U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 10-Q



(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2013



OR



[ ] 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: 0-51216



ANDAIN, INC.

(Exact Name of Company as Specified in its Charter)





|Nevada                                        |  | 20-2066406         
|--------------------------------------------- |  | -------------------
|(State or Other Jurisdiction of Incorporation |  | (I.R.S. Employer   
|or Organization)                              |  | Identification No.)









|400 South Beverly Drive, Suite 312, Beverly Hills, California |  | 90212         
|------------------------------------------------------------- |  | --------------
|(Address of Principal Executive Offices)                      |  | (Zip Code)    
|                                                              |  |               
|Company’s telephone number:                                   |  | (310) 286-1777



_____________________________________________________

(Former Name, Former Address, and Former Fiscal
Year, if Changed Since Last Report)





Indicate by check mark
whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [x] No [ ].



Indicate by check mark whether the Company has submitted electronically
and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and
post such files). Yes [x] No [ ].



Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of
“large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule
12b-2 of the Exchange Act:





|Large accelerated filer | [ ] |  | Accelerated filer         | [ ]
|----------------------- | --- |  | ------------------------- | ---
|Non-accelerated filer   | [ ] |  | Smaller reporting company | [X]



Indicate by check mark whether the Company is a shell company (as
defined in Rule 12b-2 of the Exchange Act): Yes [ ] No [x].



As of June 30, 2013, the Company had 85,115,242 shares of common stock
issued and outstanding.

Table of Contents-1-







|TABLE OF CONTENTS                                                                                                                                                              
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|PART I - FINANCIAL INFORMATION                                                                                                                                                 
|ITEM 1. FINANCIAL STATEMENTS                                                                                                                                                   
|CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2013 (UNAUDITED) AND DECEMBER 31, 2012                                                                                              
|CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE AND SIX MONTHS ENDED  JUNE 30,
    2013 AND JUNE 30, 2012 AND     PERIOD     OF INCEPTION THROUGH JUNE 30, 2013
|CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2013 AND
    JUNE 30, 2012 AND     PERIOD     OF INCEPTION THROUGH JUNE 30, 2013           
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)                                                                                                                         
|ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                                                                  
|ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                                                                             
|ITEM 4. CONTROLS AND PROCEDURES                                                                                                                                                
|                                                                                                                                                                               
|PART II - OTHER INFORMATION                                                                                                                                                    
|ITEM 1. LEGAL PROCEEDINGS                                                                                                                                                      
|ITEM 1A. RISK FACTORS                                                                                                                                                          
|ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                                                                                            
|ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                                                                                                                        
|ITEM 4. MINE SAFETY DISCLOSURES                                                                                                                                                
|ITEM 5. OTHER INFORMATION                                                                                                                                                      
|ITEM 6. EXHIBITS                                                                                                                                                               
|SIGNATURE                                                                                                                                                                      



Table of Contents-2-





PART I – FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS.



ANDAIN, INC.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

(U.S. Dollars)



|                                                                                                                                                             |  | June 30,    |            | December 31,
|------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------- | ---------- | ------------
|                                                                                                                                                             |  | 2013        |            | 2012        
|                                                                                                                                                             |  | (Unaudited) |            |             
|ASSETS                                                                                                                                                       |  |             |            |             
|Current assets:                                                                                                                                              |  |             |            |             
|Related party receivables                                                                                                                                    |  | $           | 95,767     |             
|Accounts receivable                                                                                                                                          |  |             | 13,250     |             
|Total current assets                                                                                                                                         |  |             | 109,017    |             
|                                                                                                                                                             |  |             |            |             
|Long-term assets:                                                                                                                                            |  |             |            |             
|Related party                                                                                                                                                |  |             | 384,595    |             
|Property, plant and equipment, net                                                                                                                           |  |             | —          |             
|                                                                                                                                                             |  |             |            |             
|Total assets                                                                                                                                                 |  | $           | 493,613    |             
|                                                                                                                                                             |  |             |            |             
|LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                                                                                        |  |             |            |             
|Current liabilities:                                                                                                                                         |  |             |            |             
|Credit from banks                                                                                                                                            |  | $           | —          |             
|Accounts payable and accrued expenses                                                                                                                        |  |             | 297,146    |             
|Total current liabilities                                                                                                                                    |  |             | 297,146    |             
|                                                                                                                                                             |  |             |            |             
|Long-term liabilities:                                                                                                                                       |  |             |            |             
|Key management                                                                                                                                               |  |             | 362,150    |             
|Long-term shareholder loans                                                                                                                                  |  |             | 127,000    |             
|Total liabilities                                                                                                                                            |  |             | 786,297    |             
|                                                                                                                                                             |  |             |            |             
|Stockholders’ deficit:                                                                                                                                       |  |             |            |             
|Preferred stock, $0.001 par value, 10,000,000 authorized shares; no shares issued and outstanding                                                            |  |             | —          |             
|Common stock, $0.001 par value, 500,000,000 shares authorized; 85,115,242 shares issued and outstanding at June 30, 2013 and 56,704,928 at December 31, 2012 |  |             | 84,840     |             
|Additional paid-in capital                                                                                                                                   |  |             | 6,895,798  |             
|Accumulated deficit during development stage                                                                                                                 |  |             | (7,214,432 | )           
|Accumulated other comprehensive income (loss)                                                                                                                |  |             | (58,890    | )           
|Total
    Andain, Inc.’s stockholders’ deficit                                                                                                               |  |             | (292,684   | )           
|Non-controlling
    interest                                                                                                                                 |  |             | —          |             
|                                                                                                                                                             |  |             |            |             
|Total stockholders’ deficit                                                                                                                                  |  |             | (292,684   | )           
|                                                                                                                                                             |  |             |            |             
|Total liabilities and stockholders’ deficit                                                                                                                  |  | $           | 493,613    |             
|                                                                                                                                                             |  |             |            |             



The accompanying notes are an integral part
of these consolidated financial statements

Table of Contents-3-







ANDAIN, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. Dollars)

(Unaudited)



|                                                   |  | Six Months Ended June 30, |            | Three Months Ended June 30, |  | Period from July 23, 2004 (Date of Inception) Through June 30,
|-------------------------------------------------- |  | ------------------------- | ---------- | --------------------------- |  | --------------------------------------------------------------
|                                                   |  | 2013                      |            | 2012                        |  | 2013                                                          
|Revenues:                                          |  |                           |            |                             |  |                                                               
|Government grants                                  |  | $                         | —          |                             |  | $                                                             
|Consulting income                                  |  |                           | 63,767     |                             |  |                                                               
|Total revenue                                      |  |                           | 63,767     |                             |  |                                                               
|Operating expenses:                                |  |                           |            |                             |  |                                                               
|General and administrative                         |  |                           | (247,593   | )                           |  |                                                               
|Research and development                           |  |                           | (463,332   | )                           |  |                                                               
|Loss on disposal of associate                      |  |                           | —          |                             |  |                                                               
|Impairment of goodwill                             |  |                           | —          |                             |  |                                                               
|Impairment loss                                    |  |                           | —          |                             |  |                                                               
|Other income, net                                  |  |                           | —          |                             |  |                                                               
|Total operating expenses                           |  |                           | (710,925   | )                           |  |                                                               
|Operating loss                                     |  |                           | (647,158   | )                           |  |                                                               
|Financial income, net                              |  |                           | (20,009    | )                           |  |                                                               
|Net loss, including non-controlling interests      |  |                           | (667,167   | )                           |  |                                                               
|Less: Net attributable to non-controlling interest |  |                           | —          |                             |  |                                                               
|Net loss                                           |  | $                         | (667,167   | )                           |  | $                                                             
|                                                   |  |                           |            |                             |  |                                                               
|Loss per share – basic and diluted:                |  |                           |            |                             |  |                                                               
|Net loss attributable to Andain Inc.               |  | $                         | (0.01      | )                           |  | $                                                             
|Weighted average number of shares outstanding      |  |                           | 85,080,250 |                             |  |                                                               



The accompanying notes are an integral part
of these consolidated financial statements

Table of Contents-4-





ANDAIN, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. Dollars)

(Unaudited)



|                                                                                |  | Six Months Ended June 30, |          | Period from July 23, 2004 (Date of Inception) Through June 30,
|------------------------------------------------------------------------------- |  | ------------------------- | -------- | --------------------------------------------------------------
|                                                                                |  | 2013                      |          | 2012                                                          
|Cash flows from operating activities:                                           |  |                           |          |                                                               
|Net (loss) attributable to Andain Inc.                                          |  | $                         | (667,167 | )                                                             
|Adjustments to reconcile net (loss) to net cash (used in) operating activities: |  |                           |          |                                                               
|Depreciation                                                                    |  |                           | —        |                                                               
|Loss from acquisition of subsidiary                                             |  |                           | —        |                                                               
|Impairment of goodwill                                                          |  |                           | —        |                                                               
|Impairment of loan                                                              |  |                           | —        |                                                               
|Minority interest                                                               |  |                           | —        |                                                               
|Shares issued for professional services                                         |  |                           | 93,782   |                                                               
|Stock based compensation to key management                                      |  |                           | 193,120  |                                                               
|Contribution of services from shareholders                                      |  |                           | 60,000   |                                                               
|Changes in foreign exchange rates                                               |  |                           | (51.825  | )                                                             
|Impairment of intangible assets                                                 |  |                           | —        |                                                               
|Changes in operating assets and  liabilities:                                   |  |                           |          |                                                               
|Accounts payable                                                                |  |                           | (39,782  | )                                                             
|Accounts receivable                                                             |  |                           | (90,090  | )                                                             
|Accrued compensation                                                            |  |                           | 180,000  |                                                               
|Net cash provided by (used in) operating activities                             |  |                           | (321,962 | )                                                             
|                                                                                |  |                           |          |                                                               
|Cash flows from investing activities:                                           |  |                           |          |                                                               
|Purchase of equipment                                                           |  |                           | —        |                                                               
|Acquisition of patent                                                           |  |                           | —        |                                                               
|Acquisition of subsidiary                                                       |  |                           | —        |                                                               
|Net cash used in investing activities                                           |  |                           | —        |                                                               
|                                                                                |  |                           |          |                                                               
|Cash flows from financing activities:                                           |  |                           |          |                                                               
|Proceeds from increase in bank overdrafts                                       |  |                           | —        |                                                               
|Proceeds from stock issued for cash                                             |  |                           | 180,000  |                                                               
|Proceeds from other loans                                                       |  |                           | —        |                                                               
|Loan from majority stockholder                                                  |  |                           | (50,000  | )                                                             
|Loans from key management personnel                                             |  |                           | 182,442  |                                                               
|Net cash provided by financing activities                                       |  |                           | 312,442  |                                                               
|                                                                                |  |                           |          |                                                               



Table of Contents-5-





ANDAIN, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. Dollars)

(Unaudited)

(continued)



|                                                                                                                                                                                                                                    |  | Six Months Ended June 30, |          | Period from July 23, 2004 (Date of Inception) Through June 30,
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | -------- | --------------------------------------------------------------
|                                                                                                                                                                                                                                    |  | 2013                      |          | 2012                                                          
|                                                                                                                                                                                                                                    |  |                           |          |                                                               
|Increase (decrease) in cash and cash equivalents                                                                                                                                                                                    |  |                           | —        |                                                               
|Cash and cash equivalents, beginning of period                                                                                                                                                                                      |  |                           | —        |                                                               
|Effects of exchange rate changes on balance of cash held in foreign currencies                                                                                                                                                      |  |                           | —        |                                                               
|                                                                                                                                                                                                                                    |  |                           |          |                                                               
|Cash and cash equivalents, end of period                                                                                                                                                                                            |  | $                         | —        |                                                               
|                                                                                                                                                                                                                                    |  |                           |          |                                                               
|Non-cash investing and financing activities:                                                                                                                                                                                        |  |                           |          |                                                               
|Issuance of common stock for purchase of intellectual property                                                                                                                                                                      |  | $                         | —        |                                                               
|Issuance of common stock for purchase of subsidiary                                                                                                                                                                                 |  | $                         | —        |                                                               
|Issuance of common stock to directors in exchange for a loan                                                                                                                                                                        |  | $                         | —        |                                                               
|Subsidiaries sold to stockholder:                                                                                                                                                                                                   |  |                           |          |                                                               
|Working capital deficiency, excluding cash and cash equivalents                                                                                                                                                                     |  | $                         | (70,786  | )                                                             
|Property and equipment, net                                                                                                                                                                                                         |  |                           | 24,808   |                                                               
|Non-controlling interest                                                                                                                                                                                                            |  |                           | 256,890  |                                                               
|Accumulated other comprehensive loss                                                                                                                                                                                                |  |                           | 159,614  |                                                               
|Profit
from transactions with shareholder– recorded to additional paid in capital                                                                                                                                                   |  |                           | (370,526 | )                                                             
|                                                                                                                                                                                                                                    |  | $                         | —        |                                                               
|Additional acquisition of control in Meizam Arad Investments Ltd.:                                                                                                                                                                  |  |                           |          |                                                               
|Non-controlling interest                                                                                                                                                                                                            |  | $                         | (8,528   | )                                                             
|Loss from transactions
                                                                           with shareholder recorded
                                                                           toadditional paid in capital |  |                           | 8,528    |                                                               
|                                                                                                                                                                                                                                    |  | $                         | —        |                                                               
|Additional information:                                                                                                                                                                                                             |  |                           |          |                                                               
|Cash paid for income taxes                                                                                                                                                                                                          |  | $                         | —        |                                                               
|Cash paid for interest expense                                                                                                                                                                                                      |  | $                         | —        |                                                               



The accompanying notes are an integral part
of these consolidated financial statements

Table of Contents-6-





ANDAIN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED JUNE 30, 2013
AND 2012, AND

PERIOD OF JULY 23, 2004 (DATE OF INCEPTION)
THROUGH JUNE 30, 2013

(U.S. Dollars)

(Unaudited)



NOTE 1 – GENERAL INFORMATION



Andain Inc. (“Company”) was established
in 2004 in the State of Nevada, U.S.A. Since commencing operations in 2006, the Company has been engaged, both independently and
through its consolidated entities (collectively, the “Group”), in the development of medical technology, from early
stage development to advanced clinical trials, for a wide range of medical needs.



On May 14, 2013, the Company’s board
of directors (with Sam Shlomo Elimelech, a director, recusing himself) decided to simplify the Company’s corporate structure
by transferring all assets and technologies from its subsidiaries to the Company, and sell its subsidiaries with their accumulated
losses to Mr. Elimelech, the Company’s president and CEO; the effective date of the transactions is January 1, 2013. Accordingly,
the Company sold all its holdings in: Impact Active Team Ltd., TPDS Ltd., Meizam – Advanced Enterprise Center Arad Ltd.,
and Gaia Med Ltd. to Mr. Elimelech. Simultaneously with the sale of subsidiaries, the Company acquired an additional 7.5% interest
in Meizam Arad Investments Ltd., which then became a wholly owned and the only subsidiary of the Company (the effective date of
this transaction is also January 1, 2013).



On April 29, 2013 the Company entered into
a Regulation S Stock Purchase Agreement with 1568934 Ontario Limited. Under this agreement, the purchaser purchased from the Company
21,316,000 restricted shares of common stock for a total consideration of $180,000. These shares were issued on June 27, 2013.



For the calendar year of 2013 the Company continues
to use offices provided by 1568934 Ontario Limited, an affiliate of the Company, located in Beverly Hills, California. This office
space is approximately 1,000 square feet; the Company pays 50,000 shares of restricted common stock each month for rent, electricity,
telephones, and other expenses of the office. The Company is under an annual renewable lease of these offices. On June 27, 2013,
the Company issued 600,000 restricted shares of common stock to 1568934 Ontario Limited under this arrangement as rent payment
for the 2013 calendar year



On
June 30, 2012, the Company’s board of directors agreed tore-issue restricted shares of common stock, which were issued
previously based on agreements and board resolutions, and were returned to the Company’s treasury due to issuance
errors:



·  2,720,000 shares to Sam Elimelech, the Company's President & CEO;



·  2,720,000 shares to Gai Mar-Chaim, the Company's Secretary & Treasurer;

Table of Contents-7-







·  86,667 shares to Globex Transfer (the former transfer agent for the Company); and



·  122,648 shares to several consultants and shareholders.



On June 30, 2013, the Company took the following
actions with regard to cancellation of certain shares of common stock:



·  1,500,000 shares to Otzarot Tarshish Nechasim Vehashkaott Ltd that were issued as a share-based payment for financial consulting services, but remained at the Company's treasury since these services have not been provided.



·  1,500,000 shares to Amir Uziel Economic Consultant Ltd., which were issued as a share-based payment for financial consulting services, but remained at the Company's treasury since these services have not been provided.



·  375,000 shares to AID Capital, which were issued as a share-based payment for financial consulting services, but these services have not been provided.



·  55,000 shares of common stock, which were issued based on Regulation S subscription agreements to private investors who did not remit the payment for these shares.



NOTE 2 – GOING CONCERN



The Company’s consolidated financial
statements are prepared using generally accepted accounting principles applicable to a going concern that contemplates the realization
of assets and liquidation of liabilities in the normal course of business. The Company has not established any source of revenue
to cover its operating costs. The Company has sustained operating losses and expects such losses to continue for the foreseeable
future. The Company will engage in very limited activities without incurring any liabilities that must be satisfied in cash until
a source of funding is secured. The Company will offer non-cash consideration as a mean of financing its operations. If the Company
is unable to obtain revenue-producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover
any operating losses it may incur, it may substantially curtail or terminate its operations.



NOTE 3 – SIGNIFICANT ACCOUNTING
POLICIES



Use of Estimates.



The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes. While management believes that such estimates are fair when
considered in conjunction with the consolidated financial position and results of operations taken as a whole, actual results could
differ from those estimates and such differences may be material to the financial statements.



Table of Contents-8-





Basis of Presentation.



The accompanying unaudited financial
statements of the Company are presented in accordance with the requirements of Form 10-Q and Article 10 of Regulation S-X. Certain
information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to such U.S.
Securities and Exchange Commission (“SEC”) rules and regulations. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation have been made. The results for these interim periods
are not necessarily indicative of the results for the entire year. The accompanying financial statements should be read in conjunction
with the Company’s audited financial statements for the year ended December 31, 2012 and the notes thereto included in the
Company’s Report on Form 10-K filed with the SEC on May 13, 2013.



Functional and Reporting Currency.



The consolidated financial statements are presented
in U.S. Dollars, which is the Company’s functional currency and presentation currency. The financial statements of entities
that use a functional currency other than the U.S. Dollar are translated into U.S. Dollars. Assets and liabilities are translated
using the exchange rate on the respective balance sheet dates. Items in the income statement and cash flow statement are translated
into U.S. Dollars using the average rates of exchange for the periods involved. The resulting translation adjustments are recorded
as a separate component of other comprehensive income/(loss) within stockholders’ equity.



The functional currency of foreign entities
is generally the local currency unless the primary economic environment requires the use of another currency. Gains or losses arising
from the translation or settlement of foreign-currency-denominated monetary assets and liabilities into the functional currency
are recognized in the income in the period in which they arise. However, currency differences on intercompany loans that have the
nature of a permanent investment are accounted for as translation differences as a separate component of other comprehensive income/(loss)
within stockholders’ equity.



New Israeli Shekel (“NIS”) amounts as of June 30, 2013
have been translated into U.S. Dollars at the representative rate of exchange on June 30, 2013 (USD 1 = NIS 3.648).



Consolidation Principles.



The consolidated financial statements of the
Company include the accounts of the Company, and all entities in which a direct or indirect controlling interest exists through
voting rights or qualifying variable interests. All intercompany balances and transactions have been eliminated in the consolidated
financial statements.



Table of Contents-9-







Recently Issued Accounting Pronouncements.



1.  ASC Topic 220, "Comprehensive Income"



Effective January 1, 2013, the Company adopted
Accounting Standard Update (“ASU”) No. 2013-02, “Comprehensive Income (Topic 220) - Reporting of Amounts Reclassified
out of Accumulated Other Comprehensive Income”. ASU 2013-02 requires an entity to provide information about amounts reclassified
out of accumulated other comprehensive income.



According to ASU 2013-02, significant items
that are required under U.S. GAAP to be reclassified to net income in their entirety shall be presented by the respective line
items of net income either on the face of the financial statements or in the footnotes. Items that are not required under U.S.
GAAP to be reclassified to net income in their entirety, will be required to be cross-referenced to other disclosures required
under U.S. GAAP that provide additional detail about those amounts. The standard became effective, prospectively, for interim and
annual periods beginning after December 15, 2012.



The adoption of ASU 2013-02 did not have a
material impact on the financial position or results of operations of the Company.



2. ASC Topic 210, “Balance Sheet”



Effective January 1, 2013, the Company adopted
ASU 2011-11, “Balance Sheet (Topic 210) - Disclosures about Offsetting Assets and Liabilities”. ASU 2011-11 enhances
disclosures about financial instruments and derivative instruments that are either offset in accordance with the Accounting Standards
Codification or are subject to an enforceable master netting arrangement or similar agreement.



The amended guidance became effective, in a
retrospective manner to all comparative periods presented, for annual reporting periods beginning on or after January 1, 2013,
and interim periods within those annual periods.



The adoption of ASU 2011-11 did not have a
material impact on the financial position or results of operations of the Company.



NOTE 4– EVENTS
DURING THE REPORTED PERIOD



A.	On May 14, 2013, the Company’s
board of directors (with Sam Shlomo Elimelech, a director, recusing himself) decided to simplify the Company’s corporate
structure by transferring all assets and technologies from its subsidiaries to the Company, and sell its subsidiaries with their
accumulated losses to Mr. Elimelech, the Company’s president and CEO; the effective date of the transactions is January 1,
2013. Accordingly, the Company sold all its holdings in: Impact Active Team Ltd., TPDS Ltd., Meizam – Advanced Enterprise
Center Arad Ltd., and Gaia Med Ltd. to Mr. Elimelech. Simultaneously with the sale of subsidiaries, the Company acquired an additional
7.5% interest in Meizam Arad Investments Ltd., which then became a wholly owned and the only subsidiary of the Company (the effective
date of this transaction is also January 1, 2013).



Table of Contents-10-







These transactions are set forth below:



·  On May 15, 2013, the Company’s subsidiary Meizam Arad Investments Ltd. (“Meizam Investments”) entered into an Acquisition Agreement with Meizam – Advanced Enterprise Center Arad Ltd. (“Meizam Arad”) to sell all of the shares of common stock held by Meizam Investments of the subsidiary Gaia-Med Ltd. to Meizam Arad. See Exhibit 10.26.



·  On May 15, 2013, the Company’s subsidiary Meizam Investments entered into an Acquisition Agreement with Meizam Arad to sell all of the shares of common stock held by Meizam Investments of the subsidiary TPDS Ltd. to Meizam Arad. See Exhibit 10.27.



·  On May 15, 2013, the Company entered into an Acquisition Agreement with Meizam Arad to sell all of the shares of common stock held by the Company of the subsidiary TPDS Ltd. to Meizam Arad. See Exhibit 10.28.



·  On May 15, 2013, the Company entered into an Acquisition Agreement with Meizam Arad to sell all of the shares held by the Company of its subsidiary Impact Active Team Ltd. (“Impact Active”) to Meizam Arad. See Exhibit 10.29



·  On May 15, 2013, the Company entered into an Acquisition Agreement with Mr. Elimelech to sell all of the shares of common stock held by the Company of its subsidiary Meizam Arad to Mr. Elimelech. See Exhibit 10.30.



·  On May 15, 2013, the Company entered into an Acquisition Agreement with Mr. Mar-Chaim to sellall of the shares held by Mr. Mar-Chaim in the Company’s subsidiary Meizam Investments to the Company. See Exhibit 10.31.



·  On May 15, 2013, the Company entered into an Acquisition Agreement with Mr. Elimelech to sellall of the shares held by Mr. Elimelech of its subsidiary Meizam Investments to the Company. See Exhibit 10.32.



·  On May 15, 2013, the Company’s subsidiary Meizam Investmentsentered into an Acquisition Agreement with Mr. Elimelech to sellall of the shares held by Meizam Investments of the Company’s subsidiary Meizam Arad to Mr. Elimelech. See Exhibit 10.33



|Working capital deficiency, excluding cash and cash equivalents                    |  | $ | (70,786  | )
|---------------------------------------------------------------------------------- |  | - | -------- | -
|Property and equipment, net                                                        |  |   | 24,808   |  
|Non-controlling interest                                                           |  |   | 256,890  |  
|Accumulated other comprehensive (loss)                                             |  |   | 159,614  |  
|Profit from transactions with stockholder – recorded to additional paid in capital |  |   | (370,526 | )
|                                                                                   |  | $ | —        |  



B.	Simultaneously with the sale of
subsidiaries, the Company acquired additional 7.5% in Meizam Arad Investments Ltd. for no additional cost from Mr. Elimelech.
Meizam Arad Investments Ltd. became a wholly owned and the only subsidiary of the Company. The transaction was recorded to
additional paid in capital, being a transaction with a stockholder. These transactions are set forth below:



·  On May 15, 2013, the Company entered into an Acquisition Agreement with Mr. Mar-Chaim to sell all of the shares held by Mr. Mar-Chaim in the Companys subsidiary Meizam Investments to the Company.



·  On May 15, 2013, the Company entered into an Acquisition Agreement with Mr. Elimelech to sell all of the shares held by Mr. Elimelech of its subsidiary Meizam Investments to the Company.



|Additional acquisition of control in Meizam Arad Investments Ltd.:                 |  |   |        |  
|---------------------------------------------------------------------------------- |  | - | ------ | -
|Non-controlling interest                                                           |  | $ | (8,528 | )
|Loss from transactions with
    stockholder recorded to additional paid in capital |  |   | 8,528  |  
|                                                                                   |  | $ | —      |  



Table of Contents-11-







NOTE 5 – STOCKHOLDERS’ EQUITY



On January 28, 2013, the Company issued a total
of 400,000 free trading shares of common stock under the 2011 Stock and Option Plan in connection with the conversion of accounts
payables for services provided in exchange of short-term liabilities accrued in prior years in the amount of $47,164.



On February 13, 2013 the Company engaged in
a financial public relations services agreement with Investor Communications Services (a division of A.I.D. Capital, LLC.). According
to the agreement 375,000 shares were issued for services to be provided in the six months period ending June 30, 2013 valued at
$15,000. The Company recorded stock based compensation in the amount of $15,000 for the three months ended March 31, 2013.



When preparing the financial statements for
the three months ended March 31, 2013, the Company discovered that the number of shares outstanding as of March 31, 2013 as disclosed
on the front cover and under Item 12 of the recently in the recently filed Form 10-K were incorrectly noted as 57,669,242; the
correct number is 57,479,928. This results in a very small changes in the percentages notes in the chart under Item 12: Gerald
Fialkov 14.54%; Shlomo Elimelech: 38.74%; Gai Mar-Chaim: 38.72%; and all directors and executive officers: 76.59%.



NOTE 6 – RELATED PARTY TRANSACTIONS



Balances and transactions between the Company
and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in
this note. Details of transactions between the Group and other related parties are disclosed below.



The following entities have been identified as related parties of
the Company as of March 31, 2013:





|1568934 Ontario Limited                       |  | Greater than 10% stockholder             
|--------------------------------------------- |  | -----------------------------------------
|Sam Elimelech                                 |  | Director and greater than 10% stockholder
|Eran Elimelech                                |  | Son of Sam Elimelech                     
|Gai Mar-Chaim                                 |  | Director and greater than 10% stockholder
|Meizam Arad Investments Ltd.                  |  | Wholly owned subsidiary                  
|Impact Active Team Ltd.                       |  | Israeli company with common director     
|TPDS Ltd.                                     |  | Israeli company with common director     
|Meizam - Advanced Enterprise Center Arad Ltd. |  | Israeli company with common director     
|Gaia Med Ltd.                                 |  | Israeli company with common director     
|P.O.C. Hi Tech Ltd.                           |  | Israeli company with common director     



The following transactions were carried out
with related parties:



|                                                         |  | For the six months ended June 30,
|-------------------------------------------------------- |  | ---------------------------------
|                                                         |  | 2013                             
|Income statements:                                       |  |                                  
|Directors’ remuneration                                  |  | $                                
|Stock based compensation                                 |  |                                  
|                                                         |  |                                  
|Balance sheets:                                          |  |                                  
|Related party receivable (payable) - P.O.C. Hi Tech Ltd. |  |                                  
|Long term payables – key management personnel (1)        |  |                                  
|Long term stockholder loans                              |  |                                  



(1)	The annual compensation to key management
personnel is $360,000 per year. During 2012 the Company recorded forgiveness of loans from key management personnel in the amount
of $512,982. The amount was recorded as an equity transaction.



Table of Contents-12-







NOTE 7 – SUBSEQUENT EVENTS



On July 15, 2013, the Company accepted the
resignation of Yarel + Partners, the independent registered public accounting firm who was previously engaged as the principal
accountant to audit the Company’s financial statements. The decision to accept this resignation was approved by the Company’s
Board of Directors.



Effective on August 5, 2013, the Company appointed
Fahn Kanne & Co. Grant Thornton (Israel), the Israeli member firm of Grant Thornton International Ltd., as the Company’s
new independent registered public accounting firm to audit the Company’s financial statements.



NOTE 8 – PRIOR PERIOD ADJUSTMENTS



During the preparation of its June 30, 2012, the Company
restated its financial statements for the three months ended March 31, 2012, to give retrospective effect to the elimination
of the extraordinary gain on forgiveness of debt that was recognized in the unaudited consolidated statements as of March 31
2012. As of the date of this report settlement of $185,309 of the debt to the Company’s local legal counsel has not yet
been closed, and the remaining $44,726 was reclassified to research and development expenses as follows:



|                                                       |  | As Previously Reported |          | Prior Period Adjustments |  | As Restated
|------------------------------------------------------ |  | ---------------------- | -------- | ------------------------ |  | -----------
|                                                       |  |                        |          |                          |  |            
|                                                       |  |                        |          |                          |  |            
|Extraordinary gain on forgiveness of debt              |  | $                      | (230,126 | )                        |  | $          
|                                                       |  |                        |          |                          |  |            
|Net loss                                               |  | $                      | 118,778  |                          |  | $          
|                                                       |  |                        |          |                          |  |            
|Net loss attributable to non-controlling interest      |  | $                      | 31,062   |                          |  | $          
|                                                       |  |                        |          |                          |  |            
|Net loss attributable to Andain, Inc. stockholders     |  | $                      | 87,716   |                          |  | $          
|                                                       |  |                        |          |                          |  |            
|Net loss per share (basic) attributable to Andain, Inc |  | $                      | 0.00     |                          |  | $          



Table of Contents-13-





ITEM 2. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.



The following management’s
discussion and analysis of financial condition and results of operations is based upon, and should be read in conjunction with,
the Company’s unaudited financial statements and related notes included elsewhere in this Form 10-Q, which have been prepared
in accordance with accounting principles generally accepted in the United States.



Overview.



(a)	General Discussion.



The Company invests
in commercialization of its technologies and products. The Company’s main efforts are to optimize development, engineering
for production, regulation, pre-clinical and clinical trials and market penetration, respectfully, to each of its products. The
Company is constantly working to enhance its products by new synergetic novel technologies keeping each of its products advantageous
in its market.



The Company’s technological
/ industrial accelerating incubator specializes in utilization of the industrial infrastructure of companies that it works with,
optimizing each product’s research and development and engineering development to the “best-in-the-market” product.



The Company’s team
of experts manages all technological, medical, regulatory and other aspects needed to insure timely development, and market presence
within the planed program and budget.



The Company operates five
product lines:



|· |  | Miniature insulin pump                         
|- |  | -----------------------------------------------
|· |  | Targeted drug delivery nano-particles          
|· |  | Stem cell therapy                              
|· |  | Ultasonic catheter for brain cancer therapy    
|· |  | Peptide booster for anti-wrinkle cosmeceuticals



Miniature Disposable Insulin Pump.



The Company is committed to develop a fully disposable
miniature insulin pump, suitable for diabetics type I and type II as well, without any government grant, saving the need to
pay future royalties. The Company’s main challenge was to achieve production cost capable of competing with the low
price of the insulin pen syringe injector for diabetes type II. The Company’s detailed market survey showed a
significant advantage of such a product in the market, providing the comfort of a “band aid” patch size product,
accurate as the expensive insulin pumps and preventing any hyper or hypo life threatening situations to the patient (stable
blood glucose level superior to the syringe use).



Table of Contents-14-







The Company’s team
developed successfully the technology of the Gemini, a fully disposable pump, and lab tested all regulatory aspects of the Gemini
pump, ready for the clinical trials initial production batch. During the first quarter of 2013, the Company’s team focused
on technology transfer for GMP/GLP production, and Helsinky approval for clinical trials.



The Company estimates that
the Gemini's efforts of development, regulatory affairs and manufacturing in order to complete the required clinical trials, will
require a budget of $750,000. In addition we estimate that $600,000 will be required to introduce the innovative pump to the market
and to large distributors.



Nano-particles Targeted Drug Delivery Technology.



The Company is also committed
to develop its nano-particle technology with the capacity to accommodate hydrophobic (repelling water based molecules), as well
as hydrophilic (attracting water based molecules) properties. These developments enable the Company to carry out GSK RELENZA (zanamivir)
drug for swine flu (H1N1) therapy. The Company’s lab results show very stable nano-particle with over a six months shelf
life capable of carrying hydrophobic and hydrophilic molecules with a high drug load, providing exceptional drug delivery efficiency.
During the first quarter of 2013, the Company’s team mapped all intellectual properties used in developing the multi-task
nano-particles to secure in its intellectual properties.



The Company estimates that
the additional development, regulatory affairs and manufacturing in order to complete all required clinical trials, will require
a budget of $1,100,000.



Stem Cell Therapy for Muscular Injuries.



The Company has completed
successful animal studies with positive results on limb therapy. The initial animal studies showed very promising rehabilitating
results. Based on these results, the Company has modified and accelerated its development program with two pillar technologies
with strong intellectual properties: (i) Direct a stem cell to a myogenic (muscle) cell without any spontaneous direction into
unhealthy cells such as cancer tumors; and (ii) mass produce the directed myogenic cells for patient treatment. As part of the
of the development phase, the Company has developed a “harvesting” procedure of human fat tissue from the patient as
a row material for extracting the stem cells, diverting and directing them to muscle cells, and reproducing them for an effective
treatment. Currently, the Company is developing the upscale production process for commercial use.



The Company estimates that
the additional development, regulatory affairs and manufacturing in order to complete all required pre-clinical trials, will require
a budget of $650,000.



(b)	Operations.





Insulin Pumps.



The Company separates its
Gemini pump development in any aspect from the development of its Gaia Med Diamond semi-disposable pump. The Company has successfully
managed to develop Gaia-Med’s technology and intellectual properties secured by patents, and develop new, separate intellectual
properties for the Gemini pump. During 2012 the Company further developed and enhanced the Gemini patents. Those enhancements will
be filed in second half of 2013. The Company’s development success of new and separate technology that is not based or relates
in any aspect on Gaia-Med’s technology precludes the Company and its technological industrial incubator from any royalties
payment for the Gemini product line. The Company and its technology incubator also continue developing the semi-disposable Gaia-Med
pump within its original program. Therefore, the Company intends to establish a new business unit to accommodate all assets and
operations of the Gemini pump as soon as this pump is ready for clinical trials batch production.



Table of Contents-15-







Nano-Particles.



The Company separates its
new development in any aspect from previous development performed in its former subsidiary TPDS Ltd.



The Company has successfully
managed to develop new technology and intellectual properties to be secured by new patents, for the multi-tasking nano-particles,
to be filed in after the completion of the Company's next financing round. The Company’s development success of new and separate
technology that is not based or relates in any aspect to TPDS’ technology precludes the Company and its technological industrial
incubator from any royalties payment for this product line. Currently, the Company and its incubator halted development of TPDS
technology, and now develop only its new technology. The Company will revisit the original TPDS development program during 2013,
according to the pre-clinical results of the new technology and product.



With the next financing
round the Company intends to establish a new business unit to accommodate all assets and operations of the new nano-particle technology
and development.



Stem Cell Therapy.



The Company intends to
establish a new business unit to accommodate all assets and operations of the new stem cell technology and development of the project
as soon as the clinical trials commence.



Results of Operations.



(a) 	Total Revenue.



The Company had total revenue of $30,872 for the three months
ended June 30, 2013 compared to $31,597 for the three months ended June 30, 2012, a decrease of $725 or approximately 2%. The
Company had total revenue of $63,767 for the six months ended June 30, 2013 compared to $76,246 for the six months ended June
30, 2012, a decrease of $12,479 or approximately 16%. The decrease in total revenue resulted primarily from decrease in consulting
revenue.



The Company had total revenue
of $1,312,089 for the period of June 23, 2004 (date of inception) through June 30, 2013.



Table of Contents-16-







(b) 	Research and development Expenses.



The Company had research
and development expenses of $463,332 for the three months ended June 30, 2013 compared to $65,376 for the three months ended June
30, 2012, an increase of $397,956 or approximately 608%. The Company had research and development expenses of $463,332 for the
six months ended June 30, 2013 compared to $352,576 for the six months ended June 30, 2012, an increase of $110,756 or approximately
31%. The increases in research and development expenses were mainly due to increase in technological consulting.



The Company had research
and development expenses of $854,619 for the period of June 23, 2004 (date of inception) through June 30, 2013.



(c) 	General and Administrative Expenses.



The Company had general
and administrative expenses of $97,143 for the three months ended June 30, 2013 compared to $35,923 for the three months ended
June 30, 2012, an increase of $61,220 or approximately 170%. The Company had general and administrative expenses of $247,593 for
the six months ended June 30, 2013 compared to $113,949 for the six months ended June 30, 2012, an increase of $133,644 or approximately
117%. The increases in general and administrative expenses were mainly due to increase in professional services.



The Company had general
and administrative expenses of $7,348,040 for the period of June 23, 2004 (date of inception) through June 30, 2013.



(d) 	Net Profit (Loss).



The Company had a net loss
of $549,612 for the three months ended June 30, 2013 compared to a net loss of $93,005 for the three months ended June 30, 2013,
an increase of $456,607 or approximately 491%. The Company had a net loss of $667,167 for the six months ended June 30, 2013 compared
to a net loss of $352,132 for the six months ended June 30, 2013, an increase of $315,035 or approximately 89%. The increases in
net loss is the result primarily from the Company’s corporate restructuring.



The Company had a net loss
of $7,221,690 for the period of June 23, 2004 (date of inception) through June 30, 2013.



Operating Activities.



Net cash used by operating
activities was $321,962 for the six months ended June 30, 2013 compared to net cash provided by operating activities of $12,291
for the six months ended June 30, 2012, a change of $334,883. This change was the result of the increase in the net loss.

Table of Contents-17-





The net cash used in operating activities was $338,331 for
the period of June 23, 2004 (date of inception) through June 30, 2013.



Investing Activities.



Net cash used in investing
activities was $0 for the six months ended June 30, 2013 compared to $0 for the six months ended June 30, 2013.



Net cash used in investing
activities was $552,949 for the period of June 23, 2004 (date of inception) through June 30, 2013.



Liquidity and Capital Resources.



As of June 30, 2013, the
Company had total current assets of $109,017 and total current liabilities of $297,146 resulting in a working capital deficit of
$188,129. The cash and cash equivalents was $0 as of June 30, 2013 compared to $0 as of December 31, 2012.



The
net cash provided by financing activities was $312,442 for the six months endedJune 30, 2013 compared
to net cash provided by financing activities of $0 for the six months endedJune 30, 2012.This
increase is attributed to share issuance for cash and loans from key management in the six months ended June 30, 2013.Net
cash provided by financing activities was $880,837 for the period of inception of June 23, 2004 (date of inception) through June
30, 2013.



The Company’s current
cash and cash equivalents balance will not be sufficient to fund its operations for the next 12 months. The Company’s ability
to continue as a going concern on a longer-term basis will be dependent upon its ability to generate sufficient cash flow from
operations to meet its obligations on a timely basis, and to obtain additional financing, and ultimately attain profitability.
The Company’s continued operations, as well as the implementation of the Company’s business plan will depend upon its
ability to raise additional funds through bank borrowings and equity or debt financing.



Whereas the Company has
been successful in the past in raising capital, no assurance can be given that these sources of financing will continue to be available
to it and/or that demand for the Company’s common stock will be sufficient to meet its capital needs, or that financing will
be available on terms favorable to the Company. If funding is insufficient at any time in the future, the Company may not be able
to take advantage of business opportunities or respond to competitive pressures, or may be required to reduce the scope of the
Company’s planned product development and marketing efforts, any of which could have a negative impact on its business and
operating results. In addition, insufficient funding may have a material adverse effect on the Company’s financial condition,
which could require it to:



|· |  | curtail operations significantly;                                                                                                                                
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|· |  | sell significant assets;                                                                                                                                         
|· |  | seek arrangements with strategic partners or other parties that may require the Company to relinquish significant rights to products, technologies or markets; or
|· |  | explore other strategic alternatives including a merger or sale of the Company.                                                                                  



Table of Contents-18-







To the extent that the
Company raises additional capital through the sale of equity or convertible debt securities, the issuance of such securities may
result in dilution to the Company’s existing stockholders. If additional funds are raised through the issuance of debt securities,
these securities may have rights, preferences and privileges senior to holders of common stock and the terms of such debt could
impose restrictions on the Company’s operations. Regardless of whether the Company’s cash assets prove to be inadequate
to meet its operational needs, the Company may seek to compensate providers of services by issuance of stock in lieu of cash, which
may also result in dilution to the Company’s existing stockholders.



Inflation.



The impact of inflation
on the Company’s costs and the ability to pass on cost increases to its customers over time is dependent upon market conditions.
The Company is not aware of any inflationary pressures that have had any significant impact on its operations over the past quarter
and the Company does not anticipate that inflationary factors will have a significant impact on future operations.



Off-Balance Sheet Arrangements.



The Company does not maintain off-balance sheet
arrangements nor does it participate in non-exchange traded contracts requiring fair value accounting treatment.



Critical Accounting Policies.



The
SEC has issued Financial Reporting Release No. 60, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies”
(“FRR 60”), suggesting companies provide additional disclosure and commentary on their most critical accounting policies.
In FRR 60, the Commission has defined the most critical accounting policies as the ones that are most important to the portrayal
of a company’s financial condition and operating results, and require management to make its most difficult and subjective
judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition,
the Company’s most critical accounting policies include: (a) use of estimates; (b) impairment of long-lived assets;
and (c) share-based compensation. The methods, estimates and judgments the Company uses in applying
these most critical accounting policies have a significant impact on the results the Company reports in its financial statements.



(a)	Use of Estimates.



The preparation of financial
statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosure of contingent assets and liabilities. On an on-going
basis, the Company evaluates these estimates, including those related to revenue recognition and concentration of credit risk.
The Company bases its estimates on historical experience and on various other assumptions that is believed 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 sources. Actual results may differ from these estimates under different assumptions or
conditions.



Table of Contents-19-







(b)	Impairment Long-Lived Assets.



For purposes of recognition
and measurement of an impairment loss, a long-lived asset or assets are grouped with other assets and liabilities at the lowest
level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Company
assesses the impairment of long-lived assets (including identifiable intangible assets) annually or whenever events or changes
in circumstances indicate that the carrying value may not be recoverable.



When management determines that the carrying
value of long-lived assets may not be recoverable based upon the existence of one or more of the above indicators of impairment,
we test for any impairment based on a projected undiscounted cash flow method. Projected future operating results and cash flows
of the asset or asset group are used to establish the fair value used in evaluating the carrying value of long-lived and intangible
assets. The Company estimates the future cash flows of the long-lived assets using current and long-term financial forecasts. The
carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result
from the use and eventual disposition of the asset. If this were the case, an impairment loss would be recognized. The impairment
loss recognized is the amount by which the carrying amount exceeds the fair value.



(c)	Revenue Recognition.



The Company recognizes
revenue when all four recognition criteria have been met: persuasive evidence of an arrangement exists, delivery has occurred or
services have been rendered, seller’s price to buyer is fixed or determinable, and collectability is reasonably assured.



(d)	Share-Based Compensation.



The Company follows ASC
Topic 718-10, “Stock Compensation,” which addresses accounting for transactions in which an entity exchanges its equity
instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based
payment transactions. Topic 718-10 requires measurement of the cost of employee services received in exchange for an award of equity
instruments based on the grant-date fair value of the award. Upon the adoption of Topic ASC 718-10, the Company maintained
its method of valuation for stock option awards using the Black-Scholes valuation model, which has historically been used for the
purpose of providing pro-forma financial disclosures in accordance with Topic ASC 718-10.



Table of Contents-20-





The use of the Black-Scholes
valuation model to estimate the fair value of stock option awards requires the Company to make judgments and assumptions regarding
the risk-free interest rate, expected dividend yield, expected term and expected volatility over the expected term of the award. The
assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these
estimates involve inherent uncertainties and the actual amount of expense could be materially different in the future.



Compensation expense is
only recognized on awards that ultimately vest.



Forward Looking Statements.



Information
in this Form 10-Q contains “forward looking statements” within the meaning of Rule 175 of the Securities Act of 1933,
as amended, and Rule 3b-6 of the Securities Act of 1934, as amended. When used in this Form 10-Q, the words “expects,”
“anticipates,” “believes,” “plans,” “will” and similar expressions are intended
to identify forward-looking statements. These are statements that relate to future periods and include, but are not limited to,
statements regarding the adequacy of cash, expectations regarding net losses and cash flow, statements regarding growth, the need
for future financing, dependence on personnel, and operating expenses.



Forward-looking
statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected.
These forward-looking statements speak only as of the date hereof. The Company expressly disclaims any obligation or undertaking
to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations
with regard thereto or any change in events, conditions or circumstances on which any such statement is based.



ITEM 3. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Not applicable.



ITEM 4. CONTROLS AND PROCEDURES.



Evaluation of Disclosure Controls and Procedures.



The Company maintains disclosure
controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) that are designed to ensure that
information required to be disclosed in its periodic reports filed under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated
to management, including the principal executive officer/principal financial officer, to allow timely decisions regarding required
disclosure.



As of the end of the period covered by this report, the Company’s
management carried out an evaluation, under the supervision and with the participation of the principal executive officer/principal
financial officer, of disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act).
Based upon the evaluation, the principal executive officer/principal financial officer concluded that the Company’s disclosure
controls and procedures were effective at a reasonable assurance level to ensure that information required to be disclosed by
it in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the SEC’s rules and forms. In addition, the principal executive officer/principal financial
officer concluded that the Company’s disclosure controls and procedures were effective at a reasonable assurance level to
ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated
and communicated to the Company’s management, including the principal executive officer/principal financial officer, to
allow timely decisions regarding required disclosure.



Table of Contents-21-







Inherent Limitations of Control Systems.



Because of the inherent
limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances
of fraud, if any, will be or have been detected. These inherent limitations include the realities that judgments in decision-making
can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by
the individual acts of some persons, by collusion of two or more people, and/or by management override of the control. The design
of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls
may become inadequate because of changes in conditions, and/or the degree of compliance with the policies and procedures may deteriorate.
Because of the inherent limitations in a cost-effective internal control system, misstatements due to error or fraud may occur
and not be detected.



Changes in Internal Control Over Financial
Reporting.



There have not been any
changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) during the three months ended June 30, 2013 that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial reporting.



PART II – OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS.



From time to time, the
Company may become party to litigation or other legal proceedings that the Company considers to be a part of the ordinary course
of the business. There are no material legal proceedings to report, except as outlined in the last Form 10-K. There are no changes
to those legal proceedings as reported in that Form 10-K.



ITEM 1A. RISK FACTORS.



There have been no material
changes in the risk factors as previously disclosed in response to Item 1A.of Part I of the Company’s latest Form 10-K.



Table of Contents-22-







ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.



There were no unregistered
sales of the Company’s equity securities during the three months ended June 30, 2013 that were not previously reported by
the Company.



There were no purchases
of the Company’s common stock by the Company or its affiliates during the three months ended June 30, 2013.



ITEM 3. DEFAULTS UPON SENIOR SECURITIES.



Not applicable.



ITEM 4. MINE SAFETY DISCLOSURES.



Not applicable.



ITEM 5. OTHER INFORMATION.



Subsequent Events.



On July 15, 2013, the Company
accepted the resignation of Yarel + Partners, the independent registered public accounting firm who was previously engaged as the
principal accountant to audit the Company’s financial statements. The decision to accept this resignation was approved by
the Company’s Board of Directors.



Effective on August 5,
2013, the Company appointed Fahn Kanne & Co. Grant Thornton (Israel), the Israeli member firm of Grant Thornton International
Ltd., as the Company’s new independent registered public accounting firm to audit the Company’s financial statements.



ITEM 6. EXHIBITS.



Exhibits included or incorporated
by reference herein are set forth in the Exhibit Index.

Table of Contents-23-





EXHIBIT INDEX



|Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1    |  | Articles of Incorporation, dated July 14, 2004 (incorporated by reference to Exhibit 3.1 of the Form 10-SB filed on March 24, 2005).                                                                                                                                                                                                                                                                                                                                                         
|3.2    |  | Bylaws, dated August 1, 2004 (incorporated by reference to Exhibit 3.2 of the Form 10-SB filed on March 24, 2005).                                                                                                                                                                                                                                                                                                                                                                           
|4.1    |  | Option
issued to 1568934 Ontario Limited by the Company, dated January 14, 2011 (incorporated by reference
to Exhibit 10.6 of the Form 8-K filed on March 29, 2011).                                                                                                                                                                                                                                                                                                                         
|4.2    |  | Employee Stock Option Plan, dated January 15, 2011 (incorporated by reference to Exhibit 4.2 of the Form 10-Q filed on November 21, 2011).                                                                                                                                                                                                                                                                                                                                                   
|4.3    |  | Stock Option Grant to Sam Elimelech, dated January 20, 2011 (incorporated by reference to Exhibit 4.3 of the Form 10-Q filed on November 21, 2011).                                                                                                                                                                                                                                                                                                                                          
|4.4    |  | Stock Option Grant to Gai Mar-Chaim, dated January 20, 2011 (incorporated by reference to Exhibit 4.4 of the Form 10-Q filed on November 21, 2011).                                                                                                                                                                                                                                                                                                                                          
|4.5    |  | 2011 Stock and Option Plan, dated July 26, 2011 (incorporated by reference to Exhibit 4 of the Form S-8 filed on July 26, 2011).                                                                                                                                                                                                                                                                                                                                                             
|10.1   |  | Affiliation
Agreement between the Impact Active Team Ltd. and P.O.C. High-Tech (1992) Ltd. Corporation,
dated June 23, 2004 (incorporated by reference to Exhibit 10.8 of the Form SB-2 filed on February 13, 2007).                                                                                                                                                                                                                                                                         
|10.2   |  | Consulting Agreement between the Company and Dr. Leonid Lurya, dated May 16, 2006 (incorporated by reference to Exhibit 10.2 of the Form 10-K filed on December 30, 2010).                                                                                                                                                                                                                                                                                                                   
|10.3   |  | Share Purchase Agreement between the Company and Pangea Investments GmbH, dated June 11, 2006 (not including Schedule 1, Disclosure Schedule) (incorporated by reference to Exhibit 10.1 of the Form 8-K filed on July 5, 2006).                                                                                                                                                                                                                                                             
|10.4   |  | Technology
Purchase Agreement between the Company and Pangea Investments GmbH, dated June 11, 2006 (incorporated by reference to Exhibit
10.2 of the Form 8-K filed on July 5, 2006).                                                                                                                                                                                                                                                                                                        
|10.5   |  | Finder’s
Fee Agreement between the Company and Pangea Investments GmbH, dated June 11, 2006 (incorporated by reference to Exhibit 10.5
of the Form 8-K filed on July 5, 2006).                                                                                                                                                                                                                                                                                                               
|10.6   |  | Consulting Agreement between the Company and
                                                                                                                                                         Pangea Investments GmbH, dated July 3, 2006 (incorporated by reference to Exhibit 10.3 of the Form 8-K filed on July 5,
                                                                                                                                                         2006).
|10.7   |  | Business
Development Services Agreement between the Company and Pangea Investments GmbH, dated July 3, 2006 (incorporated by reference
to Exhibit 10.4 of the Form 8-K filed on July 5, 2006).                                                                                                                                                                                                                                                                                               
|10.8   |  | Employment Agreement between the Company and Sam
                                                                                                                                                         Elimelech, dated July 3, 2006 (incorporated by reference to Exhibit 10.6 of the Form 8-K filed on July 5, 2006).                                                                                                                                                                   
|10.9   |  | Employment Agreement between the Company and Gai Mar-Chaim, dated July 3, 2006 (incorporated by reference to Exhibit 10.7 of the Form 8-K filed on July 5, 2006).                                                                                                                                                                                                                                                                                                                            
|10.10  |  | Regulation
S Stock Purchase Agreement between the Company and 1568934 Ontario Limited, dated July 19,
2006 (incorporated by reference to Exhibit 10.11 of the Form 10-K/A filed on February 7, 2011).                                                                                                                                                                                                                                                                                        



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|10.11 |  | Consulting
Agreement between the Company and Meizam - Advanced Enterprise Center Arad Ltd., dated October 25, 2006 (incorporated by reference
to Exhibit 10.10 of the Form 10-K filed on December 30, 2010).                                                                                                                                                                                                                                                
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.12 |  | Employment Agreement between the Company and Sam Elimelech, dated January 1, 2011 (incorporated by reference to Exhibit 10.1 of the Form 8-K filed on March 29, 2011).                                                                                                                                                                                                                                                                                      
|10.13 |  | Employment Agreement between the Company and Gai Mar-Chaim, dated January 1, 2011 (incorporated by reference to Exhibit 10.2 of the Form 8-K filed on March 29, 2011).                                                                                                                                                                                                                                                                                      
|10.14 |  | Regulation
S Stock Purchase Agreement between the Company and Sam Elimelech, dated January 5, 2011 (incorporated
by reference to Exhibit 10.3 of the Form 8-K filed on March 29, 2011).                                                                                                                                                                                                                                                                     
|10.15 |  | Regulation
S Stock Purchase Agreement between the Company and Gai Mar-Chaim, dated January 5, 2011 (incorporated
by reference to Exhibit 10.4 of the Form 8-K filed on March 29, 2011).                                                                                                                                                                                                                                                                     
|10.16 |  | Regulation
S Stock Purchase Agreement between the Company and 1568934 Ontario Limited, dated January 14, 2011(incorporated by reference to Exhibit 10.5 of the Form 8-K filed on March 29, 2011).                                                                                                                                                                                                                                                           
|10.17 |  | Stock
Purchase Agreement between the Company and Meizam Arad Investments Ltd., dated January 31, 2011
(incorporated by reference to Exhibit 10.7 of the Form 8-K filed on March 29, 2011).                                                                                                                                                                                                                                                                  
|10.18 |  | Stock Purchase Agreement between Meizam –
                                                                                                                 Advanced Enterprise Center Arad Ltd and Meizam Arad Investments Ltd., dated January 31, 2011(incorporated by
                                                                                                                 reference to Exhibit 10.8 of the Form 8-K filed on March 29, 2011).
|10.19 |  | Regulation
S Stock Purchase Agreement between the Company and 1568934 Ontario Limited, dated May 24, 2011
(incorporated by reference to Exhibit 10 of the Form 8-K filed on July 19, 2011) (excluding Schedules 2.4, 2.7, and 2.10).                                                                                                                                                                                                                        
|10.20 |  | Regulation
S Stock Purchase Agreement between the Company and 1568934 Ontario Limited, dated July 29, 2011
(incorporated by reference to Exhibit 10 of the Form 8-K filed on August 16, 2011) (excluding Schedules 2.4, 2.7, and 2.10).                                                                                                                                                                                                                     
|10.21 |  | Regulation
S Stock Purchase Agreement between the Company and 1568934 Ontario Limited, dated December 26, 2011(incorporated by reference to Exhibit 10 of the Form 8-K filed on February 6, 2012) (including Schedule 1.4 (Option to
Purchase Shares of Common Stock) and Schedule 2.4 (Litigation); excluding Schedule 2.7).                                                                                                                               
|10.22 |  | Corporate
Office Services Agreement between the Company and 1568934 Ontario Limited, dated January 5, 2012
(incorporated by reference to Exhibit 10.22 of the Form 10-Q filed on August 29, 2012).                                                                                                                                                                                                                                                          
|10.23 |  | Regulation
S Stock Purchase Agreement between the Company and Eran Elimelech, dated July 29, 2012 (incorporated
by reference to Exhibit 10.23 of the Form 10-Q filed on August 29, 2012).                                                                                                                                                                                                                                                                   
|10.24 |  | Regulation
S Stock Purchase Agreement between the Company and Sam Elimelech, dated July 29, 2012 ((incorporated
by reference to Exhibit 10.24 of the Form 10-Q filed on November 19, 2012).                                                                                                                                                                                                                                                                 
|10.25 |  | Regulation
S Stock Purchase Agreement between the Company and Gai Mar-Chaim, dated July 29, 2012 ((incorporated
by reference to Exhibit 10.25 of the Form 10-Q filed on November 19, 2012).                                                                                                                                                                                                                                                                 
|10.26 |  | Acquisition Agreement between Meizam – Advanced Enterprise Center Arad Ltd. and Meizam Arad Investments Ltd. (Gaia Med Ltd.), dated May 15, 2013 (incorporated by reference to Exhibit 10.26 of the Form 10-Q filed on May 20, 2013).                                                                                                                                                                                                                       



Table of Contents-25-







|10.27 |  | Acquisition Agreement between Meizam – Advanced Enterprise Center Arad Ltd. and Meizam Arad Investments Ltd. (TPDS Ltd.), dated May 15, 2013 (incorporated by reference to Exhibit 10.27 of the Form 10-Q filed on May 20, 2013).                                    
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.28 |  | Acquisition Agreement between Meizam – Advanced Enterprise Center Arad Ltd. and the Company (TPDS Ltd.), dated May 15, 2013 (incorporated by reference to Exhibit 10.28 of the Form 10-Q filed on May 20, 2013).                                                     
|10.29 |  | Acquisition
Agreement between Meizam – Advanced Enterprise Center Arad Ltd. and the Company (Impact Active
Team Ltd.), dated May 15, 2013 (incorporated by reference to Exhibit 10.29 of the Form 10-Q filed on May 20, 2013).                                       
|10.30 |  | Acquisition
Agreement between Sam Shlomo Elimelech and the Company (Meizam – Advanced Enterprise Center Arad
Ltd.), dated May 15, 2013 (incorporated by reference to Exhibit 10.30 of the Form 10-Q filed on May 20, 2013).                                          
|10.31 |  | Acquisition
Agreement between the Company and Gai Mar-Chaim (Meizam Arad Investments Ltd.), dated May 15,
2013 (incorporated by reference to Exhibit 10.31 of the Form 10-Q filed on May 20, 2013).                                                                  
|10.32 |  | Acquisition
Agreement between the Company and Sam Shlomo Elimelech (Meizam Arad Investments Ltd.), dated
May 15, 2013 (incorporated by reference to Exhibit 10.32 of the Form 10-Q filed on May 20, 2013).                                                           
|10.33 |  | Acquisition
Agreement between Sam Shlomo Elimelech and Meizam Arad Investments Ltd. (Meizam – Advanced Enterprise
Center Arad Ltd.), dated May 15, 2013 (incorporated by reference to Exhibit 10.33 of the Form 10-Q filed on May 20, 2013).                         
|10.34 |  | Regulation
S Stock Purchase Agreement between the Company and 1568934 Ontario Limited, dated April 10, 2013
(including Schedule 1.3 (Option to Purchase of Shares of Common Stock)) (incorporated by reference to Exhibit 10 of the Form 8-K
filed on June 21, 2013).
|16.1  |  | Letter on Change in Certifying Accountant (incorporated by reference to Exhibit 16 of the Form 8-K filed on January 5, 2006).                                                                                                                                        
|16.2  |  | Letter on Change in Certifying Accountant (incorporated by reference to Exhibit 16 of the Form 8-K filed on November 5, 2010).                                                                                                                                       
|16.3  |  | Letter on Change in Certifying Accountant (incorporated by reference to Exhibit 16 of the Form 8-K filed on July 24, 2012).                                                                                                                                          
|16.4  |  | Letter on Change in Certifying Accountant (incorporated by reference to Exhibit 16 of the Form 8-K/A filed on August 13, 2013).                                                                                                                                      
|21    |  | Subsidiaries of the Company (filed herewith).                                                                                                                                                                                                                        
|23.1  |  | Consent of Dov Weinstein & Co. C.P.A. (Isr) (incorporated by reference to Exhibit 23.1 of the Form 10-K filed on May 13, 2013).                                                                                                                                      
|23.2  |  | Consent of Yarel + Partners, CPA (incorporated by reference to Exhibit 23.2 of the Form 10-K filed on May 13, 2013).                                                                                                                                                 
|31.1  |  | Rule 13a-14(a)/15d-14(a) Certification of Sam Shlomo Elimelech (filed herewith).                                                                                                                                                                                     
|31.2  |  | Rule 13a-14(a)/15d-14(a) Certification of Gai Mar-Chaim (filed herewith).                                                                                                                                                                                            
|32    |  | Section 1350 Certification of Sam Shlomo Elimelech and Gai Mar-Chaim (filed herewith).                                                                                                                                                                               





Table of Contents-26-





SIGNATURE



Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.





|       |                 |  | Andain, Inc.
|------ | --------------- |  | ------------
|       |                 |  |             
|Dated: | August 19, 2013 |  | By:         
|       |                 |  |             
|       |                 |  |             











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