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UNITED STATESSECURITIES AND EXCHANGE
COMMISSIONWashington, D.C. 20549

FORM 10-QSB

(Mark One)
x QUARTERLY REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the
Quarterly Period Ended March 31, 2007

oTRANSITION REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the
Transition Period from _________ to _________

Commission
file number: 0-32835

GAMMACAN
INTERNATIONAL, INC.(Exact name of
registrant as specified in its charter)

|                                                                |  |                                    
|--------------------------------------------------------------- |  | -----------------------------------
|Delaware                                                        |  | 33-0956433                         
|(State
  or other jurisdiction ofincorporation or organization) |  | (IRS
  Employer Identification No.)

Kiryat Ono
Mall
Azorim Center A
39 Jerusalem st., 
55423 Kiryat Ono, Israel(Address of principal
executive offices)

+ 972 3
7382616(Registrants
telephone number, including area code)

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

Indicate by check mark
whether the registrant: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days.     Yesx
Noo

Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).     Yeso
Nox

APPLICABLE
ONLY TO CORPORATE ISSUERS:

State the number of shares
outstanding of each of the registrants classes of common equity, as of the
latest practicable date:  44,875,164
shares issued and outstanding as of May 7, 2007.

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GAMMACAN INTERNATIONAL, INC.

FORM 10-QSB

TABLE OF CONTENTS

|                                                                       |   
|---------------------------------------------------------------------- | --
|PART I                                                                 | 1 
|ITEM 1 - FINANCIAL
STATEMENTS                                          | 1 
|ITEM 2 - MANAGEMENTS DISCUSSION
AND
  ANALYSIS OF PLAN OF OPERATION   | 18
|ITEM 3 - CONTROLS AND
PROCEDURES                                       | 27
|PART II                                                                | 28
|ITEM 1 - LEGAL
PROCEEDINGS                                             | 28
|ITEM 2 - UNREGISTERED SALES OF
EQUITY
  SECURITIES AND USE OF PROCEEDS | 28
|ITEM 3 - DEFAULTS UPON SENIOR
SECURITIES                               | 28
|ITEM 4 - SUBMISSION OF MATTERS
TO A VOTE OF
  SECURITY HOLDERS         | 28
|ITEM 5 - OTHER
INFORMATION                                             | 28
|ITEM 6 - EXHIBITS                                                      | 29

Forward Looking Statements

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

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PART I

ITEM 1 - FINANCIAL STATEMENTS

GAMMACAN INTERNATIONAL INC.(A Development Stage
Company)INTERIM
FINANCIAL STATEMENTS
AS OF MARCH 31, 2007

TABLE OF CONTENTS

|                                               |     
|---------------------------------------------- | ----
|                                               | Page
|CONDENSED
  CONSOLIDATED FINANCIAL STATEMENTS: |     
|Balance sheets                                 | 2   
|Statements of
operations                       | 3   
|Statements of changes in
stockholders equity  | 4   
|Statements of cash
flows                       | 5   
|Notes to financial
statements                  | 6-17

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1

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GAMMACAN INTERNATIONAL INC.(A Development Stage Company)

CONDENSED CONSOLIDATED BALANCE SHEETS
(US $, except share data)

|                                                                                                                                                                                       |  |             |            |                 |   |            |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | ---------- | --------------- | - | ---------- | -
|                                                                                                                                                                                       |  | March 31,   |            | September
  30, |  
|                                                                                                                                                                                       |  | 2007        |            | 2006            |  
|                                                                                                                                                                                       |  |             |            |                 |  
|                                                                                                                                                                                       |  | (Unaudited) |            | (Audited)       |  
|                                                                                                                                                                                       |  |             |            |                 |  
|A s s e t s                                                                                                                                                                            |  |             |            |                 |   |            |  
|CURRENT ASSETS:                                                                                                                                                                        |  |             |            |                 |   |            |  
|Cash and cash equivalents                                                                                                                                                              |  | $           | 1,463,098  |                 | $ | 538,738    |  
|Short term investments                                                                                                                                                                 |  |             | 4,300,000  |                 |   |           |  
|Prepaid expenses                                                                                                                                                                       |  |             | 22,500     |                 |   |           |  
|Other                                                                                                                                                                                  |  |             | 51,640     |                 |   | 12,494     |  
|                                                                                                                                                                                       |  |             |            |                 |   |            |  
|Total
    current assets                                                                                                                                                               |  |             | 5,837,238  |                 |   | 551,232    |  
|                                                                                                                                                                                       |  |             |            |                 |   |            |  
|                                                                                                                                                                                       |  |             |            |                 |   |            |  
|FUNDS IN RESPECT OF EMPLOYEE RIGHTS UPON
  RETIREMENT                                                                                                                                  |  |             | 33,390     |                 |   | 21,071     |  
|                                                                                                                                                                                       |  |             |            |                 |   |            |  
|LONG TERM DEPOSITS                                                                                                                                                                     |  |             | 20,326     |                 |   | 22,270     |  
|                                                                                                                                                                                       |  |             |            |                 |   |            |  
|PROPERTY AND EQUIPMENT, NET                                                                                                                                                            |  |             | 23,949     |                 |   | 25,247     |  
|                                                                                                                                                                                       |  |             |            |                 |   |            |  
|Total assets                                                                                                                                                                           |  | $           | 5,914,903  |                 | $ | 619,820    |  
|                                                                                                                                                                                       |  |             |            |                 |   |            |  
|                                                                                                                                                                                       |  |             |            |                 |   |            |  
|Liabilities and stockholders
equity                                                                                                                                                   |  |             |            |                 |   |            |  
|CURRENT LIABILITIES:                                                                                                                                                                   |  |             |            |                 |   |            |  
|Accounts payable                                                                                                                                                                       |  | $           | 441,794    |                 | $ | 279,857    |  
|Convertible promissory note                                                                                                                                                            |  |             | 359,431    |                 |   |           |  
|Payroll and related accruals                                                                                                                                                           |  |             | 71,117     |                 |   | 49,242     |  
|                                                                                                                                                                                       |  |             |            |                 |   |            |  
|Total
    current liabilities                                                                                                                                                          |  |             | 872,342    |                 |   | 329,099    |  
|                                                                                                                                                                                       |  |             |            |                 |   |            |  
|                                                                                                                                                                                       |  |             |            |                 |   |            |  
|LIABILITY FOR EMPLOYEE RIGHTS UPON
  RETIREMENT                                                                                                                                        |  |             | 45,924     |                 |   | 31,531     |  
|                                                                                                                                                                                       |  |             |            |                 |   |            |  
|                                                                                                                                                                                       |  |             |            |                 |   |            |  
|STOCKHOLDERS EQUITY:                                                                                                                                                                  |  |             |            |                 |   |            |  
|Preferred stock, $0.0001 par value
  (20,000,000 shares authorized; none issued and outstanding)                                                                                       |  |             |            |                 |   |            |  
|Common stock, $0.0001 par value
  (100,000,000 authorized shares; 44,789,448 and 28,453,732 shares issued and
  outstanding as of March 31, 2007 and September 30, 2006, respectively) |  |             | 4,479      |                 |   | 2,845      |  
|Additional paid-in capital                                                                                                                                                             |  |             | 7,686,826  |                 |   | 3,172,284  |  
|Warrants                                                                                                                                                                               |  |             | 3,203,600  |                 |   | 861,474    |  
|Deficit accumulated during the development
  stage                                                                                                                                     |  |             | (5,898,268 | )               |   | (3,777,413 | )
|                                                                                                                                                                                       |  |             |            |                 |   |            |  
|Total
    stockholders equity                                                                                                                                                         |  |             | 4,996,637  |                 |   | 259,190    |  
|                                                                                                                                                                                       |  |             |            |                 |   |            |  
|Total
    liabilities and stockholders
equity                                                                                                                                         |  | $           | 5,914,903  |                 | $ | 619,820    |  
|                                                                                                                                                                                       |  |             |            |                 |   |            |  

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

2

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GAMMACAN INTERNATIONAL INC.(A Development Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(US $, except share data)

|                                                                                                     |  |                             |            |                               |   |                                                   |   |             |            |             |   |            |   |   |            |  
|---------------------------------------------------------------------------------------------------- |  | --------------------------- | ---------- | ----------------------------- | - | ------------------------------------------------- | - | ----------- | ---------- | ----------- | - | ---------- | - | - | ---------- | -
|                                                                                                     |  | Six months ended
  March 31 |            | Three months ended
  March 31 |   | Period fromOctober 6, 1998*
  through
  March 31, |  
|                                                                                                     |  |                             |            |                               |   |                                                   |  
|                                                                                                     |  | 2007                        |            | 2006                          |   | 2007                                              |   | 2006        |            | 2007        |  
|                                                                                                     |  |                             |            |                               |   |                                                   |   |             |            |             |  
|                                                                                                     |  | (Unaudited)                 |            | (Unaudited)                   |   | (Unaudited)                                       |   | (Unaudited) |            | (Unaudited) |  
|                                                                                                     |  |                             |            |                               |   |                                                   |   |             |            |             |  
|                                                                                                     |  |                             |            |                               |   |                                                   |   |             |            |             |   |            |   |   |            |  
|RESEARCH AND DEVELOPMENT COSTS                                                                       |  | $                           | 482,870    |                               | $ | 599,543                                           |   | $           | 314,898    |             | $ | 374,382    |   | $ | 1,998,044  |  
|GENERAL AND ADMINISTRATIVE EXPENSES                                                                  |  |                             | 1,631,800  |                               |   | 455,188                                           |   |             | 998,934    |             |   | 242,413    |   |   | 3,920,511  |  
|                                                                                                     |  |                             |            |                               |   |                                                   |   |             |            |             |   |            |   |   |            |  
|OPERATING LOSS                                                                                       |  |                             | 2,114,670  |                               |   | 1,054,731                                         |   |             | 1,313,832  |             |   | 616,795    |   |   | 5,918,555  |  
|FINANCIAL INCOME                                                                                     |  |                             | (32,138    | )                             |   | (23,787                                           | ) |             | (27,311    | )           |   | (15,729    | ) |   | (96,971    | )
|FINANCIAL EXPENSES                                                                                   |  |                             | 21,467     |                               |   | 6,699                                             |   |             | 14,421     |             |   | 3,663      |   |   | 43,581     |  
|                                                                                                     |  |                             |            |                               |   |                                                   |   |             |            |             |   |            |   |   |            |  
|LOSS BEFORE TAXES ON INCOME                                                                          |  |                             | 2,103,999  |                               |   | 1,037,643                                         |   |             | 1,300,942  |             |   | 604,729    |   |   | 5,865,165  |  
|TAXES ON INCOME                                                                                      |  |                             | 16,856     |                               |   |                                                  |   |             | 12,500     |             |   |           |   |   | 45,478     |  
|                                                                                                     |  |                             |            |                               |   |                                                   |   |             |            |             |   |            |   |   |            |  
|LOSS FROM OPERATIONS OF THE COMPANY AND ITS
  CONSOLIDATED SUBSIDIARY                                |  |                             | 2,120,855  |                               |   | 1,037,643                                         |   |             | 1,313,442  |             |   | 604,729    |   |   | 5,910,643  |  
|MINORITY INTERESTS IN LOSSES OF SUBSIDIARY                                                           |  |                             |           |                               |   |                                                  |   |             |           |             |   |           |   |   | (12,375    | )
|                                                                                                     |  |                             |            |                               |   |                                                   |   |             |            |             |   |            |   |   |            |  
|NET LOSS FOR THE PERIOD                                                                              |  | $                           | (2,120,855 | )                             | $ | (1,037,643                                        | ) | $           | (1,313,442 | )           | $ | (604,729   | ) | $ | (5,898,268 | )
|                                                                                                     |  |                             |            |                               |   |                                                   |   |             |            |             |   |            |   |   |            |  
|BASIC AND DILUTED LOSS PER COMMON SHARE                                                              |  | $                           | (0.068     | )                             | $ | (0.038                                            | ) | $           | (0.039     | )           | $ | (0.021     | ) |   |            |  
|                                                                                                     |  |                             |            |                               |   |                                                   |   |             |            |             |   |            |   |   |            |  
|WEIGHTED AVERAGE NUMBER OF COMMON SHARES
  USED IN COMPUTING BASIC AND DILUTED LOSS PER COMMON SHARE |  |                             | 31,204,923 |                               |   | 27,650,399                                        |   |             | 33,913,257 |             |   | 28,453,732 |   |   |            |  
|                                                                                                     |  |                             |            |                               |   |                                                   |   |             |            |             |   |            |   |   |            |  

* Incorporation date, see note 1a.

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

3

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GAMMACAN INTERNATIONAL INC. AND SUBSIDIARY(A Development Stage
Company)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS EQUITY 
(US $, except share data)

|                                                                                                         |  |                    |             |                         |   |          |   |                                |           |                                                      |   |           |   |   |            |   |   |            |  
|-------------------------------------------------------------------------------------------------------- |  | ------------------ | ----------- | ----------------------- | - | -------- | - | ------------------------------ | --------- | ---------------------------------------------------- | - | --------- | - | - | ---------- | - | - | ---------- | -
|                                                                                                         |  | Number of
  Shares |             | Common
  Stock
  Amount |   | Warrants |   | Additional
  paid-in
  capital |           | Deficit
  accumulated
  during
  development
  stage |   | Total     |  
|                                                                                                         |  |                    |             |                         |   |          |   |                                |           |                                                      |   |           |  
|Changes during the period from October 6, 1998 (date
  of incorporation) to September 30, 2004 (audited) |  |                    |             |                         |   |          |   |                                |           |                                                      |   |           |   |   |            |   |   |            |  
|Common stock and warrants issued for cash                                                                |  |                    | 57,506,498  |                         | $ | 5,750    |   | $                              | 139,494   |                                                      | $ | 782,141   |   | $ |           |   | $ | 927,385    |  
|Contributed capital                                                                                      |  |                    |             |                         |   |          |   |                                |           |                                                      |   | 7,025     |   |   |            |   |   | 7,025      |  
|Cancellation of shares at June 8, 2004                                                                   |  |                    | (32,284,988 | )                       |   | (3,228   | ) |                                |           |                                                      |   | 3,228     |   |   |            |   |   |            |  
|Gain on issuance of subsidiary Stock to third party                                                      |  |                    |             |                         |   |          |   |                                |           |                                                      |   | 86,625    |   |   |            |   |   | 86,625     |  
|Stock based compensation                                                                                 |  |                    |             |                         |   |          |   |                                |           |                                                      |   | 62,600    |   |   |            |   |   | 62,600     |  
|Net loss                                                                                                 |  |                    |             |                         |   |          |   |                                |           |                                                      |   |           |   |   | (514,086   | ) |   | (514,086   | )
|                                                                                                         |  |                    |             |                         |   |          |   |                                |           |                                                      |   |           |   |   |            |   |   |            |  
|Balance at September 30, 2004 (audited)                                                                  |  |                    | 25,221,510  |                         |   | 2,522    |   |                                | 139,494   |                                                      |   | 941,619   |   |   | (514,086   | ) |   | 569,549    |  
|Common stock and warrants issued for cash on November 11, 2004, net of
  issuance costs                  |  |                    | 978,000     |                         |   | 97       |   |                                | 367,892   |                                                      |   | 766,630   |   |   |            |   |   | 1,134,619  |  
|Common stock and warrants issued for cash on January 25, 2005, net of
  issuance costs                   |  |                    | 32,000      |                         |   | 3        |   |                                | 12,037    |                                                      |   | 24,760    |   |   |            |   |   | 36,800     |  
|Issuance of warrants to Consultants                                                                     |  |                    |             |                         |   |          |   |                                |           |                                                      |   | 34,592    |   |   |            |   |   | 34,592     |  
|Net loss                                                                                                 |  |                    |             |                         |   |          |   |                                |           |                                                      |   |           |   |   | (1,198,532 | ) |   | (1,198,532 | )
|                                                                                                         |  |                    |             |                         |   |          |   |                                |           |                                                      |   |           |   |   |            |   |   |            |  
|Balance at September 30, 2005 (audited)                                                                  |  |                    | 26,231,510  |                         |   | 2,622    |   |                                | 519,423   |                                                      |   | 1,767,601 |   |   | (1,712,618 | ) |   | 577,028    |  
|Common stock and warrants issued for cash on October 31, 2005, net of
  issuance costs                   |  |                    | 666,666     |                         |   | 67       |   |                                | 72,410    |                                                      |   | 365,670   |   |   |            |   |   | 438,147    |  
|Common stock and warrants issued for cash on December 20, 2005, net
of
  issuance costs                  |  |                    | 1,555,556   |                         |   | 156      |   |                                | 269,641   |                                                      |   | 804,998   |   |   |            |   |   | 1,074,795  |  
|Employees and consultants stock based compensation
expenses                                              |  |                    |             |                         |   |          |   |                                |           |                                                      |   | 234,015   |   |   |            |   |   | 234,015    |  
|Net loss                                                                                                 |  |                    |             |                         |   |          |   |                                |           |                                                      |   |           |   |   | (2,064,795 | ) |   | (2,064,795 | )
|                                                                                                         |  |                    |             |                         |   |          |   |                                |           |                                                      |   |           |   |   |            |   |   |            |  
|Balance at September 30, 2006 (audited)                                                                  |  |                    | 28,453,732  |                         |   | 2,845    |   |                                | 861,474   |                                                      |   | 3,172,284 |   |   | (3,777,413 | ) |   | 259,190    |  
|Common stock issued for services                                                                         |  |                    | *85,716     |                         |   | 9        |   |                                |           |                                                      |   | 59,991    |   |   |            |   |   | 60,000     |  
|Common stock and warrants issued for cash on February 27, 2007, net
of
  issuance costs                  |  |                    | 16,250,000  |                         |   | 1,625    |   |                                | 2,231,459 |                                                      |   | 3,652,640 |   |   |            |   |   | 5,885,724  |  
|Amendment of warrants exercise price **                                                                  |  |                    |             |                         |   |          |   |                                | 110,667   |                                                      |   | (110,667  | ) |   |            |   |   |           |  
|Employees and consultants stock based compensation
expenses                                              |  |                    |             |                         |   |          |   |                                |           |                                                      |   | 912,578   |   |   |            |   |   | 912,578    |  
|Net loss                                                                                                 |  |                    |             |                         |   |          |   |                                |           |                                                      |   |           |   |   | (2,120,855 | ) |   | (2,120,855 | )
|                                                                                                         |  |                    |             |                         |   |          |   |                                |           |                                                      |   |           |   |   |            |   |   |            |  
|Balance at March 31, 2007 (unaudited)                                                                    |  |                    | 44,789,448  |                         | $ | 4,479    |   | $                              | 3,203,600 |                                                      | $ | 7,686,826 |   | $ | (5,898,268 | ) | $ | 4,996,637  |  
|                                                                                                         |  |                    |             |                         |   |          |   |                                |           |                                                      |   |           |   |   |            |   |   |            |  

|   |                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*  | The Company issued a total
  of 171,432. Shares presented in the statement above represent issued shares
  in respect of services received in the six months ended March 31, 2007 (see
  also Note 6(b)).
|   |                                                                                                                                                                                                          
|** | see note 6 (k) and (l).                                                                                                                                                                                  

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

4

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GAMMACAN INTERNATIONAL INC. AND SUBSIDIARY
(A Development Stage Company)CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(US $)

|                                                                                       |  |                                |            |           |   |                                                 |   |   |            |  
|-------------------------------------------------------------------------------------- |  | ------------------------------ | ---------- | --------- | - | ----------------------------------------------- | - | - | ---------- | -
|                                                                                       |  |                                |            |           |   | Period from
  October 6,
  1998* to
  March 31, |  
|                                                                                       |  |                                |            |           |   |                                                
|                                                                                       |  |                                |            |           |   |                                                
|                                                                                       |  | Six months
  ended
  March 31, |            |          
|                                                                                       |  | 2007                           |            | 2006      |   | 2007                                            |  
|                                                                                       |  |                                |            |           |   |                                                 |  
|                                                                                       |  | Unaudited                      |            | Unaudited |   | Unaudited                                       |  
|                                                                                       |  |                                |            |           |   |                                                 |  
|                                                                                       |  |                                |            |           |   |                                                 |   |   |            |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                  |  |                                |            |           |   |                                                 |   |   |            |  
|Net loss for the period                                                                |  | $                              | (2,120,855 | )         | $ | (1,037,643                                      | ) | $ | (5,898,268 | )
|Adjustments required to reconcile net loss to net
cash used in
  operating activities: |  |                                |            |           |   |                                                 |   |   |            |  
|Income and expenses not involving cash
flows:                                          |  |                                |            |           |   |                                                 |   |   |            |  
|Depreciation                                                                           |  |                                | 4,150      |           |   | 1,686                                           |   |   | 11,042     |  
|Financial expenses on convertible promissory
note                                      |  |                                | 9,431      |           |   |                                                |   |   | 9,431      |  
|Common stock issued for services                                                       |  |                                | 60,000     |           |   |                                                |   |   | 63,000     |  
|Minority interests in losses of a
subsidiary                                           |  |                                |           |           |   |                                                |   |   | (12,375    | )
|Write off of in process research and
development                                       |  |                                |           |           |   |                                                |   |   | 100,000    |  
|Employees and consultants stock based compensation
expenses                            |  |                                | 912,578    |           |   | 81,003                                          |   |   | 1,206,727  |  
|Increase in liability for employee rights upon
retirement                              |  |                                | 14,393     |           |   | 3,247                                           |   |   | 45,924     |  
|Changes in operating assets and
liabilities:                                           |  |                                |            |           |   |                                                 |   |   |            |  
|Increase in prepaid expenses                                                           |  |                                | (19,181    | )         |   | (28,574                                         | ) |   | (22,500    | )
|Increase in other current assets                                                       |  |                                | (39,146    | )         |   | (30,851                                         | ) |   | (51,640    | )
|Increase in accounts payable                                                           |  |                                | 161,937    |           |   | 88,059                                          |   |   | 440,794    |  
|Increase in payroll and related accruals                                               |  |                                | 21,875     |           |   | 23,967                                          |   |   | 71,117     |  
|                                                                                       |  |                                |            |           |   |                                                 |   |   |            |  
|Net cash used in operating activities                                                  |  |                                | (994,818   | )         |   | (899,106                                        | ) |   | (4,036,748 | )
|                                                                                       |  |                                |            |           |   |                                                 |   |   |            |  
|                                                                                       |  |                                |            |           |   |                                                 |   |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                  |  |                                |            |           |   |                                                 |   |   |            |  
|Increase in short term investments                                                     |  |                                | (4,300,000 | )         |   |                                                |   |   | (4,300,000 | )
|Increase in long term deposits                                                         |  |                                | (1,375     | )         |   |                                                |   |   | (20,326    | )
|Funds in respect of employee rights upon
retirement                                    |  |                                | (12,319    | )         |   | (5,146                                          | ) |   | (33,390    | )
|Purchase of property and equipment                                                     |  |                                | (2,852     | )         |   | (4,576                                          | ) |   | (34,991    | )
|                                                                                       |  |                                |            |           |   |                                                 |   |   |            |  
|Net cash used in investing activities                                                  |  |                                | (4,316,546 | )         |   | (9,722                                          | ) |   | (4,388,707 | )
|                                                                                       |  |                                |            |           |   |                                                 |   |   |            |  
|                                                                                       |  |                                |            |           |   |                                                 |   |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                  |  |                                |            |           |   |                                                 |   |   |            |  
|Issuance of convertible promissory note                                                |  |                                | 350,000    |           |   |                                                 |   |   | 350,000    |  
|Issuance of common stock and warrants net of
issuance costs                            |  |                                | 5,885,724  |           |   | 1,550,000                                       |   |   | 9,538,553  |  
|                                                                                       |  |                                |            |           |   |                                                 |   |   |            |  
|Net cash provided by financing activities                                              |  |                                | 6,235,724  |           |   | 1,550,000                                       |   |   | 9,888,553  |  
|                                                                                       |  |                                |            |           |   |                                                 |   |   |            |  
|INCREASE IN CASH AND CASH EQUIVALENTS                                                  |  |                                | 924,360    |           |   | 641,172                                         |   |   | 1,463,098  |  
|BALANCE OF CASH AND CASH EQUIVALENTS AT
  BEGINNING OF PERIOD                          |  |                                | 538,738    |           |   | 713,342                                         |   |   |           |  
|                                                                                       |  |                                |            |           |   |                                                 |   |   |            |  
|BALANCE OF CASH AND CASH EQUIVALENTS AT END OF
  PERIOD                                |  | $                              | 1,463,098  |           | $ | 1,354,514                                       |   | $ | 1,463,098  |  
|                                                                                       |  |                                |            |           |   |                                                 |   |   |            |  

* Incorporation date, see note 1a.

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

5

---



GAMMACAN
INTERNATIONAL INC.(A
Development Stage Company)

NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL:

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | Operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | GammaCan
  International Inc. (A Development Stage Company; the Company) was
  incorporated on October 6, 1998, under the laws of the State of Delaware,
  under the name of San Jose International, Inc. The Company has no significant
  revenues and in accordance with Statement of financial Accounting Standard
  (SFAS) No. 7 Accounting and Reporting by Development Stage enterprises,
  the Company is considered a development stage company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | On August
  19, 2004, the name of the Company was changed from San Jose International,
  Inc. into GammaCan International, Inc..                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | Our lead
  product candidate, VitiGam, is a first-in-class anti-cancer immunotherapy
  derived entirely from the plasma of donors with vitiligo, a benign autoimmune
  skin condition affecting up to 2% of the general population. We are initially
  utilizing VitiGam to target melanoma. We have demonstrated that plasma from
  individuals with vitiligo contains anti-melanoma activities, and we are using
  this discovery to develop VitiGam for the treatment of Stage III and Stage
  IV melanoma. The incidence of melanoma, despite new developments in other cancers,
  continues to increase and has experienced little if any therapeutic progress
  in the last ten years. We plan to file an Investigational New Drug
  Application (IND) for VitiGam in late 2007. We believe that the US Food
  and Drug Administration (FDA) is well acquainted with IgG-based therapies
  and their non-toxic characteristics from a long history of approvals of
  products based on plasma.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | We have
  embarked on a non-FDA Phase II clinical trial to test the safety and efficacy
  of standard (e.g., collected and manufactured from healthy donors) IgG in
  patients with three types of late stage malignancies that have failed to
  respond to all other standard therapies as well as certain experimental
  therapies. The cancers evaluated in the non-FDA, open-label Phase II trial
  were: melanoma, prostate, and colon cancer. We expect the study to close by
  mid-year 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | The
  accompanying financial statements have been prepared assuming that the
  Company will continue as a going concern. The Company has net losses for the
  period from inception (October 6, 1998) through March 31, 2007 of
  $5,898,268, as well as negative cash flow from operating activities.
  Presently, the Company does not have sufficient cash resources to meet its
  requirements in the twelve months following April 1, 2007. These factors
  raise substantial doubt about the Companys ability to continueas a going concern. The Companys
  management estimates that it will be able to finance the Companys activities
  through future fund raising.                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | These
  financial statements do not include any adjustments that may be necessary
  should the Company be unable to continue as a going concern. The Companys
  continuation as a going concern is dependent on its ability to obtain
  additional financing as may be required and ultimately to attain
  profitability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

6

---



NOTE 1 - GENERAL (continued):

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | Unaudited interim financial information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | The
  accompanying unaudited financial statements of the Company and the subsidiary
  GammaCan Ltd. (the Subsidiary) have been prepared in accordance with
  accounting principles generally accepted in the United States (US GAAP) for
  interim financial information. Accordingly, they do not include all of the
  information and footnotes required by US GAAP for complete financial
  statements. For further information, refer to the financial statements and
  footnotes thereto included in the consolidated annual report on Form 10-KSB
  for the year ended September 30, 2006.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | In the
  opinion of management, all adjustments (consisting of normal recurring
  accruals) considered necessary for a fair presentation have been included.
  Operating results for the six-month period ended March 31, 2007, are not
  necessarily indicative of the results that may be expected for the year ended
  September 30, 2007.                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | c. | Stock based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | On August
  17, 2004, the Companys board of directors adopted the 2004 Employees and
  Consultants Stock Option Plan (hereafter - the 2004 Stock Option Plan).                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | On February
  26, 2007, the Companys board of directors adopted the 2007 Employees and
  Consultants Stock Option Plan (hereafter - the 2007 Stock Option Plan).                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | Under both
  Plans 10,000,000 shares have been reserved for the grant of options, which
  may be issued at the discretion of the Companys board of directors from time
  to time. Under these Plans, each option is exercisable to purchase one common
  share of $0.0001 par value of the Company.                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | The options
  may be exercised after vesting and in accordance with vesting schedules which
  will be determined by the board of directors for each grant.                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | The maximum
  term of the option is 10 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | The fair
  value of each stock option grant was estimated at the date of grant using a
  Black-Scholes option pricing model. The volatility is based on a historical
  volatility, by statistical analysis of the weekly share price for past
  periods. The expected term is the length of time until the expected dates of
  exercising the options, based on estimated data regarding employees exercise
  behavior.                                                                                                                                                                            

7

---



NOTE 1 - GENERAL (continued):

| |    |                                                                                                                                                           
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | c. | Stock based compensation (continued)                                                                                                                      
| |    |                                                                                                                                                           
| |    | A summary of
  the status of the Companys plans as of March 31, 2007, and changes during
  the six months period ending on this date, is presented below:

| |                                                           |  |                                     |           |                                     |   |   |     
| | --------------------------------------------------------- |  | ----------------------------------- | --------- | ----------------------------------- | - | - | ----
| |                                                           |  | Six months
  ended
  March 31, 2007 |          
| |                                                           |  |                                     |          
| |                                                           |  | Number                              |           | Weighted
  average
  exercise price |  
| |                                                           |  |                                     |           |                                     |  
| |                                                           |  |                                     |           |                                     | $ |   |     
| | For options granted to employees and
  directors:         |  |                                     |           |                                     |   |   |     
| | Options outstanding at
  beginning of the period          |  |                                     | 2,830,000 |                                     |   | $ | 1.24
| | Changes during the period:                                |  |                                     |           |                                     |   |   |     
| | Granted  at market price                                 |  |                                     | 400,000   |                                     |   |   | 0.45
| | Granted  at an exercise
  price grater then market price |  |                                     | 1,185,000 |                                     |   |   | 0.53
| |                                                           |  |                                     |           |                                     |   |   |     
| | Options outstanding at end of the period                  |  |                                     | 4,415,000 |                                     |   |   | 0.98
| |                                                           |  |                                     |           |                                     |   |   |     
| | Options exercisable at end of the period                  |  |                                     | 350,208   |                                     |   |   |     

| |                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
  weighted-average grant-date fair value of options granted during the six and
  three months periods ended March 31, 2007 and 2006 was $0.35, $0.35, and
  $0.94, $0.99, respectively.
| |                                                                                                                                                                                            
| | The
  following table presents summary information concerning the options
  outstanding as of March 31, 2007:                                                                              

| |                               |  |                                      |           |                                                            |  |                                         |  |                                 |      |  |  |         | 
| | ----------------------------- |  | ------------------------------------ | --------- | ---------------------------------------------------------- |  | --------------------------------------- |  | ------------------------------- | ---- |  |  | ------- | 
| | Range of
  exercise
  prices$ |  | Number
  outstanding atMarch31, 2007 |           | Weighted 
  average
  remaining
  contractual life
  Years |  | Weighted
  average
  exercise price
  $ |  | Aggregate
  intrinsic value
  $ |     
| |                               |  |                                      |           |                                                            |  |                                         |  |                                 |     
| | 0.45 to 0.53                  |  |                                      | 1,585,000 |                                                            |  | 9.85                                    |  |                                 | 0.51 |  |  | 269,750 | 
| | 0.93 to 1.37                  |  |                                      | 2,830,000 |                                                            |  | 8.86                                    |  |                                 | 1.24 |  |  |        | 
| |                               |  |                                      |           |                                                            |  |                                         |  |                                 |      |  |  |         | 
| |                               |  |                                      | 4,415,000 |                                                            |  | 9.21                                    |  |                                 | 0.98 |  |  | 269,750 | 

| |                                                                                                              
| | -------------------------------------------------------------------------------------------------------------
| | The
  following table presents summary information concerning the options
  exercisable as of March 31, 2007:

| |                               |  |                                      |         |                                                            |  |                                         |  |                                 |      |  |  |   | 
| | ----------------------------- |  | ------------------------------------ | ------- | ---------------------------------------------------------- |  | --------------------------------------- |  | ------------------------------- | ---- |  |  | - | 
| | Range of
  exercise
  prices$ |  | Number
  exercisable atMarch31, 2007 |         | Weighted 
  average
  remaining
  contractual life
  Years |  | Weighted
  average
  exercise price
  $ |  | Aggregate
  intrinsic value
  $ |     
| |                               |  |                                      |         |                                                            |  |                                         |  |                                 |     
| | 0.45 to 0.53                  |  |                                      |        |                                                            |  |                                        |  |                                 |     |  |  |  | 
| | 0.93 to 1.37                  |  |                                      | 350,208 |                                                            |  | 8.36                                    |  |                                 | 1.13 |  |  |  | 
| |                               |  |                                      |         |                                                            |  |                                         |  |                                 |      |  |  |   | 
| |                               |  |                                      | 350,208 |                                                            |  | 8.36                                    |  |                                 | 1.13 |  |  |  | 
| |                               |  |                                      |         |                                                            |  |                                         |  |                                 |      |  |  |   | 

8

---



NOTE 1 - GENERAL
(continued):

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c. | Stock based compensation (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | Unrecognized
  compensation as of March 31, 2007 totaled $2,010,516, to be depreciated over
  the next 47 months.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | Until
  September 30, 2006, the Company accounted for employees share-based payment
  under the intrinsic value model in accordance with Accounting Principles
  Board Opinion No. 25 - Accounting for Stock Issued to Employees (APB 25)
  and related interpretations. In accordance with Statement of Financial
  Accounting Standards No. 123 - Accounting for Stock-Based Compensation
  (FAS 123), as amended by Statement of Financial Accounting Standards
  No. 148, Accounting for Stock-Based Compensation - Transition and
  Disclosure, the Company disclosed pro forma information, assuming the
  Company had accounted for employees share-based payments using the fair
  value-based method defined in FAS 123.                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | On October
  1, 2006, the Company adopted Statement of Financial Accounting Standards
  No. 123 (revised 2004), Share-based Payment (FAS 123(R)). FAS 123(R)
  supersedes APB 25 and related interpretations and amends Statement of
  Financial Accounting Standards No. 95, Statement of Cash Flows (FAS 95).
  FAS 123(R) requires awards classified as equity awards be accounted for using
  the grant-date fair value method. The fair value of share-based payment
  transactions is recognized as expense over the requisite service period, net
  of estimated forfeitures. The Company estimated forfeitures based on
  historical experience and anticipated future conditions. This Statement is
  effective as of the beginning of the first annual reporting period that
  begins after December 15, 2005, for small business issuers, which is
  October 1, 2006 for the Company.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | In March
  2005, the Securities and Exchange Commission issued Staff Accounting Bulletin
  No. 107 (SAB 107). SAB 107 provides supplemental implementation
  guidance on FAS 123(R), including guidance on valuation methods, inventory
  capitalization of share-based compensation cost, income statement effects,
  disclosures and other issues. SAB 107 requires share-based payment to be
  classified in the same expense line items as cash compensation. The Company
  has applied the provisions of SAB 107 in its adoption of FAS 123(R). In
  addition, the Company has reclassified share-based payment from prior periods
  to correspond to current period presentation within the same operating
  expense line items as cash compensation paid to employees.                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | The Company
  elected to recognize compensation cost for an award with only service
  conditions that has a graded vesting schedule using the accelerated method
  based on multiple option award approach.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | This
  Statement applies to all awards granted or modified after the Statements
  effective date. In addition, compensation cost for the unvested portion of
  previously granted awards that remain outstanding on the Statements
  effective date shall be recognized on or after the effective date, as the
  related services are rendered, based on the awards grant-date fair value as
  previously calculated for the pro-forma disclosure under FAS 123.                                                                                                                                                                                                                                                                                                                                                                                                                                     

9

---



NOTE 1 - GENERAL
(continued):

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c. | Stock based compensation (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | The Company
  applied the modified prospective application transition method, as permitted
  by the Statement. Under such transition method, upon the adoption of FAS
  123R, the Companys financial statements for periods prior to the effective
  date of the Statement is not restated.                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | Costs
  incurred related to the implementation of FAS 123R for six and three months
  period ended March 31, 2007 were $672,253 and 360,642, respectively. Costs
  incurred related to APB 25 for the six and three months period ended March
  31, 2006 were $8,730 and $4,365, respectively.                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | The Company
  accounts for equity instruments issued to third party service providers
  (non-employees) in accordance with the fair value based on an option-pricing
  model, pursuant to the guidance in EITF 96-18 Accounting for Equity
  Instruments That Are Issued to Other Than Employees for Acquiring, or in
  Conjunction with Selling Goods or Services. The fair value of the options
  granted is revalued over the related service periods and recognized using the
  accelerated method.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | The
  following table illustrates the pro - forma effect on net loss and loss per
  common share assuming the Company had applied the fair value recognition
  provisions of FAS 123 to its stock-based employee compensation:                                                                                                                                                                                                                                                                           

|                                                                                                                                                                            |  |                                      |            |                                        |   |          |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------ | ---------- | -------------------------------------- | - | -------- | -
|                                                                                                                                                                            |  | Six months
  ended 
  March 31, 2006 |            | Three
  months ended 
  March 31, 2006 |  
|                                                                                                                                                                            |  |                                      |            |                                        |  
|Net
  loss as reported                                                                                                                                                      |  | $                                    | (1,037,643 | )                                      | $ | (604,729 | )
|Deduct:
  Stock based employee compensation expense included in net loss as reported                                                                                        |  |                                      | 8,730      |                                        |   | 4,365    |  
|Add:
  pro forma stock based employee compensation expense determined under fair
  value method for all awards                                                              |  |                                      | (164,332   | )                                      |   | (101,606 | )
|Recognize
  the reversal of the pro forma stock based employee compensation expense
  determined under fair value method due to forfeiture of awards granted to
  employees |  |                                      | 79,676     |                                        |   |         |  
|                                                                                                                                                                            |  |                                      |            |                                        |   |          |  
|Pro
  forma net loss                                                                                                                                                        |  | $                                    | (1,113,569 | )                                      | $ | (701,970 | )
|                                                                                                                                                                            |  |                                      |            |                                        |   |          |  
|Net
  loss per common shares:                                                                                                                                               |  |                                      |            |                                        |   |          |  
|Basic
  and diluted loss per share - as reported                                                                                                                            |  | $                                    | (0.038     | )                                      | $ | (0.021   | )
|                                                                                                                                                                            |  |                                      |            |                                        |   |          |  
|Basic and diluted loss per share
  - pro forma                                                                                                                              |  | $                                    | (0.040     | )                                      | $ | (0.025   | )
|                                                                                                                                                                            |  |                                      |            |                                        |   |          |  

10

---



NOTE 1 - GENERAL(continued):

| |    |                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -- | ----------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | d. | Recently issued accounting pronouncements
| |    |                                          
| |    | 1.                                        | In July
  2006, the FASB issued FASB Interpretation No. 48 Accounting for Uncertainty
  in Income Taxes - an interpretation of FASB Statement 109 (FIN 48).
  FIN 48 prescribes a comprehensive model for recognizing, measuring and
  presenting in the financial statements tax positions taken or expected to be
  taken on a tax return. This Interpretation also provides guidance on
  derecognition, classification, interest and penalties and disclosure
  requirements for uncertain tax positions. FIN 48 is effective for fiscal
  years beginning on or after December 15, 2006 (October 1, 2007, for the
  Company). The provisions of FIN 48 shall be applied to all tax positions upon
  initial adoption of this Interpretation. Only tax positions that meet
  the more likely than not recognition threshold at the effective date may be
  recognized or continue to be recognized upon adoption of this Interpretation.
  The cumulative effects, if any, of applying this Interpretation will be
  recorded as an adjustment to Retained earnings. The Company is currently
  assessing this standard effect on its financial statements in future periods.
| |    |                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | 2.                                        | In September
  2006, the FASB issued Statement of Financial Accounting Standard No. 157,
  Fair Value Measurements (FAS 157). FAS 157 defines fair value,
  establishes a framework for measuring fair value in accordance with generally
  accepted accounting principles, and expands disclosures about fair value
  measurements. FAS 157 will apply whenever another standard requires (or
  permits) assets or liabilities to be measured at fair value. The standard
  does not expand the use of fair value to any new circumstances. FAS 157 is
  effective for financial statements issued for fiscal years beginning after
  November 15, 2007, and interim periods within those fiscal years, which is
  the year beginning October 1, 2008 for the Company.                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | 3.                                        | In February 2007, FASB issued SFAS 159, The Fair Value
  Option for Financial Assets and Financial Liabilities. This standard permits
  companies to choose to measure many financial assets and financial
  liabilities at fair value. Unrealized gains and losses on items for which the
  fair value option has been elected are reported in earnings. This statement
  will be effective for fiscal years beginning on or after November 15, 2007
  (October 1, 2008, for the Company). The Company is currently evaluating the
  impact that the adoption of SFAS 159 will have on its consolidated
  financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

11

---



NOTE 1 - GENERAL(continued):

|                                 |                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                 | d.                                                                                                                                                                                                 | Recently issued accounting pronouncements(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                 |                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                 |                                                                                                                                                                                                    | 4.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | In September 2006, the SEC issued Staff
  Accounting Bulletin No. 108, Considering the Effects of Prior Year
  Misstatements when Quantifying Misstatements in Current Year Financial
  Statements (SAB No. 108). SAB No. 108 provides guidance on the
  consideration of the effects of prior year misstatements in quantifying
  current year misstatements for the purpose of a materiality assessment. SAB
  108 establishes an approach that requires quantification of financial
  statement errors based on the effects of each of the Companys balance sheet
  and statement of operations and the related financial statement disclosures.
  SAB No. 108 permits existing public companies to record the cumulative effect
  of initially applying this approach in the first year ending after November
  15, 2006 by recording the necessary correcting adjustments to the carrying
  values of assets and liabilities as of the beginning of that year with the
  offsetting adjustment recorded to the opening balance of retained earnings.
  Additionally, the use of the cumulative effect transition method requires
  detailed disclosure of the nature and amount of each individual error being
  corrected through the cumulative adjustment and how and when it arose. The
  Company does not expect this Statement to have a material effect on the
  Companys financial statements or its results of operations.
|                                 |                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                 | e.                                                                                                                                                                                                 | Reclassifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                 |                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                 |                                                                                                                                                                                                    | Certain figures in respect of prior years
  have been reclassified to conform to the current year presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                 |                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|NOTE 2 - SHORT TERM INVESTEMNTS:
|                                
|                                 | Amount
  represents bank deposits with an original maturity of more than three months
  but less then one year. The bank deposits are in US Dollars and bears
  interest of 5.16%-5.19% per annum.
|                                 |                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|NOTE 3 - LONG TERM DEPOSITS:    
|                                
|                                 | Amount
  represents deposits in respect of lease agreements for the Companys office
  facilities and vehicles used by its employees.                                                             
|                                 |                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|NOTE 4 - COMITMENTS:            
|                                
|                                 | a.                                                                                                                                                                                                 | On January 30, 2007, Gammacan, Ltd., a subsidiary of the Company (the
  Subsidiary) entered into a Master Services Agreement with BioSolutions
  Services, LLC (BioSolutions), an outside party, pursuant to which the subsidiary
  will from time-to-time engage BioSolutions for various projects to assist the
  Subsidiary with the commercialization of its anti-cancer immunotherapy to
  treat metastatic cancer.  The services
  to be performed under the Master Services Agreement will be specified in
  separate work orders, which will set forth the scope of the work, schedule
  and costs.

12

---



NOTE 4  COMITMENTS(continued):

|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 
|------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Work order 1 relates to regulatory consulting services to be provided
  by Biosolutions in connection with the application for an IND
  with the US FDA for VitiGam. As compensation for the services the Subsidiary
  will pay BioSolutions a cash fee between $170,000 to $290,000 based on
  several factors, and the Company will issue to BioSolutions a warrant to
  purchase 434,783 shares of its common stock at a purchase price of $0.45 per
  share. The warrant shall vest as follows:
  1) 33% upon signature of a definitive agreement with an IVIg
  manufacturer, 2) 33% upon IND filing and 3) 34% when IND has been approved by
  the FDA. (See also note 6e).
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                      | b.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | On February 1, 2007 the Subsidiary entered into a Cooperation and
  Project Funding Agreement with Israel-U.S. Binational
  Industrial Research and Development (the BIRD Foundation) and Life Therapeutics (Life), pursuant to
  which the BIRD Foundation will provide the Subsidiary and Life total funding
  of the lesser of $1,000,000 or 50% of expenditures on the development of an
  anti-cancer immunotherapy to treatment for metastatic cancer (the Project),
  as of March 31, 2007 the Subsidiary received $14,837 from the BIRD foundation.                                                                                                                
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | The Subsidiary and Life are liable, severally and jointly, to repay
  the funding, in its entirety, to the BIRD Foundation if the development work
  goes beyond a Phase 2 clinical trial. Such repayment will be due within 12
  months following the completion of The Project in an amount equal to the
  total funding linked to the US Consumer Price Index. The
  Companys management estimates that it is probable that the project will go
  beyond phase 2 clinical trial and thus the funding received by the subsidiary
  is presented as a liability on the consolidated balance sheet.                                                                             
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|NOTE 5 - CONVERTIBLE PROMISSORY NOTE:
|                                     
|                                      | On November
  20, 2006 the Company issued a convertible promissory note, in a principal
  amount of $350,000, which bears annual interest at 8% payable on maturity of
  the note and matures on November 20, 2007. At the discretion of the lender,
  in the event that the Company raises debt or equity financing during the 12
  month period following the issuance of the note, the principal and interest
  due under the note is convertible on the same terms as such financing.
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                      | As of the
  date of issuance the hybrid instrument was bifurcated into an option and a
  host debt contract. The fair value assigned to the option, determined using Black Scholes option-pricing model
  was $109,075.                                                                                                                                                                                                                                                                  
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                      | As of the balance sheet date, the fair value allocated to the option
  estimated by using the Black Scholes option-pricing model is $90,320.
  The value was based on the following assumptions: dividend yield of 0%;
  expected volatility of 90%; risk-free interest rates of 5.0%; and expected
  lives of 0.47 years.                                                                                                                                                               

13

---



NOTE 6 - STOCK TRANSACTIONS:

| |                                                                                                    |                                                                                                                                                                                                                                                                                                | 
| | -------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | Following
  are transactions that took place during the six months period ending March
  31, 2007:
| |                                                                                                   
| | a.                                                                                                 | On October
  12, 2006, 50,000 options were granted under the 2004 Stock Option Plan to a
  new member of the scientific advisory board, an outside party. The exercise
  price has been determined at $0.65 per share, which was equivalent to the
  traded market price on the date of grant.
| |                                                                                                    |                                                                                                                                                                                                                                                                                               
| |                                                                                                    | The options
  may be exercised after vesting and in accordance with the following:                                                                                                                                                                                                            

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

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| |    | The fair
  value of the above options estimated using a Black Scholes option-pricing
  model was $28,245, and was based on the following assumptions: dividend yield
  of 0% for all years; expected volatility of 89%; risk-free interest rates of
  4.65%; and expected lives of 7.88 years.                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | b. | On October 18, 2006 the Company entered
  into a Strategic Alliance Agreement with UTEK Corporation (UTEK), pursuant
  to which UTEK would assist the Company in identifying technology acquisition
  opportunities. Per the agreement in consideration for the services being
  provided to the Company by UTEK, the Company shall pay $120,000 in the form of 171,432
  unregistered shares of common stock. The Company had the option of paying
  UTEK $10,000 per month. The Company has agreed to issue UTEK an aggregate of
  171,432 shares of common stock, par value $0.0001 per share, of the Company,
  which will vest in 12 equal monthly instalments of 14,286 shares.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | The shares
  presented in the statement of changes in stockholders equity represent
  issued shares, to date, in respect of service received up to March 31, 2007,
  as the remaining shares are not considered issued for accounting purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | c. | On November
  13, 2006, 150,000 options were granted under the 2004 Stock Option Plan to
  each of the Companys two board members who joined the board on November 6,
  2006 (total - 300,000 options).                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | The exercise
  price has been determined at $0.45 per share, which was equivalent to the
  traded market price on the date of grant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | The options
  may be exercised after vesting and in accordance with the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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

| |  |                                                                                                                                                                                                                                                                                                        | 
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
| |  | The fair
  value of the above options on the date of grant estimated using a Black
  Scholes option-pricing model was $111,859, and was based on the following
  assumptions: dividend yield of 0%; expected volatility of 90%; risk-free
  interest rates of 4.65%; and expected lives of 7.88 years.

14

---



NOTE 6 - STOCK TRANSACTIONS(continued):

| |    |                                                                                                                                                                                                                                                                                                | 
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | d. | On December
  5, 2006, 50,000 options were granted under the 2004 Stock Option Plan to a
  new member of the scientific advisory board, an outside party. The exercise
  price has been determined at $0.50 per share, which was equivalent to the
  traded market price on the date of grant.
| |    |                                                                                                                                                                                                                                                                                               
| |    | The options
  may be exercised after vesting and in accordance with the following:                                                                                                                                                                                                            

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

| |    |                                                                                                                                                                                                                                                                                            | 
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
| |    | The fair
  value of the above options estimated using Black Scholes option-pricing model
  as $29,020, and was based on the following assumptions: dividend yield of 0%
  for all years; expected volatility of 89%; risk-free interest rates of 4.65%;
  and expected lives of 7.88 year.
| |    |                                                                                                                                                                                                                                                                                           
| | e. | On January
  30, 2007, 434,783 share purchase warrants were granted to an outside
  consultant. Each share purchase warrant
  entitles the consultant to purchase one common share for a period of five
  years after the date of grant at an exercise price of $0.45.                    
| |    |                                                                                                                                                                                                                                                                                           
| |    | Since the
  share purchase warrants only vest if certain performance condition are met
  (see also note 4a), no compensation was recorded in the period.                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                           
| | f. | On February
  15, 2007, 100,000 options were granted under the 2004 Stock Option Plan to an
  employee. The exercise price has been determined at $0.45 per share, which
  was equivalent to the traded market price on the date of grant.                                                
| |    |                                                                                                                                                                                                                                                                                           
| |    | The options
  may be exercised after vesting and in accordance with the following:                                                                                                                                                                                                        

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

| |    |                                                                                                                                                                                                                                                                                                   | 
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| |    | The fair
  value of the above options is estimated by using Black Scholes option-pricing
  model was $34,244, and was based on the following assumptions: dividend yield
  of 0% for all years; expected volatility of 90%; risk-free interest rates of
  4.68%; and expected lives of 5.91 year.
| |    |                                                                                                                                                                                                                                                                                                  
| | g. | On February
  26, 2007, 785,000 and 400,000 options were granted under the 2004 Stock
  Option Plan and the 2007 Stock Option Plan respectively. The options were
  granted to directors, officers and employees. The exercise price has been
  determined at $0.53 per share.                   
| |    |                                                                                                                                                                                                                                                                                                  
| |    | The options
  may be exercised after vesting such that 1/3 of the options will vest on each
  of 1st, 2nd and 3rd anniversary from and after the date of grant.                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                  
| |    | The fair
  value of the above options, estimated using a Black Scholes option-pricing
  model was $412,685, and was based on the following assumptions: dividend
  yield of 0% for all years; expected volatility of 89%; risk-free interest
  rates of 4.62%; and expected lives of 5.89 years. 

15

---



NOTE 6 - STOCK TRANSACTIONS
(continued):

| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | h. | On February
  26, 2007, 80,000 options were granted under the 2004 Stock Option Plan to the
  Companys chief scientist and a consultant, both outside parties. The
  exercise price has been determined at $0.53 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | The options
  may be exercised after vesting such that 1/3 of the options will vest  on each of 1st, 2nd and 3rd anniversary
  from and after the date of grant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | The fair
  value of the above options is estimated by using Black Scholes option-pricing
  model was $42,936, and was based on the following assumptions: dividend yield
  of 0% for all years; expected volatility of 89%; risk-free interest rates of
  4.62%; and expected lives of 5.89 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | i. | On February
  26, 2007, 1,075,000 options were granted under the 2007 Stock Option Plan to
  the chairman of the board of directors in his capacity as an outside
  consultant. The exercise price has been determined at $0.53 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | The options
  may be exercised after vesting such that 1/3 of the options will vest  on each of 1st, 2nd and 3rd anniversary
  from and after the date of grant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | The fair
  value of the above options is estimated by using Black Scholes option-pricing
  model was $576,951, and was based on the following assumptions: dividend
  yield of 0% for all years; expected volatility of 89%; risk-free interest
  rates of 4.62%; and expected lives of 5.89 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | j. | On February 27, 2007 the Company completed a private placement for
  the sale of 16,250,000 units at a purchase price of $0.40 per unit for a
  total consideration of
  $6,500,000. Each unit consisted of one common share and one share purchase
  warrant. Each share purchase warrant entitles the holder to purchase one
  additional common share for a period of five years after the date of the
  subscription agreement at an exercise price of $0.48. The consideration was
  allocated to the shares and warrants issued based on relative fair value. The
  fair value allocated to the warrants, estimated by using the Black Scholes
  option-pricing model is $2,231,459, which is based on the following
  assumptions: dividend yield of 0% for all years; expected volatility of 89%;
  risk-free interest rates of 4.63%; and expected lives of 5 years. Transaction
  costs of $551,775 were paid and $62,500 was accrued in connection with this
  private placement.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | k. | On February
  27, 2007 the exercise price of 1,333,334 warrants was reduced to $0.55. The
  warrants were issued on December 20, 2005 as part of a subscription agreement
  for the sale of 1,333,334 units at a purchase price of $0.75 per unit for a
  total consideration of $1,000,000. Each unit comprised of one share of the
  Companys common stock and one common share purchase warrant exercisable into
  one Share at a price of $1.20 per Share, for three years. The increase in the
  fair value of the warrants charged in the Statement of Stockholders equity
  against the Additional paid-in capital.                                                                                                                                                                                                                                                                                                                                                                

16

---



GAMMACAN INTERNATIONAL INC.(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (continued)

NOTE 6 - STOCK TRANSACTIONS
(continued):

|                         |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
|------------------------ | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|                         | l. | On February
  27, 2007 the exercise price of 333,333 warrants was reduced to $0.55. The warrants
  were issued on October 31, 2005 as part of a subscription agreement for the sale of 666,666 units at a purchase
  price of $0.75 per unit for a total consideration of $500,000. Each unit
  comprised of one share of the Companys common stock and one common share
  purchase warrant exercisable into one half Share at a price of $1.00 per
  Share, for three years. . The increase in the fair value of the
  warrants charged in the Statement of Stockholders equity against the
  Additional paid-in capital.
|                         |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                         | m. | On March 22, 2007, 350,000 share purchase
  warrants were granted to an outside consultant. Each share purchase warrant entitles the consultant to purchase one
  common share for a period of five years after the date of grant at an
  exercise price of $0.53.                                                                                                                                                                                                                                                                                                                                                          
|                        
|                         |    | The fair
  value of the above share purchase warrants is estimated by using Black
  Scholes option-pricing model as $179,470, and was based on the following
  assumptions: dividend yield of 0% for all years; expected volatility of 89%;
  risk-free interest rates of 4.62%; and expected lives of 5 years.                                                                                                                                                                                                                                                                                                             
|                         |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|NOTE 7 - LOSS PER SHARE:
|                        
|                         |    | The total
  number of common stock options and warrants excluded from the calculations of
  diluted net loss was 24,782,558 for the six months ended March 31, 2007
  (4,067,775 for the six months ended March 31, 2006).                                                                                                                                                                                                                                                                                                                                                                                                  

17

---





ITEM 2 - MANAGEMENTS DISCUSSION AND ANALYSIS
OF PLAN OF OPERATION

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

All dollar amounts refer to US dollars unless
otherwise indicated.

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

Plan
of Operation

Short
Term Business Plan

We are a life science company focused on the
development of immunotherapy and related approaches to treat cancer. To date,
we have focused on the use of intravenous immunoglobulin, or IgG, derived from
human plasma provided by healthy donors to treat melanoma, prostate, and colon
cancers. We believe that IgG may be the basis of more effective and efficient
cancer treatment both, as mono- or combination therapy and adjuvant cancer
treatments. Our business objective is to become a recognized leader in the
development of immunotherapy and related approaches to treat cancer

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

Our lead product candidate, VitiGam, is an
anti-cancer immunotherapy derived entirely from the plasma of donors with
vitiligo, a benign autoimmune skin condition affecting up to 2% of the general
population. We are initially utilizing VitiGam to target melanoma. We have
demonstrated that plasma from individuals with vitiligo contains anti-melanoma
activities, and we are attempting to develop VitiGam for the treatment of
Stage III and Stage IV melanoma. The incidence of melanoma, continues to
increase and has experienced little if any therapeutic progress in the last ten
years. In addition to VitiGam, we are developing and will continue to develop
the following:

| |   |                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------
| |  | Adjuvant therapies - IgG-based adjuvant
  therapies to modulate both the proliferation of cancer cells and the
  metastasis of tumor cells.

18

---



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

We have embarked on a non-FDA Phase II
clinical trial to test the safety and efficacy of standard (e.g., collected
and manufactured from healthy donors) IgG in patients with three types of late
stage malignancies that have failed to respond to all other standard therapies
as well as certain experimental therapies The cancers evaluated in the non-FDA,
open-label Phase II trial were: melanoma, prostate, and colon cancer. Patients
in the study receive standard IgG at a consistent dose every 28 days (a cycle).
Patients were evaluated by standard criteria for tumor progression and other
markers after three cycles, and if stable or improved, such treatment continues
for three additional cycles. We expect the study to close by mid-year 2007.
Results from melanoma patients are promising and can be summarized as follows:

| |   |                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | no serious untoward effects of IgG were
  noted; and                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                       
| |  | one patient with melanoma (out of 8) and
  one with prostate cancer (out of 9) have been stable or improved at six
  cycles of therapy or beyond. Indeed, the melanoma patient has completed
  twelve cycles, after which tumor progression was noted.

In addition to the body of pre-clinical
evidence accumulated using vitiligo derived plasma or IgG, observations with
melanoma patients in this study provide a clinical foundation for the current
plan to develop VitiGam.

We plan to file an Investigational New Drug
Application, or IND, for VitiGam in late 2007 with the United States Food and
Drug Aministration (the FDA). We believe that the FDA is well acquainted with
IgG-based therapies and their non-toxic characteristics from a long history of approvals of
products based on plasma.

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

Although there can be no assurance that the FDA will
approve VitiGam, or any other IgG immunotherapy candidate, we expect that, at
a minimum, it will take a number of years to receive final approval and
registration of such IgG candidate for commercial use as an anti-cancer agent.

19

---



Our strategy is to collaborate with a suitable partner,
although there can be no assurance that we will locate a suitable partner, to
support late stage (Phase III) clinical development, registration and/or sales
for our IgG-based cancer products.

Long Term Business Strategy

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

Other Research and Development Plans

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

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

For example, we plan to conduct research to isolate the
fraction of IgG, which is responsible for its anti-metastatic effects and to
develop a potential synthetic version of IgG. These formulations may be
suitable for:

| |   |                                                                                  
| | - | ---------------------------------------------------------------------------------
| |  | high
  dose, for use in conjunction with surgery and other cancer treatments; and
| |   |                                                                                  
| |  | maintenance
  dose for use to prevent recurrence of cancer growth.               

20

---



Our plan is to patent any successful inventions resulting
from our future research activities and to exploit any other means that may
exist to protect our future IgG anti-cancer therapies in the commercial
markets; although at this early stage there can be no assurance that there will
be any successful inventions resulting from such research
activities. For example, we may seek Orphan Drug Status for future IgG-based
anti-cancer therapies for certain indications in certain markets.



Other Strategic Plans



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



Critical accounting policies and estimates



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



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



Going
concern assumption



The accompanying financial
statements have been prepared assuming that the Company will continue as a
going concern. The Company has net losses for the period from inception
(October 6, 1998) through March 31, 2007 of $5,898,268, as well as
negative cash flow from operating activities. Presently, the Company does not
have sufficient cash resources to meet its requirements in the twelve months
following April 1, 2007. These factors raise substantial doubt about the
Companys ability to continue as a going concern. The Companys management estimates that it
will be able to finance the Companys activities through future fund raising.



The financial statements do not
include any adjustments that may be necessary should the Company be unable to
continue as a going concern. The Companys continuation as a going concern is
dependent on its ability to obtain additional financings as may be required and
ultimately to attain profitability.



Valuation of options and warrants



The Company granted options to
purchase common shares of the Company to employees and consultants and issued
warrants in connection with fund raising.



21



---



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



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



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



The Company applied the modified
prospective application transition method, as permitted by the Statement. Under
such transition method, upon the adoption of FAS 123R, the Companys financial
statements for periods prior to the effective date of the Statement is not
restated.



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



Deferred
income taxes



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



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



22



---



Results of Operations



The following table summarizes certain statement of operations data for
the Company for the six months period ended March 31, 2007 and 2006 (in US$):



|                                             |  |  |                  |            |   |  |                |   |            |   | 
|-------------------------------------------- |  |  | ---------------- | ---------- | - |  | -------------- | - | ---------- | - | 
|                                             |  |  | Six months ended |            |  
|Operating Data:                              |  |  | March 31, 2007   |            |   |  | March 31, 2006 |   |           
|                                             |  |  |                  |            |   |  |                |   |           
|                                             |  |  |                  |            |   |  |                |   |            |   | 
|Research and development costs               |  |  | $                | 482,870    |   |  |                | $ | 599,543    |   | 
|General and administrative expenses          |  |  |                  | 1,631,800  |   |  |                |   | 455,188    |   | 
|Financial income, net                        |  |  |                  | (10,671    | ) |  |                |   | (17,088    | ) | 
|                                             |  |  |                  |            |   |  |                |   |            |   | 
|Loss before tax on income                    |  |  |                  | 2,103,999  |   |  |                |   | 1,037,643  |   | 
|Taxes on Income                              |  |  |                  | 16,856     |   |  |                |   |           |   | 
|                                             |  |  |                  |            |   |  |                |   |            |   | 
|Net loss for the period                      |  |  | $                | (2,120,855 | ) |  |                | $ | (1,037,643 | ) | 
|                                             |  |  |                  |            |   |  |                |   |            |   | 
|                                             |  |  |                  |            |   |  |                |   |            |   | 
|Loss per common share  basic and diluted    |  |  | $                | (0.068     | ) |  |                | $ | (0.038     | ) | 
|                                             |  |  |                  |            |   |  |                |   |            |   | 
|Weighted
  average common shares outstanding |  |  |                  | 31,204,923 |   |  |                |   | 27,650,399 |   | 
|                                             |  |  |                  |            |   |  |                |   |            |   | 

Research and development costs.

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

During the six months ended March 31, 2007 and March 31, 2006
    the research and development expenses included, among others, the cost of
    IGg used in the clinical trails and research work, payments to medical centers
    and research labs for clinical trial and pre-clinical trial work, regulatory
    and scientific consultants compensation, costs related to the maintenance
    of the Companys registered patents, costs related to the filings on
    patents applications as well as salaries and related expenses of Research
    and development staff.

During the six months ended March 31, 2007 the research and development
expenses totaled $482,870, compared to $599,543 during the six months ended
March 31, 2006. The decrease in cost is attributable to the final stages of the
Phase 2 clinical trial we are currently conducting.

General and administrative expenses

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

23

---



For the six months ended March 31, 2007 general and
administrative expenses totaled $1,631,800 compared to $455,188 for the six
months ended March 31, 2006. Costs incurred related to general and
administrative activities in the six months ended March 31, 2007 reflect an
increase in the number of employees as compared to the six months period ending
March 31, 2006, from 5 to 7. During the six months ended March 31, 2007 the
Company incurred $672,253 of compensation expenses due to the implementation of
FAS 123R related to stock options granted to employees, $628,298 of these costs
were classified to the general and administrative expenses. During the six months ended
March 31, 2006 the Company accounted for employee stock based compensation in
accordance with Accounting Principles Board Opinion No. 25 Accounting for
Stock Issued to Employees (APB 25) and incurred $8,730 of costs. Additional
costs included in the six months ended March 31, 2007 included $211,039 related
to the fair value of warrants issued to consultants during the period, no
similar costs were incurred in the six months ended March 31, 2006.

Financial
income/expense, net

During the six
months ending March 31, 2007 and March 31, 2006, the Company generated interest
income on available cash and cash equivalents balance and incurred interest
expenses related to its issued convertible promissory note.

Liquidity and Capital Recourses
Financing activities

Through March
31, 2007, the Company has incurred losses in an aggregate amount of $5,898,268. We have financed our
operation from private placement of common stock and loans received. Through
March 31, 2007 we raised a total of $9,538,553, net of transaction cost, through private placements and
received a total of $350,000 in loans and we anticipate that additional
financing will be through similar sources. Our financing activities for the six
month period ending March 31, 2007 include the following:

On November
20, 2006 the Company issued a convertible promissory note, aggregate principal
amount of $350,000, which bears interest at 8% payable on maturity of the note
and matures on November 20, 2007.

On February
27, 2007, the Company completed a private placement for the sale of 16,250,000
units at a purchase price of $0.40 per unit for a total consideration of
$6,500,000.

On February
27, 2007, the Company reduced the exercise price of 333,333 and 1,333,334
warrants, issued on October 30, 2005 and December 20, 2005 respectively, from
$1.0 and $1.20, respectively to $0.55.

Employees and
Consultants stock options plan and warrants

Employee and
consultant stock options grants and warrant issuance activities for the six
month period ending March 31, 2007 include the following:

On October 12,
2006 we granted options to purchase up to 50,000 common shares of our Company
at an exercise price of $0.65 to a new member of our Scientific Advisory Board.

On November
13, 2006 we granted options to purchase up to 150,000 common shares of our
Company at an exercise price of $0.45 to each of Steven Katz and Albert
Passner, its two new Board members. Total options granted to purchase 300,000
common shares were granted.

On December 5,
2006 we granted options to purchase up to 50,000 common shares of our Company
at an exercise price of $0.50 to a new member of our Scientific Advisory Board.

On January 30,
2007 we granted warrants to purchase 434,783 common shares of our Company at an
exercise price of $0.45 to a consultants.

24

---



On February
15, 2007 we granted options to purchase up to 100,000 common shares of our
Company at an exercise price of $0.45 to an employee.

On February
26, 2007, our board of directors adopted The 2007 Global Share Option Plan (the
2007 Plan) in order to attract and
retain quality personnel. Under the 2007 Plan, 5,000,000 shares have been
reserved for the grant of options, which may be issued at the discretion of our
board of directors from time to time.

On February
26, 2007 we granted options to purchase 2,340,000 common shares of our Company
at an exercise price of $0.53 to the following:.

|                        |  |                                                        |  |                           |      | 
|----------------------- |  | ------------------------------------------------------ |  | ------------------------- | ---- | 
|Name                    |  | No. of
  Securities
  Underlying Options
  Granted (#) |  | Exercise
  Price
  ($/Sh) |     
|                        |  |                                                        |  |                           |      | 
|Yair
  Aloni            |  | 75,000                                                 |  |                           | 0.53 | 
|Liat
  Ben-David        |  | 70,000                                                 |  |                           | 0.53 | 
|Miri
  Blank            |  | 30,000                                                 |  |                           | 0.53 | 
|Yaron
  Cherny          |  | 40,000                                                 |  |                           | 0.53 | 
|Steven
  Katz           |  | 1,150,000                                              |  |                           | 0.53 | 
|Shmuel
  Levi           |  | 75,000                                                 |  |                           | 0.53 | 
|Elisha
  Martinez       |  | 25,000                                                 |  |                           | 0.53 | 
|Josef
  Neuhaus         |  | 75,000                                                 |  |                           | 0.53 | 
|Jacob
  Nusbacher       |  | 100,000                                                |  |                           | 0.53 | 
|Chaime
  Orlev          |  | 300,000                                                |  |                           | 0.53 | 
|Albert
  Passner        |  | 75,000                                                 |  |                           | 0.53 | 
|Patrick
  Schnegelsberg |  | 250,000                                                |  |                           | 0.53 | 
|Yehuda
  Shoenfeld      |  | 50,000                                                 |  |                           | 0.53 | 
|Lior
  Soussan-Gutman   |  | 25,000                                                 |  |                           | 0.53 | 

On March 22,
2007 we granted warrants to purchase 350,000 common shares of our Company at an
exercise price of $0.53 to a consultant.

Planned Expenditures

The estimated expenses referenced herein are
in accordance with our business plan. As the technology is still in the
development stage, it can be expected that there will be changes in some
budgetary items. Our planned expenditures for the next 12 months include:

|                                    |  |        |           |  
|----------------------------------- |  | ------ | --------- | -
|Category                            |  | Amount |          
|                                    |  |        |           |  
|Research &Development               |  | $      | 4,593,000 |  
|General &
  Administrative Expenses |  |        | 2,161,000 |  
|Finance Income, net                 |  |        | (55,000   | )
|                                    |  |        |           |  
|Total                               |  | $      | 6,699,000 |  

As previously
indicated we are planning to file an IND with the FDA for VitiGamTM
in late 2007. Our ability to proceed with this IND application as well as the
commencement of the related clinical trial is dependent on several major
factors including the ability to attract sufficient financing on terms
acceptable to us.

25

---



Related party transactions

On October 31,
2006, we entered into a consulting agreement with Steven Katz and Associates,
Inc., (SKA) a company
wholly-owned by Steven Katz, the Chairman of the Board of GammaCan
International, Inc. According to the agreement, consulting services will be provided
by SKA at $345 per hour. Through March 31, 2006 expenses incurred by the
Company under this agreement totalled $65,000.

26

---



ITEM 3 - CONTROLS AND PROCEDURES

Evaluation of
Disclosure Controls and Procedures. As of March 31, 2007, the Companys
management carried out an evaluation, under the supervision of the Companys
Chief Executive Officer and the Chief Financial Officer, of the effectiveness
of the design and operation of the Companys system of disclosure controls and
procedures (as defined by Rule 13a-15(e) and 15d-15(e) under the Security and
Exchange Act of 1934, as amended (the Exchange Act). Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the Companys disclosure controls and procedures were effective, as of the
date of their evaluation, for the purposes of recording, processing,
summarizing and timely reporting material information required to be disclosed
in reports filed by the Company under the Exchange Act.

Changes in
internal controls. There were no changes in the Companys internal controls
over financial reporting, that occurred during the period covered by this
report that have materially affected, or are reasonably likely to materially
effect, the Companys internal control over financial reporting.

27

---



PART II

ITEM 1 - LEGAL PROCEEDINGS

From time to
time the Company is subject to litigation incidental to its business. Such
claims, if successful, could exceed applicable insurance coverage. The Company
is not currently a party to any material legal proceedings.

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

On October 18, 2006 the Company
entered into a Strategic Alliance Agreement with UTEK Corporation (UTEK),
pursuant to which UTEK would assist the Corporation in identifying technology
acquisition opportunities. As consideration for the services being provided to
the Corporation by UTEK, the Corporation has agreed to issue UTEK an aggregate
of 171,432 shares of common stock, par value $0.0001 per share, of the
Corporation, which will vest in 12 equal monthly instalments of 14,286 shares.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

Not
applicable.

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

Not
applicable.

ITEM 5 - OTHER INFORMATION

Not
applicable.

28

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ITEM 6 - EXHIBITS

|       |  |                                                                                                                                                                   
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |  | Exhibit                                                                                                                                                           
|10.1   |  | Form of
  Securities Purchase Agreement, dated as of February 27, 2007, among the
  Company and the Purchasers named therein*                                     
|      
|10.2   |  | Form of
  Common Stock Purchase Warrant*                                                                                                                          
|      
|10.3   |  | Form of
  Lock-Up Agreement*                                                                                                                                      
|      
|10.4   |  | Form of
  Registration Rights Agreement, dated as of February 27, 2007, among the
  Company and the Purchasers named therein*                                     
|      
|31.1   |  | Certification
  of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
  promulgated under the Securities and Exchange Act of 1934, as amended
|      
|31.2   |  | Certification
  of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d 14(a),
  promulgated under the Securities and Exchange Act of 1934, as amended
|      
|32.1   |  | Certification
  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
  Sarbanes-Oxley Act of 2002 (Chief Executive Officer)              
|      
|32.2   |  | Certification
  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
  Sarbanes-Oxley Act of 2002 (Chief Financial Officer)              

* Incorporated
by reference to the Current Report of the Registrant on Form 8-K, dated as of
February 27, 2007.

In
accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

|            |                              |                           | 
|----------- | ---------------------------- | ------------------------- | 
|            | GAMMACAN INTERNATIONAL, INC.
|            |                              |                           | 
|May 9, 2007 |                              | /s/ CHAIME ORLEV          | 
|            |                              |                           | 
|            |                              | Chaime
  Orlev,          
|            |                              | Chief
  Financial Officer

29

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