72,511, using the Black Scholes option-pricing
    model and was based on the following assumptions: dividend yield of 0% for
    all years; expected volatility of 85%; risk-free interest rates of 4.23%;
    and expected lives of 6.42 years.

F-26

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

|         |                                                                                                                                                                                  |  |  | 
|-------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | 
|NOTE 8 - | STOCK
 BASED COMPENSATION
 (continued):                                                                                                                                         
|         |                                                                                                                                                                                  |  |  | 
|         | A summary of
 the status of the stock options granted to employees and directors as of
 September 30, 2007, and changes during the year ended on this date, is
 presented below:

|                                                                |  |                         |            |                                    |   |                     |  |                                    |           |   |   |      | 
|--------------------------------------------------------------- |  | ----------------------- | ---------- | ---------------------------------- | - | ------------------- |  | ---------------------------------- | --------- | - | - | ---- | 
|                                                                |  | Year ended September 30 |           
|                                                                |  |                         |           
|                                                                |  | 2007                    |            | 2006                               |  
|                                                                |  |                         |            |                                    |  
|                                                                |  | Number
 of
 options     |            | Weighted
 average
 exercise
 price |   | Number
 of
 options |  | Weighted
 average
 exercise
 price |          
|                                                                |  |                         |            |                                    |   |                     |  |                                    |          
|                                                                |  |                         |            |                                    | $ |                     |  |                                    |           | $ |  
|For options granted to                                          |  |                         |            |                                    |   |                     |  |                                    |           |   |   |      | 
|Employees and
Directors:                                        |  |                         |            |                                    |   |                     |  |                                    |           |   |   |      | 
|Options outstanding at beginning of
year                        |  |                         | 2,830,000  |                                    | $ | 1.24                |  |                                    | 350,000   |   | $ | 1.17 | 
|Changes during the year:                                        |  |                         |            |                                    |   |                     |  |                                    |           |   |   |      | 
|Granted  at market
price                                       |  |                         | 4,395,000  |                                    |   | 0.57                |  |                                    | 380,000   |   |   | 1.31 | 
|Granted  at an exercise price less then market price           |  |                         |           |                                    |   |                     |  |                                    | 2,250,000 |   |   | 1.23 | 
|Forfeited                                                       |  |                         | (2,780,000 | )                                  |   | 1.24                |  |                                    | (150,000  | ) |   | 1.20 | 
|                                                                |  |                         |            |                                    |   |                     |  |                                    |           |   |   |      | 
|Options outstanding at end of
year                              |  |                         | 4,445,000  |                                    |   | 0.58                |  |                                    | 2,830,000 |   |   | 1.24 | 
|                                                                |  |                         |            |                                    |   |                     |  |                                    |           |   |   |      | 
|Options exercisable at end of
year                              |  |                         | 812,458    |                                    |   |                     |  |                                    | 82,292    |   |   |      | 
|Weighted average fair value of options
 granted during the year |  | $                       | 0.49       |                                    |   |                     |  | $                                  | 1.19      |   |   |      | 
|                                                                |  |                         |            |                                    |   |                     |  |                                    |           |   |   |      | 

| |                                                                                                                 |  |  | 
| | --------------------------------------------------------------------------------------------------------------- |  |  | 
| | The
 following table presents summary information concerning the options
 outstanding as of September 30, 2007:

|                              |  |                     |  |                                                      |      |                                      |  |                               |  |  |        |  | 
|----------------------------- |  | ------------------- |  | ---------------------------------------------------- | ---- | ------------------------------------ |  | ----------------------------- |  |  | ------ |  | 
|Range of
 exercise
 prices
 $ |  | Number
 outstanding |  | Weighted
 average
 remaining
 contractuallife
 Years |      | Weighted
 average
 exercise price
 $ |  | Aggregate
 intrinsic value
 $ | 
|                              |  |                     |  |                                                      |      |                                      |  |                               | 
|                              |  |                     |  |                                                      |      |                                      |  |                               |  |  |        |  | 
|0.45 to 0.61                  |  | 4,395,000           |  |                                                      | 9.53 |                                      |  | 0.57                          |  |  | 28,000 |  | 
|0.93 to 1.37                  |  | 50,000              |  |                                                      | 8.00 |                                      |  | 1.10                          |  |  |       |  | 
|                              |  |                     |  |                                                      |      |                                      |  |                               |  |  |        |  | 
|                              |  | 4,445,000           |  |                                                      | 9.51 |                                      |  | 0.58                          |  |  | 28,000 |  | 
|                              |  |                     |  |                                                      |      |                                      |  |                               |  |  |        |  | 

F-27

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 8 -
STOCK BASED COMPENSATION(continued):

| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | The
 following table presents summary information concerning the options
 exercisable as of September 30, 2007:

|                              |  |                     |  |                                                       |  |                                      |  |                               |  |  |  |  | 
|----------------------------- |  | ------------------- |  | ----------------------------------------------------- |  | ------------------------------------ |  | ----------------------------- |  |  |  |  | 
|Range of
 exercise
 prices
 $ |  | Number
 exercisable |  | Weighted
 average
 remaining
 contractual life
 Years |  | Weighted
 average
 exercise price
 $ |  | Aggregate
 intrinsic value
 $ | 
|                              |  |                     |  |                                                       |  |                                      |  |                               | 
|0.45 to 0.61                  |  | 788,500             |  | 9.63                                                  |  | 0.61                                 |  |                              | 
|0.93 to 1.37                  |  | 23,958              |  | 8.00                                                  |  | 1.10                                 |  |                              | 
|                              |  |                     |  |                                                       |  |                                      |  |                               |  |  |  |  | 
|                              |  | 812,458             |  | 9.58                                                  |  | 0.61                                 |  |                              | 
|                              |  |                     |  |                                                       |  |                                      |  |                               |  |  |  |  | 

| |                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Unrecognized
 compensation as determined under FAS 123R as of September 30, 2007 totaled
 $1,254,999, to be recorded over the next 41 months.                        
| |                                                                                                                                                                      
| | A summary of
 the status of the stock options granted to non-employees as of September 30,
 2007, and changes during the year ended on this date, is presented below:

|                                                                |  |                          |           |                                    |   |                     |  |                                    |         |  |   |      | 
|--------------------------------------------------------------- |  | ------------------------ | --------- | ---------------------------------- | - | ------------------- |  | ---------------------------------- | ------- |  | - | ---- | 
|                                                                |  | Year ended
 September 30 |          
|                                                                |  |                          |          
|                                                                |  | 2007                     |           | 2006                               |  
|                                                                |  |                          |           |                                    |  
|                                                                |  | Number
 of
 options      |           | Weighted
 average
 exercise
 price |   | Number
 of
 options |  | Weighted
 average
 exercise
 price |        
|                                                                |  |                          |           |                                    |   |                     |  |                                    |        
|                                                                |  |                          |           |                                    | $ |                     |  |                                    |         |  | $ |     
|For options granted to Non-Employees:                           |  |                          |           |                                    |   |                     |  |                                    |         |  |   |     
|Options outstanding at beginning of year                        |  |                          | 100,000   |                                    |   | 1.15                |  |                                    | 150,000 |  |   | 1.15 | 
|Changes during the year:                                        |  |                          |           |                                    |   |                     |  |                                    |         |  |   |      | 
|Granted  at market price                                       |  |                          | 1,255,000 |                                    |   | 0.53                |  |                                    |        |  |   |      | 
|Forfeited                                                       |  |                          |          |                                    |   |                     |  |                                    | 50,000  |  |   | 1.15 | 
|Expired                                                         |  |                          |          |                                    |   |                     |  |                                    |        |  |   |      | 
|                                                                |  |                          |           |                                    |   |                     |  |                                    |         |  |   |      | 
|Options outstanding at end of year                              |  |                          | 1,355,000 |                                    |   | 0.58                |  |                                    | 100,000 |  |   | 1.15 | 
|                                                                |  |                          |           |                                    |   |                     |  |                                    |         |  |   |      | 
|Options exercisable at end of year                              |  |                          | 89,583    |                                    |   |                     |  |                                    | 37,500  |  |   |      | 
|Weighted average fair value of options
 granted during the year |  | $                        | 0.31      |                                    |   |                     |  |                                    |        |  |   |      | 
|                                                                |  |                          |           |                                    |   |                     |  |                                    |         |  |   |      | 

F-28

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 9 - TAXES ON INCOME:

| |    |                       
| | -- | ----------------------
| | a. | Deferred income taxes:

|                                   |  |              |            |      |   |          |  
|---------------------------------- |  | ------------ | ---------- | ---- | - | -------- | -
|                                   |  | September 30 |           
|                                   |  |              |           
|                                   |  | 2007         |            | 2006 |  
|                                   |  |              |            |      |  
|In respect
 of:                    |  |              |            |      |   |          |  
|Net
 operating loss carryforward   |  | $            | 1,102,725  |      | $ | 431,165  |  
|Research and
 development expenses |  |              | 215,522    |      |   | 145,840  |  
|Start-up
 costs                    |  |              |           |      |   | 142,932  |  
|Other                              |  |              | 11,036     |      |   | 6,209    |  
|Less -
 Valuation allowance        |  |              | (1,329,283 | )    |   | (726,146 | )
|                                   |  |              |            |      |   |          |  
|Net deferred
 tax assets           |  |              | ,        |      |   | ,      |  
|                                   |  |              |            |      |   |          |  

| |    |                                                                                                                                                                                                                                                                                                                                                
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | Realization
 of deferred tax assets is dependent upon sufficient future taxable income
 during the period that deductible temporary differences and carryforwards are
 expected to be available to reduce taxable income. As the achievement of
 required future taxable income is uncertain, the Company recorded a full
 valuation allowance.
| |    |                                                                                                                                                                                                                                                                                                                                                
| | b. | Corporate taxation in the U.S.                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                
| |    | Taxes on
 income included in the consolidated statements of operations represent
 current taxes due to taxable income of the US Company.                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                
| |    | The applicable
 corporate tax rate for the Company is 22%.                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                
| | c. | Corporate taxation in Israel                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                
| |    | The
 Subsidiary is taxed in accordance with Israeli tax laws. Under the Income Tax
 (Inflationary Adjustments) Law, 1985, results for tax purposes are measured
 in real terms, in accordance with the changes in the Israeli consumer price
 index (CPI).                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                
| |    | The regular
 corporate tax rate in Israel for 2007 is 29%. The corporate tax rates for
 2008 and thereafter are as follows: 2008  27%, 2009  26% and for 2010 and
 thereafter  25%.                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                
| |    | As of
 September 30, 2007, the Subsidiary has an accumulated tax loss carryforward
 of approximately $3,348,267 (September 30, 2006 approximately - $1,724,661).
 Under Israeli tax laws, carryforward tax losses are linked to the Israeli
 CPI. The Israeli loss carryforwards have no expiration date.                                      
| |    |                                                                                                                                                                                                                                                                                                                                                
| | d. | Reconciliation of the theoretical tax expense to actual tax expense                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                
| |    | The main
 reconciling items, between the statutory tax rate of the Company and the
 effective rate are the non deductible expenses and the provision of the
 valuation allowance in respect of the Companys deferred income tax asset
 (see above).                                                                                           

F-29

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 10 - RESEARCH AND DEVELOPMENT COSTS:

|                                                                  |  |                        |           |      |   |         | 
|----------------------------------------------------------------- |  | ---------------------- | --------- | ---- | - | ------- | 
|                                                                  |  | Year endedSeptember 30 |          
|                                                                  |  |                        |          
|                                                                  |  | 2007                   |           | 2006 |  
|                                                                  |  |                        |           |      |  
|                                                                  |  |                        |           |      |   |         | 
|Clinical trials                                                   |  | $                      | 370,066   |      | $ | 390,717 | 
|Consulting fees                                                   |  |                        | 248,460   |      |   | 142,404 | 
|Salaries and related expenses                                     |  |                        | 400,705   |      |   | 155,116 | 
|Costs for registration of patents                                 |  |                        | 144,698   |      |   | 79,982  | 
|Compensation costs in respect of warrants
 granted to consultants |  |                        | 33,941    |      |   | 33,440  | 
|Other                                                             |  |                        | 134       |      |   | 595     | 
|                                                                  |  |                        |           |      |   |         | 
|                                                                  |  | $                      | 1,198,004 |      | $ | 802,254 | 
|                                                                  |  |                        |           |      |   |         | 

NOTE 11 - GENERAL AND ADMINISTRATIVE EXPENSES

|                              |  |                        |           |      |   |           | 
|----------------------------- |  | ---------------------- | --------- | ---- | - | --------- | 
|                              |  | Year endedSeptember 30 |          
|                              |  |                        |          
|                              |  | 2007                   |           | 2006 |  
|                              |  |                        |           |      |  
|                              |  |                        |           |      |   |           | 
|Payroll and
 related expenses |  | $                      | 2,141,555 |      | $ | 567,785   | 
|Consulting
 fees              |  |                        | 945,643   |      |   | 83,113    | 
|Travel costs                  |  |                        | 152,243   |      |   | 99,417    | 
|Professional
 services        |  |                        | 361,155   |      |   | 247,132   | 
|Insurance                     |  |                        | 69,501    |      |   | 57,481    | 
|Business
 development         |  |                        | 212,299   |      |   | 94,786    | 
|Other                         |  |                        | 207,767   |      |   | 113,356   | 
|                              |  |                        |           |      |   |           | 
|                              |  | $                      | 4,090,163 |      | $ | 1,263,070 | 
|                              |  |                        |           |      |   |           | 

NOTE 12 - RELATED PARTIES - TRANSACTIONS:

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | On March 1,
 2005, the Company entered into an agreement appointing a principal shareholder
 as Vice President of Business Development, in consideration of a salary of
 $4,000 per month, commencing February 2005 and ended July 2, 2005. Effective
 July 2, 2005, this individual served as the CEO of the Subsidiary and as
 acting CEO of the Company, devoting approximately 70% of her time to the
 affairs of the Company for a monthly salary of $6,475. On April 15, 2006,
 this individual resigned from her position as the acting CEO of the Company,
 and continued as the CEO of the Subsidiary. Payroll and related expenses in
 respect of this individual for the years ended September 30, 2007 and 2006 was
 $111,841 and $111,609, respectively (see also Notes 12d and 13b).

F-30

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 12 - RELATED PARTIES  TRANSACTIONS
(continued):

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | On April 16,
 2006, the Company entered into an employment agreement with its then new CEO
 pursuant to which the CEO will serve as CEO of the Company, effective April
 15, 2006. Under the agreement, the CEO is entitled to an annual salary of
 $200,000 and an annual bonus of up to $200,000 upon achieving certain
 objectives. Pursuant to a separate agreement between the Company and the CEO,
 the Company agreed to indemnify the CEO for substantially all liabilities he
 may incur as a result of his employment by or service to the Company. Payroll
 and related expenses, including stock based compensation expenses, in respect
 of the CEO for the years ended September 30, 2007 and 2006 was $1,205,028 and
 $593,641, respectively.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | c. | On October
 31, 2006, the Company entered into a consulting agreement with Steven Katz
 & Associates, Inc., (SKA),
 a company wholly-owned by the Companys Chairman of the Board and President,
 engaging it as a consultant. For the year ended September 30, 2007 the
 Company incurred a total of $466,070 of consulting fees and a total of
 $158,953 of stock based compensation expenses in respect of the services
 provided by SKA.                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | d. | On May 22,
 2007, the CEO of the Subsidiary was appointed as VP of Corporate Development
 of the Company. On the same date, the CEO of the Company assumed the position
 of CEO of the Companys Subsidiary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

NOTE 13  SUBSEQUENT EVENTS:

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | On October
 30, 2007, a director of the Company resigned from his positions as member of
 the Companys Board of Directors, Audit Committee and Compensation Committee
 and Chairman of the Audit Committee. The departing director will continue to
 serve the Company as a consultant. The Company also amended the departing
 directors option agreements so that his 225,000 options previously granted
 to him will continue to vest and be exercisable under the terms of such
 agreements.                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | In
 connection with the foregoing resignation, on October 30, 2007, a new
 director was appointed to fill the vacancy on the Companys Board of
 Directors and was additionally appointed to the Companys Audit Committee and
 Compensation Committee. In connection with the appointment, the Company granted
 the new director options to purchase a total of 225,000 shares of its common
 stock under the 2007 Stock Option Plan at an exercise price of $0.41 per
 share, one third vesting on each of the first, second and third anniversaries
 of the new directors appointment. Further, the Company entered into its
 standard form of indemnification agreement with the new director.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | b. | On November
 30, 2007, the employment agreement with the related party serving as the VP
 of Corporate Development was terminated. Subsequently a consulting agreement
 was entered into between the Company and the related party pursuant to which
 the related party will perform certain consulting services as requested from
 time to time by the Company and will be compensated based on hours worked.                                                                                                                                                                                                                                                                                     

F-31

---



GAMMACAN INTERNATIONAL, INC.(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

NOTE 13  SUBSEQUENT EVENTS(continued):

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c. | On December 13, 2007, the Company entered into
        a Share Purchase Agreement made as of November 26, 2007 with ARP Biomed,
        Ltd. (ARP). The Share Purchase
 Agreement provides that subject to fulfillment of certain closing conditions,
 including the receipt of an Israeli tax ruling, ARP will sell to the Company
 12.5% of the issued and outstanding shares of our Subsidiary such that at
 closing the Company will own 100% of the issued and outstanding shares of our
 Subsidiary. In consideration for such sale, the Company agreed to issue to
 ARP, at closing, 2,697,535 shares of its common stock, a warrant to acquire
 1,123,973 shares of its common stock and an additional warrant to acquire
 449,589 shares of its common stock.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | In
 connection with the Share Purchase Agreement, ARP and our Subsidiary agreed
 to enter into an amendment of the agreement for the purchase and sale of intellectual
 property from ARP, which amendment specifically delineates clarity of title
 and related issues to certain intellectual property sold under the original
 agreement.                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | A member of
 our board of directors, is the Chief Executive Officer of ARP and the Chief
 Scientist of the Subsidiary, is an advisor to ARP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | d. | On December
 23, 2007, the Subsidiary entered into an Amendment to the THM  Agreement
 (the Amendment) with THM. The Amendment reduces the license
 fees payable under the THM Agreement and clarifies, among other things, the
 nature of research activities pursuant to the THM Agreement. Further, the
 research period under the THM Agreement has been extended for a two year
 period, commencing January 1, 2007, and the research funding for this period
 totals $500,000.                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | In
 connection with this Amendment, the Company will issue to THM a five year
 warrant to acquire 500,000 shares of the Companys common stock exercisable,
 commencing December 31, 2008, at $0.40 per share. Pursuant to certain conditions,
 the Company will issue to THM an additional warrant to acquire 250,000 shares
 of its common stock.                                                                                                                                                                                                                                                                                                                                                                                                                     

F-32

---



ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 8A  CONTROLS AND PROCEDURES

Evaluation
of disclosure controls and procedures.

An
evaluation was performed under the supervision and with the participation of
our management, including the Chief Executive Officer and the Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on managements evaluation as of the end of the
period covered by this Annual Report, our Chief Executive Officer and Chief
Financial Officer concluded that as of the end of the period covered by this
report, our disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the
Exchange Act)) were effective in ensuring that the information required to be
disclosed by us in the reports that we file under the Exchange Act is gathered,
analyzed and disclosed with adequate timeliness, accuracy and completeness.

Changes in internal
controls.

There
were no changes in our internal controls over financial reporting, that
occurred during the last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.

ITEM 8B  OTHER INFORMATION

Amendment of Research and Licensing Agreement

The
following disclosure would have otherwise been filed on Form 8-K under the
heading Item 1.01  Entry into a Material Definitive Agreement. and Item
3.02  Unregistered Sales of Equity Securities.

On
December 23, 2007, our subsidiary, GammaCan Ltd., entered into an Amendment of
the Research and Licensing Agreement (the Amendment) with
Tel HaShomer-Medical
Research Infrastructure and Services LTD. (THM) originally
entered into on December 13, 2005 (the Research and
Licensing Agreement). The Amendment reduces the license fees payable
under the Research and Licensing Agreement and clarifies, among
other things, the nature of research activities pursuant to the Research and
Licensing Agreement. Further, the
research period under the Research and Licensing Agreement has been extended
for a two year period, commencing January 1, 2007, and the research funding for
this period totals $500,000.

In
connection with this Amendment, we will issue to THM a five year warrant to
acquire 500,000 shares of our common stock exercisable, commencing December 31,
2008, at $0.40 per share. In addition, within 30 days of the acceptance by the
FDA of each new IND application that results from work pursuant to a research
project (excluding INDs pertaining to VitiGam), we will issue to THM a warrant
to acquire 250,000 shares of our common stock at an exercise price equal to the

48

---



closing price
of our common stock on the date of issuance of such warrant. The warrants are
subject to adjustment for, among other things, stock splits, stock dividends,
distributions and reclassifications.

The
foregoing description is a summary and is qualified in its entirety by the
transaction documents attached as exhibits hereto and incorporated by reference
herein.

Amendment
of Certificate of Incorporation

The
following disclosure would have otherwise been filed on Form 8-K under the
heading Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in
Fiscal Year.

On
December 27, 2007, we filed with the Secretary of State of the
    State of Delaware, a Certificate of Amendment to our Certificate of Incorporation.
Pursuant to the proposals to amend our Certificate of Incorporation approved
    at our Annual Meeting of Stockholders held on September 10, 2007, our Certificate
of Incorporation has been amended in the following
    respects:

| |                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |  the number
 of our authorized shares of common stock has been increased from 100,000,000
 to 200,000,000;                                        
| |                                                                                                                                                    
| |  20,000,000
 shares of our preferred stock have been classified as blank check
 preferred;                                                      
| |                                                                                                                                                    
| |  a
 provision providing for the indemnification of our directors and officers to
 the fullest extent permitted by Delaware law has been added; and
| |                                                                                                                                                    
| |  a
 provision for the limitation of liability of our directors has been added.                                                                    

The
foregoing description is a summary and is qualified in its entirety by the
Certificate of Amendment attached as an exhibit hereto and incorporated by
reference herein.

49

---



PART III

ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Set
forth below is certain information with respect to the individuals who are our
directors, executive officers and significant employees.

|                                     |  |     |  |                                                  
|------------------------------------ |  | --- |  | -------------------------------------------------
|Name                                 |  | Age |  | Position                                         
|                                     |  |     |  |                                                  
|                                     |  |     |  |                                                  
|Steven Katz                          |  | 59  |  | Chairman of
 the Board of Directors and President
|                                     |  |     |  |                                                  
|Patrick
 Schnegelsberg               |  | 44  |  | Chief
 Executive Officer                         
|                                     |  |     |  |                                                  
|Albert
 Passner                      |  | 69  |  | Director                                         
|                                     |  |     |  |                                                  
|Yair Aloni(2)                        |  | 58  |  | Director                                         
|                                     |  |     |  |                                                  
|David
 DeMedio(1) (2)                |  | 36  |  | Director                                         
|                                     |  |     |  |                                                  
|Josef
 Neuhaus(1) (2)                |  | 44  |  | Director                                         
|                                     |  |     |  |                                                  
|Chaime Orlev(3)                      |  | 37  |  | Chief
 Financial Officer and Treasurer           
|                                     |  |     |  |                                                  
|Prof. Yehuda
 Shoenfeld, M.D.
 FRCP. |  | 57  |  | Chief
 Scientist of GammaCan, Ltd.               

|    |                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | Member of the Audit
 Committee.                                                                                                                                   
|(2) | Member of the Compensation
 Committee.                                                                                                                            
|(3) | On November 15, 2007, Mr.
 Orlev tendered his resignation and has agreed to stay on in his current
 position at our request until no later than February 28, 2008.

Business Experience

The
following is a brief account of the education and business experience during at
least the past five years of each director, executive officer and significant
employee, indicating the principal occupation during that period, and the name
and principal business of the organization in which such occupation and
employment were carried out.

Mr.
Steven Katzhas
served as our Chairman of the Board since November 2006 and since May 2007 has
served as President. Mr. Katz has been, since 1982, President of Steven
Katz & Associates, Inc., a health care and technology-based management
consulting firm specializing in strategic planning, corporate development, new
product planning, technology licensing, and structuring and securing various
forms of financing. From January 2000 to October 2001, he was President and
Chief Operating Officer of Senesco Technologies, Inc., an American Stock
Exchange company engaged in the identification and development of proprietary
gene technology with application to human, animal and plant systems. He was a
co-founder and Executive Vice President, from 1983 to 1984, of S.K.Y. Polymers,
Inc., a biomaterials company. Prior thereto, Mr. Katz was
Vice President and General Manager of a non-banking division of Citicorp and
from 1976 to 1981 held various senior management positions at National Patent
Development Corporation, including President of three subsidiaries. He had been
employed by Revlon, Inc. in 1975 and Price Waterhouse & Co. from 1969 to
1974. Mr. Katz received a Bachelors of Business Administration degree in Accounting
from the City College of New York (CCNY) in 1969. He is presently a member of
the Board of Directors of several private companies and the following publicly-held
corporations: USA Technologies, Inc. (NASDAQ: USAT); NaturalNano, Inc. (OTCBB:
NNAN); and Health Systems Solutions, Inc. (OTCBB: HSSO).

50

---



Mr.
Patrick Schnegelsberghas served as our Chief Executive Officer since April
2006. Prior to joining us from April 2005 to April 2006, he served as Director
of Investment Banking for Global Capital Markets Group (GCMG), an independent
investment bank known internationally for advising on mergers and acquisitions
and crafting innovative financial and strategic solutions for clients globally,
with offices in New York and Sydney, Australia. Prior to GCMG Mr. Schnegelsberg
served as Director of Investment Banking at Rodman & Renshaw from March 2004
to April 2005. In this position, he led M&A and private transactions for
a host of significant companies in Life Sciences. Prior to entering investment
banking, from March 2002 to March 2004, Mr. Schnegelsberg acted as a buy-side
analyst and portfolio manager for Mehta Partners, a leading healthcare-focused
hedge fund. He joined Mehta Partners after having worked for several years in
the consulting industry with tenures at Booz Allen Hamiltons New York healthcare
practice and at Boston-based Global Prior Art, where he founded and fostered
the growth of the Companys
Life Sciences practice and intellectual property practice. The client roster
included top tier pharmaceutical and biotechnology companies as well as some
of the top U.S. and EU IP law firms. Mr. Schnegelsberg graduated from Harvard
Medical School and performed his Ph.D. thesis research in the laboratory of Dr.
Rudolf Jaenisch at the Whitehead Institute/M.I.T. He published his first
peer-reviewed paper as an undergraduate and since then his work has been
published in peer reviewed journals including Celland Nature.

Mr.
Yair Aloni has served as our director since August
2004. He has more than 25 years of experience as a senior executive of a number
of companies. Since 1996, Mr. Aloni has been the managing director of Megafil
Ltd., an Israeli company specializing in international trading and consulting.
From 2003 to 2005, he served as the Chief Executive Officer of Solidimension
Ltd., a private company specializing in 3D printers. From 1997 to 2003, Mr.
Aloni served as the Chief Executive Officer of Avnan Yazamut Ltd., a company
involved in investing in hi-tech, biotechnology and electronics companies.
Prior to 1997, Mr. Aloni was an executive or senior manager at several electronic
and auto parts companies. Mr. Aloni currently serves on the board of the following
publicly-held corporation: Global Energy, Inc. (OTCBB: GEYI).

Mr.
David DeMedio has
served as our director since October 2007. He currently serves as Chief Financial Officer of USA
Technologies, Inc. (NASDAQ: USAT), a provider of wireless networking, cashless
transactions, asset monitoring and energy management products, and has held
this position since April 2005. Since joining USA Technologies in March 1999,
Mr. DeMedio has held various positions including Vice President-Financial &
Data Services, interim Chief Financial Officer, Director of Network and
Financial Services, and Controller. Prior to joining USA Technologies, Mr.
DeMedio was employed by Elko, Fischer, Cunnane and Associates, LLC as a supervisor
of its accounting and auditing and consulting practice. Prior thereto, Mr.
DeMedio held various accounting positions with Intelligent Electronics, Inc.
Mr. DeMedio graduated with a Bachelor of Science in Business Administration
from Shippensburg University and is a Certified Public Accountant.

51

---



Mr.
Josef Neuhaushas
served as our director since March 2006. Mr. Neuhaus has been an independent
consultant since 2004 and brings extensive experience as a senior executive in
a number of companies. From August 2006 to February 2007, Mr. Neuhaus served
as Chief Financial Officer, Treasurer and Secretary of Advanced Technology
Acquisition Corp. (AMEX: AXC). Prior to that, between August 2005 and February
2006, Mr. Neuhaus served as Chief Financial Officer of Axis Mobile Ltd. (LSE:
AXIS.L). From March 2003 to November, 2003, he served as CEO of RoadEye FLR G.P.
and Managing Director of Gintec Active Safety Ltd., both private companies
dealing with collision avoidance systems. During 2002, Mr. Neuhaus took a
sabbatical year to complete an Executive M.B.A. From 2000 to 2001, Mr. Neuhaus
was the CFO of PassCall Advanced Technologies LTD., a start-up dealing with
wireless Internet. From 1998 to 2000 he was Acting Managing Director and CFO
of ITA (International Tourist Attractions) Ltd. a private company initiating
and building tourist attractions. From 1995 to 1998 he served as the CFO of ICTS
International NV (NASDAQ: ICTS). Prior to 1995, Mr. Neuhaus was a senior
auditor at Somekh Chaikin (KPMG in Israel). Mr. Neuhaus received both his M.B.A
and B.A. in Accounting and Economics at the Tel Aviv University. He is an
Israeli CPA. Mr. Neuhaus currently serves on the board of the following
publicly-held corporation:  Global Energy, Inc.
(OTCBB: GEYI).

Mr.
Albert Passner has served as our director since
November 2006. He has been for more than five years a consultant in the fields
of physics and engineering following an illustrious career at Lucent/AT&T
Bell Labs of more than thirty years. Among his many achievements with Lucent
were: the development of ultra-low noise amplifiers used to measure transistor
noise; the design of the worlds most powerful pulsed electromagnet; the
production of a positron plasma in the laboratory; the production of the first
transverse laser in semi-conductor thin film, and the demonstration that
stellar images could be corrected in real time using an electronically deformed
mirror. Mr. Passner has authored and co-authored more than fifty publications.
Between August 2004 and December 2006, Mr. Passner served as director of
Nanoscience Technologies, Inc. (OTCBB: NANS) and between June 2006 and March
2007, Mr. Passner served as director of USA Technologies, Inc. (NASDAQ: USAT).
Prior to Lucent /AT&T Bell Labs, Mr. Passner served as an engineer at RCA
from 1961 to 1963 and a member of the staff at the Princeton-Penn Accelerator
in Princeton, N.J. from 1963 to 1969. He received a B.S. in Physics from the
City College of New York in 1960 and an M.S. in Physics from New York
University in 1966.

Mr.
Chaime Orlev has served as our Chief Financial Officer
since October 2005. He is a certified public accountant in Israel and prior to
joining us, from September 2004 to September 2005, Mr. Orlev acted as Chief
Financial Officer for Solel Solar Systems, an Israeli-based company
specializing in the development, manufacturing and marketing of solar energy
systems and related equipment, as well as coatings for different substrates.
From April 2001 to August 2004 Mr. Orlev was the Vice President, Finance and
Chief Financial Officer of Huntleigh, a provider of airport services to
carriers. From 1999 to 2001 he served as Financial Controller and Acting Chief
Financial Officer for ICTS International N.V. (NASDAQ:ICTS).

Prof.
Yehuda Shoenfeld, M.D.FRCP. has served as Chief
Scientist of our subsidiary since August 2004. He is one of Israels most
prominent physicians and scientists in the field of immunology. He heads the
Department of Internal Medicine at Israels largest hospital, Sheba Medical
Center at Tel HaShomer. Professor Shoenfeld also heads the Research Center
for Autoimmune Diseases at Sheba Medical Center and is a Professor of Medicine
in Tel Aviv University and the incumbent of the Laura Schwartz-Kipp Chair for
Autoimmunity. He is the author of more than 1,000 scientific papers and more
than 40 scientific books. Fifty eight of his publications
relate to intravenous IgG, of which seven focus on intravenous IgG as a treatment
for cancer. Prof. Shoenfeld also serves as editor of several medical journals
and as scientific consultant to a number of biotechnology companies. He received
the prestigious Carol Nachman Award for Rheumatology in 2004 for outstanding
innovative research work and the EULAR (European Union Congress of Rheumatology)
Prize in 2005.

52

---



Board of Directors and Officers

There
are no agreements with respect to the election of directors. Each director is
elected for a period of one year at our annual meeting of stockholders and
serves until the next such meeting and until his or her successor is duly
elected. The board of directors may also appoint additional directors up to the
maximum number permitted under our by-laws. A director so chosen or appointed
will hold office until the next annual meeting of stockholders.

There
have been no events under any bankruptcy act, no criminal proceedings and no
judgments, injunctions, orders or decrees material to the evaluation of the
ability and integrity of any director, executive officer, or control person of
the Company during the past five years.

Board Meeting Attendance

During
the year ended September 30, 2007, our board held 10 meetings and took actions
by written consent on 26 occasions. No incumbent director of the meeting
attended fewer than 75% of the aggregate of: (i) the total number of
meetings of the board (during the period for which such director served as a
director); and (ii) the total number of meetings held by all committees of
the board on which such director served (during the period for which such director
served on such committees). Board members are encouraged to attend our annual
meetings of stockholders.

Committees

On
January 11, 2005, we established an Audit Committee and a Compensation
Committee.

Audit
Committee

The
Audit Committee is responsible for the following:

| |                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------
| |  reviewing
 the results of the audit engagement with the independent auditors;                                                             
| |                                                                                                                                             
| | 
 identifying irregularities in the management of our business, and suggesting
 an appropriate course of action;                           
| |                                                                                                                                             
| |  reviewing
 the adequacy, scope, and results of the internal accounting controls and
 procedures;                                          
| |                                                                                                                                             
| |  reviewing
 the degree of independence of the auditors, as well as the nature and scope
 of our relationship with our independent auditors;
| |                                                                                                                                             
| |  reviewing
 the auditors fees; and                                                                                                        
| |                                                                                                                                             
| | 
 recommending the engagement of auditors to the full board of directors.                                                                  

53

---



A
charter has been adopted to govern the Audit Committee. A copy of the charter
is available on our website located at www.gammacan.com. The Audit Committee
members are Messrs. Josef Neuhaus (Chairman) and David DeMedio, each of whom
has no other affiliation with us and is independent as defined under Rule
4200(a)(15) of the Nasdaq Marketplace Rules, even though such definition does
not currently apply to us because we are not listed on Nasdaq. Each has also
been determined by the board to be audit committee financial experts as
defined by the SEC.

Compensation
Committee

The
Compensation Committee determines the salaries and incentive compensation of
our executive officers, subject to outstanding employment agreements and
provides recommendations for the salaries and incentive compensation of its
other employees and consultants. Its members are Yair Aloni (Chairman), David
DeMedio, and Josef Neuhaus. A charter has been adopted to govern the
Compensation Committee. A copy of the charter is available on our website
located at www.gammacan.com.

Our
compensation programs are intended to enable the attraction, motivation,
reward, and retention of the management talent required to achieve corporate
objectives and thereby increase stockholder value. The Committees policy has
been to provide incentives to our senior management to achieve both short-term
and long-term objectives and to reward exceptional performance and
contributions to the development of our business. To attain these objectives,
the executive compensation program may include a competitive base salary, cash
incentive bonuses, and stock-based compensation.

Relationship of Compensation to Performance
and Compensation of Executive Officers

The
Compensation Committee annually establishes, subject to the approval of our
Board and any applicable employment agreement, the salaries that will be paid
to our executive officers during the year. In setting salaries, the Committee
takes into account several factors, including the following:

| |                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------
| | 
 competitive compensation data;                                                                                                         
| |                                                                                                                                           
| |  the extent
 to which an individual may participate in the stock plans which may be
 maintained by us; and                               
| |                                                                                                                                           
| |  qualitative
 factors bearing on an individuals experience, responsibilities, management
 and leadership abilities, and job performance.

Nomination of Directors

Our
board has not established a nominating committee because the board believes
that it is unnecessary in light of our size and the fact that a majority of our
five board members are independent. Our board does not utilize a nominating
committee charter. In the event that vacancies on our board of directors arise,
the board considers potential candidates for director, which may come to the
attention of the board through current directors, professional executive search
firms, stockholders or other persons. The board will consider candidates
recommended by stockholders if the names and qualifications of such candidates
are submitted in writing in accordance with the notice provisions for
stockholder proposals to our corporate secretary at Gammacan International,
Inc. Kiryat Ono Mall, Azorim Center A, 39 Jerusalem Street, 55423 Kiryat Ono,
  Israel. The board will consider properly submitted stockholder nominations
  for candidates for the board in the same manner as it evaluates other
  nominees. Following verification of the stockholder status of persons
  proposing candidates, recommendations are aggregated and considered by the
  board and the materials provided by a stockholder to the corporate secretary
  for consideration of a nominee for director are forwarded to the board. All
  candidates are evaluated at meetings of the board. In evaluating such
  nominations, the board seeks to achieve the appropriate balance of industry
  and business knowledge and experience in light of the function and needs of
  the board. The board considers candidates with excellent decision-making
  ability, business experience, personal integrity and reputation.

54

---



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Section 16(a)
  Beneficial Ownership Reporting Compliance                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Based
  solely upon a review of Forms 3, 4 and 5, and amendments thereto, furnished
  to us during fiscal year 2007, we believe that during fiscal year 2007, other
  that as set forth below, our
  executive officers, directors and all persons who own more than ten percent
  of a registered class of our equity securities complied with all Section
  16(a) filing requirements except with respect to late filings of Form 4 of
    Patrick Schnegelsberg, Josef Neuhaus, Yair Aloni, Chaime Orlev, and Shmuel
    Levi.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Code of Ethics                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|We
  have adopted a Code of Ethics for our officers, directors and employees. A
  copy of the Code of Ethics is located at our website at www.gammacan.com.                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Part III                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|ITEM 10 - EXECUTIVE COMPENSATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Summary
  Compensation Table                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|The
  following table sets forth the compensation earned during the years ended
  September 30, 2007 and 2006 by our President and Chairman of the Board, Chief
  Executive Officer, our Chief Financial Officer and former Vice President of
  Corporate Development (the Named Executive Officers):                                                                                                                                                                                                                          

|                                                     |  |            |  |              |  |                   |  |                             |  |                              |  |                                                               |  |                                                     |  |                                      |  |             | 
|---------------------------------------------------- |  | ---------- |  | ------------ |  | ----------------- |  | --------------------------- |  | ---------------------------- |  | ------------------------------------------------------------- |  | --------------------------------------------------- |  | ------------------------------------ |  | ----------- | 
|Name and
  Principal 
  Position                     |  | Year
  (1) |  | Salary
  ($) |  | Bonus
  ($)
  (2) |  | Stock 
  Awards
  ($)
  (3) |  | Option 
  Awards
  ($)
  (4) |  | Non-Equity
  
  Incentive 
  Plan 
  Compensation
  ($)
  (5) |  | Nonqualified
  Deferred 
  Compensation
  ($)
  (6) |  | All Other
  Compensation
  ($)
  (7) |  | Total
  ($) | 
|                                                     |  |            |  |              |  |                   |  |                             |  |                              |  |                                                               |  |                                                     |  |                                      |  |             | 
|Steven
  Katz,                                       |  | 2007       |  | 466,070(9)   |  | Nil               |  | Nil                         |  | 119,450                      |  | Nil                                                           |  | Nil                                                 |  | Nil                                  |  | 585,520     | 
|President
  and Chairman of Board(8)                 |  | 2006       |  | Nil          |  | Nil               |  | Nil                         |  | Nil                          |  | Nil                                                           |  | Nil                                                 |  | Nil                                  |  | Nil         | 
|Patrick
  Schnegelsberg,                             |  | 2007       |  | 212,170      |  | Nil               |  | Nil                         |  | 992,858                      |  | Nil                                                           |  | Nil                                                 |  | Nil                                  |  | 1,205,028   | 
|Chief
  Executive Officer(10)                        |  | 2006       |  | 99,084       |  | Nil               |  | Nil                         |  | 494,557                      |  | Nil                                                           |  | Nil                                                 |  | Nil                                  |  | 593,641     | 
|Vered
  Caplan,                                      |  | 2007       |  | 82,113       |  | Nil               |  | Nil                         |  | Nil                          |  | Nil                                                           |  | Nil                                                 |  | 29,727                               |  | 111,841     | 
|Former
  Vice President of Corporate Development(11) |  | 2006       |  | 82,113       |  | Nil               |  | Nil                         |  | Nil                          |  | Nil                                                           |  | Nil                                                 |  | 29,496                               |  | 111,609     | 
|Chaime
  Orlev,                                      |  | 2007       |  | 94,055       |  | Nil               |  | Nil                         |  | 121,662                      |  | Nil                                                           |  | Nil                                                 |  | 25,568                               |  | 241,285     | 
|Chief
  Financial Officer (12)                       |  | 2006       |  | 74,868       |  | Nil               |  | Nil                         |  | 174,887                      |  | Nil                                                           |  | Nil                                                 |  | 21,175                               |  | 270,930     | 

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(1)  | The information is
  provided for each fiscal year which begins on October 1 and ends on September
  30.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(2)  | No bonus awards were made
  to the Named Executive Officers in the fiscal years ended September 30, 2007
  and                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     | 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(3)  | No stock awards were
  granted to the Named Executive Officers in the fiscal years ended September
  30, 2007 and 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(4)  | The amounts reflect the
  compensation expense in accordance with FAS 123(R) of these option awards.
  The assumptions used to determine the fair value of the option awards for
  fiscal years ended September 30, 2007 and 2006 are set forth in Note 8 of our
  audited consolidated financial statements included in our Form 10-KSB for
  fiscal year ended September, 2007. Our Named Executive Officers will not
  realize the value of these awards in cash unless and until these awards are
  exercised and the underlying shares subsequently sold.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(5)  | We do not have a
  non-equity incentive compensation plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(6)  | We do not have a deferred
  non-qualified compensation plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(7)  | See
  All Other Compensation Table below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(8)  | Mr.
  Katz was appointed Chairman of the Board on November 6, 2006 and President
    on May 22, 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(9)  | Pursuant
  to an agreement between the Company and Steven Katz & Associates, Inc. (SKA),
  a company wholly-owned by Steven Katz, we pay SKA consulting fees for
  consulting services provided. The amount includes $216,635 paid to SKA and
  $249,435 accrued but not yet paid as of September 30, 2007.                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(10) | Mr.
  Schnegelsberg was appointed Chief Executive Officer on April 16, 2006 and
  served as Chief Executive Officer of our subsidiary, GammaCan Ltd, from May
  22, 2007.                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(11) | Ms.
  Caplan served as acting Chief Executive Officer from July 2, 2005 until April
  15, 2006 and served as Chief Executive Officer of our subsidiary, GammaCan
  Ltd, from July 2, 2005 until May 22, 2007. From May 22, 2007 until November
  30, 2007, Ms. Caplan served as our Vice President of Corporate Development.
  As of November 30, 2007 Ms. Caplan is no longer employed by the Company.                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(12) | Mr.
  Orlev was appointed Chief Financial Officer on October 6, 2005. On November
  15, 2007, Mr. Orlev tendered his resignation and has agreed to stay on in his
  current position at our request until no later than February 28, 2008.                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

55

---



|                             |                                                                                                               
|---------------------------- | --------------------------------------------------------------------------------------------------------------
|All Other Compensation Table
|                             |                                                                                                               
|                             | All
          Other Compensation amounts in the Summary Compensation Table consist
          of the following:
|                             |                                                                                                               

|               |  |      |      |  |        |                                     |  |        |                               |  |       |                         |  |        |             | 
|-------------- |  | ---- | ---- |  | ------ | ----------------------------------- |  | ------ | ----------------------------- |  | ----- | ----------------------- |  | ------ | ----------- | 
|Name           |  |      | Year |  |        | Automobile
  Related Expenses
  ($) |  |        | Managers
  Insurance *
  ($) |  |       | Education
  Fund*
  ($) |  |        | Total
  ($) | 
|               |  |      |      |  |        |                                     |  |        |                               |  |       |                         |  |        |             | 
|Vered
  Caplan |  |      | 2007 |  |        | 15,063                              |  |        | 11,129                        |  |       | 3,535                   |  |        | 29,727      | 
|               |  | 2006 |      |  | 15,225 |                                     |  | 11,129 |                               |  | 3,142 |                         |  | 29,496 |            
|Chaime
  Orlev |  |      | 2007 |  |        | 9,285                               |  |        | 12,748                        |  |       | 3,535                   |  |        | 25,568      | 
|               |  | 2006 |      |  | 7,886  |                                     |  | 10,147 |                               |  | 3,142 |                         |  | 21,175 |            

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|* | Managers insurance and
  education funds are customary benefits provided to employees based in Israel.
  Managers insurance is a combination of severance savings (in accordance with
  Israeli law), defined contribution tax-qualified pension savings and
  disability insurance premiums. An Education fund is a savings fund of pre-tax
  contributions to be used after a specified period of time for educational or
  other permitted purposes.

56

---



|                                                                                                                                                       
|-------------------------------------------------------------------------------------------------------------------------------------------------------
|Outstanding Equity Awards at Fiscal Year-End                                                                                                           
|                                                                                                                                                       
|The
  following table sets forth information concerning stock options and stock
  awards held by the Named Executive Officers as of September 30, 2007.

|                                                                        |         |                                                                                 |  |                                                                                   |         |                                                                                                                    |     |                                 |   |                            |      |                                                                              |          |                                                                                       |     |                                                                                                                                   |     |                                                                                                                                                          |     |     |     |     |  |  |  |  |  | 
|----------------------------------------------------------------------- | ------- | ------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------- | ------- | ------------------------------------------------------------------------------------------------------------------ | --- | ------------------------------- | - | -------------------------- | ---- | ---------------------------------------------------------------------------- | -------- | ------------------------------------------------------------------------------------- | --- | --------------------------------------------------------------------------------------------------------------------------------- | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | --- | --- | --- |  |  |  |  |  | 
|                                                                        |         | Option
  Awards                                                                 |  | Stock
  Awards                                                                    |        
|                                                                        |         |                                                                                 |  |                                                                                   |        
|Name                                                                    |         | Number of
  Securities
  Underlying
  Unexercised
  Options
  (#)
  Exercisable |  | Number of
  Securities
  Underlying
  Unexercised
  Options
  (#)
  Unexercisable |         | Equity
  Incentive 
  Plan
  Awards
  Number of
  Securities
  Underlying
  Unexercised
  Unearned
  Options
  (#) |     | Option
  Exercise
  Price
  ($) |   | Option
  Expiration
  Date |      | Number of
  Shares or
  Units of
  Stock Held
  That Have
  Not Vested
  (#) |          | Market 
  Value
  of Shares or
  Units of
  Stock Held
  That Have
  Not Vested
  ($) |     | Equity
  Incentive 
  Plan
  Awards:
  Number of
  Unearned
  Shares, 
  Units
  or Other
  Rights That
  Have Not
  Vested
  (#) |     | Equity 
  Incentive
  Plan 
  Awards:
  Market or
  Payout 
  Value of
  Unearned
  Shares, 
  Units or
  Other Rights
  That Have 
  Not
  Vested
  ($) |    
|                                                                        |         |                                                                                 |  |                                                                                   |         |                                                                                                                    |     |                                 |   |                            |      |                                                                              |          |                                                                                       |     |                                                                                                                                   |     |                                                                                                                                                          |    
|Steven Katz, 
  President and 
  Chairman                               |         | Nil                                                                             |  |                                                                                   | 150,000 | (1)                                                                                                                |     | Nil                             |   | $                          | 0.45 |                                                                              | 11/06/16 |                                                                                       |     | Nil                                                                                                                               |     | Nil                                                                                                                                                      |     | Nil |     | Nil | 
|                                                                        | Nil     |                                                                                 |  | 1,150,000                                                                         | (2)     |                                                                                                                    | Nil |                                 | $ | 0.53                       |      | 02/25/17                                                                     |          |                                                                                       | Nil |                                                                                                                                   | Nil |                                                                                                                                                          | Nil |     | Nil |    
|Patrick 
  Schnegelsberg 
  CEO                                         |         | Nil                                                                             |  |                                                                                   | 250,000 | (3)                                                                                                                |     | Nil                             |   | $                          | 0.53 |                                                                              | 02/25/17 |                                                                                       |     | Nil                                                                                                                               |     | Nil                                                                                                                                                      |     | Nil |     | Nil | 
|                                                                        | 400,000 | (4)                                                                             |  | 1,100,000                                                                         | (4)     |                                                                                                                    | Nil |                                 | $ | 0.61                       |      | 05/16/17                                                                     |          |                                                                                       | Nil |                                                                                                                                   | Nil |                                                                                                                                                          | Nil |     | Nil |    
|Chaime Orlev, 
  CFO                                                    |         | Nil                                                                             |  |                                                                                   | 300,000 | (5)                                                                                                                |     | Nil                             |   | $                          | 0.53 |                                                                              | 02/25/17 |                                                                                       |     | Nil                                                                                                                               |     | Nil                                                                                                                                                      |     | Nil |     | Nil | 
|                                                                        | 150,000 | (6)                                                                             |  | 150,000                                                                           | (6)     |                                                                                                                    | Nil |                                 | $ | 0.61                       |      | 05/16/17                                                                     |          |                                                                                       | Nil |                                                                                                                                   | Nil |                                                                                                                                                          | Nil |     | Nil |    
|Vered Caplan 
  Former Vice 
  President of 
  Corporate 
  Development |         | Nil                                                                             |  |                                                                                   | Nil     |                                                                                                                    |     | Nil                             |   |                            | Nil  |                                                                              | Nil      |                                                                                       |     | Nil                                                                                                                               |     | Nil                                                                                                                                                      |     | Nil |     | Nil | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(1) | On November 7, 2006, Mr.
  Katz was granted options under the 2004 Stock Option Plan to purchase 150,000
  shares of our common stock at an exercise price of $0.45 per share. These
  options are exercisable with respect to 37,500 shares on November 7, 2007 and
  the remaining in equal installments on the last day of each month for 36
  months thereafter.                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(2) | On February 26, 2007, Mr.
  Katz was granted options under the 2007 Stock Option Plan to purchase
  1,150,000 shares of our common stock at an exercise price of $0.53 per share,
  one third of which vest on each of the first, second and third anniversaries
  of the grant date.                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(3) | On February 26, 2007, Mr.
  Schnegelsberg was granted options under the 2007 Stock Option Plan to
  purchase 250,000 shares of our common stock at an exercise price of $0.53,
  one third of which vest on each of the first, second and third anniversaries
  of the grant date.                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(4) | On May 17, 2007, the grant
  of options to Mr. Schnegelsberg under the 2004 Stock Option Plan to purchase
  1,400,000 shares of our common stock at an exercise price of $1.29 per share
  was cancelled. On the same day, Mr. Schnegelsberg was granted options under
  the 2007 Stock Option Plan to purchase 1,500,000 shares of our common stock
  at an exercise price of $0.61 per share. These options are exercisable with
  respect to 400,000 on the grant date and the remaining 1,100,000 in two equal
  installments on the first and second anniversary of the grant date.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(5) | On February 26, 2007, Mr.
  Orlev was granted options to purchase 300,000 shares of our common stock at
  an exercise price of $0.53, one third of which vest on each of the first,
  second and third anniversaries of the grant date.                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(6) | On May 17, 2007, the grant
  of options to Mr. Orlev under the 2004 Stock Option Plan to purchase 350,000
  shares of our common stock at an exercise price of $0.93 per share was
  cancelled. On the same day, Mr. Orlev was granted options under the 2007
  Stock Option Plan to purchase 300,000 shares of our common stock at an
  exercise price of $0.61. These options are exercisable with respect to 150,000
  on the grant date and the remaining 150,000 in two equal installments on the
  first and second anniversaries of the grant date.                              

57

---



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Stock
  Option Plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|2004
  Employees and Consultants Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|On
  August 17, 2004, our board adopted the 2004 Employees and Consultants Stock
  Option Plan in order to attract and retain quality personnel. Under the 2004
  Plan, 5,000,000 shares have been reserved for the grant of options by the
  board. As of September 30, 2007, options with respect to 1,515,000 shares
  have been granted under the 2004 Stock Option Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|2007
  Global Share Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|On
  February 26, 2007, our board adopted the 2007 Global Share Option Plan in
  order to attract and retain quality personnel. Under the 2007 Stock Option
  Plan, 5,000,000 shares have been reserved for the grant of options, which may
  be issued at the discretion of our board of directors from time to time. As
  of September 30, 2007, options exercisable for an aggregate of 4,285,000
  shares have been granted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Employment
  and Consulting Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|On
  August 17, 2004, our subsidiary, GammaCan, Ltd. entered into a consultancy
    agreement with Professor Yehuda Shoenfeld, M.D., providing for a monthly
    compensation of 22,685 NIS (approximately $5,300 as of the date hereof) for
    his services as the Chief Scientist of GammaCan, Ltd. Either
    Prof. Shoenfeld or GammaCan, Ltd. may terminate the agreement without cause,
    for any reason, with 30 days notice.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|On
  March 1, 2005, GammaCan, Ltd. entered into an employment agreement with Vered
  Caplan for her to be Vice President of Business Development and provide at
  least 20 hours of service per week for a salary of $4,000 per month. She was
  appointed as acting Chief Executive Officer of both the Company and its
  subsidiary, effective July 2, 2005 at a salary of $6,475 per month. Ms.
  Caplan has devoted approximately 70% of her business time during the period
  to the affairs of both companies. She resigned from her position as our acting
  Chief Executive Officer, effective April 15, 2006. As of May 22, 2007, Ms.
  Caplan became our Vice President of Corporate Development and commencing with
  this appointment, Ms. Caplan ceased her service as Chief Executive Officer
    of our subsidiary. As of November 30, 2007, Ms. Caplan is no longer employed
    by the Company. We subsequently entered into a consulting agreement with
    Ms. Caplan whereby she will perform certain consulting services as requested
    from time to time by us and will be compensated based on hours worked.                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|On
  September 6, 2005, GammaCan, Ltd. entered into an employment agreement with
  Chaime Orlev pursuant to which he has served as Chief Financial Officer of
  the Company and its subsidiary since October 6, 2005. He received a salary
  pursuant to the agreement of 25,000 NIS per
  month (approximately US$5,800, as of the date hereof), which was increased
    on April 16, 2006 to $6,500 per month. His salary was subsequently increased
    on October 24, 2007 to $8,333 effective from April 1, 2007. The agreement
  provided for the grant of 350,000 of our stock options at an exercise price
  of $0.93 per share. On May 17, 2007, these options were cancelled and
  surrendered for options
  to purchase 300,000 shares of our common stock at an exercise price of $0.61.
  These options are exercisable with
  respect to 150,000 on the grant date and the remaining 150,000 in two equal
  installments on the first and second anniversary of the grant date. Previously,
    on February 26, 2007, Mr. Orlev was granted options to purchase 300,000 shares
    of our common stock at an exercise price of $0.53, one third of which vest
    on each of the first, second and third anniversaries of the grant date. The
    agreement further provided for the provision of a company car and managers
    insurance as well as the maintenance of an education fund.

58

---



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|On
  April 16, 2006, we entered into an agreement with Patrick Schnegelsberg
  employing him as our Chief Executive Officer. The agreement provides for an
  annual salary of $200,000 and an annual bonus of up to $200,000 upon
  achieving certain objectives. The agreement provided for the grant of
  1,400,000 stock options at an exercise price of $1.29 per share. On May 17,
  2007, these options were cancelled and surrendered for options to
  purchase 1,500,000 shares of our common stock at an exercise price of $0.61.These
    options are exercisable with respect to 400,000 on the grant date
  and the remaining 1,100,000 in two equal installments on the first and second
  anniversary of the grant date. Previously on February 26, 2007, Mr.
  Schnegelsberg was granted options to purchase 250,000 shares of our common
  stock at an exercise price of $0.53, one third of which vest on each of the
  first, second and third anniversaries of the grant date. If
  we terminate Mr. Schegelsbergs employment without cause, he shall continue
  to be entitled to his compensation under the employment agreement during the
  advance notice of termination period which is 45 days during the first year
  of employment, 90 days during the second year of employment and 180 days
  thereafter.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|On
  October 31, 2006, we entered into a consulting agreement with Steven Katz
  & Associates, Inc., (SKA),
  a company wholly-owned by Steven Katz, the Companys Chairman of the Board
  and President, engaging it as a consultant at a fee of $345 per hour.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|On
  December 20, 2007, we entered into an indemnification agreement with our
  directors and officers which supersedes any indemnification agreements
  previously entered into with such individuals.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Director
  Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Directors
  are entitled to reimbursement for reasonable travel and other out-of-pocket
  expenses incurred in connection with attendance at meetings of our board of
  directors. Effective October 1, 2006, each
  outside director is entitled to receive as remuneration for his or her
  service as a member of the board a sum equal to US$8,000 per annum, to be
  paid quarterly and shortly after the close of each quarter. Effective as of
  October 1, 2007, this amount was increased to $12,000. The board of directors may
  award special remuneration to any director undertaking any special services
  on behalf of us other than services ordinarily required of a director.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Other
  than indicated in this Annual Report, no director received and/or accrued any
  compensation for his or her services as a director, including committee
  participation and/or special assignments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

59

---



|                                                                                               
|-----------------------------------------------------------------------------------------------
|The
  following table sets forth director compensation for the year ended September
  30, 2007.

|                   |  |   |                                           |  |  |                      |  |                       |        |     |                                                  |     |  |                                         |     |  |                                |     |             |   |        | 
|------------------ |  | - | ----------------------------------------- |  |  | -------------------- |  | --------------------- | ------ | --- | ------------------------------------------------ | --- |  | --------------------------------------- | --- |  | ------------------------------ | --- | ----------- | - | ------ | 
|Name of
  Director |  |   | Fees
  Earned 
  or Paid in 
  Cash
  ($) |  |  | Stock
  Awards
  ($) |  | Option
  Awards
  ($) |        |     | Non-Equity
  Incentive Plan
  Compensation
  ($) |     |  | Nonqualified
  Deferred 
  Compensation |     |  | All Other
  Compensation
  ($) |     | Total
  ($) |  
|Yair
  Aloni       |  | $ | 8,000                                     |  |  | Nil                  |  | $                     | 78,564 | (1) |                                                  | Nil |  |                                         | Nil |  |                                | Nil |             | $ | 86,564 | 
|Steven
  Katz (2)  |  |   | Nil                                       |  |  | Nil                  |  | $                     | 39,503 | (1) |                                                  | Nil |  |                                         | Nil |  |                                | Nil |             | $ | 39,503 | 
|Shmuel
  Levi(3)   |  | $ | 8,000                                     |  |  | Nil                  |  | $                     | 78,564 | 1)  |                                                  | Nil |  |                                         | Nil |  |                                | Nil |             | $ | 86,564 | 
|Josef
  Neuhaus    |  | $ | 8,000                                     |  |  | Nil                  |  | $                     | 89,502 | (1) |                                                  | Nil |  |                                         | Nil |  |                                | Nil |             | $ | 97,502 | 
|Albert
  Passner   |  | $ | 8,000                                     |  |  | Nil                  |  | $                     | 39,503 | (1) |                                                  | Nil |  |                                         | Nil |  |                                | Nil |             | $ | 47,503 | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 
|(1) | The amounts reflect the
  compensation expense in accordance with FAS 123(R) of these option awards.
  The assumptions used to determine the fair value of the option awards are set
  forth in Note 8 of our audited consolidated financial statements included in
  this Form 10-KSB. Our directors will not realize the value of these awards in
  cash unless and until these awards are exercised and the underlying shares
  subsequently sold.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 
|(2) | Please refer to the
  summary compensation table for executive compensation with respect to the
  named individual.                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 
|(3) | On October 30, 2007, Mr. Levi resigned
        from our board of directors and our audit and compensation committees.
        His vacancy was filled by Mr. DeMedio.                                                                                                                                                                                                                                                                                 

60

---



ITEM 11-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS

The
following table sets forth certain information regarding beneficial ownership
of our common stock as of September 30, 2007 by (i) by each person who is
known by us to own beneficially more than 5% of our common stock, (ii) by
each of the Named Executive Officers and (iv) by all our directors and
executive officers as a group. On such date, we had 44,958,917 shares of common
stock outstanding.

As
used in the table below and elsewhere in this Annual Report on Form 10-KSB, the
    term beneficial
ownership with respect to a
security consists of sole or shared voting power, including the power to vote
or direct the vote and/or sole or shared investment power, including the power
to dispose or direct the disposition, with respect to the security through any
contract, arrangement, understanding, relationship, or otherwise, including a
right to acquire such power(s) during the next 60 days following September 30,
2007.

|                                                                                                |  |  |                  |         |                                         |      | 
|----------------------------------------------------------------------------------------------- |  |  | ---------------- | ------- | --------------------------------------- | ---- | 
|Name and
address of Beneficial Owner                                                            |  |  | Number of Shares |         | Percentage of Shares Beneficially Owned |     
|                                                                                                |  |  |                  |         |                                        
|Andrew
 Lessman
 430 Parkson Rd.
 Henderson, NV                                                 |  |  | 7,666,668        | (1)(16) |                                         | 15.7 | 
|                                                                                                |  |  |                  |         |                                         |      | 
|MM&B
 Holdings, a California general partnership
 23622 Calabassas Road
 Calabassas, California |  |  | 5,293,334        | (2)(16) |                                         | 11.2 | 
|                                                                                                |  |  |                  |         |                                         |      | 
|Zeev
 Bronfeld
 6 Uri St.
 Tel Aviv, Israel                                                    |  |  | 3,900,006        |         |                                         | 8.7  | 
|                                                                                                |  |  |                  |         |                                         |      | 
|Vered Caplan
 69 Deganya St.
 Pardes Hanna Karkur, Israel                                       |  |  | 3,900,006        |         |                                         | 8.7  | 
|                                                                                                |  |  |                  |         |                                         |      | 
|JMG Triton
 Offshore Fund Ltd
 11601 Wilshire Blvd., Suite 2180
 Los Angeles, CA 90025          |  |  | 3,000,000        | (3)(16) |                                         | 6.5  | 
|                                                                                                |  |  |                  |         |                                         |      | 
|JMG Capital
 Partners LP
 11601 Wilshire Blvd., Suite 2180
 Los Angeles, CA 90025               |  |  | 3,000,000        | (3)(16) |                                         | 6.5  | 
|                                                                                                |  |  |                  |         |                                         |      | 
|Ram Capital
 Group LLC
 1974 Sproul Road, Suite 204
 Broomall, PA 19008                         |  |  | 2,500,000        | (4)(16) |                                         | 5.4  | 

61

---



|                                                                                      |  |  |           |         |  |     | 
|------------------------------------------------------------------------------------- |  |  | --------- | ------- |  | --- | 
|Bristol
 Investment Fund Ltd
 10990 Wilshire Blvd., Suite 1410
 Los Angeles, CA 90024 |  |  | 2,394,800 | (4)(16) |  | 5.2 | 
|                                                                                      |  |  |           |         |  |     | 
|Yair Aloni(5)12A Shabazy St.
 Tel Aviv, Israel                                        |  |  | 310,005   | (6)     |  | *   | 
|                                                                                      |  |  |           |         |  |     | 
|Steven Katz(5)(7)20 Rebel Run Drive
 East Brunswick NJ 08816                          |  |  | 37,500    | (9)     |  | *   | 
|                                                                                      |  |  |           |         |  |     | 
|Josef
 Neuhaus(5)45 Eliezer Yafeh St.
 Raanana, Israel                               |  |  | 15,000    | (10)    |  | *   | 
|                                                                                      |  |  |           |         |  |     | 
|Albert
 Passner(5)
 3 Disbrow Court
 East Brunswick, NJ 08816                         |  |  | 37,500    | (9)     |  | *   | 
|                                                                                      |  |  |           |         |  |     | 
|Shmuel Levi(11)
 14 Hanita St.
 Naharia, Israel                                       |  |  | 30,000    | (12)    |  | *   | 
|                                                                                      |  |  |           |         |  |     | 
|Patrick
 Schnegelsberg(7)100 John St. 2901
 New York, NY                              |  |  | 400,000   | (13)    |  | *   | 
|                                                                                      |  |  |           |         |  |     | 
|Chaime Orlev(7)10 Hameyasdim St.
 Kiryat-Ono, Israel                                  |  |  | 150,000   | (14)    |  | *   | 
|                                                                                      |  |  |           |         |  |     | 
|Prof. Yehuda
 Shoenfeld, M.D.(8)26 Sapir St.
 Ramat Gan, Israel                       |  |  | 699,996   |         |  | 1.6 | 
|                                                                                      |  |  |           |         |  |     | 
|All current
 Executive Officers and Directors as a group (eight persons)              |  |  | 1,680,001 | (15)    |  | 3.7 | 
|                                                                                      |  |  |           |         |  |     | 



---

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*    | Less than 1%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(1)  | Includes 3,833,334 shares
 of common stock issuable upon the exercise of warrants beneficially owned by
 the referenced entity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(2)  | Includes 2,500,000 shares
 of common stock issuable upon the exercise of warrants beneficially owned by
 the referenced entity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(3)  | Includes 1,500,000 shares
 of common stock issuable upon the exercise of warrants beneficially owned by
 the referenced entity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(4)  | Includes 1,250,000 shares
 of common stock issuable upon the exercise of warrants beneficially owned by
 the referenced entity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(5)  | Indicates Director.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(6)  | Includes 30,000 shares of
 common stock issuable upon the exercise of outstanding stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(7)  | Indicates Officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(8)  | The referenced individual
 serves as our subsidiarys Chief Scientist and for the purposes of this
 table only is considered an executive officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(9)  | Consists of 37,500 shares
 of common stock issuable upon the exercise of outstanding stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(10) | Consists of 15,000 shares
 of common stock issuable upon the exercise of outstanding stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(11) | The referenced individual resigned from our
      board of directors and our audit and compensation committees on October
        30, 2007. His vacancy was filled by Mr. DeMedio.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(12) | Consists of 30,000 shares of common stock issuable
        upon the exercise of outstanding stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(13) | Consists of 400,000 shares
 of common stock issuable upon the exercise of outstanding stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(14) | Consists of 150,000 shares
 of common stock issuable upon the exercise of outstanding stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(15) | Includes 700,000 shares of
 common stock issuable upon the exercise of outstanding stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(16) | Notwithstanding the
 inclusion of warrants beneficially owned by the referenced entity in the
 beneficial ownership calculation, the warrants provide that the holder of the
 warrants shall not have the right to exercise any portion of the warrants,
 and we shall not effect any exercise of such warrants, to the extent that
 after giving effect to such issuance after exercise such holder of the
 warrants, together with his, her or its affiliates, would beneficially own in
 excess of 4.99% of the number of shares of common stock outstanding
 immediately after giving effect to such issuance. Such 4.99% limitation may
 be waived by each holder upon not less than 61 days prior notice to change
 such limitation to 9.99% of the number of shares of common stock outstanding
 immediately after giving effect to such issuance.

62

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ITEM 12 -
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Except
as otherwise indicated below, we have not been a party to any transaction,
proposed transaction, or series of transactions required to be disclosed pursuant
    to Item 404 of Regulation S-B.

Our
policy is to enter into transactions with related parties on terms that, on the
whole, are no less favorable than those available from unaffiliated third
parties. Based on our experience in the business sectors in which we operate
and the terms of our transactions with unaffiliated third parties, we believe
that all of the transactions described below met this policy standard at the time
they occurred.

On
December 13, 2007, we entered into a Share Purchase Agreement made as of
November 26, 2007 with ARP. The Share Purchase Agreement provides that, subject
to fulfillment of certain closing conditions, including the receipt of an
Israeli tax ruling, ARP will sell to us 12.5% of the issued and outstanding
shares of our subsidiary such that at closing we will own 100% of the issued
and outstanding shares of our subsidiary. In consideration for such sale, we
agreed to issue to ARP, at closing, 2,697,535 shares of our common stock, a
warrant to acquire 1,123,973 shares of our common stock and an additional
warrant to acquire 449,589 shares of our common stock. Both warrants are
exercisable for five years at an exercise price

63

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equal to the average last sales
price of our common stock during the sixty trading days prior to November 26,
2007. The warrants are subject to adjustment for, among other things, stock
splits, stock dividends, distributions and reclassifications. In the case of the
warrant to acquire 1,123,973 shares, if there is a change of control (as
defined therein), then subject to certain restrictions, the warrant shall be
deemed exercised in full and no exercise price shall be payable by the holder.
The securities (and underlying securities) to be issued under the Share
Purchase Agreement will also be subject to a separate lock up agreement and
registration rights agreement upon issuance.

In
connection with the Share Purchase Agreement, ARP and our subsidiary agreed to
enter into an amendment of the agreement for the purchase and sale of
intellectual property from ARP, which amendment specifically delineates clarity
of title and related issues to certain intellectual property sold under the
original agreement.

Mr.
Yair Aloni, a member of our board of directors, is the Chief Executive Officer
of ARP and Professor Yehuda Shoenfeld, M.D., our Chief Scientist of our
subsidiary, is an advisor to ARP.

See Employment and
Consultancy Agreements above for information as to the agreements with our
employees and consultants.

64

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ITEM 13  EXHIBITS

Exhibits:

|       |  |                                                                                                                                                                                                                                                                  
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |  | Exhibit                                                                                                                                                                                                                                                          
|       |  |                                                                                                                                                                                                                                                                  
|3.1    |  | Certificate
  of Incorporation, incorporated by reference to the Registration Statement on
  Form 10-SB filed with the Commission on June 4, 2001.                                                                                                               
|       |  |                                                                                                                                                                                                                                                                  
|3.2    |  | Certificate
  of Amendment to Certificate of Incorporation dated May 28, 2004 incorporated
  by reference to Current Report on Form 8-K filed with the Commission on June
  8, 2004.                                                                             
|       |  |                                                                                                                                                                                                                                                                  
|3.3    |  | Certificate
  of Amendment to Certificate of Incorporation dated August 19, 2004
  incorporated by reference to Current Report on Form 8-K filed with the
  Commission on August 27, 2004.                                                                       
|       |  |                                                                                                                                                                                                                                                                  
|3.4    |  | Certificate
  of Amendment to Certificate of Incorporation dated December 27, 2007.*                                                                                                                                                                             
|       |  |                                                                                                                                                                                                                                                                  
|3.5    |  | By-Laws,
  incorporated by reference to the Registration Statement on Form 10-SB filed with
  the Commission on June 4, 2001.                                                                                                                                    
|       |  |                                                                                                                                                                                                                                                                  
|4.1    |  | 2004
  Employees and Consultants Stock Compensation Plan, incorporated by reference
  to Current Report on Form 8-K filed with the Commission on September 1, 2004.                                                                                              
|       |  |                                                                                                                                                                                                                                                                  
|4.2    |  | 2007 Global
  Share Option Plan.*                                                                                                                                                                                                                                
|       |  |                                                                                                                                                                                                                                                                  
|10.1   |  | Sale of
  Intellectual Property Agreement dated as of June 11, 2004 between GammaCan,
  Ltd. and ARP Biomed, Ltd., incorporated by reference to Current Report on
  Form 8-K filed with the Commission on June 22, 2004.                                         
|       |  |                                                                                                                                                                                                                                                                  
|10.2   |  | Services
  Agreement dated August 17, 2004 between GammaCan, Ltd. and Prof. Yehuda
  Shoenfeld, M.D., incorporated by reference to Current Report on Form 8-K
  filed with the Commission on September 1, 2004.                                                  
|       |  |                                                                                                                                                                                                                                                                  
|10.3   |  | Consulting
  agreement between GammaCan Ltd. and PBD Ltd., dated as of November 4, 2004,
  incorporated by reference to Form 8-K dated as of November 4, 2004                                                                                                    
|       |  |                                                                                                                                                                                                                                                                  
|10.4   |  | Employment
  Agreement between GammaCan, Ltd. and Vered Caplan, dated as of June 21, 2005,
  incorporated by reference to Current Report on Form 8-K filed with the
  Commission on June 27, 2005.                                                               
|       |  |                                                                                                                                                                                                                                                                  
|10.5   |  | Employment
  Agreement between GammaCan, Ltd. and Chaime Orlev, dated as of September 6,
  2005, incorporated by reference to Current Report on Form 8-K filed with the
  Commission on September 12, 2005.                                                      
|       |  |                                                                                                                                                                                                                                                                  
|10.6   |  | Research and
  Licensing Agreement dated December 13, 2005 between Gammacan Ltd and Tel
  Hashomer Medical Research Infrastructure and Services Ltd., incorporated by
  reference to Current Report on Form 8-K filed with the Commission on December
  19, 2005.
|       |  |                                                                                                                                                                                                                                                                  
|10.7   |  | Employment
  Agreement between GammaCan, Ltd. and Patrick Schnegelsberg, dated as of April
  16, 2006, incorporated by reference to Current Report on Form 8-K filed with
  the Commission on April 19, 2006.                                                    
|       |  |                                                                                                                                                                                                                                                                  
|10.9   |  | 8% Convertible Promissory Note
  issued November 20, 2006 incorporated by reference to Current
  Report on Form 8-K filed with the Commission on November 22, 2006.                                                                                              
|       |  |                                                                                                                                                                                                                                                                  
|10.10  |  | Form of
  Securities Purchase Agreement from the private placement that closed on
  February 27, 2007 incorporated by reference to Current Report on Form 8-K
  filed with the Commission on March 1, 2007.                                                      
|       |  |                                                                                                                                                                                                                                                                  
|10.11  |  | Form of
  Stock Purchase Warrant from the private placement that closed on February 27,
  2007 incorporated by reference to Current Report on Form 8-K filed with the
  Commission on March 1, 2007.                                                             
|       |  |                                                                                                                                                                                                                                                                  
|10.12  |  | Form of Lock
  Up Agreement from the private placement that closed on February 27, 2007
  incorporated by reference to Current Report on Form 8-K filed with the
  Commission on March 1, 2007.                                                                  
|       |  |                                                                                                                                                                                                                                                                  
|10.13  |  | Form of
  Registration Rights Agreement from the private placement that closed on
  February 27, 2007
  incorporated by reference to Current Report on Form 8-K filed with the
  Commission on March 1, 2007.                                                    

65

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|      |  |                                                                                                                                                                                                                                                         
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.14 |  | Agreement
  for the Purchase and Sale of Blood Plasma between GammaCan Ltd. and DCI
  Management Group, LLC incorporated by reference to Current Report on Form 8-K
  filed with the Commission on October 5, 2007.                                     
|      |  |                                                                                                                                                                                                                                                         
|10.15 |  | Form of
  Indemnification Agreement between GammaCan International, Inc. and its
  directors and officers.*                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                         
|10.16 |  | Share
  Purchase Agreement made as of November 26, 2007 between GammaCan
  International, Inc. and ARP BioMed, Ltd. incorporated by reference to Current
  Report on Form 8-K filed with the Commission on December 19, 2007.                           
|      |  |                                                                                                                                                                                                                                                         
|10.17 |  | Form of Amendment
  to Sale of Intellectual Property Agreement effective as of November 26, 2007
  between GammaCan, Ltd. and ARP BioMed, Ltd. incorporated by reference to
  Current Report on Form 8-K filed with the Commission on December 19, 2007.
|      |  |                                                                                                                                                                                                                                                         
|10.18 |  | Form of Warrant
  to be issued to ARP BioMed, Ltd. under the Share Purchase Agreement
  incorporated by reference to Current Report on Form 8-K filed with the
  Commission on December 19, 2007.                                                       
|      |  |                                                                                                                                                                                                                                                         
|10.19 |  | Form of
  Additional Warrant to be issued to ARP BioMed, Ltd. under the Share Purchase
  Agreement incorporated by reference to Current Report on Form 8-K filed with
  the Commission on December 19, 2007.                                            
|      |  |                                                                                                                                                                                                                                                         
|10.20 |  | Form of
  Registration Rights Agreement made as of November 26, 2007 between ARP
  BioMed, Ltd. and GammaCan International, Inc. incorporated by reference to
  Current Report on Form 8-K filed with the Commission on December 19, 2007.              
|      |  |                                                                                                                                                                                                                                                         
|10.21 |  | Form of
  Lock-Up Agreement made as of November 26, 2007 between ARP BioMed, Ltd. and
  GammaCan International, Inc. incorporated by reference to Current Report on
  Form 8-K filed with the Commission on December 19, 2007.                          
|      |  |                                                                                                                                                                                                                                                         
|10.22 |  | Form of Amendment to
  Research and Licensing Agreement effective as of December 23, 2007 between
  GammaCan Ltd. and Tel HaShomer Medical Research Infrastructure and Services
  Ltd.+                                                                
|      |  |                                                                                                                                                                                                                                                         
|14    |  | Code of
  Ethics incorporated by reference to Form 10KSB for the year ended September
  30, 2007 filed with the Commission on January 13, 2005.                                                                                                         
|      |  |                                                                                                                                                                                                                                                         
|21.1  |  | List of
  Subsidiaries.*                                                                                                                                                                                                                                
|      |  |                                                                                                                                                                                                                                                         
|31.1  |  | Certification of Principal Financial Officer
  pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities
  and Exchange Act of 1934, as amended.*                                                                                    
|      |  |                                                                                                                                                                                                                                                         
|31.2  |  | Certification of Principal Executive
  Officer pursuant to Rule 13a-14 and Rule 15d 14(a), promulgated under the
  Securities and Exchange Act of 1934, as amended.*                                                                                    
|      |  |                                                                                                                                                                                                                                                         
|32.1  |  | Certification pursuant to 18 U.S.C. Section
  1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  (Chief Executive Officer).*                                                                                                  
|      |  |                                                                                                                                                                                                                                                         
|32.2  |  | Certification pursuant to 18 U.S.C. Section
  1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  (Chief Financial Officer).*                                                                                                  

|  |                                                                                                                                                                                                                                                                            
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Filed
  herewith                                                                                                                                                                                                                                                           
|  |                                                                                                                                                                                                                                                                            
|+ | We have requested confidential treatment
  with respect to this exhibit. In the event that the Commission should deny
  such request in whole or in part, such exhibit or the relevant portions
  thereof shall be filed by amendment to this Annual Report on Form 10-KSB.

66

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ITEM 14 -
PRINCIPAL ACCOUNTANT FEES AND SERVICES

We
incurred the following fees to Kesselman & Kesselman,
certified public accountants (Isr.), a member of PriceWaterhouse Coopers
International Limited, for services rendered during the fiscal year ended
September 30, 2007 and 2006:

|                        |  |          |  |         
|----------------------- |  | -------- |  | --------
|Summary:                |  | 2007     |  | 2006    
|                        |  |          |  |         
|                       
|Audit fees(1)           |  | $95,000  |  | $74,000 
|Audit
  related fees(2) |  | $18,400  |  |        
|Tax fees(3)             |  | $  5,500 |  | $  5,000
|Other fees              |  |         |  |        

|    |                                                                                                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | Amount
  represents fees paid for professional services for the audit of our
  consolidated annual financial statements and review of our interim
  consolidated financial statements included in quarterly reports and services
  that are normally provided by Kesselman & Kesselman in connection with
  statutory and regulatory filings or engagements.
|    |                                                                                                                                                                                                                                                                                                                                                             
|(2) | Amount
  represents fees paid for professional services for assurance and related
  services by Kesselman & Kesselman that are reasonably related to the
  performance of the audit or review of our financial statements and are not
  reported under item (1).                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                             
|(3) | Amount
  represents fees paid for professional services for tax compliance and tax
  advice.                                                                                                                                                                                                                                                                

67

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SIGNATURES

Pursuant
to the requirements of Section 13 or 15 (d) 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.

| |                                  | 
| | -------------------------------- | 
| | GAMMACAN INTERNATIONAL, INC.     | 
| |                                  | 
| | /s/ PATRICK SCHNEGELSBERG        | 
| |                                  | 
| | Patrick Schnegelsberg,           | 
| | Chief
  Executive Officer        | 
| | (principal
  executive officer)  | 
| |                                  | 
| | /s/ CHAIME
  ORLEV               | 
| |                                  | 
| | Chaime
  Orlev,                  | 
| | Chief
  Financial Officer        | 
| | (principal
  accounting officer) | 

Date: December
28, 2007

Pursuant to
the requirements of the Securities and Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant in the
capacities as on December 28, 2007.

| |                         | 
| | ----------------------- | 
| | /s/ STEVEN KATZ         | 
| |                         | 
| | Steven Katz,            | 
| | Chairman of
  the Board | 
| |                         | 
| | /s/ ALBERT
  PASSNER    | 
| |                         | 
| | Albert
  Passner,       | 
| | Director                | 
| |                         | 
| | /s/ YAIR
  ALONI        | 
| |                         | 
| | Yair Aloni,             | 
| | Director                | 
| |                         | 
| | /s/ DAVID
  DEMEDIO     | 
| |                         | 
| | David
  DeMedio,        | 
| | Director                | 
| |                         | 
| | /s/ JOSEF
  NEUHAUS     | 
| |                         | 
| | Josef
  Neuhaus,        | 
| | Director                | 

68

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