**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      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 June 30, 2006**





**o
      TRANSITION REPORT UNDER
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**





**For
      the Transition Period from _________ to _________**





**Commission
      file number: 0-32835**





**GAMMACAN
      INTERNATIONAL, INC.**


(Exact
      name of registrant as specified in its charter)





**Delaware**
            **33-0956433**(State
                or other jurisdiction of incorporation or organization)
            (IRS
                Employer Identification No.)





**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.  Yes
x  No
o





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





**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: 28,453,732 shares issued and
      outstanding as of August 9, 2006.





**GAMMACAN
      INTERNATIONAL, INC.**





**FORM
      10-QSB**





**TABLE
      OF CONTENTS**





Page
                No.PART
                IItem 1.
                Financial Statements
            1Item 2.
                Management’s Discussion and Analysis of Financial Condition and Results of
                Operation
            13Item 3.
                Controls And Procedures
            19PART
                IIItem 1.
                Legal Proceedings
            20Item 2.
                Unregistered Sales of Equity Securities and Use of
                Proceeds
            20Item 3.
                Defaults Upon Senior Securities
            20Item 4.
                Submission of Matters to a Vote of Security Holders
            20Item 5.
                Other Information
            20Item 6.
                Exhibits
            22








***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.





2





**ITEM
      1. - FINANCIAL STATEMENTS**








**GAMMACAN
      INTERNATIONAL INC.**


(A
      Development Stage Company)


INTERIM
      FINANCIAL STATEMENTS


AS
      OF
      JUNE 30, 2006








TABLE
      OF
      CONTENTS








**Page****CONDENSED
                CONSOLIDATED FINANCIAL STATEMENTS:**Balance
                sheets
            
            2Statements
                of operations
            
            3Statements
                of changes in stockholders’ equity
            
            4Statements
                of cash flows
            
            5Notes
                to financial statements
            
            6-12















**GAMMACAN
      INTERNATIONAL INC.**




(A
      Development Stage Company)




CONDENSED
      CONSOLIDATED BALANCE SHEETS




(US
      $,
      except share data)





**June
                30,**
            
            **September
                30,****2006**
            
            **2005****(Unaudited)**
            
            **(Audited)****A
                s s e t s****CURRENT
                ASSETS:**Cash
                and cash equivalents
            
            $
            949,230
            
            $
            713,342Prepaid
                expenses
            
            
            21,551
            
            
            6,474Other
            
            
            16,793
            
            
            22,029T
                o
                t a l  current assets
            
            
            987,574
            
            
            741,845**FUNDS
                IN RESPECT OF EMPLOYEE RIGHTS UPON RETIREMENT**
            
            
            15,036
            
            
            7,528**LONG
                TERM DEPOSITS**
            
            
            22,210
            
            
            5,145**PROPERTY
                AND EQUIPMENT, NET**
            
            
            17,422
            
            
            10,269T
                o
                t a l  assets
            
            $
            1,042,242
            
            $
            764,787Liabilities
                and stockholders' equity**CURRENT
                LIABILITIES:**Accounts
                payable
            
            $
            278,738
            
            $
            159,379Payroll
                and related accruals
            
            
            48,373
            
            
            14,655T
                o
                t a l  current liabilities
            
            
            327,111
            
            
            174,034**LIABILITY
                FOR EMPLOYEE RIGHTS UPON RETIREMENT**
            
            
            24,722
            
            
            13,725**STOCKHOLDERS’
                EQUITY:**Preferred
                stock, $ 0.0001 par value (20,000,000 sharesauthorized;
                none issued and outstanding)Common
                stock, $ 0.0001 par value (100,000,000 authorized shares;28,453,732
                and 26,231,510 shares issued andoutstanding
                as of June 30, 2006 and September 30, 2005, respectively)
            
            
            2,845
            
            
            2,622Additional
                paid-in capital
            
            
            3,021,021
            
            
            1,767,601Warrants
            
            
            925,793
            
            
            519,423Deficit
                accumulated during the development stage
            
            
            (3,259,250
            )
            
            (1,712,618
            )T
                o
                t a l  stockholders' equity
            
            
            690,409
            
            
            577,028T
                o
                t a l  liabilities and stockholders’ equity
            
            $
            1,042,242
            
            $
            764,787








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


2




**GAMMACAN
      INTERNATIONAL INC.**




(A
      Development Stage Company)




CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS





(US
      $,
      except share data)




**Period
                  from****October
                  6, 1998*****Nine
                  months ended**
              
              **Three
                  months ended**
              
              **through****June
                  30**
              
              **June
                  30**
              
              **June
                  30,****2006**
              
              **2005**
              
              **2006**
              
              **2005**
              
              **2006****(Unaudited**)****
              
              
              **(Unaudited)**
              
              
              **(Unaudited)**
              
              
              **(Unaudited)**
              
              
              **(Unaudited)**
 **RESEARCH
                  AND****DEVELOPMENT
                  COSTS**
              
              $
              719,153
              
              $
              299,985
              
              $
              119,610
              
              $
              184,987
              
              $
              1,432,073**GENERAL
                  AND****ADMINISTRATIVE****EXPENSES**
              
              
              853,591
              
              
              508,075
              
              
              398,403
              
              
              160,194
              
              
              1,879,232**FINANCIAL
                  INCOME**
              
              
              (36,203
              )
              
              (14,618
              )
              
              (12,416
              )
              
              (6,652
              )
              
              (56,906
              )**FINANCIAL
                  EXPENSES**
              
              
              10,091
              
              
              3,521
              
              
              3,392
              
              
              829
              
              
              17,2261,546,632
              
              
              796,963
              
              
              508,989
              
              
              399,358
              
              
              3,271,625**MINORITY
                  INTERESTS IN****LOSSES
                  OF SUBSIDIARY**
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (12,375
              )**NET
                  LOSS FOR THE PERIOD**
              
              $
              (1,546,632
              )
              $
              (796,963
              )
              $
              (508,989
              )
              $
              (399,358
              )
              $
              (3,259,250
              )**BASIC
                  AND DILUTED LOSS****PER
                  1,000 COMMON**
                **SHARES**
              
              $
              (55.40
              )
              $
              (30.59
              )
              $
              (17.89
              )
              $
              (12.94
              )**WEIGHTED
                  AVERAGE****NUMBER
                  OF COMMON****SHARES
                  USED IN****COMPUTING
                  BASIC AND****DILUTED
                  LOSS PER****COMMON
                  SHARE**
              
              
              27,918,176
              
              
              26,055,177
              
              
              28,453,732
              
              
              26,231,510




*
      Incorporation date, see note 1a.





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





3




**GAMMACAN
      INTERNATIONAL INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**


CONDENSED
      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY


(US
      $,
      except share data)





**Deficit****accumulated****Common**
            
            
            
            **Additional**
            
            **during****Common**
            
            **Stock**
            
            
            
            **paid-in**
            
            **development****Stock**
            
            **Amount**
            
            **Warrants**
            
            **capital**
            
            **stage**
            
            **Total****Beginning
                balance**
            
            
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Stock
                issued for cash onOctober
                6, 1998
            
            
            1,650,000
            
            
            165
            
            
            
            
            
            (155
            )
            
            
            
            
            10Stock
                issued for cash onOctober
                9, 1998
            
            
            2,722,500
            
            
            272
            
            
            
            
            
            (107
            )
            
            
            
            
            165Stock
                issued for cash onOctober
                10, 1998
            
            
            198,000
            
            
            20
            
            
            
            
            
            100
            
            
            
            
            
            120Stock
                issued for services onDecember
                1, 1998
            
            
            9,900,000
            
            
            990
            
            
            
            
            
            2,010
            
            
            
            
            
            3,000Stock
                issued for cash onApril
                7, 1999
            
            
            561,000
            
            
            56
            
            
            
            
            
            284
            
            
            
            
            
            340Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (3,444
            )
            
            (3,444
            )**Balance
                at September 30, 1999****(audited)******
            
            
            15,031,500
            
            
            1,503
            
            
            
            
            
            2,132
            
            
            (3,444
            )
            
            191Stock
                issued for cash onSeptember
                30, 2000
            
            
            41,250,000
            
            
            4,125
            
            
            
            
            
            875
            
            
            
            
            
            5,000**Balance
                at September 30, 2000****(audited)**
            
            
            56,281,500
            
            
            5,628
            
            
            
            
            
            3,007
            
            
            (3,444
            )
            
            5,191Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (3,108
            )
            
            (3,108
            )**Balance
                at September 30,****2001****(audited)**
            
            
            56,281,500
            
            
            5,628
            
            
            
            
            
            3,007
            
            
            (6,552
            )
            
            2,083Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (4,231
            )
            
            (4,231
            )**Balance
                at September 30, 2002****(audited)**
            
            
            56,281,500
            
            
            5,628
            
            
            
            
            
            3,007
            
            
            (10,783
            )
            
            (2,148
            )Contributed
                capital
            
            
            
            
            
            
            
            
            
            
            
            7,025
            
            
            
            
            
            7,025Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (4,857
            )
            
            (4,857
            )**Balance
                at September 30, 2003****(audited)**
            
            
            56,281,500
            
            
            5,628
            
            
            
            
            
            10,032
            
            
            (15,640
            )
            
            20Cancellation
                of shares atJune
                8, 2004
            
            
            (32,284,988
            )
            
            (3,228
            )
            
            
            
            
            3,228Stock
                based compensation
            
            
            
            
            
            
            
            
            
            
            
            62,600
            
            
            
            
            
            62,600Common
                stock and warrantsissued
                for cash on August 13,
            
            
            1,224,998
            
            
            122
            
            
            139,494
            
            
            779,134
            
            
            
            
            
            918,7502004Gain
                on issuance of subsidiaryStock
                on August 17, 2004 tothird
                party
            
            
            
            
            
            
            
            
            
            
            
            86,625
            
            
            
            
            
            86,625Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (498,446
            )
            
            (498,446
            )**Balance
                at September 30, 2004****(audited)**
            
            
            25,221,510
            
            
            2,522
            
            
            139,494
            
            
            941,619
            
            
            (514,086
            )
            
            569,549Common
                stock and warrantsissued
                for cash on November 11,2004
            
            
            978,000
            
            
            97
            
            
            367,892
            
            
            766,630
            
            
            
            
            
            1,134,619Common
                stock and warrantsissued
                for cash on January 25,2005
            
            
            32,000
            
            
            3
            
            
            12,037
            
            
            24,760
            
            
            
            
            
            36,800Issuance
                of warrants to Consultants'
            
            
            
            
            
            
            
            
            
            
            
            34,592
            
            
            
            
            
            34,592Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,198,532
            )
            
            (1,198,532
            )**Balance
                at September 30, 2005****(audited)**
            
            
            26,231,510
            
            
            2,622
            
            
            519,423
            
            
            1,767,601
            
            
            (1,712,618
            )
            
            577,028Common
                stock and warrantsissued
                for cash on October 31,2005
            
            
            666,666
            
            
            67
            
            
            82,784
            
            
            367,149
            
            
            
            
            
            450,000Common
                stock and warrantsissued
                for cash on December 20,2005
            
            
            1,555,556
            
            
            156
            
            
            323,586
            
            
            776,258
            
            
            
            
            
            1,100,000Benefit
                component in employees and consultants stock option plan
            
            
            
            
            
            
            
            
            
            
            
            110,013
            
            
            
            
            
            110,013Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,546,632
            )
            
            (1,546,632
            )**Balance
                at June 30, 2006****(unaudited)**
            
            
            28,453,732
            
            $
            2,845
            
            $
            925,793
            
            $
            3,021,021
            
            $
            (3,259,250
            )
            $
            690,409





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


4




**GAMMACAN
      INTERNATIONAL INC. AND SUBSIDIARY**


(A
      Development Stage Company)




CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS


(US
      $)





**Period
                from****October
                6,****Nine
                months ended**
            
            **1998*
                to****June
                30,**
            
            **June
                30,****2006**
            
            **2005**
            
            **2006****Unaudited**
            
            **Unaudited**
            
            **Unaudited**





**CASH
                FLOWS FROM OPERATING ACTIVITIES:**Net
                loss
            
            $
            (1,546,632
            )
            $
            (796,963
            )
            $
            (3,259,250
            )Adjustments
                required to reconcile net loss to net cash usedin
                operating activities:Income
                and expenses not involving cash flows:Depreciation
            
            
            2,729
            
            
            1,691
            
            
            5,322Common
                stock issued for services
            
            
            -
            
            
            -
            
            
            3,000Minority
                interests in losses of a subsidiary
            
            
            -
            
            
            -
            
            
            (12,375
            )Write
                off of in process research and development
            
            
            -
            
            
            -
            
            
            100,000Benefit
                component in employees and consultants stock option plan
            
            
            110,013
            
            
            18,653
            
            
            207,205Changes
                in operating assets and liabilities:Increase
                in prepaid expenses
            
            
            (15,077
            )
            
            (9,678
            )
            
            (21,551
            )Decrease
                (increase) in other current assets
            
            
            5,236
            
            
            (23,153
            )
            
            (16,793
            )Increase
                (decrease) in current liabilities
            
            
            153,077
            
            
            (59,276
            )
            
            326,111Increase
                in liability for employee rights upon retirement
            
            
            10,997
            
            
            -
            
            
            24,722Net
                cash used in operating activities
            
            
            (1,279,657
            )
            
            (868,726
            )
            
            (2,643,609
            )**CASH
                FLOWS FROM INVESTING ACTIVITIES -**Increase
                in long term deposits
            
            
            (17,065
            )
            
            -
            
            
            (22,210
            )Funds
                in respect of employee rights upon retirement
            
            
            (7,508
            )
            
            -
            
            
            (15,036
            )Purchase
                of property and equipment
            
            
            (9,882
            )
            
            (7,512
            )
            
            (22,744
            )Net
                cash used in investment activities
            
            
            (34,455
            )
            
            (7,512
            )
            
            (59,990
            )**CASH
                FLOWS FROM FINANCING ACTIVITIES:**Contribution
                to additional paid in capital
            
            
            
            
            
            
            
            
            12,319Issuance
                of common stock and warrants
            
            
            1,550,000
            
            
            1,171,419
            
            
            3,640,510Net
                cash provided by financing activities
            
            
            1,550,000
            
            
            1,171,419
            
            
            3,652,829**INCREASE
                IN CASH AND CASH EQUIVALENTS**
            
            
            235,888
            
            
            295,181
            
            
            949,230**BALANCE
                OF CASH AND CASH EQUIVALENTS********AT****BEGINNING
                OF PERIOD**
            
            
            713,342
            
            
            705,868**BALANCE
                OF CASH AND CASH EQUIVALENTS****AT
                END OF PERIOD**
            
            $
            949,230
            
            $
            1,001,049
            
            $
            949,230





*
      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 (continued)
  **NOTE
        1 - SIGNIFICANT ACCOUNTING POLICIES:**
  **a.**
              **General:**
 
 GammaCan
        International Inc. (A Development Stage Company; "the Company") was incorporated
        on October 6, 1998, under the laws of the State of Delaware, under the name
        of
        San Jose International, Inc. The Company has no significant revenues and
        no
        material operations and in accordance with Statement of financial Accounting
        Standard (“SFAS”) No. 7 “Accounting and Reporting by Development Stage
        enterprises”, the Company is considered a development stage
        company.
 
 On
        August
        19, 2004, the name of the company was changed from "San Jose International,
        Inc." into "GammaCan International, Inc.".
 
 At
        this
        point in the development stage, the company's focus is to demonstrate efficacy
        of IVIg cancer immunotherapy in human clinical trials. In July 2005, the
        company
        commenced Phase 2 clinical trials in humans to demonstrate clinical efficacy
        of
        IVIg immunotherapy in three major cancers: colon, prostate and melanoma.
        These
        Phase 2 clinical trials are being conducted at three medical centers in Israel
        and results are anticipated during 2007. The Phase 2 clinical trial is due
        to be
        completed by the beginning of 2007.
 
 The
        Company is in the process of applying for an IND with the US FDA for VitiGam,
        The Company’s second generation IgG product and first-in-class anti-cancer
        immunotherapy. VitiGam is slated to enter the clinic under a US IND in the
        near
        future. VitiGam is designed to target metastatic melanoma patients with Stage
        III and IV melanoma.
 
 The
        financial statements have been prepared assuming the Company will continue
        as a
        going concern. See note 3.
 
 **b.**
              **Accounting
                  principles**
 
 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 for interim
        financial information and with the instructions to Form 10-QSB and Item 310
        of
        Regulation S-B. Accordingly, they do not include all of the information and
        footnotes required by accounting principles generally accepted in the United
        States for complete financial statements.
 
 In
        the
        opinion of management, all adjustments (consisting of normal recurring accruals)
        considered necessary for a fair presentation have been included. Operating
        results for the nine-month period ended June 30, 2006, are not necessarily
        indicative of the results that may be expected for the year ended September
        30,
        2006. 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, 2005.




6


**GAMMACAN
          INTERNATIONAL INC.**
 (A
          Development Stage Company)
  NOTES
          TO
          CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
  **NOTE
          1 - SIGNIFICANT ACCOUNTING POLICIES** (continued):
 
 **c.**
              **Use
                  of estimates in the preparation of financial
                  statements**
 
 The
        preparation of the financial statements in conformity with U.S. GAAP requires
        management to make estimates and assumptions that affect the reported amounts
        of
        assets and liabilities and disclosure of contingent assets and liabilities
        at
        the financial statement date and the reported expenses during the reporting
        periods. Actual results could differ from those estimates.
 
 **d.**
              **Principles
                  of consolidation**
 
 The
        consolidated financial statements include the accounts of the Company and
        its
        subsidiary GammaCan Ltd. All material intercompany transactions and balances
        have been eliminated in consolidation.
 
 **e.**
              **Cash
                  equivalents**
 
 The
        company considers all short term, highly liquid investments, which include
        short-term deposits with original maturities of three months or less from
        the
        date of purchase that are not restricted as to withdrawal or use and are
        readily
        convertible to known amounts of cash, to be cash equivalents.
 
 **f.**
              **Loss
                  per share**
 
 Basic
        and
        diluted net losses per common share are presented in accordance with FAS
        No. 128
“Earning per share” (“FAS128”), for all periods presented. Outstanding stock
        options and warrants have been excluded from the calculation of the diluted
        loss
        per share because all such securities are anti-dilutive for all periods
        presented. The total number of common stocks options and warrants excluded
        from
        the calculations of diluted net loss was 5,967,775 for the nine months ended
        June 30, 2006 (2,484,998 for the nine months ended June 30, 2005).
 
 **g.**
              **Stock
                  based compensation**
 
 The
        Company accounts for employee stock based compensation in accordance with
        Accounting Principles Board Opinion No. 25 “Accounting for Stock Issued to
        Employees” (“APB 25”) and related interpretations. In accordance with FAS 123 -
“Accounting for Stock-Based Compensation” (“FAS 123”), the Company discloses pro
        forma data assuming the Company had accounted for employee stock option grants
        using the fair value-based method defined in FAS 123.
 
 As
        to
        services from consultants, the Company applies EITF 96-18 “Accounting for Equity
        Instruments That Are Issued to Other Than Employees for Acquiring, or in
        Conjunction with Selling, Goods or Services”.
 
 7
 **GAMMACAN
          INTERNATIONAL INC.**
 (A
          Development Stage Company)
  NOTES
          TO
          CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
  **NOTE
          1 - SIGNIFICANT ACCOUNTING POLICIES** (continued) **:**
 
 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:
 
 **Nine
                  months ended**
                **June
                  30,****2006**
              
              **2005**Net
                  loss as reported
              
              $
              (1,546,632
              )
              $
              (796,963
              )Deduct:
                  Stock based employee compensation expenseincluded
                  in net loss as reported
              
              
              79,010Add:
                  pro forma stock based employee compensationexpense
                  determined under fair valuemethod
                  for all awards, net of related tax effects
              
              
              (573,927
              )
              
              (89,638
              )Recognize
                  the reversal of the pro forma stock based employee compensation
                  expensedetermined
                  under fair value method due to forfeitureof
                  awards granted to employees
              
              
              79,676
              
              
              118,190Pro
                  forma net loss
              
              $
              (1,961,873
              )
              $
              (768,411
              )Net
                  loss per 1,000 common shares:Basic
                  and diluted loss per 1,000 shares - as reported
              
              $
              (55.40
              )
              $
              (30.59
              )Basic
                  and diluted loss per 1,000 shares - pro forma
              
              $
              (70.27
              )
              $
              (29.49
              )
 
 **h.**
              **Reclassifications**
  Certain
        figures in respect of prior years have been reclassified to conform to the
        current year presentation.
 
 **i.**
              **Recently
                  issued accounting
                  pronouncements**
  In
        February 2006, the FASB issued FAS 155, accounting for certain Hybrid Financial
        Instruments, an amendment of FASB statements No.133 and 140. This statement
        permits fair value measurement for any hybrid financial instrument that contains
        an embedded derivative that otherwise would require bifurcation. This statement
        is effective for all financial instruments acquired or issued after the
        beginning of an entity's first fiscal year that begins after September 15,
        2006.
        Earlier adoption is permitted as of the beginning of an entity's fiscal year,
        provided that no interim period financial statements have been issued for
        the
        financial year. In the Company’s opinion, implementation of this standard is not
        expected to have a material effect on its financial statements in future
        periods.
 
 In
        March
        2006 the Financial Accounting Standards Board (the "FASB") issued Statement
        of
        Financial Reporting No. 156 ("FAS 156"). This Statement amends FASB Statement
        No. 140, Accounting for Transfers and Servicing of Financial Assets and
        Extinguishments of Liabilities, with respect to the accounting for separately
        recognized servicing assets and servicing liabilities, and is effective for
        financial periods beginning after September 15, 2006. Since the Company does
        not
        currently engage in transfers of financial fixed assets , the company does
        not
        anticipate that the adoption of this statement will have a material impact
        on
        its financial statements.
  8
 **GAMMACAN
          INTERNATIONAL INC.**
 (A
          Development Stage Company)
  NOTES
          TO
          CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
 In
        July
        2006, the FASB issued FASB Interpretation (FIN) No. 48 Accounting for
        Uncertainty in Income Taxes an interpretation of FASB Statement 109. FIN
        48
        prescribes a comprehensive model for recognizing, measuring, presenting and
        disclosing in the financial statements tax positions taken or expected to
        be
        taken on a tax return, including a decision whether to file or not to file
        in a
        particular jurisdiction. FIN 48 is effective for fiscal years beginning after
        December 15, 2006. If there are changes in net assets as a result of application
        of FIN 48 these will be accounted for as an adjustment to retained earnings.
        In
        the Company’s opinion, implementation of this standard is not expected to have a
        material effect on its financial statements in future periods.





**NOTE
      2 - LONG TERM DEPOSITS**





Amount
      represents deposits in respect of lease agreements for the company’s office
      facilities and vehicles used by its employee





**NOTE
      3 - GOING CONCERN**





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 June 30, 2006 of $3,259,250. Presently,
      the company does not have sufficient cash resources to meet its requirements
      in
      the twelve months following July 1, 2006. 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.




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.





**NOTE
      4 - STOCK TRANSACTIONS:**





**a.**
            On
                October 31, 2005, the company entered into subscription agreement
                for the
                sale of 666,666 units at a purchase price of $0.75 per unit for a
                total
                consideration of $500,000. Each unit comprising one share of the
                Company's
                common stock and one common share purchase warrant exercisable for
                three
                years. Every 2 warrants can be exercisable to one common Share at
                a price
                of $1.00 per Share.




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





The
      value
      allocated to all warrants estimated by using the Black Scholes option-pricing
      model is $82,784. The value was based on the following assumptions: dividend
      yield of 0%; expected volatility of 80%; risk-free interest rates of 4.4%;
      and
      expected lives of 3 years.





9


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


**NOTE
      4 - STOCK TRANSACTIONS (continued):**





**b.**
            On
                October 6, 2005, 350,000 options were granted under the Stock Option
                Plan.
                The exercise price has been determined at $0.93 per common share
                which was
                equivalent to 90% of the traded market price on the date of grant.
                Compensation costs calculated in accordance with APB 25 totaled
                $35,000.


As
      to the
      exercise terms of the options - see note j below.





The
      fair
      value of the above options on the date of grant estimated by using Black Scholes
      option-pricing model is $283,757. The value was based on the following
      assumptions: dividend yield of 0%; expected volatility of 80%; risk-free
      interest rates of 4.5%; and expected lives of 7.59 years.





**c.**
            On
                October 20, 2005, 30,000 options were granted under the Stock Option
                Plan.
                The exercise price has been determined at $1.35 per common 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.
            25%
                of the options - On the first anniversary commencing the grant
                date


2.
            75%
                of the options - On the last day of each of the 36 months following
                the
                first anniversary of the grant date, the options shall vest in equal
                monthly installments.





The
      fair
      value of the above options on the date of grant estimated by using Black Scholes
      option-pricing model is $32,637.  The
      value
      was based on the following assumptions: dividend yield of 0%; expected
      volatility of 85%; risk-free interest rates of 4.5%; and expected lives of
      7.85
      years.





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





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





The
      value
      allocated to all warrants estimated by using the Black Scholes option-pricing
      model is $294,443. The value was based on the following assumptions: dividend
      yield of 0%; expected volatility of 81%; risk-free interest rates of 4.4%;
      and
      expected lives of 3 years.





**e.**
            On
                December 20, 2005, the company entered into subscription agreement
                for the
                sale of 222,222 units at a purchase price of $0.90 per unit for a
                total
                consideration of $200,000. Each unit comprising one share of the
                Company's
                common stock and one common share purchase warrant exercisable for
                three
                years. Every 2 warrants can be exercisable to one common Share at
                a price
                of $1.15 per Share.





10


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


**NOTE
      4 - STOCK TRANSACTIONS (continued):**





The
      value
      allocated to all warrants estimated by using the Black Scholes option-pricing
      model is $29,143. The value was based on the following assumptions: dividend
      yield of 0%; expected volatility of 81%; risk-free interest rates of 4.4%;
      and
      expected lives of 3 years.





**f.**
            On
                December 21, 2005, 250,000 options were granted under the Stock Option
                Plan. The exercise price has been determined at $1.34 per common
                share
                which was equivalent to the traded market price on the date of grant.
                As
                to the exercise terms of the options - see exercise terms in note
                3c.





The
      fair
      Value of the above mentioned options on the date of the grant estimated by
      using
      the Black Scholes option-pricing model is $269,449. The value was based on
      the
      following assumptions: dividend yield of 0%; expected volatility of 85%;
      risk-free interest rates of 4.5%; and expected lives of 7.85 years.





**g.**
            On
                January 12, 2006, 50,000 options were granted under the Stock Option
                Plan.
                The exercise price has been determined at $1.10 per common share
                which was
                equivalent to the traded market price on the date of grant. As to
                the
                exercise terms of the options - see note k
                below.





The
      fair
      Value of the above mentioned options on the date of the grant estimated by
      using
      the Black Scholes option-pricing model is $44,165. The value was based on the
      following assumptions: dividend yield of 0%; expected volatility of 85%;
      risk-free interest rates of 4.5%; and expected lives of 7.85 years.





**h.**
            On
                March 15, 2006, 50,000 options were granted under the Stock Option
                Plan.
                The exercise price has been determined at $1.37 per common share
                which was
                equivalent to the traded market price on the date of grant. As to
                the
                exercise terms of the options - see exercise terms in note c
                above.





The
      fair
      Value of the above mentioned options on the date of grant estimated by using
      the
      Black Scholes option-pricing model is $54,712. The value was based on the
      following assumptions: dividend yield of 0%; expected volatility of 84%;
      risk-free interest rates of 4.5%; and expected lives of 7.85 years.





**i.**
            On
                April 17, 2006, 1,400,000 stock options were granted to the new CEO
                under
                the Stock Option Plan. The exercise price has been determined at
                $1.29 per
                common share which was equivalent to 90% of the average closing price
                of
                the common Stock of the company on the 30 days immediately preceding
                the
                date of grant. Compensation costs calculated in accordance with APB
                25
                totaled $434,000. As to the exercise terms of the options - see exercise
                terms in note c above.





The
      fair
      Value of the above mentioned options on the date of grant estimated by using
      the
      Black Scholes option-pricing model is $1,832,296. The value was based on the
      following assumptions: dividend yield of 0%; expected volatility of 83%;
      risk-free interest rates of 4.5%; and expected lives of 7.85 years.





11


**NOTE
      4 - STOCK TRANSACTIONS** (continued) **:**





**j.**
            On
                May 2, 2006 the company amended the vesting of the 350,000 options
                granted
                on October 6, 2005.


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


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


2.
            75%
                of the options - On the last day of each of the 36 months following
                the
                first anniversary of the grant date, the options shall vest in equal
                monthly installments.





**k.**
            On
                May 2, 2006 the company amended the vesting of the 50,000 options
                granted
                on January 12, 2006.


1.
            25%
                of the options - On October 1,
                2006.


2.
            75%
                of the options - On the last day of each of the 36 months following
                October 1, 2006, the options shall vest in equal monthly
                installments.





**l.**
            On
                May 4, 2006, 500,000 (100,000 for each of its five board members)
                options
                were granted under the Stock Option Plan. The exercise price has
                been
                determined at $1.29 per common share (see also note i above regarding
                the
                determined exercise price). Compensation costs calculated in accordance
                with APB 25 totaled $105,000. As to the exercise terms of the options -
                see exercise terms in note c above.





The
      fair
      Value of the above mentioned options on the date of grant estimated by using
      the
      Black Scholes option-pricing model is $605,909. The value was based on the
      following assumptions: dividend yield of 0%; expected volatility of 83%;
      risk-free interest rates of 4.5%; and expected lives of 7.85 years.





**NOTE
      5 - RELATED PARTIES - TRANSACTIONS:**





**a.**
            On
                April 15, 2005, the CEO of the subsidiary who also served as the
                Acting
                CEO of the company had resigned from its position as the acting CEO
                of the
                company, and will continue as the CEO of the subsidiary.





**b.**
            On
                April 16, 2006, the Company entered into an employment agreement
                (the
                "Agreement") with its new CEO pursuant to which the new CEO will
                serve as
                CEO of the Company, effective April 15, 2006. Mr. Schnegelsberg shall
                receive an annual salary of $200,000 and an annual bonus of up to
                $200,000
                upon achieving certain objectives. Pursuant to a separate agreement
                between the company and the new CEO, the company agreed to indemnify
                the
                new CEO for substantially all liabilities he may incur as a result
                of his
                employment by or service to the
                company.


12


**ITEM
      2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**





As
      used
      in this current report, the terms "we", "us", "our", and "Gammacan" mean
      Gammacan International, Inc. and our subsidiary, Gammacan, Ltd., unless
      otherwise indicated.





All
      dollar amounts refer to US dollars unless otherwise indicated.





We
      currently have no revenue from operations, we are in a start-up phase with
      our
      existing assets and we have no significant assets, tangible or intangible.
      There
      can be no assurance that we will generate revenues in the future, or that we
      will be able to operate profitably in the future, if at all. We have incurred
      net losses in each fiscal year since inception of our operations.





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





Since
      July 2005, we have been conducting a Phase 2 clinical trial in humans to
      demonstrate clinical efficacy of IGg immunotherapy in three major cancers:
      colon, prostate and melanoma. To date, 31 patients have been enrolled, out
      of
      which 27 have actually received the IGg treatment. This phase 2 clinical trial
      is being conducted at three medical centers in Israel and results will likely
      be
      available during 2007. The trial is due to be completed by the beginning of
      2007, but we will probably continue to monitor patients for a number of years
      after the trial in order to collect additional evidence of efficacy and
      potential benefits or adverse effects of the IGg treatment . If
      successful or promising, and at this preliminary stage there is no assurance
      they will be, results of these clinical trials will be used to enter into
      discussions with a major pharmaceutical partner and plasma based product
      manufacturers to work with us to potentially commercialize the IGg products.
      This commercialization will include pivotal, Phase 3 clinical trials in
      accordance with regulatory requirements. Such trials may be long-term trials
      and
      may require substantial financial resources that we do not presently possess.





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





We
      are in
      the process of applying for an IND with the US FDA for VitiGam, GammaCan’s
      second generation IGg product and first-in-class anti-cancer immunotherapy.
      VitiGam is slated to enter the clinic under a US IND in the near future. VitiGam
      is designed to target metastatic melanoma patients with Stage III and IV
      melanoma.





VitiGam
      is an intravenous IgG mixture derived from IGg manufactured from plasma of
      donors with vitiligo, a benign autoimmune skin condition affecting up to 2%
      of
      the general population. GammaCan scientists have shown that vitiligo derived
      IGg
      (VitiGam) contains anti-melanoma activities in substantially higher quantities
      than those found in IGg from other donors. This “enriched” vitiligo IGg
      (VitiGam) has potent anti-melanoma activity in both *in
      vitro* and *in
      vivo* melanoma
      models. Preliminary data from the ongoing, open-label Phase 2 trial of GCAN
      101
      (“standard” IGg) in cancer patients (melanoma, prostate and colon) further
      support the rationale underling the VitiGam program.




13




The
      Company intends to conduct a Phase 1/2 under a US IND to evaluate VitiGam in
      patients with stage III and IV melanoma. As described under the Planned
      Expenditure section, the estimated costs of this Phase 1/2 are substantial;
      the
      timing of initiation of the Phase 1/2 trials will be based on several major
      factors, including the ability of the Company to attract sufficient financing
      on
      acceptable terms.





We
      are
      also contemplating to conduct additional clinical trials to test new
      formulations of IGg and to test IGg immunotherapies 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 Phase 2 and Phase 3 trials, in order to attain
      broad-based regulatory approval.





**Long
      Term Business Strategy**





As
      noted
      previously, if IGg shows significant promise in clinical trials, we may seek
      a
      strategic commercial partner, or partners, with extensive experience in
      commercialization and marketing of cancer drugs and or therapeutic proteins.
      It
      is envisaged that the partner, or partners, would be responsible for ensuring
      regulatory approvals and registrations in a timely manner and for the
      penetration of our IGg immunotherapies to the market. Any such strategic
      partnership, or partnerships, could provide a marketing and sales infrastructure
      for our products as well as financial and operational support for global trials
      and other FDA requirements concerning future clinical development. Putative
      future strategic partner, or partners, could 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 and to develop novel methods for the delivery for
      IGg
      based therapies.





**Other
      Research and Development Plans**





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





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


·
            High
                dosages for use in conjunction with surgery and other cancer treatments,
                and


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


·
            Others





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





**Other
      Strategic Plans**





If
      appropriate, we will consider in-licensing and other means of obtaining access
      to additional compounds for our product portfolio. The aim of this is to create
      a well-balanced product portfolio that includes compounds at different stages
      of
      development and addressing different medical needs.




14




**Critical
      accounting policies and estimates**





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





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





**Going
      concern assumption**


The
      financial statements have been prepared assuming the Company will continue
      as a
      going concern. Through June 30, 2006, the Company has incurred losses in an
      aggregate amount of $3,259,250. Such losses have resulted from the Company’s
      activities as a development stage company. These factors raise substantial
      doubt
      about the company's ability to continue as a going concern. We estimate that
      the
      cash reserves available on June 30, 2006 will be sufficient to cover the planned
      expenses through September 30, 2006. The Company's continuation as a going
      concern is dependent on its ability to meet its obligations, to obtain
      additional financing as may be required and ultimately to attain profitability.




**Valuation
      of options and warrants**


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




**Results
      of Operations**





Nine
      months ended June 30, 2006 and 2005





The
      following table summarizes certain statement of operations data for the company
      for the six months period ended June 30, 2006 and 2005 (in US$):





Nine
                months ended
              June
                30,2006
            
            2005Research
                and development costs
            
            $
            719,153
            
            $
            299,985General
                and administrative expenses
            
            
            853,591
            
            
            508,075Financial
                income net
            
            
            (26,112
            )
            
            (11,097
            )Net
                loss for the period
            
            $
            1,546,632
            
            $
            796,963







15




Research
      and development costs.




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





During
      the nine months ended June 30, 2006 and June 30, 2005 the research and
      development expenses included, among other, the clinical trial and pre-clinical
      trial expenses, the consultants compensation, costs related to the registered
      patents as well as salaries and related expenses.





During
      the nine months ended June 30, 2006 the research and development expenses
      totaled $719,153, compared to $299,985 during the nine months ended June 30,
      2005. The increase in costs is due to the conducted Phase 2 trial whereas during
      the nine months ended June 30, 2005 the costs were related to the pre-clinical
      activity.





General
      and administrative expenses


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





For
      the
      nine months ending June 30, 2006 the General and administrative expense totaled
      $853,591 compared to $508,075 for the nine months ended June 30, 2005. Costs
      incurred related to general and administrative in the nine months ended June
      30,
      2006 reflect an increase in activities as well as increased number of employees
      as compared to the nine months period ending June 30, 2005.





Financial
      income/expense, net


During
      the nine months ending June 30, 2006 and June 30, 2005, the company generated
      interest income on available cash and cash equivalents balance.





**Liquidity
      and Capital Recourses**


**Financing
      activities**


Through
      June 30, 2006, the Company has incurred losses in an aggregate amount of
      $3,259,250. We have financed our operation from private placement of common
      stock. Through June 30, 2006 we raised a total of $3,652,829, net of transaction
      cost, through private placements and we anticipate that additional financing
      will be through similar sources. Our financing activates for the nine months
      period ending June 30, 2006 include the following:





On
      October 31, 2005, the company entered into subscription agreement for the sale
      of 666,666 units at a purchase price of $0.75 per unit for a total consideration
      of $500,000.





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





On
      December 20, 2005, the company entered into subscription agreement for the
      sale
      of 222,222 units at a purchase price of $0.90 per unit for a total consideration
      of $200,000.





**Employee's
      stock options plan**


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





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




16




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





On
      January 12, 2006 we granted options to purchase up to 50,000 common shares
      of
      our company at an exercise price of $1.10 to an employee.





On
      March
      15, 2006 we granted options to purchase up to 50,000 common shares of our
      company at an exercise price of $1.37 to a director of the company.





On
      April
      17, 2006 we granted options to purchase up to 1,400,000 common shares of our
      company at an exercise price of $1.29 to Mr. Patrick Schnegelsberg.





On
      May 4,
      2006 we granted options to purchase up to 100,000 common shares of our company
      at an exercise price of $1.29 to each of the five members of the board for
      a
      total of 500,000 options.





**Summary
      of financing activities**


Through
      June 30, 2006 we raised approximately $3.6 Million through private placements
      of
      our securities. As of June 30, 2006 the cash and cash equivalents totaled
      $949,230. We anticipate that these reserves will be sufficient to fund operation
      through September 30, 2006. Continuation of our current operations after
      utilizing the mentioned reserves during the year ending September 30, 2006,
      is
      dependent upon obtaining financial support from investors until profitable
      results are achieved.





**Planned
      Expenditures**


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





**Category**
            
            **Amount**Research
                &Development
            
            
            1,207,000Business
                Development
            
            
            211,000General
                & Administrative Expenses
            
            
            1,345,000**Total**
            
            
            **2,763,000**





We
      are
      planning to conduct an additional clinical trial to demonstrate clinical
      efficacy of VitiGam an IGg sourced from a specific population, in patients
      with
      stage III or IV melanoma. We began initial process of planning this trial during
      the fist half of 2006. The decision to proceed past the initial process will
      be
      based on several major factors, one of which is the ability of the company
      to
      attract sufficient financing on acceptable terms. If we elect to continue this
      VitiGam trial past the initial process, we anticipate that our related clinical
      trial costs over the next 12 months would increase by approximately
      $3,000,000.





**Related
      party transactions**


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





On
      June
      6, 2005, the Company and Gammacan, Ltd. appointed Vered Caplan as acting Chief
      Executive Officer of both companies, effective July 2, 2005. Vered Caplan will
      devote approximately 70% of her business time to the affairs of Gammacan, Ltd.
      and the Company. Vered Caplan shall receive a salary of $6,475 per month. On
      April 15, 2006 Vered Caplan has resigned form her position as the acting Chief
      Executive Officer of the company. Vered Capalan will remain as the Chief
      Executive Officer of Gammacan, Ltd.




17




On
      April
      16, 2006, the Company entered into an employment agreement (the "Agreement")
      with Patrick Schnegelsberg pursuant to which Mr. Schnegelsberg will serve as
      Chief Executive Officer of the Company, effective April 15, 2006. Mr.
      Schnegelsberg shall receive a salary of $200,000 and an annual bonus of up
      to
      $200,000 upon achieving certain objectives. Pursuant to a separate agreement
      between the Company and Mr. Schnegelsberg, the Company agreed to indemnify
      Mr.
      Schnegelsberg for substantially all liabilities he may incur as a result of
      his
      employment by or service to the Company. Mr. Schnegelsberg was granted 1,400,000
      stock options of the Corporation, pursuant to the Corporation's 2004 Stock
      Option Plan, adopted by the Board on August 17, 2004. Options are exercisable
      at
      an exercise price of $1.29 per share. 350,000 of the Options shall vest on
      the
      first anniversary from their date of grant, and the remaining Options shall
      vest
      in 36 equal monthly instalments thereafter


18





**ITEM
      3. CONTROLS AND PROCEDURES**





Evaluation
      of Disclosure Controls and Procedures. As of June 30, 2006, 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 pursuant to the Securities and Exchange Act , Rule 13a-15(d) and
      15d-15(d) under 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 Securities Exchange Act of 1934.





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.


19


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





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





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





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





**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. ****





20


**ITEM
      6**  **EXHIBITS**





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)





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.**August
                9, 2006
            
            /s/*CHAIME
                ORLEV*Chaime
                Orlev,Chief
                Financial Officer


21