[Letterhead of PricewaterhouseCoopers]

                                                               S41236 - 90008170

                                AUDITORS' REPORT

To the shareholders of

SANO DISPEC DEVELOPMENT LTD.

We have audited the financial statements of Sano Dispec Development Limited
(hereafter - the company): balance sheets at December 31, 1996 and 1995 and
statements of income (loss), changes in shareholders' equity and cash flows for
each of the two years in the period ended December 31, 1996. These financial
statements are the responsibility of the company's board of directors and
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

Our audits were performed in accordance with generally accepted auditing
standards, including those prescribed by the Auditors (Mode of Performance)
Regulations, 1973. Those standards require that we plan and perform the audits
to obtain reasonable assurance that the financial statements are free of
material misstatement, whether caused by an error in the financial statements or
by misleading information included therein. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by the company's board of directors and management,
as well as evaluating the overall financial statement presentation. We believe
that our audits provide a fair basis for our opinion.

The aforementioned financial statements have been prepared on the basis of
historical cost adjusted to reflect the changes in the general purchasing power
of Israeli currency, in accordance with Opinions of the Institute of Certified
Public Accountants in Israel. Condensed nominal Israeli currency data, on the
basis of which the adjusted financial statements were prepared, are presented in
note 9.

In our opinion, the aforementioned financial statements present fairly, in all
material respects, the financial position of the company at December 31, 1996
and 1995 and its results of operations, changes in shareholders' equity and cash
flows for each of the two years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
<PAGE>

Without qualifying our opinion, we draw attention to the accounting policy for
foreign entities as described in note 1c.

Pursuant to Section 211 of the Companies Ordinance (New Version), 1983, we state
that we have obtained all the information and explanations which we have
required and our opinion on the abovementioned financial statements is given
according to the best of our information and the explanations received by us and
as shown by the books of the company.

Accounting principles generally accepted in Israel differ in certain respects
from accounting principles generally accepted in the United States. As
applicable to the company, the application of the latter would not have affected
the determination of nominal/historical loss and capital deficiency presented in
note 9.


                                          /s/ Kesselman & Kesselman
Tel-Aviv,                                 Kesselman & Kesselman
      February 19, 1997                   Certified Public Accountants (Isr.)