##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2007
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 333-144472
 TOPSPIN MEDICAL, INC.
  Delaware
(State or Other Jurisdiction of 
Incorporation or Organization)
    
    510394637
(I.R.S. Employer
Identification No.)
 Global Park
2 Yodfat Street, Third Floor
North Industrial Area
Lod 71291
Israel
 972-8-9200033
 o þ
 o þ
  o þ




---



##### 



TABLE OF
CONTENTS
  PagePART I  FINANCIAL INFORMATION


2Item 1. Financial Statements.


2Unaudited Condensed Interim
    Consolidated Financial Statements


2Condensed
    Consolidated Balance Sheet as of June 30, 2007 (unaudited)


2Condensed
    Consolidated Statements of Operations for the three and six
    month periods ended June 30, 2007 and 2006 and the period
    from inception to June 30, 2007 (unaudited)


3Statements of
Shareholders Equity for each of the years in the period ended
December 31, 2006 and for the six month period ended
June 30, 2007 (unaudited)


4Condensed
    Consolidated Statements of Cash Flows for the six month periods
    ended June 30, 2007 and 2006 and the period from inception
    to June 30, 2007 (unaudited)


8Notes to the
    Condensed Consolidated Financial Statements


10Item 2. Managements
Discussion and Analysis or Plan of Operation.


26Item 3A(T). Controls and Procedures.


31PART II  OTHER INFORMATION


32Item 2. Unregistered Sales of
Equity Securities and Use of Proceeds.


32Item 4. Submission of Matters to a Vote of Security Holders.


33Item 6. Exhibits.


34SIGNATURESCertification by Chief Executive OfficerCertification by Chief Financial OfficerCertifications Furnished pursuant to 18 U.S.C. Section 1350   1




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##### Table of Contents



PART I
 FINANCIAL INFORMATION Item 1.
Financial Statements. TopSpin
    Medical, Inc.
    (A Development Stage Company)
    CONSOLIDATED BALANCE SHEET(Unaudited)  June 30,2007NIS in thousandsASSETSCURRENT ASSETS:Cash and cash equivalents


14,090Restricted deposit


52,025Other receivables and prepaid
    expenses


3,46469,579LONG-TERM ASSETS:Restricted deposit


515Severance pay fund


36Prepaid lease payments


198749PROPERTY AND EQUIPMENT,
    NET


2,052DEFERRED ISSUANCE
    EXPENSES


3,31875,698LIABILITIES AND
    SHAREHOLDERS EQUITYCURRENT LIABILITIES:Trade payables


2,565Other accounts payables and
    accrued expenses


8,22110,786LONG TERM LIABILITIESAccrued severance pay


283Liabilities in respect of options
    to employees and consultants


7,464Liability in respect of warrants
    to investors


6,099Embedded conversion feature in
    convertible debentures


6,248Embedded derivative related to
    issuance expenses


772Convertible debentures


36,61757,200SHAREHOLDERS
    EQUITY:Ordinary shares of $0.001 par
    value:Authorized
    500,000,000 shares; Issued and outstanding
    184,941,173 shares;


832Additional paid in capital


163,285Accumulated deficit during the
    development stage


(156,688
)7,42975,698    2




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##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (Unaudited)  Period fromInceptionSix Months Ended


Three Months Ended


(September 20, 1999)June 30,


June 30,


through June 30,2007


2006


2007


2006


2007NIS in thousands except per share dataResearch and development expenses


15,004



9,606



7,830



4,303



107,284Less  participation by
    the office of the chief scientist


(3,212
)


(1,829
)


(2,912
)


(1,829
)


(14,243
)Research and development expenses,
    net


11,792



7,777



4,918



2,474



93,041Selling and marketing expenses


590



60



268



45



2,187General and administrative
    expenses (income)


4,664



3,912



1,915



(70
)


44,081Operating loss


(17,046
)


(11,749
)


(7,101
)


(2,449
)


(139,309
)Financing income (expenses), net


1,860



71



955



(510
)


(3,821
)Loss before cumulative effect of a
    change in accounting principle


(15,186
)


(11,678
)


(6,146
)


(2,959
)


(143,130
)Cumulative effect of a change in
    accounting principle






(238
)










(238
)Net loss


(15,186
)


(11,916
)


(6,146
)


(2,959
)


(143,368
)Loss before cumulative effect of a
    change in accounting principle per ordinary share


(0.09
)


(0.07
)


(0.04
)


(0.02
)Cumulative effect of a change in
    accounting principle per Ordinary share






(0.002
)






Basic and diluted loss per
    Ordinary share


(0.09
)


(0.07
)


(0.04
)


(0.02
)Weighted average number of
    Ordinary shares outstanding used in basic and diluted net loss
    per share calculation


163,487,681



158,650,932



167,039,012



158,764,775    3




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##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
    (DEFICIENCY)  Non-Recourse


Deficit AccumulatedNumber of Outstanding Shares


Share Capital


Additional


Receivables


Receivables


During the


TotalPreferred





Preferred


Paid-in


for Shares


for Shares


Development


ShareholdersOrdinary


A


B


C


Ordinary


A


B


C


Capital


Issued


Issued


Stage


EquityNIS in thousands (except number of shares)Balance as of September 20,
    1999


















































Issuance of common shares


625,000















3































3Issuance of Preferred A shares net
    of issuance expenses of NIS 20






375,001















2











3,134















3,136Net loss














































(380
)


(380
)Balance as of December 31, 1999


625,000



375,001











3



2











3,134











(380
)


2,759Issuance of Preferred B shares net
    of issuance expenses of NIS 61










208,329















1







10,183















10,184Net loss














































(3,880
)


(3,880
)Balance as of December 31, 2000


625,000



375,001



208,329







3



2



1







13,317











(4,260
)


9,063Net loss














































(7,254
)


(7,254
)Balance as of December 31, 2001


625,000



375,001



208,329







3



2



1







13,317











(11,514
)


1,809Issuance of Preferred C shares net
    of issuance expenses of NIS 2,200














87,386,858















410



47,578



(630
)










47,358Beneficial conversion feature
    related to Preferred A and Preferred B shares


































13,320











(13,320
)


Issuance of Ordinary shares to the
    Chief Executive Officer


6,957,841















56















413







(469
)






Deferred stock based compensation
    related to issuance of shares to the Chief Executive Officer


































2,822















2,822Stock based compensation related to
    options granted to consultants


































1,286















1,286Accrued interest and exchange rate
    differences on a loan to the Chief Executive Officer


































4







(4
)






Net loss














































(15,414
)


(15,414
)Balance as of December 31, 2002


7,582,841



375,001



208,329



87,386,858



59



2



1



410



78,740



(630
)


(473
)


(40,248
)


37,861    4




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##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (DEFICIENCY)
     (Continued)
  Non-Recourse


Deficit AccumulatedNumber of Outstanding Shares


Share Capital


Additional


Receivables


Receivables


During the


TotalPreferred





Preferred


Paid-in


for Shares


for Shares


Development


ShareholdersOrdinary


A


B


C


Ordinary


A


B


C


Capital


Issued


Issued


Stage


EquityNIS in thousands (except number of shares)Balance as of December 31, 2002


7,582,841



375,001



208,329



87,386,858



59



2



1



410



78,740



(630
)


(473
)


(40,248
)


37,861Receivables in respect of Preferred
    C shares issued


































25,828



630











26,458Amortization of deferred stock
    based compensation


































736















736Deferred stock based compensation
    related to issuance of shares to the Chief Executive Officer


3,077,506































1,778















1,778Stock based compensation related to
    options granted to consultants


































19















19Accrued interest and exchange rate
    differences on a loan to the Chief Executive Officer


































(14
)






14







Net loss














































(27,693
)


(27,693
)Balance as of December 31, 2003


10,660,347



375,001



208,329



87,386,858



59



2



1



410



107,087







(459
)


(67,941
)


39,159Exercise of options


418,746















2















62















64Amortization of deferred stock
    based compensation


































677















677Deferred stock based compensation
    related to issuance of shares to the Chief Executive Officer


630,793































615















615Stock based compensation related to
    options granted to consultants


































261















261Accrued interest and exchange rate
    differences on a loan to the Chief Executive Officer


































16







(16
)






Net loss














































(20,433
)


(20,433
)Balance as of December 31, 2004


11,709,886



375,001



208,329



87,386,858



61



2



1



410



108,718







(475
)


(88,374
)


20,343    5




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##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (DEFICIENCY)
     (Continued)
  Non-Recourse


Deficit AccumulatedNumber of Outstanding Shares


Share Capital


Additional


Receivables


During the


TotalPreferred





Preferred


Paid-in


for Shares


Development


ShareholdersOrdinary


A


B


C


Ordinary


A


B


C


Capital


Issued


Stage


EquityNIS in thousands (except number of shares)Balance as of December 31, 2004


11,709,886



375,001



208,329



87,386,858



61



2



1



410



108,718



(475
)


(88,374
)


20,343Conversion of Preferred A, B and C
    into Ordinary shares


104,378,107



(375,001
)


(208,329
)


(87,386,858
)


477



(2
)


(1
)


(410
)


(64
)










Exercise of options


3,553,507















16
















*)










16Issuance of ordinary shares net of
    issuance expenses of NIS 3,292


38,000,000















171















28,920











29,091Issuance of options net of issuance
    expenses of NIS 378


































3,339











3,339Deferred stock based compensation
    related to issuance of shares to the Chief Executive Officer


630,793































(627
)










(627
)Grant to the Chief Executive Officer






































74







74Amortization of deferred stock
    based compensation


































486











486Stock based compensation related to
    options granted to consultants


































66











66Accrued interest and exchange rate
    differences on a loan to the Chief Executive Officer


































58



(58
)






Net loss










































(14,325
)


(14,325
)Balance as of December 31, 2005


158,272,293















725















140,896



(459
)


(102,699
)


38,463Change of deferred stock
    compensation into liability as a result from accounting change


































(6,768
)










(6,768
)Exercise of options


634,374















3















38











41Classification of liability into
    equity in respect of exercise of 634,374 options


































451











451Grant to the Chief Executive Officer


630,794



































208







208Accrued interest and exchange rate
    differences on a loan to the Chief Executive Officer


































(14
)


14







Net loss










































(38,803
)


(38,803
)Balance as of December 31, 2006


159,537,461















728















134,603



(237
)


(141,502
)


(6,408
)     *)
    
    Less than NIS 1 thousand.   6




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##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    STATEMENTS OF CHANGES OF SHAREHOLDERS EQUITY (DEFICIENCY)
     (Continued)
  Non-Recourse


Deficit AccumulatedNumber of Outstanding Shares


Share Capital


Additional


Receivables


During the


TotalPreferred





Preferred


Paid-in


for Shares


Development


ShareholdersOrdinary


A


B


C


Ordinary


A


B


C


Capital


Issued


Stage


EquityNIS in thousands (except number of shares)Balance as of December 31, 2006


159,537,461















728















134,603



(237
)


(141,502
)


(6,408
)Exercise of options


1,005,310















4















31











35Classification of liability into
    equity in respect of exercise of 1,005,310 options


































821











821Repayment of loan to the Chief
    Executive Officer and Classification of liability into equity
    (note 7b)


































9,220



237







9,457Issuance of ordinary shares and
    warrants, net of issuance expenses of NIS 639


24,398,402















100















18,610











18,710Net loss










































(15,186
)


(15,186
)Balance as of June 30, 2007
    (Unaudited)


184,941,173















832















163,285







(156,688
)


7,429    7




---



##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited)  Period fromInceptionSix Months


(September 20,Ended


1999) throughJune 30,


June 30,2007


2006


2007NIS in thousandsCash flows from operating
    activities:Net loss


(15,186
)


(11,916
)


(143,368
)Adjustments to reconcile net loss
    to net cash used in operating activities(a)


841



1,332



32,313Net cash used in operating
    activities:


(14,345
)


(10,584
)


(111,055
)Cash flows from investing
    activities:Change in restricted deposit, net


(122
)






(479
)Restricted cash in respect of
    issuance convertible debentures










(50,944
)Purchase of fixed assets


(347
)


(177
)


(7,829
)Proceeds from sale of fixed assets










40Loan to the Chief Executive Officer










(231
)Net cash used in investing
    activities:


(469
)


(177
)


(59,443
)Cash flows from financing
    activities:Exercise of stock options


35



6



156Proceeds from issuance of shares
    and warrants , net of issuance expenses


18,710







138,278Proceeds from issuance convertible
    debentures, net of issuance expenses


(220
)






46,154Net cash provided by financing
    activities:


18,525



6



184,588Increase (decrease) in cash and
    cash equivalents


3,711



(10,755
)


14,090Cash and cash equivalents at
    beginning of period


10,379



37,160



Cash and cash equivalents at end
    of period


14,090



26,405



14,090    8




---



##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited)
 Period fromInceptionSix Months


(September 20,Ended


1999) throughJune 30,


June 30,2007


2006


2007NIS in thousands(a) Adjustments to reconcile net
    loss to net cash used in operating activities:Depreciation


380



477



5,861Capital loss from sale of fixed
    assets










25Interest and exchange rate
    differences on loan to the Chief Executive Officer










(35
)Non-cash bonus to the Chief
    Executive Officer


241



235



789Interest on restricted deposit


(888
)


(4
)


(1,117
)Change in fair value of liability
    in respect of warrants


(2,869
)






(1,931
)Change in fair value of conversion
    feature


(1,857
)






2,196Change in fair value of embedded
    derivative


(83
)






(74
)Amortization of deferred issuance
    expenses and debentures discount


2,297







3,247Amortization of deferred stock
    based compensation related to employees










6,487Cumulative effect of change in
    accounting principle






238



238Change in fair value and
    amortization of stock options classified as a liability


1,548



2,040



10,947Amortization of deferred stock
    based compensation related to consultants










1,632Accrued severance pay, net


42



(91
)


247Increase (decrease) in accounts
    receivable (including long-term receivables)


(1,368
)


(1,425
)


(3,662
)Increase (decrease) in trade
    payables


1,123



(119
)


2,416Increase (decrease) in other
    accounts payable


2,275



(19
)


5,047Total adjustments


841



1,332



32,313(b) Supplemental disclosure of
    cash flow activities:Cash paid during the period for:Taxes paid due to non-deductible
    expenses


67



56



605Interest paid










292(c) Supplemental disclosure of non
    cash flows activities:Purchase of fixed assets






78



149Non-recourse receivables in
    respect of shares issued










469Accrued issuance expenses


526







3,394Classification of liabilities into
    equity


10,041



6,774



10,041Beneficial conversion feature
    related to Preferred A and Preferred B shares










13,320    9




---



##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    NIS in thousands,
    except share and per share data  NOTE 1 
    GENERAL          NOTE 2 
    SIGNIFICANT
    ACCOUNTING POLICIES           10




---



##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NIS in thousands,
    except share and per share data
  b.
    Impact
    of recently issued accounting standards:  1.
    SFAS No. 157:    2.
    SFAS No. 159:    NOTE 3 
    CONTINGENT
    LIABILITIES  a.
    Commitments
    to pay royalties to the Chief Scientist:      b.
    The
    subsidiary pledged a bank deposit which is used as a bank
    guarantee amounting to NIS 464 to secure its payments under
    lease agreements.  NOTE 4 
    SHAREHOLDERS
    EQUITY  a.
    Composition
    of share capital:   11




---



##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NIS in thousands,
    except share and per share data
  b.
    Share
    capital:                       12




---



##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NIS in thousands,
    except share and per share data
                             13




---



##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NIS in thousands,
    except share and per share data
                  NOTE 5 
    CONVERTIBLE
    DEBENTURES AND WARRANTS   14




---



##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NIS in thousands,
    except share and per share data
  1.
    Modifications
    in the deed of trust:    a)
    Security
    on bonds (series A):    b)
    Listing
    on TASE:    c)
    Early
    redemption of bonds (Series A):       15




---



##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NIS in thousands,
    except share and per share data
  d)
    The
    trustee of debentures (Series A):    2.
    Modifications
    in warrants (Series 2):    3.
    Transfer
    of securities:    NOTE 6 
    STOCK
    BASED COMPENSATION          and/or
 16




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##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NIS in thousands,
    except share and per share data
          Six Months Ended June 30, 2006WeightedAverageWeighted


Remaining


AggregateAverage


Contractual


IntrinsicExercise


Terms


ValueNumber


Price


(In Years)


PriceOptions outstanding at
    January 1, 2006


9,293,800


$
0.054Options granted


1,545,000


$
0.138Options exercised


(204,999
)

$
0.005Options forfeited


(442,501
)

$
0.019Options outstanding at
    June 30, 2006


10,191,300


$
0.069



8.4



4,293Options vested and expected to
    vest at June 30, 2006


9,305,425


$
0.068



8.3



4,097Options exercisable at
    June 30, 2006


3,851,739


$
0.103



7.5



1,952   17




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##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NIS in thousands,
    except share and per share data
  Six Months Ended June 30, 2007WeightedAverageWeighted


Remaining


AggregateAverage


Contractual


IntrinsicExercise


Terms


ValueNumber


Price


(In Years)


PriceOptions outstanding at
    January 1, 2007


9,982,860


$
0.073Options exercised


(1,005,310
)

$
0.008Options forfeited


(683,250
)

$
0.062Options outstanding at
    June 30, 2007


8,294,300


$
0.081



7.6



5,491Options vested and expected to
    vest at June 30, 2007


7,920,208


$
0.080



7.5



5,343Options exercisable at
    June 30, 2007


4,735,676


$
0.093



7.1



3,462     Six Months Ended June 30, 2006WeightedAverageWeighted


Remaining


AggregateAverage


Contractual


IntrinsicExercise


Terms


ValueNumber


Price


(In Years)


PriceOptions outstanding at
    January 1, 2006






Options granted


1,000,000


$
0.149Options outstanding at
    June 30, 2006


1,000,000


$
0.149



9.9



Options vested and expected to
    vest at June 30, 2006


1,000,000


$
0.149



9.9



Options exercisable at
    June 30, 2006














   Six Months Ended June 30, 2007WeightedAverageWeighted


Remaining


AggregateAverage


Contractual


IntrinsicExercise


Terms


ValueNumber


Price


(In Years)


PriceOptions outstanding at
    January 1, 2007


1,000,000


$
0.149Options granted


2,400,000


$
0.150Options outstanding at
    June 30, 2007


3,400,000


$
0.150



9.3



733Options vested and expected to
    vest at June 30, 2007


3,400,000


$
0.150



9.3



733Options exercisable at
    June 30, 2007


800,000


$
0.150



9.4



172  18




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##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NIS in thousands,
    except share and per share data
      WeightedOptions








AverageFor


Exercise





RemainingIssuance

Ordinary


Price


Options


ContractualDate

Shares


Per Share


Exercisable


TermsMarch 2000  August 2001


155,300


$
2



155,300



3.0September 2002


2,000


$
12



2,000



5.3July  October 2003


1,590,000


$
0.001



1,570,000



6.1April  August 2004


1,637,000


$
0.02



1,185,563



7.0July  August 2005


3,035,000


$
0.02



1,459,063



8.1April 2006


750,000


$
0.125



187,500



8.8June 2006


1,705,000


$
0.149



376,250



8.9September 2006


420,000


$
0.111







9.2January 2007


2,400,000


$
0.150



600,000



9.5     Period fromInception(September 20,Six Months Ended


Three Months Ended


1999) throughJune 30,


June 30,


June 30,2007


2006


2007


2006


2007Research and development expenses


181



718



142



(397
)


3,742General and administrative expenses


1,122



1,161



277



(1,309
)


11,6011,303



1,879



419



(1,706
)


15,343  19




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##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NIS in thousands,
    except share and per share data
    Six Months Ended June 30, 2006WeightedAverageWeighted


Remaining


AggregateAverage


Contractual


IntrinsicExercise


Terms


ValueNumber


Price


(In Years)


PriceOptions outstanding at
    January 1, 2006


1,419,135


$
0.216Options granted


75,000


$
0.125Options forfeited


(37,500
)

$
2Options outstanding at
    June 30, 2006


1,456,635


$
0.165



7.7



502Options exercisable at
    June 30, 2006


908,119


$
0.233



7.4



317   Six Months Ended June 30, 2007WeightedAverageWeighted


Remaining


AggregateAverage


Contractual


IntrinsicExercise


Terms


ValueNumber


Price


(In Years)


PriceOptions outstanding at
    January 1, 2007


1,831,635


$
0.154Options forfeited


(375,000
)

$
0.111Options outstanding at
    June 30, 2007


1,456,635


$
0.165



6.7



921Options exercisable at
    June 30, 2007


1,249,839


$
0.183



6.5



7     Six Months Ended June 30, 2006WeightedAverageWeighted


Remaining


AggregateAverage


Contractual


IntrinsicExercise


Terms


ValueNumber


Price


(In Years)


PriceOptions outstanding at
    January 1, 2006






Options granted


230,000


$
0.125Options outstanding at
    June 30, 2006


230,000


$
0.125



9.8



4Options exercisable at
    June 30, 2006














   20




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##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NIS in thousands,
    except share and per share data
  Six Months Ended June 30, 2007WeightedAverageWeighted


Remaining


AggregateAverage


Contractual


IntrinsicExercise


Terms


ValueNumber


Price


(In Years)


PriceOptions outstanding at
    January 1, 2007 and June 30, 2007


1,200,000


$
0.111



9.2



456Options exercisable at
    June 30, 2007














       WeighedOptions








AverageFor


Exercise





RemainingOrdinary


Price


Options


ContractualIssuance Date

Shares


Per Share


Exercisable


TermsJanuary  June 2002


14,010


$
12



14,010



5.3May 2003  July 2004


1,202,000


$
0.05



1,127,625



6.3July  August 2005


165,625


$
0.02



89,454



8.1April 2006


75,000


$
0.125



18,750



8.8September 2006


1,200,000


$
0.111







9.2     Period FromInception(September 20,Six Months Ended


Three Months Ended


1999) throughJune 30,


June 30,


June 30,2007


2006


2007


2006


2007Research and development expenses


225



130



11



(154
)


1,064General and administrative expenses


12



31



(40
)


(175
)


1,828237



161



(29
)


(329
)


2,892   NOTE 7  RELATED
    PARTIES TRANSACTIONS
       21




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##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NIS in thousands,
    except share and per share data
            NOTE 8  SUBSEQUENT
    EVENTS
           22




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##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NIS in thousands,
    except share and per share data
                     23




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##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NIS in thousands,
    except share and per share data
                     24




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##### Table of Contents



TopSpin
    Medical, Inc.
    (A Development Stage Company)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NIS in thousands,
    except share and per share data
   25




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##### Table of Contents



Item 2.
Managements  Discussion and Analysis or Plan of Operation.    Overview
            Plan of
    Operation
   26




---



##### Table of Contents



27




---



##### Table of Contents



Critical
    Accounting Policies
          No. 96-18
   28




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
  Commitments
    to Pay Royalties to the Chief Scientist
    Offices
    Lease Commitments
      Bank
    Guarantee for Offices Lease
    Motor
    Vehicles Lease Commitment
   29




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##### Table of Contents



Commitment
    Related to Distribution Agreement
     30




---



##### Table of Contents



Item 3A(T). Controls and Procedures.  Evaluation of Disclosure Controls and Procedures
         31




---



##### Table of Contents





PART
II  OTHER INFORMATION


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


Recent
Sales of Unregistered Securities







    
    10,000 options for shares of Common Stock were exercised by 1 ex-employee of TopSpin
Medical (Israel) Ltd. with gross proceeds of 806 NIS (approximately
$190).




Use of
Proceeds from Best-Efforts, Direct Public Offering


















Underwriting discounts and commissions
    Finders fees
Expenses paid to or for our underwriters
Other expenses
639 NISTotal expenses
639 NIS














Construction of plant, building and facilities
    Purchase and installation of machinery and equipment
    Purchase of real estate
    Acquisition of other business
    Repayment of indebtedness
    3,128 NISWorking capital
    Temporary investments
    Other purposes (total) (for which at least 424,900 NIS has been
used based upon exchange rate of 4.249 NIS for 1 U.S. Dollar on June
30, 2007)
(1) Funds transferred to TopSpin Medical (Israel) Ltd. as advance
payment on TopSpin Medical (Israel) Ltd. shares of common stock
    6,078 NISTotal
    9,206 NIS








32



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##### Table of Contents



Item 4. Submission of
Matters to a Vote of Security Holders.   VotesFor
    

89,543,858
sharesAgainst
    
    Withheld
    
    Abstentions
    
    Broker Non-Votes
    
    
   VotesFor
    

101,974,321
sharesAgainst
    

200,000
sharesWithheld
    
    Abstentions
    
    Broker Non-Votes
    
    
 33




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##### Table of Contents



Item 6. Exhibits.  ExhibitNumber
    
    Description of Document31.1
    
    Certification by Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)31.2
    
    Certification by Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)32.1
    
    Certification Furnished pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 34




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##### Table of Contents



SIGNATURES  TOPSPIN MEDICAL, INC.August 15, 2007
    By:
    /s/ Erez GolanName:
    Erez GolanTitle:
    Chief Executive OfficerAugust 15, 2007
    By:
    /s/ Eyal KolkaName:
    Eyal KolkaTitle:
    Chief Financial Officer




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description of Document31.1
    
    Certification by Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)31.2
    
    Certification by Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)32.1
    
    Certification Furnished pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002