##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED June 30, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 Commission File Number: 333-144472
 Topspin Medical, Inc.
 (Exact name of registrant as specified in its charter)
 DELAWARE
(State or other jurisdiction of incorporation or 
organization)
    
    51-0394637
(IRS Employer Identification No.)36 Rothschild Blvd. 
Tel Aviv, Israel
(Address of registrants principal executive offices)
    
    N/A
(Zip Code)
 972-3-5257368
(Telephone number, including area code)
N/A
 (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
 þ Yes o No
 o Yes
o No
   Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 þ Yes No o
 761,470,882




---



##### 



TOPSPIN MEDICAL, INC.
 FORM 10-Q
 FOR THE QUARTER ENDED JUNE 30, 2009
 TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATION
    
    
    3ITEM 1. FINANCIAL STATEMENTS
    
    
    3ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
    
    
    26ITEM 4T. CONTROLS AND PROCEDURES
    
    
    31PART II. OTHER INFORMATION
    
    
    32ITEM 5. OTHER INFORMATION
    
    
    32ITEM 6. EXHIBITS
    
    
    32SIGNATURES
    
    
    33Exhibit 31.1Exhibit 31.2Exhibit 32.1




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##### Table of Contents



FORWARD-LOOKING STATEMENTS
    2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 TOPSPIN MEDICAL, INC.
(A Development Stage Company)
 CONSOLIDATED FINANCIAL STATEMENTS
 AS OF JUNE 30, 2009
 (Unaudited)
 INDEX
 PageConsolidated Balance Sheets
    
    
    4  5Consolidated Statements of Operations
    
    
    6Statements of Changes in Shareholders Deficiency
    
    
    7  9Consolidated Statements of Cash Flows
    
    
    10  11Notes to Consolidated Financial Statements
    
    
    12  25
  3




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##### Table of Contents



CONSOLIDATED BALANCE SHEETS (NIS in thousands)
 December 31,
    
    
    June 30,2008
    
    
    2009Audited
    
    
    UnauditedASSETSCURRENT ASSETS:Cash and cash equivalents
    
    
    3,385
    
    
    
    2,347Other receivables and prepaid expenses
    
    
    385
    
    
    
    236Restricted deposits
    
    
    562
    
    
    
    75Prepaid lease payments
    
    
    49
    
    
    
    244,381
    
    
    
    2,682PROPERTY AND EQUIPMENT, NET
    
    
    10
    
    
    
    124,391
    
    
    
    2,694
   4




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##### Table of Contents



CONSOLIDATED BALANCE SHEETS (NIS in thousands)
 December 31,
    
    
    June 30,2008
    
    
    2009Audited
    
    
    UnauditedLIABILITIES AND SHAREHOLDERS DEFICIENCYCURRENT LIABILITIES:Trade payables
    
    
    455
    
    
    
    273Other accounts payables and accrued expenses
    
    
    2,821
    
    
    
    2,433Liability in respect of warrants
    
    
    250
    
    
    
    Liabilities in respect of options to employees and consultants
    
    
    10
    
    
    
    1Accrued severance pay liability
    
    
    270
    
    
    
    Tax provision
    
    
    
    
    
    
    1,3853,806
    
    
    
    4,092LONG TERM LIABILITIESTax provision
    
    
    1,344
    
    
    
    Liabilities in respect of options to employees and consultants
    
    
    38
    
    
    
    21,382
    
    
    
    2CONTINGENT LIABILITIES, COMMITMENTS AND CHARGESSHAREHOLDERS DEFICIENCY:Common shares of $0.001 par value:Authorized 1,000,000,000 shares as of June 30, 2009 and
December 31, 2008; Issued and outstanding 761,470,882 and
636,870,882 shares as of June 30, 2009 and December 31, 2008,
respectively
    
    
    2,457
    
    
    
    2,975Additional paid in capital
    
    
    177,187
    
    
    
    177,749Accumulated deficit during the development stage
    
    
    (180,441
    )
    
    
    (182,124
    )(797
    )
    
    
    (1,400
    )4,391
    
    
    
    2,694
 August 13, 2009
    
    /s/ Ehud Gilboa
    
    /s/ Eldad YehielyDate of approval of the 
financial statements
    
    Ehud Gilboa
Chairman of Board
of Directors
    
    Eldad Yehiely
Finance Manager
   5




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##### Table of Contents



CONSOLIDATED STATEMENTS OF OPERATIONS (NIS in thousands, except for shares and per share data)
 Period frominceptionSix months ended
    
    
    Three months ended
    
    
    (September 20, 1999)June 30,
    
    
    June 30,
    
    
    through June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2008UnauditedResearch and development expenses
    
    
    
    
    
    
    10,895
    
    
    
    
    
    
    
    5,801
    
    
    
    135,023Less  participation by the office of the Chief Scientist
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,980
    )Research and development expenses, net
    
    
    
    
    
    
    10,895
    
    
    
    
    
    
    
    5,801
    
    
    
    117,043Seles and marketing expenses
    
    
    
    
    
    
    557
    
    
    
    
    
    
    
    183
    
    
    
    3,662General and administrative expenses
    
    
    1,850
    
    
    
    3,485
    
    
    
    1,099
    
    
    
    1,992
    
    
    
    58,113Operating loss
    
    
    (1,850
    )
    
    
    (14,937
    )
    
    
    (1,099
    )
    
    
    (7,976
    )
    
    
    (178,818
    )Financing income , net
    
    
    167
    
    
    
    18,166
    
    
    
    398
    
    
    
    10,938
    
    
    
    6,152Income (loss) before cumulative effect of change in accounting principle
    
    
    (1,683
    )
    
    
    3,229
    
    
    
    (701
    )
    
    
    2,962
    
    
    
    (172,666
    )Taxes on income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,344
    )Net income (loss)
    
    
    (1,683
    )
    
    
    3,229
    
    
    
    (701
    )
    
    
    2,962
    
    
    
    (174,010
    )Basic and diluted loss per Common share
    
    
    (0.002
    )
    
    
    0.017
    
    
    
    (0.001
    )
    
    
    0.016Weighted average number of Common shares outstanding used in basic and diluted net loss per share calculation
    
    
    735,600,164
    
    
    
    189,090,511
    
    
    
    759,398,355
    
    
    
    189,090,511
   6




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##### Table of Contents



STATEMENT OF CHANGES IN SHAREHOLDERS DEFICIENCY (NIS in thousands)
 Non-
    
    
    Deficitrecourse
    
    
    accumulated
    
    
    TotalNumber of outstanding shares
    
    
    Share capital
    
    
    Additional
    
    
    Receivables
    
    
    receivables
    
    
    during the
    
    
    shareholdersPreferred
    
    
    
    
    
    
    Preferred
    
    
    paid-in
    
    
    for shares
    
    
    for shares
    
    
    development
    
    
    EquityCommon
    
    
    A
    
    
    B
    
    
    C
    
    
    Common
    
    
    A
    
    
    B
    
    
    C
    
    
    capital
    
    
    issued
    
    
    issued
    
    
    stage
    
    
    (Deficiency)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 Common shares to
the Chief Executive Officer
    
    
    6,957,841
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    413
    
    
    
    
    
    
    
    (469
    )
    
    
    
    
    
    
    Deferred shares based
compensation related to
issuance of shares to the Chief
Executive Officer
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,822
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,822Shares 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
   7




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##### Table of Contents



STATEMENT OF CHANGES IN SHAREHOLDERS DEFICIENCY (NIS in thousands)
 Non-
    
    
    Deficitrecourse
    
    
    accumulated
    
    
    TotalNumber of outstanding shares
    
    
    Share capital
    
    
    Additional
    
    
    receivables
    
    
    during the
    
    
    shareholdersPreferred
    
    
    
    
    
    
    Preferred
    
    
    paid-in
    
    
    for shares
    
    
    development
    
    
    equityCommon
    
    
    A
    
    
    B
    
    
    C
    
    
    Common
    
    
    A
    
    
    B
    
    
    C
    
    
    capital
    
    
    issued
    
    
    stage
    
    
    (deficiency)NIS in thousandsBalance 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 Common 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 Common 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 shares 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 shares
based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    486
    
    
    
    
    
    
    
    
    
    
    
    486Shares 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
    )
    
    
    38,463Cumulative effect of the adoption
of SFAS 123(R)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (238
    )
    
    
    (238
    )Change of deferred shares
compensation into liability as a
result from accounting change
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,768
    )
    
    
    
    
    
    
    
    
    
    
    (6,768
    )Exercise of options
    
    
    634,374
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    41Conversion of liability into equity
in respect of exercise of 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,565
    )
    
    
    (38,565
    )Balance as of December 31, 2006
    
    
    159,537,461
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    728
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    134,603
    
    
    
    (237
    )
    
    
    (141,502
    )
    
    
    (6,408
    )
   8




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##### Table of Contents



STATEMENT OF CHANGES IN SHAREHOLDERS DEFICIENCY (NIS in thousands)
 Number of
    
    
    
    
    
    
    
    
    
    
    Non-recourse
    
    
    Deficit accumulatedoutstanding
    
    
    Share
    
    
    Additional
    
    
    receivables
    
    
    during the
    
    
    Totalshares
    
    
    capital
    
    
    paid-in
    
    
    for shares
    
    
    development
    
    
    shareholdersCommon
    
    
    capital
    
    
    issued
    
    
    stage
    
    
    deficiencyNIS in thousandsBalance as of December 31, 2006
    
    
    159,537,461
    
    
    
    728
    
    
    
    134,603
    
    
    
    (237
    )
    
    
    (141,502)-
    
    
    
    (6,408
    )Exercise of employees options
    
    
    2,270,935
    
    
    
    9
    
    
    
    66
    
    
    
    
    
    
    
    
    
    
    
    75Classification of liability into equity in respect of exercise of options
    
    
    
    
    
    
    
    
    
    
    1,665
    
    
    
    
    
    
    
    
    
    
    
    1,665Repayment of non-recourse loan and classification of liability into
equity
    
    
    
    
    
    
    
    
    
    
    9,220
    
    
    
    237
    
    
    
    
    
    
    
    9,457Issuance of Common shares and warrants (series 3), net of issuance
expenses of NIS 1,013
    
    
    24,398,402
    
    
    
    100
    
    
    
    18,236
    
    
    
    
    
    
    
    
    
    
    
    18,336Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,168
    )
    
    
    (24,168
    )Balance as of December 31, 2007
    
    
    186,206,798
    
    
    
    837
    
    
    
    163,790
    
    
    
    
    
    
    
    (165,670
    )
    
    
    (1,043
    )Cumulative effect of the adoption of SFAS 159
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,379
    
    
    
    5,379Exercise of options
    
    
    641,562
    
    
    
    2
    
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    22Exercise of warrants (series 1)
    
    
    22,522
    
    
    
    (*
    )
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    20Classification of liability into equity in respect of exercise of options
    
    
    
    
    
    
    
    
    
    
    125
    
    
    
    
    
    
    
    
    
    
    
    125Settlement with convertible bonds holders
    
    
    450,000,000
    
    
    
    1,618
    
    
    
    13,232
    
    
    
    
    
    
    
    
    
    
    
    14,850Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,150
    )
    
    
    (20,150
    )Balance as of December 31, 2008
    
    
    636,870,882
    
    
    
    2,457
    
    
    
    177,187
    
    
    
    
    
    
    
    (180,441
    )
    
    
    (797
    )Cumulative effect of the adoption of SFAS 159Exercise of options
    
    
    4,600,000
    
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19Issuance of Common shares and warrants (series 3)
    
    
    120,000,000
    
    
    
    499
    
    
    
    401
    
    
    
    
    
    
    
    
    
    
    
    900Classification of liability into equity in respect of exercise of options
    
    
    
    
    
    
    
    
    
    
    161
    
    
    
    
    
    
    
    
    
    
    
    161Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,683
    )
    
    
    (1,683
    )Balance as of June 30, 2009 (unaudited)
    
    
    761,470,882
    
    
    
    2,975
    
    
    
    177,749
    
    
    
    
    
    
    
    (182,124
    )
    
    
    (1,400
    )
 *)
    
    Less than 1 NIS.   9




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##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS (NIS in thousands)
 Period frominception(September 20,Six months ended
    
    
    1999) throughJune 30
    
    
    June 30,2009
    
    
    2008
    
    
    2009Unaudited
    
    
    UnauditedCash flows from operating activities:Net income (loss)
    
    
    (1,683
    )
    
    
    3,229
    
    
    
    (168,804
    )Adjustments to reconcile net loss to net cash used in
operating activities (a)
    
    
    (761
    )
    
    
    (19,215
    )
    
    
    10,516Net cash used in operating activities:
    
    
    (2,444
    )
    
    
    (15,986
    )
    
    
    (158,288
    )Cash flow from investing activities:Change in restricted deposit, net
    
    
    487
    
    
    
    
    
    
    
    (21
    )Restricted cash in respect of issuance of convertible bonds
    
    
    
    
    
    
    
    
    
    
    1,298Purchase of fixed assets
    
    
    
    
    
    
    (243
    )
    
    
    (9,068
    )Proceeds from sale of fixed assets
    
    
    
    
    
    
    
    
    
    
    467Loan to the Chief Executive Officer
    
    
    
    
    
    
    
    
    
    
    (231
    )Net cash provided by (used in) investing activities:
    
    
    487
    
    
    
    (243
    )
    
    
    (7,555
    )Cash flows from financing activities:Exercise of shares options and warrants
    
    
    19
    
    
    
    42
    
    
    
    257Proceeds from issuance of shares and warrants (series 3),
net of issuance expenses
    
    
    900
    
    
    
    
    
    
    
    138,805Settlement with convertible bonds holders
    
    
    
    
    
    
    
    
    
    
    (12,513
    )Proceeds from issuance convertible debentures and
warrants (series 2), net of issuance expenses
    
    
    
    
    
    
    
    
    
    
    41,636Net cash provided by financing activities:
    
    
    919
    
    
    
    42
    
    
    
    168,185Increase (decrease) in cash and cash equivalents
    
    
    (1,038
    )
    
    
    (16,187
    )
    
    
    2,342Cash and cash equivalents at the beginning of the period
    
    
    3,385
    
    
    
    40,978
    
    
    
    Cash and cash equivalents at the end of the period
    
    
    2,347
    
    
    
    24,791
    
    
    
    2,342
  10




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##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS (NIS in thousands)
 Period frominceptionSix months ended
    
    
    (September 20, 1999)June 30
    
    
    through June 30,2009
    
    
    2008
    
    
    2009Unaudited
    
    
    Unaudited(a) Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    4
    
    
    
    1,334
    
    
    
    7,460Impairment of property and equipment
    
    
    
    
    
    
    16
    
    
    
    1,270Capital loss (gain)
    
    
    
    
    
    
    
    
    
    
    (31
    )Interest and exchange rate differences on loan to the Chief Executive Officer
    
    
    
    
    
    
    (9
    )
    
    
    (35
    )Non-cash bonus to the Chief Executive Officer
    
    
    
    
    
    
    
    
    
    
    789Interest on restricted deposit
    
    
    
    
    
    
    
    
    
    
    (1,354
    )Change in fair value of liability in respect of warrants (series 2)
    
    
    (250
    )
    
    
    (675
    )
    
    
    (7,744
    )Change in fair value of conversion feature
    
    
    
    
    
    
    
    
    
    
    (2,746
    )Change in fair value of convertible bonds
    
    
    
    
    
    
    (19,010
    )
    
    
    (3,786
    )Change in fair value of embedded derivative
    
    
    
    
    
    
    325
    
    
    
    (346
    )Amortization of deferred issuance expenses and debentures discount
    
    
    
    
    
    
    
    
    
    
    6,228Amortization of deferred shares based compensation related to employees
    
    
    
    
    
    
    
    
    
    
    6,487Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (5,141
    )Change in fair value and amortization of shares options classified as a liability
    
    
    117
    
    
    
    (2,128
    )
    
    
    4,616Amortization of deferred shares based compensation related to consultants
    
    
    
    
    
    
    
    
    
    
    1,631Accrued severance pay, net
    
    
    (270
    )
    
    
    (31
    )
    
    
    Decrease (increase) in other accounts receivable and prepaid expenses (including
prepaid lease payments)
    
    
    174
    
    
    
    1,326
    
    
    
    (259
    )Increase (decrease) in trade payables
    
    
    (189
    )
    
    
    (1,241
    )
    
    
    161Increase (decrease) in other accounts payable and tax provision
    
    
    (347
    )
    
    
    878
    
    
    
    3,316Total adjustments
    
    
    (761
    )
    
    
    (19,215
    )
    
    
    10,516(b) Supplemental disclosure of cash flow activities:Cash paid during the period for:Taxes paid due to non-deductible expenses
    
    
    
    
    
    
    39
    
    
    
    787Interest paid
    
    
    
    
    
    
    20
    
    
    
    3,951x(c) Supplemental disclosure of non cash flows activities:Purchase of fixed assets
    
    
    6
    
    
    
    
    
    
    
    Accrued issuance expenses
    
    
    
    
    
    
    
    
    
    
    2,868Classification of liabilities into equity
    
    
    412
    
    
    
    125
    
    
    
    11,872
  11




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1: GENERAL
 a.
    
    TopSpin Medical, Inc. (the Company) and its subsidiary, TopSpin
Medical (Israel) Ltd. (the Subsidiary or TopSpin) are engaged in research and
development of a medical MRI technology.
  b.
    
    Since its inception, the Company has devoted substantially most of
its efforts to business planning, research and development, marketing, recruiting
management and technical staff, acquiring assets and raising capital. Accordingly,
the Company is considered to be in the development stage, as defined in Statement
of Financial Accounting Standards No. 7, Accounting and reporting by development
Stage Enterprises (SFAS No. 7).
 c.
    
    In October 2008, the Company terminated the employment of all of its
subsidiarys employees (excluding two employees from the finance department) and
suspended its operational activities.
 d.
    
    The Company and its Subsidiary have not generated any revenues and
have not achieved profitable operations or positive cash flows from operations.
The Company has an accumulated deficit of NIS 182,124 thousands as of June 30,
2009, and it incurred a net loss of NIS 1,683 thousands and negative cash flow
from operating activities in the amount of NIS 2,444 thousands for the six months
ended June 30, 2009.
   12




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##### Table of Contents



NOTE 1: GENERAL (Cont.)
 e.
    
    On June 2, 2009, the Company and its subsidiary entered into a share
purchase and investment agreement (the Agreement) with Kiryat Anavim  Silicon
Technologies, Ltd. (KAST), an Israeli company, Anavid Insulation Products Kiryat
Anavim Agricultural Cooperative Ltd., an Israeli Agricultural Cooperative
(Anavid), and Ahzakot Upituach Qiryat Anavim Agudah Shitufit Haklait Ltd., an
Israeli Agricultural Cooperative (Ahzakot), pursuant to which the Subsidiary
shall purchase from Anavid 89 common shares of KAST (the Common Shares) and
1,610,000 management shares of KAST (the Management Shares, and together with
the Common Shares, the Shares) owned by Anavid, in consideration of (i) payment
by the Subsidiary to Anavid of $10,000; (ii) payment by the Subsidiary to KAST of
an amount equal to NIS 810,000 (approximately $205,975) which shall be used to
finance an existing expense of KAST; (iii) payment by KAST to Anavid of NIS
1,000,000, plus certain expenses incurred by Anavid on behalf of KAST
(approximately $254,291 plus the cost of expenses) (with such payments funded
through contributions by the Subsidiary to KAST); and and payment by KAST of a
bank loan of approximately 1 million NIS. (iv) issuance by KAST of a warrant in
favor of Ahzakot (the controlling shareholder of Anavid) to purchase up to 35
common shares of KAST at an exercise price, subject to certain adjustments, of NIS
1 per share (the Warrant, and, together with the consideration described in
clauses (i)(iv), the Consideration).
    13




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##### Table of Contents



NOTE 1: GENERAL (Cont.)
   NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
 a.
    
    The accompanying unaudited interim consolidated financial statements
have been prepared as of June 30, 2009 and for the three-month and six-month
periods then ended, in accordance with United States generally accepted accounting
principles relating to the preparation of financial statements for interim
periods. Accordingly, they do not include all the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three-month and six-month periods ended June
30, 2009 are not necessarily indicative of the results that may be expected for
the year ended December 31, 2009.
  b.
    
    Impact of recently issued accounting standards:
 1.
    
    FASB Staff Position FAS 157-4
 Determining Whether a Market Is Not Active and a Transaction
Is Not Distressed,
  14




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##### Table of Contents



NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (Cont.)
 2.
    
    FASB Staff Position FAS 115-2, FAS 124-2, and
EITF 99-20-2FASB Staff Position FAS 115-2, FAS 124-2, and EITF 99-20-2, Recognition and
Presentation of Other-Than-Temporary Impairments, or FSP FAS 115-2,
FAS 124-2, and EITF 99-20-2; and FSP FAS 115-2, FAS 124-2, and EITF 99-20-2
provides additional guidance to provide greater clarity about the credit
and noncredit component of an other-than-temporary impairment event and to
more effectively communicate when an other-than-temporary impairment event
has occurred. This FSP applies to debt securities. This standard is
effective for periods ending after June 15, 2009. The Company does not
expect the adoption of FAS 115-2, FAS 124-2, and EITF 99-20-2 will have a
material impact on its financial position, results of operations or cash
flows.
  3.
    
    FASB Staff Position FAS 107-1 and APB 28-1FASB Staff Position FAS 107-1 and APB 28-1, Interim Disclosures about Fair
Value of Financial Instruments, or FSP FAS 107-1 and APB 28-1. FSP
FAS 107-1 and APB 28-1, amends FASB Statement No. 107, Disclosures about
Fair Value of Financial Instruments, to require disclosures about fair
value of financial instruments in interim as well as in annual financial
statements. This FSP also amends APB Opinion No. 28, Interim Financial
Reporting, to require those disclosures in all interim financial
statements. This standard is effective for periods ending after June 15,
2009. The Company will implement these pronouncements in its interim
financial statements.
 NOTE 3: CONTINGENT LIABILITIES, COMMITMENTS AND CHARGES
 1.
    
    Commitments to pay royalties to the Office of the Chief Scientist:
   2.
    
    TopSpin leases motor vehicles under operating lease arrangements for
36 months. The monthly lease payments are approximately NIS 3 thousand. As of June
30, 2009 the Companys car lease deposits amounts to NIS 8 thousand covering
rental payments for the last three months in respect of these contracts.
  15




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##### Table of Contents



NOTE 3: CONTINGENT LIABILITIES, COMMITMENTS AND CHARGES (Cont.)
 3.
    
    On April 22, 2009 former employee of the subsidiary filed a suit to
the district court in Israel in the amount of NIS 20 thousand on behalf of
holdover of payroll. The subsidiary and its legal advisor reject this claim and
believes that the probability that the claim will be accepted is low. Accordingly,
no provision was accrued in the financial statements as of June 30, 2009.
 NOTE 4: SHAREHOLDERS EQUITY
 a.
    
    Composition of share capital:The Companys authorized common shares consist of 1,000,000,000 shares with a par
value of $ 0.001 per share. All shares have equal voting rights and are entitled
to one non-cumulative vote per share in all matters to be voted upon by
shareholders. The shares have no preemptive, subscription, conversion or
redemption rights and may be issued only as fully paid and non-assessable shares.
Holders of the common shares are entitled to equal ratable rights to dividends
and distributions with respect to the common shares, as may be declared by the
Board of Directors out of funds legally available. The common shares is
registered and publicly traded on the Tel-Aviv Shares Exchangeb.
    
    Share capital:
 1.
    
    In September 1999, the Company issued 625,000 Ordinary shares at a price of $0.001 per share.
       16




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##### Table of Contents



NOTE 4: SHAREHOLDERS EQUITY (Cont.)
    2.
    
    According to an agreement signed in December 2002, the
Company issued to the Chief Executive Officer (CEO) 11,927,727 Ordinary shares in consideration for $100, subject to repurchase right according to
certain vesting terms. The subsidiary, TopSpin, gave the CEO a loan to
finance the purchase of the Companys shares. The loan is denominated in U.S
dollars and bears interest at the rate of 5%. As a security to ensure the
repayment of the loan, the CEO pledged these shares for the benefit of the
Company. The pledged shares and the related balance of the loan were
deducted from the shareholders equity.
    a.
    
    The Companys right of repurchase shall lapse on
a monthly basis over four years period commencing on the date of
execution of the original agreement.b.
    
    The Companys right of repurchase shall lapse,
with respect to 1/6 (one sixth) of the shares in the event that the
Company achieves a milestone as defined in the agreement. This milestone
has been achieved in September 2003.
  17




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##### Table of Contents



NOTE 4: SHAREHOLDERS EQUITY (Cont.)
      3.
    
    In December 2002, the Company granted fully vested
options to holders of Ordinary shares, for their services, which are
exercisable into 1,805,138 Ordinary shares of the Company at $ 0.001 per
share. The options were exercised in September 2005 in consideration for NIS
7 thousand.4.
    
    In December 2002, the Company granted fully vested
options to Hemisphere Capital Corp., for their services, which are
exercisable into 1,590,668 Preferred C shares of the Company at $ 0.1886 per
share. In September 2005, all the options were cash-less exercised into
170,247 Ordinary shares.5.
    
    On August 23, 2005, the Company increased its authorized
share capital to 500 million Ordinary shares of $ 0.001 par value each.6.
    
    On August 25, 2005, the Company published a prospectus
for the issuance of securities to the public in Israel. The securities were
issued in 38 thousand units (the units) and the price per unit, as
determined in a tender, was NIS 0.95 per unit. Each unit consisted of 1,000
Ordinary shares at NIS 0.95 per share and 600 options at no consideration.
    18




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##### Table of Contents



NOTE 4: SHAREHOLDERS EQUITY (Cont.)
 7.
    
    On April 19, 2007, the Company filed a registration
statement pursuant to the United States Securities Act of 1933 (the
registration statement and Securities Act respectively) with the U.S.
Securities and Exchange Commission (SEC) regarding the sale of Ordinary shares and warrants (series 3) and the shares resulting from the exercise of
the warrants (series 3). On June 4, 2007, the registration statement became
effective.
      8.
    
    On October 12, 2008 the Company issued 450,000,000 shares
of common shares due to the settlement with convertible bonds holders9.
    
    On February 2, 2009 the Company entered, with an
investor, into a private placement agreement. According to the agreement the
Company issued 120,000,000 common shares of $ 0.001 par value and 58,064,516
warrants exercisable into common shares of the Company for total
consideration of NIS 900 thousand. Each warrant is exercisable into one
common share for the exercise price of NIS 0.01 for a period of 4 years
following the issuance date.
  19




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##### Table of Contents



NOTE 5: SHARES-BASED COMPENSATION
 a.
    
    On February 26, 2009 the Board of Directors approved an increase of
an additional 25 million shares of Common Shares (21 out of them available for
grant) to be granted under the 2003 Israeli Shares Option Plan.b.
    
    Issuance of options to employees, directors and consultants:
 1.
    
    On May 6, 2009 the Board of Directors of the Company
approved the designation of a new Finance Manager to the Company. As part of
the employment agreement of the new Finance Manager the Company will
allocate 1,500,000 unmarketable options which are convertible to 1,500,000
Common shares of $0.001 par value each, 750,000 of the options will be
exercisable at an exercise price of NIS 0.011 per share and the balance of
750,000 options at an exercise price of NIS 0.022 per share. According to
the Binomial model, with 113.67% volatility and 0.95%-8.09% risk-free
interest rate, the compensation resulted from the grant amounted to
approximately NIS 10 thousand.2.
    
    On June 23, 2009 the Audit Committee of the Company
allocated 24,500,000 unmarketable options which are convertible to
24,500,000 Common shares of $0.001 par value each at an exercise price of
NIS 0.0143 per share. According to the Binomial model, with 136.4%
volatility and 1.26%-7.71% risk-free interest rate, the compensation
resulted from the grant amounted to approximately NIS 877 thousand.
  20




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##### Table of Contents



NOTE 5: SHARES-BASED COMPENSATION (Cont.)
 c.
    
    Options to employees:A summary of the Companys share option activities for
options granted to employees under the plans excluding performance base
options is as follows (amounts in thousands NIS):
 Six months ended June 30, 2009WeightedaverageWeighted
    
    
    remainingaverage
    
    
    contractual
    
    
    Aggregateexercise
    
    
    term
    
    
    intrinsicNumber
    
    
    price
    
    
    (in years)
    
    
    valueOptions outstanding at January 1, 2009
    
    
    7,213,251
    
    
    $
    0.053Options granted *)
    
    
    26,000,000
    
    
    $
    0.004Options exercised
    
    
    (4,100,000
    )
    
    $
    0.001Options forfeited
    
    
    (2,858,563
    )
    
    $
    0.261Options outstanding at June 30, 2009
    
    
    26,254,688
    
    
    $
    0.004
    
    
    
    9.94
    
    
    
    360Options vested and expected to vest
at June 30, 2009
    
    
    26,254,688
    
    
    $
    0.0004
    
    
    
    9.94
    
    
    
    360Options exercisable at June 30, 2009
    
    
    254,688
    
    
    $
    0.0525
    
    
    
    6.14
    
    
    
    1.2
 *
    
    Options granted to directors of the Company are pending the approval of
the Tel Aviv Shares Exchange (TASE) and the Securities Exchange Committee
(SEC).    21




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##### Table of Contents



NOTE 5: SHARES-BASED COMPENSATION (Cont.)
 2.
    
    A summary of the activity under the performance share
based options granted to employees as follows:
 Six months ended June 30, 2009WeightedaverageWeighted
    
    
    remainingaverage
    
    
    contractual
    
    
    Aggregateexercise
    
    
    term
    
    
    intrinsicNumber
    
    
    price
    
    
    (in years)
    
    
    valueOptions outstanding at January 1,
2009 and June 30, 2009
    
    
    1,740,000
    
    
    $
    0.1503
    
    
    
    7.5
    
    
    
    Options vested and expected to vest
at June 30, 2009
    
    
    1,740,000
    
    
    $
    0.1503
    
    
    
    7.5
    
    
    
    Options exercisable at June 30, 2009
    
    
    1,740,000
    
    
    $
    0.1503
    
    
    
    7.5
    
    
    
    
 4.
    
    Compensation expenses (income) related to options granted
to employees were recorded to research and development expenses and general
and administrative expenses, as follows:
 Period frominception(September 20,Six months ended
    
    
    Three months ended
    
    
    1999) throughJune 30,
    
    
    June 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009Research and development expenses
    
    
    (7
    )
    
    
    (1,009
    )
    
    
    
    
    
    
    (570
    )
    
    
    527General and administrative expenses
    
    
    (35
    )
    
    
    (576
    )
    
    
    (33
    )
    
    
    (429
    )
    
    
    9,848(42
    )
    
    
    (1,585
    )
    
    
    (33
    )
    
    
    (999
    )
    
    
    10,375
  22




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NOTE 5: SHARES-BASED COMPENSATION (Cont.)
 c.
    
    Options to non-employees:
 1.
    
    A summary of the Companys share option activities for
options granted to non-employees under the plans excluding performance base
options is as follows (amounts in thousands NIS):
 WeightedaverageWeighted
    
    
    remaining
    
    
    Aggregateaverage
    
    
    contractual
    
    
    Intrinsicexercise
    
    
    terms
    
    
    ValueNumber
    
    
    price
    
    
    (in years)
    
    
    PriceOptions outstanding at January 1, 2009
    
    
    1,378,510
    
    
    $
    0.189Options forfeited
    
    
    (812,500
    )
    
    $
    0.076Options outstanding, vested and
expected to vest at June 30, 2009
    
    
    566,010
    
    
    $
    0.346
    
    
    
    4.55
    
    
    
    Options exercisable at June 30, 2009
    
    
    566,010
    
    
    $
    0.346
    
    
    
    4.55
    
    
    
    
  A summary of the activity under the performance share-based options granted
to non-employees is as follows:
 Six months ended June 30, 2009WeightedaverageWeighted
    
    
    remainingaverage
    
    
    contractual
    
    
    Aggregateexercise
    
    
    term
    
    
    intrinsicNumber
    
    
    price
    
    
    (in years)
    
    
    valueOptions outstanding
at January 1, 2008
and June 30, 2009
    
    
    900,000
    
    
    
    0.111
    
    
    
    7.2
    
    
    
    Options exercisable at
June 30, 2009
    
    
    300,000
    
    
    
    0.111
    
    
    
    7.2
    
    
    
    
  23




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##### Table of Contents



NOTE 5: SHARES-BASED COMPENSATION (Cont.)
 3.
    
    The Companys outstanding options to non-employees
(including options under performance) as of June 30, 2009, have been
separated into ranges of exercise prices as follows:
 WeighedaverageremainingOptions for
    
    
    
    
    
    contractualOrdinary
    
    Options
    
    termExercise price per share
    
    shares
    
    
    exercisable
    
    
    (in years)$12
    
    
    14,010
    
    
    
    14,010
    
    
    
    3.25$0.05
    
    
    552,000
    
    
    
    552,000
    
    
    
    4.58$0.111
    
    
    900,000
    
    
    
    300,000
    
    
    
    7.21,466,010
    
    
    
    866,010
  Period frominception(September 20,Six months ended
    
    
    Three months ended
    
    
    1999) throughJune 30,
    
    
    June 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009Research and development expenses
    
    
    (1
    )
    
    
    (344
    )
    
    
    
    
    
    
    (221
    )
    
    
    166General and administrative expenses
    
    
    (2
    )
    
    
    (196
    )
    
    
    (1
    )
    
    
    (85
    )
    
    
    1,305(3
    )
    
    
    (540
    )
    
    
    (1
    )
    
    
    (306
    )
    
    
    1,471
  24




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##### Table of Contents



NOTE 6: RELATED PARTY
    NOTE 7: SUBSEQUENT EVENTS
 a.
    
    On July 15, 2009 the Board of Directors decided to obtain the
approval of the sharesholders of the Company to increase the registered capital of
the Company by 500,000,000 shares of common shares and to amend the corporations
certificate of incorporation that the total number of authorized shares of common shares shall be increased by 500,000,000 shares. A Shareholders meeting has been
set for September 3rd, 2009.b.
    
    On August 6, 2009 the subsidiary executed its right as per the
agreement and notify KAST, its shareholders and other parties involved in the deal
that it wishes to extend the due diligence term in 60 days up to October
15th, 2009.c.
    
    In July 2009, the Israeli Parliament (the Knesset) passed the
Economic Efficiency Law (Amended Legislation for Implementing the Economic Plan
for 2009 and 2010), 2009, which prescribes, among other things, an additional
gradual reduction in Israeli corporate tax rate starting from 2011 to the
following tax rates: 2011  24%, 2012  23%, 2013  22%, 2014  21%, 2015  20%,
2016 and thereafter  18%.The Company estimates that the Economic Efficiency Law is not expected to effect
the Companys consolidated financial statements.
  25




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  Overview
       26




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##### Table of Contents



Liquidity and Capital Resources
     Operating Activities
   27




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##### Table of Contents



Financing Activities
   Investing Activities
  Results of Operations
 For the three and six months ended June 30, 2009 and 2008
 Revenues
  Research and Development Expense
   28




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##### Table of Contents



Selling and Marketing Expense
  General and Administrative Expense
  Financing Income, net
  Taxes on Income
  Critical Accounting Policies
  FASB Staff Position FAS 157-4
   29




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##### Table of Contents



FASB Staff Position FAS 115-2, FAS 124-2, and EITF 99-20-2
  FASB Staff Position FAS 107-1 and APB 28-1
  Off-Balance Sheet Arrangements
 Commitments to Pay Royalties to the Chief Scientist
   Office Lease Commitments
   30




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ITEM 4T. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
      31




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
 ExhibitNumber
    
    Description10.1*
    
    
    Share Purchase and Investment Agreement by and among TopSpin Medical (Israel),
Ltd., Kiryat Anavim  Silicon Technologies, Ltd., Anavid Insulation Products
Kiryat Anavim Agricultural Cooperative Ltd., and Ahzakot Upituach Qiryat Anavim
Agudah Shitufit Haklait Ltd., dated June 2, 2009 (Exhibit 10.1 to our Current
Report on Form 8-K dated June 8, 2009).31.1
    
    
    Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a-14(a)31.2
    
    
    Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a)32.1
    
    
    Certification of Chief Executive Officer and Chief Financial Officer Pursuant
to 18 U.S.C. Section 1350 Certifications as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
 
 *
    
    Incorporated by reference.  32




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##### Table of Contents



SIGNATURES
  Date:  August 14, 2009
    TOPSPIN MEDICAL, INC.By:
    /s/ Ehud-Moshe GilboaChairman of the Board of DirectorsDate:  August 14, 2009
    By:
    /s/ Eldad YehielyDirector of Finance  33




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description10.1*
    
    
    Share Purchase and Investment Agreement by and among TopSpin Medical (Israel),
Ltd., Kiryat Anavim  Silicon Technologies, Ltd., Anavid Insulation Products
Kiryat Anavim Agricultural Cooperative Ltd., and Ahzakot Upituach Qiryat Anavim
Agudah Shitufit Haklait Ltd., dated June 2, 2009 (Exhibit 10.1 to our Current
Report on Form 8-K dated June 8, 2009).31.1
    
    
    Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a-14(a)31.2
    
    
    Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a)32.1
    
    
    Certification of Chief Executive Officer and Chief Financial Officer Pursuant
to 18 U.S.C. Section 1350 Certifications as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
 
 *
    
    Incorporated by reference.  34