**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-KSB**





(Mark
      One)


**x ANNUAL
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE**


**ACT
      OF 1934**





**For
      the Fiscal Year Ended September 30, 2005**





**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.)





**11
      Ben Gurion Street**


**54100
      Givat Shmuel, Israel**


(Address
      of principal executive offices)





**972
      3 5774475**


(Registrant's
      telephone number, including area code)





(Former
      name, former address and former fiscal year, if changed since last
      report)


Securities
      registered pursuant to Section 12(g) of the Act: None





Indicate
      by check mark whether the registrant: (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act 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





**APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
      THE**


**PRECEDING
      FIVE YEARS:**





Indicate
      by check mark whether the registrant filed all documents and reports required
      to
      be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934
      after
      the distribution of securities under a plan confirmed by a court. Yes o No o





**APPLICABLE
      ONLY TO CORPORATE ISSUERS:**





1


State
      the
      number of shares outstanding of each of the registrant's classes of common
      equity, as of the latest practicable date: 28,453,732 shares issued and
      outstanding as of December 28, 2005.


2


**GAMMACAN
      INTERNATIONAL, INC.**





**FORM
      10-KSB**





**TABLE
      OF CONTENTS**





Page
                No.PART
                IItem 1.
                Business
            1Item 2.
                Properties
            16Item 3.
                Legal Proceedings
            16Item 4.
                Submission of Matters to a Vote of Security Holders
            16PART
                IIItem 5.
                Market for Common Equity and Related Stockholder Matters
            17Item 6.
                Management’s Discussion and Analysis of Financial Condition and Results of
                Operation
            19Item 7.
                Financial Statements and Supplementary Data
            26Item 8.
                Change in and Disagreements with Accountants on Accounting and Financial
                Disclosure
            47Item 8A.
                Controls And Procedures
            47PART
                IIIItem 9.
                Directors and Officers of the Registrant
            47Item 10.
                Executive Compensation
            50Item 11.
                Security Ownership of Certain Beneficial Owners and Management and
                Related
                Stockholder Matters
            55Item 12.
                Certain Relationships and Related Transactions
            56Item 13.
                Exhibits
            57Item 14.
                Principal Accountant Fees and Services
            58














This
      Form
      10-KSB includes a number of forward-looking statements that reflect management's
      current views with respect to future events and financial performance. Those
      statements include statements regarding the intent, belief or current
      expectations of Gammacan and members of its management team as well as the
      assumptions on which such statements are based. Prospective investors are
      cautioned that any such forward-looking statements are not guarantees of future
      performance and involve risk and uncertainties, and that actual results may
      differ materially from those contemplated by such forward-looking statements.
      Readers are urged to carefully review and consider the various disclosures
      made
      in this report and in our other reports filed with the Securities and Exchange
      Commission. Important factors currently known to Management could cause actual
      results to differ materially from those in forward-looking statements. We
      undertake no obligation to update or revise forward-looking statements to
      reflect changed assumptions, the occurrence of unanticipated events or changes
      in the future operating results over time. Gammacan believes that its
      assumptions are based upon reasonable data derived from and known about its
      business and operations and the business and operations of Gammacan. No
      assurances are made that actual results of operations or the results of
      GammaCan's future activities will not differ materially from its
      assumptions.





**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 ("SEC").
      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/A. 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.





**DESCRIPTION
      OF BUSINESS**


As
      used
      in this current 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.





***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. On August 19, 2004, we changed the
      name
      of our company to Gammacan International, Inc. in the State of Delaware.





During
      our first quarter ended December 31, 2003, we identified a promising business
      prospect focused on the seismic acquisition business located in Western Canada
      and agreed in principal to acquire all of the shares of two Alberta based
      companies. However, on April 20, 2004, we decided to terminate our efforts
      to
      pursue this proposed acquisition, because it appeared we would not be successful
      in obtaining the necessary financing on a timely basis.





1


Pursuant
      to an agreement for purchase and sale of intellectual property between our
      subsidiary, Gammacan, Ltd., and ARP Biomed, Ltd. ("ARP”), we completed the
      purchase and sale of the intellectual property on August 17, 2004. As a result,
      we now own all of ARP's rights and interests in the intellectual property assets
      (the "Intellectual Property") consisting of intravenous immunoglobulin ("IVIG")
      research and development, patents and other intellectual property, which appears
      to hold promising potential for the clinical treatment for various cancer types.
      In consideration for acquiring the Intellectual Property, we have issued to
      ARP
      12.5% of the common shares of Gammacan, Ltd.





*Business
      Subsequent to the Acquisition of the Intellectual Property*





With
      the
      acquisition of the Intellectual Property, we are now focused on the
      commercialization of an anti-cancer immunotherapy that appears to be effective
      in reducing the metastatic spread of a wide range of cancers. Our proposed
      treatment will be based on intravenous immunoglobulin or IVIG, a safe,
      minimally-toxic human plasma-based product, currently used to treat a variety
      of
      immune deficiencies and autoimmune diseases, and replace the antibodies in
      people who are unable to produce them. Antibodies are naturally occurring,
      disease fighting proteins or compounds produced by healthy people. Intravenous
      implies the direct injection or delivery, via certain equipment, into the
      patient's bloodstream. In preliminary studies, IVIG appears to boost and
      strengthen cancer patient's immune systems or antibody levels, which may be
      successful in fighting cancer. Although there can be no assurance, many experts
      currently view IVIG as a promising future alternative or complementary therapy
      to today's standard chemotherapies and biological therapies.





**Current
      Cancer Statistics**





Cancer
      is
      a disease of the body's cells. Cells in all the tissues and organs of the body
      constantly grow and divide to replace old and damaged cells and maintain the
      health of the body. Normally, all cells divide and reproduce themselves in
      an
      orderly and controlled manner. In cancer, however, some cells keep dividing
      without proper control, forming a lump (which is called a primary tumor). In
      leukemia, or cancer of the blood, too many white blood cells are produced.





Sometimes
      cancer cells break away from a tumor and travel to other parts of the body
      through the bloodstream or lymphatic system. The lymphatic system is a network
      of fine channels - called lymph vessels - which run throughout the body and
      are
      part of the body's protection against infection and cancer. When the cancer
      cells reach other parts of the body they may settle and start to develop into
      new tumors. These are known as secondary cancers/tumors or metastases.





Primary
      tumors, while still localized, can be treated through surgery and radiation.
      However, cancers tend to metastasize, or spread, and form secondary tumors
      in
      other locations throughout the body. Most existing therapeutics or treatments
      fail because the cancer has metastasized and formed multiple tumors. Many cancer
      victims with operable tumors ultimately succumb to metastatic or spreading
      cancer following surgery





The
      extent to which metastases occur varies with the type of primary tumor. Melanoma
      or skin cancer, breast cancer, lung cancer, colon cancer and prostate cancer
      are
      among the types of cancer that frequently metastasize or spread. When metastasis
      takes place, the secondary tumors may form at a number of sites in the body.
      Lungs, liver, brain and bone are the most common sites of secondary tumors.





Cancer
      therapeutics represents a major multibillion pharmaceutical market. This market
      continues to grow in particular in response to the introduction of new an more
      effective treatments. New products that have been introduced to the market
      in
      recent years such as Mabthera Irressa, Gleevec, Avastin, Rituxan and others
      seem
      to fuel increased growth both as these more effective, and thus more costly,
      treatments replace conventional less effective, and because these new therapies
      are being used in conjunction with conventional therapies.





2


**Current
      Cancer Treatments**





Current
      cancer treatments include surgery, radiation, and chemotherapy. These treatments
      can be ineffective because they are either unable to target cancer cells
      throughout the body or they give rise to serious and life-threatening side
      effects. Consequently, the medical community is still a long way from winning
      the war on cancer. The key success factors for new therapeutic approaches in
      the
      cancer area seem to be less toxicity than what is available today and higher
      rates of efficacy, at least in some patients. Modern immunotherapies tend to
      be
      targeted towards certain patients in whom particular antigens are expressed
      in
      their tumors, but these drugs may have no or little effect in other patients.
      Thus, the new generation of anti-cancer therapies tends to be more effective
      in
      patients where they are applicable, but less effective in other patients.





The
      alternative to the traditional cancer treatments is the use of various
      immunotherapies based on enhanced understanding of cancer biology in recent
      years. Current efforts to deliver effective cancer immunotherapies generally
      fall into three categories: cytokines, monoclonal antibodies and vaccines.
      Cytokines are medical drugs that stimulate the immune system during infections.
      Drug developers have hoped that the same factors that fight infections could
      be
      used to combat cancer cells. Several have been approved for commercial use,
      but
      they are generally limited in their application.





Many
      companies are involved in developing monoclonal antibodies, which are designed
      to bind to specific cancer cells and target them for destruction by the immune
      system. These products are generally more developed, in terms of market use
      and
      acceptance, than cytokines and several have significant sales. The monoclonal
      antibody products realizing significant sales generally have limited or few
      side
      effects.





Cancer
      vaccines rely on the administration of tumor antigens to elicit an immune
      response that remains after the vaccine itself has disappeared. Most cancer
      vaccine products currently being developed require the harvesting and processing
      of tumor cells to make custom vaccines for each patient. Though this approach
      has shown promise in clinical trials, scaling-up manufacture is likely to be
      problematic, and these vaccines are generally considered to be a number of
      years
      away from commercial use.





**Chemotherapy**





Chemotherapy
      is the use of anti-cancer drugs to destroy cancer cells. There are over 50
      different chemotherapy drugs and some are given on their own, but often several
      drugs may be combined. The type of chemotherapy treatment given for a particular
      cancer depends on many things, the type of disease, where in the body it
      started, what the cancer cells look like under the microscope and whether they
      have spread to other parts of the body.





Chemotherapy
      is currently the standard treatment for cancer that has or may have metastasized
      or spread. Chemotherapy is a systemic treatment, usually administered
      intravenously, but can be administered a number of ways, intended to kill
      cancer/tumor cells, which have spread to multiple sites. However, chemotherapy
      may also kill healthy dividing cells and consequently, may cause serious side
      effects. These side effects may include a weakening of a patient's immune
      system, and reduction in number of white blood cells which are necessary to
      combat bacterial infections, inhibition or slowing of bone marrow cell growth,
      which also may be accompanied with slow down in the production of red blood
      cells or anemia, the inability to form blood clots, diarrhea, nausea and hair
      loss. Generally, these side effects are temporary in nature, but most patients
      experience a significant degree of discomfort, and can be long term in some
      cases.





Chemotherapy
      can fail to completely eradicate micro-metastases, or the spreading of very
      small cancer tumors, already residing in remote organs (lung, liver, bone marrow
      or brain), especially when treatment is discontinued due to patients' inability
      to tolerate its side effects. If the cancer is not completely eradicated, it
      will likely continue to grow.





3


The
      need
      for effective, minimally-toxic treatments to inhibit spreading cancers is widely
      recognized and numerous researchers, biotechnology and pharmaceutical companies
      are seeking alternatives to chemotherapy drugs. The potential for a large
      receptive commercial market exists for a successful approach to inhibiting
      spreading cancers without causing serious side effects.





**IVIG
      or Intravenous Immunoglobulin**





Our
      proposed immunotherapy product, if ultimately proven to be successful on a
      regulatory and commercial basis, aims to harness the body's immune system,
      or
      its natural defense mechanism to destroy cancer cells. Our proposed product
      is
      intended to be used in the prevention of recurrence of cancer and to prevent
      metastatic spread in patients. This use would suggest a long-term treatment
      in
      which patient would receive IVIG for extended periods of time (possible for
      five
      years as is the case of Tamoxifen for the prevention of breast cancer
      recurrence). IVIG seems particularly suitable for long term treatments as it
      has
      already been established as a long-term tolerable treatment with minimal side
      effects even after year-long use.





Immunoglobulin
      or IVIG is a type of protein found in human blood that helps to fight off
      harmful bacteria, viruses and other germs. IVIG is a blood plasma-derived
      product containing protective antibodies normally present in the blood of
      healthy individuals. IVIG is used to replace the antibodies in people who are
      unable to produce them, thereby restoring an almost normal immune response
      and
      helping to prevent or reduce the severity of certain infections. It is widely
      used in the treatment of certain autoimmune diseases. Extensive use over a
      period of years has demonstrated that IVIG therapy is a safe, non-toxic therapy
      with virtually no side effects.





According
      to the Marketing Research Bureau, Inc, Orange, CT the annual world market for
      IVIg is currently approximately 55 tons. There are in excess of 20 manufacturers
      of IVIg products and typically, these companies manage pools of 1,000 to 20,000
      blood donors who are carefully screened prior to being allowed to give blood.
      This donated plasma is also extensively tested for pathogens prior to use.
      It is
      this donated blood plasma that is used to manufacture IVIG, and through the
      combining the blood plasma of many individual donors, it is believed that the
      resulting combination provides superior therapy than IVIG from one individual
      exclusively.





The
      largest producers of IVIG for the U.S. market are ZLB-Behring (a subsidiary
      of
      .Aventis), Alpha Therapeutics, Baxter Healthcare, and Bayer Biological Products.





IVIG
      products became commercially available in the early 1980's. There are six
      indications or uses approved by the U.S. Food and Drug Administration (the
      "FDA"), but IVIG is also used to treat over seventy other "off-label" conditions
      supported by a consensus of expert opinion, mostly primary immune deficiencies
      or autoimmune neuromuscular disorders. Industry experts claim that many present
      IVIG prescriptions are written for off-label indications and roughly deducting
      the estimated use of IVIg for the indicated uses from the total sales, indicate
      that as much as 40-50% of uses could be off-label. Patients receiving IVIG
      therapy for primary immune deficiencies usually receive the therapy for life,
      while patients receiving IVIG therapy for autoimmune disorders receive the
      therapy intermittently over a period of months, and sometimes years, depending
      on their condition.





IVIG
      is
      generally considered to be an expensive therapy, because it is a natural product
      manufactured from whole human blood. A typical dose may consist of five
      consecutive days of intravenous administration of 1 gram per kilogram of
      patients' body weight. According to the International Blood/Plasma News, U.S.
      prices range from about $39 per gram for lyophilized preparations to a high
      of
      about $55 per gram for a 5% liquid product.





4





**Pre-Clinical
      and Preliminary Experiments**





ARP's
      scientists have already conducted certain animal experiments to test the
      effectiveness of IVIG immunotherapy in treating cancer, and investigated the
      effectiveness of IVIG treatment at various stages of disease progression with
      varying dosages and routes of administration. They have made preliminary
      progress in understanding the mechanisms under which IVIG appears to fight
      cancer.





While
      these experiments showed promising results, they are preliminary. Use of IVIG
      in
      a commercial setting would be subject to much further substantial and
      significant testing, and subject to certain clinical trials required by the
      FDA
      and similar regulatory bodies in other countries.





At
      this
      stage however, there can be no assurance that IVIG will evolve into a successful
      commercial product, gain acceptance for general use or use as a replacement
      for
      existing therapeutic products, or even be approved for use by the regulatory
      authorities.





These
      early experiments have shown that IVIG treatment appears to reduce metastases
      and tumor recurrence for a broad spectrum of cancers, with virtually no side
      effects. However, much more testing must be completed. IVIG also appears to
      show
      promise to increase the chances for long term recovery by preventing the return
      and spread of cancer. These preliminary experiments have also indicated that
      IVIG therapy holds promise as an effective anti-cancer treatment at much lower
      doses than is commonly used for treating immune deficiencies. This would serve
      to make the treatment more affordable and may enable IVIG immunotherapy to
      be
      used as a cancer prevention measure in high risk populations.





In
      these
      preliminary experiments, IVIG also appears to be effective when administered
      intravenously, or through several other methods of delivery into the patient's
      body. Alternative routes of administration could dramatically improve
      ease-of-use, lower the delivered price of treatments, and enable the treatment
      of additional conditions.





***Intellectual
      Property***





Our
      success will depend in part on our ability to obtain patent protection for
      our
      Intellectual Property. Subsequent to our acquisition of the Intellectual
      Property from ARP, we enjoy the patented protection of IVIG for treating solid
      tumors through two major U.S. patents (#5,562,902 and #5,965,130), as well
      as a
      pending application for the use of IVIG on non-solid tumors and additional
      U.S.
      and international patent applications. On October 2005 we filed a provisional
      patent for the utilization of IVIg therapy as a potential treatment for avian
      flu using IVIg from previously infected patients and from those previously
      immunized . Patent
      coverage includes a wide range of issues such as: a novel method of
      administering to a mammal a preparation of IVIG for inhibiting tumor metastasis
      or spreading, for treating primary tumors, and for a broad spectrum of cancerous
      diseases. The IVIG preparation to be administered according to this invention
      may contain intact or fragmented immunoglobulin molecules. The preparation
      may
      be administered intravenously, directly under the skin or subcutaneous routes,
      directly into a cavity (such as an organ or stomach), either as a sole agent
      or
      in combination with other agents or methods, which are commonly used for cancer
      treatment. We believe anyone selling IVIG 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.





5


We
      also
      rely on trade secrets and unpatentable know-how that we seek to protect, in
      part, by confidentiality agreements. It has not been, but is now our policy
      to
      require our employees, consultants, contractors, manufacturers, outside
      scientific collaborators and sponsored researchers, board of directors,
      technical review board and other advisors to execute confidentiality agreements
      upon the commencement of employment or consulting relationships with us. These
      agreements will provide that all confidential information developed or made
      known to the individual during the course of the individual's relationship
      with
      us is to be kept confidential and not disclosed to third parties except in
      specific limited circumstances. We also will commence to require signed
      confidentiality or material transfer agreements from any company that is to
      receive our confidential information. In the case of employees, consultants
      and
      contractors, the agreements will generally provide that all inventions conceived
      by the individual while rendering services to us shall be assigned to us as
      the
      exclusive property of 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. We have not conducted
      freedom of use patent searches and no assurance can be given that patents do
      not
      exist or could not be filed which would have an adverse affect on our ability
      to
      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 affect
      on
      our business, financial condition and results of operations. If we are required
      to defend ourselves against charges of patent infringement or to protect our
      proprietary rights against third parties, substantial costs will be incurred
      regardless of whether we are successful. Such proceedings are typically
      protracted with no certainty of success. An adverse outcome could subject us
      to
      significant liabilities to third parties and force us to curtail or cease our
      development and commercialization of our technology.





***Research
      and Development***





**Foundational
      Research**





Scientists
      have conducted extensive pre-clinical research to test the effectiveness of
      IVIG
      immunotherapy in treating cancer. They have employed mice models of various
      types of cancers as well as various types of human cancers introduced into
      immune deficient (SCID) mice. They have investigated the effectiveness of IVIG
      treatment at various stages of disease progression, using alternative dosages
      and routes of administration. These pre-clinical and preliminary experiments
      have shown that IVIG treatment prevents metastases and tumor recurrence for
      a
      broad spectrum of cancers with little or no side effects.





IVIG
      treatment was shown to potentially work in conjunction with surgery to provide
      long-term recovery. While surgery provides an effective short term mechanism
      for
      treating localized cancer tumors, IVIG treatment was shown to increase the
      chances of long term recovery by preventing the return or spread of the cancer.
      Parallel studies conducted in melanoma, carcinomas and sarcomas confirm these
      results.


6





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 IVIG representing 1% (20 milligrams
      per
      kilogram body weight) of the standard IVIG dosage. These experiments suggest
      that IVIG treatment could be affordably administered as a preventative measure.
      IVIG 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). IVIG has also been shown
      to be
      effective when administered as a whole molecule or as a fraction. All this
      preclinical research was performed by ARP Biomed, Ltd., prior to the transaction
      with Gammacan.





**Product
      Development**





Our
      initial focus over the next several years is to demonstrate efficacy of IVIG
      cancer immunotherapy in human clinical trials. Efficacy is the ability of a
      drug
      or other treatment to produce the desired result when taken by its intended
      users.





IVIG
      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 1 clinical
      studies (toxicity trials) are primarily conducted to establish safety. Phase
      2
      studies are designed to determine preliminary efficacy. Phase 3 studies are
      conducted to optimize therapeutic efficacy in a statistically significant manner
      at the levels of optimal dose, method of delivery into the body or route, and
      schedule of administration. Once clinical trials are completed successfully,
      products may receive regulatory approval.





Since
      IVIG is an established, safe therapy, we will not be required to conduct Phase
      1
      studies. Since July 2005, we have been conducting a Phase 2 clinical trial
      in
      humans to demonstrate clinical efficacy of IVIG immunotherapy in three major
      cancers: colon, prostate and melanoma. To date, 27 patients have been enrolled,
      out of which 22 have actually received the IVIG treatment. This phase 2 clinical
      trial is being conducted at three medical centers in Israel and preliminary
      results will likely be available during the first half of 2006. The trial is
      due
      to be completed by October 2006, but. We will probably continue to monitor
      patients for a number of years after the trial in order to collect additional
      evidence of efficacy and potential benefits or adverse effects of the IVIG
      treatment. If successful or promising, and at this preliminary stage there
      is no
      assurance they will be, results of these clinical trials will be used to enter
      into discussions with a major pharmaceutical partner and plasma based product
      manufacturers to work with us to potentially commercialize the IVIG products.
      This commercialization will include pivotal, Phase 3 clinical trials in
      accordance with regulatory requirements. Such trials may be long-term trials
      and
      may require substantial financial resources that we do not presently possess.
      We
      are considering a trial in order to test the potential use of IVIg as a long
      term treatment to prevent the recurrence of cancer in patient who have been
      diagnosed and successfully treated. This trial, will take a number of years
      since the end-point will be related to long-term effects.





*Employees*





During
      the next 12 months, we plan to function with a small management staff. During
      this time, we will focus on managing Phase 2 clinical trials and establishing
      preliminary relationships with potential commercial partners. Currently we
      have
      five employees, of which two are executives and one is Director of Clinical
      Affairs.





7


*Competition*





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. There can be 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 affect
      on our business, financial condition and results of operations. These companies,
      as well as academic institutions, governmental agencies and private research
      organizations, also compete with our company in recruiting and retaining highly
      qualified scientific personnel and consultants.





Competition
      within this sector itself is increasing, so we will encounter competition from
      existing firms that offer competitive solutions in the cancer treatment
      solutions. These competitive companies could develop products that are superior
      to, or have greater market acceptance, than the products being developed by
      our
      company. 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.





***Government
      Regulations and Supervision***





We
      will
      be using and developing biotechnology and pharmaceutical products for use in
      treating human diseases. We will be directly affected by governmental
      regulations from the United States Food and Drug Administration for these
      products.





The
      FDA
      regulates clinical development and marketing approval of all medical products
      intended for human use. The laws and regulations of the FDA place the burden
      of
      proof of safety and efficacy on the manufacture of the product. This agency
      possesses extensive experience with its regulatory mechanisms and applies them
      to all products, with differing statutes for various categories of products.
      Other countries have comparable regulatory agencies to the FDA, although the
      specific regulations may differ substantially.





The
      principal activities which must be completed prior to obtaining approval for
      marketing in the United States are as follows:





a)   *Pre-clinical
      Studies.* Pre-clinical
      studies are conducted in animals to test pharmacology, efficacy and toxicology
      and to do manufacturing and formulation work based on *in
      vivo* results.





8


b)   *Phase
      1 Clinical Trial.* Phase
      1
      clinical trials consist of testing a product in a small number of humans for
      its
      safety (toxicity), dose tolerance and pharmacokinetic properties.





c)   *Phase
      2 Clinical Trials.* Phase
      2clinical trials usually involve a larger patient population than is required
      for Phase I trials and are conducted to evaluate the effectiveness of a product
      in patients having the disease or medical condition for which the product is
      indicated. These trials also serve to identify possible common short-term side
      effects and risks in a larger group of patients.





d)   *Phase
      3 Clinical Trials.* Phase
      3
      clinical trials involve conducting tests in an expanded patient population
      at
      geographically dispersed test sites (i.e. multi-centre trials) in a controlled
      and/or uncontrolled environment to establish clinical safety and effectiveness.
      These trials also generate information from which the overall benefit-risk
      relationship relating to the drug can be determined and provide a basis for
      drug
      labeling.





Since
      IVIG is an established, safe therapy, we will not be required to conduct
      Pre-Clinical and Phase 1 Clinical Trials. Two key factors that influence the
      rate of progression of the remaining clinical trials are the rate at which
      patients can be recruited to participate in the research program, and whether
      effective treatments are currently available for the disease the drug is
      intended to treat. Patient recruitment is largely dependent upon the incidence
      and severity of the disease and the alternative treatments available. Regulatory
      agencies can demand more patients and longer exposure if they deem it prudent,
      so as to better assess the relative safety compared with the long-term efficacy
      of the drug.





The
      results of the pre-clinical tests and clinical trials are submitted to the
      FDA
      in the form of a biologic license application for marketing approval. The
      testing and approval process is likely to require substantial time and effort
      and there can be no assurance that any approval will be granted on a timely
      basis, if at all. Additional animal studies or clinical trials may be requested
      during the FDA review period that may delay marketing approval. After FDA
      approval for the initial indications, further clinical trials may be necessary
      to gain approval for the use of the product for additional indications. The
      FDA
      requires that adverse affects be reported to the FDA and may also require
      post-marketing testing to monitor for adverse affects, which can involve
      significant expense.





The
      growth in this industry over the last several decades has been accompanied
      by
      growth in the extent and complexity of the FDA statutes and regulations, and
      of
      the intensity of the FDA's regulations of the development, manufacturing,
      distribution, marketing, promotion, advertising and use of regulated products.
      In the last decade, the FDA legal and regulatory obstacles to product
      commercialization and the penalties of non-compliance have been pivotal factors
      in the success or failure of companies in our industry. This is particularly
      true for small, emerging companies developing biopharmaceuticals and other
      biotechnology products.





**Risk
      Related to Business**





You
      should carefully consider the following risk factors and all other information
      contained herein as well as the information included in this Annual Report
      in
      evaluating our business and prospects. The risks and uncertainties described
      below are not the only ones we face. Additional risks and uncertainties, other
      than those we describe below, that are not presently known to us or that we
      currently believe are immaterial, may also impair our business operations.
      If
      any of the following risks occur, our business and financial results could
      be
      harmed. You should refer to the other information contained in this Annual
      Report, including our consolidated financial statements and the related
      notes.





***We
      have a limited operating history.***





We
      have a
      limited operating history and must be considered in the development stage.
      Our
      company's operations will be subject to all the risks inherent in the
      establishment of a developing enterprise and the uncertainties arising from
      the
      absence of a significant operating history. No assurance can be given that
      we
      may be able to operate on a profitable basis.





9


***At
      present, our success depends solely on the successful commercialization of
      IVIG
      for our proposed use as a cancer therapy alternative.***





The
      successful commercialization of IVIG is crucial for our success. This proposed
      product and its potential application is in an early stage of clinical and
      manufacturing/process development. It faces a variety of risks and
      uncertainties. Principally, these risks include the following:





•
            future
                clinical trial results may show that IVIG at effective doses is not
                well
                tolerated by the recipients or not efficacious as compared to placebo.


•
            future
                clinical trial results may be inconsistent with ARP's previous preliminary
                testing results. Data from our earlier studies may be inconsistent
                with
                clinical data.


•
            even
                if IVIG is shown to be safe and effective for its intended purpose,
                we may
                face significant or unforeseen difficulties in obtaining/manufacturing
                sufficient quantities at or at reasonable prices.


•
            our
                ability to complete the development and commercialization of IVIG
                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 IVIG on a worldwide basis.


•
            even
                if IVIG products are successfully developed, commercially produced
                and
                receive all necessary regulatory approvals, there is no guarantee
                that
                there will be market acceptance.


•
            our
                competitors may develop therapeutics or other treatments which are
                superior 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





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





***We
      may require significant additional financing before our products may be
      marketed.***





Until
      September 30, 2005 we raised approximately $2.0 Million through private
      placements of our securities. These amounts were used to fund our activities
      during 2005 and we anticipate that the remaining funds as well as additional
      funds raised during October and December of 2005, as described in item 6 -
      Management Discussion and Analysis will be sufficient to fund additional
      operations for 12 months. Accordingly, our ability to continue develop and,
      if
      warranted, commercialize our proposed IVIG products, will be dependent upon
      our
      ability to raise significant additional financing. If 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





-
      the
      effect of commercialization activities and facility expansions if and as
      required.


10


We
      have
      limited financial resources and to date no cash flow from operations. There
      can
      be no assurance that we will be able to obtain financing on acceptable terms
      in
      light of factors such as the market demand for our securities, the state of
      financial markets generally and other relevant factors.




***Our
      success depends on our ability to attract and retain collaborative partners
      over
      whom we have limited control.***





Our
      business will likely depend on our ability to enter into arrangements with
      corporate and academic collaborators relating to the testing, manufacturing,
      marketing and commercialization of our products. If successful, we are intending
      to license or sublicense that property to others. We are planning to try to
      have
      our partners assume the obligation to manufacture, market and distribute the
      resulting products. Consequently, our success depends upon our partners' ability
      to perform these tasks. There can be no assurance that we will be able to
      establish necessary arrangements on favorable terms, or at all, or that
      collaborative agreements will be successful.





***Our
      success depends on our ability to protect our proprietary rights and operate
      without infringing upon the proprietary rights of others.***





We
      plan
      to continue to protect the technology that we consider important to the
      development of our business by filing United States and selected foreign patent
      applications. We currently hold several patents and pending patent applications
      in the United States and corresponding patents and patent applications filed
      in
      certain other countries over IVIG and its proposed use in cancer therapeutics.





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.





In
      addition to patents, we are planning to rely on trade secrets and proprietary
      know-how to protect our intellectual property. We are planning to require our
      employees, consultants, outside scientific collaborators and sponsored
      researchers and other advisors to enter into confidentiality agreements. These
      agreements may not provide meaningful protection or adequate remedies in the
      event of unauthorized use or disclosure of our proprietary information. In
      addition, it is possible that third parties could independently develop
      proprietary information and techniques substantially similar to ours or
      otherwise gain access to our trade secrets.





11


***Even
      if we are able to protect our proprietary rights we may suffer from off-label
      use of other IVIG products***





Off-label
      use is the practice of prescribing drugs for a
      purpose outside the scope of the drug's approved label, most often concerning
      the drug's indication. In the United
      States ,
      the Food
      and
      Drug Administration (FDA)
      requires numerous clinical trials to prove a drug's safety and efficacy in
      treating a given disease or condition. If satisfied that the drug is safe and
      effective, the drug's manufacturer and the FDA agree on specific language
      describing dosage, route and other information to be included on the drugs
      label. More detail is included in the drugs package insert. However, once the
      FDA approves a drug for prescription use, they do not attempt to regulate the
      practice of medicine and so the physician makes
      decisions based on her or his best judgment. It is entirely legal in the United
      States and in many other countries to use drugs off-label . There
      can
      be no assurance that IVIG produced for the use of other treatments will not
      be
      prescribed to cancer patients.





***We
      may not be able to obtain regulatory approvals that will be necessary to
      commercialize our products.***





The
      manufacture and sale of therapeutic products in the United States and Canada
      is
      governed by a variety of statutes and regulations in both countries. These
      laws
      govern the development, testing, manufacture, safety, efficacy, record keeping,
      labelling, storage, approval, advertising, promotion, sale and distribution
      of
      biopharmaceutical products. If our products are ultimately marketed abroad,
      they
      would also be subject to extensive regulation by foreign governments. There
      can
      be no assurance that we will be able to obtain the required regulatory approvals
      or comply with the applicable regulatory requirements for any of our IVIG
      products in development. If we are unable to obtain necessary regulatory
      approvals, we may not be able to commercialize our products.





The
      IVIG
      products currently under development will require significant clinical testing
      and investment of significant funds prior to commercialization. Securing
      regulatory approval requires us to submit extensive clinical data and supporting
      information for each indication to establish the product's efficacy. The process
      of completing these processes is likely to take a number of years. Any delay
      in
      obtaining approvals may:





• adversely
      affect the successful commercialization of our product(s) that we develop


• diminish
      any
      competitive advantages that we may obtain


• adversely
      affect our receipt of revenues or royalties





Additionally,
      if we fail to comply with applicable regulatory requirements at any stage during
      the regulatory process, we may be subject to sanctions, including fines,
      suspensions, product recalls, production suspensions, civil penalties and
      criminal prosecution, among other actions.





***Even
      if we are able to commercialize our products, our products may not gain market
      acceptance.***





Whether
      or not any our products gain market acceptance among the medical community
      in
      general, as well as the degree of market acceptance of any of our products,
      will
      depend on a number of factors, including:





-
      establishment and demonstration of clinical usefulness and safety





-
      cost-effectiveness of the products





-
      their
      potential advantage over alternative products





12


-
      reimbursement policies of governments and third-party payors





-
      marketing and distribution support for the products





The
      success of other products in our market segment in establishing the market,
      their pricing, their clinical usefulness or other potential advantages or
      disadvantages, will very likely have a major impact on the success of our
      product. If our products do not achieve significant market acceptance, our
      business, financial condition and results of operations will be harmed. In
      addition, third-party payors such as government health administration
      authorities, managed care providers and private health insurers are increasingly
      challenging the price and examining the cost effectiveness of medical products
      and services. If these third-party payors fail to provide adequate coverage
      for
      our products, the market acceptance of the products may be adversely affected.





***Competition
      in our targeted markets is intense and developments by other companies could
      render our products or technologies non-competitive.***





The
      biotechnology industry is highly competitive and subject to significant and
      rapid technological change. Developments by other companies within the industry
      could render our products or technologies non-competitive. Some of these
      products may be more effective or have an entirely different approach or means
      of accomplishing the desired effect than our products. We expect technological
      competition from biotechnology companies and academic research institutions
      to
      increase over time.





Many
      competitors and potential competitors have substantially greater product
      development capabilities and financial, scientific, marketing and human
      resources than we do. Our competitors may succeed in developing products earlier
      and obtaining regulatory approvals and patent protection for such products
      more
      rapidly than we can.





***Our
      lack of commercial manufacturing experience means that we will have to incur
      substantial costs to develop manufacturing facilities or contract with third
      parties over whom we have limited control to develop our products.***





In
      order
      to be successful, our products must be manufactured and/or obtained in
      commercial quantities in compliance with regulatory requirements and at
      acceptable costs. We do not have facilities to commercially manufacture our
      products under development and we must initially obtain the small amounts of
      products we require for clinical studies from contract manufacturing companies.
      In order to manufacture our products in commercial quantities, we will need
      to
      develop manufacturing facilities or contract with third parties to manufacture
      our products. We may not be able to develop or otherwise secure access to
      appropriate facilities and manufacturing contracts with third parties may not
      be
      available to us on favorable terms, if at all.





***Our
      lack of marketing and sales experience means that we must rely on the efforts
      of
      others to commercialize our products.***





We
      do not
      have a marketing, sales or distribution capability. We intend to enter into
      arrangements with third parties to market and sell most of our products. We
      may
      not be able to enter into marketing and sales arrangements with others on
      favorable terms, if at all. To the extent that we enter into marketing and
      sales
      arrangements with other companies, our revenues will depend on the efforts
      of
      others and which efforts may not be successful. If we are unable to enter into
      satisfactory third-party arrangements, then we must develop a marketing and
      sales force, which may need to be substantial in size, in order to achieve
      commercial success for any product. We may not successfully develop or obtain
      the necessary marketing and sales experience or have sufficient resources to
      do
      so. If we fail to establish successful marketing and sales capabilities or
      to
      enter into successful marketing arrangements with third parties, our business,
      financial condition and results of operations will be materially adversely
      affected.





13


***Our
      development programs and future products subject us to the risk of product
      liability claims for which we may not be able to obtain adequate insurance
      coverage.***





Human
      therapeutic products involve the risk of product liability claims and associated
      adverse publicity. Currently, our principal risks relate to participants in
      our
      clinical trials who may become ill or suffer unintended consequences from our
      IVIG therapeutic. If we ultimately are successful in commercializing a product,
      claims might be made directly by consumers, healthcare providers or by
      pharmaceutical companies or others selling or using our products. There can
      be
      no assurance that we will be able to obtain or maintain sufficient and
      affordable insurance coverage for any of these claims and, without sufficient
      coverage, any claim brought against us could have a materially adverse effect
      on
      our business, financial condition or results of operations.





***Our
      business may be harmed if we cannot obtain sufficient quantities of raw
      materials.***





We
      will
      be dependent on outside vendors for our entire supply of IVIG. If the third
      party suppliers were to cease production or otherwise fail to supply us with
      quality IVIG 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 adversely affected.





***If
      we are unable to enroll sufficient patients and clinical investigators to
      complete our clinical trials, our development programs could be delayed or
      terminated.***





The
      rate
      of completion of our clinical trials, and those of our collaborators, is
      significantly dependent upon the rate of enrollment of patients and clinical
      investigators. Patient enrollment is a function of many factors, including:





-
      efforts
      of the sponsor and clinical sites involved to facilitate timely enrollment





-
      patient
      referral practices of physicians





-
      design
      of the protocol





-
      eligibility criteria for the study in question





-
      perceived risks and benefits of the drug under study





-
      the
      size of the patient population





-
      availability of competing therapies





-
      availability of clinical trial sites





-
      proximity of and access by patients to clinical sites








We
      may
      have difficulty obtaining sufficient patient enrollment or clinician
      participation to conduct our clinical trials as planned, and we may need to
      expend substantial additional funds to obtain access to resources or delay
      or
      modify our plans significantly. These considerations may lead us to consider
      the
      termination of ongoing clinical trials or development of a product for a
      particular indication.




14


***Our
      collaborations with scientific advisors and academic institutions may be subject
      to restriction and change.***





We
      plan
      on working with scientific advisors and academic collaborators who will assist
      us in our ongoing research and development efforts. These scientists will not
      be
      our employees and may have other commitments that limit their availability
      to
      us. If a conflict of interest arises between their work for us and their work
      for another entity, we may lose their services. In addition, although we plan
      on
      our scientific advisors and academic collaborators signing non-disclosure
      agreements, it is possible that valuable proprietary knowledge may become
      publicly known which would compromise our competitive advantage.





***We
      are subject to intense competition for skilled personnel and the loss of key
      personnel or the inability to attract and retain additional personnel could
      impair our ability to conduct our operations.***





We
      will
      be highly dependent on the principal members of our management and scientific
      staff, especially Vered Caplan, our Acting Chief Executive Officer, and
      Professor Yehuda Shoenfeld, M.D., the Chief Scientist of Gammacan, Ltd. The
      loss
      of whose services might adversely impact the achievement of our objectives
      and
      the continuation of existing collaborations. 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.





***"Penny
      Stock" Rules may restrict the market for the Company's shares***





Our
      shares of common stock are subject to rules promulgated by the Securities and
      Exchange Commission relating to "penny stocks," which apply to companies whose
      shares are not traded on a national stock exchange or on the Nasdaq system,
      trade at less than $5.00 per share, or who do not meet certain other financial
      requirements specified by the Securities and Exchange Commission. These rules
      require brokers who sell "penny stocks" to persons other than established
      customers and "accredited investors" to complete certain documentation, make
      suitability inquiries of investors, and provide investors with certain
      information concerning the risks of trading in the such penny stocks. These
      rules may discourage or restrict the ability of brokers to sell our shares
      of
      common stock and may affect the secondary market for our shares of common stock.
      These rules could also hamper our ability to raise funds in the primary market
      for our shares of common stock.





***Our
      share price will likely become highly volatile.***





Factors
      such as announcements of technological innovations, new commercial products,
      patents, the development of technologies (by us or others), results of clinical
      studies, regulatory actions, publications, financial results or public concern
      over the safety of our products or other related products and other factors
      could have a significant effect on the market price of our common shares.





***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, 2005 we had 1,510,000 outstanding warrants
      and
      options (2,674,998 for the year ended September 30, 2004) to investors employees
      and consultants, as more fully described in "Liquidity and Capital Resources"
      and Item 10 - Executive compensation. 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.





15


***Our
      Principal Facilities as well as the medical centers were we conduct our clinical
      trials are located in Israel, which has historically experienced military and
      political unrest.***





Our
      principal facilities as well as the medical centers were conduct our clinical
      trials are located in Israel. As a result, we are directly influenced by the
      political, economic and military conditions affecting Israel. Any major
      hostilities involving Israel, or the interruption or curtailment of trade
      between Israel and its present trading partners, could significantly harm our
      business, operating results and financial condition.





In
      addition, certain of our officers and employees may be obligated to perform
      annual reserve duty in the Israel defense forces and are subject to being called
      up for active military duty at any time. All Israeli male citizens who have
      served in the army are subject to an obligation to perform reserve duty until
      they are between 40 and 51 years old, depending upon the nature of their
      military service.







***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.***





All
      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
      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.





***Lack
      of Anti-Takeover Provisions***





We
      do not
      currently have a shareholder rights plan or any anti-takeover provisions in
      our
      By-laws. Without any anti-takeover provisions, there is no deterrent for a
      take-over of our company, which may result in a change in our management and
      directors.







**ITEM
      2 - PROPERTIES**




Our
      principal executive offices are located in approximately 635 square feet of
      office space in Givat Shmuel. The lease for such space expired on May 19, 2005.
      However, we have an option to extend this lease for an additional two periods
      of
      12 months following May 19, 2005. During May 2005 we extended the agreement
      for
      a 12 month period ending May 19, 2006. The aggregate annual base rental for
      this
      space is approximately $8,000.






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




**ITEM
      3 - LEGAL PROCEEDINGS**





From
      time
      to time, the Company may become involved in various lawsuits and legal
      proceedings which arise in the ordinary course of business. However, litigation
      is subject to inherent uncertainties, and an adverse result in these or other
      matters may arise from time to time that may harm the Company's business. The
      Company is currently not aware of any such legal proceedings or claims that
      we
      believe will have, individually or in the aggregate, a material adverse affect
      on our business, financial condition or operating results.





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


None.




16


**PART
      II**




**ITEM
      5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**





**Market
      Information**





Our
      common stock commenced trading on the over-the-counter bulletin board in June
      2004 under the symbol "GCAN". The following table sets forth the range of the
      high and low bid quotations for our common stock for the periods indicated.
      Such
      market quotations reflect inter-dealer prices, without mark-up, mark-down or
      commission and may not necessarily represent actual transactions.





**2005**
            **2004**High
            Low
            High
            Low$
            $
            $
            $First
                Quarter
            2.17
            1.50
            -
            -Second
                Quarter
            1.90
            1.50
            -
            -Third
                Quarter
            1.65
            0.90
            0.76
            0.51Fourth
                Quarter
            1.45
            0.93
            2.50
            0.75





As
      of
      December 28, 2005, there were approximately 62 holders of record of our common
      stock and the closing bid quotation of our common stock was $1.30 per share.





**Dividend
      Policy**





We
      have
      never paid any cash dividends on our capital stock and do not anticipate paying
      any cash dividends on the Common Shares 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 the Board and will be dependent upon our financial
      condition, results of operations, capital requirements and such other factors
      as
      the Board deems relevant.





**Issuance
      of Securities**





On
      August
      13, 2004 we entered into subscription agreements for the sale of 1,224,998
      units
      to 11 offshore and 3 accredited investors at a purchase price of $0.75 per
      unit
      for total proceeds of $918,750. Each Unit consisted of one share of our common
      stock and one common stock purchase warrant, which entitles the holder to
      purchase an additional common share for $1.50 on or before August 13, 2005.





On
      November 11, 2004 we entered into subscription agreements for the sale of
      978,000 units to 2 offshore investors and 5 accredited investors at a purchase
      price of $1.25 per unit for total proceeds of $1,222,000. Each unit consisted
      of
      one common share and one common share purchase warrant. Each share purchase
      warrant entitles the holder to purchase one additional common share for a period
      of two years after the date of the subscription agreement at an exercise price
      of $1.50 in the first 15 months and $2.00 for the next nine months.





On
      January 25, 2005 the Company entered into a subscription agreement for the
      sale
      of 32,000 units to an accredited investor at a purchase price of $1.25 per
      unit
      for a total consideration of $40,000. Each unit consisted of one common share
      and one share purchase warrant. Each share purchase warrant entitles the holder
      to purchase one additional common share for a period of two years after the
      date
      of the subscription agreement at an exercise price of $1.50 in the first 15
      months and $2.00 for the next nine months.





On
      October 31, 2005 the company entered into subscription agreements for the sale
      of 666,666 units to an offshore investor at a purchase price of $0.75 per unit
      for a total consideration of $500,000. each unit comprising one share of the
      Company's common stock and one common share purchase warrant exercisable for
      three years for 1⁄2 (half) a share at a price of $1.00 per Share.





17


On
      December 20, 2005 the company entered into a subscription agreement for the
      sale
      of 1,333,334 units to an accredited investor at a purchase price of $0.75 per
      unit for a total consideration of $1,000,000. Each unit comprising one share
      of
      the Company's common stock and one common share purchase warrant exercisable
      for
      three years for one share at a price of $1.20 per share.





On
      December 20, 2005 the company entered into a subscription agreement for the
      sale
      of 222,222 units to an accredited investor at a purchase price of $0.90 per
      unit
      for a total consideration of $200,000. each unit comprising one share of the
      Company's common stock and one common share purchase warrant exercisable for
      three years for 1⁄2 (half) a share at a price of $1.15 per share.





For
      each
      sale of these units we relied on either the exemption from registration provided
      for accredited investors pursuant to Rule 506 of Regulation D, or Regulation
      S
      promulgated under the Securities Act ** of
      1933,
      as amended.


18





We
      currently have no revenue from operations, we are in a start-up phase with
      our
      existing assets and we have no significant assets, tangible or intangible.
      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.





Our
      initial focus over the next several years is to demonstrate efficacy of IVIG
      cancer immunotherapy in human clinical trials. Efficacy is the ability of a
      drug
      or other treatment to produce the desired result when taken by its intended
      users. If ultimately proven to be successful, and there can be no assurance
      that
      it will be, we could be well-positioned to enter a licensing agreement with
      a
      major pharmaceutical partner for commercial market development and sales.





Since
      July 2005, we are conducting a Phase 2 clinical trial in humans to demonstrate
      clinical efficacy of IVIG immunotherapy in three major cancers: colon, prostate
      and melanoma. To date, 27 patients have been enrolled, out of which 22 have
      actually received the IVIG treatment. This phase 2 clinical trial is being
      conducted at three medical centers in Israel and preliminary results will likely
      be available during the first half of 2006. The trial is due to be completed
      by
      October 2006, but we will probably continue to monitor patients for a number
      of
      years after the trial in order to collect additional evidence of efficacy and
      potential benefits or adverse effects of the IVIG treatment . If
      successful or promising, and at this preliminary stage there is no assurance
      they will be, results of these clinical trials will be used to enter into
      discussions with a major pharmaceutical partner and plasma based product
      manufacturers to work with us to potentially commercialize the IVIG products.
      This commercialization will include pivotal, Phase 3 clinical trials in
      accordance with regulatory requirements. Such trials may be long-term trials
      and
      may require substantial financial resources that we do not presently possess.





We
      expect
      that it will take a number of years to receive final approval and registration
      of an IVIg preparation for use as an anti-cancer reagent. However, the company's
      strategy is to collaborate with a suitable IVIg manufacturer and license them
      the rights to use IVIg as an anti-cancer agent, wherefore the company's expected
      revenue stream is not entirely dependent upon the registration of the IVIg
      products.





We
      are
      also contemplating to conduct additional clinical trials to test new
      formulations of IVIG and to test IVIG immunotherapies for different cancers
      at
      different stages of disease progression with varying dosages and routes of
      administration. Our goal is to partner with a pharmaceutical company to conduct
      these further Phase 2 and Phase 3 trials, in order to attain broad-based
      regulatory approval.





**Long
      Term Business Strategy**





As
      noted
      previously, if IVIG shows significant promise thorough clinical trials, we
      plan
      to ultimately seek a strategic commercial partner, or partners, with extensive
      experience in commercialization and marketing of cancer drugs and or therapeutic
      proteins. It is envisaged that the partner, or partners, would be responsible
      for ensuring regulatory approvals and registrations in a timely manner and
      for
      the penetration of the IVIG immunotherapies to the market. . This planned
      strategic partnership, or partnerships, could provide a marketing and sales
      infrastructure for our products as well as financial and operational support
      for
      global trials and other FDA requirements concerning future clinical development.
      Our future strategic partner, or partners, could also provide capital and
      expertise that would enable the partnership to develop new formulations of
      IVIG
      cancer immunotherapy suitable for patients at different stages of disease
      progression as well as IVIg derivatives.





**Other
      Research and Development Plans**





In
      addition to conducting early-stage clinical trials, we plan to conduct research
      to develop alternative delivery systems, to determine the optimal dosage for
      different patient groups and to investigate alternative sources of
      immunoglobulin other than human plasma. We plan to conduct research to isolate
      the fraction of IVIG, which is responsible for its anti-metastatic effects
      and
      to develop a potential synthetic version of IVIG. These formulations will be
      suitable for:





19


·
            Low-dose,
                preventative therapy for disease-free, high-risk individuals,


·
            Strong
                dose for use in conjunction with surgery and other cancer treatments,
                and


·
            Maintenance
                dose for use to prevent recurrence of cancer
                growth.


·
            Others





Our
      plan
      is to patent any successful inventions resulting from our further research
      activities.





**Other
      Strategic Plans**





We
      are
      considering in-licensing and other means of obtaining additional lead molecules
      for our product portfolio. The aim of this is to create a well-balanced product
      portfolio including lead molecules in different stages of development and
      addressing 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 principals 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
      financial statements have been prepared assuming the Company will continue
      as a
      going concern. Through September 30, 2005, the Company has incurred losses
      in an
      aggregate amount of $1,712,618. Such losses have resulted from the Company’s
      activities as a development stage company. We estimate that the cash reserves
      available on September 30, 2005 as well as the funds raised during October
      and
      December will be sufficient to cover the planned expenses for the 12 months
      period ending September 30, 2006.




**Valuation
      of options and warrants**


We
      granted options to purchase common shares of our company to employees and
      consultants as well as issue warrants in connection with fund raising. The
      fair
      value of the options and warrants is estimated by using the Black Scholes
      option-pricing model, and is based on certain assumptions regarding the expected
      dividends, expected volatility, expected life of the options and warrant and
      the
      risk free interest rate.




**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. The
      Company has provided a full valuation allowance with respect to its deferred
      tax
      assets.





20


Regarding
      the Israeli 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





**Results
      of Operations**





Years
      ended September 30, 2005 and 2004





The
      following table summarizes certain statement of operations data for the company
      for the 12 months period ended September 30, 2005 and 2004 (in
      US$):





Year
                ended September 30,2005
            
            2004Research
                and development costs
            
            $
            545,928
            
            $
            166,992General
                and administrative expenses
            
            
            666,477
            
            
            343,524Financial
                (income) expense, net
            
            
            (13,873
            )
            
            3051,198,532
            
            
            510,821Minority
                interests in losses of a subsidiary
            
            
            -
            
            
            12,375Net
                loss for the period
            
            $
            (1,198,532
            )
            $
            (498,446
            )





Research
      & development costs.


Research
      and development expenses are the costs incurred in the process of our
      pre-clinical trial and clinical trial.





During
      the year ended September 30, 2005 the research and development expenses
      included, among other, the clinical trial and pre-clinical trial expenses,
      the
      consultants compensation, costs related to the registered patents as well as
      salaries and related expenses. During the year ended September 30, 2004 the
      Research and development expenses included the acquisition of in process
      research and development as well as the cost related to the registered
      patents.


During
      the year ended September 30, 2005 the research and development expenses totaled
      $545,928, compared to $166,992 during the year ended September 30, 2004. Costs
      incurred related to research and development in 2005 reflect a full year of
      research and development activity whereas in 2004, the costs were incurred
      subsequent to the August 2004 transaction.





The
      costs
      during the year ended September 30, 2004 was mainly related to the purchase
      of
      the in-process research and development as well as costs related to the
      registered patents. During the year ending September 30, 2005 the costs included
      expenses related to the clinical trial including salaries and related expense,
      consulting, purchase of IVIg and payments to the medical centers.





General
      and administrative expenses


The
      general and administrative expense includes the salaries and related expenses
      of
      the company's management, consulting, legal and professional fees, traveling,
      business development costs as well as insurance expenses.





For
      the
      year ending September 30, 2005 the General and administrative expense totaled
      $666,477 compared to $343,524 for the year ended September 30, 2004. Costs
      incurred related to general and administrative in 2005 reflect a full year
      of
      operation whereas in 2004, the costs were incurred subsequent to the August
      2004
      transaction.





21


Salaries
      and related expenses for the year ending September 30, 2005 totaled $245,197
      compared with $81,713 for the year ending September 30, 2004.





For
      the
      year ending September 30, 2004 consulting expenses totaled $102,579 and were
      mainly related to the August 2004 transaction. For the year ending September
      30,
      2005 we did not incur consulting expenses.





During
      the year ending September 30, 2005 we incurred $149,609 related to legal and
      professional fees compared to 91,498 during the previous year.





Traveling
      expenses for the year ending September 30, 2005 totaled $66,993 compared with
      $55,887 for the year ending September 30, 2004.





Business
      development costs increased from $5,267 in the year ending September 30, 2004
      to
      $100,311 for the year ending September 30, 2005 mainly due the increase in
      the
      company's activities.





Insurance
      expense for the year ending September 30, 2005 totaled $56,162 and included
      the
      directors and officers insurance as well as office and equipment insurance.
      The
      company did not incur any insurance expenses during the year ending September
      30, 2005.





Other
      general and administrative expenses for the year ending September 30, 2005
      totaled $48,205 compared to $6,580 for the year ending September 30, 2004.
      The
      increase is also contributed to the increase in company's activities.





Financial
      income/expense, net


During
      the year ending September 30, 2005 the company generated interest income on
      available cash and cash equivalents balance. No interest income was accrued
      during the year ending September 30, 2004 due the fact that the funds were
      raised in proximity to the year end.





**Liquidity
      and Capital Recourses**





**Financing
      activities**


Through
      September 30, 2005, the Company has incurred losses in an aggregate amount
      of
      $1,712,618. We have financed our operation form private placement of common
      stock. Through September 30, 2005 we raised a total of $2,090,510, net of
      transaction cost, through private placements and we anticipate that additional
      financing will be through similar sources. Our financing activates for the
      most
      recent two years include the following.





On
      August
      13, 2004 the Company entered into subscription agreements for the sale of
      1,224,998 units at a purchase price of $0.75 per unit for a total consideration
      of $918,750.





On
      November 11, 2004 the Company entered into subscription agreements for the
      sale
      of 978,000 units at a purchase price of $1.25 per unit for a total consideration
      of $1,222,500





On
      January 25, 2005 the Company entered into a subscription agreement for the
      sale
      of 32,000 units at a purchase price of $1.25 per unit for a total consideration
      of $40,000.





On
      October 31, 2005, the company entered into 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.




22


On
      December 20, 2005, the company entered into subscription agreement for the
      sale
      of 1,333,334 units at a purchase price of $0.75 per unit for a total
      consideration of $1,000,000.





On
      December 20, 2005, the company entered into 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.





**Employee's
      stock options plan**


On
      August
      17, 2004, our board of directors adopted the 2004 Employees and Consultants
      Stock Option Plan in order to attract and retain quality personnel. Under the
      2004 Employees and Consultants 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.





On
      August
      17, 2004, we granted options to Dr. Dan J. Gelvan under the 2004 Employees
      and
      Consultants Stock Option Plan to allow Dr. Gelvan to purchase up to 1,400,000
      common shares of our company at an exercise price of $1.30 per share. On the
      same date, we also granted options to Ms. Tovi Ben Zeev under the 2004 Employees
      and Consultants Stock Option Plan to allow Ms. Ben Zeev to purchase up to 50,000
      common shares of our company at an exercise price of $1.30 per share. The
      options granted to Dr. Gelvan and Ms. Ben Zeev are exercisable until August
      17,
      2014. The options granted to Dr. Gelvan and Ms. Ben Zeev were fortified during
      2005 due to their resignation.





On
      June,
      2005 we granted options to purchase up to 50,000 common shares of our company
      at
      an exercise price of $1.15 per share, to each of the following Shmuel Levi,
      Yair
      Aloni, Jean-Pierre Elisha Martinez and Lior Soussan-Gutman.





On
      June
      2005 we granted options to purchase up to 100,000 common shares of our company
      at an exercise price of $1.15 per share to an employee. These options were
      fortified during 2005 due to the employee resignation.





On
      June
      2005 we granted options to purchase up to 50,000 common shares of our company
      at
      an exercise price of $1.15 per share to three members of our Scientific Advisory
      Board.





On
      October 6, 2005 we granted options to purchase up to 350,000 common shares
      of
      our company at an exercise price of $0.93 to Mr. Chaime Orlev.





On
      October 20, 2005 we granted options to purchase up to 30,000 common shares
      of
      our company at an exercise price of $1.35 to an employee.





On
      December 21, 2005 we granted options to purchase up to 250,000 common shares
      of
      our company at an exercise price of $1.34 to an employee.





**Summary
      of financing activities**


Through
      September 30, 2005 we raised approximately $2.0 Million through private
      placements of our securities. As of the September 30, 2005 the cash and cash
      equivalents totaled $713,342. We anticipate that these reserves as well as
      the
      funds raised during October and December of 2005 will be sufficient to fund
      additional operation for 12 months. Continuation of our current operations
      after
      utilizing the mentioned reserves during the year ending September 30, 2006,
      is
      dependent upon obtaining financial support from investors until profitable
      results are achieved.




23


**Planned
      Expenditures**





The
      estimate expenses referenced herein are in accordance with the business plan.
      As
      the 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 next
      12 months include:





**Category**
            
            **Amount**Research
                &Development
            
            $
            1,077,000Marketing
                and Business Development
            
            $
            162,000General
                & Administrative Expenses
            
            $
            936,000**Total**
            
            **$**
            **2,175,000**





We
      are
      considering an additional clinical trial to demonstrate clinical efficacy of
      IVIG, sourced from a specific population, of Melanoma patients .
      We will
      begin initial process of this trial during 2006. The decision to proceed past
      the initial process will be based on several major factors, one of which is
      the
      ability of our company to attract sufficient financing on acceptable terms.
      If
      we decide to continue this additional trial past the
      initial process, we anticipate that our related clinical trial costs over the
      next 12 months would increase by approximately $850,000.





**Contractual
      obligations**





The
      Company signed an agreement for the lease of its office facilities, which was
      due to expire on May 19, 2005, with an option to extend it for 2 additional
      optional periods of 12 months each. During May 2005 the company extended the
      agreement for a 12 month period ending May 19, 2006. The monthly payment is
      $679. The future rental payments, on a fiscal year basis under the lease, are
      $8,148 in the year ended September 30, 2006.





Rental
      expenses for the years ended September 30, 2005 and 2004 were $8,148 and
      $ 1,388, respectively





On
      February 2, 2005 the company entered into an agreement with Kamada Ltd. pursuant
      to which the company ordered 9.5Kg of Vigam Liquid (IVIg) for the purposes
      of
      the clinical trial. The total purchase price was set at $332,500 ($35/gram)
      which is paid according to a delivery schedule. For the year ending September
      30, 2005 the company paid a total of $181,650 (for 5.19Kg) under this
      agreement.





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). The liability is partly funded by purchase of insurance policies.
      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.





**Related
      party transactions**


Mr.
      Yair
      Aloni, a director of our company, and Professor Yehuda Shoenfeld, M.D., the
      Chief Scientist of our subsidiary, Gammacan, Ltd., are authorized signatories
      of
      ARP Biomed Ltd. for the Intellectual Property Purchase and Sale Agreement we
      entered into with ARP Biomed Ltd. on June 11, 2004. Mr. Aloni is the Chief
      Executive Officer of ARP and Mr. Shoenfeld is an advisor to ARP.





On
      November 4, 2004, Gammacan Ltd. entered into a consulting agreement with PBD
      Ltd., a company controlled by Vered Caplan, a principal shareholder of Gammacan
      International, Inc. Pursuant to the terms of the agreement, Gammacan Ltd. will
      pay PBD a total fee of $50,000 for the services provided as detailed in the
      agreement. The services include:




24


·
            Summary
                of pre-clinical data and collection of historical research
                data.


·
            Preparation
                of
                clinical trial.


·
            Oncologists
                survey for cancer indication.


·
            Survey
                of complementary technologies


·
            Survey
                of potential IVIg collaborators


·
            Initiation
                of
                contacts with potential partners.




On
      March
      1, 2005, Gammacan International, Inc. and its subsidiary, Gammacan, Ltd.,
      entered into an agreement appointing Vered Caplan as Vice President of Business
      Development. Ms. Caplan, who will provide at least 20 hours of service per
      week,
      shall receive a salary of $4,000 per month.




On
      June
      6, 2005, the Company and Gammacan, Ltd. appointed Vered Caplan as acting Chief
      Executive Officer of both companies, effective July 2, 2005. Vered Caplan will
      devote approximately 70% of her business time to the affairs of Gammacan, Ltd.
      and the Company. Vered Caplan shall receive a salary of $6,475 per
      month.





***Forward
      Looking Statements***





This
      Management's Discussion and Analysis of Financial Condition and Results of
      Operations includes a number of forward-looking statements that reflect
      management's current views with respect to future events and financial
      performance. Those statements include statements regarding the intent, belief
      or
      current expectations of Gammacan and members of its management team as well
      as
      the assumptions on which such statements are based. Prospective investors are
      cautioned that any such forward-looking statements are not guarantees of future
      performance and involve risk and uncertainties, and that actual results may
      differ materially from those contemplated by such forward-looking statements.
      Readers are urged to carefully review and consider the various disclosures
      made
      in this report and in our other reports filed with the Securities and Exchange
      Commission. Important factors currently known to Management could cause actual
      results to differ materially from those in forward-looking statements. We
      undertake no obligation to update or revise forward-looking statements to
      reflect changed assumptions, the occurrence of unanticipated events or changes
      in the future operating results over time. Gammacan believes that its
      assumptions are based upon reasonable data derived from and known about its
      business and operations and the business and operations of Gammacan. No
      assurances are made that actual results of operations or the results of
      GammaCan's future activities will not differ materially from its
      assumptions.


25


**ITEM
      7 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**























**GAMMACAN
      INTERNATIONAL INC.**


(A
      Development Stage Company)


2005
      ANNUAL REPORT














TABLE
      OF
      CONTENTS








**Page****REPORT
                OF INDEPENDENT REGISTERED PUBLIC****ACCOUNTING
                FIRM** - Report of Kesselman & Kesselman
            
            27**REPORT
                OF INDEPENDENT AUDITORS -**Report
                of Armando C. Ibarra
            
            28**CONSOLIDATED
                FINANCIAL STATEMENTS:**Balance
                sheets
            
            29Statements
                of operations
            
            30Statements
                of changes in stockholders’ equity
            
            31Statements
                of cash flows
            
            32Notes
                to financial statements
            
            33-46























F-26







**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
      Board of Directors and 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; hereafter - the "Company") and its subsidiary
      as of September 30, 2005 and 2004, 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, 2005. 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.





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 also includes examining,
      on a test basis, evidence supporting the amounts and disclosures in the
      financial statements. An audit 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 consolidated financial statements referred to above present fairly,
      in all material respects, the consolidated financial position of the Company
      and
      its subsidiary as of September 30, 2005 and 2004, and the consolidated results
      of operations, changes in stockholders’ equity and cash flows for each of the
      years then ended and cumulatively, for the period from October 1, 2003 to
      September 30, 2005, in conformity with accounting principles generally accepted
      in the United States of America.




As
      explained in note 1a to the financial statements, subsequent to September 30,
      2006, the Company may be dependent on obtaining additional funding in order
      to
      continue its research and development activity.





Kesselman
                & KesselmanTel-Aviv,
                IsraelDecember
                29, 2005


F-27


**ARMANDO
      C. IBARRA**


Certified
      Public Accountants


A
      Professional Corporation









Armando C. Ibarra, C.P.A.
            
            Members of the California Society
              ofCertified Public
              AccountantsArmando Ibarra, Jr., C.P.A.,
              JD
            
            Members of the American Institute
              ofCertified Public
              AccountantsMembers 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-28




**GAMMACAN
      INTERNATIONAL INC.**




(A
      Development Stage Company)




CONSOLIDATED
      BALANCE SHEETS





(US
      $,
      except share data)





**September
                30,****2005**
            
            **2004****A
                s s e t s****CURRENT
                ASSETS:**Cash
                and cash equivalents
            
            $
            713,342
            
            $
            705,868Prepaid
                expenses
            
            
            11,619
            
            
            11,029Other
            
            
            22,029
            
            
            5,971T
                o
                t a l current assets
            
            
            746,990
            
            
            722,868**FUNDS
                IN RESPECT OF EMPLOYEE RIGHTS UPON RETIREMENT**(Note
                3)
            
            
            7,528
            
            
            -**PROPERTY
                AND EQUIPMENT, NET**(Note
                2)
            
            
            10,269
            
            
            3,899T
                o
                t a l assets
            
            $
            764,787
            
            $
            726,767**Liabilities
                and stockholders' equity****CURRENT
                LIABILITIES:**Accounts
                payable
            
            $
            159,379
            
            $
            140,901Payroll
                and related accruals
            
            
            14,655
            
            
            16,317T
                o
                t a l current liabilities
            
            
            174,034
            
            
            157,218**LIABILITY
                FOR EMPLOYEE RIGHTS UPON RETIREMENT**(Note 3)
            
            
            13,725
            
            
            -**COMMITMENTS**(Note
                4)**STOCKHOLDERS’
                EQUITY:**Preferred
                stock, $ 0.0001 par value (20,000,000 sharesauthorized;
                none issued and outstanding)Common
                stock, $ 0.0001 par value (100,000,000 authorized shares;
                26,231,510 and 25,221,510 shares issued andoutstanding
                as of September 30, 2005 and 2004, respectively)
            
            
            2,622
            
            
            2,522Additional
                paid-in capital
            
            
            1,767,601
            
            
            941,619Warrants
            
            
            519,423
            
            
            139,494Deficit
                accumulated during the development stage
            
            
            (1,712,618
            )
            
            (514,086
            )T
                o
                t a l stockholders' equity
            
            
            577,028
            
            
            569,549T
                o
                t a l liabilities and stockholders’ equity
            
            $
            764,787
            
            $
            726,767





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


F-29




**GAMMACAN
      INTERNATIONAL INC.**




(A
      Development Stage Company)




CONSOLIDATED
      STATEMENTS OF OPERATIONS





(US
      $,
      except share data)





**Period
                from****October
                6,****Year
                ended**
            
            **1998*
                to****September
                30**
            
            **September
                30****2005**
            
            
            **2004**
            
            
            **2005**


**RESEARCH
                AND DEVELOPMENT COSTS**(Note
                7)
            
            $
            545,928
            
            $
            166,992
            
            $
            712,920**GENERAL
                AND ADMINISTRATIVE****EXPENSES**(Note
                8)
            
            
            666,477
            
            
            343,524
            
            
            1,025,641**FINANCIAL
                INCOME**
            
            
            (20,703
            )
            
            -
            
            
            (20,703
            )**FINANCIAL
                EXPENSES**
            
            
            6,830
            
            
            305
            
            
            7,1351,198,532
            
            
            510,821
            
            
            1,724,993**MINORITY
                INTERESTS IN LOSSES OF A SUBSIDIARY**
            
            
            -
            
            
            (12,375
            )
            
            (12,375
            )**NET
                LOSS FOR THE PERIOD**
            
            $
            (1,198,532
            )
            $
            (498,446
            )
            $
            (1,712,618
            )**BASIC
                AND DILUTED LOSS PER 1000****COMMON
                SHARES**
            
            $
            (45.92
            )
            $
            (10.91
            )**WEIGHTED
                AVERAGE NUMBER OF COMMON****SHARES
                USED IN COMPUTING BASIC AND****DILUTED
                LOSS PER COMMON SHARE**
            
            
            26,099,260
            
            
            45,672,962








*
      Incorporation date, see note 1a.





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


F-30




**GAMMACAN
      INTERNATIONAL INC. AND SUBSIDIARY**




**(A
      Development Stage Company)**




CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY







(US
      $,
      except share data)







**Deficit****accumulated****Common**
            
            
            
            **Additional**
            
            **during****Common**
            
            **Stock**
            
            
            
            **paid-in**
            
            **development****Stock**
            
            **Amount**
            
            **Warrants**
            
            **capital**
            
            **stage**
            
            **Total****Beginning
                balance**
            
            
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Stock
                issued for cash onOctober
                6, 1998
            
            
            1,650,000
            
            
            165
            
            
            
            
            
            (155
            )
            
            
            
            
            10Stock
                issued for cash onOctober
                9, 1998
            
            
            2,722,500
            
            
            272
            
            
            
            
            
            (107
            )
            
            
            
            
            165Stock
                issued for cash onOctober
                10, 1998
            
            
            198,000
            
            
            20
            
            
            
            
            
            100
            
            
            
            
            
            120Stock
                issued for services onDecember
                1, 1998
            
            
            9,900,000
            
            
            990
            
            
            
            
            
            2,010
            
            
            
            
            
            3,000Stock
                issued for cash onApril
                7, 1999
            
            
            561,000
            
            
            56
            
            
            
            
            
            284
            
            
            
            
            
            340Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (3,444
            )
            
            (3,444
            )**Balance
                at September 30, 1999**
            
            
            15,031,500
            
            
            1,503
            
            
            
            
            
            2,132
            
            
            (3,444
            )
            
            191Stock
                issued for cash onSeptember
                30, 2000
            
            
            41,250,000
            
            
            4,125
            
            
            
            
            
            875
            
            
            
            
            
            5,000**Balance
                at September 30, 2000**
            
            
            56,281,500
            
            
            5,628
            
            
            
            
            
            3,007
            
            
            (3,444
            )
            
            5,191Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (3,108
            )
            
            (3,108
            )**Balance
                at September 30,****2001**
            
            
            56,281,500
            
            
            5,628
            
            
            
            
            
            3,007
            
            
            (6,552
            )
            
            2,083Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (4,231
            )
            
            (4,231
            )**Balance
                at September 30, 2002**
            
            
            56,281,500
            
            
            5,628
            
            
            
            
            
            3,007
            
            
            (10,783
            )
            
            (2,148
            )Contributed
                capital
            
            
            
            
            
            
            
            
            
            
            
            7,025
            
            
            
            
            
            7,025Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (4,857
            )
            
            (4,857
            )**Balance
                at September 30, 2003**
            
            
            56,281,500
            
            
            5,628
            
            
            
            
            
            10,032
            
            
            (15,640
            )
            
            20Cancellation
                of shares atJune
                8, 2004
            
            
            (32,284,988
            )
            
            (3,228
            )
            
            
            
            
            3,228Stock
                based compensation
            
            
            
            
            
            
            
            
            
            
            
            62,600
            
            
            
            
            
            62,600Common
                stock and warrantsissued
                for cash on August 13,
            
            
            1,224,998
            
            
            122
            
            
            139,494
            
            
            779,134
            
            
            
            
            
            918,7502004Gain
                on issuance of subsidiaryStock
                on August 17, 2004 tothird
                party
            
            
            
            
            
            
            
            
            
            
            
            86,625
            
            
            
            
            
            86,625Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (498,446
            )
            
            (498,446
            )**Balance
                at September 30, 2004**
            
            
            25,221,510
            
            
            2,522
            
            
            139,494
            
            
            941,619
            
            
            (514,086
            )
            
            569,549Common
                stock and warrantsissued
                for cash on November 11,2004
            
            
            978,000
            
            
            97
            
            
            367,892
            
            
            766,630
            
            
            
            
            
            1,134,619Common
                stock and warrantsissued
                for cash on January 25,2005
            
            
            32,000
            
            
            3
            
            
            12,037
            
            
            24,760
            
            
            
            
            
            36,800Issuance
                of warrants to Consultants'
            
            
            
            
            
            
            
            
            
            
            
            34,592
            
            
            
            
            
            34,592Net
                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







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


F-31




**GAMMACAN
      INTERNATIONAL INC. AND SUBSIDIARY**


(A
      Development Stage Company)




CONSOLIDATED
      STATEMENTS OF CASH FLOWS







(US
      $)





**Period
                from****October
                6,****Year
                ended**
            
            **1998*
                to****September
                30**
            
            **September
                30,****2005**
            
            **2004**
            
            **2005**





**CASH
                FLOWS FROM OPERATING ACTIVITIES:**Net
                loss
            
            $
            (1,198,532
            )
            $
            (498,446
            )
            $
            (1,712,618
            )Adjustments
                required to reconcile net loss to net cash usedin
                operating activities:Income
                and expenses not involving cash flows:Depreciation
            
            
            2,534
            
            
            59
            
            
            2,593Common
                stock issued for services
            
            
            
            
            
            
            
            
            3,000Minority
                interests in losses of a subsidiary
            
            
            -
            
            
            (12,375
            )
            
            (12,375
            )Write
                off of in process research and development
            
            
            -
            
            
            100,000
            
            
            100,000Warrants
                granted to consultants
            
            
            34,592
            
            
            62,600
            
            
            97,192Changes
                in operating assets and liabilities:Increase
                in prepaid expenses
            
            
            (590
            )
            
            (11,029
            )
            
            (11,619
            )Increase
                in other current assets
            
            
            (16,058
            )
            
            (5,971
            )
            
            (22,029
            )Increase
                (decrease) in current liabilities
            
            
            16,816
            
            
            156,218
            
            
            173,034Increase
                in liability for employee rights upon retirement
            
            
            13,725
            
            
            
            
            
            13,725Net
                cash used in operating activities
            
            
            (1,147,513
            )
            
            (208,944
            )
            
            (1,369,097
            )**CASH
                FLOWS FROM INVESTING ACTIVITIES -**funds
                in respect of employee rights upon retirement
            
            
            (7,528
            )
            
            -
            
            
            (7,528
            )Purchase
                of property and equipment
            
            
            (8,904
            )
            
            (3,958
            )
            
            (12,862
            )Net
                cash used in investment activities
            
            
            (16,432
            )
            
            (3,958
            )
            
            (20,390
            )**CASH
                FLOWS FROM FINANCING ACTIVITIES:**Contribution
                to additional paid in capital
            
            
            
            
            
            
            
            
            12,319Issuance
                of common stock and warrants
            
            
            1,171,419
            
            
            918,750
            
            
            2,090,510Net
                cash provided by financing activities
            
            
            1,171,419
            
            
            918,750
            
            
            2,102,829**INCREASE
                IN CASH AND CASH EQUIVALENTS**
            
            
            7,474
            
            
            705,848
            
            
            713,342**BALANCE
                OF CASH AND CASH EQUIVALENTS********AT****BEGINNING
                OF PERIOD**
            
            
            705,868
            
            
            20**BALANCE
                OF CASH AND CASH EQUIVALENTS****AT
                END OF PERIOD**
            
            $
            713,342
            
            $
            705,868
            
            $
            713,342





*
      Incorporation date, see note 1a.


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


F-32


**GAMMACAN
        INTERNATIONAL INC. AND SUBSIDIARY**
 (A
        Development Stage Company)
  NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
        (continued)






**NOTE
      1 - SIGNIFICANT ACCOUNTING POLICIES:**




**a.**
            **General:**





GammaCan
      International Inc. (A Development Stage Company; "the Company") was incorporated
      on October 6, 1998, under the laws of the State of Delaware, under the name
      of
      San Jose International, Inc. The Company has no significant revenues and no
      material operations and in accordance with Statement of financial Accounting
      Standard (“SFAS”) No. 7 “Accounting and Reporting by Development Stage
      enterprises”, the Company is considered a development stage
      company.





On
      August
      19, 2004, the name of the company was changed from "San Jose International,
      Inc." into "GammaCan International, Inc.".





At
      this
      point in the development stage, the company's focus is to demonstrate efficacy
      of IVIG cancer immunotherapy in human clinical trials. In July 2005, the company
      commenced Phase 2 clinical trials in humans to demonstrate clinical efficacy
      of
      IVIG immunotherapy in three major cancers: colon, prostate and melanoma. These
      Phase 2 clinical trials are being conducted at three medical centers in Israel
      and preliminary results are anticipated during the first half of 2006. The
      Phase
      2 clinical trial is due to be completed by October 2006.





The
      financial statements have been prepared assuming the Company will continue
      as a
      going concern. Through September 30, 2005, the Company has incurred losses
      in an
      aggregate amount of $1,712,618. Such losses have resulted from the Company’s
      activities as a development stage company. The Company’s management estimates
      that it would be able to finance its operations from its current reserves and
      the cash raised in October 2005 and in December 2005 (see note 10) for the
      coming year. Continuation of the Company’s current operations after utilizing
      the mentioned reserves during the year ending September 30, 2006, is dependent
      upon obtaining financial support from investors until profitable results are
      achieved.





During
      August 2004, the Company acquired, through it's then wholly-owned subsidiary,
      GammaCan Ltd, all of the in-process research and development ("IPR&D") of
      ARP Biomed, Ltd. ("ARP"), an Israeli Company. The IPR&D was acquired for the
      purpose of continuing research related to the clinical treatment of various
      types of cancer. The purchase price was $100,000 which was settled with the
      issuance of 12.5% of GammaCan Ltd's issued and outstanding common shares Under
      the terms of the agreement, the Company was required to lend $800,000 to its
      subsidiary, to finance the clinical trials and conduct further research and
      development utilizing the acquired IPR&D, which was valued at
      $100,000.





In
      accordance with SAB 51, the gain on issuance of the subsidiary’s stock, totaling
      $86,625, was recorded as an addition to paid in capital within “Stockholders’
Equity” due to the fact that there is no certainty of the realization of this
      gain.





Costs
      of
      registered patents, paid by the Company in connection with acquisition of the
      in
      process research and development, were expensed to research and development
      expense **.**


F-33


**GAMMACAN
      INTERNATIONAL INC. AND SUBSIDIARY**


(A
      Development Stage Company)




NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
      (continued)


**NOTE
      1 - SIGNIFICANT ACCOUNTING POLICIES** (continued):





On
      June
      21, 2004, a company owned by the Company's sole officer and director at that
      time, was granted an option by one of the shareholders to purchase 100,000
      options at $0.01 per share. The economic fair value of the options is recognized
      as compensation expense in the amount of $62,600. The options were exercised
      on
      August 17, 2004.





**b.**
            **Accounting
                principles**





The
      consolidated financial statements have been prepared in accordance with
      generally accepted accounting principles ("GAAP") 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 and its subsidiary are conducted is the US dollar (“$” or
“dollar”).


Most
      of
      the Company’s research and development cost 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 and its subsidiary 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 the Company and its
      subsidiary GammaCan Ltd. All material intercompany 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
            
            33Office
                furniture and equipment
            
            6-15





F-34


**GAMMACAN
      INTERNATIONAL INC. AND SUBSIDIARY**


(A
      Development Stage Company)




NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
      (continued)


**NOTE
      1 - SIGNIFICANT ACCOUNTING POLICIES (continued):**





**g.**
            **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. The
      Company has provided a full valuation allowance with respect to its deferred
      tax
      assets.





Regarding
      the Israeli 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 registered patents
      that
      have not yet reached technological feasibility and 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
                income (loss)**





The
      Company has no other comprehensive income (loss) components other than net
      loss
      for the reported periods.





**k.**
            **Loss
                per share**







Basic
      and
      diluted net losses per common share are presented in accordance with FAS No.
      128
“Earning per share” (“FAS128”), for all periods presented. 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 stocks options and warrants excluded
      from
      the calculations of diluted net loss was 1,510,000 for the year ended September
      30, 2005 (2,674,998 for the year ended September 30, 2004).


F-35
 **GAMMACAN
            INTERNATIONAL INC.**
 (A
            Development Stage Company)
  NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS (continued)


**NOTE
      1 - SIGNIFICANT ACCOUNTING POLICIES** (continued) **:**




**l.**
            **Stock
                based compensation**




The
      Company accounts 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”), the Company discloses pro
      forma data assuming the Company had accounted for employee stock option grants
      using the fair value-based method defined in FAS 123.




As
      to
      services from consultants, the Company applies 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
      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,****2005**
            
            **2004**Net
                loss as reported
            
            $
            (1,198,532
            )
            $
            (498,446
            )Add:
                pro forma stock based employee compensationexpense
                determined under fair valuemethod
                for all awards, net of related tax effects
            
            
            (153,287
            )
            
            (122,411
            )Recognize
                the reversal of the pro forma stock based employee compensation
                expensedetermined
                under fair value method due to forfeitureof
                awards granted to employees (see note 5b)
            
            
            118,193Pro
                forma net loss
            
            $
            (1,233,626
            )
            $
            (620,857
            )Net
                loss per 1000 common shares:Basic
                and diluted loss per 1000 shares - as reported
            
            $
            (45.92
            )
            $
            (10.91
            )Basic
                and diluted loss per 1000 shares - pro forma
            
            $
            (47.27
            )
            $
            (13.59
            )





**m.**
            **Recently
                issued accounting
                pronouncements:**






1)
            In
                December 2004, the Financial Accounting Standards Board ("FASB")
                issued
                the revised Statement of Financial Accounting Standards ("FAS") No.
                123,*Share-Based
                Payment (*FAS 123R*)*,
                which addresses the accounting for share-based payment transactions
                in
                which the Company obtains employee services in exchange for (a) equity
                instruments of the Company or (b) liabilities that are based on the
                fair
                value of the Company’s equity instruments or that may be settled by the
                issuance of such equity instruments. This Statement eliminates the
                ability
                to account for employee share-based payment transactions using APB
                Opinion
                No. 25,*Accounting
                for Stock Issued to Employees,*and requires instead that such transactions be accounted for using
                the
                grant-date fair value based method. This Statement will be effective
                as of
                the beginning of the first annual reporting period that begins after
                December 15, 2005, for small business issuers (October 1, 2006 for
                the Company). Early adoption of FAS 123R is encouraged.







F-36


**GAMMACAN
      INTERNATIONAL INC. AND SUBSIDIARY**


(A
      Development Stage Company)




NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
      (continued)


**NOTE
      1 - SIGNIFICANT ACCOUNTING POLICIES** (continued) **:**




This
      Statement 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 expects that upon the adoption of FAS 123R, the Company will apply
      the
      modified prospective application transition method, as permitted by the
      Statement. Under such transition method, upon the adoption of FAS 123R, the
      Company’s financial statements for periods prior to the effective date of the
      Statement will not be restated.







2)
            On
                June 7, 2005, FASB issued Statement No. 154, “Accounting Changes
                and Error Corrections, a replacement of APB Opinion No. 20,
                Accounting Changes, and Statement No. 3, Reporting Accounting Changes
                in Interim Financial Statements” (“SFAS No. 154”). SFAS No. 154
                changes the requirements for the accounting for, and reporting of,
                a
                change in accounting principle. Previously, most voluntary changes
                in
                accounting principles were required to be recognized by way of a
                cumulative effect adjustment within net income during the period
                of the
                change. SFAS No. 154 requires retrospective application to prior
                periods’ financial statements, unless it is impracticable to determine
                either the period-specific effects or the cumulative effect of the
                change.
                SFAS No. 154 is effective for accounting changes made in fiscal years
                beginning after December 15, 2005; however, SFAS No. 154 does
                not change the transition provisions of any existing accounting
                pronouncements. The Company does not believe adoption of SFAS No. 154
                will have a material effect on its consolidated financial position,
                results of operations or cash flows.





**o.**
            **Reclassifications**




Certain
      figures in respect of prior years have been reclassified to conform to the
      current year presentation.





**NOTE
      2 - PROPERTY AND EQUIPMENT, net**





**a.**
              **Property**and
                  equipment are composed as follows:





**September
                30,****2005**
            
            **2004**Cost:Office
                furniture and equipment
            
            $
            7,400
            
            $
            2,068Computers
                and peripheral equipment
            
            
            5,462
            
            
            1,89012,862
            
            
            3,958Less
                - accumulated depreciation
            
            
            2,593
            
            
            5910,269
            
            $
            3,899





**b.**
            Depreciation
                expense totaled $2,534 and $59 in the years ended September 30, 2005
                and
                2004, respectively.





F-37


**GAMMACAN
      INTERNATIONAL INC. AND SUBSIDIARY**


(A
      Development Stage Company)




NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
      (continued)


**NOTE
      3 - 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 and the amounts funded are included in the
                balance
                sheet under investments and long-term receivables, 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, 2005, were
                $13,725.





**c.**
              Cash
                  flows information regarding the company’s liability for employee rights
                  upon retirement:


**1.**
            The
                Company expects to contribute $20,000 in respect of severance pay
                in
                2006.


**2.**
            Due
                to the relatively young age of the subsidiary'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
      4 - COMMITMENTS:**




**a.**
            The
                Company signed an agreement for the lease of its office facilities,
                which
                expired on May 19, 2005, with an option to extend it for 2 additional
                optional periods of 12 months each. During May 2005 the company extended
                the agreement for a 12 month period ending May 19, 2006. The monthly
                payment is $679. The future rental payments, on a fiscal year basis
                under
                the lease, are $8,148 in the year ended September 30, 2006.





Rental
      expenses for the years ended September 30, 2005 and 2004 were $8,148 and $1,388,
      respectively





**b.**
            On
                February 2, 2005 the company entered into an agreement with Kamada
                Ltd.
                pursuant to which the company ordered 9.5Kg of Vigam Liquid (IVIg)
                for the
                purposes of the clinical trial. The total purchase price was set
                at
                $332,500 ($35/gram) which is paid according to a delivery schedule.
                For
                the year ending September 30, 2005 the company paid a total of $181,650
                (for 5.19Kg) under this agreement.





**c.**
            As
                to the employment agreement with the acting CEO of the Company, see
                note
                9e.





F-38


**GAMMACAN
      INTERNATIONAL INC. AND SUBSIDIARY**


(A
      Development Stage Company)




NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
      (continued)


**NOTE
      5 - STOCK HOLDERS’ EQUITY:**





**a.**
            **Capital
                stock**





The
      Company’s shares are on the over-the-counter bulletin board. The quoted price
      per share, as of September 30, 2005 was US$1.02.





On
      April
      20, 2004 the Company affected a 16.5 to 1 forward stock split of its Common
      Stock. All shares and per share amounts have been retroactively restated to
      reflect the 16.5 to 1 stock split.





Following
      the forward split the Company also reduced the authorized capital of its common
      stock from 1,320,000,000 shares to 100,000,000 shares.





On
      June
      8, 2004, the Company's former main stockholder returned 32,284,988 shares of
      common stock to the treasury for cancellation. Accordingly, an amount of $3,228
      was deducted from the "Common stock amount" balance and transferred to the
      "Additional paid in capital" balance.





On
      August
      13, 2004 the Company entered into subscription agreements for the sale of
      1,224,998 units at a purchase price of $0.75 per unit for a total consideration
      of $918,750. Each unit consisted of one Common Share in the Company and one
      share purchase warrant, which entitles the holder to purchase an additional
      Common Share for $1.50 on or before August 13, 2005. The fair value of the
      warrants estimated by using the Black Scholes option-pricing model is $139,494,
      and is based on the following assumptions: dividend yield of 0% for all years;
      expected volatility of 103%; risk-free interest rates of 5.4%; and expected
      lives of 1 year.





On
      November 11, 2004 the Company entered into subscription agreements for the
      sale
      of 978,000 units at a purchase price of $1.25 per unit for a total consideration
      of $1,222,500 (“The November issuance”). Each unit consisted of one common share
      and one share purchase warrant. Each share purchase warrant entitles the holder
      to purchase one additional common share for a period of two years after the
      date
      of the subscription agreement at an exercise price of $1.50 in the first 15
      months and $2.00 for the next nine months. The consideration was allocated
      to
      the shares and options issued based on relative fair value. The fair value
      allocated to the warrants, estimated by using the Black Scholes option-pricing
      model is $367,892, which is based on the following assumptions: dividend yield
      of 0% for all years; expected volatility of 105%; risk-free interest rates
      of
      5.4%; and expected lives of 2 year.


Transaction
      costs of $87,881 were paid in connection with this subscription agreement.





F-39


**GAMMACAN
      INTERNATIONAL INC. AND SUBSIDIARY**


(A
      Development Stage Company)




NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
      (continued)


**NOTE
      5 - STOCK HOLDERS’ EQUITY** (continued) **:**





On
      January 25, 2005 the Company entered into a subscription agreement for the
      sale
      of 32,000 units at a purchase price of $1.25 per unit for a total consideration
      of $40,000. Each unit consisted of one common share and one share purchase
      warrant. Each share purchase warrant entitles the holder to purchase one
      additional common share for a period of two years after the date of the
      subscription agreement at an exercise price of $1.50 in the first 15 months
      and
      $2.00 for the next nine months. The consideration was allocated to the shares
      and options issued based on relative fair value. The fair value allocated to
      the
      warrants estimated by using the Black Scholes option-pricing model is $12,037,
      based on the same assumptions that used in the November issuance.


Transaction
      costs of $3,200 were paid in connection with this subscription
      agreement.





As
      to the
      subscription agreements entered to in October and December 2005, see note
      10.





**b.**
            **Summary
                of the company’s stock options
                plans**





On
      August
      17, 2004, the company’s board of directors adopted the 2004 Employees and
      Consultants Stock Option Plan (hereafter - the Stock Option Plan). Under the
      Plan 5,000,000 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 this Plan, each option is exercisable to purchase one common share of
      $
      0.0001 par value of the Company.


The
      options may be exercised after vesting and only in accordance with the
      following:


1.
            On
                the first anniversary commencing the grant date - 25% of the
                options.


2.
            On
                the last day of each of the 36 months following the first anniversary
                of
                the grant date, the options shall vest in equal monthly
                installments.




In
      August
      2004, 1,450,000 options were granted under the plan (of which 1,400,000 were
      granted to the Company’s CEO). These options were forfeited during June and
      October 2005 due to the resignation of the related employees.


The
      exercise price has been determined at $1.3 per share. The fair value of the
      above options on the date of grant was estimated by using Black Scholes
      option-pricing model as $1,662,964, and was based on the following assumptions:
      dividend yield of 0%; expected volatility of 103%; risk-free interest rates
      of
      5.4%; and expected lives of 7.88 years.





In
      June
      2005, 50,000 options were granted under the Stock Option Plan to each of four
      board members (total - 200,000 options).


The
      exercise price has been determined at $1.15 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 was estimated by using Black Scholes option-pricing
      model as $186,588, and was based on the following assumptions: dividend yield
      of
      0%; expected volatility of 87%; risk-free interest rates of 4%; and expected
      lives of 7.88 years.





In
      June
      2005, 100,000 options were granted under the Stock Option Plan to an employee
      of
      the subsidiary. These options were forfeited during October 2005 due to the
      resignation of the employee.





F-40


**GAMMACAN
        INTERNATIONAL INC. AND SUBSIDIARY**
 **(A
        Development Stage Company)**
  NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
        (continued)




**NOTE
      5 - STOCK HOLDERS’ EQUITY** (continued) **:**





The
      exercise price has been determined at $1.15 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 was estimated by using Black Scholes option-pricing
      model as $84,464, and was based on the following assumptions: dividend yield
      of
      0%; expected volatility of 72%; risk-free interest rates of 4%; and expected
      lives of 7.88 years.





A
      summary
      of the status of the company’s plan as of September 30, 2005 and 2004, and
      changes during the years ended on those dates, is presented below:





Year
                ended September 302005
            
            2004Weighted
            
            
            
            WeightedNumber
            
            average
            
            Number
            
            averageexercise
            
            
            
            exerciseprice
            
            
            
            price$
            
            
            
            $**For
                options granted to****employees:**Options
                outstanding atbeginning
                of year
            
            
            1,450,000
            
            $
            1.3
            
            
            -
            
            $
            -Changes
                during the year:Granted
            
            
            300,000
            
            
            1.15
            
            
            1,450,000
            
            
            1.3Exercised
            
            
            -
            
            
            -Forfeited
            
            
            (1,400,000
            )
            
            1.3
            
            
            -
            
            
            -Expired
            
            
            -
            
            
            -
            
            
            -
            
            
            -Options
                outstanding at endof
                year
            
            
            350,000
            
            
            0.82
            
            
            1,450,000
            
            
            1.3Options
                exercisable at endof
                year
            
            
            -
            
            
            -
            
            
            -
            
            
            -Weighted
                average fairvalue
                of options grantedduring
                the year
            
            $
            0.90
            
            
            
            
            $
            1.15





None
      of
      the outstanding options were exercisable at the end of each year.





In
      June
      2005, 50,000 options were granted under the Stock Option Plan to each of three
      scientific advisors (total - 150,000 options).


The
      exercise price has been determined at $1.15 per share, which was equivalent
      to
      the traded market price on the date of grant. The fair value of the above
      options is estimated by using Black Scholes option-pricing model as $117,475,
      and was based on the following assumptions: dividend yield of 0% for all years;
      expected volatility of 80%; risk-free interest rates of 4.5%; and expected
      lives
      of 7.88 years.








F-41




**GAMMACAN
      INTERNATIONAL INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**




NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
      (continued)


**NOTE
      5 - STOCK HOLDERS’ EQUITY** (continued) **:**





In
      accordance with SFAS 123 and EITF 96-18, options granted to consultants and
      Scientific Advisory Board members (non-employees) are recorded at fair value
      based on an option-pricing model and periodically revalued over the related
      service periods. The Company recorded stock compensation of $34,590 during
      the
      year ended September 2005, related to consulting services.





The
      company did not grant options to non-employees prior to the year ended September
      30, 2005. The only options granted to non-employees during the year ended
      September 30, 2005, were to its scientific advisors, as described above.





As
      to
      grants of stock options in October and December of 2005, see note
      10.





**NOTE
      6 - TAXES ON INCOME**





**a.**
            **Deferred
                income taxes:**





**September
                30,****2005**
            **2004**Tax
                loss carryforwards
            $268,935
            $100,369Valuation
                allowance
            (268,935)
            (100,369)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.**
              **U.S.
                  income taxes**





As
      of
      September 30, 2005, the Company has an accumulated tax loss carryforward of
      approximately $439,046 (September 30, 2004 - $240,000), which will expire 20
      years from the date the loss was incurred.





**c.**
            **Israeli
                income taxes**





The
      Israeli 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 Israeli subsidiary is taxed under this
      law.





As
      of
      September 30, 2005, the Company’s Israeli subsidiary has an accumulated tax loss
      carryforward of approximately $1,151,579 (September 30, 2004 approximately
      -
      $200,000). Under Israeli tax laws, carryforward tax losses are linked to the
      Israeli CPI. The Israeli loss carryforwards have no expiration date.





F-42


**GAMMACAN
      INTERNATIONAL INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**




NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
      (continued)


**NOTE
      7 - RESEARCH AND DEVELOPMENT COSTS:**





**Year
                ended****September
                30,****2005**
            
            **2004**Clinical
                trials
            
            $
            239,200
            
            $
            -Consulting
            
            
            127,082
            
            
            7,500Acquisition
                of in process research and development
            
            
            -
            
            
            100,000Salaries
                and related expenses
            
            
            91,337
            
            
            -Costs
                of registered patents
            
            
            50,916
            
            
            39,554Compensation
                costs in respect of warrants granted toconsultants
            
            
            34,590
            
            
            -Other
            
            
            2,803
            
            
            19,938$
            545,928
            
            $
            166,992





**NOTE
      8 - GENERAL AND ADMINISTRATIVE EXPENSES**





**Year
                ended****September
                30,****2005**
            
            **2004**Payroll
                and related expenses
            
            $
            245,197
            
            $
            81,713Consulting
            
            
            -
            
            
            102,579Travel
            
            
            66,993
            
            
            55,887Professional
                services
            
            
            149,609
            
            
            91,498Insurance
            
            
            56,162
            
            
            -Business
                development
            
            
            100,311
            
            
            5,267Other
            
            
            48,205
            
            
            6,580$
            666,477
            
            $
            343,524





F-43


**GAMMACAN
        INTERNATIONAL INC. AND SUBSIDIARY**
 **(A
        Development Stage Company)**
  NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
        (continued)




**NOTE
      9 - RELATED PARTIES - TRANSACTIONS:**





**a.**
            As
                to the employment contract with the Company’s CEO see e below.
              Payroll
                and related expenses in respect of the Company’s CEO for the year ended
                September 30, 2005 total $53,330.





**b.**
            As
                to options granted to the former Company’s CEO, see note
                5b.


Payroll
      and related expenses in respect of the former Company’s CEO for the year ended
      September 30, 2005 total $114,877.




**c.**
            On
                November 4, 2004, the Subsidiary entered into a consulting agreement
                with
                PBD Ltd., a company controlled by a principal shareholder of the
                Company,
                who effective July 2, 2005 was the CEO (see note e below) (the
                "Consultant"). Pursuant to the terms of the agreement, the Subsidiary
                paid
                the Consultant a total fee of $50,000 for the services provided as
                detailed in the agreement. Mainly the services include****summary
                of pre-clinical data and collection of historical research data,
                preparation of clinical trial, oncologist's survey for cancer indication,
                a survey of complementary technologies, a survey of potential IVIg
                collaborators and initiation of contacts with potential partners.
                The
                amount paid to the Consultant is included in "Research & development
                expenses".




The
      Subsidiary also reimbursed the Consultant for out of pocket expenses incurred
      in
      connection with performance under the agreement only if it has been approved
      in
      writing by the Subsidiary. The expenses of hiring a clinical expert to advice
      on
      the specifics of the protocol, for a total cost that will not exceed $8,000,
      were approved by the Subsidiary.





**d.**
            On
                March 1, 2005 the Company and its Subsidiary, entered into an agreement
                appointing a related party as Vice President of Business Development,
                in
                consideration of a salary of $4,000 per month, commencing February
                2005.





**e.**
            Effective
                July 2, 2005, a related party will serve as the CEO of the Subsidiary
                and
                as acting CEO of the Company, devoting approximately 70% of her business
                time to the affairs of the Company and its subsidiary for a monthly
                salary
                of $6,475.





**NOTE
      10 - SUBSEQUENT EVENTS:**





**a.**
            On
                October 31, 2005, the company entered into 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. Each unit comprising one share of the
                Company's
                common stock and one common share purchase warrant exercisable for
                three
                years. Every 2 warrants can be exercisable to one Share at a price
                of
                $1.00 per Share.





In
      connection with the subscription agreement the company paid $50,000 cash fee
      to
      a third party which assisted in securing the agreement, as well as issued 66,666
      units, each comprising of one common share purchase warrant exercisable for
      three years. Every warrant can be exercisable to one Share at a price of $1.50
      per Share.





The
      value
      allocated to the warrants estimated by using the Black Scholes option-pricing
      model is $82,784. The value 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
                October 6, 2005, 350,000 options were granted under the Stock Option
                Plan.
                The exercise price has been determined at $0.93 per share which was
                equivalent to 90% of the traded market price on the date of grant.


The
      options may be exercised after vesting and only in accordance with the
      following:


1.
            On
                the first anniversary commencing the grant date - 30,000
                options.


2.
            On
                the last day of each of the 36 months following the first anniversary
                of
                the grant date, the options shall vest in equal monthly
                installments.





The
      fair
      value of the above options on the date of grant estimated by using Black Scholes
      option-pricing model is $283,262. The value 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.





F-44


**GAMMACAN
      INTERNATIONAL INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**




NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
      (continued)


**NOTE
      10 - SUBSEQUENT EVENTS** (continued) **:**





**c.**
            On
                October 20, 2005, 30,000 options were granted under the Stock Option
                Plan.
                The exercise price has been determined at $1.35 per share which was
                equivalent to the traded market price on the date of grant. As to
                the
                exercise terms of the options - see note
                5b.





The
      fair
      value of the above options on the date of grant estimated by using Black Scholes
      option-pricing model is $32,637.  The
      value
      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.





**d.**
            On
                December 13, 2005, the subsidiary entered into a Research and Licensing
                Agreement with Tel Hashomer Medical Research Infrastructure and Services
                Ltd. (“THM”), pursuant to which the Company has agreed to provide 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. In exchange THM has granted the subsidiary
                an
                exclusive license to any resulting technology and information.





**e.**
            On
                December 20, 2005, the company entered into subscription agreement
                for the
                sale of 1,333,334 units at a purchase price of $0.75 per unit for
                a total
                consideration of $1,000,000. Each unit comprising one share of the
                Company's common stock and one common share purchase warrant exercisable
                for three years. Every warrant can be exercisable to one Share at
                a price
                of $1.20 per Share.





In
      connection with the subscription agreement the company paid $100,000 cash fee
      to
      third parties who assisted in securing the agreement, as well as issued 133,332
      units, each comprising of one common share purchase warrant exercisable for
      three years. 66,666 warrants can be exercisable to 66,666 Share at a price
      of
      $1.25 per Share, and 66,666 warrants can be exercisable to 66,666 Share at
      a
      price of $1.50 per Share.





The
      value
      allocated to all warrants estimated by using the Black Scholes option-pricing
      model is $294,443. The value 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.





**f.**
            On
                December 20, 2005, the company entered into 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 comprising one share of the
                Company's
                common stock and one common share purchase warrant exercisable for
                three
                years. Every 2 warrants can be exercisable to one Share at a price
                of
                $1.15 per Share.





The
      value
      allocated to all warrants estimated by using the Black Scholes option-pricing
      model is $29,143. The value 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.











F-45


**GAMMACAN
      INTERNATIONAL INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**




NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
      (continued)


**NOTE
      10 - SUBSEQUENT EVENTS** (continued) **:**





**g.**
            On
                December 21, 2005, 250,000 options were granted under the Stock Option
                Plan. The exercise price has been determined at $1.34 per share which
                was
                equivalent to the traded market price on the date of grant. As to
                the
                exercise terms of the options - see note
                5b.





The
      fair
      Value of the above mentioned options on the date of the grant estimated by
      using
      the Black Scholes option-pricing model is $269,449. The value 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.










F-46





**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
      procedures. Based on management's evaluation as of the
      end
      of the period covered by this Annual Report, our principal executive officer
      and
      chief financial officer have concluded that our disclosure controls and
      procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities
      Exchange Act of 1934, as amended (the “Exchange Act")) were sufficiently
      effective to ensure 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 the Company’s internal controls over financial reporting,
      that occurred during the period covered by this report that have materially
      affected, or are reasonably likely to materially effect, the Company’s internal
      control over financial reporting.




**PART
      III**




**ITEM
      9 - DIRECTORS AND OFFICERS OF THE REGISTRANT**





The
      following persons are our executive officers and directors as of the date
      hereof:





**Name**
            **Position
                Held with our Company**
            **Age**
            **Date
                First**
              **Elected
                or Appointed**Vered
                Caplan
            Acting
                Chief Executive Officer of our company and Gammacan, Ltd.
            37
            March
                1, 2005Shmuel
                Levi
            Director
                of our company and Gammacan, Ltd.
            55
            August
                17, 2004Yair
                Aloni
            Director
                of our company and Gammacan, Ltd.
            55
            August
                17, 2004Prof.
                Yehuda Shoenfeld, M.D.
            Chief
                Scientist of Gammacan, Ltd.
            56
            August
                17, 2004Jean-Pierre
                Elisha Martinez
            Director
                of our company and Gammacan, Ltd.
            53
            January
                7,2005Dr.
                Lior Soussan-Gutman
            Director
                of our company and Gammacan, Ltd.
            41
            February
                13,2005Chaime
                Orlev
            Chief
                Financial Officer of our company and Gammacan, Ltd.
            35
            October
                6, 2005





The
      appointment of the directors is valid until the next annual shareholders
      meeting.





47





***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 key 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.





**Vered
      Caplan**





Ms.
      Caplan is Acting CEO of GammaCan International, Inc. and CEO of GammaCan Ltd.
      Ms. Caplan is very active entrepreneur in the Israeli life-science arena. She
      has been involved in the founding and management of more than ten ventures
      and
      brings to the company a highly developed network as well as profound business
      development capabilities. Ms. Caplan holds a B.Sc. in mechanical engineering,
      a
      M.Sc. in Bio-medical engineering





**Mr.
      Yair Aloni**





Mr.
      Aloni
      is a director of our company and our subsidiary, Gammacan, Ltd. He brings over
      25 years experience as a senior executive in a number of companies. From 2002
      to
      present, he has served as the Chief Executive Officer of Solidimension Ltd.,
      a
      private company specializing in 3D printers. From 1996 to 2002, Mr. Aloni served
      as the Chief Executive Officer of Avnan Yazamut Ltd., a company involved in
      the
      investments in companies in the fields of high technology, biotechnology and
      electronics. Prior to 1996, Mr. Aloni worked as an executive or senior manager
      of several electronic and auto parts companies.





**Mr.
      Shmuel Levi**





Mr.
      Levi
      is a director of our company and our subsidiary, Gammacan, Ltd. He has held
      senior level financial management positions for over 28 years, for major
      organizations, high tech and start-up companies in Israel. These include serving
      as the Chief Financial Officer of Rafael Group from 1996 to 1999, the Corporate
      Finance Manager of Strauss Group from 1991 to 1996 and a Senior Vice President
      for Finance of North Hills Israel Ltd. For the last 5 years, Mr. Levi
      concentrated in high-tech and start-up companies using his expertise in
      performing due diligence, fundraising, public offerings and structuring
      financial and legal transactions. From 2003 to 2004, he acted as the Chief
      Financial Officer of Pluristem Life Systems, Inc., a biotechnology company
      whose
      shares are quoted on the NASD Over the Counter Bulletin Board. Mr. Levi received
      a M.Sc. and B.Sc. in Economics and Management from the Technion, Israel
      Institute of Technology in 1976.





**Prof.
      Yehuda Shoenfeld, M.D.**





Prof.
      Shoenfeld is the Chief Scientist of our subsidiary, Gammacan, Ltd. He is one
      of
      Israel's leading physicians and scientists in the field of immunology. Since
      1989, Prof. Shoenfeld has lead the Department of Internal Medicine "B", and
      the
      Research Center for Autoimmune Diseases at the Sheba Medical Center, Israel's
      largest hospital. In 1990, Dr. Shoenfeld was appointed a Professor of Medicine
      at Tel Aviv University and 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.





**Mr.
      Jean-Pierre Elisha Martinez**





Jean-Pierre
      Elisha Martinez is a director of our company and our subsidiary, Gammacan,
      Ltd.
      Mr. Martinez, age 53, is a biomedical researcher at the Tel-Aviv University,
      specializing in cellular engineering and bio-fluid dynamics. From September
      1999
      through November 2004, Mr. Martinez was a researcher and lecturer at Tel Aviv
      University as a PhD student, with a focus on Cellular Engineering (human cells)
      and Bio-fluid dynamics in physiology and pathology. From March 2002 to August
      2002, Mr. Martinez was a Consultant for "Barnev", for the development of
      biological binding methods of electronic devices to human tissues. From October
      2001 to August 2002, he worked on marketing initiatives for Statice Sante SA
      (France). From February 2001to April 2001, Mr. Martinez was a consultant for
      Paper Power Ltd. for medical applications. From September 1999 to October 2001,
      he was project manager at Slo-Flo Ltd., for the development of an intra-vaginal
      delivery device and from March 1999 to July 2001, Mr. Martinez was project
      manager and integrator at "Meduck" for multi-disciplinary medical
      instrumentation. Mr. Martinez headed the R&D department and was a director
      of Elcam Plastics, a world leader in medical disposables.





48


**Dr.
      Lior Soussan-Gutman**





Dr.
      Lior
      Soussan-Gutman, age 40, has managed Teva Pharmaceuticals' Oncotest unit since
      January 2003. Dr. Soussan-Gutman was the founder and CEO of Oncotest Ltd.,
      a
      company offering specialized cancer diagnostic services to the oncology
      community based on a network of laboratories around the world. Dr.
      Soussan-Gutman founded Oncotest Ltd. in 1998 and acted as CEO from that time
      until January 2003. Dr. Soussan-Gutman holds a Ph.D. in Neurobiochemistry from
      the Tel-Aviv University and she did Post-doctorate research in molecular biology
      at the Weizmann Institute of Science. Dr. Soussan-Gutman will not be appointed
      to any Board committees at this time.





**Chaime
      Orlev**





Mr.
      Orlev
      is the Chief Financial Officer. Mr. Orlev is a certified public accountant
      in
      Israel . Prior to joining Gammacan, Mr. Orlev acted as Chief Financial Officer
      for Solel Solar Systems an Israeli-based company specializes in the development,
      manufacturing and marketing of solar energy systems and related equipment as
      well as coatings of different substances. From 2001 through 2004 Mr. Orlev
      was
      Vice President Finance and Chief Financial Officer of Huntleigh , a provider
      of
      airport services to carriers. From 1999 trough 2001 he served as Financial
      Controller and Acting Chief Financial Officer for ICTS International N.V.
      (NASDAQ:ICTS) a leading provider of aviation security services.





***Board
      of Directors***





All
      of
      our directors hold office until the next annual meeting of stockholders and
      the
      election and qualification of their successors.





***Committees
      of the Board***





We
      have
      two committees of our Board of Directors.





*Audit
      Committee.* The
      Audit
      Committee is responsible for determining the adequacy of our internal accounting
      and financial controls, reviewing the results of our audit performed by the
      independent public accountants, and recommending the selection of independent
      public accountants. The Board has determined that each of the members of the
      Audit Committee is unrelated, an outside member with no other affiliation with
      us and is independent as defined by the rules of the SEC. The Board has
      determined that Mr. Shmuel Levi is an “audit committee financial expert” as
      defined by the SEC. The other audit committee member is Mr. Elisha Martinez.
      The
      Audit Committee was formed on January 11, 2005.




49





*Compensation
      Committee.* The
      Compensation Committee determines matters pertaining to the compensation of
      certain of our executive officers and administers our stock option, and
      incentive compensation. The Compensation Committee is comprised of Messrs.
      Yair
      Aloni and Shmuel Levi. The Compensation Committee was formed on January 11,
      2005.





**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 2005, we believe that during fiscal year 2005, 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 Chaime Orlev filed his Form 3 late.





**ITEM
      10. EXECUTIVE COMPENSATION**





The
      following table sets forth in summary form the compensation received during
      the
      fiscal years ended September 30, 2005, 2004, and 2003 by the Company's Chief
      Executive Officer and each of the Company’s four other most highly compensated
      executive officers based on salary and bonus earned during the 2004 fiscal
      year.


**Summary
      Compensation Table**





**Annual
                Compensation**
            **Long
                Term**
              **Compensation**
            **Pay-**
              **outs****Name
                and Principal**
              **Position**
            **Year**
            **Salary**
            **Bonus**
            **Other**
              **Annual**
              **Compen-**
              **sation**
            **Securities**
              **Under**
              **Options/**
              **SAR's**
              **Granted**
            **Restricted**
              **Shares
                or**
              **Restricted**
              **Share
                Units**
            **LTIP**
              **Pay-**
              **outs**Vered
                Caplan, Active Chief Executive Officer
            2005
            **49,538**
            Nil
            **3,792**
            Nil
            Nil
            NilDr.
                Dan J. Gelvan,(1)Former Chief Executive Officer
            2005
            **102,283**
            Nil
            **12,594**
            Nil
            Nil
            NilDr.
                Dan J. Gelvan,(1)Former Chief Executive Officer
            2004
            **14,620**
            Nil
            **2,290**
            Nil
            Nil
            NilChristopher
                Greenwood(2)Former
                President & Director
            2003
            Nil
            Nil
            Nil
            Nil
            Nil
            Nil





(1) Dr. Dan
      J. Gelvan resigned as our Chief Executive Officer on June 2, 2005.


(2) Mr.
      Christopher Greenwood resigned as our President and director on June 21, 2004.





**Option
      Grants during 2004 Fiscal Year**





The
      following table provides information related to options granted to the named
      executive officers by Gammacan International during the 2004 fiscal year. The
      Company does not have any outstanding stock appreciation rights.





Name
            No.
                of Securities Underlying Options Granted (#)
            %
                of Total Options Granted to Employees in
              Fiscal
                Year
            Exercise
                Price
              ($/Sh)
            Expiration
                DateDan
                Gelvan *
            1,400,000
            96.6
            1.3
            August
                17, 2014Tovi
                Ben Zeev *
            50,000
            3.4
            1.3
            August
                17, 2014





*
      - the
      options were fortified during 2005 due to employee resignation.




50


On
      June
      21, 2004, a company owned by our sole officer and director at that time, David
      Stephens, was granted an option by one of our shareholders to purchase 100,000
      shares at $0.01 per share. We have determined that the economic value of this
      option should be presented as an expense on behalf of Gammacan International
      Inc
      in the amount of $62,600. The option was exercised on August 17, 2004. The
      issuance of this option has not been included in the disclosure of options
      issued by Gammacan International Inc.





**Option
      Grants during 2005 Fiscal Year**





The
      following table provides information related to options granted to the named
      executive officers by Gammacan International during the 2005 fiscal year. The
      Company does not have any outstanding stock appreciation rights.





Name
            No.
                of Securities Underlying Options Granted (#)
            %
                of Total Options Granted to Employees in
              Fiscal
                Year
            Exercise
                Price
              ($/Sh)
            Expiration
                DateShmuel
                Levi
            50,000
            11.1
            1.15
            June
                21, 2015Yair
                Aloni
            50,000
            11.1
            1.15
            June
                21, 2015Jean-Pierre
                Elisha Martinez
            50,000
            11.1
            1.15
            June
                21, 2015Lior
                Soussan-Gutman
            50,000
            11.1
            1.15
            June
                21, 2015Adi
                Avidar *
            100,000
            22.3
            1.15
            June
                21, 2015David
                Sidransky
            50,000
            11.1
            1.15
            June
                21, 2015Yosef
                Yarden
            50,000
            11.1
            1.15
            June
                21, 2015Dan
                Shochat
            50,000
            11.1
            1.15
            June
                21, 2015





*
      - the
      options were forfeited on October 27, 2005 due to employee
      resignation.





**Aggregated
      Option Exercises During 2005** **Fiscal
      Year** **and** **Fiscal** **Year** **-End
      Option Values**





The
      following table provides information related to employee options exercised
      by
      the named executive officers during the 2005 and 2004 fiscal years and number
      and value of such options held at fiscal year-end.





Number
                of Securities Underlying Unexercised Options at Fiscal Year- End
                (#)
            
            Value
                of Unexercised In-the-Money Options at Fiscal Year- End ($)
                (1)Name
            Shares
                Acquired on Exercise (#)
            Value
                Realized
            
            Exercisable
            Unexercisable
            
            Exercisable
            UnexercisableNone.








51





**EMPLOYMENT
      AGREEMENTS**





On
      August
      17, 2004, we entered into a written employment agreement with Dr. Dan J. Gelvan.
      The agreement was amended on October 12, 2004. Dr. Gelvan served as our Chief
      Executive Officer and the Chief Executive Officer of our subsidiary. Dr. Gelvan
      received a monthly salary of $8,000 for the first three months of his services
      and received a monthly salary of $9,250 thereafter. Dr. Gelvan received options
      under the 2004 Employees and Consultant Stock Option Plan to purchase up to
      1,400,000 common shares of our company at the exercise price of $1.30 per share.





On
      June
      2, 2005, Dan J. Gelvan resigned as Chief Executive Officer, effective as of
      July
      2, 2005.





On
      August
      17, 2004, we also entered into a written employment agreement with Ms. Tovi
      Ben
      Zeev, which was amended on October 12, 2004. Ms. Ben Zeev served as the Chief
      Financial Officer of our company and our subsidiary, Gammacan, Ltd. on a part
      time basis. Ms. Ben Zeev received a monthly salary of $1,300 for her services
      as
      the Chief Financial Officer of Gammacan, Ltd. On January 11, 2005, effective
      November 1, 2004, Ms. Ben Zeev’s monthly salary was raised to $4,000. Ms. Ben
      Zeev will received options under the 2004 Employees and Consultant Stock Option
      Plan to purchase up to 50,000 common shares of our company at the exercise
      price
      of $1.30 per share.





On
      August
      11, 2005, Tovi Ben Zeev resigned as Chief Financial Officer, effective of
      October 5, 2005.





On
      August
      17, 2004, we entered into a services agreement with Professor Yehuda Shoenfeld,
      M.D., who will serve as the Chief Scientist of our subsidiary, Gammacan, Ltd.,
      commencing on September 1, 2004. Prof. Shoenfeld will receive a monthly
      compensation in the amount of approximately $5,000 USD, for his services as
      the
      Chief Scientist of Gammacan, Ltd. Either Prof. Shoenfeld or our company may
      terminate the services agreement with Prof. Shoenfeld without cause, for any
      reason whatsoever, with 30 days notice.




On
      March
      1, 2005, Gammacan International, Inc. and its subsidiary, Gammacan, Ltd.,
      entered into an agreement appointing Vered Caplan as Vice President of Business
      Development. Ms. Caplan, who will provide at least 20 hours of service per
      week,
      shall receive a salary of $4,000 per month.




On
      June
      6, 2005, the Company and Gammacan, Ltd. appointed Vered Caplan as acting Chief
      Executive Officer of both companies, effective July 2, 2005. Vered Caplan will
      devote approximately 70% of her business time to the affairs of Gammacan, Ltd.
      and the Company. Vered Caplan new monthly salary shall be $6,475 per
      month.




On
      September 6, 2005, Gammacan, Ltd. entered into an employment agreement with
      Chaime Orlev pursuant to which Mr. Orlev will serve as Chief Financial Officer
      of Gammacan, Ltd., and Gammacan International Inc. effective October 6, 2005.
      Mr. Orlev shall receive a salary of 25,000 NIS per month (which equals
      approximately US $5,534.65, as of the date hereof). Mr. Orlev will be granted
      up
      to 350,000 stock options of the Corporation, pursuant to the Corporation's
      2004
      Stock Option Plan, adopted by the Board on August 17, 2004. Options will be
      exercisable at an exercise price, being 90% of the market price of the common
      stock on the date of grant, such that 30,000 Options shall vest on the first
      anniversary from their date of grant, and the remaining Options shall vest
      in 36
      equal monthly installments thereafter.




We
      do not
      have any material bonus or profit sharing plans pursuant to which cash or
      non-cash compensation is or may be paid to our directors or executive
      officers.





52





**DIRECTOR
      COMPENSATION**





We
      reimburse our directors for expenses incurred in connection with attending
      board
      meetings but did not pay director's fees or other cash compensation for services
      rendered as a director in the year ended September 30, 2004. Effective as of
      January 11, 2005, members of the Board of Directors are being paid a fee of
      $500
      for each Board meeting attended. 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. The board of directors may
      award special remuneration to any director undertaking any special services
      on
      behalf of our company other than services ordinarily required of a director.
      Other than indicated in this annual report, no director received and/or accrued
      any compensation for his or her services as a director, including committee
      participation and/or special assignments.





*Stock
      Option Plan*





On
      August
      17, 2004, our board of directors adopted the 2004 Employees and Consultants
      Stock Option Plan in order to attract and retain quality personnel. Under the
      2004 Employees and Consultants 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.





*Stock
      Options/SAR Grants*





There
      were no grants of stock options under a stock option plan or stock appreciation
      rights to any officers, directors, consultants or employees of our company
      during the fiscal year ended September 30, 2003.





On
      August
      17, 2004, we granted options to Dr. Dan J. Gelvan under the 2004 Employees
      and
      Consultants Stock Option Plan to allow Dr. Gelvan to purchase up to 1,400,000
      common shares of our company at an exercise price of $1.30 per share. On the
      same date, we also granted options to Ms. Tovi Ben Zeev under the 2004 Employees
      and Consultants Stock Option Plan to allow Ms. Ben Zeev to purchase up to 50,000
      common shares of our company at an exercise price of $1.30 per share. The
      options granted to Dr. Gelvan and Ms. Ben Zeev are exercisable until August
      17,
      2014. The options granted to Dr. Gelvan and Ms. Ben Zeev were fortified during
      2005 due to their resignation.





On
      June,
      2005 we granted options to purchase up to 50,000 common shares of our company
      at
      an exercise price of $1.15 per share, to each of the following Shmuel Levi,
      Yair
      Aloni, Jean-Pierre Elisha Martinez and Lior Soussan-Gutman.





On
      June
      2005 we granted options to purchase up to 100,000 common shares of our company
      at an exercise price of $1.15 per share to an employee. These options were
      fortified during 2005 due to the employee resignation.





On
      June
      2005 we granted options to purchase up to 50,000 common shares of our company
      at
      n exercise price of $1.15 per share to three members of our Scientific Advisory
      Board.





**EQUITY
      COMPENSATION PLAN INFORMATION**





The
      following table sets forth information about the shares of the Company's common
      Stock that may be issued upon the exercise of options granted to employees
      under
      the 2004 Stock Option Plan, which were approved by the Board of Directors,
      as
      well as shares that may be issued upon the exercise of options under the 2004
      Stock Option Plan, that were issued to consultants, which were not approved
      by
      the Board of Directors.




53





Plan
                Category
            
            (a)
              Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights
            
            (b)
              Weighted-average
                exercise price of outstanding options, warrants and rights
            
            (c)
              Number
                of securities remaining available for future issuance under equity
                compensation plans excluding securities reflected in column (a)
                (1)Equity
                compensation plans approved by security holders
            
            500,000
            
            $1.17
            
            4,500,000Equity
                compensation plans not approved by security holders (1),
                (2)Total
            
            500,000
            
            $1.17
            
            4,500,000






***Code
      of Ethics***





We
      have
      adopted a Code of Ethics for our officers, directors and employees. A copy
      of
      the Code of Ethics is attached hereto as exhibit 14.





54





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





The
      following table sets forth certain information, according to information
      supplied to the Company regarding the number and percentage of the Company's
      common stock beneficially owned by (i) each person who is beneficial owner
      of
      more than 5% of the common stock; (ii) by each director; (iii) by each executive
      officer; and (iv) by all directors and executive officers as a group. Unless
      otherwise indicated, the stockholders listed possess sole voting and investment
      power with respect to the shares listed.








**Name
                and Address of Beneficial Owner**
            **Amount
                and Nature of**
              **Beneficial
                Ownership****(1)**
            **Percentage**
              **of
                Class****(1)**Yair
                Aloni
              Director
                of our company
              12A
                Shabazy St.
              Tel
                Aviv, Israel
            280,005
                common shares
            0.98%Yehuda
                Shoenfeld
              Chief
                Scientist of Gammacan, Ltd.
              26
                Sapir St.
              Ramat
                Gen
              Israel
            699,996
                common shares
            2.46%Zeev
                Bronfeld
              6
                Uri St.
              Tel
                Aviv, Israel
            3,900,006
                common shares
            13.71%Vered
                Caplan
              69
                Deganya St.
              Pardes
                Hanna Karkur
              Israel
            3,900,006
                common shares
            13.71%L.H.
                Osterloh
              1305
                1090 West Georgia St.
              Vancouver,
                B.C. V6E 3V7 Canada
            1,650,000
                common shares
            5.80%Vantech
                Securities Ltd.
              1305
                1090 West Georgia St.
              Vancouver,
                B.C. V6E 3V7 Canada
            1,650,000
                common shares
            5.80%Directors
                and Executive Officers as a Group
            4,880,007
                common shares
            17.15%





(1) Based
      on
      28,453,732 shares of common stock issued and outstanding as of December 28,
      2005. Except as otherwise indicated, we believe that the beneficial owners
      of
      the common stock listed above, based on information furnished by such owners,
      have sole investment and voting power with respect to such shares, subject
      to
      community property laws where applicable. Beneficial ownership is determined
      in
      accordance with the rules of the SEC and generally includes voting or investment
      power with respect to securities. Shares of common stock subject to options
      or
      warrants currently exercisable, or exercisable within 60 days, are deemed
      outstanding for purposes of computing the percentage ownership of the person
      holding such option or warrants, but are not deemed outstanding for purposes
      of
      computing the percentage ownership of any other person.




55


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 in which the amount involved exceeds
      $60,000, and in which, to its knowledge, any of its directors, officers, five
      percent beneficial security holder, or any member of the immediate family of
      the
      foregoing persons has had or will have a direct or indirect material interest:





Mr.
      Yair
      Aloni, a director of our company, and Professor Yehuda Shoenfeld, M.D., the
      Chief Scientist of our subsidiary, Gammacan, Ltd., are authorized signatories
      of
      ARP Biomed Ltd. for the Intellectual Property Purchase and Sale Agreement we
      entered into with ARP Biomed Ltd. on June 11, 2004. Mr. Aloni is the Chief
      Executive Officer of ARP and Mr. Shoenfeld is an advisor to ARP.





On
      November 4, 2004, Gammacan Ltd. entered into a consulting agreement with PBD
      Ltd., a company controlled by Vered Caplan, a principal shareholder of Gammacan
      International, Inc. Pursuant to the terms of the agreement, Gammacan Ltd. will
      pay PBD a total fee of $50,000 for the services provided as detailed in the
      agreement. The services include:


·
            Summary
                of pre-clinical data and collection of historical research
                data.


·
            Preparation
                of
                clinical trial.


·
            Oncologists
                survey for cancer indication.


·
            Survey
                of complementary technologies


·
            Survey
                of potential IVIg collaborators


·
            Initiation
                of
                contacts with potential partners.




On
      March
      1, 2005, Gammacan International, Inc. and its subsidiary, Gammacan, Ltd.,
      entered into an agreement appointing Vered Caplan as Vice President of Business
      Development. Ms. Caplan, who will provide at least 20 hours of service per
      week,
      shall receive a salary of $4,000 per month.




On
      June
      6, 2005, the Company and Gammacan, Ltd. appointed Vered Caplan as acting Chief
      Executive Officer of both companies, effective July 2, 2005. Vered Caplan will
      devote approximately 70% of her business time to the affairs of Gammacan, Ltd.
      and the Company. Vered Caplan new monthly salary shall be $6,475.





56





**ITEM
      13. EXHIBITS**




***Exhibits:***





Number
            
            Exhibit3.1
            
            Certificate
                of Incorporation, with amendments, filed as an exhibit to the Company’s
                Registration Statement on Form 10SB, dated June 4, 2001, and incorporated
                herein by reference.3.2
            
            By-Laws,
                filed as an exhibit to the Company’s Registration Statement on Form 10SB,
                dated June 4, 2001, and incorporated herein by
                reference.4.1
            
            2004
                Employees and Consultants Stock Compensation Plan, incorporated by
                reference from Form 8-K, dated as of August 17, 200410.1
            
            Sale
                of Intellectual Property Agreement dated June 11, 2004 between Gammacan,
                Ltd. and ARP Biomed, Ltd., incorporated by reference from the Company’s
                Form 8-K, dated as of June 21, 200410.2
            
            Employment
                Agreement dated August 17, 2004 between Gammacan Ltd. and Dr. Dan
                J.
                Gelvan, incorporated by reference from Form 8-K, dated as of August
                17,
                2004.10.3
            
            Addendum
                to Employment Agreement between Gammacan, Ltd. and Dr. Dan J.
              Gelvan,
                dated as of October 12, 2004, incorporated by reference from Form
                8-K
                dated as of October 12, 200410.4
            
            Indemnity
                Agreement between Gammacan International, Inc. and Dr. Dan J.
              Gelvan,
                dated as of October 12, 2004, incorporated by reference from Form
                8-K
                dated as of October 12, 200410.5
            
            Employment
                Agreement dated August 17, 2004 between Gammacan Ltd. and Ms. Tovi
                Ben
                Zeev, incorporated by reference from Form 8-K, dated as of August
                17,
                200410.6
            
            Addendum
                to Employment Agreement between Gammacan, Ltd. and Tovi
              Ben-Zeev,
                dated as of October 12, 2004, incorporated by reference from Form
                8-K
                dated as of October 12, 200410.7
            
            Indemnity
                Agreement between Gammacan International, Inc. and Tovi
              Ben-Zeev,
                dated as of October 12, 2004, incorporated by reference from Form
                8-K
                dated as of October 12, 2004.10.8
            
            Services
                Agreement dated August 17, 2004 between Gammacan, Ltd. and Prof.
                Yehuda
                Shoenfeld, M.D., incorporated by reference from Form 8-K, dated as
                of
                August 17, 200410.9
            
            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,
                200410.10
            
            Employment
                Agreement between Gammacan, Ltd. and Vered Caplan, dated as of June
                21,
                2005, incorporated by reference to Form 8-K dated as of June 27,
                200510.11
            
            Indemnity
                Agreement between Gammacan International, Inc. and Vered Caplan,
                dated as
                of June 27, 2005.10.12
            
            Employment
                Agreement between Gammacan, Ltd. and Chaime Orlev, dated as of September
                6, 2005, incorporated by reference to Form 8-K dated as of September
                12,
                200510.13
            
            Indemnity
                Agreement between Gammacan International, Inc. and Chaime Orlev,
                dated as
                of September 12, 2005.14
            
            Code
                of Ethics31.1
            
            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
              amended31.2
            
            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
                  amended32.1
            
            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)








57





**ITEM
      14. PRINCIPAL ACCOUNTANT FEEES AND SERVICES**





Audit
      Fees. The aggregate fees billed by our auditors, for professional services
      rendered for the audit of our annual financial statements for the year ended
      September 30, 2005 and 2004, and for the reviews of the financial statements
      included in our Quarterly Reports on Form 10-QSB during that fiscal year were
      $49,000, and $45,200, respectively.


Audit
      Related Fees. We did not incur any audit related fees billed by auditors for
      services rendered to the Company, other than the services covered in "Audit
      Fees" for the fiscal year ended September 30, 2005 and 2004.





Tax
      Fees.
      We incurred fees to auditors of 4,000 and $1,100 respectively for tax
      compliance, tax advice or tax compliance services during the fiscal year ended
      September 30, 2005 and 2004.





All
      other
      fees. We did not incur any other fees billed by auditors for services rendered
      to the Company, other than the services covered in "Audit Fees" for the fiscal
      year ended September 30, 2005 and 2004.





The
      Board
      of Directors has considered whether the provision of non-audit services is
      compatible with maintaining the principal accountant's
      independence.


58




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/
      VERED CAPLAN


Vered
      Caplan,


Acting
      Chief Executive Officer


(principal
      executive officer)








/s/
      CHAIME ORLEV


Chaime
      Orlev,


Chief
      Financial Officer


(principal
      accounting officer)





Date:
      December 29, 2005




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 29, 2005.





/s/
      SHMUEL LEVI


Shmuel
      Levi,


Director








/s/
      YAIR ALONI


Yair
      Aloni,


Director








/s/
      JEAN-PIERRE ELISHA MARTINEZ


Jean-Pierre
      Elisha Martinez,


Director








/s/
      LIOR SOUSSAN-GUTMAN


Lior
      Soussan-Gutman,


Director








59